Strong Q1 2026 for Adobe (NASDAQ: ADBE) as long-time CEO plans transition
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Adobe Inc. reported record first-quarter FY2026 results while announcing a planned CEO transition. Revenue reached $6.40 billion, up 12% year over year (11% in constant currency), driven by subscription revenue growth of 13% and AI-first annualized recurring revenue more than tripling.
GAAP diluted EPS was $4.60 and non-GAAP diluted EPS was $6.06. GAAP operating income was $2.42 billion, with non-GAAP operating income of $3.04 billion. Operating cash flow hit a record $2.96 billion, and total ARR exiting the quarter was $26.06 billion.
Adobe issued Q2 FY2026 guidance for total revenue of $6.43 billion to $6.48 billion and non-GAAP EPS of $5.80 to $5.85, and reaffirmed its full-year FY2026 targets. Separately, long-time CEO Shantanu Narayen decided to transition from his role after a successor is appointed while remaining Chair, with the Board beginning a search led by director Frank Calderoni.
Positive
- Record Q1 financial performance: Revenue reached $6.40 billion, up 12% year over year, with non-GAAP diluted EPS of $6.06 and record operating cash flow of $2.96 billion, supported by AI-first ARR more than tripling year over year and total ARR of $26.06 billion.
Negative
- CEO succession introduces leadership uncertainty: Long-time CEO Shantanu Narayen plans to transition from his role after a successor is appointed, prompting a leadership change at a pivotal time even as he remains Chair and the Board conducts a search.
Insights
Adobe posts strong Q1 growth and cash flow alongside a managed CEO succession.
Adobe delivered record Q1 FY2026 revenue of
Management highlighted AI as a core growth driver across creativity, productivity and customer experience offerings. Total ARR reached
Looking ahead, the company guided Q2 FY2026 revenue to
Long-serving Adobe CEO plans to step down, with an orderly search underway.
CEO Shantanu Narayen, in the role for eighteen years, has decided to transition from his position after a successor is appointed. He will remain as Chair of the Board. The Board created a special committee chaired by Frank Calderoni to evaluate internal and external candidates.
The company emphasizes continuity: Narayen stays as CEO until the new leader is named and then continues as Chair, mirroring prior leadership transitions he references in his employee message. This structure is designed to support strategic consistency while the Board oversees a comprehensive succession process.
The transition comes amid strong financial performance and a stated focus on the AI era. Investors will learn more about leadership plans and strategic priorities through future communications, including meetings referenced for employees and the ongoing earnings discussions for fiscal
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 9, 2026
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (408 ) 536-6000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On March 12, 2026, Adobe Inc. (“Adobe”) issued a press release announcing financial results for its first quarter fiscal year 2026 ended February 27, 2026. A copy of this press release is furnished and attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this report and the exhibit attached hereto are being furnished and shall not be deemed filed for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly stated by specific reference in such filing.
The attached press release includes non-GAAP adjusted or constant currency revenue growth rates, non-GAAP operating income, non-GAAP net income, non-GAAP diluted net income per share (earnings per share), non-GAAP operating margin and non-GAAP tax rate.
These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. Therefore, management uses both GAAP and non-GAAP financial measures when evaluating business performance and making financial and operating decisions.
In conjunction with the GAAP financial measures, we use non-GAAP financial measures in making operating decisions because we believe the measures provide meaningful supplemental information regarding our operational performance and additional consideration for how we should invest in research and development and fund infrastructure and go-to-market strategies. We use these measures to help us make budgeting decisions, for example, as between product development expenses and research and development, sales and marketing and general and administrative expenses and to facilitate our internal comparisons to our historical operating results. In addition, we believe these non-GAAP financial measures may be useful because they allow for greater transparency with respect to certain 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 our operating results and future prospects in the same manner as management and to compare operating results across accounting periods and to those of our peer companies.
We include adjusted or constant currency revenue growth rates to provide a framework for assessing how our underlying businesses have performed or are expected to perform on a year-over-year basis, excluding the effects of foreign currency rate fluctuations and the impact of our 52/53-week fiscal year, if applicable. Adjusted or constant currency revenue growth rates are calculated in constant currency by converting non-United States Dollar revenue using comparative period exchange rates and determining the change from prior period reported revenue, adjusted for any hedging effects.
