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The call presented multiple strong operating and financial positives — record revenue, ARR growth, large MAU and traffic gains, rapid AI‑first and Firefly ARR traction, sizable SEMrush acquisition, and healthy cash flow and buybacks. Management also articulated a strategic pivot to aggressively grow freemium MAU to capture the AI‑driven opportunity. That pivot and the decision to defer Creative Cloud pricing/line optimizations create an explicit near‑term ARR headwind, plus a small non‑cash impairment and leadership transitions add short‑term risk. On balance, the fundamental business momentum, AI traction, and raised financial targets outweigh the near‑term trade‑offs and risks.
Adobe raised full‑year FY26 financial targets, now guiding total revenue of $20.5–20.6 billion and non‑GAAP EPS of $24.35–24.45 (GAAP EPS $17.90–18.00), with Business Professionals & Consumers subscription revenue of $7.44–7.48 billion and Creative & Marketing Professionals subscription revenue of $18.21–18.27 billion (including roughly $280M from the SEMrush acquisition); it targets total Adobe ARR growth of 10.2% year‑over‑year off a $25.6B beginning book (Q2 ending ARR was $27.1B, +12.5% Y/Y, with SEMrush adding about $480M ARR). For Q3 FY26 Adobe guides revenue of $6.67–6.72 billion, BP&C subscription revenue of $1.87–1.89 billion, Creative & Marketing subscription revenue of $4.61–4.64 billion, GAAP EPS $4.40–4.45 and non‑GAAP EPS $6.05–6.10; FY assumptions include a ~45% non‑GAAP operating margin (Q3 ~44%), a GAAP tax rate ~22.5% (Q3 ~23%) and a non‑GAAP tax rate ~18%. Q2 exit metrics disclosed: total customer group subscription revenue $6.39B (+14% Y/Y), RPO $22.27B (+13% Y/Y), operating cash flow $2.17B, cash & short‑term investments $5.63B, ~8.5M shares repurchased in the quarter and roughly $27B remaining under buyback authorizations.
Q2 revenue of $6.62 billion, up 11% year‑over‑year (13% as reported). GAAP EPS of $4.25 (+8% YoY) and non‑GAAP EPS of $5.96 (+18% YoY). Management cited record top‑line revenue and disciplined investments as drivers of EPS growth.
Total ending ARR of $27.1 billion, up 12.5% year‑over‑year (includes ~ $480M from SEMrush). Total customer group subscription revenue $6.39 billion, up 14% YoY (12% constant currency). RPO/CRPO exited at $22.27 billion, both up ~13% YoY.
Adobe reported AI‑first ARR grew approximately 3x year‑over‑year to greater than $500 million. Firefly ARR grew ~50% quarter‑over‑quarter and Firefly ending ARR is approaching $300 million exiting Q2.
Acrobat and Express MAU rose from >700 million to >850 million year‑over‑year (~20% growth). Creative freemium MAU increased from ~50 million to ~90 million YoY (management cited ~70%+ YoY). Adobe.com traffic showed strong increases: business and consumer traffic +35% YoY, while overall creativity/productivity traffic referenced +40% to +50% YoY in segments.
GenStudio ARR grew >25% YoY. AEP and native apps subscription revenue grew >30% YoY. AEP scale metrics: ~70 billion profile activations and ~35 trillion segment evaluations per day, and >1 trillion experiences delivered per year. Over 80% of AEP/AEM customers using agentic capabilities; 1.5k customer trials for agentic web offerings.
Closed SEMrush acquisition in April; SEMrush contributed ~ $480 million ARR to Adobe's book of business. Company plans to integrate SEMrush for brand visibility and generative SEO capabilities (announcements planned at Cannes).
Operating cash flow of $2.17 billion in the quarter; cash and short‑term investments of $5.63 billion. Repurchased ~8.5 million shares in Q2 and reported ~$27 billion remaining under authorizations (includes new $25 billion authorization announced in April).
Given strong first‑half performance and SEMrush inclusion, management raised FY26 revenue and non‑GAAP EPS targets. FY revenue target set at $20.5–20.6 billion and non‑GAAP EPS target set at $24.35–24.45.
Good day. And welcome to the Q2 FY 26 Adobe Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Douglas G. Clark, Vice President of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's chair and CEO; David Wadhwani, president of creativity and productivity; Anil S. Chakravarthy, president of customer experience orchestration; and Steven Day, Senior Vice President, Corporate Finance, and CFO of customer experience orchestration. On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 26 financial results. You can find our press release as well as PDFs of our prepared remarks and financial results on Adobe's Investor Relations website. The information discussed on this call, including our financial targets and product plans, is as of today, June 11, and contains forward looking statements that involve risk, uncertainty and assumptions. Actual results may differ materially from those set forth in these statements. For more information on those risks, please review today's earnings release and Adobe's SEC filings.
On this call, we will discuss GAAP and non GAAP financial measures. Our reported results include GAAP growth rates, and non GAAP growth rates, including constant currency rates. During this presentation, Adobe's executives will refer to revenue growth in constant currency rates unless otherwise stated. Non GAAP reconciliations are available in our earnings release and on Adobe's In...
