Adobe ADBE · USD

REVENUESegment InformationWe report segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments.Our Chief Executive Officer, the company’s chief operating decision maker (“CODM”), reviews revenue and gross margin information for each of our segments to assess segment performance and allocate resources. Segment revenue and gross margin information is primarily reviewed by comparing actual results to prior period results. Our CODM does not review individual significant costs within segment cost of revenue to assess performance, and also does not review operating expense or asset information on a segment by segment basis. During fiscal 2025, our business was organized into the following reportable segments:•Digital Media—Our Digital Media segment provides products and services that enable individuals, teams, businesses, and enterprises to create, publish and promote their content anywhere and accelerate their productivity by transforming how they view, share, engage with and collaborate on documents and creative content. Our customers span creative professionals, including graphic designers, photographers, videographers, illustrators and 3D artists; creators, including social media influencers and solopreneurs; business professionals, including social media teams, small business owners and knowledge workers; and consumers. •Digital Experience—Our Digital Experience segment provides marketing professionals with an integrated platform and set of products, services and solutions that enable businesses to create, manage, execute, measure, monetize and optimize customer experiences that span from analytics to commerce. Our customers include marketers, advertisers, brand managers, campaign strategists, merchandisers, merchants, data analysts, developers and executives across the C-suite. •Publishing and Advertising—Our Publishing and Advertising segment contains legacy products and services that address diverse market opportunities, including eLearning solutions, technical document publishing, web conferencing, document and forms platform, web app development, high-end printing and our Adobe Advertising offerings.

COMMITMENTS AND CONTINGENCIESUnconditional Purchase ObligationsOur principal commitments consist of purchase obligations resulting from agreements to purchase goods and services in the ordinary course of business. The following table summarizes our non-cancellable unconditional purchase obligations for each of the next five years and thereafter as of November 28, 2025, primarily relating to contracts with vendors for third-party hosting and data center services:(in millions) Fiscal YearPurchase Obligations2026$2,083 20271,901 20281,623 20291,196 203012 Thereafter6 Total$6,821 AcquisitionsOn November 18, 2025, we entered into a definitive agreement to acquire Semrush Holdings, Inc., a publicly held brand visibility platform company, for approximately $1.9 billion of cash consideration. The transaction is subject to regulatory approvals and customary closing conditions and is expected to close in the first half of fiscal 2026.RoyaltiesWe have royalty commitments associated with the licensing of certain offerings and products. Royalty expense is generally based on a dollar amount per unit or a percentage of the underlying revenue. Royalty expense, which was recorded in our cost of revenue on our Consolidated Statements of Income, was approximately $283 million, $259 million and $246 million in fiscal 2025, 2024 and 2023, respectively.IndemnificationsIn the ordinary course of business, we provide indemnifications of varying scope to our customers and channel partners against claims of intellectual property infringement made by third parties arising from the use of our products and from time to time, we are subject to claims by our customers under these indemnification provisions. Historically, costs related to these indemnification provisions have not been significant and we are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations.To the extent permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is or was serving at our request in such capacity. The indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime.

DEBTThe carrying value of our borrowings as of November 28, 2025 and November 29, 2024 were as follows:(dollars in millions)Issuance DateDue DateEffective Interest Rate202520241.90% 2025 NotesFebruary 2020February 20252.07%$— $500 3.25% 2025 NotesJanuary 2015February 20253.67%— 1,000 2.15% 2027 NotesFebruary 2020February 20272.26%850 850 4.85% 2027 NotesApril 2024April 20275.03%500 500 4.75% 2028 NotesJanuary 2025January 20284.93%800 — 4.80% 2029 NotesApril 2024April 20294.93%750 750 4.95% 2030 NotesJanuary 2025January 20305.09%700 — 2.30% 2030 NotesFebruary 2020February 20302.69%1,300 1,300 4.95% 2034 NotesApril 2024April 20345.03%750 750 5.30% 2035 NotesJanuary 2025January 20355.40%500 — Total debt outstanding, at par$6,150 $5,650 Less: Current portion of debt, at par— (1,500)Fair value of interest rate swaps86 — Unamortized discount and debt issuance costs(26)(21)Carrying value of long-term debt$6,210 $4,129 Current portion of debt, at par$— $1,500 Unamortized discount and debt issuance costs— (1)Carrying value of current debt$— $1,499 Senior NotesIn January 2025, we issued $800 million of senior notes due January 17, 2028, $700 million of senior notes due January 17, 2030 and $500 million of senior notes due January 17, 2035. Our total proceeds were approximately $1.99 billion, net of an issuance discount of $3 million and total issuance costs of $9 million.In February 2025, $1.5 billion of senior notes became due and were repaid.Discounts and issuance costs on our senior notes are amortized to interest expense over the terms of the respective notes using the effective interest method. Interest on the notes issued in February 2020 is payable semi-annually, in arrears, on February 1 and August 1. Interest on the notes issued in April 2024 is payable semi-annually, in arrears, on April 4 and October 4. Interest on the notes issued in January 2025 is payable semi-annually, in arrears, on January 17 and July 17.During fiscal 2025, we entered into interest rate swaps related to certain of our senior notes. The interest rate swaps effectively convert the fixed interest rates on the notes to floating interest rates based on the SOFR OIS. Under the terms of the swaps, we will pay quarterly interest at the daily compounded SOFR OIS plus a fixed number of basis points on the notional amount through the respective par call dates for the notes. In exchange, we will receive the fixed rate interest on the notes from the swap counterparties on a semi-annual basis.

