Adobe Inc. reported an Annualized Recurring Revenue (ARR) of $26.06 billion for the first quarter of fiscal 2026, marking a year-over-year growth of 10.9%. The growth was largely driven by demand for Adobe Acrobat, Creative Cloud Pro, and Enterprise products including Adobe Experience Platform (AEP) and GenStudio. The company anticipates ARR growth of 10.2% for the fiscal year, although short-term pressures are expected due to an increase in freemium AI offerings.
Adobe’s AI-focused products, particularly the Firefly app and its enterprise counterpart, saw ARR exceed $250 million, with a sequential growth of 75%. Demand for video-related generative actions increased by over 800% year-over-year. The company expects total revenues for fiscal 2026 to fall between $25.9 billion and $26.1 billion, while the Zacks Consensus Estimate stands at $26.06 billion, indicating a 9.6% growth from the previous year.
Nonetheless, Adobe’s AI business remains relatively small compared to competitors like Microsoft and Alphabet, with Adobe’s remaining performance obligations at $22.22 billion, versus Microsoft’s $625 billion. Year-to-date, Adobe shares have declined 31.2%, underperforming the broader tech sector, which gained 5.6% during the same period.
