Adobe's latest results point to resilient subscription growth, solid cash generation and AI-linked recurring revenue gains, yet scepticism over monetisation keeps pressure on the shares as management sets next-year targets and a new reporting focus.

SINGAPORE, SG / ACCESS Newswire / December 16, 2025 / Burghley Capital's latest market note on Adobe is published as the software group reports a fresh quarterly revenue high and reiterates confidence in its subscription model. Revenue totals $6.9 billion in the latest quarter, up 10% compared with the same quarter a year earlier, keeping investor focus on whether AI features strengthen retention and pricing rather than dilute them.

Across the latest fiscal year, revenue reaches $26.5 billion, up 11% compared with the prior fiscal year, while non-GAAP earnings per share stand at $6.1 in the latest quarter, up 14.3% compared with the same quarter a year earlier. Cash flow from operations totals $3.5 billion over the latest quarter, reinforcing a balance between investment and capital return in the same period.

James Barker, Director of Private Equity, captures the core point as "recurring revenue plus cash conversion is where confidence is built, because it shows customers are paying and the business is collecting."

Digital Media continues to drive scale. The division generates $5.2 billion of revenue in the latest quarter, up 11% compared with the same quarter a year earlier, while Digital Experience contributes $1.7 billion, up 9% on the same basis. Within Digital Experience, subscription revenue totals $1.6 billion in the latest quarter, up 11% compared with the same quarter a year earlier, supporting the view that enterprise software demand remains resilient.

Recurring revenue metrics keep the AI discussion anchored. Digital Media annual recurring revenue stands at $21.4 billion at quarter-end, up 11.5% compared with quarter-end a year earlier, and the company reports AI-influenced annual recurring revenue of more than $5.6 billion at the same point, now exceeding one-third of total annual recurring revenue. Barker's assessment is that "if AI is bundled into existing subscriptions, adoption is the easy part, and pricing power is the harder part."

Capital return continues alongside investment. Adobe repurchases 7.2 million shares during the latest quarter and 30.8 million shares over the latest fiscal year, signalling confidence in cash capacity across those periods. Burghley Capital also draws attention to a reporting shift from the next fiscal year, which places greater emphasis on customer-group subscription revenue alongside ending annual recurring revenue growth, giving investors a clearer framework for judging performance by customer cohort.

AI usage indicators remain large. Firefly usage exceeds 16 billion pieces of content created across integrated applications as of quarter-end; first-time Firefly subscriptions run at 2x the level of the preceding quarter; and freemium monthly active users exceed 70 million in the latest month, up 35% compared with the same month a year earlier. In enterprise, 99% of Fortune 100 companies use AI features as of the latest reporting period, with close to 90% of the company's top 50 enterprise accounts implementing AI-first innovations during the latest reporting period.

The share price response stays cautious. Adobe shares are down 37% over the preceding 12 months while the S&P 500 is up 16.3% over the same period, and the shares slip 0.8% in the first trading session after the quarterly results. That reaction comes even though revenue exceeds the consensus expectation of $6.8 billion for the latest quarter, pointing to persistent questions about how quickly AI engagement translates into paid uplift.

Guidance for the next fiscal year sets a narrow corridor for expectations. Revenue is forecast at $25.9 billion to $26.1 billion, above a consensus estimate of $25.9 billion, and first-quarter revenue is projected between $8 billion and $8.1 billion compared with a market estimate of $8 billion. The business targets ending annual recurring revenue growth of 10.2% over the next fiscal year, implying about $3.3 billion of net new annual recurring revenue over that period, and Barker's view is that "the market wants a credible bridge from usage to incremental revenue, and the guidance corridor is where that bridge is tested."

About Burghley Capital

Founded in 2017, Burghley Capital Pte. Ltd. (UEN: 201731389D) is a global investment management firm headquartered in Singapore, recognised for long-only asset management and research-led analysis. The firm provides analytical insights, tailored investment approaches and dedicated financial advisory solutions for institutional investors and private clients worldwide, with a focus on disciplined investment practice and financial resilience. For additional insights, please visit https://burghleycapital.com/resources. Media enquiries can be directed to Martin Wei at m.wei@burghleycapital.com or visit https://burghleycapital.com.

SOURCE: Burghley Capital