INCOME TAXESIncome before income taxes for fiscal 2025, 2024 and 2023 consisted of the following:(in millions)202520242023Domestic$6,721 $4,160 $3,465 Foreign2,013 2,771 3,334 Income before income taxes$8,734 $6,931 $6,799 The provision for income taxes for fiscal 2025, 2024 and 2023 consisted of the following:(in millions)202520242023Current: United States federal$1,509 $1,292 $1,198 Foreign348 315 335 State and local261 232 260 Total current2,118 1,839 1,793 Deferred: United States federal(499)(580)(556)Foreign40 179 227 State and local(55)(67)(93)Total deferred(514)(468)(422)Provision for income taxes$1,604 $1,371 $1,371 Reconciliation of Provision for Income Taxes Total income tax expense differed from the income tax expense computed at the U.S. federal statutory rate of 21% as a result of the following:(in millions)202520242023Tax expense computed at U.S. federal statutory rate$1,834 $1,456 $1,428 Effects of non-U.S. operations(300)(198)(116)Tax credits(154)(150)(130)Tax settlements(55)(85)(14)State tax expense, net of federal benefit171 139 132 Stock-based compensation90 (23)29 Acquisition termination fee— 210 — Other18 22 42 Provision for income taxes$1,604 $1,371 $1,371 Deferred Tax Assets and LiabilitiesThe tax effects of the temporary differences that gave rise to significant portions of the deferred tax assets and liabilities as of November 28, 2025 and November 29, 2024 were as follows:(in millions)20252024Deferred tax assets: Capitalized expenses$2,065 $1,625 Credit carryforwards477 343 Net operating loss and capital loss carryforwards306 308 Accrued liabilities202 174 Intangible assets93 117 Stock-based compensation70 66 Operating lease liabilities68 79 Benefits relating to tax positions59 64 Total gross deferred tax assets3,340 2,776 Valuation allowance(806)(725)Total deferred tax assets2,534 2,051 Deferred tax liabilities:Acquired intangible assets144 180 Prepaid expenses112 112 Depreciation and amortization62 70 Operating lease right-of-use assets45 52 Other16 11 Total deferred tax liabilities379 425 Net deferred tax assets$2,155 $1,626 Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for tax loss and credit carryforwards.

STOCK-BASED COMPENSATIONOur stock-based compensation programs are long-term retention programs that are intended to attract, retain and provide incentives for employees, officers and directors, and to align stockholder and employee interests. We have the following stock-based compensation plans and programs:Restricted Stock Units and Performance Share ProgramsWe grant restricted stock units and performance share awards to eligible employees under our 2019 Equity Incentive Plan (“2019 Plan”). Restricted stock units generally vest over four years. Certain grants have other vesting periods approved by the Executive Compensation Committee of our Board of Directors (the “ECC”).As of November 28, 2025, we had reserved 76.0 million shares of our common stock for issuance under our 2019 Plan and had 32.8 million shares available for grant.Our Performance Share Programs aim to help focus key employees on building stockholder value, provide significant award potential for achieving outstanding company performance and enhance our ability to attract and retain highly talented and competent individuals. The ECC approves the terms of each of our Performance Share Programs, including the award calculation methodology. In January 2025, the ECC approved the 2025 Performance Share Program.Shares outstanding under our 2025, 2024 and 2023 Performance Share Programs may be earned based on the achievement of (i) an objective relative total stockholder return measured over a three-year performance period, as well as (ii) revenue-based financial metrics measured over three one-year performance periods. Each type of performance goal is weighted 50% and achievement of each performance goal is determined independently of the other. Shares associated with each performance goal are not awarded until the corresponding performance targets are defined. Performance share awards in each of our 2025, 2024 and 2023 Performance Share Programs will cliff-vest upon the later of (i) the three-year anniversary of the earliest vesting commencement date in the respective Performance Share Program, or (ii) the ECC's certification of the level of achievement of the final performance period in the respective Performance Share Program, contingent upon the participant’s continued service. Participants can earn between 0% and 200% of the target number of performance shares.

