Skip to content
CXProWealth

Adobe

ADBE · Nasdaq

Cost of revenue grew faster than revenue, led by AI hosting

Cost of revenue rose 18.85% against revenue growth of 12.89%; the filing names hosting and data center costs, including AI inferencing, as the driver.

Q3 FY2026, the quarter to Aug 28, 2026 · 10-Q filed Sep 22, 2026

Q3 FY2026 · revenue
$6.8B+12.9% on the year
Operating margin
34.8%
Net income
$1.8B
Free cash flow, quarter
$2.4B

Largest source of revenue: Subscription, 97.4% of the total.

Follow the money

Where Adobe's money goes

Tap the picture to explore the flow: levels, scale, every line and its figures.
Key insights · Q3 FY2026
  1. 01

    Cost of revenue grew faster than revenue, led by AI hosting

    Cost of revenue rose 18.85% against revenue growth of 12.89%; the filing names hosting and data center costs, including AI inferencing, as the driver.

    Why it matters

    Total cost of revenue was $763M against $642M a year earlier, and rose to 11.29% of revenue, up 0.57 points. Cost of subscription revenue was $633M against $510M, equal to 9.6% of subscription revenue of $6.582B. The filing attributes the increase mainly to hosting services and data center costs, a category it says includes AI inferencing costs.1

    Research and development grew 18.38% to $1.288B, 19.05% of revenue and up 0.88 points as a share. The filing ties it to compensation and to hosting costs, including AI training costs. Gross margin was 88.71%, down 0.57 points.1

    AnalysisAnalysis: gross margin remains very high for any business, so the shift is in direction rather than level. Classic desktop software cost little to serve once written; generative features carry a cost each time they run, while most of the price is still a flat subscription. Subscription cost set against subscription revenue, quarter by quarter, shows whether pricing and usage charges keep pace.

  2. 02

    Net income grew 3.1% as the tax rate rose

    Operating income rose 8.33%, but a tax rate of 22.5% against 19.0% and smaller non-operating income cut net income growth to 3.1%.

    Why it matters

    Operating income was $2.354B against $2.173B a year earlier, up 8.33%. The tax provision was $530M against $415M on pre-tax income of $2.357B against $2.187B, an effective rate of 22.5% against 19.0%. The filing attributes the rise to a smaller net tax benefit from non-U.S. operations and higher net tax expense related to stock-based compensation.1

    Non-operating income fell to $3M from $14M, which the filing puts down to lower average overall cash balances. Net income was $1.827B against $1.772B, and net margin fell 2.57 points to 27.03% of revenue.1

    AnalysisAnalysis: the slowdown below operating income comes from tax and cash balances rather than from the business itself. Both causes the filing names connect to choices elsewhere on the page: stock-based compensation, and cash used for repurchases and an acquisition. That makes operating income the better guide to operating momentum this quarter.

  3. 03

    Fewer shares turned slow profit growth into larger per-share gains

    Diluted shares fell to 395.5M from 424.1M, so earnings per share rose to $4.62 from $4.18 while net income grew 3.1%.

    Why it matters

    Diluted shares used to compute earnings per share were 395.5M against 424.1M a year earlier, 93.3% of the prior count. Diluted earnings per share was $4.62 against $4.18, while net income was $1.827B against $1.772B. The filing says financing cash went mainly to payments for common stock repurchases.1

    AnalysisAnalysis: per-share growth this quarter owes more to a shrinking share count than to growth in profit. The filing also describes lower cash balances and notes falling due within a year that it intends to refinance, so the pace depends on free cash flow continuing to cover repurchases and acquisitions without rising net borrowing.

  4. 04

    Contracted backlog is growing slower than recurring revenue

    Remaining performance obligations rose 8% while ARR rose 11.2%, so backlog now equals 80.6% of ARR against 82.6% a year earlier.

