Adobe Q4 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall

Adobe ADBE reported fourth-quarter fiscal 2025 non-GAAP earnings of $5.50 per share, beating the Zacks Consensus Estimate by 2.04% and increasing 14.3% year over year.Total revenues were $6.194 billion, which beat the consensus mark by 1.5% and increased 10.5% year over year both on a reported and constant-currency (cc) basis. Annualized recurring revenues (ARR) at the end of the fourth quarter of fiscal 2025 were $25.66 billion, indicating 11.5% growth from the year-ago same period. Total new AI-influenced ARR now exceeds one-third of ADBE’s overall book of business. Total customers with ARR more than$10 million grew 25% year over year to over 150.Adobe shares were down 0.61% at the time of writing this article. ADBE dropped 37.6% in the past year, underperforming the Zacks Computer and Technology sector’s 25% and the Zacks Computer Software industry’s 4.9%.ADBE’s Top Line in DetailSubscription revenues were $5.989 billion (which accounted for 96.7% of the total revenues), up 11.6% on a year-over-year basis. Product revenues totaled $74 million (1.2% of the total revenues), down 8.6% year over year. Services and other revenues were $131 million (2.1% of the total revenues), down 18.1% year over year. Adobe Inc. Price, Consensus and EPS Surprise Adobe Inc. price-consensus-eps-surprise-chart | Adobe Inc. Quote The Digital Media segment’s revenues were $4.62 billion, up 11% year over year on a reported and cc basis. Digital Media’s ARR was $19.2 billion at the end of the fiscal fourth quarter of 2025, representing 11.5% year-over-year growth. Digital Experience revenues of $1.52 billion increased 9% year over year, both on a reported and cc basis. Digital Experience subscription revenues of $1.41 billion increased 11% year over year, both on a reported and cc basis. Publishing and Advertising revenues of $60 million compared with $70 million in the year-ago quarter.Customer Group subscription revenues were $5.96 billion, up 12% year-over-year and 11% at cc. Business Professionals and Consumers’ subscription revenues were $1.72 billion, which represents 15% year-over-year growth on a reported basis and 14% at cc. Creative and Marketing Professionals subscription revenues were $4.25 billion, up 11% year over year on a reported basis and 10% at cc.ADBE Q4 Operating DetailsAdobe reported fourth-quarter fiscal 2025 GAAP gross margin of 90.4%, which expanded 10 basis points (bps) on a year-over-year basis.Operating expenses were $2.78 billion, up 12.6% year over year. As a percentage of total revenues, the figure increased 80 bps year over year to 44.8%.The adjusted operating margin was 45.6%, which contracted 70 bps year over year.ADBE’s Balance Sheet & Cash FlowAs of Nov. 28, 2025, the cash and short-term investment balance was $6.6 billion, up from $5.94 billion as of Aug. 29. Long-term debt, as of Nov. 28, was $6.2 billion, unchanged compared with the figure as of Aug. 29.Cash generated from operations was $3.16 billion in the reported quarter compared with $2.2 billion in the previous quarter.Adobe Offers Positive Q1 and FY26 GuidanceFor the first quarter of fiscal 2026, Adobe expects total revenues between $6.25 billion and $6.30 billion. Adobe expects Business Professionals and Consumers’ subscription revenue between $1.74 billion and $1.76 billion. Creative and Marketing Professionals subscription revenues are expected between $4.30 billion and $4.33 billion.Non-GAAP operating margin is expected to be 47%. Adobe expects fiscal first-quarter non-GAAP earnings between $5.85 and $5.90 per share. For fiscal 2025, Adobe expects total revenues between $25.9 billion and $26.1 billion. Adobe expects Business Professionals and Consumers’ subscription revenue between $7.35 billion and $7.4 billion. Creative and Marketing Professionals subscription revenues are expected between $17.75 billion and $17.9 billion.Non-GAAP operating margin is expected to be 45%. Adobe expects fiscal 2026 non-GAAP earnings between $23.30 and $23.50 per share.Zacks Rank & Stocks to ConsiderCurrently, ADBE carries a Zacks Rank #3 (Hold).Advanced Energy Industries AEIS, Amphenol APH and Reddit RDDT are some better-ranked stocks that investors can consider in the broader sector. Astera Labs, Amphenol and Reddit each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Long-term earnings growth rate for Advanced Energy Industries, Amphenol and Reddit is currently pegged at 33.4%, 38.7% and 38.6%, respectively.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amphenol Corporation (APH): Free Stock Analysis Report Adobe Inc. (ADBE): Free Stock Analysis Report Advanced Energy Industries, Inc. (AEIS): Free Stock Analysis Report Reddit Inc. (RDDT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks