GURUFOCUS.COM » STOCK LIST » Technology » Software » Adobe Inc (NAS:ADBE) » Definitions » Free Cash Flow

Adobe (ADBE) Free Cash Flow : $6,487 Mil (TTM As of Feb. 2024)


View and export this data going back to 1986. Start your Free Trial

What is Adobe Free Cash Flow?

Adobe's total free cash flow for the months ended in Feb. 2024 was $1,137 Mil. Its total free cash flow for the trailing twelve months (TTM) ended in Feb. 2024 was $6,487 Mil.

Adobe's Free Cash Flow per Share for the months ended in Feb. 2024 was $2.49. Its free cash flow per share for the trailing twelve months (TTM) ended in Feb. 2024 was $14.15.

During the past 12 months, the average Free Cash Flow per Share Growth Rate of Adobe was -9.60% per year. During the past 3 years, the average Free Cash Flow per Share Growth Rate was 11.40% per year. During the past 5 years, the average Free Cash Flow per Share Growth Rate was 17.70% per year. During the past 10 years, the average Free Cash Flow per Share Growth Rate was 26.50% per year. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Free Cash Flow Growth Rate using Free Cash Flow per Share data.

During the past 13 years, Adobe's highest 3-Year average Free Cash Flow per Share Growth Rate was 43.90% per year. The lowest was -6.30% per year. And the median was 16.50% per year.


Adobe Free Cash Flow Historical Data

The historical data trend for Adobe's Free Cash Flow can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Adobe Free Cash Flow Chart

Adobe Annual Data
Trend Nov14 Nov15 Nov16 Nov17 Nov18 Nov19 Nov20 Nov21 Nov22 Nov23
Free Cash Flow
Get a 7-Day Free Trial Premium Member Only Premium Member Only 4,027.00 5,308.00 6,882.00 7,396.00 6,942.00

Adobe Quarterly Data
May19 Aug19 Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22 Aug22 Nov22 Feb23 May23 Aug23 Nov23 Feb24
Free Cash Flow Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1,592.00 2,018.00 1,782.00 1,550.00 1,137.00

Adobe Free Cash Flow Calculation

Free Cash Flow is considered one of the most important parameters to measure a company's earnings power by value investors because it is not subject to estimates of Depreciation, Depletion and Amortization (DDA). However, when we look at the Free Cash Flow, we should look from a long term perspective, because any year's Free Cash Flow can be drastically affected by the spending on Property, Plant, & Equipment (PPE) of the business in that year. Over the long term, Free Cash Flow should give pretty good picture on the real earnings power of the company.

Adobe's Free Cash Flow for the fiscal year that ended in Nov. 2023 is calculated as

Free Cash Flow (A: Nov. 2023 )=Cash Flow from Operations+Capital Expenditure
=7302+-360
=6,942

Adobe's Free Cash Flow for the quarter that ended in Feb. 2024 is calculated as

Free Cash Flow (Q: Feb. 2024 )=Cash Flow from Operations+Capital Expenditure
=1174+-37
=1,137

Free Cash Flow for the trailing twelve months (TTM) ended in Feb. 2024 adds up the quarterly data reported by the company within the most recent 12 months, which was $6,487 Mil.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Adobe  (NAS:ADBE) Free Cash Flow Explanation

Free Cash Flow is very close to Warren Buffett's definition of Owner's Earnings, except that in Warren Buffett's Owner's Earnings, the spending for Property, Plant, and Equipment is only for maintenance (replacement), while in the Free Cash Flow calculation, the cost of new Property, Plant, and Equipment due to business expansion is also deducted. There, Free Cash Flow is more conservative than Owner's Earnings.

In Don Yacktman's calculation of forward rate of return, he uses Free Cash Flow for the calculation. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation.

This is what Yacktman said in his March 2012 interview - when the S&P 500 was at 1400:

If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.

The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).

For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over seven years. The reason we use seven years is because research shows that seven years is the length of the typical business cycle.

Therefore, as of Feb24, Adobe's Forward Rate of Return (Yacktman) % is

Forward Rate of Return (Yacktman) % (Feb24)=Normalized Free Cash Flow/Price+5-Year EBITDA Growth Rate
=12.71504762/560.28+0.1994
=22.21 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Be Aware

Free Cash Flow within a report period can be affected by management's decisions of capital spending. Therefore, it is important to look at long term when it comes to Free Cash Flow.


Adobe Free Cash Flow Related Terms

Thank you for viewing the detailed overview of Adobe's Free Cash Flow provided by GuruFocus.com. Please click on the following links to see related term pages.


Adobe (ADBE) Business Description

Address
345 Park Avenue, San Jose, CA, USA, 95110-2704
Adobe provides content creation, document management, and digital marketing and advertising software and services to creative professionals and marketers for creating, managing, delivering, measuring, optimizing and engaging with compelling content multiple operating systems, devices and media. The company operates with three segments: digital media content creation, digital experience for marketing solutions, and publishing for legacy products (less than 5% of revenue).
Executives
Mark S. Garfield officer: VP, CAO & Corp. Controller 345 PARK AVENUE, SAN JOSE CA 95110-2704
Amy Banse director 345 PARK AVENUE, SAN JOSE CA 95110
David Wadhwani officer: SVP & GM, Digital Media ADOBE INC., 345 PARK AVE, SAN JOSE CA 95110
Shantanu Narayen director, officer: President and CEO 345 PARK AVENUE, SAN JOSE CA 95110
Daniel Durn officer: EVP and CFO C/O APPLIED MATERIALS, INC., 3050 BOWERS AVENUE, P.O. BOX 58039, SANTA CLARA CA 95052-8039
Scott Belsky officer: EVP, Chief Product Officer 345 PARK AVENUE, SAN JOSE CA 95110
Cristiano R Amon director 5775 MOREHOUSE DRIVE, SAN DIEGO CA 92121
John E Warnock director, other: Co-Chairman of the Board C/O ADOBE SYSTEMS INC, 345 PARK AVENUE P O BOX 2704, SAN JOSE CA 95110-2704
Dana Rao officer: EVP, Gen. Counsel & Secretary 345 PARK AVE, SAN JOSE CA 95110
Ann Lewnes officer: SVP, Chief Marketing Officer 345 PARK AVENUE, SAN JOSE CA 95110
David A Ricks director LILLY CORPORATE CENTER, INDIANAPOLIS IN 46285
M. Brett Biggs director 702 SW 8TH STREET, BENTONVILLE AR 72716
Laura Desmond director 345 PARK AVENUE, SAN JOSE CA 95110
Spencer Adam Neumann director SIERRA INCOME CORPORATION, 375 PARK AVE., SUITE 3304, NEW YORK NY 10152
Gloria Chen officer: EVP, Strategy & Growth 345 PARK AVENUE, SAN JOSE CA 95110

Adobe (ADBE) Headlines

From GuruFocus

Adobe Inc Fireside Chat Hosted By Bernstein Transcript

By GuruFocus Research 01-22-2024

Q3 2022 Adobe Inc Earnings Call Transcript

By GuruFocus Research 01-22-2024

Q3 2021 Adobe Inc Earnings Call Transcript

By GuruFocus Research 01-22-2024

Q2 2023 Adobe Inc Earnings Call Transcript

By GuruFocus Research 01-22-2024

Adobe Inc. Presents at Adobe Summit 2023 Transcript

By GuruFocus Research 01-22-2024

Q2 2022 Adobe Inc Earnings Call Transcript

By GuruFocus Research 01-22-2024