Adobe Systems Incorporated (ADBE)

“For Q3, we assume non GAAP operating of approximately 44% and a GAAP tax rate of approximately 23% and a non GAAP tax rate of approximately 18%.”

“GAAP EPS of $4.4 to $4.45 and non GAAP EPS of $6.05 to $6.10”

“Creative and marketing professional subscription revenue of $4.61 billion to $4.64 billion”

“Business professionals and consumer subscription revenue of $1.87 billion to $1.89 billion”

“For Q3 FY 26, we are targeting total Adobe revenue of $6.67 billion to $6.72 billion”

“Our extensive customer base, innovative CXO products, and robust pipeline, give us confidence for a seasonally strong second half.”

“Based on our strong first half revenue performance and the inclusion of Semrush, we are pleased to raise our fiscal year revenue and non GAAP EPS targets.”

“We continue to target double digit total ARR growth for Adobe which now includes the Semrush acquisition.”

“Given we will be making more of these changes, in Q3 as it relates to you know, changing the traffic patterns, and we expect our seasonal enterprise strength. The enterprise and everything we are doing around content continues to be an area of strength for us. That will be perhaps a little bit more proportionately in Q4 than it was in, Q4 in the last few years.”

“This shift will come at the cost of short term ARR but will accelerate user acquisition in MAU while building the foundation for long term growth by removing friction from user onboarding, enabling deeper user engagement, and driving stronger lifetime value.”

“Our FY 2026 targets assume a non GAAP operating margin of approximately 45% a GAAP tax rate of approximately 22.5%, and a non GAAP tax rate of approximately 18%.”

“GAAP EPS of $17.9 to $18 and non GAAP EPS of $24.35 to $24.45”

“Total Adobe ending ARR book of business growth of 10.2% year over year compared to our FY 2026 beginning book of business of $25.6 billion.”

“Creative and Marketing Professional subscription revenue of $18.21 billion to $18.27 billion which now includes approximately $280 million from SEMRush.”

“Business Professionals and Consumer subscription revenue of $7.44 billion to $7.48 billion”

“For FY 2026, we are targeting total Adobe revenue of $20.5 billion to $20.6 billion”

“The strategic shift to acquire more freemium customers through Adobe and Firefly, lowers our second half ARR growth expectations from individual subscribers”

“For Q2, we expect non-GAAP operating margin of approximately 44.5% and non-GAAP tax rate of approximately 18%.”

“I don't see any reason why the trends we've seen in the business historically would inflect to drive a different dynamic as it relates to RPO, cRPO and translation to revenue.”

“And frankly, you'll continue to see more partnerships. So stay tuned.”

“In addition, we are reaffirming our FY '26 targets.”

“You can expect to see similar integrations into Copilot, Claude and Gemini as those platforms support integrated application experiences.”

“If you think about the fact that we reaffirmed our targets, I mean, that would imply that we would expect double-digit ending book of business growth for the remaining 3 quarters.”

“We continue to expect total Adobe ARR growth of 10.2% for FY '26.”

“We expect strength for our core Acrobat and CC products and enterprise demand for our CXO solutions, coupled with new MAU growth for Firefly and Express and increasing AI usage and monetization to gain momentum as we move through the year.”

“So I would suspect it will take a few months.”

“I would venture to say, Keith, that we should hopefully see what we had identified as the AI-first sort of book of business. That tripled, but that should be our next billion-dollar business.”

“Looking ahead to FY '26, we're confident in our ability to deliver industry-leading innovation, double-digit ARR growth, and world-class profitability.”

“This total Adobe ARR book of business growth of 10.2% translates to approximately $2.6 billion of growth, which would be our highest beginning of year guide for total net new ARR.”

“Total Adobe ending ARR book of business growth of 10.2% year over year.”

“For FY '26, we're targeting total Adobe revenue of $25.9 to $26.1 billion.”

“We expect the non-GAAP EPS impact of the acquisition to be negligible in the first year post-close and accretive thereafter.”

“This is the foundation for our FY 2026 total Adobe ARR growth target of over 10%, and we're focused on accelerating this momentum beyond FY 2026.”

“We're pleased to once again raise our FY '25 revenue and EPS targets.”

“we are excited that the product will be generally available later this quarter.”

“For Q4, we expect non-GAAP operating margin of approximately 45.5% and a non-GAAP tax rate of approximately 18.5%.”

“Adobe AI influenced ARR surpassed $5 billion and we expect it to continue to rise as a percent of our business.”

“Digital Experience segment revenue of $5.8 to $5.9 billion, Digital Experience subscription revenue of $5.375 to $5.425 billion, GAAP earnings per share of $16.3 to $16.5, and non-GAAP earnings per share of $20.5 to $20.7.”

