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    ADBE
    Earnings call· Feb 2026(Q1 FY26)

    ADOBE Q1 FY26 earnings call ADBE

    Mar 12, 2026 Source

    Executive summary

    Adobe Inc. Q1 FY26 — Strong AI-Driven Growth and CEO Transition

    Adobe delivered a strong Q1 FY26, driven by robust AI-infused product adoption and enterprise solutions, despite a faster-than-anticipated decline in its traditional stock business. The company is strategically expanding its freemium offerings to drive new user acquisition and usage, which is expected to accelerate monetization in the latter half of the year. CEO Shantanu Narayen announced his transition, initiating a search for his successor while reaffirming commitment to the company's AI-driven growth strategy.

    Highlights

    5

    • Q1 revenue reached $6.4 billion, growing 11% year-over-year.

    • Non-GAAP EPS increased 19% year-over-year to $6.06.

    • AI-first applications ending ARR more than tripled year-over-year.

    • Monthly active users (MAU) across Acrobat, Creative Cloud, Express, and Firefly surpassed 850 million, up 17% year-over-year.

    • Cash flows from operations were a Q1 record of $2.96 billion.

    Concerns

    1

    • Traditional stand-alone stock business experienced a steeper decline than expected, impacting total ARR growth by 0.3 percentage points.

    Guidance & targets

    8
    CategoryTargetConfidence
    Total Adobe ARR growth
    10.2%
    high materiality
    High
    Total Adobe revenue
    $6.43 billion to $6.48 billion
    high materiality
    High
    Business Professionals & Consumers subscription revenue
    $1.80 billion to $1.82 billion
    medium materiality
    High
    Creative & Marketing Professionals subscription revenue
    $4.41 billion to $4.44 billion
    medium materiality
    High
    GAAP EPS
    $4.35 to $4.40
    high materiality
    High
    Non-GAAP EPS
    $5.80 to $5.85
    high materiality
    High
    Non-GAAP operating margin
    approximately 44.5%
    high materiality
    High
    Non-GAAP tax rate
    approximately 18%
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Business Professionals & Consumers
    Sustained double-digit ending ARR growth across all geographies, strong upgrades to Acrobat Studio as part of enterprise license renewals.
    Acrobat and Express MAU growth: ~20% YoYAcrobat AI Assistant ARR growth: ~3x YoY
    		$1.78B16% reported, 15% constant currency——
    Creative & Marketing Professionals
    Growth in Creative Cloud driven by CC Pro offering, strong pipeline momentum for new AI offerings across LLM Optimizer, Sites Optimizer and Brand Concierge, continued strength and retention across the enterprise customer base.
    Creative freemium MAU: >80M, 50% YoY growthGenerative credit consumption: >45% QoQ increaseFirefly ending ARR (app, credit packs, Enterprise): >$250MGenStudio and AEP and apps ending ARR: >30% YoY growthCustomers with ARR over $10M: >20% YoY growth
    		$4.39B12% reported, 11% constant currency——

    Operational metrics

    20
    GAAP Operating Margin
    37.8%
    Q1 FY26
    Non-GAAP Operating Margin
    47.4%
    Q1 FY26
    Cash Flows from Operations
    $2.96B
    Q1 FY26

    Q1 record

    Cash and Short-Term Investments
    $6.89B
    Q1 FY26

    Exiting Q1

    Shares Repurchased
    8.1M
    Q1 FY26
    Remaining Buyback Authorization
    $3.89B
    Q1 FY26
    Traditional Stand-alone Stock Business
    $450M
    Q1 FY26

    Book of business, experienced steeper decline than expected.

    AEP Platform Segment Evaluations
    35T
    per day
    AEP Platform Profile Activations
    70B
    per day
    Retail Traffic from LLMs (Holiday Season 2025)
    7xincrease
    2025 Holiday Season

    According to Adobe Digital Insights.

    LLM Referrals Conversion Rate
    31%higher
    2025 Holiday Season

    Compared to other traffic.

    LLM Referrals Revenue per Visit
    254%more
    2025 Holiday Season

    Compared to other traffic.

    AEP AI Assistant Customer Usage
    70%
    Q1 FY26

    Of all AEP customers using agentic capabilities.

    Custom Models (Firefly Services and Foundry)
    2500+
    since launch

    As part of the GenStudio solution.

    Super Bowl Analytics Server Hits
    8B
    2026 Super Bowl

    Adobe-enabled experiences.

    Super Bowl Concurrent Viewers
    21M
    2026 Super Bowl

    Adobe-enabled experiences.

    Super Bowl Page Views
    34M
    2026 Super Bowl

    Adobe-enabled experiences.

    Super Bowl Video Requests per Minute
    1.5M
    2026 Super Bowl

    Adobe-enabled experiences.

    Super Bowl Emails Delivered
    216M
    2026 Super Bowl

    Adobe-enabled experiences.

    cRPO as % of Next 12-Month Revenue
    51-52%consistent
    historical rolling quarterly basis

    Analyst observation on historical consistency of cRPO as a proportion of estimated next 12-month revenue.

