Adobe Inc. (ADBE)

Business

From the FY2025 10-K, accession 0000796343-26-000003.

Adobe sells subscription software for creating, managing and delivering digital content. Its products span document productivity (Adobe Acrobat, Acrobat Reader, Acrobat Studio), creative tools (Photoshop, Illustrator, Lightroom, Premiere Pro, After Effects, Substance 3D, Adobe Express, Adobe Stock), generative AI models and applications (the Adobe Firefly family, the Firefly app, Firefly Custom Models, Firefly Foundry, Firefly Services), and enterprise marketing and customer-experience software (Adobe Experience Platform, Adobe Experience Manager, Adobe GenStudio, Adobe Analytics and Customer Journey Analytics, Real-Time Customer Data Platform, Adobe Journey Optimizer, Adobe Marketo Engage, Adobe Workfront, Adobe Commerce, Adobe Mix Modeler, Adobe LLM Optimizer, Adobe Brand Concierge, and the agent orchestration technology on Adobe Experience Platform that underpins Adobe's agentic framework). Approximately 96% of fiscal 2025 revenue was subscription revenue, recognized ratably over agreement terms that typically run 1 to 36 months; the remainder was a small perpetual-license product line and services and other revenue (project consulting, training, maintenance and support, and advertising). Total revenue in fiscal 2025 was $23.77 billion, up 11% from $21.51 billion in fiscal 2024. Adobe has operations in the Americas, EMEA and APAC, and sells through a direct sales force, its own adobe.com store, and a partner and distributor ecosystem. As of November 28, 2025 it employed 31,360 people, 50% in the United States and 50% internationally, with a fiscal 2025 attrition rate of 9.9%. The company is incorporated in Delaware and headquartered in San Jose, California.

Adobe organizes its go-to-market around two customer groups rather than products:

• Business Professionals & Consumers, Adobe Acrobat offerings and Adobe Express. The strategy here is freemium reach: from the free Acrobat Reader, to Acrobat Standard and Pro, to Acrobat AI Assistant as an add-on, to Acrobat Studio, an all-in-one destination released in August 2025 that unites Acrobat, Express and AI agents and introduces PDF Spaces (collections of files and websites turned into conversational knowledge hubs with personalized AI assistants).
• Creative & Marketing Professionals, Creative Cloud Pro and the flagship creative applications, plus the customer-experience orchestration portfolio. Creative Cloud Pro bundles the Firefly web app, premium Adobe Express and AI features embedded in Photoshop, Illustrator and Premiere Pro. On the marketing side, Adobe Experience Platform is the customer data platform that unifies known and unknown customer data into real-time profiles and serves as the foundation for the applications and AI agents built on it; GenStudio is the end-to-end content supply chain solution spanning ideation, creation, production, activation, delivery, asset management and analytics.

The AI strategy has four stated layers: applications and interfaces (AI infused into existing apps plus new AI-first apps); agent orchestration (purpose-built agents built on Adobe Experience Platform); models (Adobe's own commercially safe Firefly foundation models for image, video, vector and audio, alongside an ecosystem of third-party partner models the customer can select inside Adobe applications, plus customized models trained on a customer's own assets); and data. Commercial safety is the differentiator Adobe presses hardest: Firefly models are trained on licensed content and public domain assets, every Firefly-generated asset carries Content Credentials, and certain enterprise and teams customers are eligible for intellectual property indemnification for AI content generated by most Firefly-powered workflows.

Segments. In fiscal 2025 Adobe reported three segments: Digital Media ($17.65 billion of revenue, up 11%), Digital Experience ($5.86 billion, up 9%) and Publishing and Advertising ($256 million, down 7%), the last being legacy eLearning, technical document publishing, web conferencing, high-end printing and Adobe Advertising offerings. Effective in the first quarter of fiscal 2026 Adobe combined all three into a single operating and reportable segment, citing changes in how management evaluates results and allocates resources.

Operations. A global professional services organization designs and implements solutions for the largest customers, sold either as consulting subscriptions or on a time-and-materials or fixed-price project basis. Adobe Customer Solutions supplies Customer Success Managers, technical support (bundled into subscriptions; sold as annual fee-based maintenance to perpetual-license customers), and a digital learning portfolio that ranges from free self-service content to fee-based certification programs. A Solution Partner Program supports systems integrators, agencies and regional partners.

R&D and acquisitions. Adobe Research spans 12 research areas across AI and machine learning, content and data intelligence, AR/VR, 3D and audio, in collaboration with universities. Adobe supplements internal development by buying companies, stock or assets, or by licensing intellectual property from others. Through Adobe Ventures, its corporate venture capital program, it takes strategic stakes in companies in creativity, productivity, marketing and AI. Intellectual property is protected through patents, copyrights, trademarks and trade secrets; software and hosted offerings are licensed under click-through or signed agreements, and enterprise customers license hosted offerings as SaaS or managed services.

Competition. Adobe competes against software companies, AI companies, hardware manufacturers, operating system developers and social media companies, in markets it characterizes as having limited barriers to entry, short product lifecycles, customer price sensitivity and frequent new entrants. Its business professional and consumer offerings face general productivity platforms, web- and mobile-first design platforms, AI-first creativity and productivity tools, presentation tools and social media platforms with built-in media editing. Its creator offerings face established professional suites, purpose-built mobile apps, AI-first creative tools and creative tools embedded in broader applications. Its marketing offerings face large enterprise software and cloud companies, point solutions from specialists, new entrants and customers' own internally built applications, where Adobe identifies the key competitive factors as platform performance, security, scalability and reliability; breadth of functionality and third-party integrations; cost-effectiveness; enterprise service and training; and the ability to integrate across business workflows.

Risk factors

From the FY2025 10-K, accession 0000796343-26-000003. The 10-Q for the quarter ended August 28, 2026 restates the same set of risks under the same headings, with no new risk factor added.

