- FY2024 Net New Digital Media ARR exceeds $2.0
billion
- FY2024 Digital Experience revenue exceeds $5.3
billion
- Record Q4 operating cash flows of $2.92 billion
- Record RPO of $19.96 billion, 16 percent year-over-year
growth
Adobe (Nasdaq:ADBE) today reported financial results for its
fourth quarter and fiscal year 2024 ended Nov. 29, 2024.
“Adobe delivered record FY24 revenue, demonstrating strong
demand and the mission-critical role Creative Cloud, Document Cloud
and Experience Cloud play in fueling the AI economy,” said Shantanu
Narayen, chair and CEO, Adobe. “Our highly differentiated
technology platforms, rapid pace of innovation, diversified
go-to-market and the integration of our clouds position us for a
great year ahead.”
“Adobe drove FY24 records of $21.51 billion in revenue, $8.06
billion in cash flows from operations and $19.96 billion in RPO,”
said Dan Durn, executive vice president and CFO, Adobe. “Adobe’s
strategy, AI innovation and massive cross-cloud opportunity
position us well for 2025 and beyond.”
Fourth Quarter Fiscal Year 2024 Financial Highlights
- Adobe achieved revenue of $5.61 billion in its fourth quarter
of fiscal year 2024, which represents 11 percent year-over-year
growth as reported and in constant currency. Diluted earnings per
share was $3.79 on a GAAP basis and $4.81 on a non-GAAP basis.
- GAAP operating income in the fourth quarter was $1.96 billion
and non-GAAP operating income was $2.60 billion. GAAP net income
was $1.68 billion and non-GAAP net income was $2.13 billion.
- Record cash flows from operations were $2.92 billion.
- Remaining Performance Obligations (“RPO”) exiting the quarter
were $19.96 billion.
- Adobe repurchased approximately 4.6 million shares during the
quarter.
Fourth Quarter Fiscal Year 2024 Business Segment
Highlights
- Digital Media segment revenue was $4.15 billion, which
represents 12 percent year-over-year growth as reported and in
constant currency. Document Cloud revenue was $843 million,
representing 17 percent year-over-year growth as reported and in
constant currency. Creative revenue grew to $3.30 billion,
representing 10 percent year-over-year growth or 11 percent in
constant currency.
- Net new Digital Media Annualized Recurring Revenue (“ARR”) was
$578 million, exiting the quarter with Digital Media ARR of $17.33
billion. Document Cloud ARR grew to $3.48 billion and Creative ARR
grew to $13.85 billion.
- Digital Experience segment revenue was $1.40 billion,
representing 10 percent year-over-year growth as reported and in
constant currency. Digital Experience subscription revenue was
$1.27 billion, representing 13 percent year-over-year growth or 12
percent in constant currency.
Fiscal Year 2024 Financial Highlights
- Adobe achieved revenue of $21.51 billion in fiscal year 2024,
which represents 11 percent year-over-year growth as reported and
in constant currency. Diluted earnings per share was $12.36 on a
GAAP basis and $18.42 on a non-GAAP basis.
- GAAP operating income was $6.74 billion and non-GAAP operating
income was $10.02 billion. GAAP net income was $5.56 billion and
non-GAAP net income was $8.28 billion.
- Adobe generated $8.06 billion in operating cash flows during
the year.
- Adobe repurchased approximately 17.5 million shares during the
year.
Fiscal Year 2024 Business Segment Highlights
- Digital Media segment revenue was $15.86 billion, which
represents 12 percent year-over-year growth as reported and in
constant currency. Net new Digital Media ARR was $2.00 billion
during the fiscal year.
- Document Cloud revenue was $3.18 billion, representing 18
percent year-over-year growth as reported and in constant
currency.
- Creative revenue grew to $12.68 billion, representing 10
percent year-over-year growth or 11 percent in constant
currency.
- Digital Experience segment revenue was $5.37 billion,
representing 10 percent year-over-year growth as reported and in
constant currency. Digital Experience subscription revenue was
$4.86 billion, representing 12 percent year-over-year growth as
reported and in constant currency.
