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- News of the Week (March 10 - 14, 2025)
News of the Week (March 10 - 14, 2025)

In case you missed it:
Table of Contents
1. Adobe (ADBE) – Earnings Review
a. Adobe 101
Adobe is a software giant that invented the .pdf file (co-founder John Warnock specifically). It provides programs to create and imagine, handle customer interactions and process documents. Company revenue is split into two main buckets: Digital Media and Digital Experiences. Digital Media is made up of its “Creative Cloud” and “Document Cloud.” The Creative Cloud includes Photoshop and Illustrator. It’s what empowers creation, iteration and perfection of digital design. The Document Cloud, including the ubiquitous Adobe Acrobat, allows for secure PDF (Personal Document Format) management and collaboration – among other things.
Finally, its Experience Cloud includes Adobe Analytics and other products like “Campaign.” Campaign is its (intuitively-named) marketing campaign tool. Experience Cloud covers end-to-end customer interactions with a real-time customer data platform (CDP), ensuring that those interactions are optimized. It also publishes some greatly appreciated macro data on overall commerce spend.
b. Key Points
Fine quarter and reiterated guidance.
Strong AI adoption with monetization still ramping.
Reorganized revenue buckets to better reflect growth drivers.
c. Demand
Beat revenue estimates by 0.9% & beat guidance by 1.2%.
11% Y/Y foreign exchange neutral (FXN) revenue growth missed 12% FXN growth estimates.
Adobe’s 10.6% 2-year revenue compounded annual growth rate (CAGR) compares to 11.3% Q/Q & 10.4% 2 quarters ago.
Beat digital media revenue estimates by 1% & beat guidance by 1.0%.
Digital media annual recurring revenue (ARR) met estimates.
Beat digital experience revenue estimates by 0.7% & beat guidance by 1.4%.
Missed remaining performance obligation (RPO) estimates by 0.6%.


d. Profits & Margins
Beat EBIT estimates by 2.2%; beat GAAP EBIT estimates by 4.8%.
Beat operating cash flow (OCF) estimates by 22.2%.
Beat $3.88 GAAP EPS estimates & identical guidance by $0.26.
Beat $4.98 EPS estimates by $0.10 & beat guidance by $0.11.


e. Balance Sheet
$7.43B in cash & equivalents.
$6.15B in debt.
Diluted share count fell 4% Y/Y; basic share count fell 3.3% Y/Y. They’ve really picked up the buyback pace amid the recent stock decline.
f. Guidance & Valuation
Reiterated annual revenue guidance, which slightly missed estimates by 0.4%.
Reiterated $17.33B in annual digital media revenue, 11% annual digital media ARR growth and $5.85B in annual digital experiences revenue.
Reiterated annual $15.95 GAAP EPS estimates, which roughly met (missed by a penny).
Reiterated annual $20.35 EPS estimates, which slightly missed by $0.04.
For Q2, revenue guidance slightly missed estimates, $3.83 GAAP EPS guidance missed estimates by $0.07 and $4.98 EPS guidance roughly met estimates.
Adobe trades for 18x forward EPS and 20x forward FCF. EPS is expected to compound at a 12% clip for the next two years. FCF is expected to compound at a 14% clip for the next two years.
g. Call & Release
Table Setting:
The format of this earnings call was different than in quarters and years prior. Adobe no longer split things neatly into document cloud, creative cloud and experience cloud buckets. Instead, the theme was how it’s combining these products and infusing GenAI throughout all of them to augment utility, engagement, retention and subscription tier potential. It aims to use its world-class datasets – across PDFs, marketing content and creative materials – to keep aggressively building GenAI apps and models with this differentiated context. It’s the combination of great models, apps and data here that Adobe believes lets it stand out from the competition.
“We believe Adobe’s success will be driven by innovation in service of both “Business Professionals and Consumers” and “Creative and Marketing Professionals.” Reporting insights and the financial performance across these customer groups will provide a clear view of Adobe’s execution against our strategy.”