Growth and innovation. Adobe operates in rapidly evolving industries and must continually introduce and enhance solutions to retain and attract customers. It states directly that there is no assurance its new or enhanced solutions and AI innovations will be successful, adopted or monetizable, or that it will innovate fast enough to keep pace with the evolution of AI across its portfolio. Development is complex, costly and speculative and may not be profitable.

Competition. Competitors include large global companies with significant sales and R&D resources and broad brand awareness, as well as smaller specialists, new entrants and AI- or cloud-native companies. Adobe expects more competition as AI is integrated into its markets, and names generative and agentic AI competition specifically in prompt-based and multi-modal creation and editing, document productivity and understanding, ad distribution and creation, and purpose-built AI agents. Competitors may train on different data or hold proprietary data access and achieve faster adoption. Notably, Adobe discloses that other companies have in the past prevented, limited or interfered with its ability to use third-party models in its solutions, and may do so again. Limited barriers to entry, short product life cycles and customer price sensitivity may pressure pricing and gross margins and hurt renewal, upsell and cross-sell rates.

AI development and use. This is the most heavily elaborated risk. Ineffective AI development, deployment, content labeling or governance could cause incidents that harm individuals, customers or society, or produce unexpected outcomes. Regulation is fragmenting: the U.S. framework remains in development at the federal level with state legislation enacted, EU AI Act obligations are phasing in through 2030, and other jurisdictions are following. Adobe warns of inconsistency across jurisdictions, higher compliance and R&D costs, greater exposure to investigations and claims about its models, and liability from customers' uses it cannot control, up to and including delaying or halting AI development or changing monetization strategies and indemnity protections. Because Adobe increasingly offers third-party models inside its own products, it inherits risk from how those models were trained, including situations where the third party may lack a proper license or consent for its training data, a route to intellectual property infringement claims. Separately, the compute cost of developing, testing and deploying AI systems and third-party models "could adversely impact our margins" as Adobe scales AI without assurance customers will adopt it. Adobe has experienced, and may again experience, challenges accessing AI models, datasets or hardware.

Reputation and brand. Adobe lists as realized (not merely hypothetical) causes of reputational harm, reduced demand and customer attrition: new products, features, services or terms that miss customer expectations; its own position on new technologies including AI; backlash from customers, the creative community or government entities disagreeing with its product decisions or public positions; significant litigation or regulatory action; data security breaches; and negative media and social media campaigns. It also flags uses of its AI solutions outside its control, misleading or deceptive content, content intended to manipulate public opinion, or illicit or illegal ends, and the claims that can follow (defamation, rights of publicity, infringement, harmful content, misinformation, data privacy, personal injury torts).

Acquisitions. A long list of integration, retention, cost, control and litigation risks. The specific, non-generic disclosure: Adobe has experienced difficulties obtaining regulatory approvals, "resulting in the termination of a previously announced acquisition and the incurrence of additional costs," and notes increased global scrutiny of acquisitions. It also flags dilution or increased interest expense and leverage from financing deals.

Operations. Dependence on senior management and highly skilled personnel, in a market with substantial competition for AI and cybersecurity talent, and with hybrid work adding operational, security and culture challenges; higher compensation costs that may not be offset by productivity. Adobe does not have redundancy for all its systems and many critical applications reside in only one data center, a failure at Adobe or a third-party hosting or content delivery provider could cause system-wide outages. On security, Adobe states its solutions are incorporated into the supply chain of a large number of companies worldwide, so a compromise could affect a large portion or all of its customers for a given solution simultaneously; increasing use of AI may create new attack methods; and it has experienced revenue and reputational impact from fraudulent and abusive activity such as account takeover and stolen payment credentials. Channel risk covers the direct sales force, third-party distributors and partners, and third-party distribution platforms whose pricing and terms Adobe does not control.

Multinational exposure. A large portion of revenue and significant operations sit outside the United States, exposing Adobe to inflation and central bank responses, regional political and labor conditions, sanctions, trade disputes, tariffs and export controls, cross-border data flow restrictions, and tax law changes. Approximately 50% of employees are located outside the United States. Adobe also notes that adverse macroeconomic and geopolitical events such as trade disputes and tariffs have caused additional spend scrutiny and delays in enterprise purchasing decisions, particularly for larger and more complex deals, and that its enterprise sales pattern has historically been and is expected to remain uneven, with a higher share of a quarter's sales in its final weeks.

Laws, regulation and litigation. Exposure to class actions, regulatory inquiries, investigations and enforcement across antitrust, consumer protection, data privacy and security, employment, product liability and intellectual property; Adobe notes increased regulatory activity under federal and state consumer protection laws, including suits seeking civil penalties. Privacy risk spans GDPR interpretation in the EEA and UK, challenged mechanisms for European data transfers, the EU Digital Services Act, Data Act and DORA, the U.S. Department of Justice rule restricting data transactions involving countries of concern, Asian regimes including China's PIPL and Korea's PIPA, and U.S. state laws including the CCPA, CPRA, Colorado Privacy Act and Virginia CDPA. On intellectual property, Adobe says it continues to lose revenue to illegal use of its software, that detecting patent infringement in generative AI technologies is harder, and that using generative AI to create its own source code may leave that code unprotectable by copyright or patent.

Financial performance. Because subscription revenue is recognized ratably, lower sales, reduced demand and higher attrition in any period may not appear in results until future periods, and conversely, Adobe cannot rapidly increase revenue through additional sales in a single period. Foreign currency hedging has not offset, and may not offset, more than a portion of adverse currency movement. Goodwill and intangibles are tested for impairment and could require a significant charge. On debt: as of November 28, 2025 Adobe had $6.15 billion in senior unsecured notes outstanding, a $3 billion commercial paper program with nothing outstanding, and an undrawn $1.5 billion revolving credit facility; its notes, commercial paper program and revolver impose covenants, and a ratings downgrade could raise the revolver's interest rate and restrict future financing.

