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Adobe Q3 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise
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Key Takeaways
Adobe posted Q2 EPS of $5.31, up 14.2% year over year, on revenues of $5.99 billion.
Subscription sales drove 96.7% of total revenue, led by Digital Media and Experience growth.
Q4 guidance sees up to $6.13B in revenues and FY25 EPS between $20.80 and $20.85.
Adobe (ADBE - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of $5.31 per share, beating the Zacks Consensus Estimate by 2.71% and increasing 14.2% year over year.
Total revenues were $5.99 billion, which beat the consensus mark by 1.50% and increased 10.7% year over year on a reported basis and 10% on a constant-currency (cc) basis.
Adobe shares were up 3% at the time of writing this article. ADBE dropped 21.2% year to date, underperforming the Zacks Computer and Technology sector’s 18.2% and the Zacks Computer Software industry’s 19.3%.
ADBE’s Top Line in Detail
Subscription revenues were $5.79 billion (which accounted for 96.7% of the total revenues), up 11.8% on a year-over-year basis. Product revenues totaled $68 million (1.1% of the total revenues), down 17.1% year over year. Services and other revenues were $129 million (2.2% of the total revenues), down 11.6% year over year.
The Digital Media segment’s revenues were $4.46 billion, up 12% year over year on a reported basis and 11% in cc basis. Digital Experience revenues of $1.48 billion increased 11% year over year, both on a reported and cc basis. Publishing and Advertising revenues of $50 million compared with $60 million in the year-ago quarter.
Business Professionals and Consumers’ subscription revenue was $1.65 billion, which represents 15% year-over-year growth on a reported basis and 14% at cc. Digital Media’s annualized recurring revenues (“ARR”) were $18.59 billion at the end of the fiscal third quarter of 2025, representing 11.7% year-over-year growth.
Creative and Marketing Professionals Group subscription revenues were $4.12 billion, which represents 11% year-over-year growth on a reported basis and 10% at cc.
Digital Experience Cloud subscription revenues were $1.37 billion, up 11% year over year, both on a reported and a cc basis.
ADBE Q3 Operating Details
Adobe reported third-quarter fiscal 2025 GAAP gross margin of 89.3%, which contracted 50 basis points (bps) on a year-over-year basis.
Operating expenses were $3.17 billion, up 10.9% year over year. As a percentage of total revenues, the figure increased 10 bps year over year to 53%.
The adjusted operating margin was 46.3%, which contracted 20 bps year over year.
ADBE’s Balance Sheet & Cash Flow
As of Aug. 29, 2025, the cash and short-term investment balance was $5.94 billion, up from $5.71 billion as of May 30. Long-term debt, as of Aug. 29, was $6.2 billion compared with $6.17 billion as of May 30.
Cash generated from operations was $2.2 billion in the reported quarter compared with $2.19 billion in the previous quarter.
Remaining Performance Obligations were $20.44 billion, and Current Remaining Performance Obligations were 67%.
Adobe repurchased 8 million shares in the third quarter of fiscal 2025.
Adobe Offers Positive Q4 and FY25 Guidance
For the fourth quarter of fiscal 2025, Adobe expects total revenues between $6.075 billion and $6.125 billion. Adobe expects Digital Media revenues between $4.53 billion and $4.56 billion. The Digital Experience segment’s revenues are expected to be between $1.495 billion and $1.515 billion. Digital Experience Subscription revenues are expected to be in the $1.395-$1.41 billion range.
Non-GAAP operating margin is expected to be roughly 45.5%. Adobe expects fiscal fourth-quarter non-GAAP earnings between $5.35 and $5.40 per share.
For fiscal 2025, Adobe expects total revenues between $23.65 billion and $23.70 billion.
Adobe expects Digital Media revenues between $17.56 billion and $17.59 billion. Digital Media’s ending ARR growth rate is expected to be 11.3% year over year. The Digital Experience segment’s revenues are expected to be between $5.84 billion and $5.86 billion. Digital Experience Subscription revenues are expected to be in the $5.39-$5.41 billion range.
Non-GAAP operating margin is expected to be roughly 45.5%. Adobe expects fiscal 2025 non-GAAP earnings between $20.80 and $20.85 per share.
Zacks Rank & Stocks to Consider
Currently, ADBE carries a Zacks Rank #4 (Sell).
