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. 6/6 · 19/10/2026
Moat63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Stored customer data, customized solutions and integrated workflows create identifiable replacement friction. Generally non-cancellable contracts and substantial contracted revenue corroborate a current advantage. Migration costs remain unmeasured.
durability · 2/4 · Customer-specific integrations support persistence, but typical 1-to-36-month subscription terms provide finite protection. AI competition and limited entry barriers prevent a strong long-term durability assessment.
customer dependency · 3/4 · Customer data and customized solutions embedded in Adobe systems support meaningful workflow dependency. Subscription revenue growth corroborates continuing demand indirectly; it does not isolate existing-customer renewals.
erosion resilience · 2/4 · Subscription revenue continued growing despite increasing AI competition. Lower RPO versus fiscal year-end and operating-margin compression temper that resilience. Disclosed competitive risks are not treated as realized customer losses.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Adobe discloses increased Creative Cloud Pro individual-plan charges at applicable subscription renewals on or after June 17, 2025, demonstrating an implemented pricing increase. Evidence is limited to this plan and eligible regions; the passages do not establish the increase's magnitude, customer acceptance or contribution to aggregate revenue growth.
retention · 2/4 · Embedded workflows, committed subscriptions, growing subscription revenue and substantial RPO support repeat-demand persistence indirectly. No renewal or cohort retention rates are provided, and neither aggregate growth nor total monthly users isolates retained paying customers.
margin resilience · 2/4 · Nine-month gross margin remained approximately 89.2%, while operating margin declined from approximately 36.7% to 35.4%. Quarterly gross and operating margins also declined, although operating income grew. This is mixed resilience and does not independently prove pricing power.
contractual freedom · 2/4 · Generally non-cancellable agreements protect committed consideration, subject to cancellation exceptions. Fixed subscription periods do not establish unilateral repricing rights, and regulation has already produced more onerous contractual obligations. Evidence supports mixed freedom over commercial terms.
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
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Fiscal 2025 operating cash flow of $10.03 billion and subsequent net share reductions show cash generation and effective dilution offset. Repurchase payments of $11.28 billion in fiscal 2025, material supplier commitments and the realized $1 billion acquisition termination fee temper discipline. Repurchases alone do not establish attractive investment returns.
incentive alignment · 3/4 · Certified executive TSR-component payouts of 45% and the completed program's overall 83% payout demonstrate that underperformance actually reduced awards. Equity exposure and ownership policies strengthen alignment. CEO change-of-control acceleration is a material exception, and complete personal ownership amounts are unavailable.
execution · 3/4 · Fiscal 2025 results exceeded disclosed incentive targets, and 2026 subscription revenue and operating income continued growing. These are demonstrated operating outcomes, with product execution assessed indirectly. Margin compression and acquisition contributions limit attribution; the incoming CEO's future performance remains untested.
governance · 2/4 · Disclosed independent oversight, equal voting rights, annual elections and shareholder rights provide substantive safeguards. The combined CEO-chair role and CEO equity acceleration upon change of control weaken checks and accountability. Announced succession does not yet demonstrate improved governance outcomes.
Evidence
We also work with our customers to help them manage, gain insights from and unlock the power of their first-party data and assets, and build customized models and solutions using such data and assets stored in our applications, systems, and through connections to other business applications.
Business: customer first-party data, stored assets and customized solutions · Filed 15/01/2026
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: integrated creative and marketing workflows · Filed 15/01/2026
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
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
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 condensed consolidated statements of income: quarterly and nine-month operating results · Filed 22/09/2026
As of August 28, 2026, remaining performance obligations were approximately $22.16 billion.
Revenue recognition: August 2026 remaining performance obligations · 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.
Management discussion: fiscal 2025 remaining performance obligations and annual growth · Filed 15/01/2026
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.
Risk factors: entry barriers, price sensitivity and possible 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.
Risk factors: 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.
Risk factors: possible drivers of renewal-rate changes · Filed 22/09/2026
The complaint, which was amended on February 23, 2024, alleges that certain public statements made by Adobe during the Class Period related to competition from Figma and the adequacy of Adobe’s existing offerings to counter harms Adobe may have faced due to Figma’s growing market position were materially false and misleading.
