It’s certainly convenient from the perspective of eternal, infernal share buybacks that they go with the “Trust me, I know what I’m doing” option, where investors have to trust and competitors have to fear that season two is coming even after the explosions.
Since Adobe doesn’t report user numbers (if I recall correctly, this reporting was discontinued some time ago) or at least not paying user numbers, this is impossible to know for sure. However, I think there is reason to assume that the revenue growth comes from price increases, because if the user base were growing, the company would likely report it as well.
Personally, I don’t see it as a problem that the user count isn’t growing; as long as revenue grows, it simply speaks to the company’s pricing power—though how far that pricing power will stretch is another question. Related to this, one observation:
Based on my own experiences, very few people seem satisfied with Adobe and especially its pricing, but for some reason, the company’s revenue continues to grow. In my view, this also speaks to pricing power and the company’s moats, because even though the firm and its pricing policy are hated, customers continue to pay the ever-increasing prices.
This provides a bridge to Adobe’s main strength, which is that it’s integrated so deeply into the processes of schools and businesses. As long as that position is not threatened, I don’t see any problem even if private or free users prefer other software.
If you look at it this way: in the US, I believe a Creative Cloud license for one business user costs about $100 a month, which is $1,200 a year. If a graphic designer is paid, say, $50,000 a year (realistically salaries are likely double that in the US), then laying off one graphic designer covers the Creative Cloud licenses for about 40 employees. So, that Creative Cloud license cost is a negligible part of the company’s expenses compared to employee salary costs. In my view, Adobe can afford to keep raising prices for a long time as long as its moats in the business world remain, and on the other hand, if it can improve its software to make users’ work more efficient.
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Referring to the previous message, one of Adobe’s moats is at least its ability to hold onto customers. /s
In 2024, Adobe was taken to court to address allegations of making subscriptions too difficult to cancel. The company has denied the claims from the start of the proceedings, but has now nevertheless agreed to a total of 150 million dollars in penalties. The settlements consist of a 75 million dollar fine and 75 million in compensation to consumers.
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Regarding this ”Adobe hate,” I could comment: have you ever seen people praising Microsoft products? Or Salesforce, etc.? Many established players are hated. Furthermore, people rarely go out of their way to publicly praise products that work well. If the price stings, they are much more likely to speak out.
Unless the company’s management are financial masochists, one would assume they have some understanding of how price increases affect user numbers, churn, etc.
Speaking of which, my colleague @Mikael_Maijala mentioned at the office earlier this week that Adobe license prices are going up again. The company explained in an email that the product is now better because the name was changed to include the word ”pro.” That actually made me laugh. But what do we do? We swallow the increase. Another colleague just bought a €150 plugin to try out Adobe’s automated editing. If it works, we’ll save much more time (and thus money), even though the plugin costs a fortune in the context of license fees.
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Meaning your employer is the one swallowing it, I should point out. Adobe also has many individual/freelancer/entrepreneur customers who pay for their licenses out of their own pockets—money that may be even tighter in the age of AI. 
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Ultimately, it is the first mentioned, the employer, and finally the end customer. What is essential for the business is the latter. For Adobe, the level that leads to a subscription is enough. And the revenue from subscriptions is a different thing than the number of subscriptions.
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Adobe fined over service cancellation terms.
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We’re talking about small change here, though, and it’s certainly wise of Adobe to settle the situation, as legal battles are expensive and time-consuming. 75 million is about 0.07% of the current market cap. I hope the market punishes them by 5-10%, though, as Adobe is starting to look tempting and I’m interested in a lower price. For a long-term investor, it doesn’t matter how low Adobe goes, because ultimately if the fundamentals continue to improve, the share price will eventually be forced to recover. Besides, share buybacks at a lower price create a lot of value. Traders, of course, will take a hit if they are long and the price drops, or if they start panicking due to the price movement.
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Yes. I don’t believe Adobe is a victim of AI either, but I’ve been wondering if there might be other reasons for the slump.
Fairly devious cancellation terms, indeed.
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Below are Adobe’s EU Monthly Active User (MAU) statistics. Adobe is required to publish these under the EU’s Digital Services Act. These do not include the largest market area, the United States.
At least at the EU level, the MAU trend seems slightly concerning, as the figures are mostly in the red. On the other hand, Photoshop Lightroom MAU grew in the previous period (+5%), as did Firefly Gallery (+56%).
Interestingly, this is in clear contrast to the recent Q1 2026 results, which I believe were at least “solid”:
- “We’re ruthlessly focused on monthly active users (MAU) as an indicator of adoption and success for Acrobat & Express, Creative Cloud applications and Adobe Firefly across different surfaces, including desktop, web, mobile and LLM platforms. In Q1, we surpassed 850 million monthly active users of Acrobat, Creative Cloud, Express and Firefly, achieving 17% year-over-year growth—a clear indication that we have both strong usage and a foundation for monetization.”
