ADOBE INC.

EX-99.1 · adbeex991q226.htm

EX-99.1
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 adbeex991q226.htm
 EX-99.1

 Exhibit 99.1

 Investor Relations Contact
 Doug Clark
 Adobe
 ir@adobe.com
 Public Relations Contact
 Ashley Levine
 Adobe
 adobepr@adobe.com
 FOR IMMEDIATE RELEASE
 Adobe Reports Record Q2 Results
 • Adobe Raises FY26 Total Revenue and Non-GAAP EPS Targets
 • AI-first ARR triples year over year and exceeds $500 million
 SAN JOSE, Calif. – June 11, 2026 – Adobe (Nasdaq:ADBE), the global technology leader that unleashes creativity and productivity for individuals and businesses through innovative platforms and tools, today reported financial results for its second quarter FY2026 ended May 29, 2026.
 “Adobe delivered record revenue of $6.62 billion in Q2 reflecting strong AI-driven demand across our customer groups and we are raising our full-year fiscal 2026 revenue and non-GAAP EPS targets on the strength of that performance,” said Shantanu Narayen, chair and CEO, Adobe. “We are inspired to bring the magic of our new AI products to consumers, business professionals, creators, and marketers to deliver on our mission to Empower Everyone to Create.”
 Second Quarter FY2026 Financial Highlights
 • Adobe achieved record revenue of $6.62 billion in its second quarter of FY2026, which represents 13% year-over-year growth, or 11% in constant currency.
 • Diluted earnings per share was $4.25 on a GAAP basis and $5.96 on a non-GAAP basis. GAAP results reflect a $0.17 per share non-cash goodwill impairment charge related to the Publishing & Advertising reporting unit.
 • Total Adobe Annualized Recurring Revenue (“ARR”) exiting the quarter was $27.10 billion, including approximately $480 million from Semrush.
 • GAAP operating income in the second quarter was $2.24 billion and non-GAAP operating income was $2.95 billion. GAAP net income was $1.71 billion and non-GAAP net income was $2.40 billion.
 • Cash flows from operations were $2.17 billion.
 • Exiting the quarter, Remaining Performance Obligations (“RPO”) were $22.27 billion, and Current Remaining Performance Obligations (“cRPO”) were 67%.
 • Adobe repurchased approximately 8.5 million shares during the quarter.
 Second Quarter FY2026 Customer Group Highlights
 • Total Customer Group subscription revenue was $6.39 billion, which represents 14% year-over-year growth, or 12% in constant currency, including approximately $40 million from Semrush.
 • Business Professionals & Consumers subscription revenue was $1.85 billion, which represents 16% year-over-year growth, or 15% in constant currency.
 • Creative & Marketing Professionals subscription revenue was $4.54 billion, which represents 13% year-over-year growth, or 11% in constant currency.
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 Financial Targets
 These targets factor in the acquisition of Semrush Holdings, Inc. and assume current macroeconomic conditions.
 The following table summarizes Adobe’s third quarter FY2026 targets:

 Total revenue $6.67 billion to $6.72 billion
 Business Professionals & Consumers subscription revenue $1.87 billion to $1.89 billion
 Creative & Marketing Professionals subscription revenue $4.61 billion to $4.64 billion
 Earnings per share 1
 GAAP: $4.40 to $4.45 Non-GAAP: $6.05 to $6.10

 1 Targets assume non-GAAP operating margin of ~44.0%, GAAP tax rate of ~23.0%, non-GAAP tax rate of ~18.0% and diluted share count of ~395 million for third quarter FY2026.
 The following table summarizes Adobe’s updated FY2026 targets:

 Total revenue $26.50 billion to $26.60 billion
 Business Professionals & Consumers subscription revenue $7.44 billion to $7.48 billion
 Creative & Marketing Professionals subscription revenue $18.21 billion to $18.27 billion
 Total Adobe ending ARR growth 10.2% year over year
 Earnings per share 2
 GAAP: $17.90 to $18.00 Non-GAAP: $24.35 to $24.45

 2 Targets assume non-GAAP operating margin of ~45.0%, GAAP tax rate of ~22.5%, non-GAAP tax rate of ~18.0% and diluted share count of ~399 million for FY2026.

