ADOBE INC.

Previous wording

In our second quarter of fiscal 2026, we experienced strong demand across our portfolio of subscription-based solutions, driven by transformative and customer-focused product innovation. As we execute on our long-term growth initiatives, with emphasis on delivering value through AI-powered and highly differentiated solutions to meet the needs of our diverse and expanding customer base, we have continued to experience growth in software-based subscription revenue.

Current wording

In our third quarter of fiscal 2026, we experienced strong demand across our portfolio of subscription-based solutions, driven by transformative and customer-focused product innovation. As we execute on our long-term growth initiatives, with emphasis on delivering value through AI-powered and highly differentiated solutions to meet the needs of our diverse and expanding customer base, we have continued to experience growth in software-based subscription revenue.

Previous wording

Our offerings help our customers—spanning business professionals, consumers, creators, creative professionals and marketing professionals—to be more creative, productive and successful. We are driving continued business success through audience-specific product innovation and go-to-market strategy focused on two customer groups: Business Professionals & Consumers and Creative & Marketing Professionals.

Current wording

Our offerings help our customers—spanning business professionals, consumers, creators, creative professionals and marketing professionals—to be more creative, productive and successful. We are driving continued business success through audience-specific product innovation and go-to-market strategy focused on two customer groups: Creative & Marketing Professionals and Business Professionals & Consumers.

Previous wording

Creative & Marketing Professionals customer group subscription revenue was $4.54 billion in the second quarter of fiscal 2026, up from $4.02 billion in the second quarter of fiscal 2025, representing 13% year-over-year growth.

Current wording

Creative & Marketing Professionals customer group subscription revenue was $4.65 billion in the third quarter of fiscal 2026, up from $4.12 billion in the third quarter of fiscal 2025, representing 13% year-over-year growth.

Previous wording

Business Professionals & Consumers customer group subscription revenue was $1.85 billion in the second quarter of fiscal 2026, up from $1.60 billion in the second quarter of fiscal 2025, representing 16% year-over-year growth.

Current wording

Business Professionals & Consumers customer group subscription revenue was $1.91 billion in the third quarter of fiscal 2026, up from $1.65 billion in the third quarter of fiscal 2025, representing 16% year-over-year growth.

Previous wording

Our success will be achieved through continued acquisition and retention of our customer base by delivering valuable new features and technologies to customers with our latest releases, including generative AI capabilities to enhance creativity, productivity and marketing, and expanding availability of our offerings across an increasing number of surfaces. As part of our customer-focused strategy, we utilize a data-driven operating model and tailored go-to-market motion to raise awareness of our products and drive customer acquisition, engagement and retention. Overall, our strategy is designed to increase our revenue with existing users, continue to attract new customers, and grow our recurring and predictable revenue stream that is recognized ratably. Due to the nature of certain offerings which contain cross-product integrations or benefits, revenue attributable to certain product entitlements may be recognized in either customer group.

Current wording

Our success will be achieved through continued customer acquisition and retention by delivering valuable new features and technologies to customers with our latest releases, including generative AI capabilities to enhance creativity, productivity and marketing, and expanding availability of our offerings across an increasing number of surfaces. As part of our customer-focused strategy, we utilize a data-driven operating model and tailored go-to-market motion to raise awareness of our products and drive customer acquisition, engagement and retention. Overall, our strategy is designed to increase our revenue with existing users, continue to attract new customers, and grow our recurring and predictable revenue stream that is recognized ratably. Due to the nature of certain offerings which contain cross-product integrations or benefits, revenue attributable to certain product entitlements may be recognized in either customer group.

Previous wording

Total Adobe ARR grew to $27.10 billion at the end of the second quarter of fiscal 2026, representing 12.5% year-over-year growth, including approximately $480 million from the Semrush acquisition and further driven by strength in Creative Cloud Pro, Acrobat, and Adobe Experience Platform and related apps. Our success in driving growth in ARR has positively affected our revenue growth. Total customer group subscription revenue grew to $6.39 billion in the second quarter of fiscal 2026, up from $5.61 billion in the second quarter of fiscal 2025, representing 14% year-over-year growth.

Current wording

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. Our success in driving growth in ARR has positively affected our revenue growth.