    Why it matters

    Total Adobe ARR, management's measure of annualized recurring revenue, was $27.50B against $24.74B a year earlier, up 11.2%, with growth credited to Creative Cloud flagship apps, Acrobat, Adobe Experience Manager and agentic web apps, including the contribution from Semrush. Remaining performance obligations, contracted revenue not yet recognized, were $22.16B against $20.44B, up 8%.1

    Reported revenue grew 12.89%, faster than ARR. The filing says a weaker U.S. dollar against EMEA currencies added to reported revenue, and Semrush, acquired during the fiscal year, is included from its acquisition date.1

    AnalysisAnalysis: three measures of the same customer base move at different speeds: revenue fastest, ARR next, backlog slowest. A slower backlog can reflect shorter contract terms, more monthly self-serve plans or slower enterprise commitments; the filing does not say which. Underlying demand is clearest once the acquisition sits in both years' figures and currency effects are set aside.

Sources

  1. 1.Adobe 10-Q for the period to 2026-08-28 (the filing), Sep 22, 2026, read Nov 1, 2026

Have a question about Adobe? Ask CXProWealth on ChatGPT.Free membership required.

Business performance

Growth, profit and margin

Revenue went from $3.2B in FY2007 to $23.8B in FY2025, the operating margin from 27.2% to 36.6%, over 18 years.

  • Revenue$23.8B
  • Operating income$8.7B
  • Operating margin36.6%
Period
Q3 FY2026
Revenue
$6.8B
Operating income
$2.4B
Operating margin
34.8%
Net income
$1.8B
Free cash flow
$2.4B
Business performance

Does the profit turn into cash?

Q3 FY2026: free cash flow of $2.4B against net income of $1.8B in the quarter.

  • Operating cash flow$10.0B
  • Capital expenditure$179.0M
  • Free cash flow$9.9B
  • Net income$7.1B

Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.

Financial data and sources

How the revenue mix has shifted

Each breakdown the filing reports, as shares of revenue, for every period it restates.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME. The filing restates this breakdown for 1 period.

Click a member to isolate it across the years shown.

The figures

Margins, cash and growth for the period, each with what it was computed from.

Gross margin
88.7%
Source10-Q, Derived from Gross profit and Total revenue in the 10-Q filed 2026-09-22
Operating margin
34.8%
Source10-Q, Derived from Operating income and Total revenue in the 10-Q filed 2026-09-22
Net margin
27.0%
Source10-Q, Derived from Net income and Total revenue in the 10-Q filed 2026-09-22
Free cash flow, quarter
$2.4B
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-09-22
Free cash flow margin, quarter
36.1%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-09-22
Cash conversion, quarter
1.38x
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-09-22
Capital spending, quarter
1.3%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-09-22
Revenue growth
+12.9%
From the record's own history, against the prior year.

Where revenue comes from

Every breakdown the filing reports for the period, with each item's share.

Revenue streams

Subscription$6.6B97.4%
Services and other$111.0M1.6%
Product$67.0M1.0%

Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-09-22

Geographic markets

Americas$4.0B58.8%
Emea$1.9B27.4%
Apac$934.0M13.8%

Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-09-22

MajorCustomers

Creative & Marketing Professionals customer group$4.7B68.8%
Business Professionals & Consumers customer group$1.9B28.2%
Other subscription revenue$26.0M0.4%

These items do not sum to total revenue; the filing states them beside it. Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-09-22

What it costs

The cost lines beneath operating income, each as a share of revenue, then the operating result.

Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.

Cost lineQ3 FY2026Of revenueSource
Total cost of revenue$763.0M11.3%Source10-Q, us-gaap:CostOfRevenue, as reported in the 10-Q filed 2026-09-22
Operating income$2.4B34.8%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-09-22

Operating figures the company states

From the text of the filing rather than its statements, each with the sentence that states it.

Remaining performance obligations
$22.2B
As of Aug 28, 2026
View source
Remaining performance obligations of $22.16 billion as of August 28, 2026 increased by 8% from $20.44 billion as of August 29, 2025.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, 10-Q filed Sep 22, 2026
Remaining performance obligations year-over-year growth
8.0%
As of Aug 28, 2026
View source
Remaining performance obligations of $22.16 billion as of August 28, 2026 increased by 8% from $20.44 billion as of August 29, 2025.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, 10-Q filed Sep 22, 2026
Total Adobe ARR
$27.5B
As of Aug 28, 2026
View source
Total Adobe ARR grew to $27.50 billion at the end of the third quarter of fiscal 2026, representing 11.2% year-over-year growth, driven by strength in Creative Cloud flagship apps, Acrobat, and Adobe Experience Manager and agentic web apps, including the contribution from Semrush.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, 10-Q filed Sep 22, 2026
Total Adobe ARR year-over-year growth
11.2%
As of Aug 28, 2026
View source
Total Adobe ARR grew to $27.50 billion at the end of the third quarter of fiscal 2026, representing 11.2% year-over-year growth, driven by strength in Creative Cloud flagship apps, Acrobat, and Adobe Experience Manager and agentic web apps, including the contribution from Semrush.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, 10-Q filed Sep 22, 2026

