- Record Revenue and EPS: FY 2025 revenue reached $23.77 billion, with non-GAAP EPS at $20.94.
- Strong ARR Growth: Ending ARR grew 11.5% YoY to $19.2 billion, driven by AI-influenced and AI-first solutions.
- Firefly's Impact: Generative AI credits consumed tripled QoQ, fueling Q4 Digital Media revenue of $4.62 billion (+11% YoY).
- FY 2026 Guidance: Targets $25.9–$26.1 billion revenue and 10.2% YoY ARR growth, with non-GAAP EPS of $23.3–$23.50.
- Strategic Acquisitions: SEMRush acquisition (priced at $1.9 billion) expected to close in 2026 with negligible initial EPS impact.
Segment Performance
The Digital Media segment was a key contributor to Adobe's growth, with revenue of $17.65 billion in fiscal 2025, up 11% year-over-year. The Digital Experience segment also saw significant growth, with revenue of $5.86 billion, up 9% year-over-year. The company's subscription revenue grew 11% year-over-year to $1.41 billion in Q4, driven by strong demand for its Creative Cloud, Document Cloud, and Experience Cloud offerings.
AI-Driven Growth
Adobe's AI-driven growth was a key highlight, with generative credit consumption growing three times quarter-over-quarter. The company's Firefly application drove strong growth, and its partnership with ChatGPT and integration expands Adobe's services outside its ecosystem, driving monetization through meeting customers where they are. As Shantanu Narayen, Adobe's CEO, expressed confidence in the company's ability to deliver industry-leading innovation, double-digit ARR growth, and world-class profitability in FY '26.
Outlook and Valuation
Adobe targets FY '26 total Adobe revenue of $25.9 to $26.1 billion, with a total Adobe ending ARR book of business growth of 10.2% year-over-year. The company's guidance anticipates non-GAAP operating margin of approximately 45% and a non-GAAP tax rate of approximately 18%. With a P/E Ratio of 20.81 and an EV/EBITDA of 15.4, Adobe's valuation metrics indicate a premium for its growth prospects. The company's strong ROIC of 36.69% and ROE of 59.5% support its ability to generate returns above its cost of capital.
Growth Prospects
Analysts estimate next year's revenue growth at 9.8%, slightly lower than the current year's growth rate. However, Adobe's strong track record of innovation and its expanding ecosystem of AI-driven offerings position the company for continued growth. The pending acquisition of SEMRush is expected to enhance brand visibility and drive further growth. With a strong lineup, including freemium offers, Express, Acrobat Studio, and Firefly, Adobe is well-positioned to seize market opportunities and drive continued growth in 2026 and beyond.