Previous wording

There have been no other changes in our critical accounting policies and estimates during the six months ended May 29, 2026, as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended November 28, 2025.

Current wording

There have been no other changes in our critical accounting policies and estimates during the nine months ended August 28, 2026, as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended November 28, 2025.

Previous wording

•Total Adobe ARR of $27.10 billion as of May 29, 2026 increased by 12.5% from $24.08 billion as of May 30, 2025 revalued using currency rates determined at the beginning of fiscal 2026.

Current wording

•Total Adobe ARR of $27.50 billion as of August 28, 2026 increased by 11.2% from $24.74 billion as of August 29, 2025 revalued using currency rates determined at the beginning of fiscal 2026.

Previous wording

•Total revenue of $6.62 billion during the three months ended May 29, 2026 increased by $745 million, or 13%, compared to the year-ago period.

Current wording

•Total revenue of $6.76 billion during the three months ended August 28, 2026 increased by $772 million, or 13%, compared to the year-ago period.

Previous wording

•Total subscription revenue of $6.42 billion during the three months ended May 29, 2026 increased by $775 million, or 14%, compared to the year-ago period.

Current wording

•Total subscription revenue of $6.58 billion during the three months ended August 28, 2026 increased by $791 million, or 14%, compared to the year-ago period.

Previous wording

•Cost of revenue of $715 million during the three months ended May 29, 2026 increased by $77 million, or 12%, compared to the year-ago period.

Current wording

•Cost of revenue of $763 million during the three months ended August 28, 2026 increased by $121 million, or 19%, compared to the year-ago period.

Previous wording

•Cash flows from operations of $5.12 billion during the six months ended May 29, 2026 increased by $450 million, or 10%, compared to the year-ago period.

Current wording

•Cash flows from operations of $7.65 billion during the nine months ended August 28, 2026 increased by $775 million, or 11%, compared to the year-ago period.

Previous wording

•Remaining performance obligations of $22.27 billion as of May 29, 2026 increased by 13% from $19.69 billion as of May 30, 2025.

Current wording

•Remaining performance obligations of $22.16 billion as of August 28, 2026 increased by 8% from $20.44 billion as of August 29, 2025.

Previous wording

Subscription revenue by customer group for the three and six months ended May 29, 2026 and May 30, 2025 were as follows:

Current wording

Subscription revenue by customer group for the three and nine months ended August 28, 2026 and August 29, 2025 were as follows:

Previous wording

Increases in subscription revenue for the Creative & Marketing Professionals customer group were driven by strength in Creative Cloud Pro and other flagship apps, Adobe Experience Platform and related apps, and Adobe Experience Manager. Increases in subscription revenue for the Business Professionals & Consumers customer group were driven by strength in Acrobat.

Current wording

Increases in subscription revenue for the Creative & Marketing Professionals customer group were driven by strength in Creative Cloud flagship apps and Adobe Experience Manager and agentic web apps, including the contribution from Semrush. Increases in subscription revenue for the Business Professionals & Consumers customer group were driven by strength in Acrobat.

Previous wording

Revenue by geographic area for the three and six months ended May 29, 2026 and May 30, 2025 were as follows:

Current wording

Revenue by geographic area for the three and nine months ended August 28, 2026 and August 29, 2025 were as follows:

Previous wording

Overall revenue during the three and six months ended May 29, 2026 increased in all geographic regions as compared to the three and six months ended May 30, 2025. Within each geographic region, the fluctuations in revenue were attributable to the factors noted in the customer group subscription revenue information above.

Current wording

Overall revenue during the three and nine months ended August 28, 2026 increased in all geographic regions as compared to the three and nine months ended August 29, 2025. Within each geographic region, the fluctuations in revenue were attributable to the factors noted in the customer group subscription revenue information above.

Previous wording

Included in the overall change in revenue were impacts associated with foreign currency which were mitigated in part by our foreign currency hedging program. During the three and six months ended May 29, 2026 as compared to the three and six months ended May 30, 2025, the U.S. Dollar primarily weakened against EMEA currencies, which resulted in a net increase in revenue in U.S. Dollar equivalents of approximately $116 million and $240 million in the respective periods. The foreign currency impacts to revenue were partially offset by net hedging losses from our cash flow hedging program of $22 million and $71 million, respectively, as compared to the year-ago periods.