The statements, as filed

The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.

Income statement26 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeOf revenueSource
Revenue:
Total revenue$6.76B$5.99B+13%100%Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-09-22
Subscription$6.58B$5.79B+14%97.4%Source10-Q, us-gaap:Revenues [adbe:SubscriptionRevenueMember], as reported in the 10-Q filed 2026-09-22
Product$67.0M$68.0M-1.5%1.0%Source10-Q, us-gaap:Revenues [us-gaap:ProductMember], as reported in the 10-Q filed 2026-09-22
Services and other$111.0M$129.0M-14%1.6%Source10-Q, us-gaap:Revenues [us-gaap:ServiceOtherMember], as reported in the 10-Q filed 2026-09-22
Cost of revenue:
Total cost of revenue$763.0M$642.0M+19%11.3%Source10-Q, us-gaap:CostOfRevenue, as reported in the 10-Q filed 2026-09-22
Subscription$633.0M$510.0M+24%9.4%Source10-Q, us-gaap:CostOfRevenue [adbe:SubscriptionRevenueMember], as reported in the 10-Q filed 2026-09-22
Product$5.0M$5.0M0.0%0.1%Source10-Q, us-gaap:CostOfRevenue [us-gaap:ProductMember], as reported in the 10-Q filed 2026-09-22
Services and other$125.0M$127.0M-1.6%1.8%Source10-Q, us-gaap:CostOfRevenue [us-gaap:ServiceOtherMember], as reported in the 10-Q filed 2026-09-22
Income Statement
Gross profit$6.00B$5.35B+12%88.7%Source10-Q, us-gaap:GrossProfit, as reported in the 10-Q filed 2026-09-22
Operating expenses:
Research and development$1.29B$1.09B+18%19.1%Source10-Q, us-gaap:ResearchAndDevelopmentExpenseSoftwareExcludingAcquiredInProcessCost, as reported in the 10-Q filed 2026-09-22
Sales and marketing$1.83B$1.64B+11%27.0%Source10-Q, us-gaap:SellingAndMarketingExpense, as reported in the 10-Q filed 2026-09-22
General and administrative$488.0M$408.0M+20%7.2%Source10-Q, us-gaap:GeneralAndAdministrativeExpense, as reported in the 10-Q filed 2026-09-22
Amortization of intangibles$40.0M$38.0M+5.3%0.6%Source10-Q, adbe:OperatingExpensesAmortizationOfPurchasedIntangibles, as reported in the 10-Q filed 2026-09-22
Total operating expenses$3.64B$3.17B+15%53.9%Source10-Q, us-gaap:OperatingExpenses, as reported in the 10-Q filed 2026-09-22
Income Statement
Operating income$2.35B$2.17B+8.3%34.8%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-09-22
Non-operating income (expense):
Interest expense (shown as a deduction)($66.0M)$67.0M-1.5%1.0%Source10-Q, us-gaap:InterestExpenseNonoperating, as reported in the 10-Q filed 2026-09-22
Investment gains (losses), net$21.0M$23.0M-8.7%0.3%Source10-Q, us-gaap:GainLossOnInvestments, as reported in the 10-Q filed 2026-09-22
Other income (expense), net$48.0M$58.0M-17%0.7%Source10-Q, us-gaap:OtherNonoperatingIncomeExpense, as reported in the 10-Q filed 2026-09-22
Total non-operating income (expense), net$3.0M$14.0M-79%0.0%Source10-Q, us-gaap:NonoperatingIncomeExpense, as reported in the 10-Q filed 2026-09-22
Income Statement
Income before income taxes$2.36B$2.19B+7.8%34.9%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest, as reported in the 10-Q filed 2026-09-22
Provision for income taxes$530.0M$415.0M+28%7.8%Source10-Q, us-gaap:IncomeTaxExpenseBenefit, as reported in the 10-Q filed 2026-09-22
Net income$1.83B$1.77B+3.1%27.0%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-09-22
Basic net income per share (in usd per share)$5$4+11%0.0%Source10-Q, us-gaap:EarningsPerShareBasic, as reported in the 10-Q filed 2026-09-22
Shares used to compute basic net income per share (in shares)395,000,000423,500,000-6.7%Source10-Q, us-gaap:WeightedAverageNumberOfSharesOutstandingBasic, as reported in the 10-Q filed 2026-09-22
Diluted net income per share (in usd per share)$5$4+11%0.0%Source10-Q, us-gaap:EarningsPerShareDiluted, as reported in the 10-Q filed 2026-09-22
Shares used to compute diluted net income per share (in shares)395,500,000424,100,000-6.7%Source10-Q, us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding, as reported in the 10-Q filed 2026-09-22
Cash flow statement2 lines, as presented in the 10-Q

