Key Highlights

● Record revenue of $6.76 billion, up 13% for the quarter ended 28 August.

● AI-first annual recurring revenue grew by more than 150%.

● Total annual recurring revenue exiting the quarter was $27.50 billion.

● Non-GAAP diluted earnings per share were $6.13, up from $5.31.

Record quarter and higher targets

Adobe Inc. (NASDAQ:ADBE) raised its fiscal 2026 financial targets when it announced third-quarter results on 10 September 2026. The company reported record revenue of $6.76 billion for the quarter ended 28 August 2026, up 13% year on year, and said AI-first annual recurring revenue grew by more than 150%. The raised targets reflect management's view of subscription momentum across its creative, document and marketing products.

Business and sector

Adobe is a software company best known for Photoshop, Illustrator, Premiere Pro, Acrobat and Express, and for Experience Cloud tools used by marketers. It reports subscription revenue in two groups: Business Professionals and Consumers, which centres on document and productivity products, and Creative and Marketing Professionals, which covers creative and enterprise marketing offerings.

The sector is being reshaped by generative artificial intelligence, which lowers the cost of producing images, video and documents. Adobe's strategy is to embed its Firefly models and AI assistants in existing workflows, while competing with specialist AI start-ups, design platforms and large technology groups. The company said it has reached 1 billion monthly active users across its creativity and productivity solutions.

Latest reported results

Subscription revenue from the Business Professionals and Consumers group was $1.91 billion, up 16%, while the Creative and Marketing Professionals group delivered $4.65 billion, up 13%. Total Adobe annual recurring revenue exiting the quarter was $27.50 billion, and remaining performance obligations were $22.16 billion, of which 67% was current.

GAAP diluted earnings per share were $4.62, compared with $4.18 a year earlier, and non-GAAP diluted earnings per share were $6.13, compared with $5.31. GAAP net income was $1.83 billion and non-GAAP net income was $2.42 billion. Operating cash flow was $2.52 billion, and Adobe repurchased about 9.5 million shares during the quarter.

Financial performance and industry context

For the fourth quarter, Adobe targets revenue of $6.80 billion to $6.85 billion, GAAP earnings per share of $4.65 to $4.70 and non-GAAP earnings per share of $6.30 to $6.35. For the full fiscal year, it now targets revenue of $26.576 billion to $26.626 billion, GAAP earnings per share of $18.12 to $18.17 and non-GAAP earnings per share of $24.45 to $24.50, with total ARR growth of 10.2%.

GAAP operating income was $2.35 billion against non-GAAP operating income of $2.97 billion, a difference that mainly reflects items Adobe excludes, such as share-based compensation and amortisation of acquired intangibles. Industry-wide, software groups are being judged on whether AI features lift paid usage and retention, or instead compress pricing for core tools.

Risks and uncertainties

Adobe's results depend on continued subscription renewals and on converting free or low-priced AI users into paying customers. Competition from generative AI start-ups and from platform companies that bundle creative tools could pressure pricing and market share. The cost of training and running AI models may weigh on margins if monetisation lags usage.

Foreign exchange also matters: the 13% revenue growth was 12% in constant currency. The fourth-quarter targets assume a non-GAAP operating margin of about 44.0% and roughly 389 million diluted shares, assumptions that could change with market conditions, buyback pace and regulatory developments affecting AI and data use.

Fourth-quarter target in view

The next milestone is Adobe's fourth-quarter and full-year fiscal 2026 report, where actual revenue can be compared with the $6.80 billion to $6.85 billion target. Observers may track further disclosure on AI-first ARR, Firefly adoption, Acrobat AI Assistant usage, enterprise demand for marketing products and the extent to which share repurchases continue to support per-share earnings. Management may also outline its expectations for the following fiscal year, giving a first view of growth, margins and investment priorities beyond the current targets, together with any fresh update on AI monetisation.