Summary
Adobe closed fiscal 2025 with record fourth-quarter revenue of $6.19 billion, up 10.5% from the prior-year quarter. Gross profit was $5.54 billion, up 11.1%. Operating income was $2.26 billion, up 15.5%. Net income was $1.86 billion, up 10.3%. Gross margin was 89.5%, up 0.5 percentage points. Operating margin was 36.5%, up 1.6 percentage points. For the full fiscal year, revenue reached $23.77 billion, up 10.5%, and operating income was $8.71 billion, up 29.1%. Net income for the year was $7.13 billion, up 28.2%. Diluted EPS for the year was $16.70, up 35.1% from the prior-year period. Operating cash flow for the quarter was $3.16 billion, up 8.2%, and full-year operating cash flow was $10.03 billion, up 24.5%. Capital expenditures were $34 million in the quarter, down 29.2%.
Deferred revenue at quarter end was $7.03 billion, up 12.3% from the prior-year quarter. Remaining performance obligations were $22.52 billion, up 12.8%. Current remaining performance obligations were 65% of RPO. On a non-GAAP basis, fourth-quarter operating income was $2.82 billion, net income was $2.29 billion, and diluted EPS was $5.50. For the full year, non-GAAP operating income was $10.99 billion, non-GAAP net income was $8.94 billion, and non-GAAP diluted EPS was $20.94. Adobe repurchased approximately 7.2 million shares during the quarter and about 30.8 million shares during the year.
Total Adobe ARR exiting fiscal 2025 was $25.20 billion, up 11.5% year over year. Digital Media ARR was $19.20 billion, up 11.5%. Revaluing ending ARR using currency rates set at the beginning of fiscal 2026 increased Total Adobe ARR by $460 million, from $25.20 billion to $25.66 billion entering fiscal 2026. Management will change reporting and guidance in fiscal 2026 to focus on customer group subscription revenue and total company ending ARR year-over-year growth, while also guiding total Adobe revenue and EPS. Adobe will continue to report Digital Media and Digital Experience subscription revenue as supplemental disclosures.
Management set full fiscal year 2026 targets for non-GAAP EPS of $23.30 to $23.50 and a Total Adobe ending ARR growth target of 10.2% year over year. For the first quarter of fiscal 2026, management guided non-GAAP EPS to $5.85 to $5.90. The fiscal 2026 targets assume a non-GAAP operating margin of 45.0%, a non-GAAP tax rate of 18.0%, and a diluted share count of 403 million. The first quarter fiscal 2026 targets assume a non-GAAP operating margin of 47.0%, a non-GAAP tax rate of 18.0%, and a diluted share count of 411 million. These targets do not include any contributions from Semrush Holdings, which Adobe agreed to acquire for approximately $1.9 billion in cash. The acquisition is subject to regulatory approvals and customary closing conditions and is expected to close in the first half of fiscal 2026.
Risks remain broad. The earnings release lists failure to innovate and meet customer needs, issues with AI development and use, competitive pressure, reputation or brand damage, failure to realize acquisition benefits, service interruptions, security incidents, reliance on third-party relationships, multinational and macroeconomic risks, complex sales cycles, hiring and retention, litigation, regulatory and intellectual property claims, changing tax rules, government procurement processes, revenue recognition timing, foreign currency fluctuations, impairment charges, debt obligations, catastrophic events, and stock price volatility. The MD&A highlights an uncertain macroeconomic environment with inflation, interest rates, currency swings, potential economic slowdowns or recessions, and geopolitical pressures including trade regulations. Tax policy is also a watch item. Many countries have enacted the OECD 15% global minimum tax regime effective for Adobe starting in fiscal 2025. The 2025 U.S. Tax Act was enacted on July 4, 2025, and management said it did not have a material impact on fiscal 2025 effective rates for income taxes or cash taxes paid, while anticipating a reduction to effective rates for cash taxes paid in years after fiscal 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $6.19B | $5.99B | +3.4% | $5.61B | +10.5% |
| Gross profit | $5.54B | $5.35B | +3.7% | $4.99B | +11.1% |
| Gross margin | 89.5% | 89.3% | +0.2 pp | 89.0% | +0.5 pp |
| Sales & marketing | $1.73B | $1.64B | +5.4% | $1.54B | +12.5% |
| General & administrative | $421.0M | $408.0M | +3.2% | $456.0M | -7.7% |
| Total operating expenses | $3.28B | $3.17B | +3.5% | $3.03B | +8.3% |
| Operating income (loss) | $2.26B | $2.17B | +4.0% | $1.96B | +15.5% |
| Operating margin | 36.5% | 36.3% | +0.2 pp | 34.9% | +1.6 pp |
| Net income (loss) | $1.86B | $1.77B | +4.7% | $1.68B | +10.3% |
| Net margin | 30.0% | 29.6% | +0.4 pp | 30.0% | -0.1 pp |
| Diluted EPS | $4.35 | $4.18 | +$0.17 | $3.74 | +$0.61 |
Risks
Adobe faces intensifying competition from companies offering generative and agentic AI solutions, including prompt-based and multi-modal creation and editing, document productivity, ad creation, and purpose-built AI agents, and competitors may develop or adopt AI faster, potentially reducing sales. MD&A centers the growth strategy on AI-powered offerings such as Firefly, Acrobat AI Assistant, and GenStudio, making competitive differentiation central.
New and evolving AI regulations, including EU AI Act obligations that phase in through 2030, may require changes to business practices, increase compliance, governance, and R&D costs, and expose Adobe to administrative fines and liability for third-party AI models and training data. The company also warns that AI monetization pathways remain uncertain.
Enterprise sales involving generative and agentic AI capabilities have increased the complexity of technical and contractual assurances, leading to extended sales cycles, proof-of-concept evaluations, and contract negotiations. Adverse macroeconomic and geopolitical events such as trade disputes and tariffs have caused additional spend scrutiny and delays in larger, more complex deals.
Global adverse economic and geopolitical conditions, including inflation, interest rates, trade disputes, tariffs, economic sanctions, armed conflicts, and currency fluctuations, make forecasting difficult and can reduce customer spending, delay collections, or disrupt service providers. MD&A notes ongoing monitoring of macroeconomic pressures and unknown impacts of current and future trade regulations.
Adobe announced a definitive agreement on November 18, 2025 to acquire Semrush Holdings for approximately $1.9 billion in cash, subject to regulatory approvals and expected to close in the first half of fiscal 2026, and risk factors note prior difficulties obtaining regulatory approvals, including termination of a previously announced acquisition and additional costs.
Adobe is making significant investments in AI development, third-party AI models, and scaling AI solutions, but customer adoption and monetization pathways are uncertain, and these costs could adversely impact margins. The risk factors state that AI solutions may modify workforce needs, create negative publicity, or reduce demand.
Competition for talent, particularly with AI and cybersecurity backgrounds, remains substantial and is heightened by hybrid or remote work arrangements; higher compensation costs to retain senior management or highly skilled personnel may not be offset by innovation, productivity, or increased sales.
Expanding global data protection and privacy laws, including the EU Data Act, Digital Services Act, GDPR, and U.S. state privacy laws, impose evolving and sometimes conflicting obligations on data transfers, portability, and cybersecurity disclosure, increasing compliance costs and liability risk.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Summary, forecast, risks and KPIs are extracted from ADOBE INC.'s SEC filings for Q4 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.