Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ADOBE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value)

			February 27, 2026						November 28, 2025
			(Unaudited)						(*)
ASSETS
Current assets:
Cash and cash equivalents			$	6,332					$	5,431
Short-term investments			558						1,164
Trade receivables, net of allowances for doubtful accounts of $12 and $13, respectively			2,092						2,344
Prepaid expenses and other current assets			1,404						1,224
Total current assets			10,386						10,163
Property and equipment, net			1,852						1,873
Operating lease right-of-use assets, net			305						312
Goodwill			12,869						12,857
Other intangibles, net			454						495
Deferred income taxes			2,138						2,186
Other assets			1,700						1,610
Total assets			$	29,704					$	29,496
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade payables			$	419					$	417
Accrued expenses and other current liabilities			2,257						2,648
Debt			849						—
Deferred revenue			7,275						6,905
Income taxes payable			506						153
Operating lease liabilities			84						77
Total current liabilities			11,390						10,200
Long-term liabilities:
Debt			5,379						6,210
Deferred revenue			95						125
Income taxes payable			487						469
Operating lease liabilities			344						361
Other liabilities			576						508
Total liabilities			18,271						17,873
Stockholders’ equity:
Preferred stock, $0.0001 par value; 2 shares authorized; none issued			—						—
Common stock, $0.0001 par value; 900 shares authorized; 601 shares issued; 406 and 413 shares outstanding, respectively			—						—
Additional paid-in capital			15,870						15,361
Retained earnings			47,170						45,354
Accumulated other comprehensive income (loss)			(295)						(245)
Treasury stock, at cost (195 and 188 shares, respectively)			(51,312)						(48,847)
Total stockholders’ equity			11,433						11,623
Total liabilities and stockholders’ equity			$	29,704					$	29,496

---

(*) The condensed consolidated balance sheet as of November 28, 2025 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

See accompanying notes to condensed consolidated financial statements.

ADOBE INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)

			Three Months Ended
			February 27, 2026						February 28, 2025
Revenue:
Subscription			$	6,198					$	5,483
Product			90						95
Services and other			110						136
Total revenue			6,398						5,714
Cost of revenue:
Subscription			540						490
Product			6						6
Services and other			118						126
Total cost of revenue			664						622
Gross profit			5,734						5,092
Operating expenses:
Research and development			1,110						1,026
Sales and marketing			1,708						1,495
General and administrative			463						367
Amortization of intangibles			35						41
Total operating expenses			3,316						2,929
Operating income			2,418						2,163
Non-operating income (expense):
Interest expense			(63)						(62)
Investment gains (losses), net			5						6
Other income (expense), net			62						75
Total non-operating income (expense), net			4						19
Income before income taxes			2,422						2,182
Provision for income taxes			533						371
Net income			$	1,889					$	1,811
Basic net income per share			$	4.60					$	4.15
Shares used to compute basic net income per share			410						436
Diluted net income per share			$	4.60					$	4.14
Shares used to compute diluted net income per share			411						438

See accompanying notes to condensed consolidated financial statements.

ADOBE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

			Three Months Ended
			February 27, 2026						February 28, 2025
			Increase/(Decrease)
Net income			$	1,889					$	1,811
Other comprehensive income (loss), net of taxes:
Available-for-sale securities:
Unrealized gains / losses on available-for-sale securities			—						1
Derivatives designated as hedging instruments:
Unrealized gains / losses on derivative instruments			(96)						94
Reclassification adjustment for realized gains / losses on derivative instruments			23						(20)
Net increase (decrease) from derivatives designated as hedging instruments			(73)						74
Foreign currency translation adjustments			23						(32)
Other comprehensive income (loss), net of taxes			(50)						43
Total comprehensive income, net of taxes			$	1,839					$	1,854

See accompanying notes to condensed consolidated financial statements.

ADOBE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

(Unaudited)

						Three Months Ended February 27, 2026
						Common Stock												Additional Paid-In Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock
						Shares						Amount															Shares						Amount						Total
Balances at November 28, 2025						601						$	—					$	15,361					$	45,354					$	(245)					(188)						$	(48,847)					$	11,623
Net income						—						—						—						1,889						—						—						—						1,889
Other comprehensive income (loss), net of taxes						—						—						—						—						(50)						—						—						(50)
Re-issuance of treasury stock under stock compensation plans						—						—						—						(73)						—						1						34						(39)
Repurchases of common stock						—						—						—						—						—						(8)						(2,500)						(2,500)
Stock-based compensation						—						—						509						—						—						—						—						509
Value of shares in deferred compensation plan						—						—						—						—						—						—						1						1
Balances at February 27, 2026						601						$	—					$	15,870					$	47,170					$	(295)					(195)						$	(51,312)					$	11,433

