Executive Summary

Record Q3 revenue of $5.99B (+11% YoY; +10% cc) and non-GAAP EPS of $5.31; GAAP EPS $4.18. Both top- and bottom-line exceeded Street consensus (Rev $5.99B vs $5.91B*, EPS $5.31 vs $5.18*) . Q3 non-GAAP EPS also grew 14% YoY .
FY25 outlook raised: total revenue to $23.65–$23.70B (from $23.50–$23.60B), GAAP EPS to $16.53–$16.58 (from $16.30–$16.50) and non-GAAP EPS to $20.80–$20.85 (from $20.50–$20.70). Digital Media ending ARR growth target raised to 11.3% (from 11.0%) .
AI traction accelerated: AI‑influenced ARR surpassed $5B and AI‑first ARR exceeded the $250M FY25 target a quarter early; RPO reached $20.44B (+13% YoY), underscoring durable demand .
Stock reaction catalysts: sustained beat-and-raise, visible AI monetization (Creative Cloud Pro, Acrobat AI Assistant, Firefly/GenStudio), and strengthening enterprise pipeline (AEP/GenStudio, new AI agents GA press release) .

What Went Well and What Went Wrong

What Went Well
- “Adobe delivered record Q3 revenue… We’re raising our FY25 total revenue and EPS targets” – CFO Dan Durn (press release) .
- AI momentum: “AI‑influenced ARR surpassing $5 billion and AI‑first ARR already exceeding our $250 million year‑end target” – CEO Shantanu Narayen (press release) .
- Segment breadth: Digital Media revenue $4.46B (+12% YoY); Digital Experience revenue $1.48B (+9% YoY); DX subscription +11% YoY; cRPO steady at 67% .
What Went Wrong
- opex heavier YoY as Adobe invests in growth vectors: Q3 R&D $1.09B vs $1.02B YoY; S&M $1.64B vs $1.43B YoY; G&A $0.41B vs $0.37B YoY .
- Competitive and business model questions from analysts (seats vs consumption; ad platforms’ native generative tools; LLM discovery shift). Management argues Adobe wins via workflow integration, commercial safety, and cross‑channel activation (GenStudio) .
- FX and mix sensitivities persist; management noted FX provided only a minority of revenue benefit earlier in the year and emphasized ARR conversion as primary driver .

Financial Results

Overall P&L vs prior quarters

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($B)	$5.71	$5.87	$5.99
GAAP Diluted EPS ($)	$4.14	$3.94	$4.18
Non-GAAP Diluted EPS ($)	$5.08	$5.06	$5.31
GAAP Operating Income ($B)	$2.16	$2.11	$2.17
GAAP Op Margin (%)	37.9% (calc)	35.9% (calc)	36.3% (calc)
Non-GAAP Operating Income ($B)	$2.72	$2.67	$2.77
Non-GAAP Op Margin (%)	47.5% (calc)	45.5% (calc)	46.3% (calc)

Q3 YoY and vs Estimates

Metric	Q3 2024	Q3 2025 Actual	Q3 2025 Consensus*
Revenue ($B)	$5.41	$5.99	$5.91*
Non-GAAP EPS ($)	$4.65	$5.31	$5.18*

Segment and ARR

Metric	Q1 2025	Q2 2025	Q3 2025
Digital Media Revenue ($B)	$4.23	$4.35	$4.46
Digital Experience Revenue ($B)	$1.41	$1.46	$1.48
Digital Experience Subscription Revenue ($B)	$1.30	$1.33	$1.37
Digital Media Ending ARR ($B)	$17.63	$18.09	$18.59

Customer Groups

Metric	Q1 2025	Q2 2025	Q3 2025
Business Professionals & Consumers Subscription Rev ($B)	$1.53	$1.60	$1.65
Creative & Marketing Professionals Subscription Rev ($B)	$3.92	$4.02	$4.12

