Analysis of Reportable Segments
Adobe Inc. operates in 3 segments: Digital Media; Digital Experience; and Publishing and Advertising.
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
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Segment Profit Margin
Adobe Inc., profit margin by reportable segment
| Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | Nov 29, 2019 | |
|---|---|---|---|---|---|---|
| Digital Media | ||||||
| Digital Experience | ||||||
| Publishing and Advertising |
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).
- Digital Media Profit Margin
- The profit margin for Digital Media has remained consistently high throughout the periods analyzed, displaying minimal fluctuations. Starting at 96.24% in November 2019, it experienced a slight decline to 95.32% in December 2023, followed by a marginal increase to 95.71% by November 2024. This indicates a stable and robust profitability profile within this segment.
- Digital Experience Profit Margin
- This segment shows a clear upward trend in profit margin over the years. Beginning at 62.22% in November 2019, the margin steadily increased each year, culminating in a notable 70.39% by November 2024. The continuous growth suggests improving operational efficiency or enhanced pricing power within this segment.
- Publishing and Advertising Profit Margin
- The Publishing and Advertising segment exhibited more volatility. From 51.12% in November 2019, the margin increased moderately to 52.16% in November 2020, followed by a significant rise to 71.11% in December 2021. It remained high but slightly decreased to 70.18% in December 2022 and 71.33% in December 2023, before dropping to 67.64% in November 2024. Despite the recent decline, the segment maintains a substantially higher margin compared to the earlier years, indicating some variability but overall improved profitability.
- Overall Insights
- The data reveal that Digital Media consistently delivers the highest margins, maintaining strong profitability. Digital Experience is progressively improving, showing positive momentum likely due to strategic growth or efficiency measures. Meanwhile, Publishing and Advertising experienced substantial gains mid period but faced a decline in the latest year, signaling potential challenges or market changes affecting this segment's profitability.
Segment Profit Margin: Digital Media
Adobe Inc.; Digital Media; segment profit margin calculation
| Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | Nov 29, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenue | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2024 Calculation
Segment profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =
The Digital Media segment demonstrates a consistent upward trajectory in both revenue and gross profit over the observed periods from November 2019 through November 2024. Revenue has increased substantially each year, starting at 7,707 million US dollars in November 2019 and reaching 15,864 million US dollars by November 2024, more than doubling during this timeframe.
Correspondingly, gross profit has mirrored this growth trend, rising from 7,417 million US dollars in November 2019 to 15,184 million US dollars in November 2024. This steady increase indicates sustained improvement in the segment's ability to generate profitability from its revenue streams.
- Gross profit margin (Segment profit margin %)
- The segment profit margin has remained relatively stable and high throughout the period, fluctuating slightly but maintaining percentages above 95%. It began at 96.24% in November 2019 and ended at 95.71% in November 2024. The minor variations suggest effective cost control and consistent operational efficiency relative to revenue.
- Revenue growth
- Annual revenue growth has been strong and steady, indicating robust demand and successful expansion of the segment’s customer base or pricing power. The revenue increase from 7,707 million US dollars to 15,864 million US dollars over five years represents a compounded growth rate conducive to long-term sustainability.
- Gross profit growth
- Gross profit growth aligns closely with revenue increases, underscoring stable cost structures and the ability to maintain profitability despite scaling operations. The data does not reveal any alarming margin compression, which is often a risk in rapid expansion scenarios.
Overall, the trends observed portray a highly profitable segment with efficient cost management, continuous revenue expansion, and stable margins. This consistency suggests effective strategic execution and operational capabilities within this business segment.
Segment Profit Margin: Digital Experience
Adobe Inc.; Digital Experience; segment profit margin calculation
| Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | Nov 29, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenue | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2024 Calculation
Segment profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =
- Revenue Trend
- The revenue for the segment shows a consistent upward trajectory over the six-year period. Starting from US$2,795 million in 2019, revenue increased steadily each year, reaching US$5,366 million in 2024. This represents a near doubling of revenue over the period, indicating robust growth.
- Gross Profit Trend
- Gross profit followed a similar positive trend as revenue, rising from US$1,739 million in 2019 to US$3,777 million in 2024. The growth in gross profit reflects the increasing scale of operations and likely improvements in the cost structure, given the increase is proportionally aligned with revenue growth.
- Segment Profit Margin Trend
- The segment profit margin exhibited a steady improvement throughout the years. Beginning at 62.22% in 2019, it gradually increased to 70.39% by 2024. This consistent growth in profit margin suggests enhanced operational efficiency and possibly favorable pricing power or cost management strategies within the segment.
- Overall Analysis
- The segment demonstrates strong financial health marked by sustained revenue growth, expanding gross profit, and improving profitability margins. The concurrent rise in margin percentage alongside revenue indicates not only top-line growth but also effective control over expenses or improved product mix contributing to higher profitability.
