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Adobe (ADBE)
NASDAQ:ADBE
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Adobe
(NASDAQ:ADBE)78Outperform
Positive Factors
Financial Performance
ADBE is expected to significantly monetize its Generative AI innovations going forward, with solid upside to future ARR/revenue guidance.
Product Launch
ADBE released its long-awaited Firefly Video Model in public beta, providing good upside potential for future fiscal years.
Negative Factors
Competition
Intensifying competition could create downward pressure on product pricing and margins.
Adobe (ADBE) vs. S&P 500 (SPY)
Market Cap
$193.98B
Dividend YieldN/A
Average Volume (3M)3.16M
Price to Earnings (P/E)35.9
Beta (1Y)1.36
Revenue Growth11.02%
EPS Growth4.96%
CountryUS
Employees30,709
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)12.41
Shares Outstanding434,897,370
10 Day Avg. Volume2,772,808
30 Day Avg. Volume3,161,366
Financial Highlights & Ratios
PEG Ratio7.24
Price to Book (P/B)N/A
Price to Sales (P/S)8.92
Price to Cash Flow (P/CF)16.40
P/FCF Ratio16.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$572.26Price Target Upside28.30% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering28
Adobe Business Overview & Revenue Model
Company DescriptionAdobe, Inc. provides digital marketing and media solutions, with it operating through the following segments: Digital Media, Digital Experience, and Publishing. Its products and services include Adobe Photoshop, Adobe Illustrator, Adobe Acrobat, analytics solutions, digital experience management, products for eLearning solutions, technical document publishing, web application development, and high-end printing. The company was founded by Charles M. Geschke and John E. Warnock in December 1982 and is headquartered in San Jose, CA.
How the Company Makes MoneyAdobe makes money through a subscription-based revenue model, primarily driven by its flagship product lines: Creative Cloud, Document Cloud, and Experience Cloud. Creative Cloud offers a suite of products like Photoshop, Illustrator, and Premiere Pro, which are widely used by creative professionals for design, video editing, and digital art. Document Cloud includes Adobe Acrobat and Adobe Sign, facilitating document management and electronic signatures. Experience Cloud provides a comprehensive set of tools for digital marketing, analytics, and customer experience management. Adobe's revenue is significantly boosted by its strategic shift to cloud-based services, fostering recurring revenue streams from subscriptions. Additionally, Adobe partners with various technology companies to enhance its product offerings and expand its market reach.
Adobe Financial Statement Overview
Summary
Adobe's financial health is strong, with consistent revenue and profit growth. Gross profit margins exceed 80%, and the net profit margin remains robust. The balance sheet shows healthy leverage, though there's a slight increase in liabilities. Cash flow performance is impressive, with strong cash generation capabilities.Income Statement
Adobe has shown strong revenue growth with a consistent increase from $11.17 billion in 2019 to $21.51 billion in 2024. Gross profit margins consistently exceed 80%, indicating efficient cost management. The net profit margin remains robust, slightly above 25% in the latest year. While the EBIT and EBITDA margins are solid, they have remained relatively stable, suggesting limited operational leverage improvements.88
Very Positive
Balance Sheet
The company maintains a healthy balance sheet with a debt-to-equity ratio below 0.5, reflecting conservative leverage. Return on Equity (ROE) is strong, consistently above 30%, showcasing effective use of equity capital. The equity ratio indicates a balanced asset financing strategy with over 45% equity of total assets. However, there is a slight increase in total liabilities, which warrants monitoring.85
Very Positive
Cash Flow
Cash flow performance is impressive with consistent growth in free cash flow, supported by strong operating cash flows that exceed net income, indicating quality earnings. The free cash flow to net income ratio is above 1, highlighting robust cash generation capabilities. The operating cash flow to net income ratio also demonstrates efficient cash conversion.92
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 21.50B | 19.41B | 17.61B | 15.79B | 12.87B | Gross Profit |
| 19.15B | 17.05B | 15.44B | 13.92B | 11.15B | EBIT |
| 6.74B | 6.65B | 6.10B | 5.80B | 4.24B | EBITDA |
| 7.96B | 6.65B | 7.05B | 6.67B | 5.13B | Net Income Common Stockholders |
| 5.56B | 5.43B | 4.76B | 4.82B | 5.26B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 7.89B | 7.84B | 6.10B | 5.80B | 5.99B | Total Assets |
| 30.23B | 29.78B | 27.16B | 27.24B | 24.28B | Total Debt |
| 6.06B | 4.08B | 4.63B | 4.67B | 4.71B | Net Debt |
| -1.56B | -3.06B | 397.00M | 829.00M | 230.00M | Total Liabilities |
| 16.13B | 13.26B | 13.11B | 12.44B | 11.02B | Stockholders Equity |
| 14.11B | 16.52B | 14.05B | 14.80B | 13.26B |
| Cash Flow | Free Cash Flow | |||
| 7.82B | 6.94B | 7.40B | 6.89B | 5.31B | Operating Cash Flow |
| 8.06B | 7.30B | 7.84B | 7.22B | 5.73B | Investing Cash Flow |
| 149.00M | 776.00M | -570.00M | -3.52B | -414.00M | Financing Cash Flow |
| -7.72B | -5.18B | -6.83B | -4.30B | -3.49B |
Adobe Technical Analysis
Neutral
446.03
Price Trends
439.92
Positive
471.69
Negative
499.49
Negative
Market Momentum
-0.89
Positive
50.25
Neutral
31.86
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADBE, the sentiment is Neutral. The current price of 446.03 is below the 20-day moving average (MA) of 447.52, above the 50-day MA of 439.92, and below the 200-day MA of 499.49, indicating a neutral trend. The MACD of -0.89 indicates Positive momentum. The RSI at 50.25 is Neutral, neither overbought nor oversold. The STOCH value of 31.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ADBE.