						Three Months Ended February 28, 2025
						Common Stock												Additional Paid-In Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock
						Shares						Amount															Shares						Amount						Total
Balances at November 29, 2024						601						$	—					$	13,419					$	38,470					$	(201)					(160)						$	(37,583)					$	14,105
Net income						—						—						—						1,811						—						—						—						1,811
Other comprehensive income (loss), net of taxes						—						—						—						—						43						—						—						43
Re-issuance of treasury stock under stock compensation plans						—						—						—						(95)						—						1						32						(63)
Repurchases of common stock						—						—						—						—						—						(7)						(3,277)						(3,277)
Stock-based compensation						—						—						475						—						—						—						—						475
Value of shares in deferred compensation plan						—						—						—						—						—						—						1						1
Balances at February 28, 2025						601						$	—					$	13,894					$	40,186					$	(158)					(166)						$	(40,827)					$	13,095

See accompanying notes to condensed consolidated financial statements.

ADOBE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

			Three Months Ended
			February 27, 2026						February 28, 2025
Cash flows from operating activities:
Net income			$	1,889					$	1,811
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion			174						217
Stock-based compensation			509						475
Deferred income taxes			64						(169)
Other non-cash items			46						17
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Trade receivables, net			252						97
Prepaid expenses and other assets			(240)						(156)
Trade payables			3						(28)
Accrued expenses and other liabilities			(450)						(378)
Income taxes payable			371						365
Deferred revenue			340						231
Net cash provided by operating activities			2,958						2,482
Cash flows from investing activities:
Purchases of short-term investments			(306)						(533)
Proceeds from maturities and sales of short-term investments			920						132
Purchases of property and equipment			(37)						(26)
Purchases of long-term investments, intangibles and other assets			(104)						(59)
Other investing activities, net			1						2
Net cash provided by (used for) investing activities			474						(484)
Cash flows from financing activities:
Repurchases of common stock			(2,478)						(3,250)
Proceeds from re-issuance of treasury stock			84						96
Taxes paid related to net share settlement of equity awards			(123)						(159)
Proceeds from issuance of debt			—						1,997
Repayment of debt			—						(1,500)
Other financing activities, net			(27)						(25)
Net cash used for financing activities			(2,544)						(2,841)
Effect of foreign currency exchange rates on cash and cash equivalents			13						(12)
Net change in cash and cash equivalents			901						(855)
Cash and cash equivalents at beginning of period			5,431						7,613
Cash and cash equivalents at end of period			$	6,332					$	6,758
Supplemental disclosures:
Cash paid for income taxes, net of refunds			$	125					$	182
Cash paid for interest			$	79					$	48

See accompanying notes to condensed consolidated financial statements.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended November 28, 2025 on file with the SEC (our “Annual Report”).

Use of Estimates

In preparing the condensed consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the SEC, we must make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ materially from these estimates.

Reclassifications

Certain prior year amounts, which are not material, have been reclassified to conform to current year presentation in the condensed consolidated statements of cash flows.

Significant Accounting Policies

There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report.

Recent Accounting Pronouncements Not Yet Effective

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes, which prescribes standardized categories and disaggregation of information in the reconciliation of provision for income taxes, requires disclosure of disaggregated income taxes paid, and modifies other income tax-related disclosure requirements. The updated standard is effective for our annual report for fiscal 2026. We are currently evaluating the impact that the updated standard will have on our annual financial statement disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, which requires additional disclosure of certain costs and expenses within the notes to the financial statements. The updated standard is effective for our annual periods beginning in fiscal 2028 and interim periods beginning in the first quarter of fiscal 2029. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software, which modernizes the accounting for internal-use software and clarifies capitalization criteria. The updated standard is effective for us beginning with our interim and annual reporting periods of fiscal 2029. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our Consolidated Financial Statements.

There have been no other recent accounting pronouncements or changes in accounting pronouncements that are of significance or potential significance to us.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 2. REVENUE

Our revenue is derived from the sale of cloud-enabled software subscriptions, cloud-hosted offerings, term-based, royalty, and perpetual software licenses, associated software maintenance and support plans, consulting services, training and technical support.

Disaggregation of Revenue

Revenue by geographic area for the three months ended February 27, 2026 and February 28, 2025 were as follows:

(in millions)			2026						2025
Americas			$	3,755					$	3,405
EMEA			1,739						1,502
APAC			904						807
Total			$	6,398					$	5,714

Subscription revenue for the three months ended February 27, 2026 and February 28, 2025 were as follows:

(in millions)			2026						2025
Creative & Marketing Professionals customer group			$	4,389					$	3,922
Business Professionals & Consumers customer group			1,782						1,534
Total customer group subscription revenue			$	6,171					$	5,456
Other subscription revenue			27						27
Total subscription revenue			$	6,198					$	5,483

Contract Balances

A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Included in trade receivables on the condensed consolidated balance sheets are unbilled receivable balances which have not yet been invoiced, and are typically related to license revenue or services which are delivered prior to invoicing. As of February 27, 2026, the balance of trade receivables, net of allowances for doubtful accounts, was $2.09 billion, inclusive of unbilled receivables of $81 million. As of November 28, 2025, the balance of trade receivables, net of allowances for doubtful accounts, was $2.34 billion, inclusive of unbilled receivables of $74 million.

