Key Highlights

● Third-quarter revenue reached about $6.76 billion, up 13%, with non-GAAP EPS of $6.13.

● Anil Chakravarthy becomes chief executive on December 1; Shantanu Narayen moves to executive chair.

● Ending annual recurring revenue reached about $27.5 billion, up about 11%.

● Adobe guided fourth-quarter revenue to about $6.8 billion to $6.85 billion.

Adobe (NASDAQ:ADBE) reported fiscal third-quarter results on September 10 that topped Wall Street expectations on both revenue and earnings per share. The creative and document software maker also lifted its full-year earnings guidance and announced that a longtime executive, Anil Chakravarthy, will take over as president and chief executive on December 1.

What did Adobe report for its third quarter of fiscal 2026?

According to a transcript summary of the September 10 call, Adobe reported revenue of about $6.76 billion, up 13% as reported and 12% in constant currency. That was above a consensus figure of roughly $6.69 billion cited in the same summary.

Non-GAAP earnings per share were $6.13, up 15% and ahead of a consensus of about $6.07. GAAP earnings per share were $4.62, up 11%.

Ending annual recurring revenue was about $27.5 billion, up about 11%. Remaining performance obligation, which measures contracted revenue not yet recognized, was about $22.16 billion, up 8%, and the current portion grew 9%.

Operating cash flow was about $2.52 billion, which the summary described as a record for a fiscal third quarter. Cash and short-term securities stood at about $5.64 billion. A separate commentary piece put free cash flow growth at about 15%. Together, the figures describe a company that is still expanding at a steady clip, with cash generation that comfortably supports its capital programs.

How did Adobe's two customer groups perform in the quarter?

Adobe reports subscription revenue across two customer groups. The Business Professionals and Consumers group, which includes Acrobat, Adobe Express and related services, generated about $1.91 billion in subscription revenue, up 16% as reported and 15% in constant currency.

The Creative and Marketing Professionals group, which includes Photoshop, Illustrator, Premiere Pro and the experience software used by marketing teams, generated about $4.65 billion, up 13%, or 12% in constant currency. Total subscription revenue across the groups was about $6.56 billion, up 14%.

The faster growth in the document and consumer group is a notable feature. It reflects demand for tools that sit near everyday work, such as editing, signing and summarizing documents, where artificial intelligence features have been added to existing subscriptions.

The creative group is larger and still growing in double digits, but it is also the area where outside tools are most visible. Rival services including Canva and Figma (NYSE:FIG), along with image and video tools from OpenAI, are named in commentary as competitors for the same users. The reported numbers do not show a slowdown in revenue so far, though they do not settle the question of how pricing and usage will evolve.

What does Adobe say about its AI-first products and Firefly?

The company said AI-first ending annual recurring revenue exceeded $650 million, up more than 150%. Adobe defines that category as products and services built around artificial intelligence, such as Firefly and the AI features packaged into Acrobat and Express. As with many such measures, the definition is the company's own and may not be directly comparable with peers.

Adobe also said monthly active users across its businesses surpassed 1 billion, and that creative freemium monthly active users passed 100 million. Management said it is prioritizing growth in free and entry-level users, a strategy that widens the top of the funnel but depends on converting a share of those users into paying subscribers.

Commentary published this week describes Firefly as positioned to work with third-party models, which could keep enterprise customers inside Adobe's workflow even if they use outside generators for some tasks. That is an interpretation from market commentary rather than an Adobe statement.

The strategic tension is clear. Generative tools can lower the barrier for new competitors, but they can also be built into established products with large installed bases. Which effect dominates remains unsettled.

What guidance did Adobe give for the fourth quarter and the full year?

For the fourth quarter, Adobe guided to revenue of about $6.8 billion to $6.85 billion, non-GAAP earnings per share of about $6.30 to $6.35, and GAAP earnings per share of about $4.65 to $4.70. The non-GAAP operating margin is expected to be around 44%.

For the full fiscal year, the company guided to revenue between about $26.58 billion and $26.63 billion, with non-GAAP earnings per share of about $24.45 to $24.50. It expects a non-GAAP operating margin around 45% and ending annual recurring revenue growth of about 10%.

Management cited a foreign-exchange headwind for the fourth quarter.

The phrase 10% growth in recurring revenue is the center of the discussion. It is healthy by the standards of most industries, but it is slower than the pace some market participants expected when Adobe first rolled out its generative tools.

Who is Anil Chakravarthy and what does the Adobe CEO handover involve?

Adobe said that Anil Chakravarthy will become president and chief executive on December 1, and that Shantanu Narayen, who has led the company for many years, will move to the role of executive chair. Steve Day is serving as interim chief financial officer, according to the call summary.

Narayen said in a statement quoted in the summary that Adobe will use artificial intelligence to increase the reach, value and impact it delivers to customers. The statement does not outline specific changes in strategy, and the company did not describe a new financial framework in the call summary.

Executive transitions at established software companies draw attention because they often coincide with shifts in priorities, such as acquisitions, pricing changes or reorganizations. At the same time, having the outgoing chief remain as executive chair is a structure designed to maintain continuity. Neither the existence of a new chief executive nor the interim finance chief settles the open strategic questions, but both are items that market participants will follow.

The first scheduled public occasion following the handover will be the fourth-quarter earnings report, when the new chief executive is expected to address priorities.

How is Adobe using cash, and what happened with its share retirement program?

Adobe retired about 9.5 million shares during the quarter, according to the call summary, spending about $2.23 billion, per a separate commentary article. It fully used its March 2024 authorization and has about $24.55 billion remaining under an authorization approved in April of this year.

The pace of share retirement matters because it reduces the number of shares outstanding and supports earnings per share growth, which was 15% on a non-GAAP basis against 13% for revenue. In other words, part of the earnings growth reflects a smaller share count rather than purely operating gains.

The company also disclosed a goodwill impairment of about $70 million in its Publishing and Advertising unit, according to the commentary article. Impairments are accounting adjustments that reduce the recorded value of past acquisitions, and they do not by themselves involve cash.

On acquisitions, management said the Topaz Labs deal is expected to close in the fourth quarter, subject to regulatory approvals. Topaz is known for artificial intelligence image enhancement software, and the transaction would add to Adobe's imaging tools.

What are the main challenges facing Adobe from generative AI competition?

Three themes recur in coverage. The first is competition from tools that generate images, video and design layouts from text prompts, often at low prices or for free. If such tools satisfy a growing share of casual users, Adobe's entry-level subscriptions could face pressure.

The second is the slower growth of contracted backlog. Remaining performance obligation growth of 8% trails revenue growth of 13%, which some commentators see as an early sign of moderating demand. Adobe's explanation was not detailed in the call summary, and backlog can be affected by contract length and currency.

The third is earnings conversion. The commentary article noted that operating earnings and net earnings grew more slowly than sales in the quarter, partly due to the impairment charge and higher spending on artificial intelligence capacity. The company's own guidance points to operating margins in the mid-forties, which remains high for the industry.

Against these challenges, Adobe points to its installed base, its integration of Firefly across products, its willingness to work with outside models and its large free user pool.

What are the next Adobe dates and questions to follow?

The Adobe MAX conference is scheduled for November, according to the commentary article, and it is typically where the company showcases new creative features. The Topaz Labs closing is expected before the fourth-quarter report, and the chief executive handover takes effect on December 1.

The fourth-quarter earnings report will test whether Adobe meets its guidance of about $6.8 billion to $6.85 billion in revenue and whether recurring revenue growth stays near 10%. It will also be the first update under the new chief executive's arrival.