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1. Company Snapshot

1.a. Company Description

Adobe Inc.operates as a diversified software company worldwide.It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising.


The Digital Media segment offers products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote content; and Document Cloud, a unified cloud-based document services platform.Its flagship product is Creative Cloud, a subscription service that allows members to access its creative products.This segment serves content creators, workers, marketers, educators, enthusiasts, communicators, and consumers.


The Digital Experience segment provides an integrated platform and set of applications and services that enable brands and businesses to create, manage, execute, measure, monetize, and optimize customer experiences from analytics to commerce.This segment serves marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers, and executives across the C-suite.The Publishing and Advertising segment offers products and services, such as e-learning solutions, technical document publishing, web conferencing, document and forms platform, web application development, and high-end printing, as well as Advertising Cloud offerings.


The company offers its products and services directly to enterprise customers through its sales force and local field offices, as well as to end users through app stores and through its website at adobe.com.It also distributes products and services through a network of distributors, value-added resellers, systems integrators, software vendors and developers, retailers, and original equipment manufacturers.The company was formerly known as Adobe Systems Incorporated and changed its name to Adobe Inc.


in October 2018.Adobe Inc.was founded in 1982 and is headquartered in San Jose, California.

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1.b. Last Insights on ADBE

Adobe's recent performance has been negatively impacted by investor concerns over AI disruption, an uncertain macroeconomic environment, and stiff competition from tech giants like Microsoft, OpenAI, and Alphabet. The company's valuation has been driven down by skepticism over its ability to capitalize on AI investments, despite resilient earnings and sector-leading margins. Several institutional investors, including Birch Hill Investment Advisors and First Merchants Corp, have reduced their stakes in Adobe, contributing to the stock's decline. Additionally, growing fears of an AI bubble have further pressured the stock.

1.c. Company Highlights

2. Adobe's Q4 Results Exceed Expectations with Strong AI-Driven Growth

Adobe reported record revenue of $6.19 billion in Q4, growing 10% year-over-year, with non-GAAP EPS of $5.5, beating estimates of $5.4. For fiscal 2025, the company achieved revenue of $23.77 billion, with non-GAAP EPS of $20.94. The Digital Media segment revenue was $4.62 billion in Q4, up 11% year-over-year, with ending ARR growing 11.5% to $19.2 billion. Adobe's growth was driven by strong demand for AI-influenced offerings, with over one-third of its overall book of business now AI-influenced.

Publication Date: Dec -20

📋 Highlights
  • 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.

3. NewsRoom

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Adobe Animate is shutting down as company focuses on AI

Feb -02

Source: techcrunch.com

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UMB Bank n.a. Reduces Stock Holdings in Adobe Inc. $ADBE

Feb -02

Source: defenseworld.net

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Great Lakes Advisors LLC Sells 21,013 Shares of Adobe Inc. $ADBE

Feb -02

Source: defenseworld.net

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Keybank National Association OH Trims Stock Holdings in Adobe Inc. $ADBE

Feb -02

Source: defenseworld.net

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Adobe Inc. $ADBE Shares Sold by Bridges Investment Management Inc.

Feb -02

Source: defenseworld.net

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Principal Financial Group Inc. Has $194.29 Million Stake in Adobe Inc. $ADBE

Feb -02

Source: defenseworld.net

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Better Creative Tools Stock: Figma vs. Adobe

Feb -01

Source: fool.com

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Why Adobe Stock Is A Great Value Play

Jan -31

Source: forbes.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.90%)

6. Segments

Digital Media

Expected Growth: 8.5%

Adobe's Digital Media segment growth of 8.5% is driven by increasing demand for creative cloud services, strong subscription adoption, and expanding e-commerce capabilities. The segment's growth is also fueled by the company's strategic acquisitions, such as Figma, and its focus on artificial intelligence and machine learning technologies to enhance customer experience.

Digital Experience

Expected Growth: 10.2%

Adobe's Digital Experience segment growth of 10.2% is driven by increasing demand for personalized customer experiences, driven by AI-powered analytics, and expanding cloud-based services. Strong adoption of Experience Manager, Target, and Analytics Cloud solutions also contribute to growth, as businesses prioritize digital transformation and customer engagement.

Publishing and Advertising

Expected Growth: 6.8%

Adobe's publishing and advertising segment growth of 6.8% is driven by increasing demand for digital marketing solutions, strong adoption of Creative Cloud and Document Cloud, and strategic acquisitions. The segment benefits from Adobe's leadership in content creation and marketing automation, enabling businesses to effectively engage with customers across channels.

7. Detailed Products

Photoshop

A professional image editing and manipulation software

Illustrator

A vector graphics editor for creating logos, icons, and illustrations

InDesign

A page design and layout software for creating multi-page documents

Premiere Pro

A professional video editing software for film, TV, and digital media

After Effects

A digital visual effects, motion graphics, and compositing software

Dreamweaver

A web development tool for designing, building, and managing websites

Acrobat

A software for creating, editing, and sharing PDF files

XD

A user experience design software for creating and prototyping digital products

Analytics

A data analytics platform for measuring and optimizing digital experiences

Campaign

A marketing automation platform for managing customer experiences

Workfront

A project management platform for streamlining workflows and enhancing collaboration

8. Adobe Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Adobe's products have a high switching cost, making it difficult for customers to switch to substitutes. Additionally, Adobe's products are highly specialized, making it difficult for substitutes to match their quality.

Bargaining Power Of Customers

Adobe's customers have some bargaining power due to the availability of alternative products. However, Adobe's strong brand reputation and high-quality products reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Adobe has a diverse supplier base, reducing the bargaining power of individual suppliers. Additionally, Adobe's strong financial position gives it the power to negotiate with suppliers.

Threat Of New Entrants

The software industry has high barriers to entry, making it difficult for new entrants to compete with Adobe. Additionally, Adobe's strong brand reputation and established customer base make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The software industry is highly competitive, with many established players competing for market share. Adobe faces intense competition from companies like Autodesk, Salesforce, and Microsoft.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 19.81%
Debt Cost 3.95%
Equity Weight 80.19%
Equity Cost 10.35%
WACC 9.09%
Leverage 24.70%

11. Quality Control: Adobe Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
CrowdStrike

A-Score: 5.1/10

Value: 4.0

Growth: 8.8

Quality: 3.7

Yield: 0.0

Momentum: 9.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Palantir

A-Score: 4.8/10

Value: 0.0

Growth: 7.6

Quality: 8.9

Yield: 0.0

Momentum: 10.0

Volatility: 2.7

1-Year Total Return ->

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Stock-Card
Oracle

A-Score: 4.8/10

Value: 2.7

Growth: 6.8

Quality: 6.0

Yield: 2.0

Momentum: 8.5

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Zscaler

A-Score: 4.7/10

Value: 2.3

Growth: 8.4

Quality: 3.5

Yield: 0.0

Momentum: 9.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Fortinet

A-Score: 4.5/10

Value: 1.0

Growth: 9.1

Quality: 7.9

Yield: 0.0

Momentum: 4.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Adobe

A-Score: 4.5/10

Value: 3.0

Growth: 5.4

Quality: 9.2

Yield: 0.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

293.38$

Current Price

293.38$

Potential

-0.00%

Expected Cash-Flows