Analysis of the Form 10-K | Fiscal year ended 28 November 2025
FY2025, ended 28 November 2025. Figures in millions of US dollars (US$ mn) unless stated otherwise; billions are shown as "bn". The multiples use the closing price at 28 November 2025 (US$ 320.13) and the shares outstanding at 9 January 2026 (410.5 mn): the two dates do not coincide, and the resulting market capitalization, US$ 131.4 bn, is a stated convention, not a figure from the filing.
Adobe sells subscription software for content creation, document management and digital marketing. Subscriptions generated 22,904 mn of the 23,769 mn of revenue in FY2025, or 96.36%. The rest comes from perpetual licenses and royalties (325 mn) and from consulting, training, maintenance and advertising (540 mn).
There are two kinds of customer. Individuals and small businesses buy on adobe.com and through app stores; large enterprises buy through the direct sales force, under multi-year service terms. The filing states that subscription revenue is recognized ratably over terms that "typically range from 1 to 36 months". Cash comes in ahead of revenue: deferred revenue at year-end is 7,030 mn.
The reportable segments for FY2025 are three: Digital Media (Creative Cloud, Acrobat, Express, Firefly), Digital Experience (Experience Platform, Experience Manager, GenStudio, Marketo Engage and others) and Publishing and Advertising, which the filing describes as containing "legacy products and services".
| Segment | FY2025 | % of total | FY2024 | FY2023 | Chg. FY25/FY24 | Chg. FY24/FY23 |
|---|---|---|---|---|---|---|
| Digital Media | 17,649 | 74.25% | 15,864 | 14,216 | +11.25% | +11.59% |
| Digital Experience | 5,864 | 24.67% | 5,366 | 4,893 | +9.28% | +9.67% |
| Publishing and Advertising | 256 | 1.08% | 275 | 300 | −6.91% | −8.33% |
| Total | 23,769 | 100.00% | 21,505 | 19,409 | +10.53% | +10.80% |
| Geographic area | FY2025 | % of total | FY2024 | FY2023 | Chg. FY25/FY24 | Chg. FY24/FY23 |
|---|---|---|---|---|---|---|
| United States | 12,529 | 52.71% | 11,499 | 10,460 | +8.96% | +9.93% |
| Other Americas | 1,591 | 6.69% | 1,392 | 1,194 | +14.30% | +16.58% |
| EMEA | 6,289 | 26.46% | 5,554 | 4,881 | +13.23% | +13.79% |
| APAC | 3,360 | 14.14% | 3,060 | 2,874 | +9.80% | +6.47% |
| Total | 23,769 | 100.00% | 21,505 | 19,409 | +10.53% | +10.80% |
No customer accounts for more than 10% of revenue or of trade receivables in any of the three years (Note 2).
Employees at 28 November 2025 number 31,360, half in the United States and half abroad. The attrition rate in FY2025 was 9.9%. The filing does not report headcount for the prior years, so the annual change cannot be calculated.
The filing is signed by Shantanu Narayen (chair of the board and chief executive officer), Daniel Durn (chief financial officer) and Jillian Forusz (chief accounting officer), together with ten directors. Among the executive officers listed, Louise Pentland joined as Chief Legal Officer in May 2025 and Lara Balazs as Chief Marketing Officer in December 2024. Between October 2024 and May 2025 the legal function was led on an interim basis by Gloria Chen. The filing reports no changes in the three signing offices.
The filing introduces four new items compared with the comparative columns:
On the risk side, the text cites the US tax law of 4 July 2025 and the 15% global minimum tax, effective for Adobe from FY2025; of both it states that they had no material impact on the year.
Consolidated gross margin is 89.27% (21,218 / 23,769) and Digital Media gross margin 95.23% (16,808 / 17,649). These levels are consistent with a product that customers find hard to replace, but the filing does not supply the direct evidence: it publishes no renewal rates, subscriber numbers or churn rate. Customer retention is mentioned as a goal, without figures.
The recurring nature of revenue, by contrast, is documented. Subscriptions account for 96.36% of revenue, against 95.42% in FY2024 and 94.20% in FY2023. Remaining performance obligations amount to US$ 22.52 bn. About 65% is expected to be recognized within twelve months; the share is calculated excluding the committed-funds agreements of certain enterprise customers, which are about 4% of the total.
