← All companies ← ADAMZ Manual ADC → ← ACIW Software ADSK →

ADBE, Adobe Inc.

Software asset-light

Adobe sells software that people use to make and manage digital content. Most of its money comes from Digital Media — the programs designers and everyday users rely on to create images, video and documents, including the Acrobat software behind the PDF — sold mostly by subscription. A smaller part, Digital Experience, sells businesses the tools to deliver and manage personalized experiences for their own customers.

We build innovative platforms and tools that unleash creativity, productivity and personalized customer experiences.

Adobe's solutions are the foundation of digital experiences, starting with the first creative spark, to the creation and development of all content and media, to the personalized delivery across every channel.

Latest annual: FY2025 10-K

Read in Notes: The Moat and the Multiple, Jul 16, 2026

ADBE · Adobe Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$23.8B

+10.5% YoY · 13% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $25.2B 5-yr avg $19.6B

Gross margin 89% 5-yr avg 88%

Operating margin 36.1% 5-yr avg 34.7%

ROIC 54% 5-yr avg 42%

Owner-earnings margin 41% 5-yr avg 40%

Free cash flow margin 41% 5-yr avg 40%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is Digital Media (74%), Digital Experience (25%) and Publishing and Advertising (1%).
What moves the needle: The question is whether the creative and document tools are a franchise or a commodity — whether the people trained on them stay because moving elsewhere means relearning the craft, and whether that grip lets Adobe set its own price rather than meet a rival's. The filing itself warns these markets turn on rapid technological change and new industry standards, so the test that matters is whether the next way of making content runs through Adobe or around it. Keep in view the regulators' scrutiny of how customer data is collected and handled, and the debt the company carries against its earnings. The figures are in the record below.
Is it a good business?: Return on capital has run high across the record (median 33%, above 15% in 9 of 10 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. The steadier read is owner earnings: roughly 39% of revenue reaches owners as cash, consistently, and customers and suppliers fund the business through negative working capital. Whether these returns reflect real pricing power or an accounting artifact is the judgment the 10-K is for.

Drafted from the company's filings and reviewed by hand; every number is shown in full in the sections below.

Where the money comes from

read the 10-K →

Digital Media is 74% of revenue, with Digital Experience the other meaningful segment at 25%.

Revenue by reportable segment, FY2025

Digital Media74%$17.6B
Digital Experience25%$5.9B
Publishing and Advertising1%$256M

