Adobe Inc.
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Forward-Looking Statements
In addition to historical information, this Annual Report on Form 10-K contains “forward-looking statements” within the meaning of applicable securities laws, including statements related to our product development plans and new or enhanced offerings; our business, strategy, artificial intelligence (“AI”) and innovation momentum; our market and AI opportunity and future growth; market and AI trends; macroeconomic conditions; fluctuations in foreign currency exchange rates; strategic investments; customer success and groups; and industry positioning. In addition, when used in this report, the words “will,” “expects,” “could,” “would,” “may,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “targets,” “estimates,” “looks for,” “looks to,” “continues” and similar expressions, as well as statements regarding our focus for the future, are generally intended to identify forward-looking statements. Each of the forward-looking statements we make in this report involves risks, uncertainties and assumptions based on information available to us as of the date of this report. Such risks and uncertainties, many of which relate to matters beyond our control, could cause actual results to differ materially and adversely from these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in Part I, Item 1A of this report and elsewhere herein. The risks described herein and in Adobe’s other filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Quarterly Reports on Form 10-Q to be filed in fiscal 2026, should be carefully reviewed. Undue reliance should not be placed on the forward-looking financial information set forth in this report, which reflects estimates based on information available as of the date of this report. Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.
“Adobe,” “Acrobat,” “Photoshop,” “Adobe Firefly,” “Adobe GenStudio” and other trademarks of ours appearing in this report are our property. All other trademarks are the property of their respective owners.
PART I
ITEM 1. BUSINESS
OVERVIEW
Adobe’s mission is to empower everyone to create. We build innovative platforms and tools that unleash creativity, productivity and personalized customer experiences. For over four decades, our innovations have transformed how people everywhere engage across all types of media. Adobe’s solutions are the foundation of digital experiences, starting with the first creative spark, to the creation and development of all content and media, to the personalized delivery across every channel.
Our focus revolves around serving our customer audiences: business professionals, consumers, creators, creative professionals and marketing professionals. The massive opportunity and evolving role of creativity across roles and industries have driven Adobe’s growth over the past four decades and are expected to continue to drive our growth going forward as we evolve our solutions and routes to market to anticipate the growing needs of our customers. In the artificial intelligence (“AI”) era, we are harnessing the power of AI across our solutions by bringing together our commercially safe first-party and leading partner AI models best suited for the job; deploying conversational and agentic capabilities across offerings; ensuring ubiquity on all surfaces; delivering trusted and secure solutions; and expanding our global presence.
Adobe’s value proposition is to empower creative expression across multiple media types and channels, at scale, in a collaborative and secure environment, with an end-to-end integrated platform spanning ideation, creation, production and activation. We power the entire content workflow with Adobe’s AI platform, which offers customers brand safety, compliance, intellectual property protection, and reliability.
STRATEGY & OPPORTUNITY
Adobe’s strategy is to empower our customer audiences—business professionals, consumers, creators, creative professionals and marketing professionals—to be more creative, productive and successful. Underpinning our customer-focused solutions is our AI strategy and Adobe’s AI platform. As a technology leader that unleashes creativity, productivity and customer experience orchestration, we deliver end-to-end professional creative and marketing solutions. We support our customers to transform the way they connect with their customers and bring creativity and marketing together in new and powerful ways through a connected ecosystem of tools, agents and workflows. We are scaling differentiated digital and enterprise routes to market and automated workflows to expand our brand value and global reach.
Customer Groups Strategy
We drive our strategy through customer-specific product innovation and go-to-market motions focused on two customer groups: Business Professionals & Consumers and Creative & Marketing Professionals. We continue to focus on several key
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growth drivers among our customer groups. This includes expanding relationships and engagement with existing customers, driving new customer adoption, delivering value-driven and innovative solutions in new categories across desktop, web and mobile, and increasing our geographic reach. We continue to scale our digital and enterprise routes to market as well as our extensive partner ecosystem to expand our addressable market and deliver on our strategy.
Business Professionals & Consumers
Creativity and productivity are merging and changing how everyone communicates digitally. Business professionals and consumers seek intuitive, all-in-one solutions that seamlessly integrate creativity and productivity across web and mobile. They require tools to digest and gain insights from vast amounts of information and data. They value ease of use, enabled by freemium models that provide accessible entry points to powerful tools that span document consumption and content creation. AI-powered features and conversational interfaces are increasingly replacing traditional templates, offering dynamic and personalized workflows that enhance efficiency.
For Business Professionals & Consumers, we are democratizing productivity and creativity with AI-driven, quick and easy applications (“apps”) that enable users to be creative and productive whether consuming or generating content across multiple media types and channels. With Acrobat Studio, which brings together Adobe Acrobat and Express to deliver more product value, we are evolving Acrobat from a leading document productivity app to an integrated destination for people to get insights faster, create standout content and collaborate more seamlessly. Our Acrobat solutions, from our freemium Acrobat Reader to Acrobat AI Assistant to our AI-powered productivity and creativity destination, Acrobat Studio, facilitate frictionless onboarding and scaled reach in serving the billions of potential users in this customer group.
Creative & Marketing Professionals
Creators and creative professionals need AI-driven solutions that provide power and precision from ideation and creation to production and delivery. They want a powerful destination for creative expression and access to leading AI models. They require seamless collaboration capabilities, powerful ideation tools, conversational and agentic AI solutions and flexible access to web, mobile, and desktop applications to meet the growing demand for high-quality, personalized content in a fast-paced digital economy.