- “It’s clear that these AI-based capabilities are resonating with users, as AI Assistant MAU doubled year over year and Express MAU tripled year over year. Express is now used in 99% of U.S. Fortune 500 companies.”
- “Acrobat + Express MAU grew approximately 20% year over year”
- “Acrobat AI Assistant ARR grew ~3x year over year”
- “Creative freemium MAU crossed 80 million, growing over 50% year over year and includes web and mobile versions of Firefly, Express, Premiere, Photoshop and Lightroom”
- “Firefly ending ARR, across Firefly App, Firefly credit packs, and Firefly Enterprise exceeded $250 million”
- Revenue 6.4 BUSD and +12% y-o-y (11% in constant currency)
- ARR 26.1 BUSD and +10.9% y-o-y (+1.6% q-o-q)
- Reported EBIT without adjustments 2.4 BUSD, representing a strong 37.8% margin
- Operating cash flow 3.0 BUSD (all-time high)
- Free cash flow 2.8 BUSD, and adjusted for stock-based compensation 2.3 BUSD, which is a staggering 36% of revenue. The quality of earnings remains very high.
- Share buybacks 2.5 BEUR. Adobe has repurchased 41 BEUR worth of its own shares since 2020 vs. the current market cap of 99 BEUR (!).
And Adobe’s share price and valuation still lag behind historical levels, much like many other large enterprise software companies (see below). It’s been quite a bloodbath.
Adobe is a truly difficult investment case. If disruption occurs, it certainly doesn’t show in the numbers yet, and there is significant terminal risk/uncertainty, which weighs on the numbers and valuation now and in the future. If the business continues to hum along even moderately well—e.g., 5-10% earnings growth—this is indeed a strong buying opportunity.
Based on user interviews, Adobe is still very relevant to users, even though competition will surely increase with AI. Adobe isn’t always loved by its users, much like many other software giants (e.g., SAP, Microsoft, Salesforce, Workday). If the product and lock-in effect (data, processes) are strong enough, the moat will protect it for a long time.
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Adobe announced a $25 billion share buyback program, which is why it turned green in the after-market:
https://x.com/StockMKTNewz/status/2046682099294347709
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This is undeniably one of the most mysterious cases. I don’t know whether I should buy more or just sit tight, given that the company is buying back a quarter of its market cap in shares due to undervaluation. Normally, at that point, you should just be smashing the buy button with a cool head. Similarly, the recent cooling down of OpenAI’s Sora made me smile, as I remember those “OpenAI just killed Adobe” posts in my feeds back when Sora was first released 
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I’ve been thinking about this quite a bit—perhaps the forum experts @Eevitsi @Roope_K etc. can comment more—if AI disrupts the whole world and the major players are soon pumping trillions a year into data centers and there’s still a lack of capacity, then… Is there even enough capacity for creative sector stuff, specifically videos which, as I understand, are quite intensive to generate?
Of course, that won’t save them indefinitely; eventually, bottlenecks get resolved…
Wrestling with the same thing here. In a way, I’m admitting that I made a buying mistake earlier, because clearly as the share price has dropped, I’ve ended up with my tail between my legs and feeling a bit stumped. Usually, I welcome a price drop (and there’s certainly been plenty) when adding to stocks I believe in. But have I really thought the Adobe case through to the end…
The numbers favor adding more, but contemplating the future and staying humble about its unpredictability, perhaps not so much.
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Yeah, it is heavy. The relative inference cost for video is likely at least +1000x compared to the text modality. And since in today’s world of extremely scarce token and compute resources, tokens correlate directly with revenue for OpenAI and its peers, it makes total sense to direct inference serving to where the money comes from with the best ROI. Currently, that’s e.g., coding and similar text modalities. The scaling back of Sora wasn’t a surprising move for OAI as it struggles with compute resources and tightening competition—there is more useful use for that capacity elsewhere.
But you shouldn’t count out the image or video modality just yet. Go take a look at, for example, what Seeddance 2.0 has done to the “Will Smith eating spaghetti” benchmark. The leaps in this modality have also been huge, and there are certainly incentives to optimize and improve the cost and quality of other modalities as well. They will surely advance faster than hardware efficiency and energy bottlenecks can catch up—just like in the text modality. And of course, it’s possible to encroach quite a bit on Adobe’s turf with much lower inference costs simply by not generating from full Gaussian noise (like Sora), but by using some semi-finished work as input (cf. AI filters etc., which are commonplace and definitely not heavy workloads).
A separate chapter is these so-called world models, where the input would increasingly be image or video. The trend is indeed pulling in a direction where these might eventually replace autoregressive transformers, which could lead to interesting results directly or as a byproduct, especially from Adobe’s perspective (in terms of a threat, that is).
There’s my two cents—I wouldn’t exactly call myself an expert regarding this company, at least.