By geographyUnited States53%EMEA26%Asia Pacific14%Other7%

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMay 2026
											Income statement
$5.9B	$7.3B	$9.0B	$11.2B	$12.9B	$15.8B	$17.6B	$19.4B	$21.5B	$23.8B	$25.2B	RevenueRevenue
86%	86%	87%	85%	87%	88%	88%	88%	89%	89%	89%	Gross marginGross mgn
10%	9%	8%	8%	8%	7%	7%	7%	7%	7%	7%	SG&A / revenueSG&A/rev
$1.5B	$2.2B	$2.8B	$3.3B	$4.2B	$5.8B	$6.1B	$6.7B	$6.7B	$8.7B	$9.1B	Operating incomeOp. inc.
25.5%	29.7%	31.5%	29.3%	32.9%	36.8%	34.6%	34.3%	31.3%	36.6%	36.1%	Operating marginOp. mgn
$1.2B	$1.7B	$2.6B	$3.0B	$5.3B	$4.8B	$4.8B	$5.4B	$5.6B	$7.1B	$7.2B	Net incomeNet inc.
19%	21%	7%	8%	—	15%	21%	20%	20%	18%	21%	Effective tax rateTax rate
											Cash flow & returns
$2.2B	$2.9B	$4.0B	$4.4B	$5.7B	$7.2B	$7.8B	$7.3B	$8.1B	$10.0B	$10.5B	Operating cash flowOp. cash
$332M	$326M	$346M	$757M	$757M	$788M	$856M	$872M	$857M	$818M	$759M	DepreciationDeprec.
$350M	$438M	$482M	($74M)	($1.2B)	$551M	$786M	($716M)	($194M)	$141M	$464M	Working capital & otherWC & other
$204M	$178M	$267M	$395M	$419M	$348M	$442M	$360M	$183M	$179M	$201M	CapexCapex
3.5%	2.4%	3.0%	3.5%	3.3%	2.2%	2.5%	1.9%	0.9%	0.8%	0.8%	Capex / revenueCapex/rev
$2.0B	$2.7B	$3.8B	$4.0B	$5.3B	$6.9B	$7.4B	$6.9B	$7.9B	$9.9B	$10.3B	Owner earningsOwner earn.
34.1%	37.5%	41.7%	36.0%	41.2%	43.6%	42.0%	35.8%	36.6%	41.4%	40.8%	Owner earnings marginOE mgn
$2.0B	$2.7B	$3.8B	$4.0B	$5.3B	$6.9B	$7.4B	$6.9B	$7.9B	$9.9B	$10.3B	Free cash flowFCF
34.1%	37.5%	41.7%	36.0%	41.2%	43.6%	42.0%	35.8%	36.6%	41.4%	40.8%	Free cash flow marginFCF mgn
$48M	$460M	$6.3B	$101M	$0	$2.7B	$126M	$0	$0	$17M	$1.6B	AcquisitionsAcquis.
$1.1B	$1.1B	$2.0B	$2.8B	$3.0B	$4.0B	$6.5B	$4.4B	$9.5B	$11.3B	—	BuybacksBuybacks
15%	21%	22%	25%	33%	33%	35%	41%	45%	57%	54%	ROICROIC
16%	20%	28%	28%	40%	33%	34%	33%	39%	61%	63%	Return on equityROE
16%	20%	28%	28%	40%	33%	34%	33%	39%	61%	63%	Retained to equityRetained/eq
											Balance sheet
$4.8B	$5.8B	$3.2B	$4.2B	$6.0B	$5.8B	$6.1B	$7.8B	$7.9B	$6.6B	$5.6B	Cash & investmentsCash+inv
$833M	$1.2B	$1.3B	$1.5B	$1.4B	$1.9B	$2.1B	$2.2B	$2.1B	$2.3B	$2.0B	ReceivablesReceiv.
$88M	$114M	$186M	$209M	$306M	$312M	$379M	$314M	$361M	$417M	$499M	Accounts payablePayables
$745M	$1.1B	$1.1B	$1.3B	$1.1B	$1.6B	$1.7B	$1.9B	$1.7B	$1.9B	$1.5B	Operating working capitalOper. WC
$5.8B	$7.2B	$4.9B	$6.5B	$8.1B	$8.7B	$9.0B	$11.1B	$11.2B	$10.2B	$9.1B	Current assetsCur. assets
$2.8B	$3.5B	$4.3B	$8.2B	$5.5B	$6.9B	$8.1B	$8.3B	$10.5B	$10.2B	$12.1B	Current liabilitiesCur. liab.
2.1×	2.1×	1.1×	0.8×	1.5×	1.3×	1.1×	1.3×	1.1×	1.0×	0.8×	Current ratioCurr. ratio
$5.4B	$5.8B	$10.6B	$10.7B	$10.7B	$12.7B	$12.8B	$12.8B	$12.8B	$12.9B	$14.0B	GoodwillGoodwill
$12.7B	$14.5B	$18.8B	$20.8B	$24.3B	$27.2B	$27.2B	$29.8B	$30.2B	$29.5B	$29.9B	Total assetsAssets
$1.9B	$1.9B	$4.1B	$4.1B	$4.1B	$4.1B	$4.1B	$3.6B	$5.6B	$6.2B	$6.6B	Total debtDebt
($2.9B)	($3.9B)	$896M	($39M)	($1.9B)	($1.7B)	($2.0B)	($4.2B)	($2.3B)	($385M)	$1.0B	Net debt / (cash)Net debt
21.2×	29.1×	31.9×	20.8×	36.5×	51.3×	54.4×	58.8×	39.9×	33.1×	34.8×	Interest coverageInt. cov.
$7.4B	$8.5B	$9.4B	$10.5B	$13.3B	$14.8B	$14.1B	$16.5B	$14.1B	$11.6B	$11.5B	Shareholders’ equityEquity
6.0%	6.2%	6.8%	7.1%	7.1%	6.8%	8.2%	8.9%	8.5%	8.2%	8.1%	Stock comp / revenueSBC/rev
											Per share
504M	501M	498M	492M	486M	481M	471M	459M	450M	427M	407M	Shares out (diluted)Shares
$11.61	$14.57	$18.14	$22.72	$26.50	$32.82	$37.39	$42.28	$47.82	$55.67	$61.97	Revenue / shareRev/sh
$2.32	$3.38	$5.20	$6.00	$10.83	$10.02	$10.10	$11.82	$12.36	$16.70	$17.78	EPS (diluted)EPS
$3.96	$5.46	$7.56	$8.19	$10.93	$14.31	$15.71	$15.12	$17.51	$23.07	$25.28	Owner earnings / shareOE/sh
$3.96	$5.46	$7.56	$8.19	$10.93	$14.31	$15.71	$15.12	$17.51	$23.07	$25.28	Free cash flow / shareFCF/sh
$0.40	$0.36	$0.54	$0.80	$0.86	$0.72	$0.94	$0.78	$0.41	$0.42	$0.49	Cap. spending / shareCapex/sh
$14.72	$16.88	$18.81	$21.42	$27.32	$30.76	$29.84	$35.98	$31.37	$27.22	$28.33	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+19.0%/yr	+16.0%/yr
Owner earnings / share	+21.6%/yr	+16.1%/yr
EPS	+24.5%/yr	+9.0%/yr
Capital spending / share	+0.4%/yr	−13.4%/yr
Book value / share	+7.1%/yr	−0.1%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