Segment Profit Margin: Publishing and Advertising
Adobe Inc.; Publishing and Advertising; segment profit margin calculation
| Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | Nov 29, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenue | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2024 Calculation
Segment profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =
- Revenue Trends
- Revenue in the Publishing and Advertising segment shows a consistent downward trend from 2019 to 2024. The revenue decreased from $669 million in 2019 to $275 million in 2024. This represents a significant reduction in reported revenue, with notable decreases each year.
- Gross Profit Analysis
- Gross profit also declined progressively over the six-year period. Starting at $342 million in 2019, gross profit dropped to $186 million by 2024. This decline mirrors the reduction in revenue, indicating that gross profit is largely correlated with revenue movements in this segment.
- Segment Profit Margin
- The segment profit margin exhibits a different pattern compared to revenue and gross profit. Initially, the margin was about 51.12% in 2019 and increased substantially to over 70% in 2021 and persisted near that level through 2023. In 2024, the margin declined slightly to 67.64%. Despite falling revenues and gross profit, the segment maintained high profitability margins in recent years, suggesting improved operational efficiency or cost controls within the segment.
- Overall Insights
- The financial performance of the Publishing and Advertising segment indicates a declining scale of operations as reflected by decreased revenue and gross profit figures. However, improved profit margins from 2020 onwards suggest successful margin management or structural changes enhancing profitability despite a shrinking revenue base. The slight margin decline in 2024 may warrant attention to understand potential emerging challenges. Overall, the segment is experiencing reduced top-line size but has managed to sustain relatively strong profitability ratios.
Revenue
Adobe Inc., revenue by reportable segment
US$ in millions
| Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | Nov 29, 2019 | |
|---|---|---|---|---|---|---|
| Digital Media | ||||||
| Digital Experience | ||||||
| Publishing and Advertising | ||||||
| Total |
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).
The revenue data indicates a consistent upward trend in total revenue over the six-year period, increasing steadily from 11,171 million US dollars in 2019 to 21,505 million US dollars in 2024. This represents a significant overall growth, almost doubling within the timeframe.
- Digital Media Segment
- This segment exhibits continuous growth throughout the entire period. Revenues rose from 7,707 million US dollars in 2019 to 15,864 million US dollars in 2024. The growth appears steady year over year, with the segment contributing the largest share to the total revenue across all years. This trend highlights the segment’s strong and expanding market presence.
- Digital Experience Segment
- This segment shows a clear and consistent increase in revenue from 2,795 million US dollars in 2019 to 5,366 million US dollars in 2024. Despite being smaller than Digital Media in absolute terms, the growth rate in this segment is notable and indicates successful expansion or increased adoption of the related products or services.
- Publishing and Advertising Segment
- In contrast to the other two segments, Publishing and Advertising reveal a declining trend. Revenue decreased from 669 million US dollars in 2019 to 275 million US dollars in 2024. This steady decline suggests shrinking market demand, strategic divestments, or shifts in business focus away from this segment.
Overall, the data portrays a company with strong revenue growth driven primarily by the Digital Media and Digital Experience segments. The diminishing revenues in Publishing and Advertising do not offset the gains elsewhere, indicating a realignment towards more lucrative or strategic segments in the business portfolio.
Gross profit
Adobe Inc., gross profit by reportable segment
US$ in millions
| Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | Nov 29, 2019 | |
|---|---|---|---|---|---|---|
| Digital Media | ||||||
| Digital Experience | ||||||
| Publishing and Advertising | ||||||
| Total |
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).
The analysis of the annual reportable segment gross profit data reveals several notable trends across the periods observed.
- Digital Media Segment
- The Digital Media segment demonstrates a consistent and strong upward trajectory in gross profit over the years. Starting from 7,417 million US dollars in 2019, the profit increased steadily each year, reaching 15,184 million US dollars by 2024. This represents more than a doubling in gross profit over the six-year period, reflecting robust growth and possibly an expanding market share or enhanced product offerings in this segment.
- Digital Experience Segment
- The Digital Experience segment also shows continuous growth throughout the timeframe. Beginning with 1,739 million US dollars in 2019, it rose steadily to 3,777 million US dollars by 2024. The segment nearly doubled its gross profit, which indicates positive development and increasing importance in the company's overall portfolio. The growth rate, while consistent, appears less steep than that of the Digital Media segment but remains significant.
- Publishing and Advertising Segment
- Contrary to the other two segments, the Publishing and Advertising segment displays a declining gross profit trend. Starting at 342 million US dollars in 2019, profits decrease almost every year, culminating at 186 million US dollars in 2024. This decline suggests challenges in this segment, such as reduced demand, increased competition, or strategic deprioritization within the company’s operations.
- Total Gross Profit
- The total gross profit aggregates the performance of all segments, showing a steady increase from 9,498 million US dollars in 2019 to 19,147 million US dollars in 2024. The growth is primarily driven by the substantial increases in the Digital Media and Digital Experience segments, which outweigh the decline in Publishing and Advertising. Overall, the data indicates successful expansion and strengthening of the core digital segments, contributing to considerable growth in total gross profit over the reviewed period.