Financial Targets
We measure ARR on a constant currency basis during the fiscal
year and revalue ending ARR at year-end. Foreign exchange rate
changes between the end of fiscal year 2023 and the end of fiscal
year 2024 have resulted in a $117 million decrease to the Digital
Media ARR balance entering fiscal year 2025, from $17.33 billion to
$17.22 billion and is reflected in our investor data sheet. We
expect an approximate $200 million headwind to fiscal year 2025
revenue, as a result of the effect of foreign exchange and a
smaller impact of the continued move to subscriptions from
perpetual offerings.
The following table summarizes Adobe’s fiscal year 2025
targets1:
Total revenue
$23.30 billion to $23.55
billion
Digital Media segment revenue
$17.25 billion to $17.40
billion
Digital Media ending ARR growth
11.0% year over year
Digital Experience segment revenue
$5.80 billion to $5.90
billion
Digital Experience subscription
revenue
$5.375 billion to $5.425
billion
Earnings per share
GAAP: $15.80 to
$16.10
Non-GAAP: $20.20 to $20.50
1
Targets assume non-GAAP operating margin
of ~46 percent, non-GAAP tax rate of ~18.5 percent and diluted
share count of ~433 million for fiscal year 2025.
The following table summarizes Adobe’s first quarter fiscal year
2025 targets2:
Total revenue
$5.63 billion to $5.68
billion
Digital Media segment revenue
$4.17 billion to $4.20
billion
Digital Experience segment revenue
$1.38 billion to $1.40
billion
Digital Experience subscription
revenue
$1.27 billion to $1.29
billion
Earnings per share
GAAP: $3.85 to
$3.90
Non-GAAP: $4.95 to $5.00
2
Targets assume non-GAAP operating margin
of ~47 percent, non-GAAP tax rate of ~18.5 percent and diluted
share count of ~439 million for first quarter fiscal year 2025.
Adobe to Host Conference Call
Adobe will webcast its fourth quarter and fiscal year 2024
earnings conference call today at 2:00 p.m. Pacific Time from its
investor relations website: http://www.adobe.com/ADBE. Earnings
documents, including Adobe management’s prepared conference call
remarks with slides and an investor datasheet are posted to Adobe’s
Investor Relations Website in advance of the conference call for
reference.
Forward-Looking Statements, Non-GAAP and Other
Disclosures
In addition to historical information, this press release
contains “forward-looking statements” within the meaning of
applicable securities laws, including statements related to our
business, strategy, artificial intelligence and innovation
momentum; our market opportunity and future growth; market trends;
current macroeconomic conditions; fluctuations in foreign currency
exchange rates; strategic investments; customer success; revenue;
operating margin; annualized recurring revenue; tax rate; earnings
per share; and share count. Each of the forward-looking statements
we make in this press release involves risks, uncertainties and
assumptions based on information available to us as of the date of
this press release. Such risks and uncertainties, many of which
relate to matters beyond our control, could cause actual results to
differ materially from these forward-looking statements. Factors
that might cause or contribute to such differences include, but are
not limited to: failure to innovate effectively and meet customer
needs; issues relating to development and use of AI; failure to
realize the anticipated benefits of investments or acquisitions;
failure to compete effectively; damage to our reputation or brands;
service interruptions or failures in information technology systems
by us or third parties; security incidents; failure to effectively
develop, manage and maintain critical third-party business
relationships; risks associated with being a multinational
corporation and adverse macroeconomic conditions; failure to
recruit and retain key personnel; complex sales cycles; changes in,
and compliance with, global laws and regulations, including those
related to information security and privacy; failure to protect our
intellectual property; litigation, regulatory inquiries and
intellectual property infringement claims; changes in tax
regulations; complex government procurement processes; risks
related to fluctuations in or the timing of revenue recognition
from our subscription offerings; fluctuations in foreign currency
exchange rates; impairment charges; our existing and future debt
obligations; catastrophic events; and fluctuations in our stock
price. Further information on these and other factors are discussed
in the section titled “Risk Factors” in Adobe’s most recently filed
Annual Report on Form 10-K and Adobe's most recently filed
Quarterly Reports on Form 10-Q. The risks described in this press
release and in Adobe’s filings with the U.S. Securities and
Exchange Commission should be carefully reviewed.
Undue reliance should not be placed on the financial information
set forth in this press release, which reflects estimates based on
information available at this time. These amounts could differ from
actual reported amounts stated in Adobe’s Annual Report on Form
10-K for our fiscal year ended Nov. 29, 2024, which Adobe expects
to file in Jan. 2025. Adobe assumes no obligation to, and does not
currently intend to, update these forward-looking statements.