We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectible trade receivables and is based on both specific and general reserves. We maintain general reserves on a collective basis by considering factors such as historical experience, credit-worthiness, the age of the trade receivable balances, current economic conditions and a reasonable and supportable forecast of future economic conditions. The allowance for doubtful accounts was $12 million and $13 million as of February 27, 2026 and November 28, 2025, respectively.

A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. We regularly review contract asset balances for impairment, considering factors such as historical experience, credit-worthiness, age of the balance, current economic conditions and a reasonable and supportable forecast of future economic conditions. Contract asset impairments were not material for the three months ended February 27, 2026. Contract assets were $201 million and $241 million as of February 27, 2026 and November 28, 2025, respectively.

Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services, including non-cancellable and non-refundable committed funds and refundable customer deposits. Deferred revenue is recognized as revenue when transfer of control to customers has occurred. As of February 27, 2026, the balance of deferred revenue was $7.37 billion, which includes $65 million of refundable customer deposits. Arrangements with some of our enterprise customers with non-cancellable and non-refundable committed funds provide options to either renew monthly on-premise term-based licenses or use some or all funds to purchase other Adobe products or services. Non-

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

cancellable and non-refundable committed funds related to these agreements comprised approximately 4% of the total deferred revenue.

As of November 28, 2025, the balance of deferred revenue was $7.03 billion. During the three months ended February 27, 2026, approximately $3.21 billion of revenue was recognized that was included in the balance of deferred revenue as of November 28, 2025.

Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. As of February 27, 2026, remaining performance obligations were approximately $22.22 billion. Non-cancellable and non-refundable funds related to some of our enterprise customer agreements referred to above comprised approximately 4% of the total remaining performance obligations. Approximately 67% of the remaining performance obligations, excluding the aforementioned enterprise customer agreements, are expected to be recognized over the next 12 months with the remainder recognized thereafter.

Incremental costs of obtaining a contract with a customer are capitalized if we expect the benefit of those costs to be longer than one year and primarily relate to sales commissions paid to our sales force personnel. Capitalized contract acquisition costs are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. Capitalized contract acquisition costs were $755 million and $721 million as of February 27, 2026 and November 28, 2025, respectively.

We record refund liabilities for amounts that may be subject to future refunds, which include sales returns reserves and customer rebates and credits. Refund liabilities are included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. Refund liabilities were $120 million and $137 million as of February 27, 2026 and November 28, 2025, respectively.

NOTE 3. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash equivalents consist of highly liquid marketable securities with remaining maturities of three months or less at the date of purchase. We classify our investments in marketable debt securities as “available-for-sale.” We carry these investments at fair value, based on quoted market prices or other readily available market information. Unrealized gains and unrealized non-credit-related losses of marketable debt securities are included in accumulated other comprehensive income (loss), net of taxes, in our condensed consolidated balance sheets. Unrealized credit-related losses are recorded to other income (expense), net in our condensed consolidated statements of income with a corresponding allowance for credit-related losses in our condensed consolidated balance sheets. Gains and losses are determined using the specific identification method and recognized when realized in our condensed consolidated statements of income.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Cash, cash equivalents and short-term investments consisted of the following as of February 27, 2026:

(in millions)			Amortized Cost						Unrealized Gains						Unrealized Losses						Estimated Fair Value
Current assets:
Cash			$	646					$	—					$	—					$	646
Cash equivalents:
Corporate debt securities			1,415						—						—						1,415
Money market funds			4,211						—						—						4,211
Time deposits			60						—						—						60
Total cash equivalents			5,686						—						—						5,686
Total cash and cash equivalents			6,332						—						—						6,332
Short-term fixed income securities:
Corporate debt securities			457						—						—						457
U.S. Treasury securities			101						—						—						101
Total short-term investments			558						—						—						558
Total cash, cash equivalents and short-term investments			$	6,890					$	—					$	—					$	6,890

Cash, cash equivalents and short-term investments consisted of the following as of November 28, 2025:

(in millions)			Amortized Cost						Unrealized Gains						Unrealized Losses						Estimated Fair Value
Current assets:
Cash			$	711					$	—					$	—					$	711
Cash equivalents:
Corporate debt securities			928						—						—						928
Money market funds			3,607						—						—						3,607
Time deposits			85						—						—						85
U.S. Treasury securities			100						—						—						100
Total cash equivalents			4,720						—						—						4,720
Total cash and cash equivalents			5,431						—						—						5,431
Short-term fixed income securities:
Corporate debt securities			914						—						—						914
U.S. Treasury securities			250						—						—						250
Total short-term investments			1,164						—						—						1,164
Total cash, cash equivalents and short-term investments			$	6,595					$	—					$	—					$	6,595

See Note 4 for further information regarding the fair value of our financial instruments.