Current wording

Included in the overall change in revenue were impacts associated with foreign currency and our foreign currency hedging program. During the three and nine months ended August 28, 2026 as compared to the three and nine months ended August 29, 2025, the U.S. Dollar primarily weakened against EMEA currencies, which resulted in a net increase in revenue in U.S. Dollar equivalents of approximately $40 million and $280 million in the respective periods. During the three and nine months ended August 28, 2026, our cash flow hedging program resulted in net hedging gains of $10 million and losses of $61 million, respectively, as compared to the year-ago periods.

Previous wording

Cost of Revenue for the Three and Six Months Ended May 29, 2026 and May 30, 2025

Current wording

Cost of Revenue for the Three and Nine Months Ended August 28, 2026 and August 29, 2025

Previous wording

Cost of subscription revenue increased during the three and six months ended May 29, 2026 as compared to the three and six months ended May 30, 2025 primarily due to the following:

Current wording

Cost of subscription revenue increased during the three and nine months ended August 28, 2026 as compared to the three and nine months ended August 29, 2025 primarily due to the following:

Previous wording

Operating Expenses for the Three and Six Months Ended May 29, 2026 and May 30, 2025

Current wording

Operating Expenses for the Three and Nine Months Ended August 28, 2026 and August 29, 2025

Previous wording

Research and development expenses increased during the three and six months ended May 29, 2026 as compared to the three and six months ended May 30, 2025 primarily due to increases in compensation costs.

Current wording

Research and development expenses increased during the three and nine months ended August 28, 2026 as compared to the three and nine months ended August 29, 2025 primarily due to increases in compensation costs and, to a lesser extent, hosting services and data center costs.

Previous wording

Sales and marketing expenses increased during the three and six months ended May 29, 2026 as compared to the three and six months ended May 30, 2025 primarily due to increases in advertising expenses and, to a lesser extent, compensation costs.

Current wording

Sales and marketing expenses increased during the three and nine months ended August 28, 2026 as compared to the three and nine months ended August 29, 2025 primarily due to increases in advertising expenses and compensation costs.

Previous wording

General and administrative expenses increased during the three and six months ended May 29, 2026 as compared to the three and six months ended May 30, 2025 due to the following:

Current wording

General and administrative expenses increased during the three and nine months ended August 28, 2026 as compared to the three and nine months ended August 29, 2025 due to the following:

Previous wording

During the six months ended May 29, 2026, we recorded a goodwill impairment charge related to our Publishing & Advertising reporting unit. During the six months ended May 29, 2026, we also incurred loss contingencies associated with a legal settlement and other legal matters. See Note 13 for further details regardingthe legals ettlement.

Current wording

During the nine months ended August 28, 2026, we recorded a goodwill impairment charge related to our Publishing & Advertising reporting unit. During the nine months ended August 28, 2026, we also incurred loss contingencies associated with a legal settlement and other legal matters. See Note 13 for further details regarding the legal settlement.

Previous wording

Non-Operating Income (Expense), Net for the Three and Six Months Ended May 29, 2026 and May 30, 2025

Current wording

Non-Operating Income (Expense), Net for the Three and Nine Months Ended August 28, 2026 and August 29, 2025

Previous wording

Investment gains (losses), net consists principally of unrealized holding gains and losses associated with our deferred compensation plan assets.

Current wording

Investment gains (losses), net consists principally of unrealized holding gains and losses associated with our deferred compensation plan assets, and gains and losses associated with our direct investments in privately held companies.

Previous wording

Other income (expense), net decreased during the three months ended May 29, 2026 as compared to the three months ended May 30, 2025 primarily due to higher foreign exchange losses. Other income (expense), net decreased during the six months ended May 29, 2026 as compared to the six months ended May 30, 2025 primarily due to decreases in interest income driven by lower average overall cash balances and interest rates, as well as higher foreign exchange losses.

Current wording

Other income (expense), net decreased during the three and nine months ended August 28, 2026 as compared to the three and nine months ended August 29, 2025 primarily due to decreases in interest income driven by lower average overall cash balances.

