Adobe lifts 2025 targets on AI momentum—but Acrobat, not Photoshop, is doing the heavy lifting

Adobe’s third-quarter numbers landed late Thursday with a simple message to anxious shareholders: the pipeline is filling. Record revenue of $5.99 billion and a raised full‑year outlook grabbed headlines, but the more telling line was remaining performance obligations (RPO) crossing $20 billion, up roughly 13% year over year—evidence that multi‑year commitments are building behind Adobe’s AI story. The stock ticked higher after hours, though it remains down sharply this year as investors debate whether Adobe’s AI can outrun new rivals. (adobe.com)

The quarter suggests the center of gravity inside Adobe is shifting. Management said “AI‑influenced” annualized recurring revenue (ARR) has surpassed $5 billion, and the products showing the fastest commercial traction weren’t Photoshop or Premiere—they were Acrobat and the company’s newer Express creation tools bundled for knowledge workers. Under Adobe’s customer‑group lens, Business Professionals & Consumers subscription revenue (think Acrobat + Express) grew 15% to $1.65 billion, outpacing the 11% growth in the Creative & Marketing Professionals group. That mix helped Adobe raise full‑year revenue and EPS targets yet again. (adobe.com)

Revenue rose 11% to $5.99 billion, with non‑GAAP EPS up 14% to $5.31. Digital Media—the Creative Cloud and Document Cloud umbrella—grew 12% to $4.46 billion, while Digital Experience revenue climbed 9% to $1.48 billion (subscription up 11%). Cash from operations was a robust $2.20 billion. Adobe repurchased 8.0 million shares in the quarter, continuing to lean on its $25 billion authorization. (adobe.com)

Two forward‑looking markers stood out. First, Digital Media ARR reached $18.59 billion, up 11.7% year over year, a clean read that the core subscription engine is still compounding. Second, total RPO of $20.44 billion (with 67% expected to convert within 12 months) signals healthier backlog than earlier this year and supports the upgraded outlook. (adobe.com)

Guidance reinforced the tone. For Q4, Adobe sees $6.08–$6.13 billion of revenue and $5.35–$5.40 of non‑GAAP EPS; for FY25, revenue moves up to $23.65–$23.70 billion and non‑GAAP EPS to $20.80–$20.85. Assumptions include a roughly 46% non‑GAAP operating margin for the year. (adobe.com)

Management drew a distinction between two AI revenue streams. “AI‑influenced” ARR—subscriptions made more valuable or stickier because AI is embedded—has topped $5 billion, up from “over $3.5 billion” exiting fiscal 2024. The smaller but faster “AI‑first” bucket—standalone AI offers like Acrobat AI Assistant, Firefly Services and GenStudio—has already exceeded Adobe’s $250 million year‑end target. Those aren’t accounting categories, but they clarify where monetization is occurring: mostly through uplift in existing suites, with nascent but accelerating add‑ons. (adobe.com)

Under the hood, usage signals were strong. Acrobat AI Assistant ending units rose more than 40% sequentially, with conversations and summarizations up nearly 50%. Express added over 14,000 organizations in the quarter—4x the year‑ago pace—and one showcase deployment sees dentsu rolling Express to 68,000 employees globally as part of a broader GenStudio workflow. On the enterprise side, components of GenStudio—Workfront, Frame, AEM Assets, Firefly Services and GenStudio for Performance Marketing—now exceed $1 billion in ARR, growing over 25% year over year. (adobe.com)

Adobe is also hedging model risk. Firefly now sits alongside a roster of third‑party generative models (from OpenAI to Google to Runway and others), letting customers pick the right model inside Adobe apps rather than hopping across tools—a pragmatic move in a fast‑shifting market. (adobe.com)

For a decade, Adobe’s stock rode the Creative Cloud subscription wave; today, Acrobat and adjacent tools are the stealth growth engine. Adobe’s “Business Professionals & Consumers” group—home to Acrobat and Express—grew 15% to $1.65 billion in subscription revenue, outpacing the 11% growth in the pro‑creator cohort. Acrobat Studio, which fuses PDF workflows with Express content creation and an AI Assistant, aims directly at knowledge workers and students where Adobe’s brand is strong and budgets are more distributed. Management said monthly active users across Acrobat and Express rose about 25% year over year. (adobe.com)

Strategically, that matters for resilience. Acrobat’s ubiquity and document‑centric use cases are less exposed to the aesthetic swings of generative image/video trends and may prove more defensible against low‑cost creative tools. It also broadens Adobe’s seat expansion opportunities within enterprises that already standardize on PDF. (adobe.com)

Investors rewarded the print, with shares up about 3% after hours, but the stock remains down more than 20% year to date as skepticism lingers about competitive intensity and the pace of AI monetization. The new guide helps, but bears will note that “AI‑first” revenue is still small against a roughly $18.6 billion Digital Media ARR base. (reuters.com)

Competition is real. Canva’s purchase of the Affinity pro‑apps suite signals a push up‑market toward Adobe’s core creators, while Figma—whose aborted sale to Adobe ended with a $1 billion termination fee—is preparing to go public, potentially arming a key rival with new currency. Adobe’s answer is to make its platform the default operating system for creative and marketing work, spanning content creation, automation and measurement. (businesswire.com)

Trust remains a watch item. Adobe spent last year defusing backlash over Terms of Use language and was sued by the FTC for allegedly hiding cancellation fees in its “annual paid monthly” plans—allegations the company disputes. The business impact hasn’t shown up in ARR yet, but as AI moves deeper into workflows, clarity around data use and customer control will remain central to adoption. (blog.adobe.com)

This was a bookings story more than a margin story. The RPO jump and raised ARR target suggest enterprise commitments around GenStudio and Firefly Services are starting to stack, even as the P&L still looks like a traditional Adobe quarter. If the “AI‑first” line can compound off a $250 million‑plus base into 2026 while Acrobat keeps growing low‑ to mid‑teens, Adobe’s mix shift could offset any wobble in pro‑creator demand.

Buybacks are doing their part—diluted share count fell to 424 million from 448 million a year ago—but the more durable bull case hinges on product velocity. Management has promised more at MAX in late October; look for deeper agentic workflows, generative video and tighter Acrobat‑Express integration. (adobe.com)

- Q4 net new Digital Media ARR versus the raised 11.3% full‑year growth target. Sustained double‑digit ARR growth would validate the Acrobat + Express strategy. (adobe.com)

- AI‑first monetization run‑rate: updates on Acrobat AI Assistant attach rates, Firefly Services consumption and early GenStudio for Performance Marketing deployments. (adobe.com)

- Digital Experience momentum: subscription growth held at 11%. Watch AEP AI Assistant adoption and whether LLM Optimizer wins budget. (adobe.com)

- MAX 2025 (Oct. 28): product cadence and third‑party model integrations inside Creative Cloud Pro. A bigger vision for agentic workflows would help extend Adobe’s lead. (adobe.com)

- Regulatory overhang: progress in the FTC case and continued clarity on data usage terms—key for enterprise AI adoption. (ftc.gov)