Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Adobe Inc., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
United States federal	1,198)	465)	391)	119)	7)	501)
Foreign	335)	329)	197)	222)	211)	140)
State and local	260)	132)	103)	79)	31)	29)
Current	1,793)	926)	691)	420)	249)	670)
United States federal	(556)	(45)	(148)	(123)	23)	(466)
Foreign	227)	360)	359)	(1,313)	(12)	(10)
State and local	(93)	11)	(19)	(68)	(6)	9)
Deferred	(422)	326)	192)	(1,504)	5)	(467)
Provision for (benefit from) income taxes	1,371)	1,252)	883)	(1,084)	253)	203)

Based on: 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), 10-K (reporting date: 2018-11-30).

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Item	Description	The company
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Adobe Inc. current increased from 2021 to 2022 and from 2022 to 2023.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Adobe Inc. deferred increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Provision for (benefit from) income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Adobe Inc. provision for (benefit from) income taxes increased from 2021 to 2022 and from 2022 to 2023.

Adobe Inc., effective income tax rate (EITR) reconciliation

		Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
	U.S. federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%	22.20%
	Effective income tax rate	20.16%	20.84%	15.48%	-25.96%	7.90%	7.27%

Based on: 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), 10-K (reporting date: 2018-11-30).

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Item	Description	The company
Effective income tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Adobe Inc. effective income tax rate increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Adobe Inc., components of deferred tax assets and liabilities

US$ in millions

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
Capitalized expenses	984)	298)	355)	292)	45)	19)
Intangible assets	320)	653)	997)	1,368)	5)	10)
Credit carryforwards	366)	333)	287)	218)	252)	174)
Reserves and accruals	125)	98)	89)	71)	54)	59)
Operating lease liabilities	97)	104)	122)	131)	—)	—)
Stock-based compensation	65)	108)	91)	92)	107)	89)
Net operating loss carryforwards of acquired companies	44)	88)	131)	54)	137)	209)
Benefits relating to tax positions	68)	56)	39)	44)	47)	52)
Other	48)	41)	46)	37)	45)	75)
Gross deferred tax assets	2,117)	1,779)	2,157)	2,307)	692)	687)
Valuation allowance	(405)	(402)	(335)	(276)	(244)	(174)
Deferred tax assets	1,712)	1,377)	1,822)	2,031)	447)	512)
Acquired intangible assets	(263)	(354)	(447)	(330)	(413)	(501)
Prepaid expenses	(107)	(110)	(123)	(107)	(86)	—)
Operating lease right-of-use assets	(89)	(97)	(111)	(131)	—)	—)
Depreciation and amortization	(77)	(67)	(49)	(52)	(36)	(40)
Undistributed earnings of foreign subsidiaries	—)	—)	(12)	(51)	(52)	(18)
Deferred tax liabilities	(536)	(628)	(742)	(671)	(588)	(559)
Net deferred tax assets (liabilities)	1,176)	749)	1,080)	1,360)	(140)	(47)

Based on: 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), 10-K (reporting date: 2018-11-30).

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Item	Description	The company
Gross deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Adobe Inc. gross deferred tax assets decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.
Deferred tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Adobe Inc. deferred tax assets decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Adobe Inc. net deferred tax assets (liabilities) decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Adobe Inc., deferred tax assets and liabilities, classification

US$ in millions

		Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
	Deferred tax assets	1,191)	777)	1,085)	1,370)	—)	—)
	Deferred tax liabilities	15)	28)	5)	10)	140)	47)

Based on: 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), 10-K (reporting date: 2018-11-30).

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Item	Description	The company
Deferred tax assets	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Adobe Inc. deferred tax assets decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Deferred tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Adobe Inc. deferred tax liabilities increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Adobe Inc., adjustments to financial statements

US$ in millions

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
Adjustment to Total Assets
Total assets (as reported)	29,779)	27,165)	27,241)	24,284)	20,762)	18,769)
Less: Noncurrent deferred tax assets, net	1,191)	777)	1,085)	1,370)	—)	—)
Total assets (adjusted)	28,588)	26,388)	26,156)	22,914)	20,762)	18,769)
Adjustment to Total Liabilities
Total liabilities (as reported)	13,261)	13,114)	12,444)	11,020)	10,232)	9,407)
Less: Noncurrent deferred tax liabilities, net	15)	28)	5)	10)	140)	47)
Total liabilities (adjusted)	13,246)	13,086)	12,439)	11,010)	10,092)	9,360)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	16,518)	14,051)	14,797)	13,264)	10,530)	9,362)
Less: Net deferred tax assets (liabilities)	1,176)	749)	1,080)	1,360)	(140)	(47)
Stockholders’ equity (adjusted)	15,342)	13,302)	13,717)	11,904)	10,671)	9,409)
Adjustment to Net Income
Net income (as reported)	5,428)	4,756)	4,822)	5,260)	2,951)	2,591)
Add: Deferred income tax expense (benefit)	(422)	326)	192)	(1,504)	5)	(467)
Net income (adjusted)	5,006)	5,082)	5,014)	3,756)	2,956)	2,124)

Based on: 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), 10-K (reporting date: 2018-11-30).

