Adobe reported quarterly revenue of $6.76 billion on September 10, up 13% from a year earlier, as the software company expanded its AI offerings and attracted more users to free versions of its creative tools.
The results, covering the fiscal third quarter ended August 28, came with higher full-year revenue and earnings targets. Growth was 12% when exchange-rate movements were excluded, according to Adobe’s earnings release.
Adobe also reported rapid growth in a smaller part of its subscription business: products it classifies as “AI-first.” Their annualized recurring revenue exceeded $650 million, more than 150% above a year earlier.
That measure puts ongoing subscription business on an annual basis. It is not revenue earned during the three-month quarter, and it should not be added to quarterly sales.
More users, several ways to charge
In its prepared earnings remarks, Adobe said monthly active users across its businesses had passed one billion. Its creative freemium audience exceeded 100 million, growing more than 70% from a year earlier.
Freemium products offer basic access without charge and sell additional capabilities or capacity. A rising user count therefore shows a larger audience, but it does not reveal how many people have become paying customers or how much each spends.
Adobe’s figures give a more specific view of demand for Firefly, its creative AI offering. Annualized recurring revenue from the Firefly app and its credit packs grew 40% from the previous quarter, the company said.
Credits let customers pay for a quantity of use, adding another source of sales alongside subscriptions. As MBN recently explained, AI is changing how businesses pay for software, with suppliers combining user licenses and charges tied to activity.
For customers, this makes the allowance inside a plan more important. A subscription price alone may not describe the eventual bill if additional work consumes paid credits.
The AI-first figure is Adobe’s own product grouping. It does not establish how much of the company’s wider subscription growth was caused by AI, including features offered inside existing applications.
The established businesses still provide most sales
Subscriptions for creative and marketing professionals generated $4.65 billion, up 13% in reported terms. Subscriptions for business professionals and consumers brought in $1.91 billion, up 16%.
Adobe’s investor datasheet places Acrobat and Express in the latter group. Creative Cloud applications and Experience Cloud, which serves business marketing and customer-experience needs, sit in the former.
Across Adobe, annualized recurring revenue finished the quarter at $27.50 billion. This broader subscription base remains much larger than the separately identified AI-first business.
Net income was $1.83 billion, compared with $1.77 billion a year earlier. Diluted earnings per share, which spread profit across the share count including potential dilution, rose to $4.62 from $4.18. The company had fewer shares outstanding on that basis than a year earlier.
A higher outlook ahead of a CEO handover
Adobe forecast fourth-quarter revenue of $6.80 billion to $6.85 billion and raised its full-year revenue target to $26.576 billion to $26.626 billion. Those are management targets, subject to the economic conditions and business risks described in the release.
The results also precede a leadership change announced earlier this month. Anil Chakravarthy will become president and chief executive on December 1, while Shantanu Narayen becomes executive chair, according to Adobe’s regulatory filing.
Chakravarthy will take over with a growing free audience and expanding AI subscriptions. Turning that audience into sustained paid use will be part of the commercial challenge, alongside retaining customers who already depend on Adobe’s established applications.