As AI fundamentally transforms content production, distribution and monetization, our solutions accelerate creative expression for creators and creative professionals and enable anyone to create by using the AI functionality infused in our flagship creative applications as well as our AI-first solutions. We offer an end-to-end, ideation-to-creation platform powered by our commercially safe Firefly models and an expansive partner model ecosystem, offering customers choice and flexibility without the friction of switching between workflows and platforms.
Marketing professionals require AI-driven solutions that enable them to create, manage and optimize personalized digital experiences at scale and to enhance brand visibility across the content supply chain. They need agility, self-service capabilities, and integrated workflows to collaborate effectively with creative teams and agencies and meet the increasing demand for compelling content.
For marketing professionals, we unify creative production and marketing execution with comprehensive content supply chain solutions that deliver end-to-end customer experience orchestration solutions, automate workflows and personalize experiences and engagement at scale across channels. Centered around Adobe Experience Platform and apps and Adobe GenStudio, our offerings streamline the content supply chain and deliver agile, self-service capabilities and integrated workflows to collaborate effectively and efficiently produce high volumes of on-brand, personalized content to strengthen brand visibility. Our competitive differentiation comes from the increased value we provide customers by integrating the Adobe Experience Platform with our comprehensive set of solutions and embedding AI into our portfolio of solutions, such as Adobe Experience Platform AI Assistant. Adobe Experience Platform is a customer data platform that serves as a foundation in enterprises for digital customer engagement and brings together AI-powered apps and agents to efficiently drive engagement and loyalty. Through AI-powered features and AI agents, our solutions enable businesses to provide real-time orchestration of customer journeys and help marketers deliver impactful, data-driven campaigns while optimizing return on investment. Our innovations empower our customers to use their first-party customer data and deliver more relevant, high-impact advertising experiences rooted in direct consumer and business relationships.
Creative and marketing professionals have increasingly interconnected objectives and workflows in the content lifecycle. Creative professionals produce high-quality content, while marketing professionals leverage this content to deliver personalized, data-driven digital experiences at scale. Adobe’s integrated solutions, such as GenStudio and Firefly Services, bridge the gap between content creation and marketing execution, enabling seamless collaboration and efficiency across these roles. This unified approach reflects Adobe’s strategy to address the entire content lifecycle—from ideation to activation—ensuring alignment, scalability, and value for both creative and marketing functions.
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AI Strategy
AI represents a generational opportunity to serve an increasingly large and diverse customer universe. Adobe’s approach to AI is rooted in the belief that creativity is a uniquely human trait – and that AI has the power to assist and amplify human ingenuity and enhance productivity. Adobe’s AI leadership builds on our expertise across core creative categories like imaging, design, illustration and video as well as digital documents and digital experiences. Over the past several years, we have incorporated AI into our solutions and delivered hundreds of AI capabilities to enable customers to create, work and collaborate more efficiently. To address our customers’ need for a holistic approach for their productivity, creativity and marketing needs, Adobe’s strategy infuses AI across our apps, embeds purpose-built agents in our applications, provides choice of models and harnesses our unique data assets to deliver comprehensive and easy-to-use solutions.
Applications and Interfaces. Adobe’s AI platform powers the applications and interfaces that customers use every day across their creative, productivity and marketing workflows by bringing together innovations across agents, models and data. These integrations increase the value that our product portfolio delivers to customers with a unified experience across our solutions. We drive higher customer engagement and retention by enhancing our existing solutions and infusing AI in our core applications and launching AI-first applications.
Agent Orchestration. We use our unique data assets to design and implement AI agents that generate insights and content, make recommendations and optimize engagement and customer experience outcomes across our product portfolio. We are building agents on the Adobe Experience Platform, informed by our deep understanding of our customers’ needs and the complexity of delivering content at scale, to redefine and simplify the future of customer connection by automating decision-making, optimizing workflows and enabling real-time orchestration of content, data and journeys. We offer AI assistants powered by agents that unlock creativity and allow for conversational creation and editing. Our agents and agentic solutions in our Acrobat offerings streamline workflows, drive efficiency, unlock productivity and accelerate time to value. Our agents and agentic solutions are expanding our user base across our customer groups by reducing the need for traditional onboarding and training to unlock the value of AI solutions.
Models. In the rapidly evolving AI landscape, where each generative AI model has its own strength, we offer customers flexibility to use the model of their choice directly within certain Adobe solutions to best serve their needs. Adobe Models: We build our own creativity-focused, commercially safe Firefly foundation models for generation and editing across categories. Partner Models: We partner with an extensive ecosystem of third-party models across categories. Within certain applications, customers can choose from our Adobe Firefly models and partner models to meet their creativity, productivity and marketing needs. Our focus on controllability is designed to align with our customer’s creative intent, allowing for preferred input, customization, precise refinement, iterative control and seamless integration across our apps. Customized Models: We offer the ability for individuals and enterprises to train Firefly generative AI models tailored to their specific requirements with their own assets.
Data. As AI continues to change content creation, our customers, particularly creators and enterprises, increasingly require responsible, secure and human-centered AI solutions. In developing our Firefly foundation models, we responsibly harness our unique data assets and help our customers amplify the value of their first-party data. Adobe leverages a rich dataset sourced from licensed content and public domain assets to train our Firefly generative AI models that are commercially safe for our customers. This approach respects creator rights and builds trust among enterprise customers, enabling them to confidently use AI-generated outputs in production workflows. We also work with our customers to help them manage, gain insights from and unlock the power of their first-party data and assets, and build customized models and solutions using such data and assets stored in our applications, systems, and through connections to other business applications.
