Adobe ( $ADBE ) just reported a **double beat,** **raised guidance**, but *dropped \~10% *
A *12% FCF yield,*means the market is assuming not just slower growth, but actual permanent structural decline.
I work in creative land and was buying around $250, but at \~$205 now I'm backing up the truck.
I've been doing research and [free deep dives](https://open.substack.com/pub/durableinvesting/p/why-im-backing-up-the-truck?r=8iygzz&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true) and expected to find a value trap but came away leaning strongly the other way.
I spoke personally with plenty of creative pro's, agencies , enterprise users & even if Adobe is often hated by its users, it's still deeply embedded in their workflows.
**My Q: What is the strongest evidence that Adobe's moat has broken?**
Not "AI will disrupt everything" , but actual evidence you can send me that enterprise customers, agencies, or professional creatives are leaving the ecosystem in meaningful numbers. NOT low-end, individual users but actual, real enterprises stopping their subscriptions.
I just can't see anything backing up this AI narrative, but I'm very happy to be proved wrong.
**TLDR of the piece on what stood out from Q2 earnings for me:**
• Enterprise segment remains strong -- this is key to the bull case as these are 70% of subscriptions
• AI-related ARR continues to grow rapidly -- this negates a lot of bear cases that argue they're being disrupted
• Large value customer growth is healthy - they called this out specifically
•Customer retention appears intact - but C Suite not so much as the CFO gets poached by Marvell
• Management is prioritising user acquisition and lifetime value over near-term ARR growth
*The bear case is obvious but unproven:*
* *AI commoditises creative software & pricing power erodes*
* *Future generations of creators never enter the Adobe ecosystem*
* *CEO/CFO transition adds uncertainty*