“For FY 2025, we are now targeting total Adobe revenue of $23.5 to $23.6 billion, Digital Media segment revenue of $17.45 to $17.5 billion, Digital Media ending ARR book of business growth of 11% year over year.”

“Creative Cloud Pro will be released in other geographies over the next few months.”

“We've got a strong point of view about the financial profile throughout the course of the year. Happy to reaffirm guidance, but we're going to drive that with strong operating margins, strong cash flow delivery and be strong capital allocators throughout the year.”

“The year is off to a good start and assuming current macroeconomic conditions, I am pleased to reaffirm our full year guidance for fiscal year 2025.”

“In addition, given Q1 performance, we are pleased to reaffirm our fiscal ‘25 targets.”

“Now as we introduce the video model, which we expect to have in market early next year, that's going to create an opportunity to further tier our creative cloud offerings.”

“For Q1, we expect non-GAAP operating margin of approximately 47% and non-GAAP tax rate of approximately 18.5%.”

“We expect non-GAAP operating margin of approximately 46% and a non-GAAP tax rate of approximately 18.5%.”

“We expect an approximate $200 million headwind to FY2025 revenue as a result of the effect of foreign exchange, and a smaller impact of the continued move to subscriptions from perpetual offerings.”

“We will hope to have record net new ARR in fiscal '24, which I think is a great thing. We gave 1,950 at the end of Q2. We're clearly on track to beat that number, which we take as a positive sign.”

“That underlying strength is going to continue not just in Q3, but it's going to be something that we're able to bet on and grow on going forward because we've got a lot of flow optimizations associated with that.”

“As I said on the prepared remarks, Document Cloud is substantially a subscription business, but now with AI Assistant being available to subscribers and not as directly to perpetual users, we expect that to continue to transition even further.”

“We expect a seasonally strong Q4 and then continued innovation should continue to drive growth.”

“We would expect Creative to again grow when you talk about growth-over-growth, net new ARR in Q4.”

“Our category-leading solutions, robust pipeline, and tremendous scale position us to drive strong growth in the second half, and we are raising our subscription revenue target for the year.”

“We're pleased to raise our annual net new ARR target to $1.95 billion and excited to deliver on our rich product roadmap in the second half.”

“Given this rich product roadmap, focus on execution and customer demand in the first half of the year, we are pleased to raise our annual Digital Media net new ARR, Digital Experience subscription revenue and EPS targets.”

“Digital Media net new ARR of approximately $1.95 billion; Digital Media segment revenue of $15.80 billion to $15.85 billion;”

“For fiscal 2024, given our first half performance, we are now targeting: total Adobe revenue of $21.40 billion to $21.50 billion;”

“As we look at the momentum we're carrying into the back half, we expect to deliver year-over-year growth of Creative net new ARR in Q3 and Q4 and are raising our Digital Media net new ARR target for the fiscal year.”

“We're confident in the targets that we put out there, our ability to meet them. If there's an opportunity to do better, we certainly will.”

“We continue to be bullish about this. So the second part of your question, we are -- as we've said multiple times on the call, we are very excited about all the innovation that's coming out that's just starting to ramp in terms of monetization and/or still in beta on the Creative Cloud side. We expect that to come out in Q3 and we'll start our monetization there. So we continue to feel very confident about the second half acceleration of Creative Cloud.”

“If we look at the guide and we're on track as it relates to the $1.9 billion, and to hopefully exceed that guide.”

“The actions that we're taking right now from both a pricing and a product standpoint on the Creative side will be more apparent in the back half of the year into the end of the year.”

“Customer Experience Management remains an enterprise imperative. And as a leader in the category, we see a robust pipeline as we look into Q2 and beyond.”

“Overall Express adoption is expected to accelerate even further, given the positive reception we're seeing from the mobile beta.”

“You can expect to see the product advances and Express with Firefly on mobile. Firefly Services and AI Assistant in Acrobat drive ARR acceleration in the second half of the year.”

“Clearly, I think there has been a set of questions around the Digital Media ARR and what I'll take is on that and we're extremely confident about how that continues to be a growth business and perhaps the pricing impact was overestimated.”

“It goes to produce the type of sequential RPO progression that we saw Q3 to Q4. Every quarter won't be that large, but the backdrop around that dynamic for the company given the setup we see, it should be another strong year for RPO throughout the year.”

“Second, the impact will be more visible in net new ARR in the back half of FY '24 as we lap the previous pricing actions that I was talking to Keith about from last year.”

“We expect our cash tax rate to improve sequentially in FY '24 by 2 percentage points as the amortization of previously capitalized R&D increases our deductions next year for tax purposes, benefiting our operating cash flows next year.”

“We expect normal seasonality throughout the year with a seasonal step-down for new business into the first quarter, sequential growth from Q1 to Q2, typical Q3 summer seasonality, and a strong finish to the year in Q4.”