KPIs and Cash

KPI	Q1 2025	Q2 2025	Q3 2025
RPO ($B)	$19.69	$19.69	$20.44
cRPO (%)	67%	67%	67%
Cash from Ops ($B)	$2.48	$2.19	$2.20
Share Repurchases (M shares)	~7.0	~8.6	~8.0

Non‑GAAP adjustments (Q3 illustrative): per‑share add‑backs included stock‑based/deferred comp $1.23, amortization $0.19, investment (gains)/losses −$0.05, tax adj. −$0.24 (all other items immaterial in Q3), bridging GAAP EPS $4.18 to non‑GAAP $5.31 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	FY25	$23.50–$23.60B	$23.65–$23.70B	Raised
GAAP EPS	FY25	$16.30–$16.50	$16.53–$16.58	Raised
Non‑GAAP EPS	FY25	$20.50–$20.70	$20.80–$20.85	Raised
Digital Media Segment Rev	FY25	$17.45–$17.50B	$17.56–$17.59B	Raised
Digital Experience Segment Rev	FY25	$5.80–$5.90B	$5.84–$5.86B	Raised (narrowed)
Digital Experience Subscription Rev	FY25	$5.375–$5.425B	$5.39–$5.41B	Narrowed up
Digital Media Ending ARR Growth	FY25	11.0%	11.3%	Raised
Total Revenue	Q4 FY25	n/a	$6.075–$6.125B	New
GAAP / Non‑GAAP EPS	Q4 FY25	n/a	$4.27–$4.32 / $5.35–$5.40	New

Assumptions: Q4/FY25 non‑GAAP op margin ~45.5%/46.0%, non‑GAAP tax rate ~18.5%, diluted shares ~418M (Q4) / ~427M (FY25) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
AI monetization (AI‑influenced ARR; AI‑first ARR)	AI‑first ARR $125M exiting Q1; on pace to >$250M by FY25; AI‑influenced revenue in “billions”	AI‑influenced ARR >$5B; AI‑first ARR >$250M achieved early	Accelerating
Creative Cloud Pro migration & pricing	Rolled out Pro tiering; early adoption; attach with Firefly; CC Pro positioned as sweet spot	Migration “extremely healthy”; broad strength beyond pricing uplift	Healthy adoption
Acrobat + Express integration / Acrobat Studio	Strong cross‑surface MAU growth; Express usage in Acrobat up 10–11x YoY	Acrobat Studio launch; MAU +~25% YoY; AI Assistant units +>40% QoQ	Broadening usage
DX agentic AI (AEP, GenStudio, Agents)	AEP/app subscription +~40–50% YoY; GenStudio ARR >$1B; Agents unveiled at Summit	AEP Agent Orchestrator GA; out‑of‑the‑box agents (Audience, Journey, Data Insights, etc.)	Productizing
LLM Optimizer / LLM discovery shift	Cannes preview and partner momentum	Early access; internal use shaped product; addresses LLM‑era brand discovery	New GTM motion
Margins & AI cost	Raised full‑year guide; no degradation cited	Margins supported by GPU training/inference efficiency and utilization tactics	Cost discipline
Competition (ad platforms & LLMs)	Co‑opetition with platforms; enterprise prefers Adobe for scale/workflow/IP safety	Management emphasizes workflows, cross‑channel activation; commercial‑safe models	Defensible position

Management Commentary

“Adobe is the leader in the AI creative applications category with AI‑influenced ARR surpassing $5 billion and AI‑first ARR already exceeding our $250 million year‑end target” – Shantanu Narayen, CEO (press release) .
“We’re raising our FY25 total revenue and EPS targets as we execute against our growth strategy to deliver category leading and AI‑infused solutions” – Dan Durn, CFO (press release) .
“Simply put, Adobe is the operating system for creative work… Creative Cloud Pro… includes Firefly” – CEO, prepared remarks .
“Our Workfront, Frame, AEM Assets, Firefly Services, and Gen Studio for Performance Marketing… now exceed $1 billion in ARR, growing over 25% YoY” – CEO .
“Combined monthly active users [Acrobat + Express] growing approximately 25% year over year” – CEO .