LEASESWe lease certain facilities and data centers under non-cancellable operating lease arrangements that expire at various dates through 2038. We also have one land lease that expires in 2091. Our lease agreements do not contain any material residual value guarantees, material variable payment provisions or material restrictive covenants. Operating lease expense was $92 million, $106 million and $117 million for fiscal 2025, 2024 and 2023, respectively. Our operating lease expense includes variable lease costs and is net of sublease income, both of which are not material.During fiscal 2024, we recognized impairment charges of $78 million associated with the optimization of our leased facilities, primarily for operating lease right-of-use assets and leasehold improvements, which were recorded as general and administrative expenses. There was no impairment recognized in the other periods presented.Supplemental cash flow information for fiscal 2025, 2024 and 2023 related to operating leases was as follows:(in millions)202520242023Cash paid for amounts included in the measurement of operating lease liabilities$95 $85 $97 Right-of-use assets obtained in exchange for operating lease liabilities$86 $62 $32 The weighted-average remaining lease term and weighted-average discount rate for our operating lease liabilities as of November 28, 2025 were 6 years and 3.30%, respectively.

Adobe has certain security processes, infrastructure, systems, policies and practices for assessing, identifying and managing risks from cybersecurity threats. We maintain an information security risk management framework for managing cybersecurity risks, priorities and projects for our products, services, infrastructure and corporate resources. As part of our framework, a cybersecurity risk steering committee meets regularly to review newly identified risks and progress on remediating existing risks.We conduct regular security reviews, simulations and testing, including internal and external penetration testing, vulnerability assessments and regular scans on our hosts and network devices. We review available threat intelligence, including information from industry groups and our security vendor. We consult with third parties, including cybersecurity consultants, as part of our cybersecurity threat and risk management strategy.Depending on the environment, our risk mitigation strategies include a variety of technical, physical and operational measures designed to manage and mitigate material risks from cybersecurity threats to our systems and data. We require employees annually to complete a general security awareness training, and additional engineering and security specific training may also be required for certain positions. Further, we maintain a vendor security review program, which is designed to provide an assessment of the security practices of those third-party vendors that process Adobe non-public data or connect to our networks. We maintain an information security incident response plan designed to monitor, analyze, address, escalate and report cybersecurity incidents, and escalate certain cybersecurity incidents to members of management depending on the circumstances.For a description of the risks from cybersecurity threats that may materially affect us, see the risks described in the section titled “Risk Factors” contained in Part I, Item IA of this report, including under the headings “Security incidents, improper access to or disclosure of our customers’ data or other cybersecurity incidents may harm our reputation and materially and adversely affect our business.

BENEFIT PLANSRetirement Savings PlanThe Adobe Inc. 401(k) Retirement Savings Plan, qualified under Section 401(k) of the Internal Revenue Code, is a retirement savings plan covering substantially all of our U.S. employees. Under the plan, eligible employees may contribute up to 65% of their pretax or after-tax salary, subject to the IRS annual contribution limits. In fiscal 2025, we matched 50% of the first 6% of the employee’s eligible compensation. We contributed $96 million, $91 million and $85 million in fiscal 2025, 2024 and 2023, respectively. We are under no obligation to continue matching future employee contributions and, at our discretion, may change our practices at any time.Deferred Compensation PlanThe Adobe Inc. Deferred Compensation Plan is an unfunded, non-qualified, deferred compensation arrangement under which certain executives are able to defer a portion of their annual compensation. Participants may elect to contribute up to 75% of their base salary and 100% of other specified compensation, including commissions and bonuses. Members of the Board of Directors are also eligible to participate and are able to defer their directors’ fees and elect cash benefit distributions in the same manner as executives. Additionally, members of the Board are permitted to defer equity awards. Participants are able to elect the payment of benefits to begin on a specified date at least three years after the end of the plan year in which election is made or, with respect to equity awards, vests. For cash benefit elections, distributions are made in cash in the form of a lump sum, or five, ten, or fifteen-year annual installments. For equity award elections, distributions are made in stock in the form of a lump sum payment only.Certain deferred compensation is invested in money market and other mutual funds and subsequently recorded as other assets on our Consolidated Balance Sheets, with corresponding unrealized holding gains and losses recorded as investment gains (losses) in our Consolidated Statements of Income. Undistributed deferred compensation is recorded as other liabilities on our Consolidated Balance Sheets.As of November 28, 2025 and November 29, 2024, the invested amounts under the plan totaled $342 million and $283 million, respectively. As of November 28, 2025 and November 29, 2024, undistributed deferred compensation due to participants totaled $354 million and $297 million, respectively.