Earnings Call Insights: Adobe Inc. (ADBE) Q4 2025
Management View
- Shantanu Narayen, Chairman & CEO, announced “record revenue of $23.77 billion and non-GAAP EPS of $20.94,” citing “significant AI-influenced and AI-first ending ARR, which accelerated through the year.” He highlighted Adobe’s strategic focus on leveraging AI to serve Business Professionals and Consumers, Creators and Creative Professionals, and Marketing Professionals, emphasizing new conversational and agentic interfaces in Reader, Acrobat, and Express, and expanded generative AI capabilities in Firefly and Creative Cloud flagship applications. Narayen also referenced Adobe’s intent to acquire Semrush to enhance brand visibility and audience reach, and reported “record bookings of deals greater than $1 million and achieved over 25% year-over-year growth in the number of customers with $10 million-plus in ARR.”
- David Wadhwani, President of Digital Media Business, reported “Digital Media achieved revenue of $4.62 billion in Q4, and full year revenue of $17.65 billion, both of which grew 11% year-over-year.” He described the expansion of generative AI models and partner integrations, noting that “credit consumption increased 3x quarter-over-quarter.” Wadhwani highlighted Acrobat AI Assistant and PDF Spaces driving over “4x year-over-year” feature usage, and strong growth for Express and Firefly apps.
- Anil Chakravarthy, President of Digital Experience Business, announced “Digital Experience had a strong close to the year, achieving revenue of $1.52 billion for the quarter and a record $5.86 billion in revenue in FY ’25.” He pointed to “subscription revenue for AEP and native apps grew over 40% year-over-year,” and shared excitement over the pending Semrush acquisition.
- Daniel Durn, CFO, stated: “In FY ’25, Adobe delivered record revenue of $23.77 billion, growing 11% year-over-year as reported and in constant currency. GAAP EPS for the year was $16.70, and non-GAAP EPS was $20.94, growing 35% and 14% year-over-year, respectively.” Durn highlighted “over $10 billion in operating cash flows,” “nearly $12 billion” in share repurchases, and a reduction of shares outstanding by “over 6% during the year.”
Outlook
- Daniel Durn projected “Total Adobe revenue of $25.9 to $26.1 billion” for FY ’26, with “Business Professionals and Consumers Subscription revenue of $7.35 billion to $7.4 billion,” “Creative and Marketing Professionals Subscription revenue of $17.75 billion to $17.9 billion,” and “Total Adobe ending ARR book of business growth of 10.2% year-over-year.”
- For Q1 FY ’26, Durn guided to “Total Adobe revenue of $6.25 billion to $6.3 billion,” “GAAP EPS of $4.55 to $4.60,” and “non-GAAP EPS of $5.85 to $5.90.”
- Management reiterated that these targets do not include contributions from the pending Semrush acquisition.
Financial Results
- Adobe reported Q4 revenue of $6.19 billion, with a “10% year-over-year” increase. GAAP EPS in Q4 was $4.45 and non-GAAP EPS was $5.50, which increased “17% and 14% year-over-year, respectively.”
- Digital Media revenue for Q4 was $4.62 billion and for the full year totaled $17.65 billion. Digital Experience segment revenue was $1.52 billion for Q4 and $5.86 billion for the year.
- “Cash flows from operations of $10.03 billion,” with an ending cash and short-term investment position of $6.60 billion, and remaining performance obligations of $22.52 billion at year-end.
- “Total new AI-influenced ARR now exceeds 1/3 of our overall book of business.” Record net new Digital Media ARR and record net new Total Adobe ARR were also noted.
Q&A
- Mark Murphy, JPMorgan: Asked about early customer use and economic potential of Firefly Foundry. Shantanu Narayen responded that “Foundry just takes it to a different level in terms of our ability to customize,” and David Wadhwani added that enterprises are already seeing increased efficiency and revenue opportunities from Firefly Foundry as a managed service.
