A maker of creative software whose Photoshop, Illustrator, Acrobat, and Creative Cloud tools are used by designers, photographers, and everyday folks. Its AI models, Firefly, help generate images and content inside these apps, and its Experience Cloud helps marketers manage customer campaigns. Founded in 1982 by two Xerox researchers, John Warnock and Charles Geschke, after their employer declined their idea; the name came from Adobe Creek, a stream behind Warnock's home in California.
Adobe recorded a Q2 FY2026 goodwill impairment in its Publishing & Advertising unit as revenue rose 12.7% to $6.62B.
A hit Adobe's Publishing & Advertising unit this quarter. rose 12.7% to $6.62B and rose 7.9% to $4.25, with subscription growth of 14% the main driver, while fell 7.4% to $2.24B on the and higher G&A. The core subscription model still expanded, but a reported charge now signals pressure in one business line.
Key takeaways
A charge was recorded in Q2 FY2026 for the Publishing & Advertising reporting unit, contributing to G&A expenses rising 45% and operating expenses growing 17% to $3.67B.
rose 12.7% to $6.62B, driven by 14% subscription revenue growth, with subscription revenue up 13% to $4.54B and up 16% to $1.85B led by .
Total Adobe reached $27.10B, up 12.5% , including about $480M from the acquisition and strength in , , and .
Section summaries
Management's Discussion and Analysis
Total revenue grew 13% YoY to $6.62B in Q2 FY2026, driven by 14% subscription revenue growth across both customer groups.
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Total Adobe reached $27.10B, up 12.5% , including ~$480M from the acquisition and strength in , , and .
rose 7.9% to $4.25 and rose 1.2% to $1.71B, while fell 7.4% to $2.24B and narrowed 2.1 points to 33.8% from the and .
for H1 FY2026 was $5.12B, up 10% ; $4.59B was used for stock repurchases and $1.24B for investing including the acquisition, with up 13% to $22.27B.
The rose to 24% from 20% due to lower non-U.S. tax benefits and the non-deductible .
What changed
FY2025 flagged Digital Media adds against the $19.20B base; this quarter the company reports total Adobe ARR of $27.10B (up 12.5%) after consolidating segments, with ~$480M from .
FY2025 flagged trajectory after the rise to $6.21B; Q2 FY2026 long-term debt fell 22.1% to $4.80B, down 10.7% from Q1's $5.38B.
Q1 FY2026 flagged the close and cash effect; the $1.9B acquisition closed in Q2 with $1.24B invested and cash ending at $4.92B, down 22.3% quarter over quarter.
Q1 FY2026 flagged G&A after a 26% increase from a legal settlement; Q2 G&A rose 45% on a and , a step-up in non-operating pressure.
Q1 FY2026 flagged subscription hosting costs and ; Q2 gross margin eased 0.4 point to 89.2% as cost of subscription revenue carried AI inferencing costs, with no new .
Risk factors now name a Q2 in Publishing & Advertising as a realized financial pressure, beyond the AI and regulatory risks carried from prior filings.
What to watch
Total Adobe adds in Q3 FY2026 against the $27.10B Q2 base to confirm subscription momentum including contribution.
Further charges signaled as possible for Publishing & Advertising in coming quarters.
G&A expense trajectory after the 45% Q2 increase from and .
next quarter as AI inferencing hosting costs and the non-deductible tax effect persist.
subscription rose 13% to $4.54B, driven by , , and .
subscription increased 16% to $1.85B, led by strength.
Operating expenses grew 17% to $3.67B, with G&A up 45% due to a charge and loss contingencies, while sales and marketing rose 16% on higher advertising spend.
Net was $5.12B for H1 FY2026, up 10% ; $4.59B was used for stock repurchases, and $1.24B for investing activities including the acquisition.
increased 13% to $22.27B, and the rose to 24% from 20% due to lower non-U.S. tax benefits and a non-deductible .
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in our market risk exposures for the six months ended May 29, 2026, as compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended November 28, 2025.
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There have been no material changes in our market risk exposures for the six months ended May 29, 2026, as compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended November 28, 2025.
AI innovation, competition, and regulatory risks dominate; a Q2 FY2026 goodwill impairment in Publishing & Advertising signals financial pressure.
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Failure to innovate in AI, including generative and agentic AI, could materially harm our business if new solutions are not adopted or monetized.
Intense and increasing competition, especially from AI-native and cloud-native companies, may reduce pricing, margins, and renewal rates.
AI-related risks include reputational harm, liability from unintended outputs, and evolving global regulations like the EU AI Act that increase compliance costs.
A charge was recorded in Q2 FY2026 for the Publishing & Advertising reporting unit, with potential for further charges.
Service interruptions or cybersecurity incidents could cause data loss, customer attrition, and significant liability, heightened by AI-driven attack methods.
Global economic and geopolitical conditions, including inflation and trade disputes, may reduce customer spending and disrupt our multinational operations.