In addition, we use non-GAAP financial measures which exclude:
A. Stock-based and deferred compensation expenses. Stock-based compensation expense consists of charges for employee restricted stock units, performance shares and employee stock purchases in accordance with current GAAP including stock-based compensation expense associated with any unvested options and restricted stock units assumed in connection with our acquisitions. We believe that it is useful to investors to understand the impact of the application of accounting standards pertaining to stock-based compensation to our operational performance, liquidity and our ability to invest in research and development and fund acquisitions and capital expenditures. Deferred compensation expense consists of charges associated with movements in our deferred compensation plan liability. Although stock-based compensation and deferred compensation expenses constitute ongoing and recurring expenses, such expenses are excluded from non-GAAP results because they are not expenses that typically require current cash settlement by us and because such expenses are not used by us to assess the core profitability of our business operations. We further believe these measures are useful to investors in that they allow for greater transparency to certain line items in our financial statements. In addition, excluding these items from various non-GAAP measures facilitates comparisons to our competitors’ operating results.
B. Amortization of intangibles. We recognize amortization expense of intangibles in connection with our acquisitions. Intangibles include (i) purchased technology, (ii) trademarks, (iii) customer contracts and relationships and (iv) other intangible assets. In accordance with GAAP, we amortize the fair value of the intangibles based on the pattern in which we expect the economic benefits of the intangibles will be consumed as revenue is generated. Although the intangibles generate revenue for us, we exclude this item because the expense is non-cash in nature and because we believe the non-GAAP financial
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measures excluding this item provide meaningful supplemental information regarding our operational performance, liquidity and our ability to invest in research and development, fund acquisitions and capital expenditures. In addition, excluding this item from various non-GAAP measures facilitates our internal comparisons to our historical operating results and comparisons to our competitors’ operating results.
C. Acquisition-related expenses. We exclude certain acquisition-related expenses, including deal costs and certain professional fees, associated with significant acquisitions. Acquisition-related expenses are inconsistent in amount and are significantly impacted by the timing and nature of each transaction. Therefore, although we have in the past and may in the future continue to incur these types of expenses in connection with acquisitions, such expenses are excluded from our non-GAAP financial measures because these expenses are not used by us to assess the core profitability of our business operations. Consequently, we believe the non-GAAP financial measures excluding these expenses facilitate more meaningful evaluation of the core profitability of our business operations and comparisons to our historical operating results, and allow for greater transparency to certain line items in our financial statements.
D. Investment gains and losses. We recognize investment gains and losses principally from realized gains or losses from the sale and exchange of marketable equity investments, fair value adjustments and impairments to non-marketable equity securities, unrealized holding gains and losses associated with our deferred compensation plan assets and marketable equity securities, gains and losses on the sale of equity securities held indirectly through investment partnerships and gains and losses associated with the recording of equity or non-marketable investments to fair value upon obtaining control through a business combination, as required by GAAP. We do not actively trade publicly held securities nor do we rely on these securities positions for funding our ongoing operations. We exclude investment gains and losses on these equity securities because these items are unrelated to our ongoing business and operating results.
E. Accrued loss contingencies associated with significant litigation events. In connection with ongoing litigation or similar events, we accrue losses in the event such losses are determined to be both probable and estimable under Accounting Standards Codification (ASC) 450-20, Loss Contingencies, although such litigation may be under appeal. As new facts and circumstances arise, we adjust the accrual accordingly. We exclude the impact of such loss contingencies when they relate to significant events that are unrelated to our ongoing business and operating results.
F. Lease-related asset impairments and other charges. We exclude charges associated with significant facilities optimization efforts, including costs related to the impairment, abandonment or early termination of office spaces under operating leases. We exclude the impact of such charges because they are unrelated to our ongoing business and operating results.
G. Income tax adjustments. In determining our non-GAAP provision for income taxes, which can differ significantly from our GAAP provision for income taxes, we apply a fixed long-term projected non-GAAP tax rate that excludes certain significant, non-recurring and period-specific income tax effects, such as changes in judgment or estimates of tax matters related to prior years, changes in tax laws, and changes to our business structure including impacts from business combinations. The application of a fixed long-term non-GAAP tax rate helps us assess the core profitability of our business operations and compare to our historical operating results. In arriving at the long-term non-GAAP tax rate used in fiscal 2026, we evaluated projections and currently available information for fiscal 2026 through 2028. The projected long-term non-GAAP tax rate could be subject to change for several reasons, including significant changes in our geographic earnings mix or in application of tax laws in major jurisdictions in which we operate. As such, we periodically re-evaluate the appropriateness of the long-term non-GAAP tax rate and may adjust for significant changes.
