More Freemium

Research evidence excerpt

More Freemium

June 11, 2026 | 21:55 ET~

Adobe Systems

ADBE-NSDQ Rating Price: Jun-11 Target ↓ Total Rtn Software

Market Perform $218.80 $230.00 5%

Keith Bachman, CFA Analyst

keith.bachman@bmo.com (347) 891-0258

Adam J. Holets Senior Associate

More Freemium adam.holets@bmo.com (646) 248-5505

Bradley Clark, CFA VP Associate

brad.clark@bmo.com (347) 853-4783

Bottom Line: Jonathan Stein Associate

Adobe announced two strategic changes that raise some concern – increasing emphasis jonathan.stein@bmo.com (718) 619-7165

on freemium offerings and less emphasis on creative pricing and usage monetization. Legal Entity: BMO Capital Markets Corp.

However, we have concerns about Adobe’s ability to monetize the growing freemium

2YR Price Volume Chart

user base given competitive dynamics. Moreover, we are lowering our FY26 organic net 700

new ARR estimate from 1% growth to an ~18% y/y decline. We are lowering our target 600

price from $285 to $230 and retain our Market Perform rating. 500

400 15

Key Points 10

Reasonable Organic Results: ADBE completed the acquisition of Semrush this quarter, 200 0 Dec Jun Dec Jun

which added $480 million of total ARR and $40 million of in-quarter revenue. On an LHS: Price ($) / RHS: Volume (mm) Source: FactSet

organic basis, we estimate that Adobe added $560 million of net new ARR, which was Company Data in $

below our expectation, and organic net new ARR declined by 3.5% y/y vs. an 11% y/y

Dividend $0.00 Shares O/S (mm) 404.2

decline in net new ARR in the February quarter. Moreover, excluding Semrush revenue,

we estimate Adobe grew total revenues by about 10.3% y/y CC, or about 50bps above Yield 0.0% Market Cap (mm) $88,439

our estimate. We estimate organic subscription revenue growth of 11.3% y/y CC, or EV (mm) $83,831 AD Vol. (mm) 15.03