Adobe Inc., Financial Data: Reported vs. Adjusted

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Adobe Inc., adjusted financial ratios

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
Net Profit Margin
Reported net profit margin	27.97%	27.01%	30.55%	40.88%	26.42%	28.69%
Adjusted net profit margin	25.79%	28.87%	31.76%	29.19%	26.46%	23.52%
Total Asset Turnover
Reported total asset turnover	0.65	0.65	0.58	0.53	0.54	0.48
Adjusted total asset turnover	0.68	0.67	0.60	0.56	0.54	0.48
Financial Leverage
Reported financial leverage	1.80	1.93	1.84	1.83	1.97	2.00
Adjusted financial leverage	1.86	1.98	1.91	1.92	1.95	1.99
Return on Equity (ROE)
Reported ROE	32.86%	33.85%	32.59%	39.66%	28.03%	27.67%
Adjusted ROE	32.63%	38.20%	36.55%	31.55%	27.70%	22.57%
Return on Assets (ROA)
Reported ROA	18.23%	17.51%	17.70%	21.66%	14.22%	13.80%
Adjusted ROA	17.51%	19.26%	19.17%	16.39%	14.24%	11.32%

Based on: 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), 10-K (reporting date: 2018-11-30).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Adobe Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Adobe Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Adobe Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Adobe Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Adobe Inc. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Adobe Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income	5,428)	4,756)	4,822)	5,260)	2,951)	2,591)
Revenue	19,409)	17,606)	15,785)	12,868)	11,171)	9,030)
Profitability Ratio
Net profit margin¹	27.97%	27.01%	30.55%	40.88%	26.42%	28.69%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income	5,006)	5,082)	5,014)	3,756)	2,956)	2,124)
Revenue	19,409)	17,606)	15,785)	12,868)	11,171)	9,030)
Profitability Ratio
Adjusted net profit margin²	25.79%	28.87%	31.76%	29.19%	26.46%	23.52%

Based on: 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), 10-K (reporting date: 2018-11-30).

2023 Calculations

¹ Net profit margin = 100 × Net income ÷ Revenue
= 100 × 5,428 ÷ 19,409 = 27.97%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × 5,006 ÷ 19,409 = 25.79%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Adobe Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Revenue	19,409)	17,606)	15,785)	12,868)	11,171)	9,030)
Total assets	29,779)	27,165)	27,241)	24,284)	20,762)	18,769)
Activity Ratio
Total asset turnover¹	0.65	0.65	0.58	0.53	0.54	0.48
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenue	19,409)	17,606)	15,785)	12,868)	11,171)	9,030)
Adjusted total assets	28,588)	26,388)	26,156)	22,914)	20,762)	18,769)
Activity Ratio
Adjusted total asset turnover²	0.68	0.67	0.60	0.56	0.54	0.48

Based on: 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), 10-K (reporting date: 2018-11-30).

2023 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 19,409 ÷ 29,779 = 0.65

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 19,409 ÷ 28,588 = 0.68

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Adobe Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets	29,779)	27,165)	27,241)	24,284)	20,762)	18,769)
Stockholders’ equity	16,518)	14,051)	14,797)	13,264)	10,530)	9,362)
Solvency Ratio
Financial leverage¹	1.80	1.93	1.84	1.83	1.97	2.00
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	28,588)	26,388)	26,156)	22,914)	20,762)	18,769)
Adjusted stockholders’ equity	15,342)	13,302)	13,717)	11,904)	10,671)	9,409)
Solvency Ratio
Adjusted financial leverage²	1.86	1.98	1.91	1.92	1.95	1.99

Based on: 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), 10-K (reporting date: 2018-11-30).

2023 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 29,779 ÷ 16,518 = 1.80

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 28,588 ÷ 15,342 = 1.86

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Adobe Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income	5,428)	4,756)	4,822)	5,260)	2,951)	2,591)
Stockholders’ equity	16,518)	14,051)	14,797)	13,264)	10,530)	9,362)
Profitability Ratio
ROE¹	32.86%	33.85%	32.59%	39.66%	28.03%	27.67%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income	5,006)	5,082)	5,014)	3,756)	2,956)	2,124)
Adjusted stockholders’ equity	15,342)	13,302)	13,717)	11,904)	10,671)	9,409)
Profitability Ratio
Adjusted ROE²	32.63%	38.20%	36.55%	31.55%	27.70%	22.57%

Based on: 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), 10-K (reporting date: 2018-11-30).

2023 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 5,428 ÷ 16,518 = 32.86%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity
= 100 × 5,006 ÷ 15,342 = 32.63%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Adobe Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income	5,428)	4,756)	4,822)	5,260)	2,951)	2,591)
Total assets	29,779)	27,165)	27,241)	24,284)	20,762)	18,769)
Profitability Ratio
ROA¹	18.23%	17.51%	17.70%	21.66%	14.22%	13.80%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income	5,006)	5,082)	5,014)	3,756)	2,956)	2,124)
Adjusted total assets	28,588)	26,388)	26,156)	22,914)	20,762)	18,769)
Profitability Ratio
Adjusted ROA²	17.51%	19.26%	19.17%	16.39%	14.24%	11.32%

Based on: 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), 10-K (reporting date: 2018-11-30).

2023 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 5,428 ÷ 29,779 = 18.23%

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 5,006 ÷ 28,588 = 17.51%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Adobe Inc. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Adobe Inc. (NASDAQ:ADBE)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Adobe Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Adobe Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)