The “Business Professionals and Consumers” reporting group will include document cloud Acrobat creative cloud revenue, Adobe Express creative cloud revenue. This revenue bucket rose 15% Y/Y to $1.53B.
The “creative and marketing professionals” reporting group will include digital experience subscription revenue and all other digital media revenue not included in business professionals and consumers. This revenue bucket rose 10% Y/Y to $3.92B.
AI Accelerating the Creative & Marketing Professionals Opportunity:
Adobe continues to invest heavily in a few products to nurture the creative AI opportunity. Firefly models, services and apps are a central focus area. This can generate videos from different content modalities (thanks to the newer video model), create full scenes out of sketches, develop “custom motion design” and so much more. Dune: Part Two utilized these products and its creative suite. Most recently, Adobe incorporated a lot of the Firefly model and services work into the new Firefly Application. It thinks of this holistic product as the “more comprehensive destination to generate images, vectors and now videos with unmatched control.” And whether it’s using this content to power better customer outcomes in the experience cloud or ingesting PDFs from the document cloud to augment content generation possibilities, the Firefly App is meant to help in every facet of Adobe’s business. It’s embedded in virtually every app Adobe provides – sometimes as a complementary perk and sometimes as a premium upsell. Adobe is now offering two new subscriptions called Firefly Standard and Firefly Pro. It will soon fully release a third tier called Firefly Premium, with the initial launch happening this past week.
For Photoshop, its revamped web application and new mobile application have both been well received and are included in existing Photoshop tiers. The mobile launch is especially exciting, considering how popular smartphones are becoming for next-gen content creators. This had been a large, large hole in its product offering. Photoshop GenAI monthly active users (MAUs) rose 35% Y/Y, while Lightroom (photo editing) GenAI MAUs rose 30% Y/Y.
New Products for Creative Use Cases:
Premiere Pro (video editing app) released After Effects, which contains a Media Intelligence tool to “help users find footage faster with natural language and captions.”
Launched Distraction Removal (another GenAI tool) in Adobe Lightroom. This lets you cut that photobomber out of your favorite picture.
Launched Adaptive Profiles (another GenAI tool) to study an image and automate the optimization of things like contrast.
More on AI Accelerating the Marketing/Experiences Opportunity:
AI is helping Adobe exponentially accelerate content creation and targeting precision for client campaigns. This is really where GenStudio shines. As a reminder, GenStudio is where the Experience and Creative Clouds converge. It’s a unified bundle that includes Firefly services and a few other products. This includes Adobe Express – its “create anything app” with guardrails to guide content creation and store work. It also features the Adobe Experiences Platform (AEP) and Apps. This is its customer experiences ecosystem, which guides optimal interactions and pulls from content creation integrations to actionably power these interactions via targeted ad placements. That’s the magic of combining marketing and creative capabilities.
Unsurprisingly, Adobe added a new AEP AI Assistant to “empower more conversational interfaces for data ingestion, insight generation, audience segmentation” and more. The company is really pushing this assistant to be well-rounded with agentic capabilities. It wants AEP to “enable orchestration of customer experiences with AI agents” and that will require stellar post-training and reasoning models to power effective inference.
To support its GenStudio for Performance Marketing tool further, it debuted the real-time customer data platform (CDP). This enables clients to openly share first-party insight with one another, creating a more compelling network effect from Adobe’s client base. It creates a heightened sense of urgency to use its products. Coke, Major League Baseball, NBC and Discovery are early users. This also helped GenStudio for Performance Marketing secure contracts with Lennar, AT&T, Lenovo etc. It also added performance marketing support for Alphabet, Meta, Microsoft, Snapchat and TikTok.
One Adobe is the company’s subscription tier that unites most of the product work between these two supportive clouds. This was directly cited as a source of new business strength. It has plans to invest in more sales capacity to support this tier, as well as all other new tiers stemming from GenAI innovation.
AI Accelerating the “Business Professional and Consumer” Opportunity:
The focus here was on the combination of Adobe Express with Adobe Acrobat, as well as nurturing its AI Assistant products across Acrobat and Reader to accelerate pace of integration, iteration and improvement.