The following table summarizes the estimated fair value of short-term fixed income debt securities classified as short-term investments based on stated effective maturities as of February 27, 2026:

(in millions)									Estimated Fair Value
Due within one year									$	533
Due between one and two years									25
Total									$	558

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

We review our debt securities classified as short-term investments on a regular basis for impairment. For debt securities in unrealized loss positions, we determine whether any portion of the decline in fair value below the amortized cost basis is due to credit-related factors if we neither intend to sell nor anticipate that it is more likely than not that we will be required to sell prior to recovery of the amortized cost basis. We consider factors such as the extent to which the market value has been less than the cost, any noted failure of the issuer to make scheduled payments, changes to the rating of the security and other relevant credit-related factors in determining whether or not a credit loss exists. During the three months ended February 27, 2026 and February 28, 2025, we did not recognize an allowance for credit-related losses on any of our investments.

NOTE 4. FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The fair value of our financial assets and liabilities at February 27, 2026 was determined using the following inputs:

(in millions)			Fair Value Measurements at Reporting Date Using
									Quoted Prices in Active Markets for Identical Assets						Significant Other Observable Inputs						Significant Unobservable Inputs
			Total						(Level 1)						(Level 2)						(Level 3)
Assets:
Cash equivalents:
Corporate debt securities			$	1,415					$	—					$	1,415					$	—
Money market funds			4,211						4,211						—						—
Time deposits			60						60						—						—
Short-term investments:
Corporate debt securities			457						—						457						—
U.S. Treasury securities			101						—						101						—
Prepaid expenses and other current assets:
Foreign currency derivatives			44						—						44						—
Interest rate swap derivatives			9						—						9						—
Other assets:
Deferred compensation plan assets			371						371						—						—
Foreign currency derivatives			9						—						9						—
Interest rate swap derivatives			107						—						107						—
Total assets			$	6,784					$	4,642					$	2,142					$	—

Liabilities:
Accrued expenses and other current liabilities:
Foreign currency derivatives			$	133					$	—					$	133					$	—
Interest rate swap derivatives			14						—						14						—
Other liabilities:
Foreign currency derivatives			15						—						15						—
Total liabilities			$	162					$	—					$	162					$	—

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The fair value of our financial assets and liabilities at November 28, 2025 was determined using the following inputs:

(in millions)			Fair Value Measurements at Reporting Date Using
									Quoted Prices in Active Markets for Identical Assets						Significant Other Observable Inputs						Significant Unobservable Inputs
			Total						(Level 1)						(Level 2)						(Level 3)
Assets:
Cash equivalents:
Corporate debt securities			$	928					$	—					$	928					$	—
Money market funds			3,607						3,607						—						—
Time deposits			85						85						—						—
U.S. Treasury securities			100						—						100						—
Short-term investments:
Corporate debt securities			914						—						914						—
U.S. Treasury securities			250						—						250						—
Prepaid expenses and other current assets:
Foreign currency derivatives			62						—						62						—
Interest rate swap derivatives			2						—						2						—
Other assets:
Deferred compensation plan assets			342						342						—						—
Foreign currency derivatives			22						—						22						—
Interest rate swap derivatives			92						—						92						—
Total assets			$	6,404					$	4,034					$	2,370					$	—

Liabilities:
Accrued expenses and other current liabilities:
Foreign currency derivatives			$	94					$	—					$	94					$	—
Interest rate swap derivatives			8						—						8						—
Other liabilities:
Foreign currency derivatives			6						—						6						—
Total liabilities			$	108					$	—					$	108					$	—

See Note 3 for further information regarding the fair value of our financial instruments.

Our fixed income available-for-sale debt securities consist of high quality, investment grade securities from diverse issuers. We value these securities based on pricing from independent pricing vendors who use matrix pricing valuation techniques including market approach methodologies that model information generated by market transactions involving identical or comparable assets, as well as discounted cash flow methodologies. Inputs include quoted prices in active markets for identical assets or inputs other than quoted prices that are observable either directly or indirectly in determining fair value, including benchmark yields, issuer spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. We therefore categorize all of our fixed income available-for-sale securities as Level 2. We perform routine procedures such as comparing prices obtained from multiple independent sources to ensure that appropriate fair values are recorded.

The fair values of our money market funds, time deposits and deferred compensation plan assets, which consist of money market and other mutual funds, are based on quoted prices in active markets at the measurement date.

Our over-the-counter foreign currency and interest rate swap derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange and interest rate data at the measurement date.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Our other current financial assets and current financial liabilities have fair values that approximate their carrying values.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The fair value of our senior notes was $6.17 billion as of February 27, 2026, excluding the associated interest rate swaps, based on observable market prices in less active markets and categorized as Level 2. See Note 13 for further details regarding our debt.

NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS

We may use derivatives to partially offset our business exposure to foreign currency and interest rate risk on expected future cash flows and certain existing assets and liabilities. We do not use any of our derivative instruments for trading purposes.

We enter into master netting arrangements to mitigate credit risk in derivative transactions by permitting net settlement of transactions with the same counterparty. We do not offset fair value amounts recognized for derivative instruments under master netting arrangements. We also enter into collateral security agreements with certain of our counterparties to exchange cash collateral when the net fair value of certain derivative instruments fluctuates from contractually established thresholds. Collateral posted is included in prepaid expenses and other current assets and collateral received is included in accrued expenses and other current liabilities on our condensed consolidated balance sheets.

Cash Flow Hedges

In countries outside the United States, we transact business in U.S. Dollars and in various other currencies. We may use foreign exchange forward contracts and option contracts to hedge a portion of our forecasted foreign currency denominated revenue and expenses. These foreign exchange contracts, carried at fair value, have maturities of up to 24 months. As of February 27, 2026 and November 28, 2025, gross notional amounts of outstanding cash flow hedges were $6.12 billion and $5.97 billion, respectively, hedging exposures denominated in Euros, Japanese Yen, British Pounds, Australian Dollars, Indian Rupees and Canadian Dollars.

As of February 27, 2026, we had net derivative losses on our foreign currency cash flow hedges expected to be recognized within the next 36 months, of which $93 million of net losses are expected to be recognized into revenue within the next 12 months.

Fair Value Hedges

We have 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 Secured Overnight Financing Rate Overnight Index Swap Rate (“SOFR OIS”). Under the terms of the swaps, we pay quarterly interest at the daily compounded SOFR OIS plus a fixed number of basis points on the $2.70 billion notional amount through the respective par call dates for the notes. In exchange, we receive the fixed rate interest on the notes from the swap counterparties on a semi-annual basis. See Note 13 for further details regarding our debt.

The interest rate swaps are designated as fair value hedges. We record changes in fair value on the swaps associated with the hedged risk in interest expense in our condensed consolidated statements of income with a corresponding offset to the value of the senior notes being hedged.

Non-Designated Hedges

Our derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge monetary assets and liabilities denominated in non-functional currencies. As of February 27, 2026, gross notional amounts of outstanding contracts were $734 million, primarily hedging exposures denominated in Euros, Indian Rupees, British Pounds and Australian Dollars. As of November 28, 2025, gross notional amounts of outstanding contracts were $563 million, primarily hedging exposures denominated in Indian Rupees, Australian Dollars, British Pounds and Euros.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Fair value asset derivatives are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion, and fair value liability derivatives are included in accrued expenses and other current liabilities for the current portion and other liabilities for the long-term portion on our condensed consolidated balance sheets. The fair value of derivative instruments as of February 27, 2026 and November 28, 2025 were as follows:

(in millions)			2026												2025
			Fair Value Asset Derivatives						Fair Value Liability Derivatives						Fair Value Asset Derivatives						Fair Value Liability Derivatives
Derivatives designated as hedging instruments:
Foreign exchange contracts			$	51					$	145					$	82					$	99
Interest rate swaps			116						14						94						8
Derivatives not designated as hedging instruments:
Foreign exchange contracts			2						3						2						1
Total derivatives			$	169					$	162					$	178					$	108

Unrealized gains and losses on derivative instruments, net of tax, recognized in our condensed consolidated statements of comprehensive income for the three months ended February 27, 2026 and February 28, 2025 were primarily associated with our foreign exchange contracts, for which we recognized $96 million of net losses and $94 million of net gains, respectively.

For the three months ended February 27, 2026 and February 28, 2025, the effects of derivative instruments on our condensed consolidated statements of income were immaterial.

NOTE 6. GOODWILL AND OTHER INTANGIBLES

Goodwill as of February 27, 2026 and November 28, 2025 was $12.87 billion and $12.86 billion, respectively.

Other intangible assets subject to amortization as of February 27, 2026 and November 28, 2025 were as follows:

(in millions)			2026																		2025
			Gross Carrying Amount						Accumulated Amortization						Net						Gross Carrying Amount						Accumulated Amortization						Net
Customer contracts and relationships			$	1,010					$	(685)					$	325					$	1,208					$	(857)					$	351
Purchased technology			75						(51)						24						881						(853)						28
Trademarks			342						(280)						62						372						(301)						71
Other			55						(12)						43						60						(15)						45
Other intangibles, net			$	1,482					$	(1,028)					$	454					$	2,521					$	(2,026)					$	495

Amortization expense related to other intangibles was $41 million and $84 million for the three months ended February 27, 2026 and February 28, 2025, respectively. Of these amounts, $5 million and $43 million were included in cost of revenue for the three months ended February 27, 2026 and February 28, 2025, respectively.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of February 27, 2026, the estimated aggregate amortization expense in future periods was as follows:

(in millions)
Fiscal Year						Other Intangibles
Remainder of 2026						$	120
2027						119
2028						73
2029						69
2030						65
Thereafter						8
Total expected amortization expense						$	454

NOTE 7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities as of February 27, 2026 and November 28, 2025 consisted of the following:

(in millions)			2026						2025
Accrued compensation costs			$	891					$	1,345
Accrued corporate marketing			179						197
Fair value of derivative liabilities			147						102
Sales and use taxes payable			142						150
Refund liabilities			120						137
Excise taxes payable			105						105
Derivative collateral liabilities			74						101
Other			599						511
Accrued expenses and other current liabilities			$	2,257					$	2,648

Other primarily includes general business accruals, royalties payable and accrued hosting fees.