Year to date, as a quarterly filing reports it.

LineQ3 FY2026A year earlierChangeSource
Cash flows from operating activities:
Net income$1.83B$1.77B+3.1%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-09-22
Statement of Cash Flows
Cash and cash equivalents at end of period$4.36B$4.98B-13%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-09-22
Balance sheet33 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeSource
Current assets:
Cash and cash equivalents$4.36BSource10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-09-22
Short-term investments$1.28BSource10-Q, us-gaap:ShortTermInvestments, as reported in the 10-Q filed 2026-09-22
Trade receivables, net of allowances for doubtful accounts of $12 and $13, respectively$2.08BSource10-Q, us-gaap:AccountsReceivableNetCurrent, as reported in the 10-Q filed 2026-09-22
Prepaid expenses and other current assets$1.44BSource10-Q, us-gaap:PrepaidExpenseAndOtherAssetsCurrent, as reported in the 10-Q filed 2026-09-22
Total current assets$9.16BSource10-Q, us-gaap:AssetsCurrent, as reported in the 10-Q filed 2026-09-22
Assets
Property and equipment, net$1.87BSource10-Q, us-gaap:PropertyPlantAndEquipmentNet, as reported in the 10-Q filed 2026-09-22
Operating lease right-of-use assets, net$286.0MSource10-Q, us-gaap:OperatingLeaseRightOfUseAsset, as reported in the 10-Q filed 2026-09-22
Goodwill$14.04BSource10-Q, us-gaap:Goodwill, as reported in the 10-Q filed 2026-09-22
Other intangibles, net$956.0MSource10-Q, us-gaap:OtherIntangibleAssetsNet, as reported in the 10-Q filed 2026-09-22
Deferred income taxes$1.93BSource10-Q, us-gaap:DeferredIncomeTaxAssetsNet, as reported in the 10-Q filed 2026-09-22
Other assets$1.75BSource10-Q, us-gaap:OtherAssetsNoncurrent, as reported in the 10-Q filed 2026-09-22
Total assets$29.98BSource10-Q, us-gaap:Assets, as reported in the 10-Q filed 2026-09-22
Current liabilities:
Trade payables$529.0MSource10-Q, us-gaap:AccountsPayableCurrent, as reported in the 10-Q filed 2026-09-22
Accrued expenses and other current liabilities$2.52BSource10-Q, us-gaap:AccruedLiabilitiesCurrent, as reported in the 10-Q filed 2026-09-22
Debt$1.60BSource10-Q, us-gaap:DebtCurrent, as reported in the 10-Q filed 2026-09-22
Deferred revenue$7.09BSource10-Q, us-gaap:ContractWithCustomerLiabilityCurrent, as reported in the 10-Q filed 2026-09-22
Income taxes payable$63.0MSource10-Q, us-gaap:AccruedIncomeTaxesCurrent, as reported in the 10-Q filed 2026-09-22
Operating lease liabilities$89.0MSource10-Q, us-gaap:OperatingLeaseLiabilityCurrent, as reported in the 10-Q filed 2026-09-22
Total current liabilities$11.89BSource10-Q, us-gaap:LiabilitiesCurrent, as reported in the 10-Q filed 2026-09-22
Long-term liabilities:
Debt$4.77BSource10-Q, us-gaap:LongTermDebt, as reported in the 10-Q filed 2026-09-22
Deferred revenue$110.0MSource10-Q, us-gaap:ContractWithCustomerLiabilityNoncurrent, as reported in the 10-Q filed 2026-09-22
Income taxes payable$567.0MSource10-Q, us-gaap:AccruedIncomeTaxesNoncurrent, as reported in the 10-Q filed 2026-09-22
Operating lease liabilities$310.0MSource10-Q, us-gaap:OperatingLeaseLiabilityNoncurrent, as reported in the 10-Q filed 2026-09-22
Other liabilities$576.0MSource10-Q, us-gaap:OtherLiabilitiesNoncurrent, as reported in the 10-Q filed 2026-09-22
Total liabilities$18.22BSource10-Q, us-gaap:Liabilities, as reported in the 10-Q filed 2026-09-22
Stockholders’ equity:
Preferred stock, $0.0001 par value; 2 shares authorized; none issued$0Source10-Q, us-gaap:PreferredStockValue, as reported in the 10-Q filed 2026-09-22
Common stock, $0.0001 par value; 900 shares authorized; 601 shares issued; 391 and 413 shares outstanding, respectively$0Source10-Q, us-gaap:CommonStockValue, as reported in the 10-Q filed 2026-09-22
Additional paid-in capital$16.99BSource10-Q, us-gaap:AdditionalPaidInCapital, as reported in the 10-Q filed 2026-09-22
Retained earnings$50.59BSource10-Q, us-gaap:RetainedEarningsAccumulatedDeficit, as reported in the 10-Q filed 2026-09-22
Accumulated other comprehensive income (loss)-$203.0MSource10-Q, us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax, as reported in the 10-Q filed 2026-09-22
Treasury stock, at cost (210 and 188 shares, respectively) (shown as a deduction)($55.62B)Source10-Q, us-gaap:TreasuryStockCommonValue, as reported in the 10-Q filed 2026-09-22
Total stockholders’ equity$11.76B$11.77B-0.1%Source10-Q, us-gaap:StockholdersEquity, as reported in the 10-Q filed 2026-09-22
Liabilities and stockholders’ equity
Total liabilities and stockholders’ equity$29.98BSource10-Q, us-gaap:LiabilitiesAndStockholdersEquity, as reported in the 10-Q filed 2026-09-22

