We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Adobe Q1 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall
Read MoreHide Full Article
Key Takeaways
ADBE reported Q1 FY26 EPS of $6.06 and $6.398B revenue, both topping estimates.
Adobe's subscription revenues rose 13% to $6.198B, making up 96.9% of total revenues in the quarter.
ADBE guided fiscal Q2 revenues to $6.43B-$6.48B and reaffirmed FY26 revenue outlook of $25.9B-$26.1B.
Adobe (ADBE - Free Report) reported first-quarter fiscal 2026 non-GAAP earnings of $6.06 per share, beating the Zacks Consensus Estimate by 3.06% and increasing 19.3% year over year.
Total revenues were $6.398 billion, which beat the consensus mark by 1.86% and increased 12% year over year on a reported and 11% on a constant-currency (cc) basis. Annualized recurring revenues (ARR) at the end of the first quarter of fiscal 2026 were $26.06 billion.
Adobe shares were down 8.15% at the time of writing this article. ADBE dropped 31.6% in the past year, underperforming the Zacks Computer and Technology sector’s return 31.9% and the Zacks Computer Software industry’s drop 1.7%.
ADBE’s Top Line in Detail
Subscription revenues were $6.198 billion (which accounted for 96.9% of the total revenues), up 13% on a year-over-year basis. Product revenues totaled $90 million (1.4% of the total revenues), down 5.3% year over year. Services and other revenues were $110 million (1.7% of the total revenues), down 19.1% year over year.
Customer Group subscription revenues were $6.17 billion, up 13% year over year and 12% at cc. Business Professionals and Consumers’ subscription revenues were $1.78 billion, which represents 16% year-over-year growth on a reported basis and 15% at cc. Creative and Marketing Professionals subscription revenues were $4.39 billion, up 12% year over year on a reported basis and 11% at cc.
Adobe reported first-quarter fiscal 2025 GAAP gross margin of 89.6%, which expanded 50 basis points (bps) on a year-over-year basis.
Operating expenses were $3.32 billion, up 13.2% year over year. As a percentage of total revenues, operating expenses increased 60 bps year over year to 51.8%.
The adjusted operating margin was 47.4%, which contracted 10 bps year over year.
ADBE’s Balance Sheet & Cash Flow
As of Feb. 27, 2026, the cash and short-term investment balance was $6.89 billion, up from $6.6 billion as of Nov. 28, 2025. Long-term debt, as of Feb. 27, was $5.38 billion compared with $6.2 billion as of Nov. 28.
Cash generated from operations was $2.96 billion in the reported quarter compared with $3.16 billion in the previous quarter.
Adobe Offers Positive Q2 and FY26 Guidance
For the second quarter of fiscal 2026, Adobe expects total revenues between $6.43 billion and $6.48 billion. Adobe expects Business Professionals and Consumers’ subscription revenue between $1.80 billion and $1.82 billion. Creative and Marketing Professionals subscription revenues are expected between $4.41 billion and $4.44 billion.
Non-GAAP operating margin is expected to be 44.5%. Adobe expects fiscal second-quarter non-GAAP earnings between $5.85 and $5.90 per share.
For fiscal 2026, Adobe still expects total revenues between $25.9 billion and $26.1 billion. Adobe expects Business Professionals and Consumers’ subscription revenues between $7.35 billion and $7.4 billion. Creative and Marketing Professionals subscription revenues are expected between $17.75 billion and $17.9 billion.
Non-GAAP operating margin is expected to be 45%. Adobe expects fiscal 2026 non-GAAP earnings between $23.30 and $23.50 per share.
Zacks Rank & Stocks to Consider
Currently, ADBE carries a Zacks Rank #3 (Hold).
Western Digital (WDC - Free Report) , Teradyne (TER - Free Report) and Silicon Motion Technology (SIMO - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
View the Zacks #1 Rank List
Image: Bigstock
Adobe Q1 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall
Key Takeaways
Adobe (ADBE - Free Report) reported first-quarter fiscal 2026 non-GAAP earnings of $6.06 per share, beating the Zacks Consensus Estimate by 3.06% and increasing 19.3% year over year.
Total revenues were $6.398 billion, which beat the consensus mark by 1.86% and increased 12% year over year on a reported and 11% on a constant-currency (cc) basis. Annualized recurring revenues (ARR) at the end of the first quarter of fiscal 2026 were $26.06 billion.
Adobe shares were down 8.15% at the time of writing this article. ADBE dropped 31.6% in the past year, underperforming the Zacks Computer and Technology sector’s return 31.9% and the Zacks Computer Software industry’s drop 1.7%.
ADBE’s Top Line in Detail
Subscription revenues were $6.198 billion (which accounted for 96.9% of the total revenues), up 13% on a year-over-year basis. Product revenues totaled $90 million (1.4% of the total revenues), down 5.3% year over year. Services and other revenues were $110 million (1.7% of the total revenues), down 19.1% year over year.
Customer Group subscription revenues were $6.17 billion, up 13% year over year and 12% at cc. Business Professionals and Consumers’ subscription revenues were $1.78 billion, which represents 16% year-over-year growth on a reported basis and 15% at cc. Creative and Marketing Professionals subscription revenues were $4.39 billion, up 12% year over year on a reported basis and 11% at cc.
Adobe Inc. Price, Consensus and EPS Surprise
Adobe Inc. price-consensus-eps-surprise-chart | Adobe Inc. Quote
ADBE Q1 Operating Details
Adobe reported first-quarter fiscal 2025 GAAP gross margin of 89.6%, which expanded 50 basis points (bps) on a year-over-year basis.
Operating expenses were $3.32 billion, up 13.2% year over year. As a percentage of total revenues, operating expenses increased 60 bps year over year to 51.8%.
The adjusted operating margin was 47.4%, which contracted 10 bps year over year.
ADBE’s Balance Sheet & Cash Flow
As of Feb. 27, 2026, the cash and short-term investment balance was $6.89 billion, up from $6.6 billion as of Nov. 28, 2025. Long-term debt, as of Feb. 27, was $5.38 billion compared with $6.2 billion as of Nov. 28.
Cash generated from operations was $2.96 billion in the reported quarter compared with $3.16 billion in the previous quarter.
Adobe Offers Positive Q2 and FY26 Guidance
For the second quarter of fiscal 2026, Adobe expects total revenues between $6.43 billion and $6.48 billion. Adobe expects Business Professionals and Consumers’ subscription revenue between $1.80 billion and $1.82 billion. Creative and Marketing Professionals subscription revenues are expected between $4.41 billion and $4.44 billion.
Non-GAAP operating margin is expected to be 44.5%. Adobe expects fiscal second-quarter non-GAAP earnings between $5.85 and $5.90 per share.
For fiscal 2026, Adobe still expects total revenues between $25.9 billion and $26.1 billion. Adobe expects Business Professionals and Consumers’ subscription revenues between $7.35 billion and $7.4 billion. Creative and Marketing Professionals subscription revenues are expected between $17.75 billion and $17.9 billion.
Non-GAAP operating margin is expected to be 45%. Adobe expects fiscal 2026 non-GAAP earnings between $23.30 and $23.50 per share.
Zacks Rank & Stocks to Consider
Currently, ADBE carries a Zacks Rank #3 (Hold).
Western Digital (WDC - Free Report) , Teradyne (TER - Free Report) and Silicon Motion Technology (SIMO - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
Western Digital, Teradyne and Silicon Motion each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Western Digital, Teradyne and Silicon Motion is currently pegged at 51.11%, 27.28% and 28.05%, respectively.