Summary
Adobe reported record revenue for the second quarter of fiscal 2025. Revenue was $5.87 billion, up 10.6% from the prior year quarter. That is an increase of $564 million. Gross profit was $5.24 billion, up 11.1%. Operating income was $2.11 billion, up 11.9%. Net income was $1.69 billion, up 7.5%. Diluted earnings per share was $3.94, up 12.9%. Gross margin was 89.1%, up 0.4 percentage points. Operating margin was 35.9%, up 0.4 percentage points. For the first six months, revenue was $11.59 billion, up 10.4%. Gross profit was $10.33 billion, up 11.0%. Operating income was $4.27 billion, up 53.0%. Net income was $3.50 billion, up 59.7%. Diluted earnings per share was $8.08, up 67.3%. Gross margin for the six months was 89.1%, up 0.4 percentage points. Operating margin for the six months was 36.9%, up 10.3 percentage points.
Digital Media annualized recurring revenue ended the quarter at $18.09 billion, up 12.1% year over year. Remaining performance obligations were $19.69 billion, up 10.2%. Current remaining performance obligations were 67% of total RPO. Deferred revenue was $6.33 billion, up 11.2%. Cash from operations was $2.19 billion in the quarter, up 12.9%. For the six months, operating cash flow was $4.67 billion, up 50.1%, helped by the prior-year Figma termination fee. Capital expenditures were $47 million in the quarter, up 14.6%, but $73 million for the six months, down 6.4%. Non-GAAP operating income was $2.67 billion, non-GAAP net income was $2.17 billion, and non-GAAP diluted earnings per share was $5.06. Adobe repurchased about 8.6 million shares during the quarter.
For the third quarter of fiscal 2025, Adobe targets non-GAAP earnings per share of $5.15 to $5.20. The company assumes a non-GAAP operating margin of 45.5%, a non-GAAP tax rate of 18.5%, and a diluted share count of 425 million for the quarter. Growth is targeted across both the Digital Media and Digital Experience segments. For the full fiscal year 2025, Adobe raised its non-GAAP earnings per share target to $20.50 to $20.70. The full-year assumptions include a non-GAAP operating margin of 46%, a non-GAAP tax rate of 18.5%, and a diluted share count of 428 million. The company also targets Digital Media ending ARR growth of 11.0% year over year for the full fiscal year.
Adobe faces macroeconomic risks. These include inflation, interest rates, foreign currency fluctuations, potential slowdowns or recessions, and geopolitical pressures including unknown impacts of trade regulations. The company said the U.S. dollar strengthened against APAC currencies and the Euro, which reduced revenue, partly offset by net hedging gains. Other risks include failure to innovate effectively, issues with AI development and use, competition, and service interruptions. Adobe also faces risks related to complex sales cycles, recruitment and retention of key personnel, litigation, and regulatory inquiries. During the second quarter, Adobe executed agreements for long-term supplier commitments that increased minimum purchase obligations by approximately $1.3 billion through December 2029. As of May 30, 2025, $10.90 billion remained under the March 2024 stock repurchase authority. Subsequent to May 30, 2025, Adobe entered into a stock repurchase arrangement to execute up to $2.5 billion in open market repurchases.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $5.87B | $5.71B | +2.8% | $5.31B | +10.6% |
| Gross profit | $5.24B | $5.09B | +2.8% | $4.71B | +11.1% |
| Gross margin | 89.1% | 89.1% | +0.0 pp | 88.7% | +0.4 pp |
| Sales & marketing | $1.63B | $1.50B | +8.8% | $1.45B | +12.5% |
| General & administrative | $377.0M | $367.0M | +2.7% | $355.0M | +6.2% |
| Total operating expenses | $3.13B | $2.93B | +6.7% | $2.83B | +10.6% |
| Operating income (loss) | $2.11B | $2.16B | -2.5% | $1.89B | +11.9% |
| Operating margin | 35.9% | 37.9% | -1.9 pp | 35.5% | +0.4 pp |
| Net income (loss) | $1.69B | $1.81B | -6.6% | $1.57B | +7.5% |
| Net margin | 28.8% | 31.7% | -2.9 pp | 29.6% | -0.8 pp |
| Diluted EPS | $3.94 | $4.14 | -$0.20 | $3.49 | +$0.45 |
Risks
Adobe faces increasing competition from companies offering generative AI capabilities, including text-to-image, text-to-video and multi-modal offerings that compete directly with its creative offerings. Competitors may incorporate AI more successfully and achieve faster adoption, impairing Adobe's ability to compete.
Significant investments in AI development, adding AI capabilities and scaling AI offerings could increase costs and adversely impact margins. MD&A notes cost of subscription revenue increased 7% in Q2 FY2025 vs prior year, partly due to AI inferencing costs.
Extended and complex sales cycles for enterprise offerings are exacerbated by end-to-end solutions with cross-cloud and generative AI capabilities, leading to longer evaluation and contract negotiations. Macroeconomic and geopolitical events such as trade disputes and tariffs have caused additional spend scrutiny and delays.
Global adverse economic conditions, trade disputes, tariffs and foreign currency fluctuations pose risks. MD&A notes the U.S. Dollar strengthened against APAC currencies and the Euro, resulting in net revenue decrease of approximately $24 million in Q2 FY2025 and $98 million for the six months ended May 30, 2025.
New regulations like the EU AI Act (adopted 2024, phased through 2030) may increase compliance, governance and R&D costs, and could delay or halt AI offerings or require changes to monetization and indemnity protections.
Competition for talent with AI and cybersecurity backgrounds is intense, compounded by hybrid work challenges and higher compensation costs to retain senior management and skilled personnel.
Reliance on third-party AI models introduces risks inherent in their development and deployment, including situations where the third party may lack proper license or consent for training data used for their model.
Increasing regulatory focus on privacy, security and AI, with expanding laws and enforcement actions, could impact business models and expose Adobe to increased liability, fines or prohibitions on sales.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Digital Media Annualized Recurring Revenue (ARR)
Summary, forecast, risks and KPIs are extracted from ADOBE INC.'s SEC filings for Q2 FY2025 (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.