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I was wondering why this Kodak of digital art rose on Friday, but apparently, investors’ fears regarding the software sector eased in general (dinosaur Microsoft +5%), and perhaps especially because of this:
Michael Burry published a piece where he praised Adobe’s competitive advantages and the depth of its moat. Firefly is gaining traction (it is indeed good), and that integration is undeniably deep.
To quote the article’s text a bit generously:
Adobe’s forward outlook remains stronger than the market assumes, despite fears that AI could disrupt its core creative software business, Burry argued.
The bullish view is driven by strong early traction for Firefly AI products, rising enterprise adoption, and Adobe’s deep integration across large organizations and creative workflows. The piece also highlights Adobe’s advantage in managing proprietary customer IP and its massive ecosystem reach, with 850 million monthly active users and relationships with 99 of the Fortune 100.
“Those 850 million monthly active users plus Adobe’s wide distribution across and within Anthropic, OpenAI, Google, and Microsoft amount to an aggressive moat,” Burry wrote. “If and when AI agents try to compete, Adobe still puts forth platform-agnostic connections across all four foundation-model ecosystems and has effective control of the playing field.”
While competition from AI-native tools, Canva and Figma remains a real threat, the argument is that human creativity and Adobe’s entrenched ecosystem position the company to adapt and potentially benefit from the AI transition rather than be displaced by it.
However, to my taste, that doesn’t dismiss the concerns raised in this thread about how more casual users might shift to AI-native alternatives. Still, the company’s “meat” comes from enterprises. Additionally, tools and agents increase productivity, which presumably reduces the billable headcount.
The point about human creativity is a good catch.
I’ve also been thinking about whether one can actually stand out visually from the competition with “AI mush.” Even cave paintings from tens of thousands of years ago speak to a human’s innate need to express themselves and create something of aesthetic value. By running everything through an AI mangle, we aren’t expressing ourselves, nor are we enjoying the output of another human, but rather that of a large language model. Of course, the marketing industry, for example, is a business, not aesthetics, and is thus subject to the logic of money—but I still doubt that the need for truly deep tools, which allow for the creation of original and distinctive content, will decrease.
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That “AI-native” label is quite a bit of marketing jargon. What does it actually mean? Claude Cowork is “AI-native,” but it’s not particularly mind-blowing either. I must admit I haven’t used Figma or similar tools, but sometimes that “nativeness” doesn’t exactly seem like much of a moat.
Adobe should certainly have the muscle to integrate AI into their workflows, but I might be quite naive myself regarding how quickly these giant ships can turn. So far, however, many AI tools have looked fairly easy to copy.
I haven’t bought the stock yet because my firepower isn’t enough to cover every direction, thanks to Nordnet’s fees.
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Agreed, I also believe that the need for artistic work won’t disappear. AI will replace the coder (or not exactly, the coder will just spend more time on other tasks), but not the author, even though AI can easily write a book. The value of code lies in the functionality it produces, but the value of (fine) literature is in the content itself. Similarly, AI won’t replace the designer, following the same analogy of AI-slop vs. authentic human-made design.
However, I’m playing the Figma card instead of Adobe because it’s a younger and faster-growing company. It’s the only seat-based billing software company I currently hold in my portfolio.
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In addition, tools and agents will increase productivity, which will presumably reduce the billable headcount.
Or one could consider the opposite: that the pace is accelerating and we are simply moving forward faster. You see the same thing in the software sector, where material is being produced faster than before; if companies were to coldly cut headcount, competitors would pass them left and right. Something will certainly be visible, but Adobe does indeed have access to the workflow and, most importantly of all: the data. In that sense, they are in a good position to respond quite agilely to the needs and value creation of different customer segments. It is, of course, a completely different question how they will actually be able to do that and what will really happen
e: And Adobe specifically needs to jump on this new kind of demand somehow, as people in the micro and small business sector are producing a lot of material themselves that wasn’t produced at all before because it wouldn’t have been profitable.
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Good point, and a very important one at that.
We humans have a great ability to see how, in theory, one could cut from almost anywhere, but we don’t clearly see how technology creates new challenges and opportunities.
And on the other hand, what its “dynamic” effects are. If everyone’s pace accelerates, you can’t afford to decrease; instead, you have to increase the number of experts, just as you said. 
In the AI-software disruption debate, radiologists are sometimes brought up as an example of a profession that people were recently told not to train for. Well, now there’s a terrible shortage of them.
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You can often get poor quality for cheap, but good quality only rarely—and even then, there is usually some widely known cause for concern.
My primary concern is assessing the company’s intrinsic value and comparing it to what is priced into the stock. Of course, it is worrying to wonder if the people in the company know what they are doing, but I won’t get an answer to that except through results—for instance, whether new products are being launched and if there is demand (it seems there are and there is). Many deeper concerns are for management to worry about. I trust the competitive environment to keep them alert; otherwise, I would discard the whole idea.
If a top-tier, highly profitable company in its field can be bought cheaper than a Finnish industrial piping firm, I’m not going to poke at it and wonder why others aren’t buying.
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