COMPETITION
We participate in a highly competitive and rapidly evolving environment where our competitors include companies of various sizes and both public and private companies, including large, global companies and smaller companies with more specialized focuses, new entrants, and AI or cloud-native companies. We compete with software companies, AI companies, hardware manufacturers, operating system developers, and social media companies across our business. The markets for our solutions are characterized by rapid technological innovation, new industry standards, evolving distribution and sales models, limited barriers to entry, short product lifecycles, customer price sensitivity, global economic conditions and the frequent entry of new solutions or competitors.
Our future success will depend on our ability to effectively appeal to customers and accurately predict and meet changing customer needs by enhancing our existing solutions and introducing new ones in a timely and cost-effective manner. We need to anticipate emerging standards, business models, software delivery methods, and other technological changes.
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Our solutions for business professionals and consumers face broad competition from productivity tools and consumer-focused creative tools including general productivity platforms and apps, web- and mobile-first design platforms, an array of easy-to-use desktop, web and mobile content creation apps, AI-first creativity and productivity tools, presentation tools, and social media platforms that offer built-in media editing capabilities.
Our solutions for creators and creative professionals face broad competition from both established and emerging players including professional tools and suites for imaging, video, design, 3D, and other creative tasks, purpose-built mobile apps, AI-first creative tools, as well as creative tools integrated into broader desktop, web, and mobile applications.
Our solutions for marketing professionals face broad competition from large, established enterprise software and cloud companies, point solutions from smaller, specialized companies, new companies constantly entering the digital experience space as well as business’ internally developed apps. Key competitive factors in this environment include proven performance, security, scalability, flexibility, and reliability of the platform; breadth of functionality & strategic integrations with third parties; cost-effective benefits; enterprise-level service & training; and ability to integrate across business workflows.
Adobe continues to build on its strong foundation of research and development, transformative innovation, category and brand leadership and world-class financial discipline. We deliver Adobe magic to an expanding set of global customers and are executing on the opportunity ahead. We are a trusted partner to companies of all sizes who look to our integrated ecosystems and connected workflows across creativity, productivity, and marketing to stand out and grow their brands.
See the section titled “Risk Factors” contained in Part I, Item 1A of this report for additional information regarding risks related to competition.
PRINCIPAL SOLUTIONS
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto.
In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements, including statements regarding product plans, future growth, market opportunities, including artificial intelligence (“AI”) opportunities, customer needs, business and finance strategies, macroeconomic conditions, fluctuations in foreign currency exchange rates, strategic investments, industry positioning, customer acquisition and retention, the amount of annualized recurring revenue and revenue growth. In addition, when used in this report, the words “will,” “expects,” “could,” “would,” “may,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “targets,” “estimates,” “intends to,” “continues” and similar expressions, as well as statements regarding our focus for the future, are generally intended to identify forward-looking statements. Each of the forward-looking statements we make in this report involves risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in Part II, Item 1A of this report. The risks described herein and in other documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for fiscal 2025, should be carefully reviewed. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document, except as required by law.
“Adobe,” “Acrobat,” “Photoshop,” “Adobe Firefly,” “Adobe GenStudio” and other trademarks of ours appearing in this report are our property. All other trademarks are the property of their respective owners.
BUSINESS OVERVIEW
Adobe’s mission is to empower everyone to create. We build innovative platforms and tools that unleash creativity, productivity and personalized customer experiences. For over four decades, our innovations have transformed how people everywhere engage across all types of media. Adobe’s solutions are the foundation of digital experiences, starting with the first creative spark, to the creation and development of all content and media, to the personalized delivery across every channel. We have operations in the Americas; Europe, Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”).
Our focus revolves around serving our customer audiences: business professionals, consumers, creators, creative professionals and marketing professionals. The massive opportunity and evolving role of creativity across roles and industries have driven Adobe’s growth over the past four decades and are expected to continue to drive our growth going forward as we evolve our solutions and routes to market to anticipate the growing needs of our customers. In the AI era, we are harnessing the power of AI across our solutions by bringing together our commercially safe first-party and leading partner AI models best suited for the job; deploying conversational and agentic capabilities across offerings; ensuring ubiquity on all surfaces; delivering trusted and secure solutions; and expanding our global presence.
Adobe’s value proposition is to empower creative expression across multiple media types and channels, at scale, in a collaborative and secure environment, with an end-to-end integrated platform spanning ideation, creation, production and activation. We power the entire content workflow with Adobe’s AI platform, which offers customers brand safety, compliance, intellectual property protection, and reliability.
In the first quarter of fiscal 2026, we combined our former segments—Digital Media, Digital Experience and Publishing and Advertising—into a single operating and reportable segment due to changes in how management evaluates results and allocates resources, reflecting the Company’s shift to unified selling motions and integrated product innovation.
OPERATIONS OVERVIEW
For our first quarter of fiscal 2026, we experienced strong demand across our portfolio of solutions, driven by transformative and customer-focused product innovation. As we execute on our long-term growth initiatives, with emphasis on delivering value through AI-powered and highly differentiated solutions to meet the needs of our diverse and expanding customer base, we have continued to experience growth in software-based subscription revenue.
Our offerings help our customers—spanning business professionals, consumers, creators, creative professionals and marketing professionals—to be more creative, productive and successful. We are driving continued business success through audience-specific product innovation and go-to-market strategy focused on two customer groups: Business Professionals & Consumers and Creative & Marketing Professionals.
