Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Adobe Inc., economic profit calculation
US$ in millions
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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 7,363 – 20.04% × 22,203 = 2,914
The analysis of economic profit reveals a period of significant volatility in value creation, characterized by a strong peak in 2021, a subsequent contraction through 2024, and a robust recovery in 2025. The overall financial performance is dictated by the interplay between operating profitability and the substantial cost of capital required to sustain the invested base.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability experienced an initial surge, peaking at 6,201 million US$ in 2021. This was followed by a gradual downward trend over the next three years, reaching a low of 5,235 million US$ in 2024. However, a sharp increase is observed in 2025, with NOPAT rising to 7,363 million US$, indicating a strong recovery in core operational efficiency.
- Cost of Capital and Invested Capital
- The cost of capital remained remarkably stable throughout the period, fluctuating narrowly around the 20% mark. Simultaneously, invested capital grew from 18,837 million US$ in 2020 to a peak of 24,970 million US$ in 2023. A strategic reduction in invested capital occurred between 2023 and 2025, ending at 22,203 million US$, which suggests an optimization of the asset base.
- Economic Profit Dynamics
- Economic profit exhibited extreme variance, moving from 220 million US$ in 2020 to a high of 1,872 million US$ in 2021. A significant decline occurred between 2022 and 2024, where economic profit fell to 209 million US$, suggesting that NOPAT barely exceeded the capital charge during this interval. This trend reversed sharply in 2025, with economic profit reaching a period high of 2,914 million US$. This result is attributed to the combination of the highest recorded NOPAT and a reduction in the total invested capital base.
AI Ask an analyst for more
Net Operating Profit after Taxes (NOPAT)
Adobe Inc., NOPAT calculation
US$ in millions
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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 438 × 3.30% = 14
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 277 × 21.00% = 58
7 Addition of after taxes interest expense to net income.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 306 × 21.00% = 64
9 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) exhibited considerable fluctuation over the observed period. While net income generally increased, NOPAT presented a more complex trajectory, indicating shifts in operational efficiency and cost structures relative to tax obligations.
- Overall Trend
- From 2020 to 2025, NOPAT demonstrated an initial increase, followed by a period of relative stability, and then a substantial rise. The period began with a NOPAT of US$4,082 million in 2020, peaking at US$6,201 million in 2021 before declining to US$5,690 million in 2022. A further decrease to US$5,413 million was noted in 2023, followed by US$5,235 million in 2024. A significant increase to US$7,363 million was observed in 2025.
- Comparison to Net Income
- A consistent difference between net income and NOPAT is apparent throughout the period. NOPAT consistently reports a lower value than net income, reflecting the impact of items such as depreciation, amortization, and other non-cash charges, as well as the effects of accounting for operating leases. The gap between net income and NOPAT varied annually, suggesting changes in the composition of earnings.
- Year-over-Year Changes
- The largest year-over-year increase in NOPAT occurred between 2020 and 2021, with an increase of US$2,119 million. The most substantial decline was observed between 2021 and 2022, decreasing by US$511 million. The period from 2023 to 2024 showed a modest decrease of US$78 million, while the final period from 2024 to 2025 demonstrated a substantial increase of US$2,128 million.
- Recent Performance
- The most recent two years, 2024 and 2025, show a notable shift. After a slight decrease in 2024, NOPAT experienced a significant increase in 2025, exceeding the previous peak observed in 2021. This suggests potential improvements in operational performance or changes in the tax environment during that period.
The fluctuations in NOPAT warrant further investigation to determine the underlying drivers. Analyzing changes in operating expenses, revenue growth, and tax rates would provide a more comprehensive understanding of these trends.
AI Ask an analyst for more
Cash Operating Taxes
Adobe Inc., cash operating taxes calculation
US$ in millions
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 provision for (benefit from) income taxes exhibited considerable fluctuation over the observed period. Beginning with a significant benefit of approximately negative $1.084 billion in 2020, the provision shifted to a positive value of $883 million in 2021, and continued to increase to $1.252 billion in 2022 and $1.371 billion in 2023. This trend persisted into 2024, remaining stable at $1.371 billion, before increasing further to $1.604 billion in 2025.
Cash operating taxes demonstrated a consistent upward trend throughout the period. Starting at $435 million in 2020, these taxes increased to $710 million in 2021, $943 million in 2022, and a substantial rise to $1.761 billion in 2023. The growth continued, albeit at a slightly moderated pace, reaching $1.795 billion in 2024 and $2.112 billion in 2025.
- Provision for Income Taxes Trend
- The initial benefit in 2020 likely reflects tax loss carryforwards or other tax planning strategies. The subsequent shift to positive provisions indicates increasing profitability and a reduced reliance on such strategies. The consistent increases from 2021 through 2025 suggest sustained and growing taxable income.