H. Income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes. Excluding the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes assists investors in understanding the tax provision associated with those adjustments and the effective tax rate related to our ongoing operations.
We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our financial results as determined in accordance with GAAP and that these measures should only be used to evaluate our financial results in conjunction with the corresponding GAAP measures; therefore we qualify the use of non-GAAP financial information in a statement when non-GAAP information is presented.
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 9, 2026, Shantanu Narayen notified Adobe of his decision to transition from his role as Adobe’s Chief Executive Officer. Adobe is conducting a search for Mr. Narayen’s successor. Mr. Narayen will remain as Adobe’s Chief Executive Officer until his successor is appointed. Mr. Narayen will remain as Chair of Adobe’s Board of Directors.
Item 7.01 Regulation FD Disclosure.
A copy of the press release and Mr. Narayen’s message to employees, each dated March 12, 2026, announcing Mr. Narayen’s decision to transition from his role as Adobe’s Chief Executive Officer are attached hereto as Exhibits 99.2 and 99.3, respectively, and are incorporated herein by reference.
The information contained in this Item 7.01 of this Current Report on Form 8-K, including the accompanying Exhibits 99.2 and 99.3 hereto, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by Adobe under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings, unless expressly incorporated by specific reference in such filings.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Exhibit Description | |||||||
| 99.1 | Press release issued on March 12, 2026 entitled “Adobe Delivers Record Q1 Results” | |||||||
| 99.2 | Press release issued on March 12, 2026 entitled “Shantanu Narayen Announces Decision to Transition as Adobe’s CEO Once Successor is Named” | |||||||
| 99.3 | Message to Employees issued on March 12, 2026 | |||||||
| 104 | Cover Page Interactive Data File (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ADOBE INC. | ||||||||
| By: | /s/ DANIEL DURN | |||||||
| Daniel Durn | ||||||||
Chief Financial Officer and Executive Vice President, Finance, Technology, Security and Operations | ||||||||
Date: March 12, 2026
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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 Delivers Record Q1 Results
•AI-first ARR more than triples year over year
•Total subscription revenue and RPO increases 13% year over year
•Record Q1 operating cash flows of $2.96 billion
SAN JOSE, Calif. – March 12, 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 first quarter FY2026 ended Feb. 27, 2026.
“Adobe delivered record Q1 results with AI-first ARR more than tripling year over year and subscription revenue growing 13 percent,” said Shantanu Narayen, chair and CEO, Adobe. “Our mission to empower everyone to create represents an even larger opportunity as content powers all experiences in the AI era.”
“Adobe delivered 13 percent subscription revenue growth and record Q1 cash flow of $2.96 billion,” said Dan Durn, executive vice president and CFO, Adobe. “As we accelerate AI-powered capabilities across creativity, productivity and customer experience orchestration, Adobe is well positioned for continued profitable growth.”
First Quarter FY2026 Financial Highlights
•Adobe achieved record revenue of $6.40 billion in its first quarter of FY2026, which represents 12% year-over-year growth, or 11% in constant currency. Diluted earnings per share was $4.60 on a GAAP basis and $6.06 on a non-GAAP basis.
•Total Adobe Annualized Recurring Revenue (“ARR”) exiting the quarter was $26.06 billion.
•GAAP operating income in the first quarter was $2.42 billion and non-GAAP operating income was $3.04 billion. GAAP net income was $1.89 billion and non-GAAP net income was $2.49 billion.
•Record Q1 cash flows from operations were $2.96 billion.
•Exiting the quarter, Remaining Performance Obligations (“RPO”) were $22.22 billion, and Current Remaining Performance Obligations (“cRPO”) were 67%.
•Adobe repurchased approximately 8.1 million shares during the quarter.
First Quarter FY2026 Customer Group Highlights
•Total Customer Group subscription revenue was $6.17 billion, which represents 13% year-over-year growth, or 12% in constant currency.
•Business Professionals & Consumers subscription revenue was $1.78 billion, which represents 16% year-over-year growth, or 15% in constant currency.
•Creative & Marketing Professionals subscription revenue was $4.39 billion, which represents 12% year-over-year growth, or 11% in constant currency.
