10-QPeriod: Q1 FY2026

ADOBE INC. Quarterly Report for Q1 Ended Feb 27, 2026

Filed March 25, 2026For Securities:ADBE

Summary

Adobe Inc. reported solid financial results for the quarter ending February 27, 2026, with total revenue increasing by 12% year-over-year to $6.40 billion. Subscription revenue, the primary driver of growth, rose by 13% to $6.20 billion, highlighting the continued strength of Adobe's cloud-based offerings. The company also saw a significant increase in operating cash flow, which grew by 19% to $2.96 billion, demonstrating strong operational efficiency and effective cash generation. Strategic initiatives, particularly in artificial intelligence (AI), are a key focus for Adobe, with the company emphasizing its commitment to integrating AI across its product portfolio to enhance creativity, productivity, and customer experiences. The acquisition of Semrush Holdings, Inc. for $1.9 billion, expected to close in Q2 fiscal 2026, signifies Adobe's intent to expand its capabilities and market reach. While facing a competitive landscape and evolving regulatory environment, Adobe's robust subscription model, growing Annualized Recurring Revenue (ARR), and strong cash flow position it well for continued growth and value creation for its shareholders.

Financial Highlights

54 data points
Beta

Revenue

$6.40B

89.6% Gross Margin

Net Income

$1.89B

29.5% Net Margin

EPS (Diluted)

$4.60

Total Assets

$29.70B

Cash & Equivalents

$6.33B

Free Cash Flow

$2.92B

Financial Statements
Beta
Revenue$6.40B
Cost of Revenue$664.00M
Gross Profit$5.73B
Operating Expenses$3.32B
Operating Income$2.42B
Net Income$1.89B
EPS (Basic)$4.60
EPS (Diluted)$4.60
Shares Outstanding (Basic)410.20M
Shares Outstanding (Diluted)410.80M

Key Highlights

  • 1Total revenue increased 12% year-over-year to $6.40 billion.
  • 2Subscription revenue, representing 97% of total revenue, grew 13% to $6.20 billion, driven by strong performance in both Creative & Marketing Professionals and Business Professionals & Consumers segments.
  • 3Operating cash flow surged 19% year-over-year to $2.96 billion.
  • 4Total Adobe Annualized Recurring Revenue (ARR) reached $26.06 billion, a 10.9% increase year-over-year.
  • 5The company announced the pending acquisition of Semrush Holdings, Inc. for approximately $1.9 billion, expected to close in Q2 fiscal 2026.
  • 6Net income rose 4% to $1.89 billion, with diluted EPS at $4.60.
  • 7Adobe's effective tax rate increased to 22% from 17% in the prior year period.

Frequently Asked Questions

Adobe's primary growth driver is its subscription revenue, which continues to show strong momentum. For the quarter ending February 27, 2026, subscription revenue grew 13% year-over-year to $6.20 billion, representing 97% of total revenue. This growth is attributed to strong performance across both the Creative & Marketing Professionals and Business Professionals & Consumers customer segments.

Adobe demonstrated robust cash flow generation, with net cash provided by operating activities increasing 19% year-over-year to $2.96 billion. The company continues to return value to shareholders through its stock repurchase program, having repurchased $2.48 billion worth of common stock during the quarter. Additionally, Adobe is investing in strategic growth through the announced acquisition of Semrush Holdings, Inc. for $1.9 billion.

Adobe is heavily focused on integrating AI across its product portfolio to enhance creativity, productivity, and customer experiences. The company is leveraging AI through initiatives like Adobe Firefly and Adobe GenStudio, aiming to provide commercially safe and trusted AI-powered solutions. This strategic emphasis on AI is seen as a key differentiator and growth driver for its subscription offerings.

Adobe is involved in ongoing legal proceedings, including a settlement reached with the DOJ regarding subscription cancellation practices and ongoing securities and shareholder derivative litigations. While the company has settled certain matters, the ultimate outcome of other ongoing legal issues remains uncertain and could potentially impact financial results or operations.