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ADBE · Forward model · Business Professionals & Consumers · Bear case

What has to happen in Business Professionals & Consumers

Model as of

This page changes Business Professionals & Consumers inside the complete ADBE model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

ADBE forward model
Horizon
Consolidated fair value $234.84 all other verticals held in this portfolio case
Final-quarter revenue $2.42B 29% of company revenue
Explicit segment contribution $30.15B EBITDA less segment capex, before corporate items

The AI-disruption case, argued from Adobe's own filings rather than from sentiment: terminal sequential growth falls half a point on every line and margins run two points below the disclosed level as inference cost bites, with the exit compressing to 8.5x EBITDA. The evidence is inside the basis quarter. Adobe wrote off $70m of goodwill on the Publishing & Advertising reporting unit; subscription cost of revenue grew 16.0% year over year against 13.7% subscription revenue growth, so the subscription gross margin slipped from 91.05% to 90.87%; and the fiscal 2026 ending-ARR growth target of 10.2% is a step down from the 11.5% delivered in fiscal 2025 and was left untouched in June even as revenue and EPS targets were raised. Fiscal 2030 revenue reaches $32.0bn instead of $33.4bn and fair value is $234.84, 19% below the price - close to the $220 and $240 targets Bank of America and Morgan Stanley published in July and August 2026.

Business Professionals & Consumers

Basis quarter$1.85B
Final quarter$2.42B
Implied CAGR+5%
Final revenue mix29%

Acrobat, Acrobat AI Assistant, Acrobat Studio and Adobe Express: 28.0% of revenue in the basis quarter and the faster-growing of the two disclosed groups, up 16% year over year for six straight quarters. The strategic argument is reach, since Acrobat Reader is freemium and the funnel is measured in billions of users, and the monetisation argument is that AI assistants convert document consumption into a subscription. Adobe attributes the growth to one product, Acrobat. As with the other customer group, revenue is published and the seat base behind it is not, so the driver is a sequential growth rate calibrated to guidance rather than a subscriber count Adobe has never disclosed.

Last four quarters
2025 Q3 $1.65B Reported
2025 Q4 $1.72B Estimated
2026 Q1 $1.78B Reported
2026 Q2 $1.85B Reported
Adobe Acrobat subscriptions across desktop, mobile and webAcrobat AI Assistant and PDF SpacesAcrobat StudioAdobe Express
Sequential growth +1.9%/qtr decaying toward +1.4% Smooths the guided 1.46% Q3 and 3.5% Q4 zigzag; lands both the quarter and the year in range.
Business Professionals & Consumers

Latest: $2.42B (2031Q2E)

Period Value
2024Q1 $1.34B
2024Q2 $1.39B
2024Q3 $1.44B
2024Q4 $1.50B
2025Q1 $1.53B
2025Q2 $1.59B
2025Q3 $1.65B
2025Q4 $1.72B
2026Q1 $1.78B
2026Q2 $1.85B
2026Q3E $1.89B
2026Q4E $1.92B
2027Q1E $1.96B
2027Q2E $1.99B
2027Q3E $2.02B
2027Q4E $2.05B
2028Q1E $2.08B
2028Q2E $2.11B
2028Q3E $2.13B
2028Q4E $2.16B
2029Q1E $2.19B
2029Q2E $2.21B
2029Q3E $2.24B
2029Q4E $2.27B
2030Q1E $2.29B
2030Q2E $2.32B
2030Q3E $2.34B
2030Q4E $2.37B
2031Q1E $2.39B
2031Q2E $2.42B

Assumptions & reasoning

  • Ten contiguous quarters on the same disclosure basis as the other customer group, with the same three estimated quarters derived the same way and closed by the same fiscal-year sums: 1,339 + 1,389 + 1,437 + 1,497 = 5,662 for fiscal 2024 and 1,534 + 1,595 + 1,648 + 1,718 = 6,495 for fiscal 2025, both equal to the 10-K.
  • Adobe's own fiscal 2026 guidance for this line is not internally consistent quarter to quarter: the third-quarter range implies a 1.46% sequential step and the full-year range then implies about 3.5% in the fourth. No mechanism is given for the step-up, so the model smooths it to 1.90%, which lands Q3 at $1,888m inside the guided $1.87-1.89bn and the year at $7,446m inside the guided $7.44-7.48bn.
  • The margin carried here is the consolidated subscription gross margin of 90.9%, the same figure used for the other customer group, because Adobe publishes no cost of revenue by customer group at all. Splitting one disclosed margin into two undisclosed ones would be invention, so the model does not.
  • No Acrobat or Express subscriber count or price is published, so nothing in this line separates seats from pricing. A 16% growth rate that is mostly price is a different business from one that is mostly seats, and the disclosure does not say which it is.
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