Adobe delivers strong Q2, ups outlook and cites AI-driven demand

Adobe's second quarter results were well ahead of estimates as it continues to see demand for its AI tools. The company also raised its outlook.

The company reported second quarter earnings of $4.25 a share on revenue of $6.62 billion, up 13% from a year ago. Non-GAAP earnings were $5.96 a share.

Wall Street was looking for non-GAAP earnings of $5.81 a share on revenue of $6.45 billion.

CEO Shantanu Narayen said the company saw "strong AI-driven demand across our customer groups."

In prepared remarks, Narayen added:

"As we reflect on the market context and our first half performance, it is clear that relative even to the beginning of Fiscal 2026, AI is accelerating customer behavior at an unprecedented speed, and we need to evolve our strategy and execution to address these changing expectations. Much like how developers have embraced and expanded the AI-coding market, there’s a transformation underway for how consumers are discovering, experiencing, onboarding and purchasing products across all categories including creativity, productivity, gaming and entertainment. As it relates to creativity and productivity, there is an unprecedented demand across additional surfaces for the combination of content consumption and content creation."

"Adobe's AI innovation has driven an impressive 3X year over year increase in AI-first ARR to greater than $500 million. We believe now is the time to aggressively acquire the next generation of Adobe loyalists."

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By the numbers for the second quarter:

• Annualized recurring revenue for the quarter was $27.10 billion, which includes $480 million from SEMrush.
• Cash flows from operations were $2.17 billion.
• Remaining performance obligations (RPO) was $22.27 billion.

As for the outlook, Adobe said third quarter revenue will be $6.67 billion to $6.72 billion with non-GAAP earnings of $6.05 a share to $6.10 a share. For fiscal 2026, Adobe said revenue will be $26.5 billion to $26.6 billion with non-GAAP earnings of $24.35 a share to $24.45 a share.

Adobe said CFO Dan Durn is leaving the company June 15. Steve Day, SVP of Corporate Finance and CFO of Adobe’s Customer Experience Orchestration Business Unit, will serve as interim CFO.