- Cash Operating Taxes Trend
- The steady increase in cash operating taxes directly correlates with the increasing provision for income taxes, but also suggests a growing tax burden as a percentage of pre-tax income. The magnitude of the increase in cash taxes is greater than the increase in the provision, potentially indicating changes in deferred tax assets or liabilities.
- Relationship between Provision and Cash Taxes
- A divergence exists between the provision for income taxes and cash operating taxes. While both generally trend upwards, the cash taxes consistently represent a smaller proportion of the total tax expense recognized in the income statement. This difference is typical, as the provision includes both current and deferred tax components, while cash taxes represent actual cash outflows.
The observed trends suggest a strengthening financial position with increasing taxable income. However, the growing cash tax burden warrants continued monitoring to assess its impact on future cash flows and overall financial performance.
AI Ask an analyst for more
Invested Capital
Adobe Inc., invested capital calculation (financing approach)
US$ in millions
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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of capital projects in-progress.
8 Subtraction of short-term investments.
The invested capital of the company demonstrates an overall increasing trend between 2020 and 2023, followed by a slight decrease in the most recent two periods. A closer examination of the components reveals fluctuations in both total reported debt & leases and stockholders’ equity, which contribute to the observed patterns in invested capital.
- Invested Capital Trend
- Invested capital increased from US$18,837 million in 2020 to US$24,970 million in 2023, representing a cumulative growth of approximately 32.5%. This indicates an expansion of the company’s asset base funded by both debt and equity. However, in 2024, invested capital decreased slightly to US$24,709 million, and further decreased to US$22,203 million in 2025. This recent decline suggests a potential shift in capital allocation strategy or a reduction in investment activities.
- Debt & Leases
- Total reported debt & leases exhibited a relatively stable pattern between 2020 and 2023, decreasing from US$4,708 million to US$4,080 million. This suggests a focus on debt reduction during this period. However, a significant increase is observed in 2024, rising to US$6,056 million, and continuing to US$6,648 million in 2025. This substantial increase in debt could be attributed to financing new investments, acquisitions, or share repurchases.
- Stockholders’ Equity
- Stockholders’ equity generally increased from US$13,264 million in 2020 to US$16,518 million in 2023, reflecting retained earnings and potentially new equity issuances. However, a decrease is noted in 2024, falling to US$14,105 million, and a more pronounced decrease in 2025 to US$11,623 million. This decline in stockholders’ equity could be due to share repurchases, dividend payments, or unrealized losses.
The interplay between debt and equity significantly influences the overall invested capital. While debt decreased initially, the recent increase, coupled with the decline in stockholders’ equity, contributes to the observed stabilization and subsequent decrease in invested capital in the latest reporting periods. Further investigation into the specific uses of the increased debt and the reasons for the equity decline would be necessary for a more comprehensive understanding.
AI Ask an analyst for more
Cost of Capital
Adobe Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 124,829) | 124,829) | ÷ | 131,447) | = | 0.95 | 0.95 | × | 20.93% | = | 19.88% | ||
| Senior notes3 | 6,180) | 6,180) | ÷ | 131,447) | = | 0.05 | 0.05 | × | 4.16% × (1 – 21.00%) | = | 0.15% | ||
| Operating lease liability4 | 438) | 438) | ÷ | 131,447) | = | 0.00 | 0.00 | × | 3.30% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 131,447) | 1.00 | 20.04% | ||||||||||
Based on: 10-K (reporting date: 2025-11-28).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 177,820) | 177,820) | ÷ | 183,758) | = | 0.97 | 0.97 | × | 20.93% | = | 20.25% | ||
| Senior notes3 | 5,510) | 5,510) | ÷ | 183,758) | = | 0.03 | 0.03 | × | 3.56% × (1 – 21.00%) | = | 0.08% | ||
| Operating lease liability4 | 428) | 428) | ÷ | 183,758) | = | 0.00 | 0.00 | × | 2.69% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 183,758) | 1.00 | 20.34% | ||||||||||
Based on: 10-K (reporting date: 2024-11-29).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 269,437) | 269,437) | ÷ | 273,273) | = | 0.99 | 0.99 | × | 20.93% | = | 20.64% | ||