The filing itself tempers the competitive protection. The markets are described as having "limited barriers to entry, short product lifecycles, customer price sensitivity". The risk factors state: "we face increasing competition from companies offering generative and agentic AI solutions". The section on competition names no competitor. The only name appears in the note on legal proceedings, where the securities class action concerns statements about "competition from Figma".
The stated approach to artificial intelligence is to combine Adobe's own models (Firefly, trained on licensed content and public domain assets) with third-party models selectable inside the applications. The filing does not quantify the revenue attributable to these features.
The filing contains no price lists, no average price per subscriber and no breakdown of growth between price, volume and mix. Pricing power therefore cannot be demonstrated with the available data; only indirect signs can be read.
First sign: subscription revenue grew 11.61% while gross margin rose from 89.04% to 89.27%. Second: management attributes Digital Media growth to "strength in Creative Cloud Pro and other flagship apps as well as Acrobat", that is, to the higher-tier plan, which suggests a contribution from mix. Third, pointing the other way: Digital Media cost of revenue rose 23.68% (from 680 to 841), more than twice the segment's revenue growth.
Subscription disclosure and cancellation practices are the subject of the Department of Justice lawsuit. Whether part of the resilience of revenue from individual customers depends on the cancellation frictions that the authority alleges, the filing does not make it possible to establish.
Growth over the three years is almost entirely organic. Acquisitions absorbed 17 mn in FY2025 and nothing in the two prior years; goodwill increased by 14 mn from acquisitions (Note 8).
The currency effect is marginal: management estimates a reduction in revenue of about 18 mn, offset by 22 mn of hedging gains. Growth of 10.53% is therefore essentially at constant currency.
ARR, the main management metric, grew 11.5% to US$ 25.20 bn. The comparison is built at exchange rates fixed at the start of the year, and the prior balance is revalued at the same rates: it is not an accounting measure and appears only in the management discussion, outside the financial statements. Revalued at start-of-FY2026 rates, ending ARR would be US$ 25.66 bn.
From FY2026 the scope will change. Semrush, if the transaction closes, will enter the accounts for a consideration equal to about 29% of year-end cash and securities (about 1.9 bn / 6,595 mn). The filing gives neither its revenue nor its profitability.
| Item | FY2025 | FY2024 | Chg. | % of revenue FY2025 | % of revenue FY2024 |
|---|---|---|---|---|---|
| Revenue | 23,769 | 21,505 | +10.53% | 100.00% | 100.00% |
| Cost of revenue | 2,551 | 2,358 | +8.18% | 10.73% | 10.96% |
| Research and development | 4,294 | 3,944 | +8.87% | 18.07% | 18.34% |
| Sales and marketing | 6,488 | 5,764 | +12.56% | 27.30% | 26.80% |
| of which advertising (rounded figures) | about 1,370 | about 1,040 | about +32% | about 5.8% | about 4.8% |
| General and administrative | 1,573 | 1,529 | +2.88% | 6.62% | 7.11% |
| Operating expenses excluding the Figma fee | 12,512 | 11,406 | +9.70% | 52.64% | 53.04% |
Three of the four cost lines grow more slowly than revenue. The exception is sales and marketing, up 724 mn. The filing attributes the increase "primarily" to advertising, which it reports only in billions: US$ 1.37 bn against 1.04 bn, or about 0.33 bn more. Advertising therefore explains slightly less than half of the increase; excluding it, the line grows about 8%, from about 4.72 to about 5.12 bn.
Real operating leverage is more modest than reported operating income suggests. FY2024 includes the Figma termination fee of 1,000 mn; excluding it, FY2024 operating income is 7,741 (6,741 + 1,000) and the margin 36.00% (7,741 / 21,505). The FY2025 margin is 36.63%: the improvement is 0.63 points, not 5.28.