Adobe Risk Analysis
Adobe disclosed 23 risk factors in its most recent earnings report. Adobe reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Adobe Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.89T | 31.30 | 30.64% | 0.81% | 15.04% | 12.38% | |
79 Outperform | $171.61B | 57.36 | 16.92% | 0.65% | 13.73% | 9.93% | |
78 Outperform | $193.98B | 35.94 | 39.42% | ― | 11.02% | 4.96% | |
75 Outperform | $440.44B | 38.54 | 84.57% | 0.99% | 6.40% | 12.83% | |
73 Outperform | $274.98B | 45.18 | 10.13% | 0.55% | 8.72% | 51.47% | |
69 Neutral | $57.50B | 52.15 | 42.43% | ― | 12.46% | 22.28% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
ADBE
Adobe
446.03
-97.06
-17.87%
ADSK
Autodesk
267.43
16.33
6.50%
INTU
Intuit
598.07
-48.24
-7.46%
MSFT
Microsoft
388.61
-10.43
-2.61%
ORCL
Oracle
157.47
46.40
41.78%
CRM
Salesforce
287.34
-14.74
-4.88%
Adobe Earnings Call Summary
Earnings Call Date: Dec 11, 2024 | % Change Since: -18.89% | Next Earnings Date: Mar 12, 2025
Earnings Call Sentiment Neutral
Adobe demonstrated strong financial performance and innovative product development in FY 2024, achieving record revenues and expanding its AI capabilities. Despite this, there were concerns about growth acceleration, particularly in the Creative Cloud segment, and anticipated revenue headwinds from FX and subscription transitions in FY 2025.Highlights
Record Revenue and Growth
Adobe achieved record revenue of $21.51 billion in FY 2024, representing 11% year-over-year growth. GAAP EPS was $12.36 and non-GAAP EPS was $18.42, growing 5% and 15% year-over-year, respectively.
Strong Digital Media and Experience Performance
In Q4, Adobe's Digital Media revenue was $4.15 billion, growing 12% year-over-year. Digital Experience revenue was $1.4 billion for the quarter, with subscription revenue growing 12% year-over-year.
Innovations in AI and Product Development
Adobe introduced new AI models and innovations, including the Firefly family and AI Assistant in Acrobat, which enhanced productivity and drove customer adoption.
Significant Enterprise Customer Wins
Adobe secured key enterprise customers such as Abbott Laboratories, American Express, Coca-Cola, and the U.S. Department of Defense.
Strong Document Cloud Performance
Document Cloud revenue in Q4 was $843 million, growing 17% year-over-year, with a record net new ARR of $173 million.
Lowlights
Deceleration Concerns
Investors expressed concerns about the lack of acceleration in growth despite significant innovation, with Creative Cloud ARR growth being perceived as slower.
FX and Subscription Headwinds
Adobe expects an approximate $200 million revenue headwind in FY 2025 due to foreign exchange effects and the continued transition from perpetual to subscription models.
Company Guidance
During Adobe's Q4 2024 earnings call, the company provided robust guidance and highlighted significant achievements across its business segments. Adobe reported Q4 revenue of $5.61 billion, marking an 11% year-over-year growth, with the Digital Media segment contributing $4.15 billion and the Digital Experience segment $1.40 billion. The company achieved record net new Digital Media ARR of $578 million and a Digital Experience subscription revenue of $1.27 billion, representing 12% growth. For the fiscal year 2024, Adobe's revenue reached a record $21.51 billion, with GAAP and non-GAAP earnings per share at $12.36 and $18.42, respectively, showing 5% and 15% growth. The company exited the year with $19.96 billion in RPO and $7.89 billion in cash and short-term investments. Looking ahead to FY 2025, Adobe targets revenue between $23.30 billion and $23.55 billion, with GAAP EPS of $15.80 to $16.10 and non-GAAP EPS of $20.20 to $20.50, focusing on expanding its AI innovation and integrated solutions like GenStudio to drive growth.Adobe Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Adobe Announces Leadership Change and New Incentive Plans
Neutral
Jan 30, 2025
On January 24, 2025, Adobe Inc. announced the resignation of Scott Belsky, Chief Strategy Officer, effective March 15, 2025, as he pursues other opportunities. Additionally, Adobe’s Executive Compensation Committee approved the 2025 Performance Share Program aimed at enhancing stockholder value and attracting talent, with performance shares tied to stockholder return and sales goals over a three-year period. This program is designed to align executive interests with those of stockholders and serves as a retention mechanism. The committee also approved the 2025 Executive Annual Incentive Plan to drive revenue growth, profitability, and strategic priorities, with cash bonuses tied to revenue and earnings per share targets.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.