 Adobe CFO Update
 Dan Durn, executive vice president and CFO of Adobe, is departing the company on June 15, 2026 to pursue a new professional opportunity. Steve Day, SVP of Corporate Finance and CFO of Adobe’s Customer Experience Orchestration Business Unit, will serve as interim Chief Financial Officer, effective June 15, 2026. Mr. Day brings 20 years of financial leadership experience at Adobe to the Interim Chief Financial Officer role. Day will report directly to CEO and Chair Shantanu Narayen.
 “I want to thank Dan for leading the finance organization that will support Adobe's next chapter of growth in the AI era, and wish him all the best,” said Narayen. “Steve has been a key member of our finance organization for two decades, and his deep understanding of Adobe’s business will be critical as we execute our strategy to deliver AI innovations to a broader set of customers across creativity, productivity and customer experience orchestration.”
 Adobe to Host Conference Call
 Adobe will webcast its second quarter fiscal year 2026 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: http://www.adobe.com/ADBE. Earnings documents, including Adobe management’s prepared conference call remarks with slides and an investor datasheet are posted to Adobe’s Investor Relations Website in advance of the conference call for reference.
 Forward-Looking Statements, Non-GAAP and Other Disclosures
 In addition to historical information, this press release 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; industry positioning; expectations regarding acquisitions and other business transactions; and our financial targets and assumptions related thereto, including revenue, operating margin, operating efficiencies, annualized recurring revenue, tax rate, earnings per share and share count. Each of the forward-looking statements we make in this press release involves risks, uncertainties and assumptions based on information available to us as of the date of this press release. Such risks and uncertainties, many of which relate to matters beyond our control, 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: failure to innovate effectively and meet customer needs; failure to compete effectively; issues relating to development and use of AI; damage to our reputation or brands; failure to realize the anticipated benefits of acquisitions, investments or other strategic transactions; failure to recruit and retain key personnel; service interruptions or failures in information technology systems by us or third parties; security incidents; failure to effectively develop, manage and maintain our sales channels or critical third-party business relationships; risks associated with being a multinational corporation and adverse macroeconomic and geopolitical conditions; complex sales cycles; litigation, regulatory inquiries, investigations and other actions; changes in, and compliance with, global laws and regulations, including those related to information security and privacy; failure to protect our intellectual property; changes in tax regulations; complex government procurement processes; risks related to fluctuations in or the timing of revenue recognition from our subscription offerings; fluctuations in foreign currency exchange rates;
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 impairment charges; our existing and future debt obligations; catastrophic events; and fluctuations in our stock price. Further information on these and other factors are discussed in the section titled “Risk Factors” in Adobe’s most recently filed Annual Report on Form 10-K and Adobe's most recently filed Quarterly Reports on Form 10-Q. The risks described in this press release and in Adobe’s filings with the U.S. Securities and Exchange Commission should be carefully reviewed.
 Undue reliance should not be placed on the financial information set forth in this press release, which reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe’s Quarterly Report on Form 10-Q for our fiscal quarter ended May 29, 2026, which Adobe expects to file in June 2026.
 Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.
 A reconciliation between GAAP and non-GAAP earnings results and financial targets and a statement regarding use of non-GAAP financial information are provided at the end of this press release and on Adobe’s investor relations website. Definitions of our non-GAAP financial measures are provided in the Current Report on Form 8-K relating to this press release.
 About Adobe
 Adobe (Nasdaq: ADBE) empowers everyone to create through industry-leading platforms and tools that unleash creativity, productivity and personalized customer experiences. For more information, visit www.adobe.com .
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 ©2026 Adobe. All rights reserved. Adobe and the Adobe logo are either registered trademarks or trademarks of Adobe (or one of its subsidiaries) in the United States and/or other countries. All other trademarks are the property of their respective owners.
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 Condensed Consolidated Statements of Income
 (In millions, except per share data; unaudited)
 Three Months Ended Six Months Ended

