On Wednesday, December 10, 2025, after the U.S. market close, Adobe Inc. reported its fiscal Q4 and full‑year 2025 results for the period ended November 28, 2025. The company beat Wall Street expectations on both revenue and adjusted earnings, leaned heavily into its AI narrative, and issued 2026 guidance that came in ahead of consensus. [1]
Yet the stock reaction was subdued. Adobe shares finished regular trading around $344, down roughly 0.35% on the day, and slipped further in after‑hours trading toward the low‑$340s. As of late Wednesday evening, the stock was changing hands near $343 in the extended session, modestly below the official close. [2]
Here’s what actually happened after the bell on December 10 — and the main things investors should know heading into the Thursday, December 11, 2025 open.
Key takeaways from Adobe’s Q4 2025 results
1. Top‑line and EPS beat expectations
Adobe’s Q4 numbers were clearly ahead of consensus on the commonly watched non‑GAAP metrics: [3]
- Revenue: $6.19 billion, up about 10% year over year (YoY), versus expectations around $6.11 billion.
- GAAP EPS: $4.45.
- Non‑GAAP EPS: $5.50, beating analyst forecasts clustered around $5.39–$5.40.
For the full fiscal year 2025, Adobe delivered:
- Revenue: $23.77 billion, up 11% YoY.
- Non‑GAAP EPS: $20.94.
- Total annualized recurring revenue (ARR): $25.2 billion, up 11.5% YoY. [4]
So on an operational basis, the quarter extended Adobe’s streak of “beat and raise” style execution.
2. Segment performance shows broad‑based strength
Adobe’s business continues to be dominated by subscriptions, and both major segments delivered double‑digit growth on key lines: [5]
- Digital Media revenue: $4.62 billion, +11% YoY.
- Digital Experience revenue: $1.52 billion, +9% YoY (or +8% in constant currency).
- Digital Experience subscription revenue: $1.41 billion, +11% YoY.
By customer group:
- Total subscription revenue: $5.96 billion, +12% YoY.
- Business Professionals & Consumers subscription: $1.72 billion, +15% YoY.
- Creative & Marketing Professionals subscription: $4.25 billion, +11% YoY. [6]
Cash generation remained impressive as well, with Q4 operating cash flow of $3.16 billion and record annual operating cash flow above $10 billion for FY25. [7]
3. Heavy focus on AI and freemium growth
Management’s commentary made it clear: Adobe sees AI not as a side feature but as the core of its growth engine.
Highlights from the earnings script and press coverage: [8]
- Monthly active users of Adobe’s creative freemium offerings (Firefly, Express, Premiere Mobile and others) surpassed 70 million, growing over 35% YoY.
- First‑time subscriptions to Firefly doubled quarter‑over‑quarter, and generative‑AI credit consumption across Creative Cloud, Firefly and Express grew roughly 3x QoQ.
- Adobe reports strong adoption of Creative Cloud Pro, Photoshop, Lightroom and Acrobat where generative AI is deeply embedded.
- In a separate but strategically important move, Adobe rolled out Photoshop, Adobe Express and Acrobat inside ChatGPT, giving ChatGPT’s hundreds of millions of weekly users direct access to Adobe tools through conversational prompts. [9]
In short, Adobe is trying to own both the tooling (Creative Cloud apps) and the distribution (freemium funnels, LLM integrations, agent‑style workflows) of creative work in the AI era.
Guidance: what Adobe expects in 2026
The other major reason investors tune in after the bell is guidance — and here Adobe leaned bullish.
From its FY2026 and Q1 FY2026 targets: [10]
FY2026 (full year) targets
- Total revenue: $25.9–$26.1 billion (roughly 9%+ growth), slightly above Wall Street estimates around $25.87 billion. [11]
- Total Adobe ending ARR growth: 10.2%, implying about $2.6 billion in net new ARR — the highest beginning‑of‑year ARR guide the company has issued. [12]
- Non‑GAAP EPS: $23.30–$23.50.
- GAAP EPS: $17.90–$18.10.
- Target non‑GAAP operating margin: ~45%.
Importantly, these FY2026 targets do not include any contribution from the pending Semrush acquisition. [13]
Q1 FY2026 (next quarter) targets
- Revenue: $6.25–$6.30 billion.
- Non‑GAAP EPS: $5.85–$5.90.
- GAAP EPS: $4.55–$4.60.
- Non‑GAAP operating margin: ~47%. [14]
The guidance implies:
- High single‑digit to low double‑digit revenue growth.
- Low‑teens EPS growth, thanks to margin leverage and buybacks.
- Double‑digit growth in the overall recurring revenue “book of business”.
Reuters notes that both the revenue and non‑GAAP EPS ranges come in slightly above consensus forecasts, underscoring management’s confidence that AI‑driven products can sustain growth despite rising competition. [15]
Semrush deal and the “agentic web” story
Another key part of Adobe’s post‑earnings messaging is its pending $1.9 billion all‑cash acquisition of Semrush, a well‑known provider of search and generative‑engine optimization tools used by brands such as Amazon, JPMorgan Chase and TikTok. [16]
Management’s pitch:
- Generative AI and large language models are changing how consumers discover brands — increasingly via AI assistants and agentic browsers, not just traditional search.
