AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Integrated workflows and customer-data infrastructure support replacement friction, reinforced by actual non-cancellable contracts and substantial contracted revenue. Quantified migration costs or comparative superiority are absent.
durability · 2/4 · Integration and contractual commitment support persistence, but typical 1–36 month terms provide bounded protection. Limited entry barriers and evolving AI competition prevent a strong long-term durability assessment.
customer dependency · 2/4 · Enterprise-wide decisions, integrated customer data and continuing subscription growth indirectly support dependency. The evidence does not isolate repeat-customer demand or establish that customers cannot readily replace Adobe.
erosion resilience · 2/4 · Subscription revenue continued growing despite disclosed increasing AI competition. Modestly lower sequential contracted revenue and weaker operating margins temper that evidence; neither establishes realized competitive displacement.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · Revenue growth is disclosed without price-volume attribution or observed selling-price changes. Potential downward pricing pressure does not establish realized price cuts.
retention · 2/4 · Assessed indirectly from growing subscription revenue, substantial contracted obligations and generally non-cancellable contracts. New customers and mix may explain growth; no renewal or customer-retention rate is supplied.
margin resilience · 2/4 · Nine-month gross margin remained approximately 89.2% in both comparative periods, but operating margin declined from approximately 36.7% to 35.4%; quarterly gross margin also softened. This supports mixed resilience, without attributing margins to pricing power.
contractual freedom · 2/4 · Adobe contracts on enterprise licensing terms and generally secures non-cancellable subscription commitments, supporting control over terms and collection during the committed period. Cancellation exceptions and finite terms constrain that control; unilateral repricing rights are not disclosed.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 0.48
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 3.11
Financial strength79
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 100.00
- netDebtEbitGrade
- 98.21
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 19.71
- Debt / FCF (x)
- 0.63
- Net debt / operating income (x)
- 0.09
- Interest coverage (x)
- 33.10
- Current ratio (x)
- 1.00
Capital allocation91
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 60.98
- 3-year average dilution (%)
- -3.17
- 3-year average SBC / revenue (%)
- 8.52
- cashConversionGrade
- 100.00
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Strong fiscal 2025 operating cash generation and net share reduction support capital discipline. However, $11.28 billion of repurchase payments exceeded $10.03 billion of operating cash flow, debt increased, substantial vendor commitments remain, and the prior acquisition termination cost $1 billion. Later repurchases continued offsetting issuance, but investment returns and repurchase valuation discipline are unproven.
incentive alignment · 3/4 · Actual performance-share arrangements use multi-year relative returns, a negative-return payout cap and stock ownership requirements. The completed 2023 program paid 83% of target, demonstrating payout variability rather than merely proposed alignment. Executive ownership compliance and future outcomes remain unverified.
execution · 3/4 · Fiscal 2025 revenue and earnings exceeded disclosed incentive targets, followed by continued subscription and operating-income growth in 2026. This is demonstrated aggregate operating execution, an indirect measure of strategy delivery. Margin compression, the acquisition termination cost and weak relative shareholder returns constrain the assessment.
governance · 3/4 · Disclosed equal voting rights, annual director elections, shareholder meeting rights, independent committees and an independent lead-director framework support strong governance structures. Current audit-committee independence is explicitly established. Combined chair and CEO roles limit separation of authority; nominee independence does not prove subsequent election results.
Evidence
Adobe’s integrated solutions, such as GenStudio and Firefly Services, bridge the gap between content creation and marketing execution, enabling seamless collaboration and efficiency across these roles.
Business: integration of content creation and marketing workflows · Filed 15/01/2026
Adobe Experience Platform’s open system transforms businesses’ customer data from across their Adobe solutions and third-party software into robust customer profiles.
Business: integration of customer data across Adobe and third-party software · Filed 13/01/2025
Although our subscription contracts are generally non-cancellable, a limited number of customers have the right to cancel their contracts by providing prior written notice to us of their intent to cancel the remainder of the contract term and consumers have a period of time to terminate certain agreements without penalty.
