Adobe Reports Earnings and Guidance Below Expectations Despite AI Growth
Adobe reported third-quarter earnings after market close on Sept. 10, highlighting strong user growth driven by its freemium model but falling short of analyst expectations for the fourth quarter. The company's Creative Cloud suite remains popular among professionals, while Adobe Firefly and other AI tools are attracting new users through free access before monetization. Despite a successful strategy in acquiring over 100 million monthly active users on creative products—up 70% year-over-year—the stock dropped nearly 5% after hours due to weaker-than-expected guidance. Adobe's revenue for the quarter reached $6.76 billion, up 13%, with diluted earnings per share at $4.62 and annualized recurring revenue (ARR) of $27.50 billion. AI-first ARR grew over 150% year-over-year. However, fourth-quarter guidance came in below expectations, leading to investor skepticism despite Adobe's long-term growth strategy. The company is betting on converting free users into paid subscribers as it expands its ecosystem and integrates more AI features.
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