Adobe sets revenue record as freemium shift tests growth
Adobe posted record third-quarter revenue and crossed one billion monthly active users, but investors remained cautious as its expanding freemium strategy slowed some recurring-revenue indicators and tempered near-term growth expectations. The software group reported revenue of $6.76 billion for the fiscal third quarter ended August 28, up 13% from a year earlier and above market expectations of…
Adobe reported record third-quarter revenue of $6.76 billion, surpassing market expectations of about $6.7 billion, with adjusted earnings at $6.13 per share. The company's monthly active users increased to over 1 billion across its creativity and productivity products, with the free and lower-cost freemium strategy attracting 100 million new users, a 70% year-over-year growth.
However, investors remain cautious as Adobe's expanded freemium approach slowed recurring revenue indicators and tempered near-term growth expectations, particularly concerning its fourth-quarter outlook. Despite a 2% stock drop following the results, the share price rebounded 1.4% by Friday's close. Adobe's AI-powered services, such as Acrobat's AI Assistant, saw a doubling of AI Assistant usage in the quarter, highlighting the company's focus on AI monetisation.
The company projected fiscal 2026 revenue between $26.576 billion and $26.626 billion, with adjusted earnings of $24.45 to $24.50 per share, slightly below analyst expectations for the fourth quarter. Meanwhile, Adobe is undergoing a major leadership transition, with Anil Chakravarthy set to become CEO on December 1, succeeding long-time CEO Shantanu Narayen, who will become executive chair.
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