A reconciliation between GAAP and non-GAAP earnings results and
financial targets and a statement regarding use of non-GAAP
financial information are provided at the end of this press release
and on Adobe’s investor relations website.
About Adobe
Adobe is changing the world through personalized digital
experiences. For more information, visit www.adobe.com.
©2024 Adobe. All rights reserved. Adobe, Creative Cloud,
Document Cloud and the Adobe logo are either registered trademarks
or trademarks of Adobe (or one of its subsidiaries) in the United
States and/or other countries. All other trademarks are the
property of their respective owners.
Condensed Consolidated Statements of
Income
(In millions, except per share data;
unaudited)
Three Months Ended
Year Ended
November 29, 2024
December 1, 2023
November 29, 2024
December 1, 2023
Revenue:
Subscription
$
5,365
$
4,763
$
20,521
$
18,284
Product
81
114
386
460
Services and other
160
171
598
665
Total revenue
5,606
5,048
21,505
19,409
Cost of revenue:
Subscription
475
505
1,799
1,822
Product
6
6
25
29
Services and other
135
123
534
503
Total cost of revenue
616
634
2,358
2,354
Gross profit
4,990
4,414
19,147
17,055
Operating expenses:
Research and development
999
889
3,944
3,473
Sales and marketing
1,536
1,368
5,764
5,351
General and administrative
456
372
1,529
1,413
Acquisition termination fee
—
—
1,000
—
Amortization of intangibles
42
42
169
168
Total operating expenses
3,033
2,671
12,406
10,405
Operating income
1,957
1,743
6,741
6,650
Non-operating income (expense):
Interest expense
(50
)
(28
)
(169
)
(113
)
Investment gains (losses), net
14
4
48
16
Other income (expense), net
70
89
311
246
Total non-operating income (expense),
net
34
65
190
149
Income before income taxes
1,991
1,808
6,931
6,799
Provision for income taxes
308
325
1,371
1,371
Net income
$
1,683
$
1,483
$
5,560
$
5,428
Basic net income per share
$
3.81
$
3.26
$
12.43
$
11.87
Shares used to compute basic net income
per share
441
455
447
457
Diluted net income per share
$
3.79
$
3.23
$
12.36
$
11.82
Shares used to compute diluted net income
per share
443
459
450
459
Condensed Consolidated Balance
Sheets
(In millions; unaudited)
November 29, 2024
December 1, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
7,613
$
7,141
Short-term investments
273
701
Trade receivables, net of allowances for
doubtful accounts of $14 and $16, respectively
2,072
2,224
Prepaid expenses and other current
assets
1,274
1,018
Total current assets
11,232
11,084
Property and equipment, net
1,936
2,030
Operating lease right-of-use assets,
net
281
358
Goodwill
12,788
12,805
Other intangibles, net
782
1,088
Deferred income taxes
1,657
1,191
Other assets
1,554
1,223
Total assets
$
30,230
$
29,779
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Trade payables
$
361
$
314
Accrued expenses
2,336
1,942
Debt
1,499
—
Deferred revenue
6,131
5,837
Income taxes payable
119
85
Operating lease liabilities
75
73
Total current liabilities
10,521
8,251
Long-term liabilities:
Debt
4,129
3,634
Deferred revenue
128
113
Income taxes payable
548
514
Operating lease liabilities
353
373
Other liabilities
446
376
Total liabilities
16,125
13,261
Stockholders’ equity:
Preferred stock
—
—
Common stock
—
—
Additional paid-in capital
13,419
11,586
Retained earnings
38,470
33,346
Accumulated other comprehensive income
(loss)
(201
)
(285
)
Treasury stock, at cost
(37,583
)
(28,129
)
Total stockholders’ equity
14,105
16,518
Total liabilities and stockholders’
equity
$
30,230
$
29,779
Condensed Consolidated Statements of
Cash Flows
(In millions; unaudited)
Three Months Ended
November 29, 2024
December 1, 2023
Cash flows from operating activities:
Net income
$
1,683
$
1,483
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and
accretion
218
222
Stock-based compensation
441
427
Lease-related asset impairments
78
—
Unrealized investment (gains) losses,
net
(11
)
(3
)
Other non-cash adjustments
(105
)
(129
)
Changes in deferred revenue
353
467
Changes in other operating assets and
liabilities
264
(870
)
Net cash provided by operating
activities
2,921
1,597
Cash flows from investing activities:
Purchases, sales and maturities of
short-term investments, net
50
219
Purchases of property and equipment
(48
)
(47
)
Purchases and sales of long-term
investments, intangibles and other assets, net
17
(19
)
Net cash provided by investing
activities
19
153
Cash flows from financing activities:
Repurchases of common stock
(2,500
)
(1,000
)
Taxes paid related to net share settlement
of equity awards, net of proceeds from treasury stock
re-issuances
(152
)
(202
)
Other financing activities, net
151
(15
)
Net cash used for financing activities
(2,501
)
(1,217
)
Effect of exchange rate changes on cash
and cash equivalents
(19
)
7
Net change in cash and cash
equivalents
420
540
Cash and cash equivalents at beginning of
period
7,193
6,601
Cash and cash equivalents at end of
period
$
7,613
$
7,141
Non-GAAP Results
The following table shows Adobe’s
GAAP results reconciled to non-GAAP results included in this
release.