NOTE 8. STOCK-BASED COMPENSATION

Restricted Stock Units

Restricted stock unit activity for the three months ended February 27, 2026 was as follows:

			Number of Shares (in millions)						Weighted Average Grant Date Fair Value						Aggregate Intrinsic Value (in millions)
Beginning outstanding balance			7.9						$	436.52
Awarded			5.6						$	304.19
Released			(0.9)						$	453.46
Forfeited			(0.1)						$	426.01
Ending outstanding balance			12.5						$	375.57					$	3,272
Expected to vest			11.3						$	377.21					$	2,967

The total fair value of restricted stock units vested during the three months ended February 27, 2026 was $276 million.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Performance Shares

In the first quarter of fiscal 2026, the Executive Compensation Committee of our Board of Directors (the “ECC”) approved the 2026 Performance Share Program, the terms of which are similar to the 2025 Performance Share Program that is still outstanding. For information regarding our outstanding Performance Share Programs, including the terms, see “Note 12. Stock-Based Compensation” of our Annual Report on Form 10-K for the fiscal year ended November 28, 2025.

As of February 27, 2026, performance shares awarded under our 2026, 2025 and 2024 Performance Share Programs remained outstanding and unvested.

Performance share activity for the three months ended February 27, 2026 was as follows:

			Number of Shares (in millions)						Weighted Average Grant Date Fair Value						Aggregate Intrinsic Value (in millions)
Beginning outstanding balance			0.6						$	501.16
Awarded			0.3						$	339.26
Released			(0.2)						$	472.18
Forfeited			(0.1)						$	477.34
Ending outstanding balance			0.6						$	430.26					$	158
Expected to vest			0.5						$	434.70					$	140

Under our Performance Share Programs, participants generally have the ability to receive up to 200% of the target number of shares originally granted. Shares released during the three months ended February 27, 2026 resulted from overall payout at 83% of target for the 2023 Performance Share Program, as certified by the ECC in the first quarter of fiscal 2026.

The total fair value of performance shares vested during the three months ended February 27, 2026 was $62 million.

Employee Stock Purchase Plan Shares

Employees purchased 0.3 million shares at an average price of $297.49 and 0.3 million shares at an average price of $305.04 for the three months ended February 27, 2026 and February 28, 2025, respectively. The intrinsic value of shares purchased during the three months ended February 27, 2026 and February 28, 2025 was $15 million and $44 million, respectively. The intrinsic value is calculated as the difference between the market value on the date of purchase and the purchase price of the shares.

Compensation Costs

As of February 27, 2026, there was $4.44 billion of unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock-based awards and purchase rights which will be recognized over a weighted average period of 2.73 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.

Total stock-based compensation costs included in our condensed consolidated statements of income for the three months ended February 27, 2026 and February 28, 2025 were as follows:

(in millions)			2026						2025
Cost of revenue			$	31					$	30
Research and development			271						247
Sales and marketing			142						137
General and administrative			65						61
Total			$	509					$	475

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of accumulated other comprehensive income (loss) and activity, net of related taxes, were as follows:

(in millions)			November 28, 2025						Increase / Decrease						Reclassification Adjustments						February 27, 2026
Net unrealized gains / losses on derivative instruments designated as hedging instruments			$	(45)					$	(96)					$	23		(1)			$	(118)
Cumulative foreign currency translation adjustments			(200)						23						—						(177)
Total accumulated other comprehensive income (loss), net of taxes			$	(245)					$	(73)					$	23					$	(295)

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(1) Reclassification adjustments for gains / losses on foreign currency hedges are classified in revenue or operating expenses, depending on the nature of the underlying transaction, and reclassification adjustments for gains / losses on Treasury lock hedges are classified in interest expense.

Taxes related to each component of other comprehensive income (loss) for the three months ended February 27, 2026 and February 28, 2025 were immaterial.

NOTE 10. STOCK REPURCHASE PROGRAM

To facilitate our stock repurchase program, designed to return value to our stockholders and minimize dilution from stock issuances, we may repurchase our shares in the open market or enter into structured repurchase agreements with third parties. In March 2024, our Board of Directors granted authority to repurchase up to $25 billion in our common stock through March 14, 2028. As of February 27, 2026, $3.89 billion remained under our March 2024 stock repurchase authority.

