Common-Size Income Statement
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Adobe Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2025-11-28), 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).
The common-size income statement reveals a significant shift in revenue composition and profitability trends over the analyzed period. A clear trend towards increasing revenue concentration in the subscription segment is observed, while contributions from product and services are declining. Operating income exhibits volatility, and net income demonstrates a complex pattern influenced by tax provisions and non-operating items.
- Revenue Composition
- Subscription revenue consistently increases as a percentage of total revenue, rising from 90.35% in 2020 to 96.36% in 2025. Conversely, product revenue declines steadily, decreasing from 3.94% to 1.37% over the same period. Services and other revenue also exhibits a downward trend, falling from 5.71% to 2.27%. This indicates a strategic shift towards a subscription-based business model.
- Cost of Revenue and Gross Profit
- Cost of revenue as a percentage of revenue generally decreases from 13.38% in 2020 to 10.73% in 2025, suggesting improved cost management or economies of scale. Consequently, gross profit as a percentage of revenue increases from 86.62% to 89.27% over the period, peaking at 89.04% in 2023. However, a slight dip in gross profit margin is observed in 2022.
- Operating Expenses
- Operating expenses initially decrease as a percentage of revenue, from 53.69% in 2020 to 51.43% in 2021. However, they increase significantly in 2024 to 57.69%, largely due to a substantial acquisition termination fee. Excluding this one-time event, operating expenses remain relatively stable, fluctuating between 52.64% and 53.61%. Research and development expenses remain consistently high, around 17-18% of revenue. Sales and marketing expenses also remain substantial, fluctuating around 27-28% of revenue.
- Operating and Net Income
- Operating income as a percentage of revenue fluctuates, peaking at 36.76% in 2021 and declining to 31.35% in 2024, before recovering to 36.63% in 2025. This volatility is influenced by both gross profit trends and operating expense fluctuations. Net income as a percentage of revenue demonstrates a more pronounced pattern, decreasing from 40.88% in 2020 to 27.01% in 2022, increasing to 27.97% in 2023, decreasing to 25.85% in 2024, and recovering to 30.00% in 2025. The (provision for) benefit from income taxes exhibits significant variation, including a negative value in 2021, indicating a benefit rather than an expense.
- Non-Operating Items
- Non-operating income (expense), net, fluctuates considerably, moving from a net expense of -0.47% in 2020 to a net income of 0.88% in 2024, before decreasing to 0.12% in 2025. Investment gains (losses), net, and other income, net, contribute to these fluctuations. Interest income increases significantly in 2023 and 2024, reaching 1.39% and 1.59% of revenue respectively, before decreasing in 2025. Interest expense consistently decreases as a percentage of revenue, from -0.90% to -1.11%.