(In millions, except per share data)
Three Months Ended
Year Ended
November 29,
2024
December 1,
2023
August 30, 2024
November 29,
2024
December 1,
2023
Operating income:
GAAP operating income
$
1,957
$
1,743
$
1,992
$
6,741
$
6,650
Stock-based and deferred compensation
expense
455
431
485
1,881
1,735
Amortization of intangibles
84
91
83
334
373
Acquisition-related expenses (1)
—
34
—
1,007
116
Loss contingency (reversal) (2)
—
44
(45
)
(44
)
44
Lease-related asset impairments and other
charges (3)
100
—
—
100
—
Non-GAAP operating income
$
2,596
$
2,343
$
2,515
$
10,019
$
8,918
Net income:
GAAP net income
$
1,683
$
1,483
$
1,684
$
5,560
$
5,428
Stock-based and deferred compensation
expense
455
431
485
1,881
1,735
Amortization of intangibles
84
91
83
334
373
Acquisition-related expenses (1)
—
34
—
1,007
116
Loss contingency (reversal) (2)
—
44
(45
)
(44
)
44
Lease-related asset impairments and other
charges (3)
100
—
—
100
—
Investment (gains) losses, net
(14
)
(4
)
(12
)
(48
)
(16
)
Income tax adjustments
(176
)
(120
)
(115
)
(509
)
(303
)
Non-GAAP net income
$
2,132
$
1,959
$
2,080
$
8,281
$
7,377
Diluted net income per share:
GAAP diluted net income per share
$
3.79
$
3.23
$
3.76
$
12.36
$
11.82
Stock-based and deferred compensation
expense
1.03
0.94
1.08
4.18
3.78
Amortization of intangibles
0.19
0.20
0.19
0.75
0.81
Acquisition-related expenses (1)
—
0.07
—
2.24
0.25
Loss contingency (reversal) (2)
—
0.10
(0.10
)
(0.10
)
0.10
Lease-related asset impairments and other
charges (3)
0.23
—
—
0.22
—
Investment (gains) losses, net
(0.03
)
(0.01
)
(0.03
)
(0.10
)
(0.03
)
Income tax adjustments
(0.40
)
(0.26
)
(0.25
)
(1.13
)
(0.66
)
Non-GAAP diluted net income per share
$
4.81
$
4.27
$
4.65
$
18.42
$
16.07
Shares used to compute diluted net income
per share
443
459
448
450
459
(1)
Associated with the Figma
transaction, and includes deal costs, certain professional fees and
the termination fee
(2)
Associated with an IP litigation
matter
(3)
Associated with the optimization
of our leased facilities, and primarily includes impairment charges
related to certain operating lease right-of-use assets and
leasehold improvements
Non-GAAP Results
(continued)
The following table shows Adobe’s
fourth quarter fiscal year 2024 GAAP tax rate reconciled to the
non-GAAP tax rate included in this release.