About this data

Source
Adobe 10-Q, accession 0000796343-26-000156, filed Sep 22, 2026, read on Nov 1, 2026.
History
From the SEC's XBRL company facts, the value from the latest filing that stated each period.
Reading
Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
Version
methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-01
Edge and risks

What holds Adobe's model up, and what could bend it

Competitive edge

  • Nearly all revenue renews by contract

    Subscriptions were $6.582B of $6.76B, 97.37% of revenue, recognized over each contract's term, so most of a quarter is set before it starts.

    The detail

    Subscription revenue was $6.582B, 97.37% of total revenue and up 0.66 points as a share. Product licenses brought $67M and services and other $111M. The filing describes a recurring and predictable revenue stream recognized ratably over the contract term.1

    AnalysisAnalysis: this visibility lets the company commit to multi-year spending on AI models, hosting and acquisitions with less risk of a sudden revenue gap, and it is why management steers by ARR rather than by one-off sales.

  • Professionals pay for depth, office users bring reach

    Creative & Marketing Professionals brought $4.651B, 68.8% of revenue; Business Professionals & Consumers, Acrobat and Adobe Express, brought $1.905B, 28.2%.

    The detail

    Creative & Marketing Professionals covers Creative Cloud flagship apps such as Photoshop, Illustrator and Premiere, plus Adobe Experience Manager, Adobe Analytics and Marketo Engage. Business Professionals & Consumers is Acrobat and Adobe Express, and the filing credits its growth to strength in Acrobat. Integrated products such as GenStudio and Firefly Services connect content creation to marketing execution.1

    Reaching both audiences is the largest expense: sales and marketing was $1.827B, 27.03% of revenue, against research and development at $1.288B. It grew 11.47%, slower than revenue, and fell 0.34 points as a share.1

    AnalysisAnalysis: file formats and trained users tie work to the tools, and a customer who buys one step of the content workflow is a natural buyer of the next. One reading of selling costs growing more slowly than revenue is that the installed base does part of the selling.

  • Little capital needed, so cash runs ahead of profit

    Free cash flow was $2.438B, 36.07% of revenue and above net income of $1.827B, with capital spending at 1.26% of revenue.

    The detail

    Operating cash flow was $2.523B, 1.38 times net income, and capital spending was $85M. Free cash flow was $2.438B against $2.126B a year earlier. Gross margin was 88.71%.1

    AnalysisAnalysis: customers pay at the start of a term and revenue is recognized over it, while the product needs little physical investment. The surplus funds acquisitions and share repurchases, the source of the per-share effect described in the findings.

What to watch

  • AI-native tools compete for the same creative work

    The filing names AI or cloud-native companies among its competitors and warns that other companies may limit its use of third-party models.

    The detail

    The company says it faces growing competition from generative and agentic AI tools, some embedded in third-party AI platforms, and names AI or cloud-native companies among its competitors. It warns that other companies may prevent or limit its use of third-party models in its products, and it relies on third parties for hosting, generative AI and large language models.1