| Senior notes3 | 3,390) | 3,390) | ÷ | 273,273) | = | 0.01 | 0.01 | × | 2.77% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 446) | 446) | ÷ | 273,273) | = | 0.00 | 0.00 | × | 2.50% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 273,273) | 1.00 | 20.67% | ||||||||||
Based on: 10-K (reporting date: 2023-12-01).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 157,657) | 157,657) | ÷ | 162,041) | = | 0.97 | 0.97 | × | 20.93% | = | 20.36% | ||
| Senior notes3 | 3,880) | 3,880) | ÷ | 162,041) | = | 0.02 | 0.02 | × | 2.67% × (1 – 21.00%) | = | 0.05% | ||
| Operating lease liability4 | 504) | 504) | ÷ | 162,041) | = | 0.00 | 0.00 | × | 2.37% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 162,041) | 1.00 | 20.42% | ||||||||||
Based on: 10-K (reporting date: 2022-12-02).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 235,808) | 235,808) | ÷ | 240,648) | = | 0.98 | 0.98 | × | 20.93% | = | 20.51% | ||
| Senior notes3 | 4,290) | 4,290) | ÷ | 240,648) | = | 0.02 | 0.02 | × | 2.67% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 550) | 550) | ÷ | 240,648) | = | 0.00 | 0.00 | × | 2.28% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 240,648) | 1.00 | 20.55% | ||||||||||
Based on: 10-K (reporting date: 2021-12-03).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 219,283) | 219,283) | ÷ | 224,354) | = | 0.98 | 0.98 | × | 20.93% | = | 20.46% | ||
| Senior notes3 | 4,480) | 4,480) | ÷ | 224,354) | = | 0.02 | 0.02 | × | 2.67% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 591) | 591) | ÷ | 224,354) | = | 0.00 | 0.00 | × | 2.32% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 224,354) | 1.00 | 20.50% | ||||||||||
Based on: 10-K (reporting date: 2020-11-27).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Adobe Inc., economic spread ratio calculation, comparison to benchmarks
| Nov 28, 2025 | Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,914) | 209) | 253) | 1,375) | 1,872) | 220) | |
| Invested capital2 | 22,203) | 24,709) | 24,970) | 21,130) | 21,065) | 18,837) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 13.13% | 0.84% | 1.01% | 6.51% | 8.89% | 1.17% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Accenture PLC | 0.65% | 0.29% | 1.07% | 3.94% | 5.76% | 6.36% | |
| AppLovin Corp. | 28.12% | 0.41% | -20.71% | -26.87% | -30.28% | — | |
| Cadence Design Systems Inc. | -1.20% | -2.79% | 7.26% | 6.67% | 6.88% | — | |
| CrowdStrike Holdings Inc. | -13.27% | -8.34% | -4.60% | -7.90% | -10.16% | — | |
| Datadog Inc. | -8.82% | -9.51% | -6.04% | -11.79% | -3.97% | — | |
| International Business Machines Corp. | -0.62% | -7.46% | -3.42% | -11.18% | -6.05% | — | |
| Intuit Inc. | -5.20% | -8.87% | -10.90% | -9.75% | -2.22% | 1.23% | |
| Microsoft Corp. | 7.74% | 9.62% | 12.66% | 20.63% | 29.66% | 27.74% | |
| Oracle Corp. | -4.37% | -4.37% | -5.29% | -4.60% | 3.54% | -1.99% | |
| Palantir Technologies Inc. | 41.56% | -12.35% | -9.08% | -32.82% | -40.27% | — | |
| Palo Alto Networks Inc. | -3.99% | 5.20% | 11.33% | 3.37% | -5.32% | -6.16% | |
| Salesforce Inc. | -12.47% | -14.28% | -17.72% | -14.60% | -12.45% | — | |
| ServiceNow Inc. | 2.76% | 6.04% | 5.33% | 0.82% | 2.04% | — | |
| Synopsys Inc. | -12.36% | -8.10% | -7.40% | -0.81% | -6.83% | -6.63% | |
| Workday Inc. | -11.63% | -13.03% | -19.26% | -14.09% | -19.34% | — | |
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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,914 ÷ 22,203 = 13.13%
4 Click competitor name to see calculations.
The financial performance between 2020 and 2025 is characterized by significant volatility in value creation, with a notable recovery and peak in the final period. While invested capital grew steadily for several years before contracting, economic profit and the economic spread ratio exhibited sharp fluctuations, indicating varying levels of efficiency in capital utilization relative to the cost of capital.
- Economic Profit Volatility
- Economic profit demonstrated an inconsistent trajectory, starting at 220 million USD in 2020 and surging to 1,872 million USD in 2021. A subsequent decline occurred over the following three years, reaching a low of 209 million USD in 2024, before a substantial increase to 2,914 million USD in 2025, marking the highest value in the analyzed period.
- Invested Capital Trends
- Invested capital followed a general upward trend from 18,837 million USD in 2020, peaking at 24,970 million USD in 2023. This period of capital expansion was followed by a moderate reduction, with the balance descending to 22,203 million USD by 2025, suggesting a shift toward capital optimization or divestment.