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Creative & Marketing Professionals
Our solutions targeted toward the Creative & Marketing Professionals customer group consist of our customer experience orchestration offerings as well as Creative Cloud flagship apps such as Photoshop, Lightroom, Illustrator and Premiere. Creators, creative professionals and marketing professionals require agile and comprehensive solutions to create high volumes of compelling content, infused with commercially safe AI capabilities. For creators and creative professionals, we offer an end-to-end, ideation-to-creation platform powered by our commercially safe Adobe Firefly models and an expansive partner model ecosystem, offering customers choice and flexibility. For marketing professionals, we unify creative production and marketing execution with comprehensive content supply chain solutions that deliver end-to-end customer experience orchestration solutions, automate workflows and personalize experiences and engagement at scale across channels. Our customer experience orchestration solutions deliver actionable data, with products such as Adobe Analytics and Adobe Real-Time Customer Data Platform; optimize personalized content delivery, with products such as Adobe Experience Manager, Adobe Commerce and Adobe GenStudio for Performance Marketing; and manage customer journeys, with products such as Adobe Marketo Engage and Adobe Campaign. Adobe Experience Platform is a customer data platform that serves as a foundation in enterprises for digital customer engagement by unifying our comprehensive set of AI-powered apps and agents to build, deliver, and optimize marketing campaigns and customer experiences. Adobe’s integrated solutions, such as GenStudio and Firefly Services, bridge the gap between content creation and marketing execution, enabling seamless collaboration and efficiency across the entire content lifecycle spanning content ideation, creation, production, and activation.
Creative & Marketing Professionals customer group subscription revenue was $4.39 billion in the first quarter of fiscal 2026, up from $3.92 billion in the first quarter of fiscal 2025, representing 12% year-over-year growth.
Business Professionals & Consumers
Our solutions targeted toward the Business Professionals & Consumers customer group consist of Adobe Acrobat offerings and Adobe Express. Business professionals and consumers desire web and mobile apps with easy-to-use AI capabilities that enable them to create, collaborate and derive insights across multiple media types and channels. Our Adobe Acrobat offerings fuel document productivity, enabling users to create, collaborate, review, approve, sign and track documents at home, in the office and across devices. Acrobat AI Assistant provides users with conversational experiences to quickly and accurately derive insights within individual documents, or across documents in PDF Spaces. Adobe Express is our web and mobile app designed to enable a broad spectrum of users, including novice content creators and communicators, to create, edit and customize content quickly and easily with content first, task-based solutions. Acrobat Studio is an all-in-one platform for productivity and creation that unites Adobe Acrobat, Adobe Express and AI agents to enable people to quickly, easily and intuitively work.
Business Professionals & Consumers customer group subscription revenue was $1.78 billion in the first quarter of fiscal 2026, up from $1.53 billion in the first quarter of fiscal 2025, representing 16% year-over-year growth.
Customer-Focused Strategy
Our success will be achieved through continued acquisition and retention of our customer base by delivering valuable new features and technologies to customers with our latest releases, including generative AI capabilities to enhance creativity, productivity and marketing, and expanding availability of our offerings across an increasing number of surfaces. As part of our customer-focused strategy, we utilize a data-driven operating model and tailored go-to-market motion to raise awareness of our products and drive customer acquisition, engagement and retention. Overall, our strategy is designed to increase our revenue with existing users, continue to attract new customers, and grow our recurring and predictable revenue stream that is recognized ratably. Due to the nature of certain offerings which contain cross-product integrations or benefits, revenue attributable to certain product entitlements may be recognized in either customer group.
The key performance metric used by management to evaluate progress against our customer-focused strategy is Total Adobe Annualized Recurring Revenue (“ARR”), which represents the annual value of subscription contracts in the Creative & Marketing Professionals and Business Professionals & Consumers customer groups. We adjust our reported ARR on an annual basis, primarily to reflect any exchange rate changes. Our reported ARR results in the current fiscal year are based on currency rates set at the beginning of the year and held constant throughout the year for measurement purposes. Prior year ARR balances are also revalued at the new currency rates for comparative purposes.
Total Adobe ARR grew to $26.06 billion at the end of the first quarter of fiscal 2026, representing 10.9% year-over-year growth driven by strength in Creative Cloud Pro, Acrobat, and Adobe Experience Platform and related apps, partially offset by a decrease from Adobe Stock. Our success in driving growth in ARR has positively affected our revenue growth. Total customer group subscription revenue grew to $6.17 billion in the first quarter of fiscal 2026, up from $5.46 billion in the first quarter of fiscal 2025, representing 13% year-over-year growth.
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Macroeconomic Conditions
As a corporation with an extensive global footprint, we are subject to risks and exposures from the evolving macroeconomic environment, including the effects of increased global inflationary pressures and interest rates, fluctuations in foreign currency exchange rates, potential economic slowdowns or recessions and geopolitical pressures, including the unknown impacts of current and future trade regulations. We continuously monitor the direct and indirect impacts of these circumstances on our business and financial results.
While our revenue and earnings are relatively predictable as a result of our subscription-based business model, the broader implications of these macroeconomic events on our business, results of operations and overall financial position, particularly in the long term, remain uncertain. See the section titled “Risk Factors” in Part II, Item 1A of this report for further discussion of the possible impact of these macroeconomic issues on our business.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
In preparing our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC, we make assumptions, judgments and estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We evaluate our assumptions, judgments and estimates on a regular basis. We also discuss our critical accounting policies and estimates with the Audit Committee of the Board of Directors.
We believe that the assumptions, judgments and estimates involved in the accounting for revenue recognition and income taxes have the greatest potential impact on our condensed consolidated financial statements. These areas are key components of our results of operations and are based on complex rules requiring us to make judgments and estimates, and consequently, we consider these to be our critical accounting policies. Historically, our assumptions, judgments and estimates relative to our critical accounting policies have not differed materially from actual results.
