AI Takeaway
Adobe delivered strong Q1 FY2026 results with revenue of $6.40B (+12.0% YoY) and operating cash flow of $2.96B (+19.2% YoY), though net income growth lagged at +4.3% and the current ratio dipped below 1.0, signaling near-term liquidity tightness.
Revenue
$6.4B
++11.97% YoY
EPS (Basic)
$4.60
++10.84% YoY
Gross Margin
89.6%
++0.51% YoY
Operating Income
$2.42B
++11.79% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Adobe grew total revenue to $6.40B in Q1 FY2026, up 12.0% YoY from $5.71B, reflecting continued demand across its Digital Media and Digital Experience segments. The gross profit expanded to $5.73B (+12.6% YoY), maintaining an industry-leading gross margin of approximately 89.6%.
Source: Source: 10-Q Income Statement
Operating income reached $2.42B (+11.8% YoY), with operating margin holding near 37.8%, essentially flat YoY (-0.1 ppt). This suggests Adobe is managing cost growth effectively even as it invests in AI and product innovation, though cost of revenue grew 6.8% YoY to $664M.
Source: Source: 10-Q Income Statement
Operating cash flow surged to $2.96B in Q1 FY2026, up 19.2% YoY from $2.48B, demonstrating Adobe's strong cash conversion. Investing cash flow turned sharply positive at $474M vs. -$484M in the prior year, likely reflecting maturities or sales of short-term investments.
Source: Source: 10-Q Cash Flow Statement
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Upgrade to unlockAdobe's current ratio fell to 0.91 in Q1 FY2026, meaning current liabilities of $11.39B exceed current assets of $10.39B. This is partly structural (deferred revenue is a large current liability), but it warrants monitoring as rising short-term obligations could pressure liquidity if cash generation slows.
Source: Source: 10-Q Balance Sheet
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Upgrade to unlockReported EPS of $6.06 versus the $5.99 analyst consensus — a +1.2% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $6.4B | $5.71B | +11.97% |
Cost of Revenue | $664M | $622M | +6.75% |
Gross Profit | $5.73B | $5.09B | +12.61% |
Operating Income | $2.42B | $2.16B | +11.79% |
Net Income | $1.89B | $1.81B | +4.31% |
EPS (Basic) | $4.60 | $4.15 | +10.84% |
EPS (Diluted) | $4.60 | $4.14 | +11.11% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $29.7B | $29.95B | -0.84% |
Current Assets | $10.39B | $10.86B | -4.32% |
Total Liabilities | $18.27B | $16.86B | +8.37% |
Current Liabilities | $11.39B | $9.16B | +24.30% |
Stockholders' Equity | $11.43B | $13.1B | -12.69% |
Cash & Equivalents | $6.33B | $6.76B | -6.30% |
Long-Term Debt | $5.38B | $6.16B | -12.61% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $2.96B | $2.48B | +19.18% |
Investing Cash Flow | $474M | $-484M | +197.93% |
Financing Cash Flow | $-2.54B | $-2.84B | +10.45% |
Share Buybacks | $2.48B | $3.25B | -23.75% |
D&A | $174M | $217M | -19.82% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 89.6% | 89.1% | +0.51% |
Operating Margin | 37.8% | 37.9% | -0.06% |
Net Margin | 29.5% | — | — |
ROE | 16.5% | — | — |
ROA | 6.4% | — | — |
Current Ratio | $0.912 | — | — |
Debt to Equity | $1.598 | — | — |
Adobe delivered solid Q2 FY2026 revenue growth of 12.7% YoY to $6.62B, but net income grew only 1.2% as operating margin compressed 2.1 percentage points, reflecting rising cost pressures even as the business generated strong operating cash flow of $5.12B year-to-date.
Adobe delivered strong FY2025 results with revenue growing 10.5% to $23.8B, operating income surging 29.1% to $8.7B, and operating cash flow reaching $10.0B, while the company returned $11.3B to shareholders via buybacks.
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Adobe reported Q1 FY2026 revenue of $6.40B, up 12.0% YoY, with diluted EPS of $4.60 (+11.1% YoY) and operating cash flow of $2.96B (+19.2% YoY). Gross margin held near 89.6%, reflecting the strength of its subscription software model.
Yes, Adobe grew revenue 12.0% YoY to $6.40B in Q1 FY2026, up from $5.71B in the prior year period. Gross profit grew even faster at 12.6% YoY to $5.73B, indicating improving cost efficiency.
Key risks include a current ratio below 1.0 (0.91), elevated debt-to-equity of 1.60 from sustained buybacks, and net income growth of only 4.3% lagging the 12% revenue growth. Competitive pressure from AI-native tools also poses a strategic risk to Adobe's core creative franchises.
Adobe repurchased $2.48B in shares during Q1 FY2026, down 23.8% from $3.25B in the prior year quarter. These buybacks contributed to a 12.7% YoY decline in stockholders' equity to $11.43B.
Adobe's financial health is broadly strong, with $6.33B in cash, $2.96B in quarterly operating cash flow, and a 89.6% gross margin. However, the current ratio of 0.91 and debt-to-equity of 1.60 indicate the balance sheet carries more leverage than in prior years, warranting attention.