What explains Adobe's operating expense volatility recently?

Adobe's operating expense volatility can be attributed to several factors:

1. Legal Challenges and Litigation: Adobe is facing significant liabilities, costs, and disruptions due to intellectual property disputes and litigation. The Federal Trade Commission (FTC) has filed a lawsuit against Adobe, alleging anti-competitive practices related to its cloud-based offerings. Such legal challenges can lead to increased expenses for defense, settlements, or alterations in business practices.
2. Tax Changes and Regulations: Changes in tax rules and regulations, or interpretations thereof, could adversely affect Adobe's effective tax rates and financial results. This volatility can be due to uncertainties in tax law and the company's efforts to manage its tax affairs in a changing regulatory environment.
3. Strategic Initiatives and Investments: Adobe's strong financial performance and strategic initiatives, such as the introduction of generative AI models like Adobe Firefly, may also influence operating expense volatility. While these initiatives can drive growth and improve efficiency, they often require significant upfront investment, which can affect short-term operating expenses.

In summary, Adobe's operating expense volatility is a complex interplay of legal challenges, tax considerations, and strategic investments, all of which can significantly impact the company's financial performance and operational stability.