The market is treating Adobe like a legacy software company in terminal decline. Yet the actual data shows it's one of the biggest beneficiaries of the rise of GenAI. In fact, it's one of the top 5 most profitable & fastest-growing AI companies today, in an industry where profitability is rare.
Adobe hit a record $6.62 billion in Q2 revenue (up 13% YoY) while non-GAAP EPS jumped 18% to $5.96. Its net margins are at 36%, close to an all-time high. They are absorbing the compute costs of generative AI while expanding their profitability.
Their AI-first ARR tripled year-over-year to surpass $500 million. Very few enterprise software companies are reporting this level of direct, paid AI adoption. The breakout driver is Firefly, now at $300M in ARR, growing approximately 50% quarter-over-quarter through apps and credit packs. That's better growth than most top AI startups. Paid users for the Acrobat AI Assistant also grew by more than 150%.
Adobe has also been successful at using AI to make its software easier to use for new users, resulting in a large increase of its freemium-tier MAUs (now 850M, up from 700M last year).
TL;DR: Adobe is currently the most profitable it has ever been, and it is using AI to accelerating its adoption and earning growth (now 13%, up from 10-11% last year).
For all the talk about "Adobe is over", every creative I know is still using Photoshop and Premiere. And those are some of the people who are leaning the hardest into AI image and video generation. People still love these products.
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