Adobe ADBE is set to report its third-quarter fiscal 2026 results on Sept. 10.
For the third quarter of fiscal 2026, Adobe expects total revenues between $6.67 billion and $6.72 billion. The company expects fiscal third-quarter non-GAAP earnings between $6.05 per share and $6.10 per share.
The Zacks Consensus Estimate for revenues is pegged at $6.69 billion, suggesting growth of 11.75% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged at $6.08 per share over the past 30 days, indicating 14.5% growth from the figure reported in the year-ago quarter.
ADBE’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 2.51%.
Consensus Estimate Trend
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Let us see how things have shaped up for ADBE stock prior to this announcement.
Adobe Inc. Price and EPS Surprise
Adobe Inc. price-eps-surprise | Adobe Inc. Quote
Factors to Note Prior to ADBE’s Q3 Earnings
Adobe’s third-quarter fiscal 2026 results are expected to have benefited from continued strength in its subscription business. The Business Professionals & Consumers business is expected to have benefited from robust demand for Acrobat and Express and increasing adoption of AI-powered capabilities. In the preceding quarter, Acrobat and Express monthly active users surpassed 850 million, increasing approximately 20% year over year, while Acrobat AI Assistant ARR nearly tripled. Continued strength across commercial and government enterprises is also likely to have supported subscription revenues.
Creative & Marketing Professionals revenues are expected to have gained from healthy Creative Cloud demand, particularly the Creative Cloud Pro offering, alongside increasing adoption of Adobe’s generative-AI products. Creative freemium MAU exceeded 90 million in the fiscal second quarter, rising more than 70% year over year, while Firefly ARR approached $300 million. Strong generative-credit consumption across video and audio and increasing AI usage within Photoshop, Illustrator and Premiere are likely to have supported monetization during the quarter.
Adobe’s enterprise business is also expected to have benefited from growing demand for AI-powered Customer Experience Orchestration solutions. ARR across GenStudio, Adobe Experience Platform (AEP) and apps, and Adobe Experience Manager (AEM) and Agentic Web increased more than 20% year over year in the preceding quarter. GenStudio ARR grew more than 25%, while AEP and native-app subscription revenues increased more than 30%. More than 80% of AEP and AEM customers were already using agentic capabilities, suggesting continued adoption momentum entering the fiscal third quarter.
The Semrush acquisition is likely to have provided an additional boost. Semrush added roughly $480 million of ARR upon closing and expanded Adobe’s capabilities across search engine optimization, generative engine optimization and brand visibility. Adobe was rapidly integrating Semrush with its agentic web applications, while management cited a robust enterprise pipeline and expressed confidence in a seasonally strong second half.
However, Adobe faces stiff competition in the AI and Generative AI (GenAI) space from the likes of Microsoft MSFT, OpenAI, Alphabet GOOGL, Salesforce CRM, Midjourney and Canva. Adobe’s aggressive shift toward freemium offerings is likely to have limited near-term ARR growth. The company is directing more traffic to friction-free experiences across Firefly, Acrobat and Express to accelerate user acquisition. Rising investments could also have weighed on profitability.
ADBE Shares Underperform Sector
In the year-to-date period, Adobe shares have lost 23.8%, underperforming the broader Zacks Computer and Technology sector’s return of 18.2%.
The company’s shares have also underperformed its peers, which include Microsoft, Alphabet and Salesforce. Alphabet and Microsoft shares have appreciated 8.2% and 3.3% over the same time frame, while Salesforce dropped 2%.
ADBE Stock’s Price Performance
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ADBE shares are cheap, with a forward 12-month Price/Sales of 3.73X compared with the broader sector’s 6.11X, Microsoft’s 9.22X, Alphabet’s 8.16X and Salesforce’s 4.36X. ADBE has a Value Score of B.
ADBE Stock’s Valuation
Image Source: Zacks Investment Research
ADBE Benefits From Expanding Partnerships
Adobe’s long-term growth is expected to benefit from expanding adoption of AI across its creativity, productivity and customer-experience portfolio. Firefly, Acrobat AI Assistant, GenStudio and Adobe Experience Platform are seeing increasing customer engagement and monetization. AI-first ARR more than tripled year over year to above $500 million in the second quarter of fiscal 2026, while Firefly ARR approached $300 million. Growing generative-credit consumption and integration of AI agents across Creative Cloud should further strengthen recurring revenues over time.
Adobe’s expanding enterprise footprint represents another important growth catalyst. Demand for customer experience orchestration, GenStudio, AEP and agentic web applications is increasing as enterprises automate content creation, personalization and marketing workflows. More than 80% of AEP and AEM customers were already using agentic capabilities, while Semrush expands Adobe’s capabilities in SEO, generative engine optimization and brand visibility. The combination should help Adobe deepen relationships with marketers and capture a larger share of enterprise spending.
However, Adobe faces intensifying competition as generative AI lowers barriers to content creation and expands the number of standalone AI tools available to consumers, creators and enterprises. Rapid shifts in customer behavior require Adobe to continuously innovate and integrate new AI models while maintaining differentiated, commercially safe offerings.
Adobe’s shift toward freemium offerings also creates monetization risk. The strategy is aimed at expanding monthly active users and lifetime customer value, but management expects it to reduce near-term ARR growth from individual subscribers. The decision to defer Creative Cloud line optimizations similarly postpones potential pricing benefits.
Conclusion
Adobe’s expanding AI portfolio, strengthening enterprise adoption and growing monetization across Firefly, Acrobat AI Assistant, GenStudio and AEP support its long-term growth prospects. The Semrush acquisition should further broaden its opportunity across digital marketing and AI-driven search. Moreover, ADBE’s discounted valuation relative to the broader sector and key peers appears attractive.
However, intensifying competition in generative AI, rising investments and near-term ARR pressure from the shift toward freemium offerings remain concerns. Given these offsetting factors and uncertainty ahead of fiscal third-quarter results, investors may prefer to wait for greater clarity on AI monetization, ARR growth and profitability before taking a position in ADBE stock.
Adobe currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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