Adobe Inc Delivers Solid FY25 Results as Semrush Acquisition Strengthens Marketing Portfolio December 16, 2025

Strong Financial Performance Meets Expectations

Adobe Inc. has delivered solid fiscal year 2025 results in line with analyst expectations, with revenue and adjusted profit after tax and minority interest reaching 101% and 100% of forecasts, respectively. The company’s fourth-quarter 2025 adjusted profit after tax and minority interest grew 8% year-on-year to US$2.3 billion, driven by stronger revenue performance and improved operating leverage across its business segments.

Company Overview and Market Position

Adobe Inc operates as a leading software company specializing in creative and marketing solutions for professionals and enterprises. The company’s core business revolves around subscription-based services, positioning it as a dominant player in the digital content creation and marketing technology sectors.

Strategic Acquisition and Forward Guidance

Looking ahead to the first quarter of fiscal year 2026, Adobe has provided optimistic guidance, with adjusted earnings per share expected to be US$5.85 to US$5.90, representing 16% year-over-year growth. Revenue is projected to reach US$6.25 to US$6.30 billion, marking 10% year-on-year growth. This growth is expected to be driven primarily by a 10% increase in Creative and Marketing Professionals Subscription revenue, forecast to reach US$4.3 to US$4.33 billion.

The company’s strategic US$1.9 billion acquisition of Semrush is anticipated to close in the first half of fiscal year 2026, with minimal earnings-per-share impact in the initial year, before becoming accretive thereafter. This acquisition is expected to strengthen Adobe’s marketing capabilities and expands its addressable market.

Investment Outlook and Recommendation

Phillip Securities Research maintains a BUY recommendation for Adobe Inc, though with a revised DCF target price of US$487, down from the previous US$560. For fiscal year 2026, analysts expect 10% revenue growth and 6% earnings-per-share growth, supported by increased adoption of artificial intelligence and higher subscription revenue.

The research firm retains a 7.3% weighted average cost of capital but has lowered the terminal growth rate to 3.5% from 4%, reflecting increased competition from generative AI solutions among smaller customers. However, risks remain limited for enterprise clients utilizing Adobe for complex workflows, where third-party models complement rather than compete with the platform.

Frequently Asked Questions

Q: What were Adobe’s FY25 financial results compared to expectations?

A: Adobe’s FY25 results met expectations with revenue and adjusted PATMI at 101% and 100% of forecasts, respectively. The 4Q25 adjusted PATMI increased 8% year over year to US$2.3 billion.

Q: What is Adobe’s guidance for 1Q26?

A: Adobe expects adjusted EPS of US$5.85-5.90 (16% YoY growth) on revenue of US$6.25-6.30 billion (10% YoY growth), with Creative & Marketing Professionals Subscription revenue growing 10% to US$4.3-4.33 billion.

Q: When will the Semrush acquisition close, and what is its expected impact?

A: The US$1.9 billion Semrush acquisition is expected to close in the first half of FY26 with minimal EPS impact in the first year but will be accretive thereafter.

Q: What is Phillip Securities Research’s recommendation and target price?

A: Phillip Securities maintains a BUY recommendation with a DCF target price of US$487, down from the previous US$560.

Q: What are the expected growth rates for FY26?

A: For FY26, analysts expect 10% revenue growth and 6% EPS growth, supported by rising AI adoption and higher subscription revenue.

Q: What factors led to the lower target price?

A: The lower target price reflects a reduced terminal growth rate to 3.5% from 4% due to increased competition from generative AI among smaller customers, while maintaining a 7.3% WACC.

Q: What risks does Adobe face from AI competition?

A: Risks remain limited for enterprise clients using Adobe for complex workflows, where third-party AI models complement the platform rather than compete directly with it.

This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.

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