Summary
Adobe's FY2024 Q2 revenue was $5.31 billion, up 10.2% from the prior-year quarter. GAAP gross profit was $4.71 billion, up 11.0%, and gross margin was 88.7%, up 0.6 percentage points. GAAP operating income was $1.89 billion, up 16.1%, and operating margin was 35.5%, up 1.8 percentage points. GAAP net income was $1.57 billion, up 21.5%. GAAP diluted EPS was $3.49, up 23.8%. Non-GAAP operating income was $2.44 billion, non-GAAP net income was $2.02 billion and non-GAAP diluted EPS was $4.48.
Digital Media net new ARR was $487 million in the quarter, and Digital Media ARR exited at $16.25 billion. Creative ARR was $13.11 billion, while Document Cloud ARR was $3.15 billion. RPO was $17.86 billion, up 17.3% from the prior-year quarter. Deferred revenue was $5.69 billion, up 5.8%. Adobe highlighted AI product delivery, including Firefly-powered features across Creative Cloud apps and the Acrobat AI Assistant introduced in April 2024. The company said demand was strong across Digital Media and Digital Experience offerings, with growth in software-based subscription revenue. The company repurchased about 4.6 million shares during the quarter.
Cash flow from operations was $1.94 billion for the quarter, down 9.3% from the prior-year quarter. For the six months ended May 31, 2024, operating cash flow was $3.11 billion, down 18.7% from the prior-year period, largely because of the Figma termination fee paid in the first quarter. Capital expenditures were $41 million in the quarter, down 66.1%. Year-to-date GAAP operating income was $2.79 billion, down 13.0%, GAAP net income was $2.19 billion, down 13.7%, and GAAP diluted EPS was $4.83, down 12.8%. During the six months, Adobe repurchased 7.7 million shares and entered accelerated share repurchase agreements with $4.5 billion in prepayments. After quarter end, it entered a $2.5 billion ASR.
Management issued third-quarter fiscal 2024 targets. Total revenue is targeted at $5.33 billion to $5.38 billion. Digital Media net new ARR is targeted at $460 million. Digital Media segment revenue is targeted at $3.95 billion to $3.98 billion. Digital Experience segment revenue is targeted at $1.325 billion to $1.345 billion. Digital Experience subscription revenue is targeted at $1.20 billion to $1.22 billion. Non-GAAP diluted EPS is targeted at $4.50 to $4.55. For the full fiscal year 2024, total revenue is targeted at $21.40 billion to $21.50 billion, Digital Media net new ARR at $1.95 billion, Digital Media segment revenue at $15.80 billion to $15.85 billion, Digital Experience segment revenue at $5.325 billion to $5.375 billion, Digital Experience subscription revenue at $4.775 billion to $4.825 billion, and non-GAAP diluted EPS at $18.00 to $18.20.
Risks remain. Adobe cites macroeconomic conditions, including inflation, interest rates, foreign currency fluctuations, potential economic slowdowns or recessions, and geopolitical pressures such as trade regulations. The company also lists AI development and adoption, competition, brand damage, service interruptions or failures in information technology systems, security incidents, third-party relationships, key personnel retention, complex sales cycles, and legal, regulatory, tax and intellectual property matters. The Figma termination fee weighed on year-to-date operating income, net income and operating cash flow. Adobe's subscription model makes revenue relatively predictable, but the company says the broader implications of macroeconomic events remain uncertain. The list of risk factors also includes failure to innovate effectively and meet customer needs, failure to realize anticipated benefits of investments or acquisitions, failure to compete effectively, failure to protect intellectual property, litigation, regulatory inquiries, changes in tax regulations, complex government procurement processes, timing of revenue recognition from subscription offerings, impairment charges, debt obligations, catastrophic events and stock price fluctuations.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $5.31B | $5.18B | +2.5% | $4.82B | +10.2% |
| Gross profit | $4.71B | $4.59B | +2.6% | $4.24B | +11.0% |
| Gross margin | 88.7% | 88.6% | +0.1 pp | 88.1% | +0.6 pp |
| Sales & marketing | $1.45B | $1.35B | +6.9% | $1.34B | +7.4% |
| General & administrative | $355.0M | $352.0M | +0.9% | $357.0M | -0.6% |
| Total operating expenses | $2.83B | $3.69B | -23.3% | $2.62B | +7.9% |
| Operating income (loss) | $1.89B | $907.0M | +107.8% | $1.62B | +16.1% |
| Operating margin | 35.5% | 17.5% | +18.0 pp | 33.7% | +1.8 pp |
| Net income (loss) | $1.57B | $620.0M | +153.7% | $1.29B | +21.5% |
| Net margin | 29.6% | 12.0% | +17.7 pp | 26.9% | +2.7 pp |
| Diluted EPS | $3.49 | $1.36 | +$2.13 | $2.82 | +$0.67 |
Risks
Risk factors extensively discuss generative AI competition, including companies offering text-to-image generative AI technology that may compete directly with Adobe's creative offerings. Adobe expects competition to intensify as AI continues to be integrated into its markets, and MD&A highlights the focus on driving adoption of AI-powered solutions such as Adobe Firefly and Acrobat AI Assistant.
Evolving AI regulatory environment may increase R&D costs, create inconsistent legal frameworks across jurisdictions, and require changes to AI development practices and monetization strategies. The risk factors note that AI regulation is in nascent stages and could affect Adobe's ability to make AI offerings available without costly changes.
The $1 billion Figma termination fee incurred during the six months ended May 31, 2024 adversely impacted net income and cash flows from operations. MD&A reports operating cash flow of $3.11 billion for the six months ended May 31, 2024, down 18.7% compared to the prior-year period, primarily due to the fee; net income for the same period was down 13.7%.
Adobe is exposed to global macroeconomic risks including inflation, interest rate changes, foreign currency fluctuations, potential economic slowdowns or recessions, and geopolitical pressures such as trade regulations. MD&A notes that the broader implications of these events on the business and financial position remain uncertain.
The technology industry faces substantial competition for talent, particularly with cybersecurity and AI backgrounds, and demand for unique skill sets is heightened by hybrid or remote working arrangements. Adobe may experience higher compensation costs to retain and recruit senior management and highly skilled personnel that may not be offset by improved productivity or increased sales.
Some enterprise offerings have extended and complex sales cycles, which increase costs and make sales unpredictable. Risk factors note that enterprise customers often require longer evaluation processes and more extensive contract negotiations, and that a higher percentage of a quarter's total sales historically occurs during the final weeks of each quarter.
As of May 31, 2024, Adobe had $5.65 billion in senior unsecured notes outstanding, including $2 billion issued in April 2024. Interest expense increased 58% for the three months ended May 31, 2024 and 17% for the six months ended May 31, 2024 compared to the year-ago periods, and the debt obligations may limit future financing flexibility.
SaaS KPIs
All quarters →Creative ARR
Document Cloud ARR
Remaining Performance Obligations (RPO)
Digital Media ARR
Summary, forecast, risks and KPIs are extracted from ADOBE INC.'s SEC filings for Q2 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.