Adobe: Monetization Meets Scalable Success

Summary:

• Adobe added $578M in Q4 Digital Media ARR and $2B for FY2024, supporting stable recurring revenues.
• FY2024 revenue grew 11% YoY to $21.51B, with Q4 revenue reaching $5.61B, driven by subscriptions.
• Firefly generated 16B assets, boosting adoption and enterprise wins and enhancing ARPU and cross-product monetization opportunities.
• Adobe’s price-to-sales ratio of 9.34 suggests a 52% upside compared to its long-term average of 14.17.
• ARR increased 23% YoY to $3.48B, with Q4 revenue of $843M, underscoring scalability and user engagement.

Investment Thesis

For YTD 2024, Adobe (NASDAQ:ADBE) performed very badly (>-25% price change) against the S&P 500 (SPX) (>+25% price change). However, the business holds solid top line growth based on Digital Media ARR and

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