427Mpeak FY2016

ROIC

57%low FY2016

Gross margin

89%low FY2019

Net debt ÷ owner earnings

-0.0×peak FY2018

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$9.9Bowner earningsvs.$7.1Bnet incomelow FY2016

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned $7.1B of profit into $9.9B of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

Reported net income$7.1B

Owner earnings$9.9B · 41% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$7.1B	$5.6B	$5.4B	$4.8B	$4.8B
Depreciation & amortizationnon-cash charge added back	+$818M	+$857M	+$872M	+$856M	+$788M
Stock-based compensationreal costnon-cash, but a real cost	+$1.9B	+$1.8B	+$1.7B	+$1.4B	+$1.1B
Working capital & othertiming of cash in and out, other non-cash items	+$141M	−$194M	−$716M	+$786M	+$551M
Cash from operations	$10.0B	$8.1B	$7.3B	$7.8B	$7.2B
Capital expenditurecash put back in to keep running and to grow	−$179M	−$183M	−$360M	−$442M	−$348M
Owner earnings	$9.9B	$7.9B	$6.9B	$7.4B	$6.9B
Owner-earnings marginowner earnings ÷ revenue	41%	37%	36%	42%	44%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $1.9B), owner earnings is nearer $7.9B.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 33.1×

Comfortable

Operating income $8.7B ÷ interest expense $263M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? +$385M

Net cash

Cash $5.4B + ST investments $1.2B − debt $6.2B

What this means
Cash and short-term investments exceed every dollar of debt by $385M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? -24d

Negative, funded by others

DSO 36 + DIO 0 − DPO 60 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)

Is it a good business?

Return on invested capital 33%

Very high (≥25%) through the cycle

10-yr median, range 15%–57%; 57% latest = NOPAT $7.1B ÷ invested capital $12.4B

Industry peers: median 6%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 57% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 37%

High through the cycle

10-yr median margin, range 34%–44%; latest $9.9B = operating cash $10.0B − maintenance capex $179M

Industry peers: median 19%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 41% of revenue this year, a 37% median across 10 years. Treating stock comp as the real expense it is (less $1.9B of SBC) leaves $7.9B.
Are earnings backed by cash? 1.41×

Cash-backed

Cash from ops $10.0B ÷ net income $7.1B

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 115%

Returned more than it generated

Dividends + buybacks $11.3B ÷ Owner Earnings $9.9B

What this means
The company returned more than it generated: against $9.9B of Owner Earnings, $11.3B (115%) went back to shareholders, $0 dividends, $11.3B buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Net of $1.9B stock comp, the real buyback was about $9.3B. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands.
Investing or harvesting? 0.22×

Harvesting

Capex $179M ÷ depreciation $818M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 3 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $23.8B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 1.00×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $6.2B vs ($37M) WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (10-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +232%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $15.19/share (latest year $17.94), the averaged base the calculator's gate runs on, and book value is $29.24/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 10 of 10

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Return on capital ≥ 15% 9 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 29% → 34% (3-yr avg ends)

What this means
Through the cycle the operating margin widened — about 29% early to 34% lately, median 31% — pricing power intact or improving.
Reinvestment, incremental ROIC —

What this means
The reinvested base moved too little against the change in profit to read a reliable return on it here — the figure would be a small-denominator artifact, not a moat. Judge this one on the owner-earnings record and the cash it returns instead.
Owner earnings growth +16%/yr

What this means
Owner earnings grew about 16% a year over the record.
Worst year 2016 · 25.5% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −1.8%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.

Does AI threaten the moat?

Elevated contestability

The product is software or information, the very thing capable AI now produces more cheaply, so the moat is more contestable than the record alone implies.

In its own filing A competitive risk, new this year

Its FY2025 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.

“For example, artificial intelligence ("AI"), including generative and agentic, enables users of all skill levels to create and provide new ways of marketing, creating and editing content and interacting with documents.”