“AI Assistant in Acrobat, Reader and Express will accelerate the delivery of new conversational and agentic interfaces to add value to this combined offering.”
Adobe is tightly integrating these products to “make the journey from document creation to consumption smoother than ever.” Express paired with Acrobat deepens the potential to create more complex, aesthetically pleasing PDFs with “AI-generated cover pages, embedded infographics” and more. And in the future, you’ll be able to take these PDFs and generate fully-fledged slide decks with the information. This quarter, Express Usage on Acrobat rose 1000% Y/Y off of a small base. Express adoption from this “business professional and consumer” bucket also spiked 50% higher Q/Q to reach 6,000 new clients added during the period. Some of these wins (mainly business expansions rather than new logos) included AT&T, Delta, Disney, IBM, JP Morgan and Microsoft.
It’s important to note that most PDFs contain visual elements, which makes this inclusion in Express a great opportunity to expand their content creation services. While these two product categories may not seem as complementary as Creative + Experiences, this is still an impactful unification. Again… all of these products are meant to work better together.
Acrobat web business professional MAUs rose 50% Y/Y.
Acrobat and Reader MAUs both rose 23% Y/Y.
Added new Text Rewrite tools for its PDF franchise.
Added new Microsoft Edge, Chrome, GMail and Google Drive extensions for its productivity suite.
GenAI Financial Progress:
Between Acrobat AI Assistant, Firefly, GenStudio and its other AI work, Adobe is gaining $125M in directly incremental revenue. It expects to reach $250M by the end of FY 2025. That’s solid growth, but still represents just 1% of expected annual revenue. Analysts understandably seemed a bit underwhelmed by this contribution. Leadership reminded us that GenAI is also improving existing products, which is not included in that AI revenue number despite indirectly contributing. Furthermore, Adobe remains mainly in AI product adoption mode and will focus more aggressively on monetizing once it has built more scale here. Same playbook as always. Deloitte, IBM and Mattel were among named clients for GenAI products.
“Tapestry has implemented a new and highly productive digital twin workflow using custom models and Firefly. You’ll hear more on how the combination of creativity and marketing is powering personalization at scale in enterprises.”
Growth Drivers:
For digital media (creative + document clouds), Acrobat adoption and free conversion, Express, AI Assistant traction and creative app momentum were the highlights.
For digital experiences, AEP had a great quarter while GenStudio crossed $1B in ARR. A strong debut for GenStudio for performance marketing and higher retention were the other highlights.
Macro:
They remain confident in their guidance despite some airlines and retailers revising their numbers lower in recent days. As leadership rightfully said, tariffs have little to no impact on Adobe directly. Still, they could impact overall marketing and content budgets, which would affect it a bit. Like for every other company, we’ll just have to wait and see how things shake out.
h. Take
Really not a bad quarter. The company reported earnings amid one of the worst days for major indexes in a while, which surely amplified the sell-off. At multi-year lows for forward valuation and with stable forward estimates, one may wonder why this company is being punished so harshly? Guidance was essentially in-line and all of the commentary from the call was positive. So where’s the disconnect? Part of it is certainly overall market weakness-related. I also think it’s about Adobe being a bit slower to monetize GenAI than others in the app layer of the opportunity.
Markets will always assume uncertain delays mean the worst until they’re proven wrong, and Adobe still needs to prove the doubters wrong. A 1% direct revenue contribution for this year means that will not happen immediately, as the company has only recently begun tiering GenAI products to shift from adoption to monetization. I think it really does need to come in 2026. The AI market is moving rapidly. There are many mega-caps debuting image generation models and augmented targeting tools that could theoretically take some demand away from Adobe. Furthermore, GenAI has placed far more importance on unstructured data, while Adobe specializes in the realm of structured data like PDFs.
