Adobe’s second quarter results were driven by broad-based demand across its creative and digital document solutions, with management highlighting rapid adoption of generative AI features and the integration of productivity tools. CEO Shantanu Narayen attributed performance to expanding use cases among business professionals and consumers, noting that monthly active users across Acrobat, Express, and Creative Cloud applications now exceed 700 million. President of Digital Media David Wadhwani emphasized the growing intersection of creativity and productivity, stating, “The combination of Acrobat and Express can help anyone move from consumption to creation faster with more impactful content than ever before.” Management also pointed to accelerating adoption of AI-powered tools like Acrobat AI Assistant and Firefly, citing their role in driving user engagement and new customer acquisition.
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Adobe (ADBE) Q2 CY2025 Highlights:
- Revenue: $5.87 billion vs analyst estimates of $5.79 billion (10.6% year-on-year growth, 1.5% beat)
- Adjusted EPS: $5.06 vs analyst estimates of $4.97 (1.7% beat)
- Adjusted Operating Income: $2.67 billion vs analyst estimates of $2.62 billion (45.5% margin, 2% beat)
- The company slightly lifted its revenue guidance for the full year to $23.55 billion at the midpoint from $23.43 billion
- Management raised its full-year Adjusted EPS guidance to $20.60 at the midpoint, a 1.2% increase
- Operating Margin: 35.9%, in line with the same quarter last year
- Annual Recurring Revenue: $18.09 billion at quarter end
- Billings: $5.72 billion at quarter end, up 17% year on year
- Market Capitalization: $160.9 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Adobe’s Q2 Earnings Call
- Saket Kalia (Barclays) asked about the integration and pricing model for Acrobat and Express. Management explained that users can access Express features within Acrobat and signaled further integration ahead, with more details to come later in the year.
- Mark Murphy (JPMorgan) questioned the impact of copyright concerns and content safety in AI-generated media. Management emphasized Adobe’s focus on “commercially safe” models, contributor compensation, and the long-term advantage of transparent training data.
- Kirk Materne (Evercore ISI) inquired about initial customer response to Creative Cloud Pro and its rollout schedule. Management said early feedback is positive, but full adoption will occur as existing subscriptions renew, with further rollout planned for additional regions and the enterprise segment.
- Tyler Radke (Citi) asked about the pace of generative AI usage versus monetization. Management noted significant user engagement and stated monetization is ahead of internal targets, but acknowledged that much of the financial upside is still ahead.
- Alex Zukin (Wolfe Research) raised competitive pressures in web/mobile creative tools and the role of partnerships with advertising platforms. Adobe described its approach of integrating Express and Firefly across business and enterprise channels while deepening integrations with third-party ad platforms.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace of global rollout for new Firefly and Creative Cloud Pro offerings, (2) enterprise adoption and upsell of GenStudio and Firefly automation services, and (3) user engagement trends across AI-powered features within Acrobat and Express. Progress in integrating third-party AI models and forming new marketing platform partnerships will also be key indicators of Adobe’s ability to sustain growth.
Adobe currently trades at $380.50, down from $414.02 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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