Adobe Shares Dip on Tepid Q4 Revenue Forecast Despite Q3 Beat

Adobe Inc. (NASDAQ:ADBE) reported third-quarter financial results that exceeded analyst expectations, driven by strong subscription growth, but its shares fell after the company provided a slightly soft revenue forecast for the fourth quarter.

In after-hours trading, the company's stock edged down approximately 2.5% as investors weighed the cautious outlook against the strong quarterly performance.

Q3 Results Exceed Expectations

For the third quarter, Adobe posted strong results that topped Wall Street estimates, citing robust performance in its subscription-based services. The company announced it had reached a milestone of more than one billion monthly active users across its products.

• Adjusted Earnings Per Share (EPS): $6.13, beating the consensus estimate of $6.07.
• Revenue: $6.76 billion, surpassing the $6.69 billion analyst forecast and marking a 13% year-over-year increase.
• Cash Flow: The company generated $2.52 billion in cash flows from operations.

"Adobe delivered record Q3 results, reflecting the strength of our AI innovation, expanding customer reach and leadership across creativity, productivity and customer experience," said Shantanu Narayen, chair and CEO of Adobe, in a statement.

Cautious Guidance Weighs on Shares

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Despite the strong Q3 performance, Adobe's guidance for the upcoming fourth quarter appeared to temper investor enthusiasm. The company's revenue projection fell slightly short of market expectations, a key factor for a stock valued on future growth.

For the fourth quarter, Adobe projects revenue in a range of $6.80 billion to $6.85 billion. The midpoint of this range, $6.825 billion, is just below the analyst consensus of $6.85 billion. The forecast for adjusted EPS of $6.30 to $6.35 was largely in line with the consensus of $6.30.

However, the company did raise its full-year fiscal 2026 guidance. It now expects revenue between $26.576 billion and $26.626 billion and adjusted EPS in the range of $24.45 to $24.50.

Subscription Strength Underpins Growth

The company's growth was fueled by its core subscription model. Total customer group subscription revenue climbed 14% year-over-year to $6.56 billion. The company's annualized recurring revenue (ARR) reached $27.50 billion by the end of the quarter.

During the period, Adobe also repurchased approximately 9.5 million of its shares, returning capital to shareholders.