There have been no significant changes in our critical accounting policies and estimates during the three months ended February 27, 2026, as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended November 28, 2025.
Recent Accounting Pronouncements
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RESULTS OF OPERATIONS
Financial Performance Summary
•Total Adobe ARR of $26.06 billion as of February 27, 2026 increased by 10.9% from $23.50 billion as of February 28, 2025 revalued using currency rates determined at the beginning of fiscal 2026.
•Total revenue of $6.40 billion during the three months ended February 27, 2026 increased by $684 million, or 12%, compared to the year-ago period.
•Total subscription revenue of $6.20 billion during the three months ended February 27, 2026 increased by $715 million, or 13%, compared to the year-ago period.
•Cost of revenue of $664 million during the three months ended February 27, 2026 increased by $42 million, or 7%, compared to the year-ago period.
•Operating expenses of $3.32 billion during the three months ended February 27, 2026 increased by $387 million, or 13%, compared to the year-ago period.
•Net income of $1.89 billion during the three months ended February 27, 2026 increased by $78 million, or 4%, compared to the year-ago period.
•Cash flows from operations of $2.96 billion during the three months ended February 27, 2026 increased by $476 million, or 19%, compared to the year-ago period.
•Remaining performance obligations of $22.22 billion as of February 27, 2026 increased by 13% from $19.69 billion as of February 28, 2025.
Revenue for the Three Months Ended February 27, 2026 and February 28, 2025
| (dollars in millions) | Three Months | |||||||||||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||||||||||
| Subscription | $ | 6,198 | $ | 5,483 | 13 | % | ||||||||||||||||||||||
| Percentage of total revenue | 97 | % | 96 | % | ||||||||||||||||||||||||
| Product | 90 | 95 | (5) | % | ||||||||||||||||||||||||
| Percentage of total revenue | 1 | % | 2 | % | ||||||||||||||||||||||||
| Services and other | 110 | 136 | (19) | % | ||||||||||||||||||||||||
| Percentage of total revenue | 2 | % | 2 | % | ||||||||||||||||||||||||
| Total revenue | $ | 6,398 | $ | 5,714 | 12 | % | ||||||||||||||||||||||
Subscription
Our subscription revenue is comprised primarily of fees we charge for our subscription and hosted service offerings, and also includes subscription-based consulting services. We primarily recognize subscription revenue ratably over the term of agreements with our customers, beginning with commencement of service. Subscription revenue related to certain offerings, where fees are based on a number of transactions and invoicing is aligned to the pattern of performance, customer benefit and consumption, are recognized on a usage basis.
Subscription revenue by customer group for the three months ended February 27, 2026 and February 28, 2025 were as follows:
| (dollars in millions) | Three Months | |||||||||||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||||||||||
Creative & Marketing Professionals | $ | 4,389 | $ | 3,922 | 12 | % | ||||||||||||||||||||||
Business Professionals & Consumers | 1,782 | 1,534 | 16 | % | ||||||||||||||||||||||||
Total customer group subscription revenue | $ | 6,171 | $ | 5,456 | 13 | % | ||||||||||||||||||||||
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Increases in subscription revenue for the Creative & Marketing Professionals customer group were driven by strength in Creative Cloud Pro and other flagship apps, Adobe Experience Platform and related apps, Adobe Experience Manager and GenStudio solutions. Increases in subscription revenue for the Business Professionals & Consumers customer group were driven by strength in Acrobat.
Product
Our product revenue is comprised primarily of fees related to licenses for on-premise software purchased on a perpetual basis, for a fixed period of time, or based on usage for certain of our original equipment manufacturer and royalty agreements. We primarily recognize product revenue at the point in time the software is available to the customer, provided all other revenue recognition criteria are met.
Services and Other
Our services and other revenue is comprised primarily of fees related to project-based consulting and training, as well as maintenance and support for certain on-premise licenses that are recognized at a point in time and our advertising offerings. We sell our project-based consulting contracts on a time-and-materials or fixed-fee basis. These revenues are recognized as the services are performed for time-and-materials contracts and on a relative performance basis for fixed-fee contracts. Training revenues are recognized as the services are performed. Our maintenance and support offerings, which entitle customers, partners and developers to receive desktop product upgrades and enhancements or technical support, depending on the offering, are generally recognized ratably over the term of the arrangement. Transaction-based advertising revenue is recognized on a usage basis as we satisfy the performance obligations to our customers.
Geographical Information
Revenue by geographic area for the three months ended February 27, 2026 and February 28, 2025 were as follows:
| (dollars in millions) | Three Months | |||||||||||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||||||||||
| Americas | $ | 3,755 | $ | 3,405 | 10 | % | ||||||||||||||||||||||
| Percentage of total revenue | 59 | % | 60 | % | ||||||||||||||||||||||||
| EMEA | 1,739 | 1,502 | 16 | % | ||||||||||||||||||||||||
| Percentage of total revenue | 27 | % | 26 | % | ||||||||||||||||||||||||
| APAC | 904 | 807 | 12 | % | ||||||||||||||||||||||||
| Percentage of total revenue | 14 | % | 14 | % | ||||||||||||||||||||||||
| Total revenue | $ | 6,398 | $ | 5,714 | 12 | % | ||||||||||||||||||||||
Overall revenue during the three months ended February 27, 2026 increased in all geographic regions as compared to the three months ended February 28, 2025. Within each geographic region, the fluctuations in revenue were attributable to the factors noted in the customer group subscription revenue information above.
