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Adobe Inc. ADBE

Technology  —  Software Application
235.47 (3.46) (1.45%) as of 25 Sep
Market cap
$92.6B
P/E
13.1×
S&P 500 Member Revenue Champion (10y) Insider Buys (last 12m)
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Overview Business Profile Financial Analysis Income Statement Balance Sheet Cash Flow Metrics & Ratios 10-Q 10-K

Adobe Inc. (ADBE) Financial Analysis

Updated · Covers results through Q3 FY2026 · Sources · How this is made

Snapshot

Adobe generated revenue of $23.8 billion, gross profit of $21.2 billion and net income of $7.1 billion in FY2025. Operating income was $8.7 billion and diluted EPS was $16.70 in FY2025.

Revenue reached $6.8 billion, gross profit was $6.0 billion and operating income was $2.4 billion in Q3 FY2026. Net income was $1.8 billion and diluted EPS was $4.62 in Q3 FY2026. Revenue over the TTM to Q3 FY2026 was $26.0 billion, while net income over the TTM to Q3 FY2026 was $7.3 billion. Market capitalisation was $95.1 billion as of September 23, 2026.

Growth

Revenue grew 10.5% in FY2025 against FY2024, reaching $23.8 billion in FY2025. Revenue compound annual growth was 10.5% over FY2022–FY2025 and 13.1% over FY2020–FY2025. Diluted EPS grew 35.1% in FY2025 against FY2024 to $16.70 in FY2025, while free cash flow grew 25.1% in FY2025 against FY2024 to $9.9 billion in FY2025.

Revenue was $6.8 billion in Q3 FY2026, up 2.15% in Q3 FY2026 against Q2 FY2026 and 12.9% in Q3 FY2026 against Q3 FY2025. Diluted EPS was $4.62 in Q3 FY2026, up 8.71% sequentially and 10.5% year over year. Free cash flow was $2.4 billion in Q3 FY2026, up 15.7% sequentially and 14.7% year over year.

Profitability

Gross margin was 89.3% in FY2025, an increase of 0.2 percentage points over FY2024–FY2025 and 2.6 percentage points over FY2020–FY2025. Operating margin was 36.6% in FY2025, up 5.3 percentage points over FY2024–FY2025 and 3.7 percentage points over FY2020–FY2025. Net margin was 30.0% in FY2025, up 4.1 percentage points over FY2024–FY2025 but down −10.9 percentage points over FY2020–FY2025.

Return on equity was 55.4%, return on assets was 23.9% and return on invested capital was 48.4% in FY2025. In Q3 FY2026, gross margin was 88.7% and operating margin was 34.8%. Industry-median comparisons for margins and returns are not reported for FY2025 or Q3 FY2026.

Balance sheet

Total debt was $6.2 billion, cash and short-term investments were $6.6 billion, and net debt was −$385.0 million in FY2025. Shareholders’ equity was $11.6 billion, working capital was −$37.0 million and book value per share was $27.28 in FY2025.

Net debt was $724.0 million in Q3 FY2026, compared with −$385.0 million in Q4 FY2025. The current ratio was 0.8× and debt to equity was 0.5× in Q3 FY2026. Total debt increased from $5.6 billion in FY2024 to $6.2 billion in FY2025, while cash and short-term investments declined from $7.9 billion in FY2024 to $6.6 billion in FY2025. Shareholders’ equity declined from $14.1 billion in FY2024 to $11.6 billion in FY2025.

Cash flow & capital return

Operating cash flow was $10.0 billion and capital expenditure was $179.0 million in FY2025. Free cash flow was $9.9 billion in FY2025 and represented 138.2% of net income in FY2025. Operating cash flow grew 24.5% in FY2025 against FY2024, while free cash flow grew 25.1% in FY2025 against FY2024.

Net share repurchases were $10.9 billion in FY2025, compared with $9.1 billion in FY2024. Weighted average shares were 426.0 million shares in FY2025, and the share count changed −11.4% over FY2020–FY2025. Free cash flow was $10.6 billion and operating cash flow was $10.8 billion over the TTM to Q3 FY2026. Dividend figures are not reported for FY2025 or Q3 FY2026.

Valuation

As of September 23, 2026, Adobe’s P/E was 13.4×, lower than its five-year median of 41.4× over the five fiscal years to FY2025 and its ten-year median of 45.6× over the ten fiscal years to FY2025. As of September 23, 2026, its P/S was 3.7×, lower than its five-year median of 10.7× and ten-year median of 12.7× over the respective fiscal-year periods to FY2025.

As of September 23, 2026, P/B was 8.1×, lower than the five-year median of 16.4× and ten-year median of 13.6× over the respective fiscal-year periods to FY2025. As of September 23, 2026, EV/Sales was 3.7× and EV/Cash flow was 9.0×, each lower than their respective five- and ten-year medians to FY2025. Industry-median valuation comparisons are not reported as of September 23, 2026.

What changed since last quarter

Revenue increased 2.15% in Q3 FY2026 against Q2 FY2026 to $6.8 billion in Q3 FY2026, while diluted EPS increased 8.71% to $4.62 in Q3 FY2026. Free cash flow increased 15.7% in Q3 FY2026 against Q2 FY2026 to $2.4 billion in Q3 FY2026. Gross margin declined −0.5 percentage points, while operating margin increased 1.0 percentage point, in Q3 FY2026 against Q2 FY2026.

Against Q3 FY2025, revenue increased 12.9%, diluted EPS increased 10.5% and free cash flow increased 14.7% in Q3 FY2026. Management attributes year-over-year subscription-revenue growth in Q3 FY2026 to strength in Creative Cloud flagship apps, Adobe Experience Manager, agentic web apps, Semrush’s contribution and Acrobat. Management also cites higher compensation, hosting, data-center and advertising costs, lower interest income from lower average cash balances, and a higher effective tax rate as factors affecting Q3 FY2026 results.

Open questions

  • How will the changes in gross and operating margins develop as subscription revenue and related costs evolve?
  • What factors drove the shift from net cash to net debt at the latest quarter end?
  • How will acquisition-related investing activity affect future cash flows and capital allocation?
  • What portion of future revenue growth will come from existing customers versus new customer acquisition?

Sources

This page is for information only. It is not investment advice, a recommendation or an offer to buy or sell any security. Figures come from the sources listed above and may contain errors; verify against the company's filings.