“GAAP earnings per share of $13.45 to $13.85. And non-GAAP earnings per share of $17.60 to $18.”

“Too early to really call it with precision, but I see that setup being slightly different. And maybe just a slight headwind versus what we were seeing a year ago.”

“what we are confident is while we continue to invest in that, the scrutiny that Dan and his team have on other expenses, that we can continue to drive top-line growth as well as cash flow and EPS.”

“We're also working on generative AI for other DX applications as well. And at the investor meeting in October, we'll share more details.”

“We're going to start them late in Q4. And we're going to start it in certain geos only. And then, we're going to have a measured rollout in new countries over the course of the next couple of years.”

“that mid-40%s number we think is the right ballpark to think about the margin structure of the company as we continue to drive this technology and leadership.”

“implicit in that guide is an operating margin of around 45.5%.”

“total Adobe revenue of $4.975 billion to $5.025 billion”

“the renewal timing will probably take about three years, given the multi-year contracts that we have in place.”

“Our updated targets for fiscal 2023 demonstrates solid operating margin expansion in the second half as compared to the second half of fiscal 2022.”

“Given the company's performance in the first half of the year and our relentless focus on driving disciplined profitable growth, we're raising our annual fiscal 2023 targets for EPS and net new Digital Media ARR.”

“Given the momentum, we are raising our net new Digital Media ARR and revenue targets for fiscal '23.”

“As a result of our groundbreaking innovation and continued execution, we are pleased to raise total Adobe annual revenue and EPS targets.”

“None of this, we expect to impact our Q3 numbers. And we'll start to see some of it in Q4 but we don't expect it to be material.”

“In Q4, we expect to see year-end strength in customer demand for Digital Experience and Digital Media solutions.”

“While overall demand is strong and win rates remain healthy, as we enter the second half, we are seeing some projects being pushed out in the current enterprise spend environment, which we have reflected in our updated annual targets.”

“We continue to engage in conversations with the Competition and Markets Authority in the U.K., the European Commission and the U.S. Department of Justice as they conduct their regulatory reviews and given the merits of the case, we believe the transaction should close by the end of 2023.”

“For FY '23, we now expect Creative Cloud and Document Cloud to end the year ahead of our previously issued revenue and ARR targets and Digital Experience to be slightly below our previous annual target given the current enterprise spend environment.”

“And maybe just putting it altogether if you look at it and say that, hey, we did $410 million in Q1, we are targeting $420 million of net new ARR in Q2. The question you would have asked us if we hadn’t done this was what are you signaling about the second half of the year. So I think it’s a way of showing that the momentum is there in the business.”

“As a result of the strong performance in Q1 and trajectory of the business, we are raising our fiscal 2023 net new ARR and EPS targets.”

“Given the strong Q1, the demand for our products and our innovation roadmap, we are pleased to raise our FY ‘23 Digital Media net new ARR target.”

“And based on current process timing, we believe the transaction continues to be on track for a close by the end of 2023.”

“In terms of cash taxes, there is a 5-year amortization period around the capitalization of that R&D. So you’ll see a pretty dramatic cash tax step-up initially. But over that 5-year amortization period, it will converge on the reported tax rate.”

“While there is ongoing macro uncertainty, given the massive long-term opportunity in digital and the momentum in our business, we are pleased to reiterate those financial targets.”

“We expect normal seasonality throughout the year, with Q1 being sequentially down and seasonally light for new business, sequential growth from Q1 to Q2, a dip in Q3 on account of summer seasonality, and a strong finish to the year in Q4.”

“We now intend to use cash on hand to repay the current portion of our debt on or before the due date, which we expect will reduce our interest expense in fiscal year ‘23.”

“We expect that the transaction will also be reviewed in the EU. We continue to feel positive about the facts underlying the transaction and expect to receive approval to close the transaction in 2023.”

“Starting in year two post close, you will see our EPS growth rate faster than our overall revenue growth, will be accretive exiting year three and we are poised to deliver a lot of value.”

“I think we continue to believe that our business is resilient and if you look at the initial targets that we are providing, we would expect to have another strong seasonal close to the year.”

“And then by the time we get to year three, I would expect it to be more neutral from an influence standpoint.”

“Think about margins that are maybe 1 point to 2 points delta versus where we would be on a standalone basis.”

“For Q4 we are targeting; total Adobe revenue of approximately $4.52 billion”

“While the transaction is pending, at a minimum we expect to maintain share repurchases sufficient to offset the dilution of equity issuances to Adobe employees.”

“We will quickly pay down any term loan, if necessary, after close and then resume stock repurchases to reduce Adobe’s share count.”

“This year they are expected to add $200 million in net new ARR, surpassing $400 million total ARR by the end of the year, with greater than 150% net dollar retention.”