Fixed investment is low: capex is 0.75% of revenue (179 / 23,769). The infrastructure, however, is largely rented. Non-cancellable purchase obligations, "primarily relating to contracts with vendors for third-party hosting and data center services", total 6,821 mn, of which 2,083 in FY2026 alone.
| Item | FY2025 | FY2024 | FY2023 | Chg. FY25/FY24 | Chg. FY24/FY23 |
|---|---|---|---|---|---|
| Revenue | 23,769 | 21,505 | 19,409 | +10.53% | +10.80% |
| Cost of revenue | 2,551 | 2,358 | 2,354 | +8.18% | +0.17% |
| Gross profit | 21,218 | 19,147 | 17,055 | +10.82% | +12.27% |
| Research and development | 4,294 | 3,944 | 3,473 | +8.87% | +13.56% |
| Sales and marketing | 6,488 | 5,764 | 5,351 | +12.56% | +7.72% |
| General and administrative | 1,573 | 1,529 | 1,413 | +2.88% | +8.21% |
| Figma termination fee | 0 | 1,000 | 0 | n.m. | n.m. |
| Amortization of intangibles | 157 | 169 | 168 | −7.10% | +0.60% |
| Operating expenses | 12,512 | 12,406 | 10,405 | +0.85% | +19.23% |
| Operating income | 8,706 | 6,741 | 6,650 | +29.15% | +1.37% |
| Non-operating income (expense) | 28 | 190 | 149 | n.m. | n.m. |
| Income before income taxes | 8,734 | 6,931 | 6,799 | +26.01% | +1.94% |
| Income taxes | 1,604 | 1,371 | 1,371 | +16.99% | 0.00% |
| Net income | 7,130 | 5,560 | 5,428 | +28.24% | +2.43% |
| Diluted earnings per share (US$) | 16.70 | 12.36 | 11.82 | +35.11% | +4.57% |
| Diluted weighted average shares (mn) | 427.0 | 449.7 | 459.1 | −5.05% | −2.05% |
Net income growth of 28.24% is inflated by the base. The Figma fee was not deductible: the FY2024 tax reconciliation shows an "Acquisition termination fee" line of 210 mn, equal to 21% of 1,000. FY2024 net income without the fee is therefore 6,560 (5,560 + 1,000), and FY2025 growth falls to +8.69% (7,130 / 6,560 − 1).
| FY2024 | Reported | Adjustment | Without the Figma fee |
|---|---|---|---|
| Gross profit | 19,147 | 0 | 19,147 |
| Operating expenses | 12,406 | −1,000 | 11,406 |
| Operating income | 6,741 | +1,000 | 7,741 |
| Non-operating income | 190 | 0 | 190 |
| Income before income taxes | 6,931 | +1,000 | 7,931 |
| Income taxes | 1,371 | 0 | 1,371 |
| Net income | 5,560 | +1,000 | 6,560 |
On a like-for-like basis net margin does not improve. The FY2024 figure without the fee is 30.50% (6,560 / 21,505), against 30.00% in FY2025. The decline comes from non-operating income, which fell from 190 to 28.
Normalized FY2024 diluted earnings per share are 6,560 / 449.7 = US$ 14.59. Against this base, FY2025 growth is +14.48% (16.70 / 14.59 − 1). The difference from net income growth comes from the 5.05% reduction in average shares.
Net financial income has almost disappeared. Interest income fell from 341 to 264 on lower balances and lower rates; interest expense rose from 169 to 263 because of the January 2025 issuance. The difference between the two lines goes from +172 to +1.
| Item | 28 Nov 2025 | 29 Nov 2024 |
|---|---|---|
| Cash and cash equivalents | 5,431 | 7,613 |
| Short-term investments | 1,164 | 273 |
| Cash and marketable securities | 6,595 | 7,886 |
| Senior notes, current portion | 0 | 1,499 |
| Senior notes, non-current portion | 6,210 | 4,129 |
| Operating leases, current portion | 77 | 75 |
| Operating leases, non-current portion | 361 | 353 |
| Gross debt | 6,648 | 6,056 |
| Net financial position (cash − gross debt) | (53) | 1,830 |
| Stockholders' equity | 11,623 | 14,105 |
| Goodwill | 12,857 | 12,788 |
Net financial position = 6,595 − 6,648 = −53 mn (net debt). A year earlier it was 7,886 − 6,056 = +1,830 mn (net cash). The deterioration of 1,883 mn in a year with 9,852 mn of free cash flow is explained by buybacks: 11,281 mn.
Senior notes at par are 6,150 mn, in eight series maturing from 2027 to 2035 with coupons between 2.15% and 5.30% (Note 17). None matures in FY2026. The notes carry no financial covenants. A revolving credit facility of 1,500 mn, maturing on 30 June 2027, and a commercial paper program of 3,000 mn remain undrawn.
