AI Takeaway
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.
Revenue
$6.62B
++12.69% YoY
EPS (Basic)
$4.26
++7.85% YoY
Gross Margin
89.2%
++0.06% YoY
Operating Income
$2.24B
++6.12% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Adobe's total revenue reached $6.62B in Q2 FY2026, up 12.7% YoY from $5.87B, indicating continued demand for its creative and document cloud products. The gross profit grew in lockstep at 12.8% YoY to $5.90B, maintaining a near-identical gross margin of ~89.2%.
Source: Source: 10-Q Income Statement
Despite strong top-line growth, operating income rose only 6.1% YoY to $2.24B, causing operating margin to contract from 35.9% to 33.8% — a decline of approximately 2.1 percentage points. This suggests operating expenses are growing faster than revenue, likely reflecting increased R&D and sales investments, potentially tied to AI product development.
Source: Source: 10-Q Income Statement & Key Ratios
Net income grew just 1.2% YoY to $1.71B despite 12.7% revenue growth, implying meaningful below-the-line cost increases such as higher interest expense, taxes, or other non-operating items. Net margin stood at approximately 25.9%.
Source: Source: 10-Q Income Statement
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Upgrade to unlockAdobe's current ratio stands at 0.75, meaning current liabilities of $12.08B significantly exceed current assets of $9.07B. This 33.6% YoY surge in current liabilities could reflect deferred revenue reclassification or upcoming debt maturities, and warrants close attention to near-term liquidity management.
Source: Source: 10-Q Balance Sheet
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Upgrade to unlockReported EPS of $5.96 versus the $5.94 analyst consensus — a +0.4% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $6.62B | $5.87B | +12.69% |
Cost of Revenue | $715M | $638M | +12.07% |
Gross Profit | $5.9B | $5.24B | +12.76% |
Operating Income | $2.24B | $2.11B | +6.12% |
Net Income | $1.71B | $1.69B | +1.24% |
EPS (Basic) | $4.26 | $3.95 | +7.85% |
EPS (Diluted) | $4.25 | $3.94 | +7.87% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $29.93B | $28.11B | +6.50% |
Current Assets | $9.07B | $8.98B | +1.00% |
Total Liabilities | $18.41B | $16.66B | +10.54% |
Current Liabilities | $12.08B | $9.04B | +33.62% |
Stockholders' Equity | $11.52B | $11.45B | +0.61% |
Cash & Equivalents | $4.92B | $4.93B | -0.24% |
Long-Term Debt | $4.8B | $6.17B | -22.12% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $5.12B | $4.67B | +9.63% |
Investing Cash FlowYTD | $-1.24B | $-762M | -62.73% |
Financing Cash FlowYTD | $-4.4B | $-6.63B | +33.64% |
Share BuybacksYTD | $4.59B | $6.75B | -32.01% |
D&AYTD | $367M | $426M | -13.85% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 89.2% | 89.1% | +0.06% |
Operating Margin | 33.8% | 35.9% | -2.09% |
Net Margin | 25.9% | — | — |
ROE | 14.9% | — | — |
ROA | 5.7% | — | — |
Current Ratio | $0.751 | — | — |
Debt to Equity | $1.599 | — | — |
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.
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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Based on the filing data, Adobe reported Q2 FY2026 diluted EPS of $4.25, up 7.9% YoY, and revenue of $6.62B, up 12.7% YoY. Whether these figures beat Wall Street consensus estimates would require comparison to analyst forecasts, which are not included in the SEC filing itself.
Adobe's Q2 FY2026 results showed strong revenue growth of 12.7% to $6.62B, but net income grew only 1.2% to $1.71B as operating margin compressed 2.1 percentage points to 33.8%. The company generated robust YTD operating cash flow of $5.12B, though the current ratio fell below 1.0 at 0.75 due to a 33.6% surge in current liabilities.
Adobe's revenue grew 12.7% YoY to $6.62B in Q2 FY2026, up from $5.87B in the same quarter last year. Gross profit grew at a nearly identical pace of 12.8% to $5.90B, maintaining a gross margin of approximately 89.2%, reflecting the scalability of Adobe's subscription software model.
Key financial risks evident from Adobe's Q2 FY2026 filing include operating margin compression of 2.1 percentage points YoY to 33.8%, a current ratio below 1.0 at 0.75 indicating short-term liquidity pressure, and net income growing just 1.2% despite 12.7% revenue growth. The company also carries a debt-to-equity ratio of approximately 1.60, reflecting meaningful financial leverage.
Adobe's financial health is broadly solid, with $4.92B in cash, strong YTD operating cash flow of $5.12B, and a near-90% gross margin. However, the current ratio of 0.75 and a debt-to-equity ratio of 1.60 indicate some balance sheet leverage, and the gap between revenue growth (12.7%) and net income growth (1.2%) suggests rising cost pressures that investors should monitor.