General. Catastrophic events, including climate-related ones, Adobe's headquarters, significant R&D activity and certain data centers are in the San Francisco Bay Area and the Salt Lake Valley Area, both near major earthquake faults. Stock price volatility, driven among other things by shortfalls against guidance, changes to key performance metrics, changes in ARR, unearned revenue and remaining performance obligations, changes in the amount or frequency of stock repurchases, and changes to the management team including recruitment or departure of key personnel.

Management's discussion, fiscal 2025

From the FY2025 10-K, accession 0000796343-26-000003.

Adobe described fiscal 2025 as strong demand across Digital Media and Digital Experience, driven by product innovation, with continued growth in software-based subscription revenue.

Headline results. Total revenue $23.77 billion, up 11%. Gross profit $21.22 billion. Total operating expenses $12.51 billion, essentially flat against fiscal 2024. Operating income $8.71 billion, up from $6.74 billion. Net income $7.13 billion, up $1.57 billion or 28%. Cash flow from operations $10.03 billion, up $1.98 billion or 25%, a comparison flattered by the prior year, since fiscal 2024 operating cash flow absorbed payment of the $1 billion Figma termination fee. Remaining performance obligations $22.52 billion as of November 28, 2025, up 13% from $19.96 billion.

Recurring revenue. Total Adobe ARR, the annual value of subscription contracts across the two customer groups, and the key metric management used to evaluate its customer-focused strategy, grew to approximately $25.20 billion exiting fiscal 2025, up 11.5% from $22.61 billion revalued at beginning-of-fiscal-2025 currency rates. Adobe noted that revaluing the fiscal 2025 ending balance at beginning-of-fiscal-2026 rates would put it at $25.66 billion, roughly $460 million higher. Digital Media ARR reached approximately $19.20 billion, also up 11.5%.

By segment. Digital Media revenue $17.65 billion (up $1.79 billion, 11%), with subscription revenue of $17.39 billion up 12%, driven by strength in Creative Cloud Pro and other flagship apps and by Acrobat across all routes to market and geographies. Digital Experience revenue $5.86 billion (up $498 million, 9%), with subscription revenue of $5.41 billion up 11%, driven by GenStudio solutions and Adobe Experience Platform and related apps. Publishing and Advertising revenue $256 million, down 7%.

Costs. Cost of revenue $2.55 billion, up $193 million or 8%; subscription cost of revenue is dominated by third-party hosting and data center costs, including AI inferencing costs. Operating expenses were roughly flat year over year, and the year-over-year comparison benefited from two fiscal 2024 items that did not repeat: general and administrative expenses in fiscal 2024 included charges for optimization of leased facilities (impairment of certain operating lease right-of-use assets and leasehold improvements), and fiscal 2024 also carried the $1 billion Figma termination fee.

Below the line and taxes. Interest expense rose, primarily because of senior notes issued in January 2025. Other income (expense), net declined on lower interest income from lower average cash balances and rates. The effective tax rate fell about two percentage points versus fiscal 2024, mainly because the prior year's Figma termination fee was not deductible for financial statement purposes, partially offset by a net tax expense on stock-based compensation in fiscal 2025 versus a net benefit in fiscal 2024. The fiscal 2025 rate was below the 21% U.S. federal statutory rate on net benefits from non-U.S. operations and the federal research credit, partly offset by state taxes and stock-based compensation. Adobe carried a $806 million valuation allowance at November 28, 2025 and $693 million of gross unrecognized tax benefits, of which $528 million would reduce the effective rate if recognized; it believed unrecognized benefits could decrease by up to $40 million over the following twelve months. The OECD 15% global minimum tax regime became effective for Adobe in fiscal 2025 without material impact. The One Big Beautiful Bill Act, enacted July 4, 2025, restores immediate expensing of domestic R&D costs beginning in fiscal 2026 and modifies international provisions from fiscal 2027; Adobe anticipates a reduction in its effective cash tax rates in years after fiscal 2025.

Liquidity and capital allocation. Investing activities used $1.19 billion, principally net investment purchases and capital expenditures. Financing used $11.06 billion, principally buybacks and repayment of the 1.90% and 3.25% 2025 Notes, offset in part by senior note issuance. In January 2025 Adobe issued $800 million of notes due 2028, $700 million due 2030 and $500 million due 2035, taking total senior notes to $6.15 billion; carrying value at year end was $6.21 billion net of interest rate swap fair value, discount and issuance costs, with a maximum interest commitment of $1.03 billion over the remaining life. During fiscal 2025 Adobe paid $11.28 billion to repurchase shares, including a September 2025 arrangement of up to $2.5 billion that remained partly outstanding at year end; $5.90 billion was to remain under the March 2024 $25 billion authority on its completion. Non-cancellable unconditional purchase obligations were $6.82 billion, primarily third-party hosting and data center contracts, and operating lease obligations $485 million. Adobe said it does not anticipate paying cash dividends in the foreseeable future.

Critical accounting policies. Revenue recognition and income taxes. On revenue, Adobe concluded that certain subscription offerings combining on-premise or on-device software licenses with cloud services constitute a single, highly integrated performance obligation, the software and cloud services are so interdependent that customers get the intended benefit only when they operate together, so revenue for those offerings is recognized ratably over the subscription period.

Market risk. Gross notional foreign exchange contracts of $6.54 billion at November 28, 2025, the largest tranche $3.27 billion in Euros. Short-term debt securities of $1.16 billion. Interest rate swaps convert fixed rates to floating on certain notes, leaving $2.70 billion of hedged fixed-rate debt whose fair value would move $71 million on a 50 basis point rate change.

Current quarter, third quarter of fiscal 2026 (ended August 28, 2026)

From the 10-Q for the quarter ended August 28, 2026, accession 0000796343-26-000156, and the results press release furnished with the Form 8-K of September 10, 2026, accession 0000796343-26-000147.