Fourth Quarter Fiscal
2024
Effective income tax rate:
GAAP effective income tax rate
15.5
%
Income tax adjustments
5.0
Stock-based and deferred compensation
expense
(1.4
)
Amortization of intangibles
(0.3
)
Lease-related asset impairments and other
charges (3)
(0.3
)
Non-GAAP effective income tax rate (4)
18.5
%
(3)
Associated with the optimization
of our leased facilities, and primarily includes impairment charges
related to certain operating lease right-of-use assets and
leasehold improvements
(4)
Represents Adobe’s fixed
long-term non-GAAP tax rate based on projections and currently
available information through fiscal 2025
Reconciliation of GAAP to
Non-GAAP Financial Targets and Assumptions
The following tables show Adobe's
annual fiscal year 2025 financial targets and assumptions
reconciled to non-GAAP financial targets and assumptions included
in this release.
(Shares in millions)
Fiscal Year 2025
Low
High
Diluted net income per share:
GAAP diluted net income per share
$
15.80
$
16.10
Stock-based and deferred compensation
expense
4.69
4.69
Amortization of intangibles
0.71
0.71
Income tax adjustments
(1.00
)
(1.00
)
Non-GAAP diluted net income per share
$
20.20
$
20.50
Shares used to compute diluted net income
per share
433
433
Fiscal Year 2025
Operating margin:
GAAP operating margin
36.0
%
Stock-based and deferred compensation
expense
8.7
Amortization of intangibles
1.3
Non-GAAP operating margin
46.0
%
Reconciliation of GAAP to
Non-GAAP Financial Targets and Assumptions (continued)
The following tables show Adobe's
first quarter fiscal year 2025 financial targets and assumptions
reconciled to non-GAAP financial targets and assumptions included
in this release.
(Shares in millions)
First Quarter Fiscal
2025
Low
High
Diluted net income per share:
GAAP diluted net income per share
$
3.85
$
3.90
Stock-based and deferred compensation
expense
1.13
1.13
Amortization of intangibles
0.19
0.19
Income tax adjustments
(0.22
)
(0.22
)
Non-GAAP diluted net income per share
$
4.95
$
5.00
Shares used to compute diluted net income
per share
439
439
First Quarter Fiscal
2025
Operating margin:
GAAP operating margin
37.0
%
Stock-based and deferred compensation
expense
8.5
Amortization of intangibles
1.5
Non-GAAP operating margin
47.0
%
First Quarter Fiscal
2025
Effective income tax rate:
GAAP effective income tax rate
19.0
%
Stock-based and deferred compensation
expense
(1.7
)
Amortization of intangibles
(0.3
)
Income tax adjustments
1.5
Non-GAAP effective income tax rate (4)
18.5
%
(4)
Represents Adobe’s fixed
long-term non-GAAP tax rate based on projections and currently
available information through fiscal 2025
Use of Non-GAAP Financial Information
Adobe continues to provide all information required in
accordance with GAAP, but believes evaluating its ongoing operating
results may not be as useful if an investor is limited to reviewing
only GAAP financial measures. Adobe uses non-GAAP financial
information to evaluate its ongoing operations and for internal
planning and forecasting purposes. Adobe's management does not
itself, nor does it suggest that investors should, consider such
non-GAAP financial measures in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP. Adobe
presents such non-GAAP financial measures in reporting its
financial results to provide investors with an additional tool to
evaluate Adobe's operating results. Adobe believes these non-GAAP
financial measures are useful because they allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision-making. This allows
institutional investors, the analyst community and others to better
understand and evaluate our operating results and future prospects
in the same manner as management.
Adobe's management believes it is useful for itself and
investors to review, as applicable, both GAAP information as well
as non-GAAP measures, which may exclude items such as stock-based
and deferred compensation expenses, amortization of intangibles,
investment gains and losses, income tax adjustments, and the income
tax effect of the non-GAAP pre-tax adjustments from the provision
for income taxes. Adobe uses these non-GAAP measures in order to
assess the performance of Adobe's business and for planning and
forecasting in subsequent periods. Whenever such a non-GAAP measure
is used, Adobe provides a reconciliation of the non-GAAP financial
measure to the most closely applicable GAAP financial measure.
Investors are encouraged to review the related GAAP financial
measures and the reconciliation of these non-GAAP financial
measures to their most directly comparable GAAP financial measure
as detailed above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241211684094/en/
Investor Relations Contact Steve Day Adobe
ir@adobe.com
Public Relations Contact Ashley Levine Adobe
adobepr@adobe.com
Adobe (NASDAQ:ADBE)
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