Adobe beat expectations, raised guidance, and flashed real AI dollars, sending shares higher after hours as skeptics recalibrate.
An AI Bill Comes Due
Investors have been rolling their eyes at every “AI-powered” pitch this year. Then Adobe reported fiscal Q3 numbers that actually moved the needle. Revenue hit $5.99 billion, up 11 percent year over year, with the company looking for a profit of $5.35 to $5.40 per share, both ahead of expectations. The stock popped in late trading, which is what happens when a company stops teasing and starts tallying.
Real Money, Not Vibes
Here is what got the Street’s attention. Adobe said AI-influenced annual recurring revenue is now above $5 billion, and the company already crossed its “AI-first” ARR target of more than $250 million for the year.
That is not a demo. That is a line item. Management also lifted the full-year revenue outlook to a range of $23.65 billion to $23.70 billion. Guidance for Q4 calls for $6.08 billion to $6.13 billion in sales. Translation, the AI flywheel is spinning, and finance finally has receipts.
Creative Cloud Making an Impact
Creative Cloud, the digital media segment, home to Photoshop, Acrobat, Illustrator and friends, brought in $4.46 billion, up 12 percent. ARR in that segment reached about $18.6 billion. Yes, people still pay for staple tools, and now those tools have generative fill and smart assistants baked in. That combo is proving sticky with both individuals and enterprises that want speed without sacrificing brand control.
Agents, Optimizers, and a New Supply Chain
Adobe did not just polish the old icons. Earlier this week it launched its first set of AI agents to automate customer journeys and audience segmentation, plus an LLM Optimizer to help brands shape content that AI systems will not mangle on the way to consumers. That is less sizzle, more workflow. If you are a marketer who lives inside the cloud , shaving hours off repetitive steps is a raise disguised as software.
A Flex … and Tangible Benefits
“Adobe is the leader in the AI creative applications category,” Narayen said. “Given our customer strategy, AI product innovation and strong go-to-market execution, we’re pleased to once again raise our FY25 total revenue and EPS targets.” You can call it chest-thumping. You can also call it math.
Adobe's latest Q3 FY25 earnings: revenue up 11% YoY to $5.99B, non-GAAP EPS up 14% to $5.31, GAAP EPS up 11% to $4.18. With PE at ~22, it's trading below historical averages, supporting the undervalued case if growth holds.
— Grok (@grok) September 12, 2025
Much of this is down to the fact that, Adobe kept its AI effort aimed at responsible, shippable models that plug straight into creator workflows. The new automation and agentic tools are showing up where people actually work, which explains the uptick in platform usage and the brighter outlook. In plain English, the dog finally caught the car.
An Inconvenient Truth
Let’s not pretend everything is confetti. Shares are still down about 21 percent this year as investors fretted about Canva, Figma and every AI-native challenger with a slick landing page. Beating, raising, and showing AI dollars does not erase competitive pressure. It does, however, reset the narrative from “Is Adobe late” to “How fast can Adobe monetize the lead it actually has.”
Adobe Stock Is an Unappreciated AI Play. It’s Time to Buy. https://t.co/dOr5DWPIM6
— Barron's (@barronsonline) September 19, 2024
On the money?
Adobe and AI: A Story of Challengers vs. Incumbents
If you believe AI is a feature, incumbents win. If you believe AI is a platform shift, the door stays open for challengers. Adobe is trying to be both, infusing AI into the flagships while building new AI-first offerings that enterprises can standardize on. The quarter suggests the strategy is sticking, and the raised guidance suggests management thinks it will stick a bit harder in Q4. For once, the hype machine has numbers to back it up.
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