Stockholders' equity fell from 16,518 to 11,623 in two years, as a result of treasury stock at cost, which rose to 48,847 mn. Tangible equity is negative: 11,623 − 12,857 − 495 = −1,729 mn. Goodwill is 43.6% of total assets (12,857 / 29,496). Two thirds of it is allocated to Digital Experience: 8,553 mn.
Working capital is negative by 37 mn, because current deferred revenue (6,905) exceeds non-cash current assets. The negative balance stems from customers paying in advance.
| Item | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Operating cash flow | 10,031 | 8,056 | 7,302 |
| Capex | 179 | 183 | 360 |
| Free cash flow | 9,852 | 7,873 | 6,942 |
| SBC | 1,942 | 1,833 | 1,718 |
| FCF net of SBC | 7,910 | 6,040 | 5,224 |
| Buybacks | 11,281 | 9,500 | 4,400 |
| Dividends | 0 | 0 | 0 |
| Cash paid for income taxes | 2,219 | 1,727 | 1,854 |
| Taxes paid on net share settlement of equity awards | 475 | 677 | 589 |
| D&A | 818 | 857 | 872 |
| SBC / revenue | 8.17% | 8.52% | 8.85% |
| Buybacks / FCF | 114.5% | 120.7% | 63.4% |
FY2024 operating cash flow includes the payment of the Figma fee. Without it, operating cash flow would be 9,056 (8,056 + 1,000) and free cash flow 8,873 (9,056 − 183). FY2025 free cash flow growth thus falls from +25.14% to +11.03% (9,852 / 8,873 − 1).
FCF net of SBC = 9,852 − 1,942 = 7,910 mn. SBC is a real cost that free cash flow does not capture. Part of the cost does show up in cash, within financing activities: 475 mn of taxes paid on behalf of employees on vested awards.
Owner earnings = net income + D&A − capex = 7,130 + 818 − 179 = 7,769 mn. Net income is already net of SBC, which is therefore not deducted a second time. The figure is 2,083 mn below free cash flow; the difference consists of SBC (1,942), deferred taxes (−512), other non-cash items (48) and changes in working capital (605).
Shares outstanding fell from 441 to 413 mn, or 6.35% (28 / 441). The statement of stockholders' equity shows 31 mn shares repurchased and 3 mn re-issued to employees. Buybacks therefore did reduce the share count rather than merely offset dilution: the year's SBC equals 17.2% of buyback spending (1,942 / 11,281).
The price paid is the weak point. The filing reports average prices only for the fourth quarter: US$ 353.68, 345.96 and 332.31 in the three monthly periods. All exceed the supplied closing price at 28 November 2025, US$ 320.13.
For the full year only an estimate is possible: 11,281 / 30.8 = about US$ 366 per share. The estimate is rough, because in accelerated share repurchases payments and deliveries do not fall in the same period. With the same limitation, the FY2024 accelerated repurchases give 9,500 / 16.9 = about US$ 562.
Unrecognized SBC cost is US$ 3.24 bn, to be expensed over a weighted average of 2.19 years. Restricted stock units awarded in FY2025 number 5.2 mn at an average value of US$ 407.67, against US$ 579.87 in FY2024: for the same value granted, a lower price requires more shares.
Cash paid for income taxes (2,219) exceeds the income statement provision (1,604) by 615 mn. The gap is consistent with the capitalization of expenses for tax purposes: deferred tax assets for "Capitalized expenses" rose from 1,625 to 2,065. The filing does not explicitly link the two figures. On the July 2025 law management writes: "we anticipate a reduction to our effective rates for cash taxes paid in years after fiscal 2025".
| Metric | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Gross margin | 89.27% | 89.04% | 87.87% |
| Digital Media gross margin | 95.23% | 95.71% | 95.32% |
| Digital Experience gross margin | 72.29% | 70.39% | 67.24% |
| Operating margin | 36.63% | 31.35% | 34.26% |
| Operating margin excluding the Figma fee | 36.63% | 36.00% | 34.26% |
| Net margin | 30.00% | 25.85% | 27.97% |
| Net margin excluding the Figma fee | 30.00% | 30.50% | 27.97% |
| FCF margin | 41.45% | 36.61% | 35.77% |
| FCF margin excluding the Figma fee | 41.45% | 41.26% | 35.77% |
| Effective tax rate | 18.37% | 19.78% | 20.16% |
| EBITDA (operating income + D&A) | 9,524 | 7,598 | 7,522 |
| FCF / net income | 1.38x | 1.42x | 1.28x |
| ROIC (year-end balances) | 60.9% | 44.1% | n/a |
| Gross debt / EBITDA | 0.70x | 0.80x | n/a |
| Interest coverage | 33.1x | 39.9x | 58.8x |
On reported figures, FY2025 gross, operating, net and FCF margins are the highest of the three years in the filing (FY2023-FY2025). Excluding the Figma fee from FY2024, this holds for gross, operating and FCF margin, not for net margin: 30.50% in FY2024 against 30.00%. The filing does not support statements about longer periods.