Share repurchase activity for the three months ended February 27, 2026 and February 28, 2025 was as follows:

(in millions)			Number of Shares Delivered						Amount Paid
Three months ended February 27, 2026
Open market repurchases			8.1						$	2,478
Three months ended February 28, 2025
Accelerated share repurchase agreements			5.9						$	2,750
Open market repurchases			1.1						500
Total			7.0						$	3,250

Prepayments for stock repurchases are classified as treasury stock, a component of stockholders’ equity on our condensed consolidated balance sheets, at the payment date, though only shares physically delivered to us by the end of the respective period are excluded from the computation of net income per share.

NOTE 11. NET INCOME PER SHARE

Basic net income per share is computed using the weighted average number of common shares outstanding for the period, excluding unvested stock-based awards and purchase rights. Diluted net income per share is based upon the weighted average common shares outstanding for the period plus dilutive potential common shares, including unvested restricted stock units, stock purchase rights and performance share awards using the treasury stock method. Performance share awards are included based on the number of shares that would be issued as if the end of the reporting period was the end of the performance period and the result was dilutive.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table sets forth the computation of basic and diluted net income per share for the three months ended February 27, 2026 and February 28, 2025:

(in millions, except per share data)			2026						2025
Net income			$	1,889					$	1,811
Shares used to compute basic net income per share			410.2						436.2
Dilutive potential common shares from stock plans and programs			0.6						1.4
Shares used to compute diluted net income per share			410.8						437.6
Basic net income per share			$	4.60					$	4.15
Diluted net income per share			$	4.60					$	4.14
Anti-dilutive potential common shares			6.3						2.6

NOTE 12. COMMITMENTS AND CONTINGENCIES

Acquisitions

On 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, primarily in cash consideration. The transaction is subject to regulatory approvals and customary closing conditions and is expected to close in the second quarter of fiscal 2026.

Indemnifications

In 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. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer insurance coverage that reduces our exposure and enables us to recover a portion of any future amounts paid. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.

Legal Proceedings

We are subject to legal proceedings, claims, including claims relating to intellectual property, consumer protection, commercial, employment and other matters, and investigations, including government investigations, that arise in the ordinary course of our business. Some of these disputes, legal proceedings and investigations may include speculative claims for substantial or indeterminate amounts of damages. We consider all claims on a quarterly basis in accordance with GAAP and based on known facts assess whether potential losses are considered reasonably possible or probable and estimable. Based upon this assessment, we then evaluate disclosure requirements and whether to accrue for such claims in our financial statements. This determination is then reviewed and discussed with the Audit Committee of the Board of Directors.

We make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. As of February 27, 2026, we accrued provisions for legal liabilities that were probable and estimable, which were not material to our financial statements. Unless otherwise specifically disclosed in this note, we have determined that no disclosure is required related to any claim against us because: (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial.

All legal costs associated with litigation are expensed as incurred. Litigation is inherently unpredictable. However, we believe that we have valid defenses with respect to the legal matters pending against us. It is possible, nevertheless, that our consolidated financial position, results of operations or cash flows could be negatively affected by an unfavorable resolution of one or more of such proceedings, claims or investigations.

Since June 2022, we have been cooperating with the Federal Trade Commission (the “FTC”) staff in response to a Civil Investigative Demand seeking information regarding our disclosure and subscription cancellation practices relative to the Restore Online Shoppers’ Confidence Act (“ROSCA”). In November 2023, the FTC staff asserted that they had the authority to enter into consent negotiations to determine if a settlement regarding their investigation of these issues could be reached. On March 20, 2024, we were informed that the FTC had voted to authorize a filing of the case. The FTC then referred the case to the Department of Justice (the “DOJ”), and on June 17, 2024, the DOJ filed a civil complaint in the United States District Court for the Northern District of California (the “Court”), naming Adobe and certain of our employees as defendants. The complaint alleges that Adobe failed to clearly and conspicuously disclose material terms, failed to obtain express informed consent and failed to provide a simple cancellation mechanism regarding our disclosure and subscription cancellation practices in violation of ROSCA and the FTC Act. The DOJ sought injunctive relief, civil penalties, equitable monetary relief and other relief. On October 7, 2024, we filed a motion to dismiss the DOJ’s civil complaint, and that motion was fully briefed as of December 23, 2024. On May 2, 2025, the Court denied our motion to dismiss the complaint, and discovery then ensued. On March 12, 2026, we reached an agreement to settle the action, and on March 13, 2026, we filed a stipulation of dismissal with the Court.

