Adobe Reports Record Q3 Revenue, Lifts Full-Year Targets
Adobe posted record third-quarter revenue of $6.76 billion, crossing one billion monthly active users and raising its annual financial outlook.
Adobe Inc. reported record third-quarter revenue of $6.76 billion on Thursday, marking a 13% year-over-year increase. The company simultaneously announced it has surpassed one billion monthly active users, a milestone driven largely by its expanding freemium artificial intelligence offerings. Subscriptions contributed the bulk of the income, reaching $6.58 billion, up from $5.79 billion in the same period last year.
Net income climbed to $1.83 billion, or $4.62 per diluted share, compared with $1.77 billion, or $4.18 per share, in the prior year. On an adjusted basis, earnings came in at $6.13 per share, slightly exceeding the consensus estimate of $6.08 per share cited by the Wall Street Journal. Despite these figures, Adobe shares declined 2.3% to $243.08 in after-hours trading.
Annual financial targets adjusted upward
The company raised its full-year revenue guidance to a range of $26.576 billion to $26.626 billion, previously set at $26.5 billion to $26.6 billion. Adjusted earnings-per-share targets were also increased to between $24.45 and $24.50, up from the earlier $24.35 to $24.45 range. For the fourth quarter, Adobe projects revenue of $6.8 billion to $6.85 billion and adjusted earnings of $6.30 to $6.35 per share.
AI strategy drives user growth
The one-billion user milestone was fueled by a strategic push into freemium AI products. Creative products saw freemium monthly active users exceed 100 million, a figure more than 70% higher than a year earlier. AI-first annualized recurring revenue grew over 150% year-over-year, contributing to total exiting ARR of $27.50 billion. The company expects full-year ARR growth of 10.2%.
However, this strategy has introduced trade-offs. Executives noted that the freemium model contributed to slower growth in remaining performance obligations and a dip in net new ARR. The shift reflects a broader effort to expand market reach through lower-barrier access to AI tools, even if it temporarily impacts traditional subscription metrics.
Leadership transition underway in 2026
Adobe is navigating a significant leadership transition. Anil Chakravarthy, head of the customer experience division, will assume the role of CEO on December 1, succeeding Shantanu Narayen, who announced plans to step down. Steve Day, senior vice president of corporate finance, is serving as interim CFO following the departure of Dan Durn to Marvell Technology in June. The company continues its search for a permanent CFO.
