Summary
Adobe posted record revenue of $6.62 billion in its fiscal 2026 second quarter, up 12.7% from the prior-year quarter. Gross profit rose 12.8% to $5.90 billion, and gross margin was 89.2%, flat versus a year earlier. The bottom line grew more slowly. Operating income rose 6.1% to $2.24 billion, but operating margin slipped 2.1 percentage points to 33.8%. Net income was $1.71 billion, up 1.2%, and diluted EPS came in at $4.25, up 7.9%. Non-GAAP diluted EPS was $5.96. For the six months, revenue was $13.02 billion, up 12.3%.
Subscription revenue drove the quarter. Total customer group subscription revenue reached $6.39 billion, up 14% year over year. Creative and Marketing Professionals subscription revenue was $4.54 billion, up 13%, and Business Professionals and Consumers subscription revenue was $1.85 billion, up 16%. Management pointed to Creative Cloud Pro, Acrobat, and Adobe Experience Platform as the main drivers. Total Adobe ARR ended the quarter at $27.10 billion, up 12.5%, including roughly $480 million from the Semrush acquisition that closed in April 2026. AI-first ARR tripled year over year and topped $500 million. Current RPO was 67% of the total.
Revenue rose in every region. Americas revenue was $3.87 billion, up 11%, and the region stayed the largest at 59% of total revenue. EMEA revenue was $1.81 billion, up 17%, and APAC revenue was $937 million, up 13%. Foreign currency added about $116 million to quarterly revenue as the dollar weakened against EMEA currencies, partly offset by hedging losses.
Two charges shaped the GAAP picture. A non-cash goodwill impairment tied to the Publishing and Advertising reporting unit cut GAAP EPS by $0.17. The company also booked a loss contingency tied to a legal settlement. General and administrative costs climbed 45% in the quarter, and total operating expenses rose 17%. The GAAP effective tax rate was 23.5% for the quarter. Adobe also announced that CFO Dan Durn will depart on June 15, 2026, with Steve Day, a 20-year company finance veteran, stepping in as interim CFO.
Adobe raised its full-year fiscal 2026 revenue and non-GAAP EPS targets, citing AI-driven demand. The company now guides to non-GAAP EPS of $24.35 to $24.45 for the full fiscal year and expects ending ARR growth of 10.2% year over year. For the third quarter, Adobe targets non-GAAP EPS of $6.05 to $6.10. Management said the targets factor in the Semrush acquisition and assume current macroeconomic conditions.
Cash flow was mixed. Operating cash flow was $2.16 billion in the quarter, down 1.2%, while the six-month total of $5.12 billion was up 9.6%. Capital expenditures rose 23.4% to $58 million. Deferred revenue reached $7.25 billion, up 14.5%, and remaining performance obligations were $22.27 billion, up 13.1%. Adobe repurchased about 8.5 million shares in the quarter and spent $4.59 billion on buybacks over six months, leaving $26.78 billion under its repurchase authorities. The Semrush acquisition, net of cash acquired, cost $1.56 billion. The company's $1.5 billion revolving credit facility had no outstanding borrowings. Risks include macroeconomic pressure, foreign currency swings, AI competition, and the finance leadership transition.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $6.62B | $6.40B | +3.4% | $5.87B | +12.7% |
| Gross profit | $5.90B | $5.73B | +2.9% | $5.24B | +12.8% |
| Gross margin | 89.2% | 89.6% | -0.4 pp | 89.1% | +0.1 pp |
| Sales & marketing | $1.88B | $1.71B | +10.3% | $1.63B | +15.9% |
| General & administrative | $546.0M | $463.0M | +17.9% | $377.0M | +44.8% |
| Total operating expenses | $3.67B | $3.32B | +10.5% | $3.13B | +17.2% |
| Operating income (loss) | $2.24B | $2.42B | -7.4% | $2.11B | +6.1% |
| Operating margin | 33.8% | 37.8% | -4.0 pp | 35.9% | -2.1 pp |
| Net income (loss) | $1.71B | $1.89B | -9.4% | $1.69B | +1.2% |
| Net margin | 25.9% | 29.5% | -3.6 pp | 28.8% | -2.9 pp |
| Diluted EPS | $4.25 | $4.60 | -$0.35 | $3.94 | +$0.31 |
Risks
Adobe faces intensifying competition from generative and agentic AI offerings, including prompt-based and multi-modal creation, document productivity, ad distribution, and purpose-built AI agents, some embedded in third-party AI platforms. Competitors may use different data training strategies or proprietary data to develop competing solutions more rapidly, which could reduce sales and pressure pricing.
Adobe is subject to evolving AI rules such as the EU AI Act, whose obligations phase in through 2030, and to U.S. federal and state AI proposals, increasing compliance, governance, and R&D costs. Noncompliance could bring administrative fines, while third-party AI models may raise IP infringement and privacy claims if training data lacks proper licenses or consents.
In the second quarter of fiscal 2026, Adobe recorded a goodwill impairment charge tied to its Publishing & Advertising reporting unit; operating margin declined to 33.8% in FY2026 Q2 from 35.9% in FY2025 Q2, down 2.1 percentage points. The charge is not deductible for income tax purposes and helped push the quarterly effective tax rate up about four percentage points, and G&A rose 45% partly from impairment and loss contingency costs.
Enterprise sales cycles are extended and complex, and Adobe's growing generative and agentic AI offerings can add technical or contractual assurances, proof-of-concept evaluations, and lengthy negotiations. Trade disputes and tariffs have caused additional customer spend scrutiny and delays on larger deals, and Adobe expects a higher percentage of quarterly sales to occur in the final weeks of a quarter.
Competition for talent, particularly in AI and cybersecurity, is intense and heightened by Adobe's hybrid work model; the company may face higher compensation costs to retain or recruit senior management and skilled personnel that are not offset by innovation, productivity, or sales. Research and development expenses rose 11% in the quarter and sales and marketing expenses rose 16%, primarily from compensation and advertising costs.
Adobe is exposed to global inflationary pressures, interest rate actions, potential economic slowdowns or recessions, foreign currency fluctuations, and geopolitical pressures including trade regulations and tariffs. These conditions may cause enterprise customers to scrutinize spending and delay purchases, while third parties such as service providers and distributors may be unable to deliver critical services.
As of May 29, 2026, Adobe had $6.15 billion in senior notes outstanding and a $3 billion commercial paper program with $500 million outstanding; working capital was $(3.01 billion) compared with $(37 million) as of November 28, 2025. Debt covenants, credit rating changes, or refinancing needs could limit financial flexibility or increase borrowing costs.
Adobe acquired Semrush in April 2026, adding approximately $480 million to ARR, and faces risks in integrating operations, technologies, and personnel. The company has experienced difficulties obtaining regulatory approvals, resulting in termination of a previously announced acquisition and additional costs, and future strategic transactions may face similar global scrutiny.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Total Adobe ARR
Summary, forecast, risks and KPIs are extracted from ADOBE INC.'s SEC filings for Q2 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Sep 24, 2026.