 May 29, 2026 May 30, 2025 May 29, 2026 May 30, 2025
 Revenue:
 Subscription $ 6,416  $ 5,641  $ 12,614  $ 11,124 
 Product 89  88  179  183 
 Services and other 113  144  223  280 
 Total revenue 6,618  5,873  13,016  11,587 

 Cost of revenue:
 Subscription 586  505  1,126  995 
 Product 5  6  11  12 
 Services and other 124  127  242  253 
 Total cost of revenue 715  638  1,379  1,260 

 Gross profit 5,903  5,235  11,637  10,327 

 Operating expenses:
 Research and development 1,198  1,082  2,308  2,108 
 Sales and marketing 1,884  1,626  3,592  3,121 
 General and administrative 546  377  1,009  744 

 Amortization of intangibles 37  41  72  82 
 Total operating expenses 3,665  3,126  6,981  6,055 

 Operating income 2,238  2,109  4,656  4,272 

 Non-operating income (expense):
 Interest expense (65) (68) (128) (130)
 Investment gains (losses), net 18  2  23  8 
 Other income (expense), net 47  58  109  133 
 Total non-operating income (expense), net —  (8) 4  11 
 Income before income taxes 2,238  2,101  4,660  4,283 
 Provision for income taxes 526  410  1,059  781 
 Net income $ 1,712  $ 1,691  $ 3,601  $ 3,502 
 Basic net income per share $ 4.26  $ 3.95  $ 8.86  $ 8.10 
 Shares used to compute basic net income per share 402  428  406  432 
 Diluted net income per share $ 4.25  $ 3.94  $ 8.86  $ 8.08 
 Shares used to compute diluted net income per share 402  429  407  433 

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 Condensed Consolidated Balance Sheets
 (In millions; unaudited)
 May 29, 2026 November 28, 2025
 ASSETS

 Current assets:
 Cash and cash equivalents $ 4,919  $ 5,431 
 Short-term investments 707  1,164 
 Trade receivables, net of allowances for doubtful accounts of $14 and $13, respectively
 1,993  2,344 
 Prepaid expenses and other current assets 1,449  1,224 
 Total current assets 9,068  10,163 

 Property and equipment, net 1,870  1,873 
 Operating lease right-of-use assets, net 299  312 
 Goodwill 14,041  12,857 
 Other intangibles, net 1,012  495 

 Deferred income taxes 1,998  2,186 
 Other assets 1,645  1,610 
 Total assets $ 29,933  $ 29,496 

 LIABILITIES AND STOCKHOLDERS’ EQUITY

 Current liabilities:
 Trade payables $ 499  $ 417 
 Accrued expenses and other current liabilities
 2,455  2,648 
 Debt 1,843  — 
 Deferred revenue 7,152  6,905 
 Income taxes payable 38  153 
 Operating lease liabilities 91  77 
 Total current liabilities 12,078  10,200 

 Long-term liabilities:
 Debt 4,802  6,210 
 Deferred revenue 98  125 
 Income taxes payable 536  469 
 Operating lease liabilities 329  361 
 Other liabilities 572  508 
 Total liabilities 18,415  17,873 

 Stockholders’ equity:
 Preferred stock —  — 
 Common stock —  — 
 Additional paid-in capital 16,416  15,361 
 Retained earnings 48,767  45,354 
 Accumulated other comprehensive income (loss) (247) (245)
 Treasury stock, at cost (53,418) (48,847)
 Total stockholders’ equity 11,518  11,623 
 Total liabilities and stockholders’ equity $ 29,933  $ 29,496 