The reporting change. In the first quarter of fiscal 2026 Adobe combined its former Digital Media, Digital Experience and Publishing and Advertising segments into a single operating and reportable segment, reflecting a shift to unified selling motions and integrated product innovation. Prior period segment information has been recast. The Chief Executive Officer, as chief operating decision maker, reviews consolidated results including net income. The practical effect for readers: segment-level revenue lines are gone, and the disclosed revenue cut is now by customer group and by geography.

Results. Total revenue $6.76 billion for the quarter, up $772 million or 13% (12% in constant currency), and $19.78 billion for the nine months, up 13%. Subscription revenue $6.58 billion for the quarter, up 14%, at 97% of total revenue; product revenue $67 million, down 1%; services and other $111 million, down 14%. Gross profit $6.00 billion. Total operating expenses $3.64 billion, up 15%. Operating income $2.35 billion. Net income $1.83 billion, up $55 million or 3%, materially slower than revenue growth, for reasons visible in the expense and tax lines below. Diluted earnings per share $4.62 on a GAAP basis and $6.13 on a non-GAAP basis, on 395.5 million diluted shares against 424.1 million a year earlier.

By customer group. Creative & Marketing Professionals subscription revenue $4.65 billion, up 13% (12% in constant currency), driven by Creative Cloud flagship apps and by Adobe Experience Manager and agentic web apps, including the contribution from Semrush. Business Professionals & Consumers subscription revenue $1.91 billion, up 16% (15% in constant currency), driven by Acrobat. Total customer group subscription revenue $6.56 billion, up 14%.

By geography. Americas $3.97 billion (up 12%, 59% of revenue), EMEA $1.85 billion (up 17%, 27%), APAC $934 million (up 10%, 14%). Currency was a tailwind: a weaker U.S. Dollar against EMEA currencies added approximately $40 million of revenue in the quarter and $280 million over the nine months, with cash flow hedging producing a $10 million gain in the quarter and a $61 million loss over the nine months.

Recurring revenue and backlog. Total Adobe ARR reached $27.50 billion at quarter end, up 11.2% from $24.74 billion revalued at beginning-of-fiscal-2026 currency rates, with growth attributed to Creative Cloud flagship apps, Acrobat, and Adobe Experience Manager and agentic web apps including Semrush. Remaining performance obligations were $22.16 billion, up 8% from $20.44 billion a year earlier, slower than revenue growth, and slower than the 13% RPO growth reported for fiscal 2025. Current RPO was 67% of the total. In the press release Adobe also said AI-first ARR grew more than 150% year over year and that it had reached more than one billion monthly active users across its creativity and productivity solutions.

Where the margin went. Cost of revenue rose 19% to $763 million, faster than revenue; subscription cost of revenue rose 24%, and Adobe attributes 22 of those 24 percentage points to hosting services and data center costs (which include AI inferencing costs), 5 points to compensation, offset by 5 points of lower intangible amortization. Research and development rose 18% to $1.29 billion, or 19% of revenue against 18% a year earlier, on compensation and, to a lesser extent, hosting and data center costs including AI training costs. Sales and marketing rose 11% to $1.83 billion on advertising and compensation. General and administrative rose 20% to $488 million, and 30% over the nine months, where the nine-month increase includes 8 points from loss contingencies and 6 points from goodwill impairment. Two discrete nine-month charges sit here: a $70 million goodwill impairment on the Publishing & Advertising reporting unit, recorded in general and administrative expenses in the second quarter of fiscal 2026, and $92 million of loss contingencies (per the segment disclosure) associated with a legal settlement and other legal matters.

Taxes. The effective tax rate was 22% for the quarter against 19% a year earlier, and 23% for the nine months against 18%. The three-point quarterly increase came from a smaller net tax benefit from non-U.S. operations and a larger net tax expense on stock-based compensation; the five-point nine-month increase adds the prior year's benefit from an anticipated foreign tax asset. Both periods ran above the 21% statutory rate. The valuation allowance was $799 million, and gross unrecognized tax benefits $755 million, of which $576 million would reduce the effective rate.

Litigation resolved and outstanding. The FTC/DOJ action over Adobe's disclosure and subscription cancellation practices under the Restore Online Shoppers' Confidence Act, filed by the DOJ in June 2024 in the Northern District of California after the Court denied Adobe's motion to dismiss in May 2025, was settled: Adobe reached a settlement agreement on March 12, 2026 and filed a stipulation of dismissal on March 13, 2026. Still outstanding: the securities class action (In Re Adobe Inc. Securities Litigation, S.D.N.Y.) over statements about competition from Figma, dismissed in full in March 2025 with leave to amend denied in November 2025 and now on appeal by the plaintiff; and five shareholder derivative actions on largely the same facts, presently stayed. Adobe says it cannot estimate a reasonably possible loss or range for the securities and derivative matters. Accrued provisions for probable and estimable legal liabilities as of August 28, 2026 were not material.

Balance sheet and cash. Cash and cash equivalents $4.36 billion (down from $5.43 billion at November 28, 2025) and short-term investments $1.28 billion. Working capital was negative $2.73 billion, against negative $37 million at fiscal year end, the swing driven by the reclassification of the senior notes due February 1, 2027 and April 4, 2027 to current debt ($1.35 billion carrying value), which Adobe intends to refinance on or before the due date subject to market conditions, and by $248 million of commercial paper (at a 3.77% weighted average rate on $250 million outstanding, where nothing was outstanding at fiscal year end). Stockholders' equity $11.76 billion. Total senior notes outstanding remained $6.15 billion at par. The $1.5 billion revolver was undrawn. Goodwill rose to $14.04 billion from $12.86 billion, the increase from Semrush net of the $70 million impairment; other intangibles net rose to $956 million from $495 million.