Astera Labs (ALAB - Free Report) , Amphenol (APH - Free Report) and Reddit (RDDT - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
Image: Bigstock
Adobe Q3 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise
Key Takeaways
Adobe (ADBE - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of $5.31 per share, beating the Zacks Consensus Estimate by 2.71% and increasing 14.2% year over year.
Total revenues were $5.99 billion, which beat the consensus mark by 1.50% and increased 10.7% year over year on a reported basis and 10% on a constant-currency (cc) basis.
Adobe shares were up 3% at the time of writing this article. ADBE dropped 21.2% year to date, underperforming the Zacks Computer and Technology sector’s 18.2% and the Zacks Computer Software industry’s 19.3%.
ADBE’s Top Line in Detail
Subscription revenues were $5.79 billion (which accounted for 96.7% of the total revenues), up 11.8% on a year-over-year basis. Product revenues totaled $68 million (1.1% of the total revenues), down 17.1% year over year. Services and other revenues were $129 million (2.2% of the total revenues), down 11.6% year over year.
Adobe Inc. Price, Consensus and EPS Surprise
Adobe Inc. price-consensus-eps-surprise-chart | Adobe Inc. Quote
The Digital Media segment’s revenues were $4.46 billion, up 12% year over year on a reported basis and 11% in cc basis. Digital Experience revenues of $1.48 billion increased 11% year over year, both on a reported and cc basis. Publishing and Advertising revenues of $50 million compared with $60 million in the year-ago quarter.
Business Professionals and Consumers’ subscription revenue was $1.65 billion, which represents 15% year-over-year growth on a reported basis and 14% at cc. Digital Media’s annualized recurring revenues (“ARR”) were $18.59 billion at the end of the fiscal third quarter of 2025, representing 11.7% year-over-year growth.
Creative and Marketing Professionals Group subscription revenues were $4.12 billion, which represents 11% year-over-year growth on a reported basis and 10% at cc.
Digital Experience Cloud subscription revenues were $1.37 billion, up 11% year over year, both on a reported and a cc basis.
ADBE Q3 Operating Details
Adobe reported third-quarter fiscal 2025 GAAP gross margin of 89.3%, which contracted 50 basis points (bps) on a year-over-year basis.
Operating expenses were $3.17 billion, up 10.9% year over year. As a percentage of total revenues, the figure increased 10 bps year over year to 53%.
The adjusted operating margin was 46.3%, which contracted 20 bps year over year.
ADBE’s Balance Sheet & Cash Flow
As of Aug. 29, 2025, the cash and short-term investment balance was $5.94 billion, up from $5.71 billion as of May 30. Long-term debt, as of Aug. 29, was $6.2 billion compared with $6.17 billion as of May 30.
Cash generated from operations was $2.2 billion in the reported quarter compared with $2.19 billion in the previous quarter.
Remaining Performance Obligations were $20.44 billion, and Current Remaining Performance Obligations were 67%.
Adobe repurchased 8 million shares in the third quarter of fiscal 2025.
Adobe Offers Positive Q4 and FY25 Guidance
For the fourth quarter of fiscal 2025, Adobe expects total revenues between $6.075 billion and $6.125 billion. Adobe expects Digital Media revenues between $4.53 billion and $4.56 billion. The Digital Experience segment’s revenues are expected to be between $1.495 billion and $1.515 billion. Digital Experience Subscription revenues are expected to be in the $1.395-$1.41 billion range.
Non-GAAP operating margin is expected to be roughly 45.5%. Adobe expects fiscal fourth-quarter non-GAAP earnings between $5.35 and $5.40 per share.
For fiscal 2025, Adobe expects total revenues between $23.65 billion and $23.70 billion.
Adobe expects Digital Media revenues between $17.56 billion and $17.59 billion. Digital Media’s ending ARR growth rate is expected to be 11.3% year over year. The Digital Experience segment’s revenues are expected to be between $5.84 billion and $5.86 billion. Digital Experience Subscription revenues are expected to be in the $5.39-$5.41 billion range.
Non-GAAP operating margin is expected to be roughly 45.5%. Adobe expects fiscal 2025 non-GAAP earnings between $20.80 and $20.85 per share.
Zacks Rank & Stocks to Consider
Currently, ADBE carries a Zacks Rank #4 (Sell).
Astera Labs (ALAB - Free Report) , Amphenol (APH - Free Report) and Reddit (RDDT - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
Astera Labs, Amphenol and Reddit each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Astera Labs, Amphenol and Reddit is currently pegged at 47.8%, 20.6% and 34.9%, respectively.