Financial Targets
These targets factor in expectation for current macroeconomic conditions and do not include contributions from our pending acquisition of Semrush Holdings, Inc., subject to regulatory approvals and other customary closing conditions.
The following table summarizes Adobe’s second quarter FY2026 targets:
| Total revenue | $6.43 billion to $6.48 billion | |||||||
| Business Professionals & Consumers subscription revenue | $1.80 billion to $1.82 billion | |||||||
| Creative & Marketing Professionals subscription revenue | $4.41 billion to $4.44 billion | |||||||
Earnings per share1 | GAAP: $4.35 to $4.40 | Non-GAAP: $5.80 to $5.85 | ||||||
1Targets assume non-GAAP operating margin of ~44.5%, GAAP tax rate of ~22.5%, non-GAAP tax rate of ~18.0% and diluted share count of ~402 million for second quarter FY2026.
In addition, Adobe is reaffirming previously issued FY2026 targets.
Adobe CEO Announces Decision to Transition
Shantanu Narayen, who has served as CEO of Adobe for eighteen years, has decided to transition from his position as CEO after a successor has been appointed. Narayen will remain as Chair of the Board. The Board of Directors has appointed Frank Calderoni, Lead Independent Director of Adobe, as Chair to the special committee to direct the process that will consider both internal and external candidates.
Adobe to Host Conference Call
Adobe will webcast its first 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; 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 Feb. 27, 2026, which Adobe expects to file in March 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.
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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.
###
©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 | |||||||||||
| February 27, 2026 | February 28, 2025 | ||||||||||
| Revenue: | |||||||||||
| Subscription | $ | 6,198 | $ | 5,483 | |||||||
| Product | 90 | 95 | |||||||||
| Services and other | 110 | 136 | |||||||||
| Total revenue | 6,398 | 5,714 | |||||||||
| Cost of revenue: | |||||||||||
| Subscription | 540 | 490 | |||||||||
| Product | 6 | 6 | |||||||||
| Services and other | 118 | 126 | |||||||||
| Total cost of revenue | 664 | 622 | |||||||||
| Gross profit | 5,734 | 5,092 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 1,110 | 1,026 | |||||||||
| Sales and marketing | 1,708 | 1,495 | |||||||||
| General and administrative | 463 | 367 | |||||||||
| Amortization of intangibles | 35 | 41 | |||||||||
| Total operating expenses | 3,316 | 2,929 | |||||||||
| Operating income | 2,418 | 2,163 | |||||||||
| Non-operating income (expense): | |||||||||||
| Interest expense | (63) | (62) | |||||||||
| Investment gains (losses), net | 5 | 6 | |||||||||
| Other income (expense), net | 62 | 75 | |||||||||
| Total non-operating income (expense), net | 4 | 19 | |||||||||
| Income before income taxes | 2,422 | 2,182 | |||||||||
| Provision for income taxes | 533 | 371 | |||||||||
| Net income | $ | 1,889 | $ | 1,811 | |||||||
| Basic net income per share | $ | 4.60 | $ | 4.15 | |||||||
| Shares used to compute basic net income per share | 410 | 436 | |||||||||
| Diluted net income per share | $ | 4.60 | $ | 4.14 | |||||||
| Shares used to compute diluted net income per share | 411 | 438 | |||||||||
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Condensed Consolidated Balance Sheets
(In millions; unaudited)
| February 27, 2026 | November 28, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 6,332 | $ | 5,431 | |||||||
| Short-term investments | 558 | 1,164 | |||||||||
Trade receivables, net of allowances for doubtful accounts of $12 and $13, respectively | 2,092 | 2,344 | |||||||||
| Prepaid expenses and other current assets | 1,404 | 1,224 | |||||||||
| Total current assets | 10,386 | 10,163 | |||||||||
| Property and equipment, net | 1,852 | 1,873 | |||||||||
| Operating lease right-of-use assets, net | 305 | 312 | |||||||||
| Goodwill | 12,869 | 12,857 | |||||||||
| Other intangibles, net | 454 | 495 | |||||||||
| Deferred income taxes | 2,138 | 2,186 | |||||||||
| Other assets | 1,700 | 1,610 | |||||||||
| Total assets | $ | 29,704 | $ | 29,496 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Trade payables | $ | 419 | $ | 417 | |||||||
Accrued expenses and other current liabilities | 2,257 | 2,648 | |||||||||
| Debt | 849 | — | |||||||||
| Deferred revenue | 7,275 | 6,905 | |||||||||
| Income taxes payable | 506 | 153 | |||||||||
| Operating lease liabilities | 84 | 77 | |||||||||
| Total current liabilities | 11,390 | 10,200 | |||||||||