The moat the record shows, a high return on capital held across years, was earned before AI collapsed the cost of building a capable substitute for the very thing this business sells. When a credible alternative can be assembled for a fraction of the incumbent's price, it is pricing power that erodes first, not revenue tomorrow. The live question is whether the moat survives that, not whether it held in the past. Whether that question is answerable at all is yours to decide, against your own circle of competence.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, May 29, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$9.1B

Cash & short-term investments$5.6B
Receivables$2.0B
Other current assets$1.4B

Current liabilities$12.1B

Debt due within a year$1.8B
Accounts payable$499M
Other current liabilities$9.7B

Current ratio0.75×all current assets ÷ what's due · Graham looked for 2×

Quick ratio0.75×stricter: inventory excluded

Cash ratio0.47×strictest: cash alone against what's due

Working capital($3.0B)the cushion left after near-term bills

Its current ratio is below 1, which usually reads as strain; here it is likely structural strength. This business collects from customers before it pays suppliers (a negative cash-conversion cycle), so the balance sheet is funded by that float, the way Costco's and Amazon's are. The low ratio can be the edge, not the risk; the cash-conversion cycle and the debt due above say which.

Debt due this year vs. cash$1.8B due · $5.6B cash covered by cash on hand, no refinancing forced · both figures from the May 29, 2026 balance sheet

Revenue, latest quarter vs. a year ago+12.7%the freshest read on whether the business is still growing

Current ratio, recent quarters1.1× → 0.8×

Deeper floors

Tangible book value($3.5B)equity stripped of goodwill & intangibles

Net current asset value($9.3B)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$7.1B$420M of it operating leases

Deferred revenue$7.3Bcustomer cash collected before delivery; operating float

From the company's latest filing.

How the cash was used, 2016–2025

Over the record, the business generated $59.7B of operating cash; how management split it reads as a cash returner, paying most of what it earns straight back to owners.

Reinvested$3.0B · 5%
Buybacks$45.7B · 76%
Retained (debt / cash)$11.1B · 19%

Returned to owners$45.7B
81% of the owner earnings the business produced over the span, $0 as dividends and $45.7B as buybacks.
Average price paid for buybacks$354.53
Across the years where the filing reports a share count, 97M shares were bought for $34.4B, about $354.53 each. Year to year the price paid ranged from $103.37 (2016) to $548.61 (2021); its heaviest year, 2024, paid $542.86 ($9.5B).
Net change in share count−19.4%
The diluted count fell from 504M to 407M, so the buybacks outran the stock issued to staff.
Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$13.4B45% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equityexceeds itgoodwill alone is larger than the company’s entire book equity; stripped of the acquisition premium, there is no net book worth

Cash spent acquiring$9.7Bover 10 years buying other businesses, against $3.0B of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Pay, as filed	“Actually paid”	Owner earnings
2021	$36.1M	$104.7M	$6.9B
2022	$31.6M	−$95.3M	$7.4B
2023	$44.9M	$127.7M	$6.9B
2024	$52.4M	$10.1M	$7.9B
2025	$51.2M	−$17.4M	$9.9B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership<1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
Stock-based compensation$1.9B
The slice of the business handed to employees in shares this year, 8% of revenue, equal to 22% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Adobe Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

None of the 5 tests turned up a mark; each came back clean. A clean panel says only that these particular ways of being wrong are not written into the record.

Each test came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

Peers, Software

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
CRMSalesforce Inc.	$41.5B	74%	3.7%	3%	22%
XYZBlock Inc.	$24.2B	34%	-0.7%	-1%	4%
ADBEAdobe Inc.	$23.8B	87%	32.2%	33%	39%
CTSHCognizant	$21.1B	—	15.3%	18%	12%
ADPAutomatic Data Processing Inc.	$20.6B	43%	21.3%	46%	19%
INTUIntuit Inc.	$18.8B	99%	26.0%	35%	32%
NOWServiceNow Inc.	$13.3B	77%	4.4%	6%	30%
SHOPShopify Inc.	$11.6B	49%	-1.3%	-0%	15%
Group median	—	74%	9.8%	12%	21%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Adobe Inc. has delivered.

Today’s price $

Through the cycle, Adobe Inc. earns about $9.4B on its 39.4% median owner-earnings margin. This year’s 41.4% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($9.4B) Net of stock comp (−$2.0B) Steady-state · maintenance capex ($10.3B)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+6%/yr

Owner-earnings growth · ’16→’25+16%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $10.3B on 398M shares outstanding, per the 10-Q cover, as of 2026-06-11; net debt $1.0B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($201M) runs well above depreciation ($759M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $10.3B, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh ADBE against another business →

The owners of ADBE: the meeting and the votes →

Notes

Jul 16, 2026 The Moat and the Multiple

Cite: Owner Scorecard, "Adobe Inc. (ADBE), the owner's record," https://ownerscorecard.com/c/ADBE, data as of 2026-07-09.

Manual order: ← ADAMZ its page in the Manual ADC →

Industry order: ← ACIW the Software chapter ADSK →