- Adobe already has deep telemetry on digital behavior via Adobe Experience Platform and its Digital Experience suite; Semrush brings granular SEO/“GenAI search” data and tools. [17]
- Together, Adobe wants to become the go‑to platform for marketers trying to influence how their brands show up across search, social, LLMs and AI agents.
The company expects the Semrush acquisition to close in the first half of FY2026, with negligible non‑GAAP EPS impact in the first year and accretion thereafter. Guidance for FY2026 explicitly excludes Semrush’s future contribution, so any upside from the integration would be incremental. [18]
Mixed messages on the earnings “beat” vs “miss”
Most mainstream coverage describes Q4 2025 as a clean beat: revenue and non‑GAAP EPS came in above the Street’s $6.11 billion and ~$5.40 baseline. [19]
However, at least one analytics outlet framed the quarter as an EPS miss, comparing Adobe’s GAAP EPS of $4.45 to a higher GAAP expectation (they cite $5.50 as the EPS estimate), while also noting that reported revenue of about $6.2 billion was slightly below their $6.23 billion consensus. [20]
The discrepancy boils down to:
- Whether you evaluate Adobe on GAAP earnings (which include stock‑based compensation, amortization and other items), or
- On non‑GAAP figures, which strip those out and are the basis for most sell‑side models and management guidance. [21]
For most institutional investors in large‑cap software, non‑GAAP numbers and ARR trends tend to dominate the narrative. But the GAAP vs non‑GAAP gap is still important context, especially when thinking about long‑term dilution and true profitability.
How Wall Street and smart money are reacting
Analyst ratings and price targets
Alternative‑data provider Quiver Quantitative tracks recent analyst actions and finds: [22]
- 10 “Buy”‑type ratings vs 1 “Sell”‑type in recent months.
- 16 analysts offering price targets over the last six months, with a median target of $427.50.
Recent examples include:
- Stifel: Buy, $450 target (December 9, 2025).
- Citigroup: Target $366 (December 4, 2025).
- DA Davidson: Buy, $600 target (November 20, 2025).
- Mizuho: Buy, $390 target (November 20, 2025).
- Wells Fargo: Overweight, $420 target (November 20, 2025). [23]
A separate preview piece earlier this week noted that the Street’s 12‑month average price target implied over 40% upside from pre‑earnings levels, underscoring how far ADBE has fallen from its prior valuation peaks. [24]
Independent analysis on Seeking Alpha framed the stock as a “bargain”, arguing that: [25]
- Subscription revenue grew 11%.
- Margins and EPS grew faster than revenue.
- FY2026 guidance points to roughly 9% revenue growth and around 12% EPS growth.
- On those numbers, Adobe trades at under 15x forward earnings, which the author characterizes as undemanding for a business with durable double‑digit ARR and strong cash generation.
Valuation in context
If we take the mid‑point of Adobe’s FY2026 non‑GAAP EPS guidance (~$23.40) and compare it with a recent after‑hours price around $343, the stock trades at roughly 14.7x forward non‑GAAP earnings — squarely in the range that analysis described. [26]
On another measure, Zacks puts Adobe’s 2025 P/E ratio at about 20.2x, versus an industry average near 28.7x, again suggesting a discount to the broader software/tech peer group. [27]
The market seems to be grappling with a familiar software question: is Adobe cheap because growth is slowing and competition is intensifying, or merely less expensive than the AI hype darlings despite still‑solid fundamentals?
Trading action after the bell: Why the stock barely moved
Despite beating expectations and guiding above consensus, Adobe’s stock reaction after the bell was mild and choppy:
- Regular session (Dec 10): Stock closed around $344.32, down ~0.35% on the day. [28]
- Early after‑hours: Some reports noted shares briefly up about 1% as the numbers hit the tape. [29]
- Late evening extended session: Shares drifted toward the low‑$340s, roughly 0.3% below the close as of around 1:15 a.m. UTC. [30]
What might explain the muted reaction?
- Expectations were already high. Options pricing implied a move of roughly 7–9% around earnings, reflecting elevated implied volatility near 44%. The actual move was far smaller, setting up the classic “volatility crush” for options traders. [31]
- Macro tailwind already in the price. Earlier in the day, the Federal Reserve announced a 25‑basis‑point rate cut and signaled a cautious, but not aggressively dovish, path ahead. Equity markets rallied, with the Dow and S&P 500 near record levels by the close. [32] Adobe shares had already bounced off recent lows earlier in the week as investors positioned ahead of earnings and the Fed. [33]
- Debate over cash and GAAP EPS. Some analysts flagged the YoY decline in Adobe’s cash and equivalents balance (down roughly 29% YoY to about $5.4 billion) and the lower GAAP EPS figure, framing the quarter as less clean than the non‑GAAP numbers suggest. [34]
- AI competition narrative. Reuters and others emphasized that, even as Adobe leans into AI, it faces a crowded field of rivals using generative models to challenge its dominance in design and marketing. That competitive overhang may be limiting how much investors are willing to re‑rate the stock on any one quarter. [35]
Big themes to watch before the December 11 open
For traders and longer‑term investors heading into Thursday’s session, these are the main storylines to keep in mind.