Nine-month operating cash flow was $7.65 billion, up $775 million or 11%, helped by decreases in trade receivables on strong cash collections and held back by increases in prepaid expenses and other assets and decreases in accrued expenses and other liabilities; the quarter alone generated $2.52 billion. Investing used $1.91 billion, up from $1.04 billion, primarily on the Semrush acquisition plus capital expenditures and net investment purchases. Financing used $6.81 billion, down from $8.51 billion, primarily buybacks. Adobe states its existing balances, anticipated operating cash flow and revolver will be sufficient for the next twelve months and the foreseeable future.

Buybacks. The March 2024 $25 billion authority was fully utilized during the nine months. In April 2026 the Board granted a new $25 billion authority through April 30, 2030, of which $24.55 billion remained at August 28, 2026. Adobe paid $6.82 billion for 26.1 million shares over the nine months, all through open market repurchases (against $8.81 billion for 23.6 million shares a year earlier, that year split between accelerated share repurchase agreements and open market buying). Roughly 9.5 million shares were repurchased in the third quarter, at average prices of $221.95, $219.90 and $260.01 across the quarter's three monthly windows.

Acquisitions. Adobe completed its acquisition of Semrush Holdings, Inc., a publicly held brand visibility platform company, on April 28, 2026 for $1.87 billion, primarily in cash. The final purchase price allocation puts $582 million in identifiable intangibles ($415 million purchased technology over a 7-year weighted average life, $107 million customer contracts and relationships over 11 years, $60 million trademarks over 7 years), $262 million of acquired cash, $221 million of other net liabilities assumed (primarily deferred revenue and deferred tax liabilities) and $1.25 billion of goodwill, non-deductible for tax purposes and attributed to assembled workforce and expected synergies. Adobe positions Semrush as adding search engine optimization, generative engine optimization and agentic search optimization to its ability to serve marketers, and has folded it into Adobe Experience Manager. Financial results and pro forma information were not presented because the impact was not material.

Guidance. In the September 10, 2026 release Adobe raised its full-year targets and set fourth quarter targets. For the fourth quarter of fiscal 2026: total revenue of $6.80 billion to $6.85 billion; Business Professionals & Consumers subscription revenue of $1.93 billion to $1.95 billion; Creative & Marketing Professionals subscription revenue of $4.665 billion to $4.695 billion; earnings per share of $4.65 to $4.70 on a GAAP basis and $6.30 to $6.35 on a non-GAAP basis, assuming a non-GAAP operating margin of approximately 44.0%, a GAAP tax rate of approximately 22.0%, a non-GAAP tax rate of approximately 18.0% and a diluted share count of approximately 389 million. For full-year fiscal 2026: total revenue of $26.576 billion to $26.626 billion; Business Professionals & Consumers subscription revenue of $7.470 billion to $7.490 billion; Creative & Marketing Professionals subscription revenue of $18.242 billion to $18.272 billion; Total Adobe ending ARR growth of 10.2% year over year; and earnings per share of $18.12 to $18.17 GAAP and $24.45 to $24.50 non-GAAP, assuming a non-GAAP operating margin of approximately 45.0%, a GAAP tax rate of approximately 22.5%, a non-GAAP tax rate of approximately 18.0% and a diluted share count of approximately 400 million. The targets assume current macroeconomic conditions.

Finance leadership changed during the quarter. On June 8, 2026 Daniel Durn notified Adobe of his decision to resign as Chief Financial Officer and Executive Vice President, Finance, Technology, Security and Operations, effective June 15, 2026. On June 11, 2026 Steven Day, an Adobe employee since 2006, most recently SVP, Customer Experience Orchestration Business Unit CFO and Corporate Finance since 2023, and previously Interim Head of Investor Relations from October 2024 to June 2025, was appointed interim Chief Financial Officer, effective immediately upon Durn's departure (Form 8-K, accession 0000796343-26-000109). The position was still held on an interim basis at the close of the period: the 10-Q's certifications for the quarter ended August 28, 2026 were signed by the Chief Executive Officer and the Interim Chief Financial Officer.

Controls. Disclosure controls and procedures were concluded effective as of August 28, 2026, and there were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, it.

Subsequent events

The 10-Q for the quarter ended August 28, 2026 contains no subsequent events note. The following post-period developments are drawn from the Current Reports on Form 8-K identified below, together with the pending acquisition Adobe disclosed in that 10-Q.

Chief executive succession, announced September 8, 2026 (Form 8-K, accession 0000796343-26-000144). The handoff began six months earlier: on March 9, 2026 Shantanu Narayen notified Adobe of his decision to transition from his role as Chief Executive Officer, and Adobe opened a search for his successor, with Narayen to remain Chief Executive Officer until a successor was appointed and to remain Chair of the Board (Form 8-K, accession 0000796343-26-000048). On September 2, 2026 the Board appointed Anil Chakravarthy, then President of Adobe's Customer Experience Orchestration business and worldwide field operations, as President and Chief Executive Officer and a member of the Board, effective December 1, 2026. Shantanu Narayen, Chair and Chief Executive Officer, will retire as CEO on that date and become Executive Chair of the Board. Chakravarthy joined Adobe in January 2020 to lead the Digital Experience business, added worldwide field operations in September 2020 and was promoted to president of Digital Experience and worldwide field operations in December 2021; Adobe credits him with championing the Workfront and Semrush acquisitions and their integration. Before Adobe he was CEO of Informatica for four years. Lead Independent Director Frank Calderoni led the special committee overseeing the selection. Adobe said it intends to file an amendment containing the compensation information called for by Item 5.02(c)(3) of Form 8-K within four business days of its determination, so the terms of Chakravarthy's arrangement were not disclosed in the initial report.

Departure of the president of the Creativity & Productivity business (same Form 8-K, accession 0000796343-26-000144). On September 2, 2026 David Wadhwani notified Adobe of his decision to step down as President, Creativity & Productivity Business, effective September 27, 2026. He will remain with the company as a senior advisor for a transition period.

