Adobe heads into tonight’s earnings at just 9.8x forward earnings as Wall Street continues to question whether generative AI will ultimately strengthen its business or disrupt it.
The company’s AI-first annual recurring revenue has already tripled year over year to more than $500 million, making continued growth in that business one of the biggest numbers to watch tonight.
At the same time, Adobe’s push toward freemium products could pressure near-term ARR as the company prioritizes acquiring a much larger base of AI-era users. Investors will be looking for evidence that those free users can eventually be converted into paying customers.
Prediction markets put the probability of an EPS beat at 93.5%, so simply clearing consensus may not be enough. With a new CEO framework, an interim CFO, and the first full quarter incorporating Semrush, Adobe’s outlook could be the most important part of the report tonight.
This article is updated throughout the trading day. Check back for more.
Adobe (NASDAQ:ADBE | ADBE Price Prediction) is expected to report Q3 FY2026 earnings at 4:05 PM ET, with the earnings call scheduled for 5:00 PM ET. Shares sit at $247.98, down 29.17% YTD, and this is the first quarterly update since Adobe named its next CEO, Anil Chakravarthy.
Q2 FY26 delivered record revenue of $6.62 billion, up 13% YoY, with non-GAAP EPS of $5.96 and total ARR of $27.10 billion. Management framed a decisive strategy shift: accelerate MAU acquisition through freemium Firefly and Express experiences, and defer previously planned Creative Cloud line optimizations. Adobe conceded the move “will come at the cost of short-term ARR” to build long-term lifetime value.
Meanwhile, Semrush contributed roughly $480 million to ARR post-close, and CFO Dan Durn departed June 15, 2026, with Steve Day serving as interim CFO.
| Metric | Q3 FY26 Estimate | YoY Change | FY26 Estimate | FY27 Estimate |
|---|---|---|---|---|
| Revenue | $6.70B | +11.9% | $26.54B | $28.93B |
| EPS (Non-GAAP) | $6.0866 | +14.6% | $24.41 | $27.50 |
The Street sits right inside Adobe’s own $6.67B to $6.72B revenue and $6.05 to $6.10 non-GAAP EPS guide. Revisions have been flat, with zero upward and zero downward EPS revisions in the trailing 30 days, suggesting analysts are anchored to management’s framework rather than reaching.
Tonight, I’ll be primarily focused on four watchpoints. First, the freemium ramp. Adobe cited that Adobe.com traffic is up over 40% YoY and creative freemium MAU is up over 70% YoY to more than 90 million. I’ll be watching whether Q3 shows those users converting or if the ARR drag deepens.
Second, AI monetization. Firefly ARR grew roughly 50% quarter over quarter, approaching $300 million, and Creative Agent now sits inside ChatGPT and Claude.
Third, Semrush contribution. Management guided to roughly $280 million in FY26 Creative and Marketing Professionals subscription revenue from Semrush. Q3 is the first full-quarter read.
Fourth, credibility of the interim executive team. With CFO Durn out and Steve Day at the helm, tone on margins (guided at ~44% non-GAAP operating margin) and capital return ($27 billion buyback authorization remaining) matters.
| Quarter | EPS Surprise | 1-Day Move | 7-Day Move | 30-Day Move |
|---|---|---|---|---|
| Q2 FY26 | n/a | -6.76% | -4.47% | +15.34% |
| Q1 FY26 | +3.18% | -7.58% | -0.47% | -1.87% |
| Q4 FY25 | +1.90% | +2.13% | +1.54% | -13.12% |
| Q3 FY25 | +2.48% | -0.34% | +4.73% | -3.84% |
On average, shares moved +0.25% seven days after earnings over the past year.
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Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 250 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.
Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.
He specializes in breaking down complex companies into clear, actionable insights for everyday investors, with a focus on fundamentals-driven research.
His work has also been featured on platforms including Seeking Alpha and Sure Dividend.
Outside of work, Thomas enjoys weight lifting and soccer.
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