    Industry KPIs

    9
    MetricValueDetails
    Revenue growth$6.40BUSD
    Arr net new arr$26.06BUSD
    Rpo current rpo$22.22BUSD
    Customer account count850M+users
    Large customer cohorts—
    Acquisition contribution—
    Gross retention renewal rate—
    Operating FCF margin rule of 4047.4%%
    Ai product adoption monetization850M+users

    Orderbook & backlog

    2
    Total RPO$22.22BQ1 FY26 end

    13% YoY reported, 12% YoY constant currency

    Current RPO (cRPO)Not stated as absolute valueQ1 FY26 end

    12% YoY reported, 11% YoY constant currency

    cRPO is the portion of RPO expected to be recognized as revenue within the next 12 months.

    Product announcements

    4
    ProductTypeDetails
    Adobe Acrobat Studiolaunch
    Acrobat and Express for ChatGPTlaunch
    Adobe LLM Optimizerlaunch
    Adobe Brand Conciergelaunch

    Deals & partnerships

    4
    Semrushacquisition

    Acquisition expected to close in Q2, subject to regulatory approvals and closing conditions. Not included in current financial targets.

    Airtelpartnership

    New Express partnership in India, illustrating acceleration of new user acquisition at scale.

    OpenAIpartnership

    Joint initiative to enable brands to create ads for ChatGPT.

    B5 Studios, Cantina Creative, Creative Artists Agency, United Talent Agency, WMEpartnership

    Firefly Foundry continues to build momentum in the media and entertainment vertical through these partnerships.

    Risks & headwinds

    1
    Faster-than-expected decline in traditional stock businessQ1 FY26

    Impacted total ARR growth by approximately 0.3 percentage points (10.9% reported vs. 11.2% without decline). Book of business is ~$450M.

    Mitigation: Focus on providing customers with choice between stock and generative AI offerings for creative and marketing workflows; aim to offer combined royalty-free stock plus generative AI.

    Q&A highlights

    6

    Given cRPO's consistent historical relationship (51-52% of next 12-month revenue), is there any reason to expect this revenue visibility to increase structurally in the future?

    Management is pleased with the current progression and performance, and does not foresee any structural changes that would alter the historical dynamic between RPO, cRPO, and revenue translation.

    “I don't see any reason why the trends we've seen in the business historically would inflect to drive a different dynamic as it relates to RPO, cRPO and translation to revenue.”

    asked by Jay Vleeschhouwer · answered by Daniel Durn

    2 min read5 chapters

    Detailed Narrative

    01

    CEO Transition and Strategic Priorities

    Shantanu Narayen announced his transition from CEO after 18 years, while remaining Chair of the Board to ensure a smooth succession. He emphasized the company's commitment to its fiscal '26 strategic priorities, focusing on AI transformation, customer-centric product strategy, and expanding innovation across flagship applications and new offerings like Adobe Acrobat Studio, Adobe Firefly, and Adobe GenStudio. The search for a new CEO is expected to take a few months, with the Board taking ownership of the selection process.

    02

    AI-Driven Product Innovation and Monetization

    Adobe is leveraging AI to reshape creation and work, expanding access through existing products like Creative Cloud and Acrobat, and reaching new audiences with Firefly and Express. The strategy involves driving new user acquisition, increasing AI usage through generative credit consumption, and automating content production for enterprises. The company is seeing strong momentum in AI-first applications, which more than tripled their ending ARR year-over-year, positioning them to become a significant revenue driver.

    03

    Enterprise Momentum and Customer Experience Orchestration

    Adobe's enterprise business is experiencing strong tailwinds from AI, with AEP and apps, as well as Adobe GenStudio ending ARR, growing over 30% year-over-year. The company is helping enterprises drive their AI strategy across customer experience orchestration, providing solutions for brand visibility, content supply chain, and customer engagement. Partnerships with global leaders like Accenture and Deloitte, along with new offerings like Adobe LLM Optimizer and Brand Concierge, underscore Adobe's leadership in this space.

    04

    Freemium Strategy and User Adoption

    Adobe's freemium strategy, particularly with Creative freemium MAU crossing 80 million (up 50% YoY) and Express MAU tripling YoY, is driving significant new user acquisition. While this approach has a near-term impact on ARR, it builds brand loyalty and sets the foundation for accelerated long-term growth through increased engagement and eventual monetization. The company views this as a strategic shift to meet evolving customer preferences to 'try before they buy'.

    05

    Partnerships and Ecosystem Expansion

    Adobe is actively integrating its capabilities with leading AI platforms such as Anthropic, Google, Microsoft, NVIDIA, and OpenAI, providing customers with choice and flexibility. The company is also forming strategic partnerships with advertising platforms like Amazon Ads, Google, LinkedIn, and Meta to help monetize creative content and enhance campaign efficacy. These collaborations are seen as additive to Adobe's market opportunity, expanding its reach and reinforcing its role in the broader digital ecosystem.

    AI-generated summary of the company’s earnings call. Not investment advice.