Third quarter results and raised fiscal 2026 targets, September 10, 2026 (Form 8-K, accession 0000796343-26-000147). Adobe furnished the press release reporting the quarter summarized above and raising its full-year revenue and earnings per share targets; the fourth quarter and full-year figures are set out under Guidance in the preceding section.

Pending acquisition of Topaz Labs Inc. On June 24, 2026 Adobe entered into a definitive agreement to acquire Topaz Labs Inc., a privately held AI company specializing in video and image enhancement models, for approximately $340 million, primarily in cash consideration and subject to customary purchase price adjustments. The transaction is subject to regulatory approvals and customary closing conditions and was expected to close in the fourth quarter of fiscal 2026, that is, after the August 28, 2026 quarter end. Adobe expects to finance it with cash on hand. It remained pending as of the 10-Q filed September 22, 2026.

Filings that contain financial statements

• 8-K, accession 0000796343-26-000147, filed September 10, 2026, furnishes the Exhibit 99.1 press release "Adobe Reports Record Q3 Results," with income-statement-level results (revenue, GAAP/non-GAAP operating income and net income, diluted EPS) and cash flow for the third quarter of fiscal 2026 (ended August 28, 2026), plus fourth-quarter and full-year FY2026 targets.
• 8-K, accession 0000796343-26-000109, filed June 11, 2026, Exhibit 99.1 covers second-quarter fiscal 2026 (ended May 29, 2026) results, including the impact of the Semrush acquisition on ARR and revenue.
• 8-K, accession 0000796343-26-000048, filed March 12, 2026, Exhibit 99.1 covers first-quarter fiscal 2026 (ended February 27, 2026) results.
• 8-K, accession 0000796343-25-000135, filed December 10, 2025, Exhibit 99.1 covers fourth-quarter and full-year fiscal 2025 (ended November 28, 2025) results.
• 8-K, accession 0000796343-25-000102, filed September 11, 2025, Exhibit 99.1 covers third-quarter fiscal 2025 (ended August 29, 2025) results and a raise to FY2025 revenue, EPS and Digital Media ARR targets.
• 8-K, accession 0000796343-25-000064, filed June 12, 2025, Exhibit 99.1 covers second-quarter fiscal 2025 (ended May 30, 2025) results and a raise to FY2025 revenue and EPS targets.
• 8-K, accession 0000796343-25-000052, filed March 12, 2025, Exhibit 99.1 covers first-quarter fiscal 2025 (ended February 28, 2025) results.
• 8-K, accession 0000796343-24-000250, filed December 11, 2024, Exhibit 99.1 covers fourth-quarter and full-year fiscal 2024 (ended November 29, 2024) results.

Note: full underlying GAAP financial statements (balance sheet, statement of cash flows) for each quarter are filed separately in Adobe's Form 10-Q for that period; the 8-K exhibits above carry summarized results and reconciliations.

Leadership transition

Adobe is in the middle of a full leadership handoff during fiscal 2026.

• March 9, 2026, Chair and CEO Shantanu Narayen notified the company of his decision to transition out of the CEO role once a successor is named; he will remain Chair of the Board. The decision was announced publicly on March 12, 2026. The Board's Lead Independent Director, Frank Calderoni, was named chair of a special committee to run the search (8-K, accession 0000796343-26-000048).
• June 8, 2026, CFO Daniel Durn resigned as Chief Financial Officer, effective June 15, 2026. Steven Day, previously SVP of Corporate Finance, was appointed interim CFO effective on Durn's departure (8-K, accession 0000796343-26-000109).
• September 2, 2026, The Board appointed Anil Chakravarthy, then President of Adobe's Customer Experience Orchestration business, as President and Chief Executive Officer and a new Board member, effective December 1, 2026. Narayen will become Executive Chair of the Board on that date. Separately, David Wadhwani notified Adobe of his decision to step down as President, Creativity & Productivity Business, effective September 27, 2026, remaining as a senior advisor during the transition (8-K, accession 0000796343-26-000144).
• July 14, 2026, The Board's Executive Compensation Committee approved a retention letter for Chief Legal Officer Louise Pentland providing severance protections (cash severance, COBRA continuation and partial equity acceleration) tied to a qualifying termination; the protections sunset 12 months after the new CEO's start date (8-K, accession 0000796343-26-000120).
• Earlier, on January 24, 2025, Chief Strategy Officer Scott Belsky notified Adobe of his resignation, effective March 15, 2025 (8-K, accession 0000796343-25-000036).

Acquisitions

• Semrush Holdings, Inc., Adobe signed a definitive agreement on November 18, 2025 to acquire Semrush, a publicly held brand-visibility platform company, for approximately $1.9 billion in cash, subject to regulatory approval; this signing is disclosed in Adobe's Form 10-K for fiscal 2025 (accession 0000796343-26-000003) and was not the subject of a standalone Form 8-K. Adobe completed the acquisition on April 28, 2026 for $1.87 billion, primarily in cash, as disclosed in the Form 10-Q for the quarter ended August 28, 2026 (accession 0000796343-26-000156). Semrush is being integrated into Adobe's Digital Experience/Customer Experience Orchestration offerings and contributed approximately $480 million of ARR and roughly $40 million of subscription revenue in the second quarter of fiscal 2026 (8-K, accession 0000796343-26-000109).
• Topaz Labs Inc., Adobe entered into a definitive agreement on June 24, 2026 to acquire Topaz Labs Inc., a privately held AI company specializing in video and image enhancement models, for approximately $340 million, primarily in cash consideration, subject to customary purchase price adjustments. The transaction is subject to regulatory approvals and customary closing conditions, is expected to close in the fourth quarter of fiscal 2026, and is expected to be financed with cash on hand. As of the Form 10-Q for the quarter ended August 28, 2026 (accession 0000796343-26-000156), the acquisition had not yet closed. There was no standalone Form 8-K for this agreement.