| Long-term liabilities: | |||||||||||
| Debt | 5,379 | 6,210 | |||||||||
| Deferred revenue | 95 | 125 | |||||||||
| Income taxes payable | 487 | 469 | |||||||||
| Operating lease liabilities | 344 | 361 | |||||||||
| Other liabilities | 576 | 508 | |||||||||
| Total liabilities | 18,271 | 17,873 | |||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock | — | — | |||||||||
| Common stock | — | — | |||||||||
| Additional paid-in capital | 15,870 | 15,361 | |||||||||
| Retained earnings | 47,170 | 45,354 | |||||||||
| Accumulated other comprehensive income (loss) | (295) | (245) | |||||||||
| Treasury stock, at cost | (51,312) | (48,847) | |||||||||
| Total stockholders’ equity | 11,433 | 11,623 | |||||||||
| Total liabilities and stockholders’ equity | $ | 29,704 | $ | 29,496 | |||||||
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Condensed Consolidated Statements of Cash Flows
(In millions; unaudited)
| Three Months Ended | |||||||||||
| February 27, 2026 | February 28, 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 1,889 | $ | 1,811 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and accretion | 174 | 217 | |||||||||
| Stock-based compensation | 509 | 475 | |||||||||
| Other non-cash adjustments | 110 | (152) | |||||||||
| Changes in deferred revenue | 340 | 231 | |||||||||
| Changes in other operating assets and liabilities | (64) | (100) | |||||||||
| Net cash provided by operating activities | 2,958 | 2,482 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases, sales and maturities of short-term investments, net | 614 | (401) | |||||||||
| Purchases of property and equipment | (37) | (26) | |||||||||
Purchases and sales of long-term investments, intangibles and other assets, net | (103) | (57) | |||||||||
| Net cash provided by (used for) investing activities | 474 | (484) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repurchases of common stock | (2,478) | (3,250) | |||||||||
Taxes paid related to net share settlement of equity awards, net of proceeds from treasury stock re-issuances | (39) | (63) | |||||||||
| Proceeds from issuance of debt | — | 1,997 | |||||||||
| Repayment of debt | — | (1,500) | |||||||||
| Other financing activities, net | (27) | (25) | |||||||||
| Net cash used for financing activities | (2,544) | (2,841) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 13 | (12) | |||||||||
| Net change in cash and cash equivalents | 901 | (855) | |||||||||
| Cash and cash equivalents at beginning of period | 5,431 | 7,613 | |||||||||
| Cash and cash equivalents at end of period | $ | 6,332 | $ | 6,758 | |||||||
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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 | ||||||||||||||||
| February 27, 2026 | February 28, 2025 | November 28, 2025 | |||||||||||||||
| Operating income: | |||||||||||||||||
| GAAP operating income | $ | 2,418 | $ | 2,163 | $ | 2,261 | |||||||||||
| Stock-based and deferred compensation expense | 514 | 469 | 501 | ||||||||||||||
| Amortization of intangibles | 39 | 83 | 61 | ||||||||||||||
Acquisition-related expenses | 2 | — | 1 | ||||||||||||||
Loss contingency (*) | 62 | — | — | ||||||||||||||
| Non-GAAP operating income | $ | 3,035 | $ | 2,715 | $ | 2,824 | |||||||||||
| Net income: | |||||||||||||||||
| GAAP net income | $ | 1,889 | $ | 1,811 | $ | 1,856 | |||||||||||
| Stock-based and deferred compensation expense | 514 | 469 | 501 | ||||||||||||||
| Amortization of intangibles | 39 | 83 | 61 | ||||||||||||||
Acquisition-related expenses | 2 | — | 1 | ||||||||||||||
Loss contingency (*) | 62 | — | — | ||||||||||||||
| Investment (gains) losses, net | (5) | (6) | (12) | ||||||||||||||
| Income tax adjustments | (13) | (133) | (113) | ||||||||||||||
| Non-GAAP net income | $ | 2,488 | $ | 2,224 | $ | 2,294 | |||||||||||
| Diluted net income per share: | |||||||||||||||||
| GAAP diluted net income per share | $ | 4.60 | $ | 4.14 | $ | 4.45 | |||||||||||
| Stock-based and deferred compensation expense | 1.25 | 1.07 | 1.20 | ||||||||||||||
| Amortization of intangibles | 0.10 | 0.19 | 0.15 | ||||||||||||||
Loss contingency (*) | 0.15 | — | — | ||||||||||||||
| Investment (gains) losses, net | (0.01) | (0.01) | (0.03) | ||||||||||||||
| Income tax adjustments | (0.03) | (0.31) | (0.27) | ||||||||||||||
| Non-GAAP diluted net income per share | $ | 6.06 | $ | 5.08 | $ | 5.50 | |||||||||||
Shares used to compute diluted net income per share | 411 | 438 | 417 | ||||||||||||||
The following table shows Adobe’s first quarter fiscal year 2026 GAAP tax rate reconciled to the non-GAAP tax rate included in this release.
