0000796343-26-000112
SEC filingAdobe's Q2 FY2026 revenue grew 13% YoY to $6.62B, driven by 14% subscription growth and 12.5% ARR expansion.
Adobe's second quarter of fiscal 2026 demonstrated robust top-line growth, with total revenue of $6.62 billion, up 13% year-over-year. Subscription revenue, which constitutes 97% of total revenue, grew 14% to $6.42 billion, driven by strong demand across both customer groups. Cost of revenue increased 12% to $715 million, primarily due to higher hosting services and data center costs (up 16% in the quarter) and compensation costs. Operating expenses rose 17% to $3.67 billion, with notable increases in sales and marketing (16%) and general and administrative (45%), the latter heavily impacted by a goodwill impairment charge related to the Publishing & Advertising reporting unit and a legal settlement loss contingency. Net income remained relatively flat at $1.71 billion, as higher revenue and margins were offset by increased operating expenses and a higher effective tax rate (24% vs. 20% in the prior year).
While Adobe operates as a single reportable segment, the company discloses subscription revenue by customer group. Creative & Marketing Professionals generated $4.54 billion in subscription revenue, up 13% YoY, fueled by strength in Creative Cloud Pro, flagship apps, Adobe Experience Platform, and Adobe Experience Manager. Business Professionals & Consumers subscription revenue grew 16% to $1.85 billion, led by Acrobat. Combined, customer group subscription revenue reached $6.39 billion, a 14% increase year-over-year, aligning with the overall subscription trend.
Management highlighted continued investment in AI-powered solutions, including Adobe Firefly, GenStudio, and Acrobat AI Assistant, as key growth drivers. The acquisition of Semrush in April 2026 is expected to enhance Adobe Experience Manager with SEO capabilities. Total Adobe ARR grew 12.5% to $27.10 billion, including $480M from Semrush, and remaining performance obligations rose 13% to $22.27 billion, indicating strong future revenue visibility. The company maintains a focus on subscription-based recurring revenue and expanding its customer base through data-driven go-to-market strategies.
As of May 29, 2026, Adobe held $4.9B in cash and cash equivalents plus $0.7B in short-term investments, totaling $5.6B in liquid assets. Total debt stood at $6.6B, comprising $6.15B in senior notes (at par) and $500M of commercial paper (carrying $494M), with $1.8B classified as current. Shareholders' equity was $11.5B, down slightly from $11.6B at year-end due to share repurchases offset by retained earnings. The current portion of debt includes $1.35B of senior notes maturing within one year (2.15% 2027 and 4.85% 2027) and $494M commercial paper. The company maintains $1.5B undrawn revolver.
No material purchase commitments were disclosed in the Notes. Remaining performance obligations (RPO) totaled $22.27B, of which 67% is expected to be recognized within 12 months. Deferred revenue was $7.25B, including $99M refundable deposits. Non-cancellable committed funds from enterprise customers represented ~4% of deferred revenue. Goodwill increased to $14.04B, driven by the Semrush acquisition ($1.25B goodwill), partially offset by a $70M impairment in the Publishing & Advertising unit.
Adobe continues aggressive share repurchases: $4.59B spent on 16.6M shares in the six months ended May 29, 2026. In April 2026, the Board authorized an additional $25B buyback, bringing total authorized to $50B (March 2024 + April 2026), with $26.78B remaining. No dividends were paid or mentioned. Debt activity included $493M commercial paper issuance; no debt repayments. Capital expenditures were $95M (0.7% of revenue). The company also spent $1.56B net on acquisitions (Semrush).
Adobe operates as a single reportable segment following the Q1 FY2026 reorganization. Revenue for the six months totaled $13.02B, up 12.3% YoY. Geographic breakdown: Americas $7.63B (58.6%), EMEA $3.55B (27.3%), APAC $1.84B (14.1%). Subscription revenue by customer groups: Creative & Marketing Professionals $8.93B, Business Professionals & Consumers $3.64B, other subscription $53M. The single-segment structure reflects unified selling and product integration, with the CODM reviewing consolidated net income for performance assessment.
Net income was $3.6B, while operating cash flow reached $5.1B, reflecting strong cash conversion. Key non-cash additions: stock-based compensation ($1.0B) and depreciation/amortization ($0.4B). Working capital was a net drain of $0.2B, primarily from an increase in prepaid expenses and decrease in accrued liabilities.
Capex of $0.1B was minimal (1.9% of CFO), underscoring Adobe's asset-light model. Free cash flow (CFO minus capex) would be $5.0B, but not explicitly stated.
Capital returns were heavy: $4.6B in buybacks and $0 in dividends. This consumed 90% of CFO. Acquisitions used $1.6B in investing cash.
Anomalies included a $0.1B goodwill impairment (non-cash) and $1.1B cash taxes paid. Working capital swings were moderate; no major one-time items.
Overall, cash generation remains robust, with ample coverage for capital returns despite acquisition spending.