Adobe Stock May Be Worth Buying as Recurring Revenue Grows
Adobe (ADBE) reported another record quarter with revenue rising 13% year-over-year to $6.76 billion and adjusted earnings growing faster than expected. Management raised its full-year targets, but the stock dipped before recovering slightly below its 52-week high. The key focus is Adobe's total annualized recurring revenue (ARR), which reached $27.50 billion — a critical indicator of long-term growth potential. If current trends continue, ARR could surpass $30 billion within about a year. The company’s subscription model drives most of its business, with 97% of Q3 revenue coming from subscriptions. Despite slower growth in fiscal 2026 compared to the previous year and some market impatience due to delayed conversion of free users into paying customers, Adobe is still trading at a relatively low valuation. The stock currently trades around $252, which appears undervalued given its strong fundamentals.
Tickers: $ADBE
Topics: Adobe AI products recurring revenue (ARR) S&P 500 subscription model