| First Quarter Fiscal 2026 | |||||||||||
| Effective income tax rate: | |||||||||||
| GAAP effective income tax rate | 22.0 | % | |||||||||
| Income tax adjustments | (0.7) | ||||||||||
| Stock-based and deferred compensation expense | (3.0) | ||||||||||
Loss contingency (*) | (0.3) | ||||||||||
Non-GAAP effective income tax rate (**) | 18.0 | % | |||||||||
(*) Associated with the settlement of an outstanding litigation matter which reflects ongoing negotiations
(**) Represents Adobe’s fixed long-term non-GAAP tax rate based on projections and currently available information for fiscal 2026 through fiscal 2028
7
Reconciliation of GAAP to Non-GAAP Financial Targets and Assumptions
The following tables show Adobe's second quarter fiscal year 2026 financial targets and assumptions reconciled to non-GAAP financial targets and assumptions included in this release.
(Shares in millions) | Second Quarter Fiscal 2026 | ||||||||||||||||||||||
| Low | High | ||||||||||||||||||||||
| Diluted net income per share: | |||||||||||||||||||||||
| GAAP diluted net income per share | $ | 4.35 | $ | 4.40 | |||||||||||||||||||
Stock-based and deferred compensation expense | 1.33 | 1.33 | |||||||||||||||||||||
| Amortization of intangibles | 0.10 | 0.10 | |||||||||||||||||||||
| Acquisition-related expenses | 0.03 | 0.03 | |||||||||||||||||||||
| Income tax adjustments | (0.01) | (0.01) | |||||||||||||||||||||
| Non-GAAP diluted net income per share | $ | 5.80 | $ | 5.85 | |||||||||||||||||||
| Shares used to compute diluted net income per share | 402 | 402 | |||||||||||||||||||||
Second Quarter Fiscal 2026 | |||||||||||
Operating margin: | |||||||||||
GAAP operating margin | 35.0 | % | |||||||||
Stock-based and deferred compensation expense | 8.7 | ||||||||||
| Amortization of intangibles | 0.6 | ||||||||||
| Acquisition-related expenses | 0.2 | ||||||||||
Non-GAAP operating margin | 44.5 | % | |||||||||
Second Quarter Fiscal 2026 | |||||||||||
| Effective income tax rate: | |||||||||||
| GAAP effective income tax rate | 22.5 | % | |||||||||
Stock-based and deferred compensation expense | (3.0) | ||||||||||
| Income tax adjustments | (1.5) | ||||||||||
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 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.
8
Exhibit 99.2
Public Relations Contact
Ashley Levine
Adobe
adobepr@adobe.com
FOR IMMEDIATE RELEASE
Shantanu Narayen Announces Decision to Transition as Adobe’s CEO Once Successor is Named
Board Initiates Search for Successor
SAN JOSE, Calif. – March 12, 2026 – Adobe (Nasdaq: ADBE) – the global technology leader that unleashes creativity, productivity and customer experiences through innovative tools and platforms – today announced that Shantanu Narayen, who has served as CEO of Adobe for eighteen years, has decided to transition from his position as CEO after a successor has been appointed. Narayen will remain as Chair of the Board.
The Board of Directors has appointed Frank Calderoni, Lead Independent Director of Adobe, as Chair to the special committee to direct the process that will consider both internal and external candidates.
“On behalf of the Board, I want to recognize Shantanu’s contributions as CEO and architect of Adobe’s transformation over the past 18 years, and for positioning Adobe for success in the AI-driven era," said Frank Calderoni, Lead Independent Director of Adobe. “As we take the next step in succession planning, we are focused on selecting the right leader for this next exciting chapter of the company’s growth and are grateful for Shantanu’s continued leadership as CEO to ensure a smooth transition.”