Revenue recognition: subscription cancellation terms and exceptions · Filed 15/01/2026
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data) (Unaudited) Three Months Ended Nine Months Ended August 28, 2026 August 29, 2025 August 28, 2026 August 29, 2025 Revenue: Subscription $ 6,582 $ 5,791 $ 19,196 $ 16,915 Product 67 68 246 251 Services and other 111 129 334 409 Total revenue 6,760 5,988 19,776 17,575 Cost of revenue: Subscription 633 510 1,759 1,505 Product 5 5 16 17 Services and other 125 127 367 380 Total cost of revenue 763 642 2,142 1,902 Gross profit 5,997 5,346 17,634 15,673 Operating expenses: Research and development 1,288 1,088 3,596 3,196 Sales and marketing 1,827 1,639 5,419 4,760 General and administrative 488 408 1,497 1,152 Amortization of intangibles 40 38 112 120 Total operating expenses 3,643 3,173 10,624 9,228 Operating income 2,354 2,173 7,010 6,445 Non-operating income (expense): Interest expense (66) (67) (194) (197) Investment gains (losses), net 21 23 44 31 Other income (expense), net 48 58 157 191 Total non-operating income (expense), net 3 14 7 25 Income before income taxes 2,357 2,187 7,017 6,470 Provision for income taxes 530 415 1,589 1,196 Net income $ 1,827 $ 1,772 $ 5,428 $ 5,274 Basic net income per share $ 4.63 $ 4.18 $ 13.48 $ 12.28 Shares used to compute basic net income per share 395 423 403 429 Diluted net income per share $ 4.62 $ 4.18 $ 13.47 $ 12.26 Shares used to compute diluted net income per share 395 424 403 430 See accompanying notes to condensed consolidated financial statements.
Unaudited income statements: subscription revenue, costs and operating results · Filed 22/09/2026
As of August 28, 2026, remaining performance obligations were approximately $22.16 billion.
Revenue recognition: remaining performance obligations at August 28, 2026 · Filed 22/09/2026
For our enterprise customers, the evaluation process may be longer and more involved, and require us to invest more in educating our customers about our solutions, particularly because the decision to use our solutions is often an enterprise-wide decision.
Risk factors: enterprise-wide purchasing decisions and evaluation processes · Filed 22/09/2026
We generally recognize revenue from our subscription solutions ratably over the terms of their subscription agreements, which typically range from 1 to 36 months.
Risk factors: typical subscription agreement duration · Filed 22/09/2026
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) some of our enterprise customers with non-cancellable and non-refundable committed funds provide them with options to either renew monthly on-premise term-based licenses or use some or all funds to purchase other Adobe products or services.
Revenue recognition: enterprise committed funds and product-selection options · Filed 22/09/2026
New industry standards, evolving distribution and sales models, limited barriers to entry, short product life cycles, customer price sensitivity, global economic conditions and the frequent entry of new solutions or competitors may increase downward pressure on pricing and gross margins and adversely affect our renewal, upsell and cross-sell rates as well as our ability to attract new customers.
Competition risks: entry barriers, price sensitivity and potential pricing pressure · Filed 22/09/2026
We face increasing competition from companies offering generative and agentic AI 38 Table of Contents solutions, including but not limited to prompt-based and multi-modal creation and editing, document productivity and understanding, ad distribution and creation, and purpose-built AI agents and AI-enabled workflows, some of which are embedded within or operating across third-party AI platforms or domain-specific solutions.
Competition risks: increasing generative and agentic AI competition · Filed 22/09/2026
Our renewal rates may decline or fluctuate as a result of a number of factors, including our customers’ level of satisfaction, our ability to continue enhancing features and functionality, reliability of our solutions, prices of ours and competitors’ solutions, the actual or perceived information security of our systems and services, decreases in the size of our customer base, changes as a result of regulatory or legal requirements, changes in the composition of our customer base and reductions in our customers’ spending levels or declines in customer activity.
Subscription risks: possible renewal fluctuations and their drivers · Filed 22/09/2026
•Remaining performance obligations of $22.52 billion as of November 28, 2025 increased by 13% from $19.96 billion as of November 29, 2024.
Fiscal 2025 results: remaining performance obligations and annual growth · Filed 15/01/2026
As of May 29, 2026, remaining performance obligations were approximately $22.27 billion.
Revenue recognition: remaining performance obligations at May 29, 2026 · Filed 15/06/2026
Non-cancellable and non-refundable funds related to some of our enterprise customer agreements referred to above comprised approximately 3% of the total remaining performance obligations.
