research report · ADBE

Adobe Inc.

Johannes Vermeer, Woman Holding a Balance, c. 1664, detail · National Gallery of Art

Viridis’s deep research report, written Nov 1, 2026 from its quarterly report (10-Q for the quarter ended Aug 28, 2026, filed Sep 22, 2026). Written and checked with Anthropic’s Claude models.

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business trajectory

Deteriorating

worse on balance: sales, margins, cash or competitive position

financial resilience

Strong

can meet its obligations and fund its plan for two years with money it can count on, with room

Judgments of the business from its filings, not of its shares: no valuation, no advice.

bottom line

Adobe remains a highly cash-generative subscription business with no funding strain, but this quarter shows its fundamentals softening at the margin. Revenue grew 13% to $6.76B, yet the forward indicators are slower and partly bought. Annualized recurring revenue (ARR) grew 11.2% including the Semrush acquisition, and contracted backlog (remaining performance obligations, RPO) grew 8%. Costs, led by AI computing and hosting, grew faster than revenue and cut the adjusted operating margin to 44.0% from 46.3% (my calculation), so earnings per share rose 10.5% only with help from a 6.7% smaller share count.

what changed this quarter

  • Q3 FY2026 (three months to August 28, 2026) against a year earlier:
  • Revenue was $6,760M vs $5,988M (+13%; 12% in constant currency).
  • Net income was $1,827M vs $1,772M (+3%).
  • Diluted EPS was $4.62 vs $4.18.
  • ARR reached $27.50B (+11.2%). RPO was $22.16B (+8%), down from $22.52B at the November 2025 fiscal year-end.
  • The FY2026 revenue target was raised to $26.576–26.626B, about $50M at the midpoint per management. The 10.2% ending-ARR growth target was kept.
  • On September 2 the board named Anil Chakravarthy CEO effective December 1, with Shantanu Narayen becoming Executive Chair. Creative-business head David Wadhwani stepped down effective September 27.
  • Semrush ($1.87B, closed April 28) is now in results for a full quarter. Topaz Labs (~$340M, mostly cash) is expected to close in Q4 FY2026.

in the full report

Its findings, each with the evidence, the strongest counterpoint and what would prove it wrong:

  • Reported growth is 13%, but forward indicators point to about 10% and include an acquisition
  • AI computing and spending are outgrowing revenue
  • Per-share growth rests on a shrinking share count
  • The free-user bet and the leadership handover leave monetization unproven

Then its finances, the quality of its earnings, its management, the case for and against, and what to watch, its claims cited to the filings and checked against them.

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