- Economic Spread Ratio Performance
- The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital, closely tracked the movements of economic profit. After an initial spike to 8.89% in 2021, the ratio contracted sharply to 1.01% in 2023 and reached a minimum of 0.84% in 2024. However, the ratio expanded rapidly to 13.13% in 2025, indicating a significant increase in the efficiency of value generation per unit of capital employed.
AI Ask an analyst for more
Economic Profit Margin
Adobe Inc., economic profit margin calculation, comparison to benchmarks
| Nov 28, 2025 | Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,914) | 209) | 253) | 1,375) | 1,872) | 220) | |
| Revenue | 23,769) | 21,505) | 19,409) | 17,606) | 15,785) | 12,868) | |
| Add: Increase (decrease) in deferred revenue | 771) | 309) | 536) | 536) | 1,119) | 258) | |
| Adjusted revenue | 24,540) | 21,814) | 19,945) | 18,142) | 16,904) | 13,126) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 11.88% | 0.96% | 1.27% | 7.58% | 11.08% | 1.68% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Accenture PLC | 0.42% | 0.16% | 0.55% | 1.90% | 2.95% | 3.24% | |
| AppLovin Corp. | 28.90% | 0.39% | -28.35% | -50.32% | -60.62% | — | |
| Cadence Design Systems Inc. | -1.80% | -4.28% | 7.23% | 6.65% | 6.99% | — | |
| CrowdStrike Holdings Inc. | -21.84% | -13.08% | -6.18% | -12.37% | -21.10% | — | |
| Datadog Inc. | -5.24% | -8.64% | -3.78% | -8.16% | -3.15% | — | |
| International Business Machines Corp. | -1.11% | -13.19% | -6.10% | -19.37% | -11.51% | — | |
| Intuit Inc. | -6.71% | -13.62% | -17.86% | -18.77% | -2.82% | 1.39% | |
| Microsoft Corp. | 11.54% | 13.45% | 14.42% | 19.77% | 24.62% | 20.59% | |
| Oracle Corp. | -8.76% | -8.31% | -10.23% | -8.44% | 7.01% | -4.52% | |
| Palantir Technologies Inc. | 21.53% | -10.72% | -4.87% | -55.05% | -66.34% | — | |
| Palo Alto Networks Inc. | -4.73% | 5.52% | 11.25% | 3.93% | -7.16% | -10.00% | |
| Salesforce Inc. | -26.92% | -33.00% | -44.81% | -40.53% | -28.55% | — | |
| ServiceNow Inc. | 3.05% | 4.97% | 4.29% | 0.66% | 1.77% | — | |
| Synopsys Inc. | -72.13% | -13.58% | -10.44% | -1.13% | -10.87% | -11.39% | |
| Workday Inc. | -12.36% | -14.51% | -23.62% | -19.09% | -25.23% | — | |
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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 2,914 ÷ 24,540 = 11.88%
3 Click competitor name to see calculations.
An analysis of the financial performance between November 2020 and November 2025 reveals a divergence between steady top-line growth and highly volatile economic profitability. While adjusted revenue maintained a consistent upward trajectory throughout the period, the economic profit and the resulting economic profit margin experienced significant fluctuations, characterized by a sharp decline followed by a substantial recovery.
- Adjusted Revenue Trends
- Adjusted revenue grew monotonically over the six-year period, increasing from 13,126 million USD in 2020 to 24,540 million USD by 2025. This represents a sustained expansion of the scale of operations, with consistent year-over-year increases that indicate a stable growth in market reach or pricing power.
- Economic Profit Volatility
- Economic profit exhibited extreme variance despite the steady revenue growth. After an initial surge from 220 million USD in 2020 to a peak of 1,872 million USD in 2021, a multi-year downward trend occurred. Economic profit fell to 1,375 million USD in 2022 and collapsed to 253 million USD in 2023, reaching a period low of 209 million USD in 2024. However, a significant reversal occurred in 2025, with economic profit surging to its highest recorded level of 2,914 million USD.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the volatility of the absolute economic profit. The margin expanded rapidly from 1.68% in 2020 to 11.08% in 2021, before contracting for three consecutive years to a low of 0.96% in 2024. This suggests a period where the return on capital barely exceeded the cost of capital, despite increasing revenues. The cycle concluded with a sharp recovery in 2025, where the margin reached a peak of 11.88%, indicating a substantial improvement in value creation efficiency.
The contrast between the linear growth in revenue and the cyclical nature of the economic profit margin suggests that internal efficiencies or the cost of capital significantly impacted the company's ability to generate value above its required return between 2022 and 2024. The recovery in 2025 indicates a successful realignment of operational returns relative to the capital employed.
AI Ask an analyst for more