Q&A Highlights

Third‑party model integration vs differentiation: Adobe’s edge is workflow integration and choice within Creative Cloud/Firefly; commercial safety remains a key enterprise driver .
Seats vs consumption and AI: Adobe sees both seat expansion and automation monetization; unified offering wins either way; creative automation (GenStudio) scaling in enterprise .
Margins in an AI era: GPU training/inference efficiency, high utilization, and reserved‑instance mix optimize cost per inference and support mid‑40% non‑GAAP OM profile .
LLM Optimizer: Product originated from Adobe.com shifts in traffic toward LLMs; helps brands optimize presence in LLM results; general availability imminent .
Retention and AI usage: Direct correlation between higher AI usage and retention; commercial‑safe/customizable models underpin value‑based pricing in enterprise .

Estimates Context

Q3 beat: Revenue $5.99B vs $5.91B*, non‑GAAP EPS $5.31 vs $5.18* .
Q2 beat: Revenue $5.87B vs $5.81B*, non‑GAAP EPS $5.06 vs $4.97* .
Q1 beat: Revenue $5.71B vs $5.66B*, non‑GAAP EPS $5.08 vs $4.97* .

Consensus vs actuals by quarter

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue – Actual ($B)	$5.71	$5.87	$5.99
Revenue – Consensus ($B)	5.66*	5.81*	5.91*
EPS (non‑GAAP) – Actual ($)	$5.08	$5.06	$5.31
EPS – Consensus ($)	4.97*	4.97*	5.18*

Values retrieved from S&P Global.*

Implications: The three‑quarter streak of beats alongside a FY25 raise suggests estimates may drift higher for Q4/FY; AI monetization (AI‑first and Pro tiering) is already accretive and should support continued upward revisions .

Guidance Changes – Explanation of Why

Raised FY25 revenue/EPS: management cites stronger demand for AI‑infused and AI‑first offerings across customer groups (Creative Cloud Pro, Firefly app/services, Acrobat AI Assistant) and accelerating enterprise adoption of GenStudio/AEP; RPO +13% YoY supports visibility .
Digital Media ending ARR growth raised (11.3%): strong ending ARR ($18.59B, +11.7% YoY) with migration to higher‑value offerings and robust new user acquisition in Firefly/Express .
Q4 margin assumptions reaffirmed (non‑GAAP OM ~45.5%): AI cost containment through model/infra efficiency and utilization .

Key Takeaways for Investors

Beat‑and‑raise quarter with broad‑based strength; Q4 guide and FY raise reflect confidence in AI monetization and enterprise pipeline .
AI is translating to dollars now: AI‑influenced ARR >$5B; AI‑first ARR >$250M target achieved a quarter early; expect continued mix shift toward AI‑tiered offerings .
Creative flywheel: Creative Cloud Pro migration healthy; Acrobat Studio and Express integration deepen B2C/B2B penetration and retention .
Enterprise catalyst: AEP Agent Orchestrator and packaged AI agents move DX from vision to productization; strengthens Adobe’s position in agentic CX orchestration .
Margin durability despite AI compute: disciplined GPU fleet management and inference optimization help sustain mid‑40s non‑GAAP OM .
Watch the narrative: co‑opetition with ad platforms and LLM discovery shift favor Adobe’s workflow integration and brand‑safe models; LLM Optimizer opens a new top‑of‑funnel category .
Near‑term trading: Positive estimate revisions likely; investor focus on Q4 execution, Pro migration pace, and incremental AI attach should drive stock sentiment .

Additional Context – Other Q3 Releases

Adobe announced GA of AI Agents (AEP Agent Orchestrator) with out‑of‑the‑box agents (Audience, Journey, Data Insights, Site Optimization, Product Support) and Agent Composer/SDK for customization and multi‑agent workflows; new partnerships with Cognizant, Google Cloud, Havas, Medallia, Omnicom, PwC, VML .

ADOBE INC. (ADBE)·Q3 2025 Earnings Summary