Included in the overall change in revenue were impacts associated with foreign currency which were mitigated in part by our foreign currency hedging program. During the three months ended February 27, 2026 as compared to the three months ended February 28, 2025, the U.S. Dollar primarily weakened against EMEA currencies, which resulted in a net increase in revenue in U.S. Dollar equivalents of approximately $123 million and was partially offset by net hedging losses of $49 million from our cash flow hedging program.
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Cost of Revenue for the Three Months Ended February 27, 2026 and February 28, 2025
| (dollars in millions) | Three Months | |||||||||||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||||||||||
| Subscription | $ | 540 | $ | 490 | 10 | % | ||||||||||||||||||||||
| Percentage of total revenue | 8 | % | 9 | % | ||||||||||||||||||||||||
| Product | 6 | 6 | — | % | ||||||||||||||||||||||||
| Percentage of total revenue | * | * | ||||||||||||||||||||||||||
| Services and other | 118 | 126 | (6) | % | ||||||||||||||||||||||||
| Percentage of total revenue | 2 | % | 2 | % | ||||||||||||||||||||||||
| Total cost of revenue | $ | 664 | $ | 622 | 7 | % | ||||||||||||||||||||||
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(*) Percentage is less than 1%.
Subscription
Cost of subscription revenue consists primarily of third-party hosting services and data center costs, including expenses related to operating our network infrastructure and AI inferencing costs. Cost of subscription revenue also includes compensation costs associated with network operations, implementation, account management and technical support personnel, royalty fees, software costs and amortization of certain intangible assets.
Cost of subscription revenue increased during the three months ended February 27, 2026 as compared to the three months ended February 28, 2025 primarily due to the following:
Components of % Change 2026-2025 | |||||||||
| Hosting services and data center costs | 14 | % | |||||||
Compensation costs | 3 | ||||||||
| Royalty costs | 1 | ||||||||
| Amortization of intangibles | (8) | ||||||||
| Total change | 10 | % | |||||||
Product
Cost of product revenue is primarily comprised of third-party royalties, localization costs and costs associated with the manufacturing of our products.
Services and Other
Cost of services and other revenue is primarily comprised of compensation and contracted costs incurred to provide consulting services, training and product support, and hosting services and data center costs.
Operating Expenses for the Three Months Ended February 27, 2026 and February 28, 2025
(dollars in millions) | Three Months | |||||||||||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||||||||||
| Research and development | $ | 1,110 | $ | 1,026 | 8 | % | ||||||||||||||||||||||
| Percentage of total revenue | 17 | % | 18 | % | ||||||||||||||||||||||||
| Sales and marketing | 1,708 | 1,495 | 14 | % | ||||||||||||||||||||||||
| Percentage of total revenue | 27 | % | 26 | % | ||||||||||||||||||||||||
| General and administrative | 463 | 367 | 26 | % | ||||||||||||||||||||||||
| Percentage of total revenue | 7 | % | 6 | % | ||||||||||||||||||||||||
Amortization of intangibles | 35 | 41 | (15) | % | ||||||||||||||||||||||||
| Percentage of total revenue | 1 | % | 1 | % | ||||||||||||||||||||||||
| Total operating expenses | $ | 3,316 | $ | 2,929 | 13 | % | ||||||||||||||||||||||
29
Research and Development
Research and development expenses consist primarily of compensation and contracted costs associated with software development, third-party hosting services and data center costs including AI training costs, related facilities costs and expenses associated with computer equipment and software used in development activities.
Research and development expenses increased during the three months ended February 27, 2026 as compared to the three months ended February 28, 2025 primarily due to increases in compensation costs.
Investments in research and development, including the recruiting and hiring of software developers, are critical to remain competitive in the marketplace and are directly related to continued timely development of new and enhanced offerings and solutions. We will continue to focus on long-term opportunities available in our end markets and make significant investments in the development of our subscription and service offerings, apps and tools.
Sales and Marketing
Sales and marketing expenses consist primarily of compensation costs, amortization of contract acquisition costs, including sales commissions, travel expenses and related facilities costs for our sales, marketing, order management and global supply chain management personnel. Sales and marketing expenses also include the costs of programs aimed at increasing revenue, such as advertising, trade shows and events, public relations and other market development programs.
Sales and marketing expenses increased during the three months ended February 27, 2026 as compared to the three months ended February 28, 2025 primarily due to increases in advertising expenses and, to a lesser extent, compensation costs.
General and Administrative
General and administrative expenses consist primarily of compensation and contracted costs, travel expenses and related facilities costs for our finance, facilities, human resources, legal, information services and executive personnel. General and administrative expenses also include outside legal and accounting fees, expenses associated with computer equipment and software used in the administration of the business, charitable contributions, provision for bad debts and various forms of insurance.
General and administrative expenses increased during the three months ended February 27, 2026 as compared to the three months ended February 28, 2025 due to the following:
Components of % Change 2026-2025 | |||||||||
Loss contingency | 17 | % | |||||||
Compensation costs | 4 | ||||||||
| Software licenses | 3 | ||||||||
| Various individually insignificant items | 2 | ||||||||
| Total change | 26 | % | |||||||
During the three months ended February 27, 2026, we incurred a loss contingency associated with a legal settlement. See Note 12 for further details regarding our legal proceedings.
Non-Operating Income (Expense), Net for the Three Months Ended February 27, 2026 and February 28, 2025
| (dollars in millions) | Three Months | |||||||||||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||||||||||
| Interest expense | $ | (63) | $ | (62) | 2 | % | ||||||||||||||||||||||
| Investment gains (losses), net | 5 | 6 | ** | |||||||||||||||||||||||||
Other income (expense), net | 62 | 75 | (17) | % | ||||||||||||||||||||||||
Total non-operating income (expense), net | $ | 4 | $ | 19 | ** | |||||||||||||||||||||||
_________________________________________
(**) Percentage is not meaningful.
