Adobe Inc. (NASDAQ:ADBE)

Goodwill

The goodwill value shows a generally increasing trend from 10,691 million USD in 2019 to a peak of 12,805 million USD in 2023, followed by a slight decline to 12,788 million USD in 2024. This indicates overall growth in acquisitions or business expansions over the period, with minor adjustment or impairment toward the end.

Customer contracts and relationships

Values fluctuate modestly, starting at 1,219 million USD in 2019, dropping to 958 million USD in 2020, then rising back to around 1,204 million USD from 2022 through 2024. This pattern suggests some revaluation or changes in the customer-related intangible assets but relative stability in the latter years.

Purchased technology

Purchased technology rose from 759 million USD in 2019 to 1,060 million USD in 2022, followed by a decline to 877 million USD by 2024. The initial increase likely reflects investments in technology acquisitions, while the subsequent reduction may reflect amortization or asset disposals.

Trademarks

Trademarks remain relatively stable, fluctuating narrowly between 372 million USD and 384 million USD across the years. This stability suggests a consistent valuation of trademark assets without significant impairment or acquisition activity.

Other intangibles (gross carrying amount)

The gross carrying amount for other intangibles shows variability, decreasing sharply from 2,589 million USD in 2019 to 2,182 million USD in 2020, then increasing to a peak of 2,702 million USD in 2021, followed by gradual decline through 2024 to 2,494 million USD. This indicates some asset reclassifications or acquisitions during the period, with amortization or disposals affecting the latter years.

Accumulated amortization

Accumulated amortization exhibits a progressive increase in absolute value, from -869 million USD in 2019 to -1,712 million USD in 2024. This consistent growth in amortization expenses reflects ongoing consumption of intangible asset value over time, accelerating notably after 2020.

Other intangibles (net)

The net value of other intangibles decreased between 2019 and 2024, from 1,721 million USD down to 782 million USD. Despite gross carrying amount fluctuations, the rising accumulated amortization has led to a sharp reduction in net intangibles, suggesting accelerated amortization or impairment.

Goodwill and other intangibles (combined)

The combined total of goodwill and other intangibles increased from 12,412 million USD in 2019 to a high of 14,488 million USD in 2021, then declined steadily to 13,570 million USD by 2024. This trend indicates that while initial asset growth occurred, possibly due to acquisitions, subsequent amortization and asset writedowns have reduced the overall intangible asset base.

The data reveals several key trends regarding the financial position over the six-year period.

Total Assets

The reported total assets show a consistent upward trend from 20,762 million US dollars in 2019 to 30,230 million US dollars in 2024, indicating overall growth in asset base. In contrast, the adjusted total assets, which remove the effects of goodwill, also rise but at a slower pace, from 10,071 million US dollars in 2019 to 17,442 million US dollars in 2024. The widening gap between reported and adjusted total assets suggests an increasing proportion of goodwill or other intangible assets over the years.

Stockholders' Equity

Reported stockholders' equity grows from 10,530 million US dollars in 2019 to a peak of 16,518 million US dollars in 2023 before declining to 14,105 million US dollars in 2024. This fluctuation may indicate some equity adjustments or losses incurred during the last reported year. Adjusted stockholders’ equity, excluding goodwill, starts at a negative value of -161 million US dollars in 2019, then increases substantially to positive figures around 2,129 to 3,713 million in the subsequent years, though it experiences a decrease to 1,317 million in 2024. This pattern suggests underlying equity stability improving after adjustment, with some volatility in recent years.

Comparative Insights

The divergence between reported and adjusted values highlights the significance of goodwill and intangible assets in the financial structure. While reported figures suggest robust growth, the adjusted figures provide a more conservative perspective on tangible asset and equity expansion. The decrease in both reported and adjusted equity in 2024 could warrant further investigation into specific transactions, impairments, or other financial events impacting equity.

The data reveals noteworthy trends in the company's financial performance over the analyzed periods, both on a reported basis and after adjustment for goodwill.

Total Asset Turnover

The reported total asset turnover exhibits a gradual increase from 0.54 in late 2019 to 0.71 by the end of 2024, indicating an improvement in asset utilization efficiency over time. The adjusted total asset turnover, which considers goodwill, presents higher values throughout the periods and follows a somewhat fluctuating but generally upward trajectory, peaking at 1.23 in 2024. This suggests that when excluding goodwill effects, the company's assets have generated even greater revenue relative to their book value.

