TenQ

The Adobe story

Adobe provides Photoshop, Acrobat and other creative and document tools by subscription, with the central question whether Firefly and Acrobat Studio can turn broader AI use into paying customer growth.

Written from Adobe's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $231.01share price, last close
  • $89.9Bmarket value
  • 24/36TenQ Score checks passed
  • -1.7%growth a year the price assumes

The story in brief

  • AI reach expands. In the quarter to August 2026, Adobe reached 1 billion monthly active users across creativity and productivity solutions, while AI-first annualized recurring revenue grew more than 150% year over year.
  • Subscriptions keep growing. Revenue reached $6.76 billion in the quarter to August 2026, up 13% year over year, with Business Professionals & Consumers subscription revenue growing faster than Creative & Marketing Professionals.
  • Cash funds repurchases. Adobe generated $2.52 billion of operating cash flow and repurchased approximately 9.5 million shares in the quarter to August 2026.

What drives the business

  • Adobe is expanding its Creative Cloud and Document Cloud subscription business into an integrated set of creativity, productivity and marketing tools, embedding its Firefly AI models and partner models across customer workflows.
  • Acrobat Studio combines Acrobat and Express to connect document work with content creation, serving a Business Professionals & Consumers group whose subscription revenue reached $1.91 billion in the quarter to August 2026, up 16% year over year.
  • Firefly, Adobe Experience Platform and GenStudio connect content creation with marketing execution for Creative & Marketing Professionals, whose subscription revenue reached $4.65 billion in the quarter to August 2026, up 13% year over year.
  • Adobe exited the quarter to August 2026 with $27.50 billion of annualized recurring revenue and $22.16 billion of remaining performance obligations, reflecting its recurring subscription base and contracted business.
  • Capital returns are another substantial use of subscription cash, with a $25 billion stock repurchase authorization running through April 30, 2030, alongside $10.6 billion of free cash flow over the last twelve months.

What the price assumes

At $231.01, the reverse DCF implies free cash flow after stock pay grows -1.7% a year for ten years, using a 10.2% discount rate.

That compares with Adobe's delivered growth of 23.2% a year over the last 10 years and the TenQ check's 13.6% bar, which slows the historical record halfway toward 4%.

Value ADBE on your own assumptions

What could change the story

  • Adobe faces AI-native competitors, limited barriers to entry and customer price sensitivity, making its ability to turn free access and AI engagement into paid subscriptions an important test.
  • Revenue growth of 12.0% over the last twelve months trails the TenQ sector benchmark of 17.0%, while annual revenue growth of 10.5% over the last three years trails 14.9%, despite accelerating from its own historical pace.
  • Near-term liquidity fails the TenQ check at 0.77 against 1.50, and total debt of $6.4 billion exceeds cash and short-term investments of $5.6 billion, although Adobe remains cash generative.
  • The AI transition also coincides with a leadership handoff, with Anil Chakravarthy scheduled to become president and CEO on December 1, 2026, and Shantanu Narayen moving to executive chair.

What to watch next

  • Adobe's guidance for the fourth quarter of fiscal 2026 calls for revenue of $6.80 billion to $6.85 billion and GAAP earnings per share of $4.65 to $4.70.
  • Customer group results will show where subscription growth is coming from against fourth-quarter expectations of $1.93 billion to $1.95 billion for Business Professionals & Consumers and $4.665 billion to $4.695 billion for Creative & Marketing Professionals.
  • Fiscal 2026 guidance calls for ending annualized recurring revenue growth of 10.2% year over year, making that measure, AI-first recurring revenue and operating cash flow concrete tests of whether expanding usage is translating into recurring revenue and cash.

Sources

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