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 Condensed Consolidated Statements of Cash Flows
 (In millions; unaudited)
 Three Months Ended
 May 29, 2026 May 30, 2025
 Cash flows from operating activities:
 Net income $ 1,712  $ 1,691 
 Adjustments to reconcile net income to net cash provided by operating activities:
 Depreciation, amortization and accretion 193  209 
 Stock-based compensation 534  481 

 Impairment of goodwill 70  — 

 Other non-cash adjustments 77  (101)
 Changes in deferred revenue (223) (156)
 Changes in other operating assets and liabilities (198) 67 
 Net cash provided by operating activities 2,165  2,191 

 Cash flows from investing activities:
 Purchases, sales and maturities of short-term investments, net (140) (96)
 Purchases of property and equipment (58) (47)

 Purchases and sales of long-term investments, intangibles and other assets, net
 44  (135)
 Acquisitions, net of cash acquired (1,560) — 
 Net cash used for investing activities (1,714) (278)

 Cash flows from financing activities:
 Repurchases of common stock (2,111) (3,500)
 Taxes paid related to net share settlement of equity awards, net of proceeds from treasury stock re-issuances
 (91) (112)
 Proceeds from issuance of debt 493  — 

 Other financing activities, net (146) (176)
 Net cash used for financing activities (1,855) (3,788)
 Effect of exchange rate changes on cash and cash equivalents (9) 48 
 Net change in cash and cash equivalents (1,413) (1,827)
 Cash and cash equivalents at beginning of period 6,332  6,758 
 Cash and cash equivalents at end of period $ 4,919  $ 4,931 

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 Non-GAAP Results
 The following table shows Adobe’s GAAP results reconciled to non-GAAP results included in this release.

 (In millions, except per share data)
 Three Months Ended
 May 29,
2026 May 30,
2025 February 27,
2026
 Operating income:

 GAAP operating income $ 2,238  $ 2,109  $ 2,418 
 Stock-based and deferred compensation expense 556  482  514 
 Impairment of goodwill 70  —  — 
 Amortization of intangibles 46  83  39 
 Acquisition-related expenses
 5  —  2 
 Loss contingency (*)
 30  —  62 

 Non-GAAP operating income $ 2,945  $ 2,674  $ 3,035 

 Net income:

 GAAP net income $ 1,712  $ 1,691  $ 1,889 
 Stock-based and deferred compensation expense 556  482  514 
 Impairment of goodwill
 70  —  — 
 Amortization of intangibles 46  83  39 
 Acquisition-related expenses
 5  —  2 
 Loss contingency (*)
 30  —  62 

 Investment (gains) losses, net (18) (2) (5)
 Income tax adjustments (1) (83) (13)
 Non-GAAP net income $ 2,400  $ 2,171  $ 2,488 

 Diluted net income per share:

 GAAP diluted net income per share $ 4.25  $ 3.94  $ 4.60 
 Stock-based and deferred compensation expense 1.38  1.12  1.25 
 Impairment of goodwill 0.17  —  — 
 Amortization of intangibles 0.12  0.19  0.10 
 Acquisition-related expenses
 0.01  —  — 
 Loss contingency (*)
 0.07  —  0.15 

 Investment (gains) losses, net (0.04) —  (0.01)
 Income tax adjustments —  (0.19) (0.03)
 Non-GAAP diluted net income per share $ 5.96  $ 5.06  $ 6.06 

 Shares used to compute diluted net income per share
 402  429  411 

 The following table shows Adobe’s second quarter fiscal year 2026 GAAP tax rate reconciled to the non-GAAP tax rate included in this release.

 Second Quarter
Fiscal 2026
 Effective income tax rate:

 GAAP effective income tax rate 23.5  %
 Income tax adjustments (2.5)
 Stock-based and deferred compensation expense (3.0)
 Non-GAAP effective income tax rate (**)
 18.0  %

 (*) Associated with a settlement of litigation and other legal matters
 (**) Represents Adobe’s fixed long-term non-GAAP tax rate based on projections and currently available information for fiscal 2026 through fiscal 2028
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 Reconciliation of GAAP to Non-GAAP Financial Targets and Assumptions
 The following tables show Adobe's third quarter fiscal year 2026 financial targets and assumptions reconciled to non-GAAP financial targets and assumptions included in this release.