Financial Leverage

The reported financial leverage ratio shows a modest variation, decreasing slightly from 1.97 in 2019 to 1.8 in 2023 before rising sharply to 2.14 in 2024. The adjusted financial leverage figures present more volatility, increasing significantly from 5.37 in 2020 to an extreme of 11.38 in 2022, then declining to 4.57 in 2023, before rising again to 13.24 in 2024. These substantial fluctuations may point to considerable changes in the capital structure or adjustments related to goodwill impacting the leverage measurement.

Return on Equity (ROE)

Reported ROE demonstrates strong profitability with some fluctuation, rising from 28.03% in 2019 to a peak of 39.66% in 2020, followed by moderate decreases and increases, eventually reaching 39.42% in 2024. Adjusted ROE values are markedly higher and more volatile, ranging from 146.19% in 2023 up to 422.17% in 2024. This considerable disparity highlights the significant impact goodwill has on equity returns when adjusted, possibly reflecting the effects of intangible asset valuations on reported equity.

Return on Assets (ROA)

The reported ROA remains relatively stable across the years, moving from 14.22% in 2019 to a higher level near 18.39% in 2024. Adjusted ROA is consistently more elevated than reported figures, with values fluctuating between 29.31% and around 33% through most periods, slightly declining to 31.88% in 2024. This suggests the company maintains robust asset efficiency even after goodwill adjustment, though the adjustment tends to magnify the performance metrics.

In summary, the adjusted data excluding goodwill generally amplifies financial performance ratios, showcasing stronger asset turnover, greater leverage volatility, and significantly higher returns on equity and assets compared to reported figures. The company appears to have gradually improved asset utilization and maintained solid profitability, while the fluctuations in adjusted leverage and returns may merit further examination of goodwill implications and capital structure changes.

The analysis of the financial data reveals distinct trends in the company's asset base and efficiency ratios over the observed periods.

Total Assets

Reported total assets demonstrate a consistent upward trend, increasing from approximately 20.8 billion US dollars in late 2019 to over 30.2 billion US dollars by late 2024. This signifies steady asset growth over the six-year span.

Adjusted total assets, which exclude goodwill, also show a significant rise from about 10.1 billion US dollars in 2019 to approximately 17.4 billion US dollars in 2024. Although growth is apparent, the adjusted figures are consistently lower than the reported totals, reflecting the impact of goodwill on reported asset values.

Total Asset Turnover

The reported total asset turnover ratio maintains a generally positive trajectory, beginning at 0.54 in 2019 and rising to 0.71 by 2024. This indicates an improving efficiency in utilizing assets to generate sales, with notable increases during 2021-2022 and sustained improvement thereafter.

The adjusted total asset turnover ratio exhibits more fluctuation but remains higher than the reported counterpart throughout, starting at 1.11 in 2019, dipping to 0.95 in 2020, and then recovering to a peak of 1.23 in 2024. This pattern suggests that when removing goodwill effects, the company appears more effective at generating revenue from its tangible and non-goodwill assets, with some volatility around the 2020 period.

In summary, the company has experienced consistent growth in both reported and adjusted asset bases over the analyzed timeframe. The efficiency measures, as indicated by asset turnover ratios, improve overall, with higher turnover after adjusting for goodwill. These trends imply enhanced asset utilization and operational efficiency in recent years, despite some short-term variations.

The data reveals distinct trends in both reported and goodwill adjusted financial metrics over the six-year period. Total assets and stockholders' equity show consistent growth when reported, yet exhibit greater volatility under adjusted figures, reflecting the impact of goodwill adjustments.

Total Assets

Reported total assets steadily increase from US$20,762 million in late 2019 to US$30,230 million in late 2024, indicating asset expansion over the period, though growth is somewhat uneven between 2021 and 2022 when assets slightly decrease.

Adjusted total assets also rise overall, from US$10,071 million in 2019 to US$17,442 million in 2024, but differences relative to reported figures highlight substantial goodwill deductions. The adjusted asset base fluctuates, including a decrease between 2021 and 2022 before a rebound thereafter.

Stockholders’ Equity

Reported equity increases from US$10,530 million in 2019 to a peak of US$16,518 million in 2023, followed by a decline to US$14,105 million in 2024. This reflects growth with some contraction in the latest year.

In contrast, adjusted equity starts negative at -US$161 million in 2019, moves into positive territory by 2020, then fluctuates noticeably around the US$1,200 to US$3,700 million range. The adjusted equity trend signals significant goodwill impairment or amortization impacts affecting net equity values.

