Common-Size Income Statement
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Adobe Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2024-11-29), 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27), 10-K (reporting date: 2019-11-29).
- Revenue Composition Trends
- The subscription segment shows a continuous increase in its share of total revenue, rising steadily from 89.47% in 2019 to 95.42% in 2024. Conversely, the product revenue proportion consistently decreases, declining from 5.8% in 2019 to 1.79% in 2024. The services and other revenue category also declines gradually from 4.74% to 2.78% over the same period. This pattern indicates a strategic shift or market preference favoring subscription-based offerings.
- Cost of Revenue and Gross Profit
- The cost of revenue as a percentage of revenue decreases from 14.97% in 2019 to 10.96% in 2024, suggesting improved cost efficiency or economies of scale. Correspondingly, the gross profit margin improves from 85.03% to 89.04%, reflecting stronger profitability at the gross level.
- Operating Expenses Analysis
- Research and development (R&D) expenses relative to revenue show a slight upward trend, increasing from 17.28% in 2019 to 18.34% in 2024, indicating sustained or growing investment in innovation. Sales and marketing expenses fluctuate but generally trend downward, dropping from 29.04% to 26.8%, which may imply enhanced marketing efficiency. General and administrative expenses remain relatively stable, hovering around 7% of revenue throughout the period.
- Special Items Impact
- Beginning in 2024, an acquisition termination fee appears, accounting for 4.65% of revenue, significantly impacting operating expenses this year. Additionally, amortization of intangibles steadily decreases from 1.57% to 0.79%, reflecting diminishing intangible asset charges over time.
- Operating Income and Profitability
- Operating income as a percentage of revenue improves from 29.25% in 2019 to a peak of 36.76% in 2021 before declining to 31.35% in 2024. This decline in recent years partly corresponds with increased operating expenses in 2024 due to the acquisition termination fee. Income before income taxes follows a similar trajectory, peaking in 2021 and then moderating.
- Non-Operating Items and Investment Income
- Interest expense consistently decreases over time from 1.41% to 0.79% but with a slight uptick in 2024. Investment gains and losses fluctuate, with net investment income showing small positive percentages overall. Interest income increases notably after 2021, rising from 0.11% to 1.59% by 2024, suggesting increased returns from investments or cash holdings. Foreign exchange losses remain minimal but persist throughout the period.
- Income Tax and Net Income
- The provision for income taxes exhibits variability, with a notable positive benefit recorded in 2020 (8.42%), contrasting with negative provisions in other years. Net income as a percentage of revenue spikes in 2020 at 40.88%, likely influenced by this tax benefit, followed by a decline and stabilization near mid-20% levels in later years. By 2024, net income stands at 25.85% of revenue, indicating ongoing profitability but a reduction from peak levels.
- Summary
- Overall, the financial data depict a company increasingly reliant on subscription revenues with improving gross margins and sustained investment in R&D. Operating efficiency shows mixed results due to special charges in the latest period, impacting profitability. Non-operating income components contribute modestly, with interest income gains over time. Variability in tax provisions influences net income outcomes, with the company maintaining solid profitability throughout.