Previous wording

Provision for Income Taxes for the Three and Six Months Ended May 29, 2026 and May 30, 2025

Current wording

Provision for Income Taxes for the Three and Nine Months Ended August 28, 2026 and August 29, 2025

Previous wording

Our effective tax rate increased by approximately four percentage points for the three months ended May 29, 2026, as compared to the three months ended May 30, 2025, primarily due to a decrease in the net tax benefit from effects of non-U.S. operations, an increase in state taxes, and a goodwill impairment charge which is not deductible for income tax purposes. Our effective tax rate increased by approximately five percentage points for the six months ended May 29, 2026, as compared to the six months ended May 30, 2025, primarily due to an increase in the anticipated benefit from a foreign tax asset in the prior year, and a decrease in the net tax benefit from effects of non-U.S. operations and increase in the net tax expense related to stock-based compensation in the current year.

Current wording

Our effective tax rate increased by approximately three percentage points for the three months ended August 28, 2026, as compared to the three months ended August 29, 2025, primarily due to a decrease in the net tax benefit from effects of non-U.S. operations and an increase in the net tax expense related to stock-based compensation. Our effective tax rate increased by approximately five percentage points for the nine months ended August 28, 2026, as compared to the nine months ended August 29, 2025, primarily due to a decrease in the net tax benefit from effects of non-U.S. operations, an increase in the net tax expense related to stock-based compensation in the current year, and an increase in the anticipated benefit from a foreign tax asset in the prior year.

Previous wording

Our effective tax rates for the three and six months ended May 29, 2026 were higher than the U.S. federal statutory tax rate of 21% primarily due to state taxes and a net tax expense related to stock-based compensation, partially offset by net tax benefits from the effects of non-U.S. operations and the U.S. federal research tax credit.

Current wording

Our effective tax rates for the three and nine months ended August 28, 2026 were higher than the U.S. federal statutory tax rate of 21% primarily due to state taxes and a net tax expense related to stock-based compensation, partially offset by net tax benefits from the effects of non-U.S. operations and the U.S. federal research tax credit.

Previous wording

We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized based on evaluation of all available positive and negative evidence. On the basis of this evaluation, we continue to maintain a valuation allowance to reduce our deferred tax assets to the amount realizable. The total valuation allowance was $862 million as of May 29, 2026, primarily related to certain U.S. state and federal credits and capital loss carryforwards.

Current wording

We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized based on evaluation of all available positive and negative evidence. On the basis of this evaluation, we continue to maintain a valuation allowance to reduce our deferred tax assets to the amount realizable. The total valuation allowance was $799 million as of August 28, 2026, primarily related to certain U.S. state and federal credits and capital loss carryforwards.

Previous wording

The gross liabilities for unrecognized tax benefits excluding interest and penalties were $736 million and $685 million as of May 29, 2026 and May 30, 2025, respectively. If the total unrecognized tax benefits as of May 29, 2026 and May 30, 2025 were recognized, $563 million and $516 million would decrease the respective effective tax rates.

Current wording

The gross liabilities for unrecognized tax benefits excluding interest and penalties were $755 million and $715 million as of August 28, 2026 and August 29, 2025, respectively. If the total unrecognized tax benefits as of August 28, 2026 and August 29, 2025 were recognized, $576 million and $542 million would decrease the respective effective tax rates.

Previous wording

Net cash provided by operating activities of $5.12 billion for the six months ended May 29, 2026 was primarily comprised of net income adjusted for the net effect of non-cash items. Working capital sources of cash included decreases in trade receivables driven by strong cash collections and increases in deferred revenue due to the timing of billings during the period. The primary working capital uses of cash included increases in prepaid expenses and other assets and decreases in accrued expenses and other liabilities.

Current wording

Net cash provided by operating activities of $7.65 billion for the nine months ended August 28, 2026 was primarily comprised of net income adjusted for the net effect of non-cash items. Working capital sources of cash included decreases in trade receivables driven by strong cash collections. The primary working capital uses of cash included increases in prepaid expenses and other assets and decreases in accrued expenses and other liabilities.

Previous wording

Net cash used for investing activities of $1.24 billion for the six months ended May 29, 2026 was primarily due to our acquisition of Semrush in the second quarter of fiscal 2026, as well as purchases of short-term investments, partially offset by proceeds from maturities of short-term investments. See Note 3 for further details regarding this acquisition.