Financial Leverage

Reported financial leverage ratios decline from 1.97 in 2019 to 1.8 in 2023 but rise to 2.14 in 2024, showing mostly stable but slightly increasing leverage after an initial improvement.

Adjusted financial leverage, available from 2020 onwards, shows considerable volatility: initially at 5.37 in 2020, peaking at 11.38 in 2022, dropping to 4.57 in 2023, and climbing again to 13.24 in 2024. This reflects greater variability in the capital structure when goodwill is excluded, indicating fluctuations in debt relative to adjusted equity that may affect financial risk assessment.

The analysis of the reported and goodwill-adjusted financial data over the six-year period reveals distinct trends and variations in equity and return on equity (ROE) metrics.

Stockholders' Equity

Reported stockholders' equity shows an overall upward trend from 10,530 million US dollars in 2019 to a peak of 16,518 million in 2023, followed by a decline to 14,105 million in 2024. This progression indicates consistent growth in the company's equity base through most of the period, with a notable reduction in the final year.

In contrast, adjusted stockholders’ equity, which accounts for goodwill adjustments, starts from a negative value of -161 million in 2019, then rises sharply to over 2,500 million in 2020, before fluctuating within a range between 1,264 million and 3,713 million thereafter. This pattern suggests significant goodwill adjustments impacting equity, with positive adjustments improving equity figures but also considerable volatility in the later years.

Return on Equity (ROE)

Reported ROE demonstrates strong performance throughout the period, increasing from 28.03% in 2019 to 39.66% in 2020, then slightly fluctuating around the low to mid-30% range in subsequent years, ending at 39.42% in 2024. The stability and relatively high reported ROE indicate effective use of equity in generating profits over the years.

Adjusted ROE, accounting for goodwill, is markedly more volatile and elevated. It begins from a lack of data in 2019 but exhibits extremely high figures from 2020 onwards, with percentages surpassing 200% and peaking at over 420% in 2024. This extreme volatility and high magnitude suggest that the goodwill adjustment significantly reduces the equity base, causing the equity returns to appear disproportionately large and variable.

Overall, the analysis shows steady growth in reported equity and stable profitability as measured by ROE. However, when adjusted for goodwill, both equity and ROE display substantial volatility, indicating that goodwill has a material impact on capitalization and profitability metrics, which should be carefully considered when evaluating financial health and performance.

The data reveals consistent growth in reported total assets over the analyzed periods, increasing from US$20,762 million in 2019 to US$30,230 million in 2024. This represents a general upward trend in asset accumulation, albeit with a slight plateau between 2021 and 2022 before continuing the growth trajectory. Adjusted total assets, which likely exclude goodwill or other intangible assets, also follow a rising pattern, increasing from US$10,071 million in 2019 to US$17,442 million in 2024. The growth in adjusted assets shows a smoother progression without notable stagnation.

Regarding profitability metrics, the reported Return on Assets (ROA) demonstrates variation over the years. It peaks at 21.66% in 2020, then declines to a range close to 17.5%-18.4% in subsequent years through 2024. This suggests a temporary efficiency improvement in asset utilization in 2020, followed by stabilization at a slightly lower level.

Adjusted ROA values, presumably calculated by excluding goodwill impacts, are significantly higher than reported ROA throughout all periods. Beginning at 29.31% in 2019, adjusted ROA reaches its maximum of 38.84% in 2020, then declines gradually to about 31.88% in 2024. This pattern indicates that operational performance, when adjusted for intangible assets, remains strong but experiences some reduction in returns between 2021 and 2024.

Overall, the financial data suggests robust asset growth alongside strong, though somewhat volatile, profitability performance. The disparity between reported and adjusted figures highlights the impact of intangible assets on financial metrics, with adjusted measures indicating higher efficiency in asset utilization. The trends call for monitoring to understand the factors influencing the dip in profitability after 2020 and the ongoing asset composition changes.

Asset Growth

Both reported and adjusted total assets increase steadily over the six-year span, reflecting expansion in asset base, with adjusted assets growing at a substantial rate and less fluctuation.

Profitability (ROA)

Reported ROA peaks in 2020, then stabilizes slightly lower, while adjusted ROA is consistently higher but shows a gradual decline post-2020, indicating a reduction in returns when excluding goodwill.

Intangible Assets Impact

The difference between reported and adjusted figures reveals significant influence of goodwill on asset base and profitability metrics, emphasizing the importance of adjusted analyses for operational insights.