Legal proceedings: allegations concerning competition from Figma · Filed 22/09/2026
The laws, regulations and codes above may impact our innovation and business drivers in developing new and emerging technologies (for example, AI and machine learning) and may impact demand for our solutions and has resulted in more onerous obligations in our contracts and changes to our business practices, and may require us to bear additional burdensome contractual obligations and make additional changes to our business practices in the future.
Risk factors: realized increases in contractual obligations and changes in business practices · Filed 22/09/2026
•Cash flows from operations of $10.03 billion during fiscal 2025 increased by $1.98 billion, or 25%, compared to fiscal 2024.
Management discussion: fiscal 2025 operating cash flow · Filed 15/01/2026
Fiscal 2024 cash flows from operations were adversely impacted by payment of the $1 billion Figma termination fee.
Management discussion: prior-year cash-flow effect of acquisition termination fee · 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.
Liquidity and capital resources: fiscal 2025 repurchase payments · 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 stockholders' equity statement: repurchases, share reissuance and stock compensation · Filed 22/09/2026
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 hosting and data-center purchase commitments · Filed 15/01/2026
Executive Compensation | 2026 Proxy Statement 47 Table of Contents The following table shows the target and actual shares earned by each of our NEOs for the Relative TSR Goal for calendar years 2023 to 2025 under the 2023 PSP as certified by the Committee: 2023 Performance Share Program - Relative TSR Shares Earned For Calendar Years 2023 to 2025 Name(1) Actual Payout (%) Target Number of Shares(2) (#) Actual Number of Shares Earned (#) Shantanu Narayen 45 % 41,062 18,477 Daniel Durn 45 % 9,053 4,073 Anil Chakravarthy 45 % 14,195 6,387 David Wadhwani 45 % 14,195 6,387 ________________________ (1)Ms.
Executive compensation: certified executive payouts under the completed relative TSR component · 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-based compensation: certified payout of the completed 2023 performance share program · Filed 22/09/2026
Narayen’s Retention Agreement provides that all outstanding equity awards (provided that, for performance shares, vesting is solely to the extent shares are credited at the change of control) accelerate in vesting in full upon a COC, regardless of whether his employment is terminated.
Executive compensation: CEO equity acceleration upon change of control · 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.
Corporate governance highlights: voting rights, independent oversight and ownership policies · 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 structure: combined CEO and chair · 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 results against incentive targets · Filed 27/02/2026
• Achieves major milestone of 1 billion monthly active users (MAU) across creativity and productivity solutions
Earnings release: reported monthly active user milestone · Filed 10/09/2026
•Total Adobe Annualized Recurring Revenue (“ARR”) exiting the quarter was $27.10 billion, including approximately $480 million from Semrush.
Second-quarter financial highlights: ARR including acquired Semrush contribution · Filed 11/06/2026
SAN JOSE, Calif.--(BUSINESS WIRE)--Adobe (Nasdaq: ADBE) — Adobe's Board of Directors today announced that Anil Chakravarthy, president of Adobe’s Customer Experience Orchestration business and worldwide field operations, will become Adobe’s next president and chief executive officer and join the Board of Directors effective December 1, 2026.
CEO succession announcement: appointment effective December 1, 2026 · Filed 08/09/2026
Steve Day, SVP of Corporate Finance and CFO of Adobe’s Customer Experience Orchestration Business Unit, will serve as interim Chief Financial Officer, effective June 15, 2026.
Earnings release: interim CFO appointment effective June 15, 2026 · Filed 11/06/2026
We also continue to employ a pricing strategy, as appropriate, to migrate our customers to higher-value offerings as well as attract past customers and potential users to try out our products and ultimately subscribe.
Business strategy: intended migration to higher-value offerings through pricing · Filed 17/01/2024
charged the increased price for Creative Cloud Pro
Creative Cloud Pro individual-plan pricing changes: increased price charged; regional exclusions apply. · Retrieved 18/10/2026
your subscription renewal date on or after June 17, 2025
Creative Cloud Pro individual-plan pricing changes: applicable subscription renewal timing. · Retrieved 18/10/2026
