Adobe’s (ADBE) decision to remove Digital Media annual recurring revenue growth as a metric next year and replace it with total annual recurring revenue is a sign of “moderating growth,” Citi said.
“We see the new change as a sign of moderating growth in the [Digital Media] category with concerns of rising competition in [Creative Cloud],” analyst Tyler Radke wrote in a note to clients. “We expect to see ~10% total ARR growth for FY26 and some modest margin pressure with investments in inhouse AI initiatives and with [third-party large language models].”
Radke, who lowered his price target to $366 from $400, said he expects to hear more details on the Semrush (SEMR) acquisition and the “willingness to buy solutions in the DX category moving forward.”
Adobe is set to report its next fiscal quarterly results after the close of trading on Dec. 10. A consensus of analysts expect the company will earn $5.40 per share on $6.11B in revenue.
