Adobe (NASDAQ:ADBE) unveiled upbeat annual revenue and earnings guidance that surpassed Wall Street expectations, suggesting the company’s efforts to monetize its expanding suite of AI-powered features are gaining traction.

The longtime favorite among creative professionals has spent years integrating artificial intelligence across more of its tools, aiming to simplify and speed up image and video creation. Adoption of its freemium products continues to climb, with monthly active users increasing 35% from last year to more than 70 million, CFO Dan Durn told Reuters.

Even so, intensifying competition—fueled by businesses racing to adopt AI—has raised questions about how sustainable Adobe’s growth trajectory will be.

For the year ahead, Adobe projects revenue of $25.90 billion to $26.10 billion, above the $25.87 billion consensus. Adjusted earnings are forecast at $23.30 to $23.50 per share, also exceeding estimates of $23.34 at the midpoint.

In its fourth quarter, the company posted revenue of $6.19 billion, up 10% year-over-year and ahead of expectations. Adjusted earnings came in at $5.50 per share. Digital Media revenue rose 11% to $4.62 billion, while Digital Experience revenue climbed 9% to $1.52 billion.

Subscription-based revenue across all customer groups increased 12% to $5.96 billion, driven largely by a 15% jump in its Business Professionals and Consumers segment. Operating cash flow reached a record $3.16 billion for the quarter.

Adobe also announced that beginning in 2026, its financial reporting will shift to emphasize customer group subscription revenue and total company annual recurring revenue. Digital Media and Digital Experience segment metrics will still be provided, but only as supplementary information.

Morgan Stanley summarized the mixed investor reaction in a note, stating: “Bottom-line, despite significant portfolio expansion for AI capabilities and early shift to monetization, investors likely need firmer evidence of a growth re-acceleration and/or material positive revisions to the forward outlook to ease concerns on AI competition and get back on-board despite shares trading at an undemanding valuation.”

Adobe shares edged slightly lower in premarket U.S. trading on Thursday.

Adobe stock price

Join the discussion: Connect with other investors on your favorite stocks or explore the top-talked-about stocks on our Breakout Boards.

This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.
Some portions of this content may have been generated or assisted by artificial intelligence (AI) tools and been reviewed for accuracy and quality by our editorial team.