20250314-招银国际-Inline_1QFY25_results__AI_standalone_products_ARR_to_double_by_end-FY25_6页_1mb

Adobe (ADBE US) Summary

Core Content and Key Highlights

Adobe (ADBE US) reported its 1QFY25 financial results, showing strong performance with total revenue increasing by 11% YoY to US$5.71bn in constant currency, and non-GAAP net income rising by 9% YoY to US$2.22bn, both in line with consensus estimates. The company reaffirmed its FY25 financial targets and provided total revenue guidance for 2QFY25 of US$5.77-5.82bn (+9-10% YoY), also matching the consensus.

Adobe emphasized the impact of AI on its business, noting that AI-first standalone and add-on applications, such as Acrobat AI Assistant and Firefly App, achieved over US$125mn ARR by end-1QFY25 and expect to double this by the end of FY25, representing about 1% of total revenue. Beyond incremental ARR, AI is also driving user adoption and upselling of core Adobe products. For instance, Photoshop and Lightroom Gen AI MAUs accounted for 35% and 30% of total MAUs, respectively, and Firefly users generated over 20bn assets.

The Digital Media segment saw 11% YoY revenue growth to US$4.23bn, with ARR up 13% YoY to US$17.63bn. Digital Experience revenue increased by 9% YoY to US$1.41bn, attributed to Adobe Experience platform and native applications, with subscription revenue up 50% YoY.

Adobe has also revised its earnings forecast for FY25–FY27, slightly lowering it by 0–1%, and adjusted its target price to US$629.0, based on a 32x FY25E non-GAAP P/E. The BUY rating is maintained.

Financial Overview

Revenue

• FY23A: US$19,409mn
• FY24A: US$21,505mn
• FY25E: US$23,429mn
• FY26E: US$25,435mn
• FY27E: US$27,489mn
• YoY growth: 10.2%, 10.8%, 8.9%, 8.6%, 8.1%

Non-GAAP Adjusted Net Profit

• FY23A: US$7,377.0mn
• FY24A: US$8,281.0mn
• FY25E: US$8,787.1mn
• FY26E: US$9,571.8mn
• FY27E: US$10,619.9mn

EPS (Adjusted)

• FY23A: US$15.70
• FY24A: US$18.12
• FY25E: US$19.66
• FY26E: US$22.26
• FY27E: US$25.29

Consensus EPS

• FY23A: US$15.70
• FY24A: US$18.12
• FY25E: US$20.39
• FY26E: US$23.00
• FY27E: US$25.52

Valuation and Guidance

• Target Price: US$629.0 (down from US$634.50)
• Valuation per share: US$629.0 based on 32x FY25E non-GAAP P/E
• Current Price: US$438.60
• Up/Downside: 43.4%
• Market Cap: US$196,054.2mn
• Avg 3 mths t/o: US$1,588.0mn
• 52w High/Low: US$586.55/US$405.92
• Total Issued Shares: 447.0mn

Shareholding Structure

• The Vanguard Group: 8.9%
• BlackRock: 8.4%

Share Performance

Business Forecasts

Valuation Table

Valuation Comparison (SaaS)

Analyst Certification and Ratings

• Ratings:
  • BUY: Stock with potential return of over 15% over next 12 months
  • HOLD: Stock with potential return of +15% to -10% over next 12 months
  • SELL: Stock with potential loss of over 10% over next 12 months
  • OUTPERFORM: Industry expected to outperform the relevant broad market benchmark
  • MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark
  • UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark

Share Repurchase

Adobe has accelerated its share repurchase from 4.6mn shares in 4QFY24 to 7.0mn shares (US$3.25bn, ~2% of market cap) in 1QFY25. The company is supported by strong cash flow and may continue repurchasing shares if it believes the company is undervalued.

Analysts and Contact Information

• Saiyi HE, CFA: (852) 3916 1739 | hesaiyi@cmbi.com.hk
• Wentao LU, CFA: luwentao@cmbi.com.hk
• Ye TAO, CFA: franktao@cmbi.com.hk
• Joanna Ma: (852) 3761 8838 | joannama@cmbi.com.hk

Disclaimer

• The report is for informational purposes only and is not investment advice.
• CMBIGM does not provide individually tailored investment advice.
• The value of investments is uncertain and may fluctuate based on market conditions.
• The research analyst certifies that the views expressed accurately reflect personal views and no compensation is tied to the report.
• The report may not be reproduced or distributed without prior written consent.