Adobe Inc. (NASDAQ: ADBE) reported stronger-than-expected third-quarter results, supported by solid subscription growth.
However, Adobe shares fell about 2.7% in premarket trading on Friday after the company issued fourth-quarter revenue guidance that came in slightly below Wall Street expectations.
Adobe Beats Q3 Earnings Estimates
Adobe reported adjusted earnings of $6.13 per share for the third quarter, beating the analyst consensus of $6.07.
Revenue reached $6.76 billion, above expectations of $6.69 billion.
The figure also represented 13% year-over-year growth, highlighting continued demand for Adobe’s software and subscription products.
Q4 Revenue Guidance Falls Slightly Short
Despite the strong quarter, investors focused on Adobe’s outlook for the fourth quarter.
The company expects revenue of between $6.80 billion and $6.85 billion.
The midpoint of that range, $6.825 billion, is slightly below the analyst consensus of approximately $6.85 billion.
Adobe also expects fourth-quarter adjusted earnings of between $6.30 and $6.35 per share.
The midpoint of $6.325 per share is broadly in line with Wall Street expectations.
Adobe Raises Full-Year Outlook
Adobe increased its fiscal 2026 revenue forecast to between $26.576 billion and $26.626 billion.
The company also raised its full-year adjusted earnings guidance to a range of $24.45 to $24.50 per share.
Adobe additionally announced that its creativity and productivity platforms have now surpassed one billion monthly active users.
Subscription Revenue Remains Strong
Subscription growth remained a major driver of Adobe’s quarterly performance.
Total Customer Group subscription revenue rose 14% year over year to $6.56 billion.
Business Professionals & Consumers subscription revenue increased 16% to $1.91 billion.
Meanwhile, Creative & Marketing Professionals subscription revenue climbed 13% to $4.65 billion.
Adobe exited the quarter with total annualized recurring revenue of approximately $27.50 billion.
Adobe Generates Strong Cash Flow
The software company generated approximately $2.52 billion in operating cash flow during the quarter.
Adobe also repurchased around 9.5 million shares, continuing its capital-return program.
Jefferies analysts described the results as relatively uneventful, pointing to a modest revenue beat and higher guidance while operating margin expectations remained unchanged.
The analysts also noted that Adobe’s valuation remains under pressure as investors continue to look for greater clarity around future growth.
Adobe Highlights AI Growth Strategy
Adobe CEO Shantanu Narayen said the company delivered record third-quarter results, supported by its growing artificial intelligence capabilities and expanding customer base.
Adobe has increasingly integrated AI tools across its creative, productivity and customer experience products.
The company’s latest earnings show that its core subscription business remains strong, although investors appear to be demanding faster growth and clearer evidence that AI investments will translate into stronger future revenue.