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Interest Expense
Interest expense represents interest associated with our debt instruments. Interest on our senior notes is payable semi-annually, in arrears. Floating interest payments on our interest rate swaps are paid quarterly. The fixed-rate interest receivable on the swaps is received semi-annually concurrent with the senior notes interest payments. See Notes 5 and 13 for further details regarding our interest rate swaps and debt, respectively.
Investment Gains (Losses), Net
Investment gains (losses), net consists principally of unrealized holding gains and losses associated with our deferred compensation plan assets.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest earned on cash, cash equivalents and short-term fixed income investments. Other income (expense), net also includes realized gains and losses on fixed income investments and foreign exchange gains and losses.
Other income (expense), net decreased during the three months ended February 27, 2026 as compared to the three months ended February 28, 2025 primarily due to decreases in interest income driven by lower average overall cash balances and interest rates.
Provision for Income Taxes for the Three Months Ended February 27, 2026 and February 28, 2025
| (dollars in millions) | Three Months | |||||||||||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||||||||||
| Provision for income taxes | $ | 533 | $ | 371 | 44 | % | ||||||||||||||||||||||
| Effective tax rate | 22 | % | 17 | % | ||||||||||||||||||||||||
Our effective tax rate increased by approximately five percentage points for the three months ended February 27, 2026, as compared to the three months ended February 28, 2025, primarily due to an increase in the anticipated benefit from a foreign tax asset in the prior year, and an increase in the net tax expense related to stock-based compensation and decrease in the net tax benefit from effects of non-U.S. operations in the current year.
Our effective tax rate for the three months ended February 27, 2026 was higher than the U.S. federal statutory tax rate of 21% primarily due to state taxes and a net tax expense related to stock-based compensation, partially offset by net tax benefits from the effects of non-U.S. operations and the U.S. federal research tax credit.
We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized based on evaluation of all available positive and negative evidence. On the basis of this evaluation, we continue to maintain a valuation allowance to reduce our deferred tax assets to the amount realizable. The total valuation allowance was $833 million as of February 27, 2026, primarily related to certain U.S. state and federal credits and capital loss carryforwards.
We are a U.S.-based multinational company subject to tax in multiple domestic and foreign tax jurisdictions. The current U.S. tax law subjects the earnings of certain foreign subsidiaries to U.S. tax and generally allows an exemption from taxation for distributions from foreign subsidiaries.
In the current global tax policy environment, the domestic and foreign governing bodies continue to consider, and in some cases introduce, changes in regulations applicable to corporate multinationals such as Adobe. As regulations are issued, we account for finalized regulations in the period of enactment.
The Organization for Economic Cooperation and Development introduced an international tax framework that provides for a global minimum tax of 15% for large multinational companies. The framework and guidance do not have a material impact on our effective rates for income taxes or cash taxes paid. We continue to monitor developments and evaluate impacts, if any, of these rules on our results of operations and cash flows.
On July 4, 2025, the One Big Beautiful Bill Act (“2025 U.S. Tax Act”) was enacted in the United States. Among the changes, the 2025 U.S. Tax Act restores immediate expensing of domestic research and development costs and modifies certain international provisions effective for us starting in fiscal 2026 and 2027, respectively. We anticipate a reduction to our effective rates for cash taxes paid for fiscal 2026 and beyond.
31
Accounting for Uncertainty in Income Taxes
The gross liabilities for unrecognized tax benefits excluding interest and penalties were $702 million and $657 million as of February 27, 2026 and February 28, 2025, respectively. If the total unrecognized tax benefits as of February 27, 2026 and February 28, 2025 were recognized, $536 million and $492 million would decrease the respective effective tax rates.
As of February 27, 2026 and February 28, 2025, the combined amounts of accrued interest and penalties included in long-term income taxes payable related to tax positions taken on our tax returns were not material.
The timing of the resolution of income tax examinations is highly uncertain as are the amounts and timing of tax payments that are part of any audit settlement process. These events could cause large fluctuations in the balance sheet classification of our tax assets and liabilities. We believe that within the next 12 months, it is reasonably possible that either certain audits will conclude or statutes of limitations on certain income tax examination periods will expire, or both.
Our future effective tax rates may be materially affected by changes in the tax rates in jurisdictions where our income is earned, changes in jurisdictions in which our profits are determined to be earned and taxed, changes in the valuation of our deferred tax assets and liabilities, changes in or interpretation of tax rules and regulations in the jurisdictions in which we do business, or unexpected changes in business and market conditions that could reduce certain tax benefits.
In addition, tax laws in the United States as well as other countries and jurisdictions in which we conduct business are subject to change as new laws are passed and/or new interpretations are made available. These countries, governmental bodies, such as the European Commission of the European Union, and intergovernmental economic organizations, such as the Organization for Economic Cooperation and Development, have made and/or could make other unprecedented assertions about how taxation is determined and, in some cases, have proposed or enacted new laws that are contrary to the way in which rules and regulations have historically been interpreted and applied. Changes in our operating landscape, such as changes in laws or interpretations of tax rules, have in the past and may in the future adversely affect our effective tax rates and/or cause us to respond by making changes to our business structure, which could adversely affect our operations and financial results.
