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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 impacted by intensifying competition, particularly in AI. Despite AI-fueled growth boosting revenue guidance, stretched valuation and fierce competition weigh on investor sentiment (Source: Melius Research). The company's Q4 guidance projects deceleration in revenue and EPS growth, indicating ongoing challenges in monetizing AI advancements. Additionally, a research firm downgraded Adobe, citing AI "eating software" that will dig into future profits. Institutional investors, such as Joel R Mogy Investment Counsel, have also sold Adobe shares, worth $7.5 million.

1.c. Company Highlights

2. Adobe's Q3 FY '25 Earnings: AI-Powered Growth Drives Record Revenue

Adobe reported record revenue of $5.99 billion for Q3 FY '25, representing 10% year-over-year growth. GAAP earnings per share were $4.18 and non-GAAP earnings per share were $5.31, up 14% year-over-year. The company's strong financial performance was driven by the successful integration of AI into its core Creative Cloud products, with AI-influenced ARR surpassing $5 billion. Adobe's revenue growth was fueled by its three main segments: Digital Media, Digital Experience, and AI.

Publication Date: Sep -12

📋 Highlights
  • Record Revenue:: Adobe hit $5.99B in Q3 FY'25 revenue, up 10% YoY, with non-GAAP EPS at $5.31 (14% YoY growth).
  • AI-Driven Growth:: AI-influenced ARR surpassed $5B, exceeding full-year targets, with Firefly and Acrobat AI Assistant driving $250M+ ARR.
  • Digital Media Expansion:: Generated $4.46B revenue (12% YoY), led by Acrobat Studio, Adobe Express, and AI-enhanced Creative Cloud Pro.
  • Digital Experience Momentum:: Revenue reached $1.48B (9% YoY) via AEP adoption and AI-powered tools like AEM Sites Optimizer.
  • Strong Cash Flow & Guidance:: Q3 operating cash flow hit $2.20B, and Adobe raised FY'25 revenue targets to $23.65–23.70B (10% YoY growth).

Segment Performance

Digital Media revenue reached $4.46 billion, growing 11% year-over-year, driven by strong demand for AI-infused offerings like Creative Cloud Pro and Acrobat. Digital Experience revenue reached $1.48 billion, up 9% year-over-year, fueled by the adoption of Adobe Experience Platform (AEP) and apps. The company's AI segment saw significant growth, with Firefly, the AI production studio, exceeding $250 million in ARR.

AI-Driven Growth

The success of Adobe's AI-powered products was a key driver of the company's growth, with customers embracing AI tools like Firefly and the Creative Cloud Pro offering. The company's focus on value-based pricing, driven by the increased productivity and efficiency AI brings to customers, was also a contributing factor. Adobe's CEO, Shantanu Narayen, highlighted the importance of commercially safe AI models and customization options, addressing enterprise concerns about intellectual property and data security.

Valuation Metrics

Adobe's current valuation metrics indicate a premium valuation, with a P/E Ratio of 21.96 and a P/S Ratio of 6.55. The company's ROIC (%) is 35.47, and ROE (%) is 51.65, indicating strong profitability. The EV/EBITDA ratio is 15.92, and the Free Cash Flow Yield (%) is 6.37, suggesting a reasonable valuation. The actual EPS of $5.31 beat estimates of $5.18, and analysts estimate next year's revenue growth at 9.5%.

Outlook

Adobe raised its full-year revenue and EPS targets, projecting total revenue of $23.65 billion to $23.70 billion, representing 10% year-over-year growth. The company's confidence in its ability to continue this growth trajectory is driven by the expanding opportunities in AI-powered creativity and marketing solutions. With the successful integration of AI into its products, Adobe is well-positioned for continued growth and innovation.

3. NewsRoom

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Johnson Fistel Investigates Semrush (SEMR) Shareholders' Rights Following Adobe's $12 Buyout Offer

Dec -04

Source: prnewswire.com

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Adobe Hints Growth Is Slowing

Dec -04

Source: gurufocus.com

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Adobe stock is extremely cheap amid AI fears: is it a buy?

Dec -04

Source: invezz.com

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Groupe la Francaise Has $3.66 Million Stake in Adobe Inc. $ADBE

Dec -04

Source: defenseworld.net

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Why Is Adobe Stock Falling in 2025, and Is It a Buying Opportunity for 2026?

Dec -04

Source: fool.com

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Adobe: AI Fears Are Overblown

Dec -03

Source: seekingalpha.com

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Retail Investors Price In 91% Chance Adobe Beats Estimates on December 10

Dec -03

Source: 247wallst.com

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AI Won't Kill Adobe, Here's Why

Dec -03

Source: seekingalpha.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

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Oracle

A-Score: 4.9/10

Value: 2.2

Growth: 6.8

Quality: 6.0

Yield: 2.0

Momentum: 9.0

Volatility: 3.3

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Zscaler

A-Score: 4.9/10

Value: 2.0

Growth: 8.4

Quality: 4.6

Yield: 0.0

Momentum: 9.0

Volatility: 5.3

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CrowdStrike

A-Score: 4.8/10

Value: 2.0

Growth: 8.8

Quality: 4.8

Yield: 0.0

Momentum: 9.0

Volatility: 4.3

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Palantir

A-Score: 4.8/10

Value: 0.0

Growth: 7.6

Quality: 8.5

Yield: 0.0

Momentum: 10.0

Volatility: 2.7

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Fortinet

A-Score: 4.8/10

Value: 0.8

Growth: 9.1

Quality: 8.5

Yield: 0.0

Momentum: 5.5

Volatility: 4.7

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Adobe

A-Score: 4.7/10

Value: 3.0

Growth: 7.7

Quality: 9.0

Yield: 0.0

Momentum: 1.5

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

328.73$

Current Price

328.73$

Potential

-0.00%

Expected Cash-Flows