Capital allocation

• April 21, 2026, Adobe's Board authorized a new stock repurchase program permitting the company to buy back up to $25 billion of common stock through April 30, 2030, in the open market or via structured repurchase agreements (8-K, accession 0000796343-26-000101).
• January 17, 2025, Adobe completed a public offering of $2.0 billion in aggregate principal amount of senior notes: $800 million of 4.750% notes due 2028, $700 million of 4.950% notes due 2030 and $500 million of 5.300% notes due 2035. Net proceeds were approximately $1.99 billion, intended for general corporate purposes including debt repayment, stock repurchases, capital expenditures and acquisitions (8-K, accession 0001193125-25-008409).

Earnings and guidance

• Q3 FY2026 (reported September 10, 2026): record revenue of $6.76 billion, up 13% year over year; GAAP diluted EPS of $4.62, non-GAAP diluted EPS of $6.13; total Adobe ARR of $27.50 billion; cash flow from operations of $2.52 billion. Adobe raised full-year FY2026 targets to total revenue of $26.576–$26.626 billion and non-GAAP EPS of $24.45–$24.50 (8-K, accession 0000796343-26-000147).
• Q2 FY2026 (reported June 11, 2026): record revenue of $6.62 billion, up 13%; GAAP diluted EPS of $4.25 (including a $0.17 per-share non-cash goodwill impairment on the Publishing & Advertising reporting unit) and non-GAAP diluted EPS of $5.96; Adobe raised FY2026 total revenue and non-GAAP EPS targets (8-K, accession 0000796343-26-000109). The related $70 million goodwill impairment charge on the Publishing & Advertising reporting unit was recorded in the second quarter of fiscal 2026, per the Form 10-Q (accession 0000796343-26-000156).
• Q1 FY2026 (reported March 12, 2026): record revenue of $6.40 billion, up 12%; GAAP diluted EPS of $4.60, non-GAAP diluted EPS of $6.06; record Q1 operating cash flow of $2.96 billion (8-K, accession 0000796343-26-000048).
• Q4 & FY2025 (reported December 10, 2025): Q4 revenue of $6.19 billion, up 10%; FY2025 operating cash flow exceeded $10 billion; Adobe targeted over 10% total ARR growth for FY2026 (8-K, accession 0000796343-25-000135).
• Q3 FY2025 (reported September 11, 2025): revenue of $5.99 billion, up 11%; Adobe raised FY2025 total revenue, EPS and Digital Media ARR growth targets, citing AI-first ARR exceeding its year-end target (8-K, accession 0000796343-25-000102).
• Q2 FY2025 (reported June 12, 2025): revenue of $5.87 billion, up 11%; Adobe raised FY2025 revenue and EPS targets (8-K, accession 0000796343-25-000064).

Legal and regulatory

• FTC/DOJ ROSCA action resolved. The U.S. Department of Justice filed a civil complaint on June 17, 2024 in the U.S. District Court for the Northern District of California, alleging that Adobe's disclosure and subscription-cancellation practices violated the Restore Online Shoppers' Confidence Act and the FTC Act. The court denied Adobe's motion to dismiss on May 2, 2025. On March 12, 2026, Adobe reached an agreement to settle the action, and on March 13, 2026 filed a stipulation of dismissal with the court (Form 10-Q, accession 0000796343-26-000156). For the nine months ended August 28, 2026, Adobe recorded $92 million of loss contingencies associated with a legal settlement and other legal matters; the filings do not break out how much of that total is attributable to this settlement specifically (Form 10-Q, accession 0000796343-26-000156).

Governance and compensation

• April 15, 2026 Annual Meeting: stockholders re-elected all eleven directors, approved a 12-million-share increase to the 2019 Equity Incentive Plan reserve, ratified KPMG LLP as auditor, and approved executive compensation on an advisory basis; stockholder proposals on golden-parachute voting, board matrix disclosure, a civil-liberties report and climate-risk retirement disclosure were not approved (8-K, accession 0000796343-26-000101).
• January 26, 2026: the Executive Compensation Committee approved the 2026 Performance Share Program and 2026 Executive Annual Incentive Plan for executive officers, and adopted an Executive Officer Cash Severance Policy capping new cash severance arrangements at 2.99 times base salary plus target bonus without stockholder ratification (8-K, accession 0000796343-26-000019).
• April 22, 2025 Annual Meeting: stockholders re-elected all eleven directors, approved a 7-million-share increase to the 2019 Equity Incentive Plan reserve, and ratified KPMG LLP as auditor; a golden-parachute vote proposal was not approved. The Board also adopted Amended and Restated Bylaws addressing universal proxy rules and advance-notice procedures for director nominations (8-K, accession 0001628280-25-019665).

About this file

ADBE annual income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

• Source statement, FY2025, FY2024. Consolidated Statements of Income, Consolidated Balance Sheets, Consolidated Statements of Cash Flows and the accompanying notes in the FY2025 Form 10-K
• Source statement, FY2023. Consolidated Statements of Income, Consolidated Statements of Cash Flows and the accompanying notes in the FY2025 Form 10-K. The 10-K presents balance sheets for the two most recent year ends only, so no balance sheet is reported for this year.

ADBE quarterly income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

• Source statement, Q3 FY2026. Condensed Consolidated Statements of Income, Condensed Consolidated Balance Sheets and the accompanying notes in the Q3 FY2026 Form 10-Q; the discrete three-month cash flow statement and the GAAP to non-GAAP reconciliation in Exhibit 99.1 to the Form 8-K dated September 10, 2026.
• Source statement, Q3 FY2025. Condensed Consolidated Statements of Income and the accompanying notes in the Q3 FY2026 Form 10-Q, which presents this quarter as the prior-year comparative; the discrete three-month cash flow statement and the GAAP to non-GAAP reconciliation in Exhibit 99.1 to the Form 8-K dated September 10, 2026. No balance sheet is presented as of August 29, 2025 in either filing.