Revenue recognition: enterprise committed funds as a share of remaining performance obligations · Filed 22/09/2026
Our enterprise customers license our hosted offerings as SaaS or Managed Services via agreements based on our enterprise licensing terms.
Business: enterprise licensing agreements · Filed 15/01/2026
•Cash flows from operations of $10.03 billion during fiscal 2025 increased by $1.98 billion, or 25%, compared to fiscal 2024.
Fiscal 2025 results: operating cash generation · Filed 15/01/2026
Fiscal 2024 cash flows from operations were adversely impacted by payment of the $1 billion Figma termination fee.
Fiscal 2024 cash flow comparison: acquisition termination payment · Filed 15/01/2026
During fiscal 2025, we entered into stock repurchase arrangements with large financial institutions and made payments totaling $11.28 billion to repurchase shares.
Capital resources: fiscal 2025 repurchase payments · Filed 15/01/2026
DEBT The carrying value of our borrowings as of November 28, 2025 and November 29, 2024 were as follows: (dollars in millions) Issuance Date Due Date Effective Interest Rate 2025 2024 1.90% 2025 Notes February 2020 February 2025 2.07% $ — $ 500 3.25% 2025 Notes January 2015 February 2025 3.67% — 1,000 2.15% 2027 Notes February 2020 February 2027 2.26% 850 850 4.85% 2027 Notes April 2024 April 2027 5.03% 500 500 4.75% 2028 Notes January 2025 January 2028 4.93% 800 — 4.80% 2029 Notes April 2024 April 2029 4.93% 750 750 4.95% 2030 Notes January 2025 January 2030 5.09% 700 — 2.30% 2030 Notes February 2020 February 2030 2.69% 1,300 1,300 4.95% 2034 Notes April 2024 April 2034 5.03% 750 750 5.30% 2035 Notes January 2025 January 2035 5.40% 500 — Total debt outstanding, at par $ 6,150 $ 5,650 Less: Current portion of debt, at par — (1,500) Fair value of interest rate swaps 86 — Unamortized discount and debt issuance costs (26) (21) Carrying value of long-term debt $ 6,210 $ 4,129 Current portion of debt, at par $ — $ 1,500 Unamortized discount and debt issuance costs — (1) Carrying value of current debt $ — $ 1,499 Senior Notes In January 2025, we issued $800 million of senior notes due January 17, 2028, $700 million of senior notes due January 17, 2030 and $500 million of senior notes due January 17, 2035.
Note 17: debt outstanding, maturities and issuance · Filed 15/01/2026
As of November 28, 2025, the value of our non-cancellable unconditional purchase obligations was $6.82 billion, primarily relating to contracts with vendors for third-party hosting and data center services.
Contractual obligations: non-cancellable vendor purchase commitments · Filed 15/01/2026
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In millions) (Unaudited) Nine Months Ended August 28, 2026 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Shares Amount Shares Amount Total Balances at November 28, 2025 601 $ — $ 15,361 $ 45,354 $ (245) (188) $ (48,847) $ 11,623 Net income — — — 5,428 — — — 5,428 Other comprehensive income (loss), net of taxes — — — — 42 — — 42 Re-issuance of treasury stock under stock compensation plans — — 37 (188) — 4 107 (44) Repurchases of common stock — — — — — (26) (6,880) (6,880) Replacement awards related to acquisition — — 12 — — — — 12 Stock-based compensation — — 1,582 — — — — 1,582 Value of shares in deferred compensation plan — — — — — — 1 1 Balances at August 28, 2026 601 $ — $ 16,992 $ 50,594 $ (203) (210) $ (55,619) $ 11,764 Nine Months Ended August 29, 2025 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Shares Amount Shares Amount Total Balances at November 29, 2024 601 $ — $ 13,419 $ 38,470 $ (201) (160) $ (37,583) $ 14,105 Net income — — — 5,274 — — — 5,274 Other comprehensive income (loss), net of taxes — — — — (140) — — (140) Re-issuance of treasury stock under stock compensation plans — — 96 (228) — 3 99 (33) Repurchases of common stock — — — — — (24) (8,889) (8,889) Stock-based compensation — — 1,453 — — — — 1,453 Balances at August 29, 2025 601 $ — $ 14,968 $ 43,516 $ (341) (181) $ (46,373) $ 11,770 See accompanying notes to condensed consolidated financial statements.