Moreover, we are subject to the examination of our income tax returns by domestic and foreign tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations. Our policy is to record interest and penalties related to unrecognized tax benefits in income tax expense. While we believe our tax estimates are reasonable, we cannot provide assurance that the final determination of any of these examinations will not have an adverse effect on our financial position and results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Our primary source of cash is receipts from revenue. Other customary sources of cash include proceeds from maturities and sales of short-term investments and issuance of debt instruments. Our primary uses of cash are general business expenses including payroll and related benefits costs, income taxes, marketing and third-party hosting services, as well as our stock repurchase program as described below. Other customary uses of cash include purchases of short-term investments, property and equipment, payments for taxes related to net share settlement of equity awards, repayment of debt instruments and business acquisitions.
This data should be read in conjunction with our condensed consolidated statements of cash flows.
| As of | |||||||||||
| (in millions) | February 27, 2026 | November 28, 2025 | |||||||||
| Cash and cash equivalents | $ | 6,332 | $ | 5,431 | |||||||
| Short-term investments | $ | 558 | $ | 1,164 | |||||||
| Working capital | $ | (1,004) | $ | (37) | |||||||
| Stockholders’ equity | $ | 11,433 | $ | 11,623 | |||||||
32
A summary of our cash flows is as follows:
| Three Months Ended | |||||||||||
| (in millions) | February 27, 2026 | February 28, 2025 | |||||||||
| Net cash provided by operating activities | $ | 2,958 | $ | 2,482 | |||||||
| Net cash provided by (used for) investing activities | 474 | (484) | |||||||||
| Net cash used for financing activities | (2,544) | (2,841) | |||||||||
| Effect of foreign currency exchange rates on cash and cash equivalents | 13 | (12) | |||||||||
| Net change in cash and cash equivalents | $ | 901 | $ | (855) | |||||||
Cash Flows from Operating Activities
Net cash provided by operating activities of $2.96 billion for the three months ended February 27, 2026 was primarily comprised of net income adjusted for the net effect of non-cash items. Working capital sources of cash included decreases in trade receivables driven by strong cash collections and increases in deferred revenue due to the timing of billings during the quarter. The primary working capital uses of cash included decreases in accrued expenses and other liabilities largely driven by the payment of accrued bonuses.
Cash Flows from Investing Activities
Net cash provided by investing activities of $474 million for the three months ended February 27, 2026 was primarily due to proceeds from the maturities of short-term investments, offset in part by purchases of short-term and long-term investments.
Cash Flows from Financing Activities
Net cash used for financing activities of $2.54 billion for the three months ended February 27, 2026 was primarily due to payments for our common stock repurchases and taxes paid related to the net share settlement of equity awards. These uses of cash were offset in part by proceeds from re-issuance of treasury stock related to our employee stock purchase plan. See the section titled “Stock Repurchase Program” below.
Liquidity and Capital Resources Considerations
Our existing cash, cash equivalents and investment balances may fluctuate during fiscal 2026 due to changes in our planned cash outlay.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, risks detailed in the section titled “Risk Factors” in Part II, Item 1A of this report. Based on our current business plan and revenue prospects, we believe that our existing cash, cash equivalents and short-term investment balances, our anticipated cash flows from operations and our available revolving credit facility will be sufficient to meet our working capital, operating resource expenditure and capital expenditure requirements for the next twelve months and for the foreseeable future.
Our cash equivalent and short-term investment portfolio as of February 27, 2026 consisted of money market funds, corporate debt securities, U.S. Treasury securities, time deposits and other investments.
We expect to continue our investing activities, including short-term and long-term investments, purchases of computer and server hardware to operate our network infrastructure, sales and marketing, product support and administrative staff. Furthermore, cash reserves may be used to repurchase stock under our stock repurchase program and to strategically acquire companies, products or technologies that are complementary to our business.
On November 18, 2025, we entered into a definitive agreement to acquire Semrush Holdings, Inc., a publicly held brand visibility platform company, for approximately $1.9 billion, primarily in cash consideration. The transaction is subject to regulatory approvals and customary closing conditions and is expected to close in the second quarter of fiscal 2026. We expect to finance the acquisition using cash on hand.
Revolving Credit Agreement
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-04-30 | Forusz Jillian | SVP & CAO | Sell | -755 | $246.25 | -$185,915 |
| 2026-04-28 | NARAYEN SHANTANU indirect | Chair and CEO | Sell | -75,000 ×3 | $243.54 | -$18,265,234 |
| 2026-04-20 | Durn Daniel | EVP & CFO | Sell | -1,336 | $248.02 | -$331,355 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-06-24 10-Q expected by 2026-07-08 (in 9 days)
- ~2026-09-23 10-Q expected by 2026-10-07 (in 100 days)
- ~2027-01-15 10-K expected by 2027-01-29 (in 214 days)
- ~2027-03-24 10-Q expected by 2027-04-07 (in 282 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-06-11 8-K Earnings Release; Officer/Director Change; Financial Statements and Exhibits
- 2026-04-28 S-8 Employee Benefit Plan Registration
- 2026-04-21 8-K Officer/Director Change; Shareholder Vote Results; Other Events; Financial Statements and Exhibits
- 2026-03-25 10-Q Quarterly Report
- 2026-03-12 8-K Earnings Release; Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-01-27 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-01-15 10-K Annual Report
- 2025-12-10 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-24 10-Q Quarterly Report
- 2025-09-11 8-K Earnings Release; Financial Statements and Exhibits
- 2025-06-25 10-Q Quarterly Report
- 2025-06-12 8-K Earnings Release; Financial Statements and Exhibits
- 2025-04-24 8-K Officer/Director Change; Bylaws/Articles Amended; Shareholder Vote Results; Financial Statements and Exhibits
- 2025-03-26 10-Q Quarterly Report
- 2025-03-12 8-K Earnings Release; Financial Statements and Exhibits