Narayen’s email to employees regarding his announcement can be found here.
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.
©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.
Exhibit 99.3
Leadership Update
I want to share with all of you that I have informed the Board of my decision to transition from my role as CEO of Adobe after over 18 years in the job (and the earnings call that I am about to conduct will be my 100th at the greatest company on the planet). Over the coming months, I will be working with Frank Calderoni, our lead Director, and the Board of Directors to identify my successor and to ensure a smooth transition. I will stay on as Chair of the Board to support the next CEO just as John and Chuck did when I took on this role.
This is not a goodbye by any means but a time for reflection. What attracted me to Adobe 28 years ago was our leadership in creating new market categories, world-class products, a relentless desire to innovate in every functional area of the company and the people I met during the interview process. We have continued to create new markets, deliver world-class products, drive innovation in everything we do and attract and retain the best and brightest employees. Over this time, we grew from ~3K employees to >30K employees, delivered technology that touched billions of people as customers of our products or the digital experiences that our customers create, leading to our revenue growing from <$1B to >$25B. I am so incredibly proud of what we have accomplished together.
Our mission, Empowering Everyone to Create, represents an even larger opportunity in the AI era. By delivering an innovative roadmap aligned to our audience strategy, we are positioning Adobe to lead this next chapter.
The next era of creativity is being written right now — shaped by AI, by new workflows and by entirely new forms of expression. Adobe has never waited for the future to arrive. We’ve anticipated it. We’ve built it. And we’ve led it. What gives me the greatest confidence isn’t just our technology — it’s our people. Your ingenuity, resilience and commitment to customers are what will define this moment.
I love Adobe and the privilege of leading it has been the greatest honor of my career. I will ensure that I set up Adobe for its next decade of greatness with the right leader and executive team, in partnership with the Board, while continuing to deliver on our FY26 Must Wins.
The opportunity in front of us is extraordinary. Together, we are uniquely positioned to lead it — and I remain deeply committed to doing so as we look ahead and prepare to name Adobe’s next CEO. I am more confident than ever that Adobe’s best days are still to come.
I look forward to the Employee Meeting next week where we will discuss our quarterly accomplishments and I will be happy to answer any questions.
Shantanu
FAQ
How did Adobe (ADBE) perform financially in Q1 FY2026?
Adobe reported record Q1 FY2026 revenue of $6.40 billion, up 12% year over year, with subscription revenue growing 13%. GAAP diluted EPS was $4.60, while non-GAAP diluted EPS reached $6.06, supported by strong operating income and cash flow.
What were Adobe’s key profitability and cash flow metrics for Q1 FY2026?
Adobe generated GAAP operating income of $2.42 billion and non-GAAP operating income of $3.04 billion in Q1 FY2026. Net income was $1.89 billion, and operating cash flows reached a record $2.96 billion, highlighting strong underlying profitability and cash generation.
What guidance did Adobe (ADBE) provide for Q2 FY2026?
For Q2 FY2026, Adobe targets total revenue between $6.43 billion and $6.48 billion. It expects GAAP diluted EPS of $4.35 to $4.40 and non-GAAP diluted EPS of $5.80 to $5.85, assuming a non-GAAP operating margin of about 44.5% and a non-GAAP tax rate of 18.0%.
What leadership changes did Adobe announce regarding CEO Shantanu Narayen?
Adobe announced that Shantanu Narayen, CEO for eighteen years, has decided to transition from his role after a successor is appointed. He will remain as Chair of the Board, while a special committee led by director Frank Calderoni conducts a search for internal and external candidates.
How is AI contributing to Adobe’s growth in Q1 FY2026?
Adobe highlighted that its AI-first annualized recurring revenue more than tripled year over year. Management emphasized accelerating AI-powered capabilities across creativity, productivity and customer experience orchestration as central to its strategy and a key driver of subscription revenue growth and long-term opportunity.
What were Adobe’s Q1 FY2026 ARR and remaining performance obligations?
Exiting Q1 FY2026, Adobe’s total annualized recurring revenue (ARR) was $26.06 billion. Remaining performance obligations (RPO) stood at $22.22 billion, with current RPO at 67%, reflecting a large base of contracted subscription revenue expected to be recognized over time.
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