Formulas:
Multiples. Price at 28 November 2025: US$ 320.13. Shares at 9 January 2026: 410.5 mn. Year-end market capitalization = 320.13 × 410.5 = US$ 131.4 bn (131,413 mn). All denominators are FY2025 figures.
The US$ 144.94 bn on the cover page is the market value of shares held by non-affiliates at 30 May 2025, in the middle of the fiscal year. It is not the year-end market capitalization and is not used in any multiple.
Competition from generative artificial intelligence tools (potential, under way). The filing writes: "we face increasing competition from companies offering generative and agentic AI solutions, including but not limited to prompt-based and multi-modal creation and editing, document productivity and understanding". It adds that other companies "have in the past, and may in the future prevent, limit or interfere with our ability to use third-party models". It matters because 74.25% of revenue comes from Digital Media, the segment with a gross margin of 95.23%: that is where a low-cost alternative would do the most damage.
Cost of artificial intelligence on margins (partly already materialized). Digital Media cost of revenue rose 23.68% against revenue up 11.25%. The segment's gross margin fell from 95.71% to 95.23%. Of the 13 points of increase in cost of subscription revenue, 8 come from hosting and data centers, a line the filing says includes "AI inferencing costs". The text warns: "These costs could adversely impact our margins".
Department of Justice lawsuit over cancellations (ongoing, no estimate). On 17 June 2024 the Department filed a civil complaint against Adobe and certain employees, alleging violation of the rules on online subscription sales. On 2 May 2025 the court denied the motion to dismiss; discovery is ongoing. The filing acknowledges that resolution "could involve significant monetary costs or penalties" and indicates neither specific provisions nor a range of loss. Beyond any penalty, an obligation to simplify cancellation would affect renewals in the online channel.
Dependence on third-party providers of infrastructure and models. Non-cancellable obligations are 6,821 mn, concentrated in the four years through FY2029. The filing states: "We do not have redundancy for all our systems, many of our critical applications [...] reside in only one of our data centers". The 2,083 mn due in FY2026 equals 81.7% of FY2025 cost of revenue.
Regulation of artificial intelligence and intellectual property in third-party models. Obligations under the European rules "will continue to be implemented in phases through 2030". On third-party models integrated into its products, the filing acknowledges the risk that the provider "may lack a proper license or consent for the training data". Adobe indemnifies customers against intellectual property infringement claims and states that it cannot estimate the maximum exposure.
Acquisitions: one negative precedent and one open transaction (partly materialized). The failure to obtain approval for the Figma acquisition cost 1,000 mn in FY2024, not deductible. In addition, a securities class action and several derivative actions are pending, concerning statements made between July 2021 and September 2022 about competition from Figma. The former was dismissed on 27 March 2025 and is on appeal; the latter are stayed. The filing gives no estimate of loss. The Semrush agreement, for about US$ 1.9 bn, is in turn subject to regulatory approvals.
Goodwill and intangibles. Goodwill is 12,857 mn, above stockholders' equity of 11,623 mn. The annual test was qualitative only. Among the indicators of possible impairment the filing lists "declines in stock price, market capitalization".
Taxes. The effective rate of 18.37% benefits from 300 mn of effects of non-US operations and 154 mn of credits. Unrecognized tax benefits are 693 mn. Foreign income before taxes fell from 3,334 to 2,013 in two years. Domestic income before taxes rose from 3,465 to 6,721. The filing does not explain the shift.
Currencies. Revenue outside the United States is 47.29% of the total (11,240 / 23,769). Outstanding hedges have a notional amount of US$ 6.54 bn. The filing specifies that hedging activities "have not, and may not in the future, offset more than a portion of the adverse financial impact".
Key people. The chief executive officer is 62 and has been in office since December 2007; since 2017 he has also chaired the board. The filing cites the risk of not succeeding in "developing adequate succession plans", without describing a plan.