Unaudited equity statements: repurchases, share issuance and stock compensation · Filed 22/09/2026
32 Table of Contents Relative Total Stockholder Return •In order to achieve 100% payout for the relative total stockholder return (“TSR”) component, the 2025 PSP requires achieving a TSR rank at the 55th percentile relative to companies that comprised the Nasdaq 100 Index as of January 1, 2025, excluding the second class of stock for any company with dual-classes of stock (the “Index Companies”) over a three-year performance period (the “Relative TSR Goal”).
Executive compensation: adopted 2025 relative shareholder-return performance goal · Filed 27/02/2026
Additionally, regardless of Adobe’s position with respect to the Index Companies, each NEO’s award with respect to the Relative TSR Goal will be capped at 100% of target if Adobe has a negative absolute TSR over the performance period.
Executive compensation: payout cap for negative absolute shareholder returns · Filed 27/02/2026
Shares released during the nine months ended August 28, 2026 resulted from overall payout at 83% of target for the 2023 Performance Share Program, as certified by the ECC in the first quarter of fiscal 2026.
Stock compensation: certified 2023 program payout and shares released · Filed 22/09/2026
Position Minimum Ownership Value Chief Executive Officer 20x base salary President, Executive Vice President or Chief Financial Officer 10x base salary Select Senior Vice Presidents 3x base salary All Other Senior Vice Presidents 2x base salary The minimum share ownership levels for each title are determined annually using the following: •average base salary (as defined in the guidelines) of the individuals holding such title as of December 31; and •the average daily closing share price for the 30 calendar days ending on December 31.
Executive compensation: minimum stock ownership requirements · Filed 27/02/2026
Financial Performance Result: For fiscal year 2025, we achieved revenue of $23.77 billion, and diluted EPS of $16.70 on a GAAP basis and $20.94 on a non-GAAP basis, exceeding both targets for 100% payout.
Executive compensation: fiscal 2025 operating results versus incentive targets · Filed 27/02/2026
•Strong Board independence (10 of 11 director nominees are independent) •Independent lead director and all committee members are independent •Majority vote standard plus resignation policy for uncontested director elections •All directors stand for election annually •Single class of stock with equal voting rights •Bylaws provide for proxy access for stockholders •Stockholder right to call a special meeting •Above-market stock ownership requirements for executive officers and directors •Simple majority vote standard for charter/bylaw amendments •All current Audit Committee members are audit committee financial experts under SEC rules •Any independent director may call for a meeting in executive session •Regular Board and committee evaluations facilitated by an independent third party •No Director may serve on more than four public company boards (including the Board) without first obtaining specific approval from the Board •Prohibition on transactions involving pledging, hedging or short sales of Adobe equity Our management team also provides regular updates to the Board and its committees on topics including those related to risk management, cybersecurity, regulatory updates and various environmental, social and governance (“ESG”) matters including climate actions, AI ethics and responsible innovation, and ESG disclosures and performance objectives.
Governance highlights: voting rights, director elections, independence and shareholder rights · Filed 27/02/2026
Based on these considerations, the Board has determined that, at this time, our Chief Executive Officer (“CEO”), Shantanu Narayen, is the director best qualified to serve in the role of Chair.
Board leadership: combined chair and CEO roles · Filed 27/02/2026
Corporate Governance | 2026 Proxy Statement 9 Table of Contents To maintain an appropriate level of independent checks and balances, our Corporate Governance Guidelines provide that if the Chair of the Board and the CEO are the same person or if the Chair is not an independent director, the independent members of the Board will annually select an independent director to serve in a lead capacity, who we refer to as our Lead Director.
Board leadership: independent lead director selection requirement · Filed 27/02/2026
Each current member of the Audit Committee meets the independence criteria prescribed by applicable regulations and the rules of the SEC for audit committee membership and is an “independent director” within the meaning of applicable Nasdaq listing standards.
Audit committee: current member independence · Filed 27/02/2026
With the above TSR performance, our percentile rank among the 96 companies against whom relative TSR performance was compared as of December 31, 2025 was at the 28th percentile.
Executive compensation: realized relative shareholder-return ranking · Filed 27/02/2026
