Adobe forecasts strong results on AI and design software demand
What's the story
Adobe has forecasted better-than-expected fiscal 2026 revenue and profit, driven by the growing demand for its design software and increased monetization of its artificial intelligence (AI) products. The company expects an annual revenue between $25.90 billion and $26.10 billion, slightly above the estimated $25.87 billion, according to LSEG data. On an adjusted basis, Adobe also expects annual earnings per share of between $23.30 and $23.50, higher than the estimated $23.34 per share.
User adoption
AI tools see significant user growth
Since the launch of ChatGPT in 2022, Adobe has invested heavily in generative AI with its Firefly tool. The tool can be integrated into the company's Creative Cloud suite to create images and videos. Despite facing stiff competition from other companies leveraging AI to grow their businesses and win contracts, Adobe has reported a 35% year-over-year (YoY) increase in monthly active users for its freemium offerings.
Strategic moves
Adobe's acquisition and future plans
Last month, Adobe announced its plan to acquire Semrush for $1.9 billion. The move is aimed at helping marketers better understand how their brands are perceived by online consumers through website searches and GenAI bots like ChatGPT and Gemini. From fiscal 2026 onward, the company also plans to restructure some forecast and reporting segments to focus on subscription revenue from different customer groups as well as year-ending annual recurring revenue.
Financial performance
Q4 revenue exceeds estimates
Adobe reported a fourth-quarter revenue of $6.19 billion, beating the estimated $6.11 billion. The company's CFO Dan Durn told Reuters that "we're seeing significant strength in Creative Cloud Pro, Photoshop, Lightroom," adding that natively embedding generative AI into these products is paying off. This strong financial performance and user growth highlight Adobe's successful strategy in the competitive tech industry.