Adobe has a single class of common stock, listed on Nasdaq. The filing describes no controlling shareholders and no differential voting rights. Holders of record at 9 January 2026 numbered 801.
The most relevant governance information is not in the filing. Board composition and independence, executive compensation, holdings of directors and major shareholders, related-party transactions and auditor fees are deferred to the 2026 Proxy Statement, not yet filed at the signing date. On these points no assessment is possible.
The filing shows eleven signatories acting as directors, including the chief executive officer. The roles of chair and chief executive officer are combined in Shantanu Narayen. Chief financial officer Daniel Durn has been at Adobe since October 2021 and is also responsible for technology, security and operations.
On compensation the filing provides only the design of the equity plans. Performance shares are earned half on relative total stockholder return over three years and half on revenue-based metrics measured over three one-year periods; the payout ranges from 0% to 200% of target. The 2022 program paid out 79% of target. The metrics are based on revenue, not on profitability or return on capital.
The exhibits include a retention agreement with the chief executive officer dated December 2014, a 2023 executive severance plan in the event of a change of control, and an incentive compensation recovery policy. The bylaws in force ("Amended and Restated Bylaws") are incorporated by reference to a Form 8-K of 24 April 2025; the filing does not describe their content. Fixed assets include a company aircraft ("our corporate jet").
The auditor is KPMG LLP, which states: "We have served as the Company's auditor since 1983". The opinion on the financial statements and on internal control is unqualified.
The financial statements are prepared under US GAAP. The only new standard applied in FY2025 is the update on segment reporting (ASU 2023-07), adopted retrospectively and with no effect on balances. Certain prior-year amounts were reclassified in the cash flow statement and the notes; the filing describes them as not material. There are no restatements.
The auditor reports a single Critical Audit Matter: the sufficiency of audit evidence over revenue from subscriptions sold on adobe.com, because of "the number of revenue-related IT systems involved". It concerns part of the 17,389 mn of Digital Media subscription revenue. It is not a finding on the accounting policy but on the traceability of data across systems.
Three accounting choices move earnings.
The first is the treatment of subscriptions combining installed software and cloud services as a single performance obligation, recognized ratably. The choice defers revenue compared with an alternative that would recognize the license component up front, and is therefore conservative.
The second is the capitalization of sales commissions, amortized over 5 years. The capitalized balance is 721 mn, almost unchanged from 717 mn, and annual amortization is 282 mn. The 5-year period exceeds the typical contract term (up to 36 months) because it includes expected renewals, but with a stable balance the effect on the year's earnings is negligible.
The third is the "Loss contingency reversal" line, which explains 2 of the 13 points of increase in cost of subscription revenue. The most direct reading is that FY2024 had benefited from the reversal of a provision. The filing does not say so explicitly and reports neither the amount nor the origin.
The Form 10-K presents no non-GAAP measures: there is no adjusted earnings figure and no list of excluded items. The only adjustment to reported figures used in the preceding sections is the exclusion of the Figma fee from FY2024. ARR is a constant-currency management metric, reported in the management discussion.
Earnings are backed by cash. The ratio of operating cash flow to net income is 1.41x (10,031 / 7,130). The two items that lift it are SBC (1,942), non-cash but costly for shareholders, and the increase in deferred revenue (771), which depends on growth in billings.
Effective tax rate = 1,604 / 8,734 = 18.37%, against the 21% federal rate.
| FY2025 reconciliation | US$ mn |
|---|---|
| Tax at the 21% statutory rate | 1,834 |
| Effects of non-US operations | −300 |
| Tax credits | −154 |
| Tax settlements | −55 |
| State taxes | +171 |
| Stock-based compensation | +90 |
| Other | +18 |
| Provision for income taxes | 1,604 |
The SBC line moved from a benefit of 23 mn in FY2024 to an expense of 90 mn; the filing does not state the cause. Deferred tax assets carry a valuation allowance of 806 mn, up 81 mn.
Lower cash taxes from FY2026. The law of 4 July 2025 "restores immediate expensing of domestic research and development costs", effective for Adobe from FY2026. In FY2025 cash taxes exceeded the income statement provision by 615 mn. The filing does not quantify the expected benefit.
Growth of the Business Professionals & Consumers group. Subscription revenue rose 14.71% to 6,495 mn, after +19.35% in FY2024, against +10.54% for the Creative & Marketing Professionals group. In August 2025 Acrobat Studio was released, bringing together Acrobat, Express and artificial intelligence agents.