 (Shares in millions)
 Third Quarter Fiscal 2026

 Low High
 Diluted net income per share:

 GAAP diluted net income per share $ 4.40  $ 4.45 
 Stock-based and deferred compensation expense
 1.47  1.47 
 Amortization of intangibles 0.15  0.15 

 Acquisition-related expenses 0.04  0.04 
 Income tax adjustments (0.01) (0.01)
 Non-GAAP diluted net income per share $ 6.05  $ 6.10 

 Shares used to compute diluted net income per share 395  395 

 Third Quarter
 Fiscal 2026

 Operating margin:

 GAAP operating margin
 34.0  %
 Stock-based and deferred compensation expense
 8.9 
 Amortization of intangibles 0.9 
 Acquisition-related expenses 0.2 
 Non-GAAP operating margin
 44.0  %

 Third Quarter
 Fiscal 2026

 Effective income tax rate:

 GAAP effective income tax rate 23.0  %
 Income tax adjustments (1.5)
 Stock-based and deferred compensation expense
 (3.5)

 Non-GAAP effective income tax rate (**)
 18.0  %

 (**) Represents Adobe’s fixed long-term non-GAAP tax rate based on projections and currently available information for fiscal 2026 through fiscal 2028
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 Reconciliation of GAAP to Non-GAAP Financial Targets and Assumptions (continued)
 The following tables show Adobe's updated annual fiscal year 2026 financial targets and assumptions reconciled to non-GAAP financial targets and assumptions included in this release.

 (Shares in millions)
 Fiscal Year 2026

 Low High
 Diluted net income per share:

 GAAP diluted net income per share $ 17.90  $ 18.00 
 Stock-based and deferred compensation expense 5.53  5.52 
 Amortization of intangibles 0.50  0.50 
 Impairment of goodwill 0.18  0.18 
 Loss contingency 0.23  0.23 
 Acquisition-related expenses 0.09  0.09 
 Income tax adjustments (0.08) (0.07)
 Non-GAAP diluted net income per share $ 24.35  $ 24.45 

 Shares used to compute diluted net income per share 399  399 

 Fiscal Year 2026

 Operating margin:

 GAAP operating margin
 35.0  %
 Stock-based and deferred compensation expense
 8.5 
 Amortization of intangibles 0.8 
 Impairment of goodwill 0.3 
 Loss contingency 0.3 
 Acquisition-related expenses 0.1 
 Non-GAAP operating margin
 45.0  %

 Fiscal Year 2026

 Effective income tax rate:

 GAAP effective income tax rate 22.5  %
 Income tax adjustments (1.0)
 Stock-based and deferred compensation expense
 (3.5)

 Non-GAAP effective income tax rate (**)
 18.0  %

 (**) Represents Adobe’s fixed long-term non-GAAP tax rate based on projections and currently available information for fiscal 2026 through fiscal 2028
 Use of Non-GAAP Financial Information
 Adobe continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Adobe uses non-GAAP financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. Adobe's management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adobe presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Adobe's operating results. Adobe believes these non-GAAP financial measures are useful because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. This allows institutional investors, the analyst community and others to better understand and evaluate Adobe’s operating results and future prospects in the same manner as management.
 Adobe's management believes it is useful for itself and investors to review, as applicable, both GAAP information as well as non-GAAP measures, which may exclude items such as stock-based and deferred compensation expenses, amortization of intangibles, investment gains and losses, income tax adjustments and other items that are not considered part of Adobe’s ongoing operations, and the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes. Adobe uses these non-GAAP measures in order to assess the
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 performance of Adobe's business and for planning and forecasting in subsequent periods. Whenever such a non-GAAP measure is used, Adobe provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed above.
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