👉 Background: Adobe is the creative software behemoth behind toolkits that every designer swears by, curses at, and secretly can’t live without. As of 2025, Adobe’s Creative Cloud has an estimated 37 million subscribers. For the two decades, Adobe has been known as a design darling, continually growing in dominance - until Canva, Figma and other competitors entered the chat.

‍👉 What happened: Now, Adobe has announced its Q3 adjusted earnings of $5.99 billion in revenue, which was ahead of analyst forecasts. Throw on top of that, its AI-powered ARR cracked $5 billion USD. Adobe is VERY keen to show investors that its customers are paying for its generative AI features.

‍👉 What else: Although Adobe’s share price has fallen by 24% over the past 12 months, there was a glimmer of hope after these results. On the back of this news, Adobe’s shares jumped more than 3%. So while Adobe’s competitive moat seemed to be cracking, it’s holding up for now.

‍What's the key learning?

‍💡A “competitive moat” refers to the advantages that help a company protect its market share against rivals.

💡For Adobe, its moat is built on three layers:

• First, its brand recognition is enormous - Photoshop is practically a verb.
• Second, its ecosystem is sticky: once businesses adopt Adobe tools across marketing, design, and documents, switching to another provider is costly and disruptive.
• And thirdly, its enterprise reputation is tied to security and compliance.

💡Adobe makes a big deal of being “commercially safe” with its AI models, ensuring intellectual property protections - especially important when 99% of the Fortune 100 companies are supposedly using Adobe’s AI tools. And maaaybe this is what will keep its competitive moat against its growing competitors.