Digital Experience margin. The segment's gross margin went from 67.24% to 72.29% in two years. Cost of revenue was almost flat, from 1,603 to 1,625, while revenue grew by 971 mn.
Revenue already contracted. Remaining performance obligations grew about 12.8% (22.52 / 19.96 − 1, on figures in billions; the filing states 13%), faster than revenue (+10.53%). Deferred revenue grew 12.32% (7,030 / 6,259 − 1).
Reduction in the share count. 6,369 mn of authorization remains at 28 November 2025, valid through 14 March 2028. Once the September 2025 repurchase arrangement is completed, the remaining amount stated in the filing is US$ 5.90 bn.
Semrush. The acquisition, if approved, adds a platform the filing describes as "brand visibility" to the offering for marketing professionals. The filing provides no financial data on the target, so the contribution cannot be assessed.
The Form 10-K does not report numerical targets for revenue, margins or earnings per share set a year earlier, nor does it compare them with actual results. A comparison between forecasts and operating results is therefore not possible on this filing. Only commitments that leave a trace in the statements can be checked.
| Item | Stated | Delivered | Variance |
|---|---|---|---|
| Debt repayment | 1,499 mn classified as current at 29 November 2024 (notes due February 2025) | "In February 2025, $1.5 billion of senior notes became due and were repaid" | None |
| Buyback program | March 2024 authorization for 25,000 mn through 14 March 2028 | 18,631 mn used (25,000 − 6,369) at 28 November 2025, or 74.5% | Faster than the calendar: three quarters of the amount used in less than half of the term |
| Dividends | "We do not anticipate paying any cash dividends in the foreseeable future" | No dividend in the three years | None |
| Figma acquisition | Merger agreement of 15 September 2022 (Exhibit 2.1) | Terminated on 17 December 2023; fee of 1,000 mn paid in FY2024 | Transaction not completed, at a cost equal to 18.0% of FY2024 net income (1,000 / 5,560) |
| Optimization of leased facilities | Impairments of 78 mn in FY2024 | Operating lease expense down from 106 to 92 mn | Consistent with the statement |
| Offsetting dilution | Repurchase program instituted to "minimize the impact of ongoing dilution" | Shares outstanding down from 441 to 413 mn | Objective exceeded: net reduction of 6.35% |
| Financing of Semrush | "We expect to finance the acquisition using cash on hand" | Cannot be checked: closing expected in the first half of FY2026 | Not yet measurable |
At the price of US$ 320.13 on 28 November 2025 and with 410.5 mn shares at 9 January 2026, the market values Adobe at US$ 131.4 bn. The earnings yield is 5.43% and the yield on free cash flow net of SBC is 6.02%. With revenue up 10.53% and ARR up 11.5%, these yields are consistent with an expectation of future growth below that of FY2025. The filing does not make it possible to establish which risk the market is pricing.
The FY2025 accounts do not confirm a slowdown, but they do not rule one out. Contracted revenue is growing faster than recognized revenue (about +12.8% against +10.53%), which points to demand. Digital Media gross margin falls by 0.48 points with costs growing at twice the pace of revenue, a pattern compatible with artificial intelligence costs not yet fully passed on in prices. The filing does not provide the data to verify this.
The thesis holds on three verifiable conditions. ARR growth must stay close to 11.5% without a further increase in the weight of advertising, which rose to about 5.8% of revenue. Infrastructure costs must not erode consolidated gross margin below the FY2024 level (89.04%). Buybacks must be made at prices that do not later prove to be above the market price: in the fourth quarter of FY2025 the three monthly average prices paid were all above US$ 320.13.
The thesis weakens if the move to a single segment reduces visibility on the very figures that allow these conditions to be checked.
Metrics to monitor in the coming quarters:
Report based exclusively on the Adobe Inc. Form 10-K for the fiscal year ended 28 November 2025, signed on 15 January 2026 (the SEC filing date is not stated separately in the document). The multiples use the closing price of US$ 320.13 at 28 November 2025 and the 410.5 million shares outstanding at 9 January 2026, supplied by the client. The report is for analysis purposes and does not constitute investment advice.
The full data table behind this report — every line item with its source in the filing and the arithmetic checks — is published separately: Adobe FY2025 data table.