Summary
Adobe reported first-quarter fiscal 2023 revenue of $4.66 billion, up 9.2% from the prior-year quarter. Gross profit was $4.09 billion, up 9.0%. Operating income was $1.59 billion, flat versus the prior-year quarter. Net income was $1.25 billion, down 1.5%. GAAP diluted earnings per share rose 1.9% to $2.71. Gross margin was 87.8%, down 0.2 percentage points, and operating margin was 34.1%, down 3.0 percentage points. The company generated operating cash flow of $1.69 billion, down 4.3%, and capital expenditures of $101 million, up 1.0%. Deferred revenue ended the quarter at $5.48 billion, up 9.2%. Remaining performance obligations were $15.21 billion, up 10.0%.
Digital Media remained the largest driver. The segment grew 9% year over year, with Creative up 8% and Document Cloud up 13%. Net new Digital Media ARR was $410 million, and Digital Media ARR ended the quarter at $13.67 billion. Creative ARR reached $11.28 billion, while Document Cloud ARR reached $2.39 billion. Digital Experience grew 11% year over year, and its subscription revenue grew 12%. Adobe said foreign currency reduced revenue by $169 million in the quarter, offset in part by $21 million of hedging gains. The company also noted that its subscription model makes revenue relatively predictable, though macroeconomic conditions remain uncertain.
Management provided second-quarter fiscal 2023 targets and updated full-year fiscal 2023 targets for Digital Media net new ARR and earnings per share. For the second quarter, Adobe set Digital Media net new ARR at $420 million, Digital Media segment revenue at $3.45 billion to $3.47 billion, and Digital Experience segment revenue at $1.21 billion to $1.23 billion. Digital Experience subscription revenue was targeted at $1.06 billion to $1.08 billion. The second-quarter non-GAAP effective tax rate target was 18.5%. Non-GAAP earnings per share was targeted at $3.75 to $3.80. For the full fiscal year 2023, Adobe updated its Digital Media net new ARR target to $1.70 billion. It also set a full-year non-GAAP earnings per share target of $15.30 to $15.60. The targets assume a share count of 458 million for the second quarter and 456 million for the full fiscal year. Adobe said the targets reflect current expectations for the macroeconomic and foreign exchange environments.
Several named risks hang over the outlook. Adobe cited increased global inflationary pressures, higher interest rates, potential economic slowdowns or recessions, the COVID-19 pandemic, and geopolitical pressures including the Russia-Ukraine war. Foreign currency rate fluctuations negatively affected revenue and earnings in the quarter and may continue to hurt results for the remainder of fiscal 2023. The U.S. Dollar strengthened against the Euro, Japanese Yen, and British Pound, which decreased revenue in U.S. Dollar equivalents by $169 million. The planned acquisition of Figma remains a major item. Adobe has a definitive agreement to acquire Figma for approximately $20 billion, about half cash and half stock. The company would owe a reverse termination fee of $1 billion if the deal fails to receive regulatory clearance under certain conditions. In January 2023, Adobe entered a delayed draw term loan of up to $3.5 billion to help fund the purchase, and there were no outstanding borrowings under it as of March 3, 2023. The company also listed failure to compete effectively, information security and privacy risks, and complex sales cycles among the risks that could cause actual results to differ.
Adobe kept returning capital during the quarter. It repurchased approximately 5.0 million shares. After March 3, 2023, the company settled an accelerated share repurchase agreement, resulting in total repurchases of 4.0 million shares at an average purchase price of $348.46. It also entered a new structured stock repurchase agreement with a $1 billion prepayment. Upon completion of the new $1 billion agreement, $4.15 billion remains under the December 2020 repurchase authority. The company said it expects existing cash, investments, anticipated cash flows from operations, and its available revolving credit facility to be sufficient for working capital, operating resource expenditure, and capital expenditure requirements for the next twelve months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $4.66B | $4.53B | +2.9% | $4.26B | +9.2% |
| Gross profit | $4.09B | $3.96B | +3.3% | $3.75B | +9.0% |
| Gross margin | 87.8% | 87.5% | +0.3 pp | 88.0% | -0.2 pp |
| Sales & marketing | $1.30B | $1.30B | +0.3% | $1.16B | +12.3% |
| General & administrative | $331.0M | $340.0M | -2.6% | $269.0M | +23.0% |
| Total operating expenses | $2.50B | $2.45B | +2.0% | $2.17B | +15.3% |
| Operating income (loss) | $1.59B | $1.50B | +5.4% | $1.58B | +0.4% |
| Operating margin | 34.1% | 33.3% | +0.8 pp | 37.1% | -3.0 pp |
| Net income (loss) | $1.25B | $1.18B | +6.0% | $1.27B | -1.5% |
| Net margin | 26.8% | 26.0% | +0.8 pp | 29.7% | -2.9 pp |
| Diluted EPS | $2.71 | $2.50 | +$0.21 | $2.66 | +$0.05 |
Risks
Pending acquisition of Figma for approximately $20 billion, split roughly half cash and half stock, requires regulatory approvals and could trigger a $1 billion reverse termination fee if clearance fails or the deal does not close within 18 months. MD&A notes transaction costs associated with Figma contributed to higher professional and consulting fees in Q1 FY2023, and integration may disrupt management and operations.
Adobe is increasingly building AI into offerings, including Adobe Firefly, and risk factors warn that social, ethical or regulatory issues around AI may cause reputational harm, legal liability, slower adoption, and additional R&D and computing costs. The filing also flags that expanding generative AI into all product offerings could pressure profit margin.
MD&A states foreign currency exchange rate fluctuations negatively impacted revenue and earnings for the three months ended March 3, 2023 versus the prior-year period, and may continue to negatively impact fiscal 2023 results. It also cites inflationary pressures, rising interest rates, potential recession, and the Russia-Ukraine war as ongoing uncertainties.
Risk factors say competition for experienced personnel is intense and has recently intensified, with hybrid or remote work expanding the pool of competing employers and potentially raising compensation costs. MD&A attributes part of the increase in operating expenses to base and incentive compensation, while operating margin declined 3.0 percentage points in Q1 FY2023 versus prior year.
Adobe has $3.65 billion of senior notes outstanding and entered a $3.5 billion delayed draw term loan in January 2023 to partially fund the Figma acquisition, alongside a $1.5 billion undrawn revolving credit facility. The debt increases vulnerability to adverse economic conditions and may limit flexibility for other uses of cash.
Risk factors highlight expanding global privacy and data protection laws, including GDPR, PIPL, and new U.S. state laws, plus complex cross-border data transfer rules that may affect Adobe's ability to process data and develop AI/ML offerings. Non-compliance or restrictive interpretations could lead to fines, liability, and business model changes.
SaaS KPIs
All quarters →Creative ARR
Document Cloud ARR
Remaining Performance Obligations (RPO)
Digital Media ARR
Net New Digital Media ARR
Summary, forecast, risks and KPIs are extracted from ADOBE INC.'s SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.