Disclaimer: This is not financial or investment advice. I'm sharing my personal investment decisions and reasoning for educational and informational purposes. Always do your own research before making any investment decisions.
Adobe ($ADBE)
Adobe sells the software that creative and marketing professionals use to make and manage digital content, anchored by Creative Cloud and Acrobat, and a growing enterprise marketing suite. It is also one of the most heavily debated names in software, cast by skeptics as a prime casualty of generative AI as free tools crowd the entry point. This quarter amplified that debate, as management chose to defer planned price increases and lean into a freemium push, all while absorbing the exit of its chief financial officer and an unfinished search for its next chief executive.
Quarter at a Glance
Total Revenue: $6.62B, +13% YoY (+11% constant currency)
Record quarterly revenue, driven by subscription bookings converting to revenue.
GAAP EPS: $4.25, +8% YoY
GAAP net income was flat at $1.71B. The entire per-share gain came from a 6% lower share count.
Ending ARR: $27.10B, +12.5% YoY
Up from $26.06B in Q1. Includes ~$480M from Semrush acquisition, which closed in April.
Non-GAAP Operating Margin: 44.5%, down ~1 pt YoY
OpEx grew 17% against 13% revenue growth, led by sales and marketing.
Creative & Marketing Professionals Revenue: $4.54B, +13% YoY (+11% constant currency)
Led by Creative Cloud Pro. Enterprise customers above $10M in ARR grew over 20%, with continued retention strength.
Business Professionals & Consumers Revenue: $1.85B, +16% YoY (+15% constant currency)
Acrobat and Express monthly active users surpassed 850M.
FY2026 Guidance: ARR growth held at 10.2%, organic ~8.3%
Revenue raised to $26.50B–$26.60B; GAAP EPS maintained at $17.90–$18.00. The held ARR target now carries Semrush and reflects deferred Creative Cloud price increases, so organic growth was revised downwards.
Now, let's discuss the three most important takeaways from the quarter, valuation, and exactly what I plan to do next:
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