- Matthew Swanson, RBC Capital Markets: Inquired about ROI for enterprises adopting enhanced Creative and Experience Cloud integrations. Narayen explained Adobe can “close the loop from the creation of a campaign, the execution of that campaign as well as then actually looking at what that causes in terms of commerce,” and Chakravarthy stated, “we are helping them reduce the content production creation and production cost.”
- Ivan Radojicic, Wolfe Research: Asked about the strategic rationale and synergies for the Semrush acquisition. Chakravarthy said combining Adobe and Semrush will deliver “a comprehensive solution for marketers” to improve brand visibility across owned and new channels.
- Keith Weiss, Morgan Stanley: Questioned when ARR growth could stabilize or accelerate. Narayen replied, “Q4 was an inflection in the early indicators,” and highlighted strong leading indicators such as MAU and AI adoption.
- Shelly Tang, Sanford C. Bernstein: Sought clarification on ARR growth target moderation. Narayen said the guidance reflects “momentum that we have” across all customer groups and confidence in performance.
- Jacob Roberge, William Blair: Queried about monetization of new surfaces like ChatGPT. Wadhwani explained LLMs are “a great top of funnel” and enable conversion into full paid plans.
- Michael Turrin, Wells Fargo: Asked about growth in generative credit consumption and monetization. Wadhwani detailed the multi-faceted growth algorithm and noted the “3x quarter-over-quarter growth in generation.”
- Keith Bachman, BMO: Asked about seat growth and pricing levers. Wadhwani said “we’re seeing strong seat growth” and “a lot of value to pricing opportunity with creative professionals.”
Sentiment Analysis
- Analysts emphasized interest in monetization timing, ARR growth, and ROI, with a neutral-to-slightly positive tone, probing for specifics and expressing cautious optimism.
- Management consistently expressed confidence, with Narayen stating “we are confident in our ability to deliver industry-leading innovation, double-digit ARR growth and world class profitability.” The tone was upbeat in both prepared remarks and the Q&A, with a particular focus on inflection points and execution.
- Compared to the previous quarter, the tone remained optimistic, but current management responses reflected greater assurance around inflection in ARR growth and monetization, while analysts maintained a similar neutral-inquisitive approach.
Quarter-over-Quarter Comparison
- Q4 introduced a clear FY ’26 growth target of “10.2% year-over-year” ARR, compared to the prior quarter’s guidance of “11.3%” for Digital Media ending ARR, signaling a slightly moderated but still robust growth outlook.
- Strategic focus shifted toward deepening AI integration, monetization of generative credits, and expansion into new customer acquisition channels, including LLMs and conversational platforms.
- The Semrush acquisition was a new strategic highlight, not present in Q3.
- Analyst focus continued to probe monetization, ARR growth, and product adoption, with increased emphasis on the impact of AI and new business models.
- Key financial metrics all improved quarter-over-quarter, with record revenue, EPS, and cash flows reported for the year.
- Management’s confidence was more pronounced in discussing inflection points and leading indicators for future growth.
Risks and Concerns
- Management acknowledged that FY ’26 targets exclude Semrush contributions and are “based on the strength exiting FY ’25 and continued momentum across all 3 audiences.”
- Potential regulatory and closing conditions for the Semrush acquisition were noted as pending.
- No explicit mention of macroeconomic or competitive risks beyond those inherent in execution and customer adoption, though management emphasized their mitigation strategies through product innovation and partnerships.
- Analysts questioned sustainability of ARR growth rates and timing for monetization, reflecting market concerns around growth consistency and new channel adoption.
Final Takeaway
Adobe delivered record financial results in Q4 and FY ’25, driven by accelerating adoption of AI-infused and AI-first products, significant user acquisition, and strong enterprise demand. Management outlined a robust vision for FY ’26 with a projected over 10% ARR growth, continued innovation in generative AI, and expansion into new marketing channels, supported by strategic moves such as the pending Semrush acquisition. The company emphasized confidence in sustaining double-digit growth, driven by strategic execution, deepening AI integration, and expanding routes to market across its diverse customer base.