With all of that said, I do think Adobe has the assets and financial resources in place to continue demanding its fair share of the pie. It has great models, apps and data that should allow it to out-focus and out-innovate a field of generalists within its specialty. Confidence in that rosy outcome, for bulls and neutral commenters like myself, is dwindling just a bit. But I am still not ready to say this business is structurally challenged or already peaked. I think it’s just hibernating and gearing up for its next wave of monetization. We shall see.
I continue to think very highly of this company but am not compelled to start a position. I’d like to focus the finite remaining cash pile on higher-conviction existing holdings.
2. ServiceNow (NOW) – M&A
ServiceNow is acquiring Moveworks for $2.85B in cash and stock. Per leadership, this combines world-class enterprise agentic AI and automation with a high-quality “front-end AI assistant and enterprise search.” In turn, the pairing should help create more tangible enterprise AI use cases and easier value creation. Most of Moveworks’s clients are also ServiceNow clients, which will ease the integration. Some examples of what Moveworks can actually do in practice include:
Sales, CRM, finance and HR automations with real-time account information to prioritize and perfect salesperson engagements.
Automates scraping on contract details, order history and more to improve customer service scores.
Handles tedious payroll work.
Expedites talent recruiting by organizing and screening candidates.
Once the deal closes (expected 2nd half of this year), the two companies will integrate product suites and “deliver a unified, end-to-end search and self-service experience for all workflows.” ServiceNow’s ability to organize and orchestrate agent presence and work will mean these newly introduced agents from Moveworks will quickly be put to good use. Between that and customer overlap, I expect a seamless transition.
ServiceNow’s North Star is accelerating enterprise AI adoption. How does it accomplish that? By giving clients a higher number of compelling tools, which drive improved outcomes at lower costs. It’s by making sure that the things it is selling are… well… actually valuable. ServiceNow has been among the strongest software monetizers in GenAI because it has crafted its offering in a way that creates tangible financial value. Moveworks will build on this.
3. DraftKings (DKNG) – Prediction Markets
DraftKings has registered “DraftKings Predict” with the National Futures Association (NFA). As leadership has telegraphed, they fully plan to enter this market as regulations permit and, to me, that’s exciting. Leadership is confident that the opportunity for adding these new bets is far greater than the risk of companies like Robinhood being able to offer simplistic sports betting under this label. I agree with them. As I said in the last earnings review, if MGM, Barstool and ESPN have struggled this much to take market share, I don’t see how Robinhood will make a large dent. Furthermore, the idea of connecting retirement accounts to a sports gambling menu reeks of danger to me. I would not be surprised to see brokerages blocked from offering sports gambling while DraftKings is allowed to offer prediction markets. Still, even if everything is allowed, I view this as coming with more upside than downside.
4. Alphabet (GOOGL) – Gemma
Alphabet debuted Gemma 3 this week. As a reminder, Gemma 3 is built with the same foundational technology as its Gemini LLMs, but with a fixation on efficiency to drive more affordable access. Impressively, this model can run on just 1 GPU to deliver agentic workflows at roughly 10% of the compute needed for competing models. It unlocks the ability to rationally build goal-oriented, multi-step tasks right from your device. It outperforms Deepseek v3 with far fewer GPUs, Perplexity’s o3-mini model and the Llama 3 405 billion parameter model. It also ranks just 2% lower on human usage preference than DeepSeek R1, while using just 1 H100 GPU vs. 32 with that competing model.
The focus on efficiency also means these models are miniaturized enough to run high-performance compute workloads right from an individual iPhone. Perhaps this is what Apple plans to use when it (finally) launches its new version of Siri.
Gemma 3 comes in 1 billion, 4 billion, 12 billion and 27 billion parameter model sizes.
So far, the Gemma family has racked up 100 million downloads.
Google also debuted ShieldGemma 2 as a 4 billion parameter model. This is a content generation filter that flags inappropriate content.
Larger context windows allow Gemma to process more data per token than its predecessor.
