Summary
Adobe reported first quarter fiscal 2024 revenue of $5.18 billion, up 11.3% from the prior-year quarter. The press release called it record Q1 revenue and noted 11% growth as reported and 12% in constant currency. Gross profit was $4.59 billion, up 12.4%, and gross margin reached 88.6%, up 0.8 percentage points. The bottom line looked very different. GAAP operating income was $907 million, down 42.8%, and GAAP operating margin fell to 17.5%, down 16.6 percentage points. GAAP net income was $620 million, down 50.3%, while diluted GAAP earnings per share were $1.36, down 49.8%. Non-GAAP results were much stronger: non-GAAP operating income was $2.47 billion, non-GAAP net income was $2.05 billion, and non-GAAP diluted earnings per share were $4.48. The gap between GAAP and non-GAAP results reflects items such as stock-based compensation, amortization of intangibles, and costs tied to the Figma transaction. Operating cash flow was $1.17 billion, down 30.7%, and capital expenditures were $37 million, down 63.4%.
Digital Media momentum remained the core story. Net new Digital Media annualized recurring revenue was $432 million, and Digital Media ARR exited the quarter at $15.76 billion. Creative ARR grew to $12.78 billion and Document Cloud ARR grew to $2.98 billion. Remaining performance obligations were $17.58 billion, up 15.6% from the prior-year quarter. Deferred revenue was $6.11 billion, up 11.5%. Adobe credited strong demand across Creative Cloud, Document Cloud, and Experience Cloud, along with generative AI innovation such as Adobe Firefly. The company also said its Experience Cloud offerings continued to gain traction, with subscription revenue growth helping the segment. Management pointed to enterprise strength and record Q1 net new Document Cloud ARR as key highlights. Those metrics suggest the subscription model still has room to expand, even as GAAP profitability was weighed down by one-time items.
Guidance for the second quarter of fiscal 2024 points to continued growth, and Adobe framed the targets against an uncertain backdrop. The company set a Digital Media net new ARR target of $440 million. It assumed a GAAP tax rate of 18.5% and a non-GAAP tax rate of 18.5%. Non-GAAP diluted earnings per share were targeted at $4.35 to $4.40. The targets assume a diluted share count of 453 million. Management said the second quarter outlook factors in current expectations for the macroeconomic and foreign exchange environments, and it scheduled an investor meeting for March 26, 2024 to lay out its long-term market opportunity, strategy, and innovation roadmap.
Capital returns are a major part of the Adobe story. The board approved a new $25 billion share repurchase program through March 14, 2028. During the first quarter, Adobe repurchased about 3.1 million shares. It also entered a $2 billion accelerated share repurchase agreement and received an initial delivery of 2.5 million shares. After the quarter, that agreement settled with total repurchases of 3.5 million shares at an average price of $578.11. Adobe then announced a separate $2.5 billion accelerated share repurchase, with an initial delivery of 3.6 million shares, leaving $22.65 billion under the March 2024 authority. Risks remain familiar but real. The company cited macroeconomic conditions, inflation, interest rates, foreign currency fluctuations, geopolitical pressures, and trade regulations. It also flagged failure to innovate effectively, issues with AI development and use, competition, security incidents, tax regulation changes, and litigation. The Figma termination fee hurt GAAP operating income, net income, and operating cash flow in the quarter, and the company paid the fee using cash on hand. Adobe reclassified $1.50 billion of debt as current and said it intends to refinance that amount before the due date. New long-term supplier commitments increased minimum purchase obligations by $2.3 billion through December 2028.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $5.18B | $5.05B | +2.7% | $4.66B | +11.3% |
| Gross profit | $4.59B | $4.41B | +4.0% | $4.09B | +12.4% |
| Gross margin | 88.6% | 87.4% | +1.2 pp | 87.8% | +0.8 pp |
| Sales & marketing | $1.35B | $1.37B | -1.2% | $1.30B | +3.9% |
| General & administrative | $352.0M | $372.0M | -5.4% | $331.0M | +6.3% |
| Total operating expenses | $3.69B | $2.67B | +38.0% | $2.50B | +47.3% |
| Operating income (loss) | $907.0M | $1.74B | -48.0% | $1.59B | -42.8% |
| Operating margin | 17.5% | 34.5% | -17.0 pp | 34.1% | -16.6 pp |
| Net income (loss) | $620.0M | $1.48B | -58.2% | $1.25B | -50.3% |
| Net margin | 12.0% | 29.4% | -17.4 pp | 26.8% | -14.8 pp |
| Diluted EPS | $1.36 | $3.23 | -$1.87 | $2.71 | -$1.35 |
Risks
Risk factors state generative AI technologies provide new ways of marketing, creating content and interacting with documents that could disrupt industries in which Adobe operates, and that competitors may incorporate AI more successfully or offer text-to-image generative AI that competes directly with Adobe's creative offerings.
Risk factors note AI regulation is in nascent stages and evolving rules may increase R&D costs, create inconsistent legal frameworks, require changes to AI development, monetization strategies or indemnity protections, and subject Adobe to additional compliance requirements, regulatory action or legal liability.
The termination of the Figma transaction and related fee contributed to operating income down 42.8% and net income down 50.3% in FY2024 Q1 vs prior-year quarter. Risk factors also cite acquisition and investment risks including integration challenges, regulatory approval conditions, and failure to achieve anticipated benefits.
MD&A states Adobe is subject to risks from increased global inflationary pressures and interest rates, fluctuations in foreign currency exchange rates, potential economic slowdowns or recessions, and geopolitical pressures including unknown impacts of current and future trade regulations.
Risk factors state enterprise offerings including Adobe Experience Cloud and Enterprise Term License Agreements have extended and complex sales cycles, and adverse macroeconomic conditions have caused and may cause delays in enterprise customers' purchasing decisions, increasing costs and reducing predictability.
Risk factors state competition for talent is substantial and continuous, particularly for cybersecurity and AI backgrounds, and hybrid work arrangements may present operational and workplace culture challenges, potentially increasing compensation costs and harming execution.
MD&A notes the Figma acquisition termination fee was not deductible for financial statement purposes, contributing to a higher effective tax rate, and risk factors state changes in tax rules or interpretations could adversely affect effective tax rates and cause fluctuations from audits.
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 FY2024 (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.