Creative software giant Adobe (NASDAQ: ADBE) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 10.5% year on year to $6.19 billion. Guidance for next quarter’s revenue was better than expected at $6.28 billion at the midpoint, 0.7% above analysts’ estimates. Its non-GAAP profit of $5.50 per share was 1.9% above analysts’ consensus estimates.
Is now the time to buy Adobe? Find out by accessing our full research report, it’s free for active Edge members.
Adobe (ADBE) Q4 CY2025 Highlights:
- Revenue: $6.19 billion vs analyst estimates of $6.11 billion (10.5% year-on-year growth, 1.4% beat)
- Adjusted EPS: $5.50 vs analyst estimates of $5.40 (1.9% beat)
- Adjusted Operating Income: $2.82 billion vs analyst estimates of $2.78 billion (45.6% margin, 1.5% beat)
- Revenue Guidance for Q1 CY2026 is $6.28 billion at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for the upcoming financial year 2026 is $23.40 at the midpoint, in line with analyst estimates
- Operating Margin: 36.5%, up from 34.9% in the same quarter last year
- Free Cash Flow Margin: 50.5%, up from 35.5% in the previous quarter
- Annual Recurring Revenue: $19.2 billion
- Billings: $6.69 billion at quarter end, up 12.3% year on year
- Market Capitalization: $144.1 billion
Company Overview
Originally named after Adobe Creek that ran behind co-founder John Warnock's house, Adobe (NASDAQ: ADBE) develops software products used for digital content creation, document management, and marketing solutions across desktop, mobile, and cloud platforms.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Adobe grew its sales at a 13.1% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Adobe’s recent performance shows its demand has slowed as its annualized revenue growth of 10.7% over the last two years was below its five-year trend. 
This quarter, Adobe reported year-on-year revenue growth of 10.5%, and its $6.19 billion of revenue exceeded Wall Street’s estimates by 1.4%. Company management is currently guiding for a 9.8% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 8.7% over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges.
Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.
Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Adobe’s billings came in at $6.69 billion in Q4, and over the last four quarters, its growth was underwhelming as it averaged 12.6% year-on-year increases. However, this alternate topline metric grew faster than total sales, meaning the company collects cash upfront and then recognizes the revenue over the length of its contracts - a boost for its liquidity and future revenue prospects. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Adobe is efficient at acquiring new customers, and its CAC payback period checked in at 38.4 months this quarter. The company’s relatively fast recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments. 
Key Takeaways from Adobe’s Q4 Results
It was great to see Adobe’s EPS guidance for next quarter top analysts’ expectations. We were also glad its billings outperformed Wall Street’s estimates. Less exciting was that revenue guidance next quarter and EPS guidance for the full year were both just in line. Overall, we think this was still a solid quarter with some key areas of upside. The stock remained flat at $342.41 immediately following the results.
Should you buy the stock or not? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