Other Alphabet News:
Alphabet is buying AdHawk Microsystems for $115M as it likely gears up to enter the smart glasses and XR headsets race at some point. At the same time, AdHawk works closely with Meta Quest on components of its headsets, so perhaps Alphabet will look to partner instead of compete. TBD. The company’s eye-tracking technology is what Alphabet wanted here. It has a product called MindLink that blazes a trail between eye motion and brain activity.
Alphabet owns 14% of Anthropic with plans to invest another $750M in the company.
5. Contextualized Headlines
A lot of headlines on Meta testing in-house AI training chips came out this week. That’s not news. They told us this would happen on the call. The company will keep innovating on ASICs (custom chips) to handle increasingly complex workloads. The ultimate aim is to diminish (not eliminate) reliance on Nvidia. This is expected to cut infrastructure costs for the firm, as it can design these chips with its own, granular, company-specific needs in mind. Nvidia GPUs are more general-purpose.
The Trade Desk named Vivek Kundra as its COO. He previously served as the U.S. government's very first CIO, an executive VP at Salesforce, and the COO of Sprinklr.
As spoken about on the last call, Starbucks is now in the testing phase for its new store design that focuses on a warmer, more inviting ambiance that you actually want to hang out in. There will be more seating and more outlets to turn Starbucks back into the neighborhood coffee shop. I continue to be quite excited by this investment, which is why I added this week for the first time since starting the position last year. Starbucks is a globally iconic brand. The old team basically did everything wrong. New CEO Brian Niccol is a proven legend in quick-service, with a mountain of low-hanging fruit to devour. Sources of financial progress are crystal clear (fix throughput, menu clutter, menu decisioning and in-store experience) and the comps are oh, so very easy.
Following regulatory blowback, Uber will not purchase Delivery Hero’s Taiwanese business. Uber will need to pay $250M in termination fees, which will likely hit GAAP results this quarter or next quarter.
CrowdStrike and Accenture are deepening their go-to-market partnership and CrowdStirke also signed a new Australian distribution deal with Dicker Data. Dicker represents 10,000+ reseller partners.
Palantir named Walgreens and Heineken as new customers at AIPCon 2025. Walgeens leadership talked through large time-to-market, cost, performance and analytics leads with Palantir vs. old vendors. RaceTrac walked through how impactful Palantir Ontology has been for augmenting the customer experience. The main international Wendy’s supplier spoke about dramatic improvements to communication and response time with the large fast food chain. It also added a half dozen Operation Warp Speed (initiative to “re-industrialize” America).
Walmart was warned by Chinese officials not to pass tariff costs onto its supplier. Selfishly, if this elite business is swept up in trade war noise, I could see myself starting a position at lower multiples down the road. We shall see.
SoFi closed its previously announced 2-year, $5 billion funding deal with Blue Owl. Assuming stable gain on sale margin and ignoring the potential for other unnamed deals, this business is likely generating north of $250M a year in asset-light, fee-based revenue… less than a year into launching. That was quick.
Coupang added HBO Max to Coupang Play via a new Warner Brothers partnership.
6. Macro
Inflation:
The Consumer Price Index (CPI) Y/Y rose by 2.8% in February vs. 2.9% expected and 3.0% last month.
The CPI M/M rose by 0.2% in February vs. 0.3% expected and 0.5% last month.
The Core CPI M/M rose by 0.2% in February vs. 0.3% expected and 0.4% last month.
The Producer Price Index (PPI) M/M rose by 0% in February vs. 0.3% expected and 0.6% last month.
Core PPI M/M rose by -0.1% vs. 0.3% expected and 0.5% last month.
A 10-year note auction was held with an average yield of 4.31% vs. 4.63% last auction.
Consumer & Employment:
JOLTs Job Openings for January rose from 7.51M last month to 7.44M this month. Good to see this continue to rise (even though this is for January not February). These openings will be vital in supporting fired government employees quickly finding private sector work.
Initial jobless claims were 220,000 vs. 226,000 expected and 222,000 last report. Still looking good here.
Michigan Consumer Expectations and Sentiment sharply missed expectations. Again, there is a wildly sharp difference between Republicans surveyed and Democrats surveyed.
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