The news
Adobe Q3 earnings, released on September 10, showed Adobe (ADBE) hitting record revenue of $6.76 billion and more than 1 billion monthly active users. Executives also said the company had held back some Creative Cloud price increases to keep new users coming in.
Revenue rose 13% from a year earlier, or 12% in constant currency, according to the company's results filing. Non-GAAP earnings were $6.13 a share and GAAP earnings $4.62. Total ending annual recurring revenue (ARR), the yearly value of subscriptions, reached $27.50 billion; Adobe's earnings presentation put that growth at 11.2%, according to Investing.com. Adobe said its AI-first ARR grew more than 150%, which Investing.com put at more than $650 million. Operating cash flow was $2.52 billion, a record for the third quarter.
Adobe raised its full-year revenue target to between $26.576 billion and $26.626 billion and set fourth-quarter revenue guidance of $6.80 billion to $6.85 billion. It now targets full-year growth in ending ARR of 10.2%. Interim chief financial officer Steve Day said Adobe is widening its user base through a freemium strategy, meaning free entry tiers designed to convert users to paid plans later.
That trade-off was the focus of the earnings call. Investing.com reported that management delayed some Creative Cloud pricing actions and put user growth ahead of immediate revenue. Creative freemium users topped 100 million, up more than 70%. Chief executive Shantanu Narayen said he was glad Adobe had not leaned on price increases, according to a BigGo Finance summary of the call.
Investors wanted more proof. Analysts cited by Yahoo Finance calculated that net new ARR fell 38% from a year earlier to $390 million. Remaining performance obligations, a measure of contracted future revenue, grew 8% to $22.16 billion, according to Investing.com. Shares slipped about 2% after hours. Anil Chakravarthy, who runs Adobe's customer experience business, becomes CEO on December 1, with Narayen moving to executive chair.
The numbers
- Q3 revenue
- $6.76 billion (+13%)
- Total ending ARR
- $27.50 billion (+11.2%)
- AI-first ARR
- More than $650 million (+150%+)
- Monthly active users
- More than 1 billion
- Net new ARR (analyst est.)
- $390 million (-38% year over year)
- Q4 revenue guidance
- $6.80–$6.85 billion
Why CEOs should care
For software buyers, the pricing delay is a window, not a promise. Adobe said it delayed pricing actions; it did not say it cancelled them. Enterprise customers with Creative Cloud, Acrobat or Express renewals in the next two quarters should ask for multi-year price holds now, before a new CEO sets a fiscal 2027 plan. Ask specifically how seat prices, generative credit allowances and any AI add-ons will change at renewal.
CFOs should watch the credit line. Investing.com reported that Firefly ARR grew 40% from the prior quarter, which BigGo Finance attributed to rising credit consumption and video generation. Generative credits, the units Adobe uses to meter AI image and video output, turn part of a fixed subscription into a variable cost. Finance teams should ask for usage reporting by team, pooled credits across departments and clear overage rates before creative staff scale up video work.
Marketing and customer-experience leaders should note who is taking over. Chakravarthy has led Adobe's customer experience business, where products such as Adobe Experience Platform, GenStudio and Experience Manager each grew ARR more than 20%, according to Investing.com. Buyers of those products can expect more attention, and should put roadmap and integration commitments in contracts rather than relying on keynote promises.
The bigger picture
Adobe's quarter shows a tension running through application software. AI usage is rising fast, but revenue is not keeping pace. Oracle (ORCL), which also reported on September 10, grew cloud application revenue 10% while its infrastructure business more than doubled. Vendors must choose between raising prices on existing seats, which risks churn, and pushing free or metered AI tiers that grow slowly into revenue. Salesforce (CRM) took another route on September 3, folding AI agents, Slack and usage credits into three new editions priced from $195 to $550 per user per month. Adobe has chosen adoption for now, and buyers benefit until that choice changes.
What’s next
The leadership handover on December 1 is the next marker. Analysts cited by Yahoo Finance are split, with Morgan Stanley and KeyBanc questioning whether user growth will turn into faster ARR. Watch whether deferred Creative Cloud price increases return in Adobe's fiscal 2027 plans, and whether net new ARR recovers in the fourth quarter. Buyers should also track whether Adobe changes how generative credits are bundled into enterprise plans, since that is where AI costs will show up first.
What “Fact-checked” means
Fact-checking means testing a story’s facts against the evidence before it is published. This story went through at least two separate checks before this version was published.
- What we checked
- Its names, figures, dates, job titles, quotes and who said what were checked against the story’s sources, including its main source where it could be opened. The headline was checked for accuracy and overstatement.
- How
- A first check reviewed the whole story. If it passed, a second, skeptical check went back to the sources to look for mistakes in the most important facts. If a check flagged the story, it was edited to fix the problems found, and a separate re-check then reviewed the whole story again.
- Who
- The checks are made with our newsroom’s technology tools, as steps kept separate from the writing, under rules set by our editor, Hussein Mukhtar. A story the checks still flag is not published automatically; it is held for the editor, who decides whether it is fixed, published or dropped.
- If something is wrong
- “Fact-checked” does not mean error-free. If a material error is found after publication, we correct the story and add a note saying what changed. Report an error
Companies in this story
