Adobe joins the tracked set today, eleven weeks after it reported its May quarter on 11 June and ten days before it reports the August one on 10 September.
The operating record is the least interesting thing about it, because it barely moves. Fourteen stored quarters, every one of them growing revenue between 10.2% and 12.7% year over year, every one of them at a gross margin between 87.4% and 89.8%. The Rule of 40 score has cleared the line in ten consecutive quarters.
| Quarter | Revenue | YoY | FCF | FCF margin | R40 |
|---|---|---|---|---|---|
| 2024 Q1 | $5.18B | +11.3% | $1.14B | 21.9% | 33.3 |
| 2024 Q2 | $5.31B | +10.2% | $1.90B | 35.8% | 46.0 |
| 2024 Q3 | $5.41B | +10.6% | $1.96B | 36.3% | 46.9 |
| 2024 Q4 | $5.61B | +11.1% | $2.87B | 51.2% | 62.3 |
| 2025 Q1 | $5.71B | +10.3% | $2.46B | 43.0% | 53.2 |
| 2025 Q2 | $5.87B | +10.6% | $2.14B | 36.5% | 47.1 |
| 2025 Q3 | $5.99B | +10.7% | $2.13B | 35.5% | 46.2 |
| 2025 Q4 | $6.19B | +10.5% | $3.13B | 50.5% | 61.0 |
| 2026 Q1 | $6.40B | +12.0% | $2.92B | 45.7% | 57.6 |
| 2026 Q2 | $6.62B | +12.7% | $2.11B | 31.8% | 44.5 |
Quarters are Adobe's fiscal ones — the fiscal year ends on the Friday nearest 30 November, so "2026 Q2" is the thirteen weeks to 29 May 2026. On a trailing-four-quarter basis the score is 52.3: $25.20 billion of revenue growing 11.5% against a 40.8% free-cash-flow margin.
The multiple did all the moving
Set the same series next to the price and the picture inverts. Trailing GAAP diluted EPS has gone from $11.81 to $17.47 across the eleven quarters we can compute it for — up 48%. Over the same stretch the stock went from about $597 to $259 at the May quarter-end.
| Quarter end | Price | Trailing GAAP EPS | P/E |
|---|---|---|---|
| 2023 Q4 | $596.60 | $11.81 | 50.5 |
| 2024 Q2 | $444.76 | $11.13 | 40.0 |
| 2024 Q4 | $515.93 | $12.39 | 41.6 |
| 2025 Q2 | $415.09 | $15.62 | 26.6 |
| 2025 Q4 | $320.13 | $16.70 | 19.2 |
| 2026 Q1 | $262.41 | $17.16 | 15.3 |
| 2026 Q2 | $259.21 | $17.47 | 14.8 |
Earnings up 48%, multiple down 71%. At the 28 August close of $291.52 the trailing GAAP P/E is 16.7x — a software company compounding at 12% with an 89% gross margin, priced closer to a mature industrial than to its own peer group.
What the market is pricing
Three things happened inside eighteen months, and only one of them shows up in the table above.
The CEO is leaving. On 12 March 2026 Shantanu Narayen told the board he would transition out of the CEO role once a successor is appointed, after eighteen years in the job. He stays as chair. A special committee under lead independent director Frank Calderoni is running a search covering internal and external candidates. As of the last 8-K on file, no successor has been named — the search has now been open for five and a half months.
The CFO left with a week's notice. On 8 June 2026, three days before the Q2 release, Daniel Durn told the company he was resigning as CFO effective 15 June. Adobe disclosed it in the same 8-K that carried the earnings release, and named Steve Day — a twenty-year internal finance executive, most recently SVP of Corporate Finance — interim CFO. The company is now searching for two of its top three officers at once.
The AI question is unresolved in both directions. Adobe's own numbers say AI is additive: the Q2 release put AI-first annualised recurring revenue past $500 million, tripled year over year, inside $27.10 billion of total ARR. The Semrush acquisition — $1.9 billion in cash, announced 18 November 2025, closed April 2026 — added roughly $480 million of that ARR and bought a position in AI-search visibility. Against it sits the bear case that generative tools erode what a Photoshop or Premiere seat is worth. The multiple says the market has not settled this; the revenue line says it has not shown up yet.
What the 10 September print has to answer
- Whether guidance holds. Adobe raised FY26 targets in June to $26.50–26.60 billion of revenue and $17.90–18.00 of GAAP EPS. The Q3 guide is $6.67–6.72 billion and $4.40–4.45 GAAP. Hitting the low end of the Q3 revenue guide is 11.4% growth; the high end is 12.2%.
- Whether the free-cash-flow margin normalises. The May quarter's 31.8% is the lowest of the ten and follows a 45.7% February quarter. Adobe's cash flow is seasonal — the February quarter collects the annual renewals — so the useful comparison is the 35.5% of a year earlier, not the quarter before.
- Whether a CEO is named. Nothing in the operating series will re-rate this stock as fast as that announcement will, in one direction or the other.
Revenue, cost of revenue, diluted GAAP EPS, operating cash flow and capital expenditure are taken from Adobe's own filings via the SEC XBRL company-facts API (CIK 0000796343), with fourth-quarter figures derived as the fiscal year less the first three quarters and free cash flow as operating cash flow less purchases of property and equipment. EPS is GAAP throughout — Adobe's non-GAAP figure for the May quarter was $5.96 against the $4.25 used here. Quarter-end prices are month-end adjusted closes. Guidance, ARR, the Semrush contribution and the officer changes are from the 8-K filed 11 June 2026 and its Exhibit 99.1, and the CEO transition from the 8-K filed 12 March 2026.