ADBE year-to-date income statement and cash flow

Taken from the SEC filings and normalized to actual dollars.

• Source statement. Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Cash Flows and the accompanying notes in the Q3 FY2026 Form 10-Q

ADBE trailing twelve month income statement and cash flow

Derived by AI from the figures the filings report. No filing prints these, so none of them is linked.

• Basis. Fiscal 2025 as reported in the FY2025 Form 10-K (accession 0000796343-26-000003), plus the nine months ended August 28, 2026, less the nine months ended August 29, 2025, both as reported in the Q3 FY2026 Form 10-Q (accession 0000796343-26-000156). Adobe does not publish a trailing-twelve-month statement; these are roll-ups of the reported period figures.

Adjustments

Prior year to date

Taken from the SEC filings and normalized to actual dollars.

• Source statement. Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Cash Flows and the accompanying notes in the Q3 FY2026 Form 10-Q

Sources

Notes

• Adobe's fiscal year is a 52- or 53-week year ending on the Friday closest to November 30. Fiscal 2025, 2024 and 2023 were each 52-week years, and the company states its next 53-week year will be fiscal 2027 (FY2025 10-K, accession 0000796343-26-000003). Period start dates here are the day after the prior period's end, so each fiscal year spans 364 days and each quarter 91 days.
• Figures are stated in actual U.S. dollars, converted from the "in millions" presentation of the filings; share counts are likewise converted from the "in millions" presentation and are therefore precise only to the nearest million shares, as the filings print them.
• Cash flow lines are carried with the sign the filings print, so outflows such as purchases of property and equipment, repurchases of common stock and repayments of debt are negative. Free cash flow is operating cash flow less purchases of property and equipment, and is a derived figure: none of these filings publishes a free cash flow line.
• The Q3 FY2026 Form 10-Q (accession 0000796343-26-000156) presents its cash flow statement for the nine months only. The discrete three-month cash flow figures for the third quarters of fiscal 2026 and fiscal 2025 are taken from the condensed three-month cash flow statement in Exhibit 99.1 to the Form 8-K dated September 10, 2026 (accession 0000796343-26-000147); each quarter records that accession in cash_flow_source_accession. That statement groups several lines more coarsely than the 10-Q's, so the quarters carry fewer cash flow line items than the nine-month block.
• The FY2025 10-K presents balance sheets as of November 28, 2025 and November 29, 2024 only, so FY2023 carries no balance sheet. Neither filing presents a balance sheet as of August 29, 2025, so the year-ago quarter carries an income statement and cash flow only. Total debt is the sum of the current and long-term debt captions, and total deferred revenue the sum of the current and long-term deferred revenue captions.
• Segment reporting changed during the period covered. In the first quarter of fiscal 2026 Adobe combined its former Digital Media, Digital Experience and Publishing and Advertising segments into a single operating and reportable segment, reflecting unified selling motions and integrated product innovation. The annual periods therefore carry the three-segment revenue and gross profit split as reported in the FY2025 10-K, while the fiscal 2026 quarters carry the subscription revenue split by customer group -- Creative & Marketing Professionals and Business Professionals & Consumers -- that the 10-Q reports in its place. Consolidated revenue, income and cash flow were not restated by this change.
• The trailing-twelve-month block is derived: fiscal 2025 as reported, plus the nine months ended August 28, 2026, less the nine months ended August 29, 2025. Its weighted average diluted share count of approximately 407 million is rolled up the same way from the share counts the filings print in whole millions, and its diluted earnings per share of $17.90 is trailing net income over that count. Adding the four constituent quarters' reported diluted earnings per share gives $17.91.
• Adobe paid no dividends in any period reported here; no dividend line appears in any of these cash flow statements. The company returns cash through share repurchases, which totalled $11.28 billion in fiscal 2025 and $6.82 billion in the first nine months of fiscal 2026.
• Non-GAAP operating income, net income and diluted earnings per share are shown for the third quarters of fiscal 2026 and fiscal 2025 exactly as the company reconciled them in its earnings release (accession 0000796343-26-000147). They exclude stock-based and deferred compensation expense, amortization of intangibles, acquisition-related expenses, investment gains and losses and related income tax adjustments, and are not a substitute for the GAAP figures alongside them.
• Adobe reports in U.S. dollars, is not an American Depositary Receipt issuer, and has had no stock split in the period these filings cover, so no currency, depositary-ratio or split adjustment was applied to any figure.

Uncertainties

• The trailing-twelve-month weighted average diluted share count (approximately 407 million) and the resulting diluted earnings per share of $17.90 are derived from share counts the filings print rounded to whole millions, so both are approximate. Summing the four constituent quarters' reported diluted earnings per share gives $17.91 instead.
• The discrete three-month cash flow figures for the third quarter of fiscal 2025 come from the comparative column of an earnings release furnished in September 2026, not from a fiscal 2025 filing. They are consistent with the nine-month figures in the same 10-Q but are unaudited and were never presented as a standalone quarter in a periodic report.
• Shares outstanding (391 million at August 28, 2026; 413 million and 441 million at the fiscal 2025 and 2024 year ends) are read from the balance-sheet common stock caption, which states them in whole millions.
• No complete set of financial statements for the fourth quarter of fiscal 2025 or for the first and second quarters of fiscal 2026 is presented in the filings drawn on here, so those quarters are not carried as periods. A few second-quarter fiscal 2026 income and per-share amounts appear only as a comparative column in the GAAP to non-GAAP reconciliation in the third-quarter fiscal 2026 earnings release (accession 0000796343-26-000147), and are not carried here. The company's earlier reports cover those quarters.
• Revenue by geography for the quarterly and nine-month periods is presented by the company as Americas, EMEA and APAC without a separate United States figure; the United States line is available only for the fiscal years, from the FY2025 10-K.

Company details

Fiscal period

Source filings