ADBE · Forward model · Product, services and legacy subscription · Bear case
What has to happen in Product, services and legacy subscription
Model as of
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Product, services and legacy subscription
Everything Adobe reports outside the two customer groups: perpetual and term product licences, consulting, training and technical support, and the legacy Publishing & Advertising subscription line. It was $228m in the basis quarter, 3.4% of revenue, and it is shrinking - it was $293m nine quarters earlier. Adobe wrote off $70m of goodwill on the Publishing & Advertising reporting unit in the basis quarter, which is management's own statement about where this line is going. It is modelled as a single declining residual because that is the only shape the disclosure supports across all ten quarters.
Latest: $120M (2031Q2E)
| Period | Value |
|---|---|
| 2024Q1 | $293M |
| 2024Q2 | $277M |
| 2024Q3 | $256M |
| 2024Q4 | $268M |
| 2025Q1 | $258M |
| 2025Q2 | $259M |
| 2025Q3 | $223M |
| 2025Q4 | $231M |
| 2026Q1 | $227M |
| 2026Q2 | $228M |
| 2026Q3E | $219M |
| 2026Q4E | $210M |
| 2027Q1E | $203M |
| 2027Q2E | $195M |
| 2027Q3E | $189M |
| 2027Q4E | $182M |
| 2028Q1E | $176M |
| 2028Q2E | $170M |
| 2028Q3E | $165M |
| 2028Q4E | $160M |
| 2029Q1E | $155M |
| 2029Q2E | $151M |
| 2029Q3E | $146M |
| 2029Q4E | $142M |
| 2030Q1E | $138M |
| 2030Q2E | $134M |
| 2030Q3E | $130M |
| 2030Q4E | $127M |
| 2031Q1E | $123M |
| 2031Q2E | $120M |
Assumptions & reasoning
- Every quarter of this line is estimated, and deliberately so: it is total consolidated revenue less the two disclosed customer-group lines. Adobe does not publish it as a line, so the honest label is computed rather than reported, and by construction the three verticals sum to reported revenue in all ten quarters.
- The residual is not a plug, because where all the pieces are published it decomposes exactly: fiscal 2026 Q2 is $89m of product revenue plus $113m of services and other revenue plus $26m of other subscription revenue, which is $228m. The same identity holds in fiscal 2026 Q1 at $90m + $110m + $27m = $227m.
- A three-way split cannot be carried back across the whole history: Adobe published Publishing & Advertising as a separate subscription line only from fiscal 2026, so before that the legacy piece cannot be separated from product and services without apportioning it, which the model refuses to do.
- The decline is set at 4.0% a quarter, faster than the 3.2% trailing rate over nine quarters, because Adobe's own fiscal 2026 Q3 revenue guidance implies a residual of $140m to $240m against the $228m delivered in each of the last two quarters. That is the one place where the guided total and the guided customer groups do not add up, and the model resolves it here rather than by pushing the customer groups outside their guided ranges.
- Consulting runs a negative gross margin - services and other revenue was $113m against $124m of cost in the basis quarter - so this line shrinking is mildly accretive to the consolidated margin. The flat 42% terminal margin does not capture that, which makes it a small conservatism.