    AnalysisAnalysis: the pressure is not yet visible in revenue, since both customer groups and every region grew. Creative & Marketing Professionals is the larger group and the one most exposed if generated content replaces work done in the flagship apps.

  • AI costs could rise ahead of what customers adopt

    The filing warns AI computing costs could hurt margins as it scales AI solutions without assurance of adoption; operating margin already fell 1.47 points.

    The detail

    The filing warns that the computing costs of AI could hurt margins as the company scales AI solutions without assurance that customers and users will adopt them. It adds that the EU AI Act and other new rules could raise compliance costs or force changes to products and pricing, and that third-party models it offers carry liability if their training data was not properly licensed.1

    Operating margin was 34.82%, down 1.47 points from a year earlier, with cost of revenue, research and development, and general and administrative each growing faster than revenue's 12.89%.1

    AnalysisAnalysis: of the risks in the filing, this is the one the numbers already show. Whether it persists depends on AI showing up as higher-priced plans, paid usage above included allowances or lower churn, rather than only as features bundled into existing seats.

  • Subscription terms draw legal and reputational scrutiny

    A Justice Department complaint over subscription disclosure and cancellation was settled this fiscal year, while consumer protection enforcement is rising in general.

    The detail

    The filing describes a Justice Department complaint alleging unclear disclosure of subscription terms and a hard cancellation process, settled during the fiscal year, and notes rising consumer protection enforcement in general. It also names backlash from customers or the creative community over product decisions or its approach to AI.1

    AnalysisAnalysis: the case is settled, but its terms can still shape how plans are sold and cancelled. In a business where nearly all revenue is subscription, any change that eases cancellation tests how much of the base renews by choice rather than by default.

Sources

  1. 1.Adobe 10-Q for the period to 2026-08-28 (the filing), Sep 22, 2026, read Nov 1, 2026
Go deeper

Adobe, further in

Member research, then your own questions on ChatGPT.

What could change the outlook

What Adobe's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.

  • Can pricing keep pace with the cost of AI?

    What the profit line depends on as serving costs grow, which ratios show the direction first, and how ARR, backlog and the share count fit together.

Loading…

CXProWealth on ChatGPT

Have a question about Adobe?

Explore its profit drivers, competitive edge, risks, or your own investment and business questions with CXProWealth on ChatGPT.

Ask CXProWealth on ChatGPTFree CXProWealth membership required. Learn more
Questions to start with
  • How could Adobe price its AI features so that hosting and inferencing costs stop growing faster than revenue?
  • Why are Adobe's remaining performance obligations growing more slowly than its ARR, and what could explain the gap?
  • How much of Adobe's earnings per share growth came from share repurchases rather than higher net income?

Business Lens describes Adobe from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.