Adobe reported third-quarter fiscal 2026 results on September 10. Revenue was $6.76 billion, up 13 percent as reported and 12 percent after currency. GAAP earnings were $4.62 a share and non-GAAP earnings were $6.13. Ending annual recurring revenue reached $27.50 billion. The company raised full-year revenue to $26.576 billion through $26.626 billion and kept the 10.2 percent ending ARR growth target (Adobe, 2026).

Anil Chakravarthy, who runs Customer Experience Orchestration and the worldwide field team, becomes president and chief executive on December 1. Shantanu Narayen becomes executive chair. In March I wrote that Narayen had said he would leave and the incoming name was missing. The name is now on the page. This print is the first one with that name attached.

Free seats are growing faster than the paid book

Business Professionals and Consumers subscription revenue was $1.91 billion, up 16 percent as reported and 15 percent in constant currency. That group now has more than 900 million monthly active users, up more than 25 percent. Acrobat AI Assistant monthly users doubled from the prior quarter. Creative freemium monthly users passed 100 million and grew more than 70 percent. Firefly ending ARR from the app and credit packs rose 40 percent quarter over quarter (Adobe, 2026).

Steve Day, the interim chief financial officer, said Adobe is adding those people through free Acrobat and Firefly products and delayed some Creative Cloud price changes so the free path stays open. Revenue and earnings guidance went up. The ARR growth target stayed at 10.2 percent because a free user does not show up in ARR until someone pays.

The new people are mostly in Acrobat, Express, and free creative apps. The money still comes from Creative Cloud seats, enterprise term licenses, Experience Platform, Experience Manager, and GenStudio. In May I wrote that Adobe rolls Firefly credits, Acrobat assistants, and GenStudio into one AI-first ARR number. That number is now above $650 million, up more than 150 percent year over year, on a $27.50 billion book (Adobe's AI-First ARR Just Tripled).

Research took 19 cents of every third-quarter dollar

Research and development in the quarter was $1.288 billion, up from $1.088 billion a year earlier, or 19 percent of the $6.76 billion in sales. For the first nine months Adobe spent $3.596 billion on research against $19.776 billion in revenue, 18 percent. Fiscal 2025 was also 18 percent, $4.294 billion on $23.77 billion in sales (Adobe, 2026).

When I write about chips, security, and models I use 20 to 25 percent of revenue as the research load this cycle charges. Huawei printed 25.9 percent of first-half sales in August. Netskope's GAAP share in early September ran higher because stock compensation after its public offering inflated the line. Adobe still targets a 45 percent non-GAAP operating margin, so 19 percent in one quarter is a raise inside a mature plan.

What that money bought this quarter sits on products finance already knows. Acrobat now has a Productivity Agent, a Knowledge Base, and an Analyzer that can ask questions across a large set of files. The Creative Agent moved into Photoshop and Premiere. Firefly can generate music, speech, and sound effects. CX Enterprise Coworker is in more than 1,700 accounts.

A new vertical is a wrapper. A new category is a different job.

I first used Adobe after it bought Macromedia. Dreamweaver was the page editor. ColdFusion was the application server behind the page that talked to a database. You opened a site, wrote the template, published it, and paid for that stack on its own. The buyer was a webmaster or an applications person, not a Photoshop seat holder.

Narayen spent 18 years turning boxed Creative Suite into Creative Cloud, then putting documents, marketing, and experience data on one recurring invoice. That was a category change. I walked Adobe Summit in Las Vegas this spring while the company retold that story as Customer Experience Orchestration and a coworker agent. The Semrush close in April put search and large-language-model visibility under Chakravarthy (Adobe Closed the Semrush Deal). David Wadhwani, who ran Creativity and Productivity, leaves on September 27. The board picked the enterprise operator.

Student Spaces is Acrobat for campuses. Commerce Media Networks is GenStudio for retailers. Those are verticals. ColdFusion was a category because the job and the buyer were new.

Look at what shipped this quarter through that lens. Student Spaces takes Acrobat into higher education. Create Storyboard and Create Brand Kit take Firefly toward social creators and one-person shops. GenStudio for Commerce Media Networks lets a retailer build ads from product listings. Brand visibility joins Semrush data with Adobe content tools so marketers can see how a page will show up in search and in model answers. Each one points an existing product at a different industry or a smaller customer. None of them asks a company to buy Adobe for a job it does not already hire Adobe to do.

Topaz Labs sharpens photos and video. The deal is not closed.

On June 25 Adobe said it had agreed to buy Topaz Labs, a Dallas company that builds software to make existing photos and videos sharper and cleaner. Photographers and editors use Topaz Photo, Topaz Video, and Gigapixel to remove noise, lift resolution, and restore old footage. The company won an Emmy last year for using that work on television catalogs. Adobe also pointed to Topaz's Neurostream method, which runs those models on the laptop or workstation instead of sending every frame to a cloud. After a close, Adobe says the models would sit inside Firefly, Firefly Services, and Creative Cloud apps, and the standalone Topaz site would keep selling (Adobe, 2026).

The close is targeted for the second half of 2026. Australia's competition review was still in its first phase in August. Until Adobe says the deal closed, treat Topaz as a signed agreement.

If it closes, Photoshop and Premiere get better cleanup on files people already open in those apps. That is useful. It is still quality inside the current category.

Adobe MAX opens in Miami on November 10

The conference runs November 10 through 12 at the Miami Beach Convention Center. The first two days also stream free online. Chakravarthy will have been named for two months and will be two weeks short of his start date. He can put a category claim on a keynote. He cannot have shipped one by then.

I will listen for a named product with its own license and its own buyer. If the stage only shows Student Spaces, Brand Kit, Commerce Media Networks, and a Topaz slider inside Photoshop, Adobe spent the quarter wrapping industries around the stack it has.

About Shashi Bellamkonda

Loading bio…

LinkedIn Profile

Get new posts by email:

Subscribe

Powered by