“In year one and two after closing, the transaction will be dilutive to Adobe’s non-GAAP EPS and we expect it to be breakeven in year three and accretive at the end of year three.”

“Figma is expected to add approximately $200 million in net new ARR this year, surpassing $400 million in total ARR exiting 2022, with greater than 150% net dollar retention rate.”

“So I guess where I'd start is, if you take a look at where we are in, in the first half, I would say the performance of the businesses is really good... we see strength into the back half of the year.”

“So as it relates to our second half pipeline, the confidence remains undiminished. And we're just maybe a little cautious as it relates to timing.”

“And we are on track for another year of record revenue and operating cash flows.”

“When I net both of those together, we would expect to see about $0.60 to $0.70 a share erosion of the earnings power of the company.”

“We're playing that same playbook now with Photoshop as well. And we expect that to be a very productive opportunity.”

“And fourth while demand for our products remains strong, we now expect the second half of the fiscal year to show more pronounced summer seasonality in Q3 and the enterprise business with a stronger sequential increasing Q4.”

“Third, as a result of the continued strength of the U.S. dollar, we are now factoring in an incremental effects headwind of $175 million across Q3 and Q4 revenue.”

“Digital Experience subscription revenue growth of approximately 15% year-over-year, or 19% on an adjusted basis.”

“Digital Experience segment revenue growth of approximately 14% year-over-year, or 17% on an adjusted basis.”

“Digital Media segment revenue growth of approximately 12% year-over-year, or 17% on an adjusted basis.”

“Net New Digital Media ARR of approximately $1.90 billion.”

“Looking ahead, our category leading solutions, strong pipeline and tremendous scale through our partner ecosystem, position us to deliver personalization at scale across every industry and drive strong growth in the second half.”

“We continue to see strong demand for our products in the second half of FY 2022 will continue to win in the digital media business through product innovation across Creative Cloud and Document Cloud, which are targeting a broad growing base of customers.”

“The targets that we set in FA Day a few months ago implied in those – in that framework is an operating margin for the year. And so I think you will see that unfold throughout the rest of the year.”

“So, we expect this to continue through the year in terms of our momentum.”

“And so when I net all of that out on a go-forward basis, you have got about an $0.08 per share headwind in each quarter.”

“And then when I look at the share repurchase activity, clearly the company took advantage of the current environment. And that’s going to create about a $0.02 a share benefit each quarter this year versus where we were at FA Day.”

“That’s about $0.06 a share per quarter throughout the year.”

“That’s about a $0.04 a share headwind per quarter for the balance of the year, Q2 through Q4.”

“And so we expect to see strength in the second half of the year and certainly beyond that.”

“The impact of this, we think, for Q2 will be fairly minimal because it takes time to roll this out globally, and it takes time for customers to go through their renewal cycles where their prices change. But we expect it to have a more significant impact and build-out in Q3 and Q4.”

“As the world reopens, we expect to increase our travel and facilities expenses.”

“We expect Digital Experience bookings to show continued momentum in the second half with a traditional strong Q4 finish.”

“In addition, we expect ARR contributions to increase sequentially in Q3 and Q4 from a new offering and pricing structure which starts late in Q2.”

“In Digital Media, we expect strong second half ARR performance across Document Cloud and Creative Cloud, including continued strength of emerging businesses like Acrobat Web, Frame.io, Substance and Creative Cloud Express.”

“And clearly, we factored that into our guidance for fiscal 2022, which is the strongest ARR guide that we've ever guided to.”

“as we think about 2022, we in the prepared comments talked about as the world begins to open up, we're going to get on airplanes, we're going to spend time with customers, you'll see some of the facilities costs come back”

“As we take a look at FX and we think about the currency moves... As we look forward into the next year, it creates about a one-point headwind given the recent moves that we've seen over the last couple of weeks”

“digital experience segment revenue growth of approximately 14% year-over-year or 17% on an adjusted basis”

“the math around the return to a 52-week fiscal year is expected to be a two-point headwind on our full-year, FY'22 growth rates and a seven-point headwind in Q1.”

“While many of our employees continue to work from home, we expect these expenses to ramp throughout FY 2022.”

“The recent U.S. dollar strength is expected to result in a headwind to our reported revenue and growth rates for fiscal year 2022.”

“we had originally, I think said something like Workfront will do a 140. You're a 150 million in revenue for FY 21. And then I think we've said that it's on track to significantly beat that and that continues to be the case.”

“Given Adobe's year-to-date performance and our Q4, we are clearly on track to exceed our updated annual targets for fiscal 2021 provided in March.”

“But we expect those expenses to come back in a Phase reentering out maybe a little slower than we originally thought when we talked about the second half,”

“The majority of our employees continue to work from home, while the return to business travel is expected to ramp slowly. And we expect to further ramp our hiring in Q4.”