Current wording

Net cash used for investing activities of $1.91 billion for the nine months ended August 28, 2026 was primarily due to our acquisition of Semrush in the second quarter of fiscal 2026, ongoing capital expenditures and purchases of short-term investments, net of proceeds from maturities of short-term investments. See Note 3 for further details regarding this acquisition.

Previous wording

Net cash used for financing activities of $4.40 billion for the six months ended May 29, 2026 was primarily due to payments for our common stock repurchases and taxes paid related to the net share settlement of equity awards. These uses of cash were offset in part by proceeds from the issuance of commercial paper. See the section titled “Stock Repurchase Program” below.

Current wording

Net cash used for financing activities of $6.81 billion for the nine months ended August 28, 2026 was primarily due to payments for our common stock repurchases. See the section titled “Stock Repurchase Program” below.

Previous wording

We have a commercial paper program under which we may issue unsecured commercial paper up to a total of $3 billion outstanding at any time, with maturities of up to 397 days from the date of issue. The net proceeds from the issuance of commercial paper are used for general corporate purposes, which may include working capital, capital expenditures, acquisitions, stock repurchases, refinancing indebtedness or any other general corporate purposes. As of May 29, 2026, the carrying value of our commercial paper was $494 million, net of the related discount.

Current wording

We have a commercial paper program under which we may issue unsecured commercial paper up to a total of $3 billion outstanding at any time, with maturities of up to 397 days from the date of issue. The net proceeds from the issuance of commercial paper are used for general corporate purposes, which may include working capital, capital expenditures, acquisitions, stock repurchases, refinancing indebtedness or any other general corporate purposes. As of August 28, 2026, the carrying value of our commercial paper was $248 million, net of the related discount.

Previous wording

We have $6.15 billion of senior notes outstanding, which rank equally with our other unsecured and unsubordinated indebtedness. As of May 29, 2026, the carrying value of our senior notes was $6.15 billion, net of fair value of the interest rate swaps and unamortized discount and debt issuance costs, and our maximum commitment for interest payments was $974 million for the remaining duration of our outstanding senior notes and interest rate swaps. Interest on the notes is payable semi-annually, in arrears, and interest on the swaps is payable quarterly. Our senior notes do not contain any financial covenants. See Note 14 of our notes to condensed consolidated financial statements for further details regarding our debt.

Current wording

We have $6.15 billion of senior notes outstanding, which rank equally with our other unsecured and unsubordinated indebtedness. As of August 28, 2026, the carrying value of our senior notes was $6.12 billion, net of fair value of the interest rate swaps and unamortized discount and debt issuance costs, and our maximum commitment for interest payments was $941 million for the remaining duration of our outstanding senior notes and interest rate swaps. Interest on the notes is payable semi-annually, in arrears, and interest on the swaps is payable quarterly. Our senior notes do not contain any financial covenants. See Note 14 of our notes to condensed consolidated financial statements for further details regarding our debt.

Previous wording

During the six months ended May 29, 2026, we reclassified the senior notes due February 1, 2027 and April 4, 2027 as current debt in our condensed consolidated balance sheets. As of May 29, 2026, the carrying value of the current portion of our senior notes was $1.35 billion, net of the related discount and issuance costs. We intend to refinance the current portion of our debt on or before the due date, subject to market conditions.

Current wording

During the nine months ended August 28, 2026, we reclassified the senior notes due February 1, 2027 and April 4, 2027 as current debt in our condensed consolidated balance sheets. As of August 28, 2026, the carrying value of the current portion of our senior notes was $1.35 billion, net of the related discount and issuance costs. We intend to refinance the current portion of our debt on or before the due date, subject to market conditions.

Previous wording

Our principal commitments as of May 29, 2026 consisted of purchase obligations resulting from agreements to purchase goods and services in the ordinary course of business and obligations under operating lease arrangements. There have been no material changes in those obligations during the six months ended May 29, 2026.

Current wording

Our principal commitments as of August 28, 2026 consisted of purchase obligations resulting from agreements to purchase goods and services in the ordinary course of business and obligations under operating lease arrangements. There have been no material changes in those obligations during the nine months ended August 28, 2026.