ADBE · Q2 FY2026
ADOBE INC. Q2 FY2026 earnings analysis
By SageNoodle ResearchBullish
| Metric | Actual | Estimate | Result |
|---|---|---|---|
| Revenue | $6.62B | $5.87B (yr ago) | Beat |
| EPS | $4.25 GAAP | $3.94 GAAP (yr ago) | Beat |
| Free Cash Flow | $2.11B | $2.14B (yr ago) | Miss |
| Gross Margin | 89.2% | 89.1% (yr ago) | Beat |
| Operating Margin | 33.8% | 35.9% (yr ago) | Miss |
What changed
Adobe's Q2 FY2026 revenue rose 13.0% year over year to $6.62 billion, GAAP EPS increased to $4.25, and AI-first ARR more than tripled to over $500 million. The quality of the print was mixed: free cash flow declined to $2.11 billion and GAAP operating margin contracted 2.1 percentage points to 33.8%. Management nevertheless raised its FY2026 revenue and non-GAAP EPS targets.
Impact on the investment thesis
There is no prior SageNoodle fair value to move; we establish a base-case value of $287.20 per share using 16.0 times the midpoint of Adobe's FY2026 GAAP EPS guidance. The quarter supports a modest valuation premium to the current 14.3-times trailing P/E, but weaker cash conversion and lower GAAP operating margin prevent a more aggressive multiple.