1. Does AI‑driven freemium growth translate into paid ARR?
Adobe’s bet is clear: pull tens of millions of users into Firefly, Express, Premiere Mobile and Acrobat via free or low‑tier offerings, then convert them into higher‑value Creative Cloud and Document Cloud subscriptions.
Key datapoints to focus on over the next few quarters: [36]
- Growth in Total Adobe ARR versus the >70 million freemium MAUs.
- Net new Digital Media ARR, which re‑accelerated in Q4.
- Monetization of generative credits and AI add‑ons in both individual and enterprise plans.
If those metrics keep compounding, today’s mid‑teens forward P/E will look increasingly conservative; if conversion stalls, the freemium funnel becomes a more expensive experiment.
2. Integration of Semrush and the evolving “agentic web”
Investors should expect more questions — and likely more news flow — around:
- Regulatory approval and timing for the Semrush deal.
- How quickly Adobe can embed Semrush’s data and tools into Experience Cloud and Adobe Experience Platform.
- Whether marketers see real lift from Adobe’s pitch to manage brand visibility across search, social and AI assistants in one place. [37]
None of this upside is in 2026 guidance yet, but it will shape the narrative around Adobe’s position in the AI‑driven marketing stack.
3. Cash, leverage and capital returns
Quiver’s breakdown shows: [38]
- Healthy operating cash flow (over $3.2 billion in Q4),
- A declining cash balance,
- Rising total liabilities, and
- Ongoing share repurchases (7.2 million shares repurchased in Q4 alone; about 30.8 million over FY25).
Before the open, investors will be weighing whether Adobe’s capital allocation — buybacks plus a sizable cash M&A deal in Semrush — is the best use of its balance sheet at current valuations.
4. Technical levels and near‑term volatility
From a price‑action standpoint, recent commentary flagged: [39]
- Support in the mid‑$330s to around $340, an area tested earlier in the week.
- Near‑term resistance in the mid‑$340s to low‑$350s; a sustained move above recent intraday highs in the $346–$361 range would indicate stronger post‑earnings momentum.
With implied volatility elevated going into the print, Thursday’s session could see continued swings as options traders unwind positions and new fundamental buyers (or short sellers) adjust to the updated guidance.
5. Macro overlay: Fed path vs. growth stocks
The same Fed decision that buoyed markets on Wednesday — a 25 bps cut and a plan to add Treasury bills to its balance sheet — also came with a relatively cautious rate‑cut outlook for 2026. [40]
For long‑duration assets like high‑margin software, small changes in the market’s rate expectations can have outsized effects on valuation multiples. Adobe’s fundamentals give it room to maneuver, but its multiple will still rise or fall in part with the broader macro tide.
Bottom line: A fundamentally strong quarter, a cautiously optimistic market
Adobe’s Q4 2025 report delivered:
- Solid top‑ and bottom‑line beats on non‑GAAP metrics,
- Strong ARR and cash generation,
- Ambitious but credible 2026 guidance anchored in AI‑driven products, and
- A coherent strategy around the emerging “agentic web,” bolstered by the planned Semrush acquisition and deep LLM integrations like the ChatGPT partnership. [41]
Yet the stock’s quiet reaction after the bell shows that none of this is happening in a vacuum. Investors are balancing:
- Attractive forward valuation relative to history and peers,
- Rising competition in AI and design tools,
- Some concern about cash trends and GAAP profitability, and
- Macro uncertainty around rates and tech multiples.
Heading into the December 11 open, the investment case for ADBE is less about whether Q4 was “good” — it clearly was — and more about whether Adobe can keep converting its vast AI‑fueled user base and enterprise pipeline into sustained, double‑digit ARR growth over the next several years.
References
1. www.businesswire.com, 2. www.investing.com, 3. www.businesswire.com, 4. www.adobe.com, 5. www.businesswire.com, 6. www.businesswire.com, 7. www.businesswire.com, 8. www.adobe.com, 9. www.benzinga.com, 10. www.businesswire.com, 11. www.reuters.com, 12. www.adobe.com, 13. www.businesswire.com, 14. www.businesswire.com, 15. www.reuters.com, 16. www.reuters.com, 17. www.adobe.com, 18. www.adobe.com, 19. www.benzinga.com, 20. www.quiverquant.com, 21. www.businesswire.com, 22. www.quiverquant.com, 23. www.quiverquant.com, 24. finance.yahoo.com, 25. seekingalpha.com, 26. www.businesswire.com, 27. www.optionslam.com, 28. www.investing.com, 29. www.tradingview.com, 30. www.investing.com, 31. www.barchart.com, 32. www.tradingview.com, 33. www.trefis.com, 34. www.quiverquant.com, 35. www.reuters.com, 36. www.adobe.com, 37. www.adobe.com, 38. www.quiverquant.com, 39. www.benzinga.com, 40. www.tradingview.com, 41. www.businesswire.com
