Adobe Q2 2025: AI-Fueled Beat, Record Revenue, Guidance Raised
Adobe posted another record quarter as AI features gained traction across its product suite. Revenue and adjusted EPS topped expectations, free cash flow stayed strong, and guidance moved higher. Shares were choppy after hours following a sharp run from April lows.
Key metrics (Q2 FY2025)
- Revenue: $5.87B (+11% YoY) - beat expectations; prior-year Q2: $5.31B
- Adjusted EPS: $5.06 (+13% YoY) - beat expectations
- Operating cash flow: $2.19B (+13% YoY); Free cash flow: $2.15B (~37% FCF margin)
- Digital Media ARR: $18.09B (+12% YoY) vs. $16.14B
Where the growth is coming from
Both core segments-Digital Media (Creative Cloud, Acrobat) and Digital Experience (Experience Cloud)-delivered double-digit growth. AI adoption is lifting engagement and paid conversions across the portfolio.
- Acrobat link sharing monthly active users grew >20% YoY.
- Use of generative AI features in Adobe Express tripled.
- Firefly traffic rose ~30% sequentially; paid subscriptions roughly doubled.
Guidance and setup
Q3 outlook calls for revenue of $5.875B-$5.925B and adjusted EPS of $5.15-$5.20, both above consensus and implying another record quarter. The full-year view is also slightly ahead of Street estimates.
The stock trades at under 20x forward earnings with double-digit top-line growth. Any acceleration from AI monetization could reset expectations and support multiple expansion.
Market reaction
Post-print trading was volatile: the stock jumped as much as 6% right after the release, then faded to about -1.3% in after-hours by 4:25 p.m. The move likely reflects a 25% rebound since April and a beat that, while positive, was modest. Commentary from the earnings call could still swing sentiment.
What to watch next (for finance teams)
- AI monetization: Firefly paid conversions, Express AI usage, and Acrobat engagement translating into ARR and seat expansion.
- Net new ARR and retention: Pace of net adds in Digital Media and net retention in Digital Experience.
- Margins vs. AI spend: Durability of a ~37% FCF margin as compute and model investments scale.
- Pricing and packaging: Uptake of AI-linked plans and willingness to pay across SMB and enterprise cohorts.
- Cash deployment: Balance between buybacks, organic investment, and potential M&A.
For the latest figures and call materials, visit Adobe Investor Relations.
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