On October 20, 2023, a securities class action captioned Pembroke Pines Firefighters & Police Officers Pension Fund et al v. Adobe, Inc. et al, renamed as In Re Adobe Inc. Securities Litigation, Case No. 1:23-cv-09260, was filed in the U.S. District Court for the Southern District of New York (the “Securities Action”) naming Adobe and certain of our current and former officers as defendants. The Securities Action purports to be brought on behalf of purchasers of the Company’s stock between July 23, 2021 and September 22, 2022 (the “Class Period”). The complaint, which was amended on February 23, 2024, alleges that certain public statements made by Adobe during the Class Period related to competition from Figma and the adequacy of Adobe’s existing offerings to counter harms Adobe may have faced due to Figma’s growing market position were materially false and misleading. The Securities Action seeks unspecified compensatory damages, attorneys’ fees and costs, and extraordinary equitable and/or injunctive relief. We filed a motion to dismiss the Securities Action, which was granted in full on March 27, 2025. Plaintiff sought leave to amend the complaint in response to the court’s order, which the court denied on November 7, 2025. Plaintiff is appealing the court’s orders.

On November 16, 2023, a shareholder derivative action captioned Shah v. Narayen et al, Case No. 1:23-cv-01315, was filed in the U.S. District Court for the District of Delaware (the “Shah Action”), purportedly on behalf of Adobe. On January 3, 2024, a second shareholder derivative action captioned Gervat v. Narayen et al, Case No. 1:24-cv-00006, was filed in the U.S. District Court for the District of Delaware (the “Gervat Action”), purportedly on behalf of Adobe. On January 24, 2024, the Court consolidated the Shah and Gervat Actions (together, the “Consolidated Derivative Action”). On January 18, 2024, a shareholder derivative action captioned Sbriglio v. Narayen et al., Case No. 24-cv-429458, was filed in California Superior Court (the “Sbriglio Action”), purportedly on behalf of Adobe. On January 29, 2024, a shareholder derivative action captioned Roy v. Narayen et al., No. 1:24-cv-00633, was filed in the U.S. District Court for the Southern District of New York, (the “Roy Action”), purportedly on behalf of Adobe. On May 28, 2025, a shareholder derivative action captioned Daniel v. Narayen et al., Case No. 25-cv-46762 was filed in California Superior Court (the “Daniel Action,” and together with the Consolidated Derivative Action, the Roy Action, and the Sbriglio Action, the “Derivative Actions”), purportedly on behalf of Adobe. On July 11, 2025, the Sbriglio and Daniel Actions were consolidated. The Derivative Actions are based largely on the same alleged facts and circumstances as the Securities Action, and name certain of our current and former officers and members of our Board of Directors as defendants and Adobe as a nominal defendant. The Derivative Actions together allege claims for breach of fiduciary duty and/or aiding and abetting breach of fiduciary duties, unjust enrichment, waste of corporate assets, abuse of control, and violations of Section 10(b) (and Rule 10b-5 promulgated thereunder), Section 20(a), and/or Section 21D of the Securities Exchange Act of 1934, as amended, and seek recovery of unspecified damages, restitution, and attorney’s fees and costs, as well as disgorgement of profits and certain payments and benefits, in the case of the Gervat and Daniel Actions, and improvements to Adobe’s corporate governance and internal procedures, in the case of the Shah and Daniel Actions, on behalf of Adobe. The Derivative Actions are presently stayed.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

We dispute the allegations of wrongdoing in the Securities Action and the Derivative Actions and intend to vigorously defend ourselves in these matters. In view of the complexity and ongoing and uncertain nature of the outstanding proceedings and inquiries, at this time we are unable to estimate a reasonably possible financial loss or range of financial loss, if any, that we may incur to resolve or settle the Securities Action and the Derivative Actions.

In connection with disputes relating to the validity or alleged infringement of third-party intellectual property rights, including patent rights, we have been, are currently and may in the future be subject to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation may be very costly and can be disruptive to our business operations by diverting the attention and energies of management and key technical personnel. Although we have successfully defended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and disputes. Third-party intellectual property disputes could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from licensing certain of our products or offering certain of our services, subject us to injunctions restricting our sale of products or services, cause severe disruptions to our operations or the markets in which we compete, or require us to satisfy indemnification commitments with our customers including contractual provisions under various license arrangements and service agreements.

NOTE 13. DEBT

The carrying value of our borrowings as of February 27, 2026 and November 28, 2025 were as follows:

(dollars in millions)			Issuance Date						Due Date						Effective Interest Rate						2026												2025
2.15% 2027 Notes			February 2020						February 2027						2.26%						$	850											$	850
4.85% 2027 Notes			April 2024						April 2027						5.03%						500												500
4.75% 2028 Notes			January 2025						January 2028						4.93%						800												800
4.80% 2029 Notes			April 2024						April 2029						4.93%						750												750
4.95% 2030 Notes			January 2025						January 2030						5.09%						700												700
2.30% 2030 Notes			February 2020						February 2030						2.69%						1,300												1,300
4.95% 2034 Notes			April 2024						April 2034						5.03%						750												750
5.30% 2035 Notes			January 2025						January 2035						5.40%						500												500
Total debt outstanding, at par																					$	6,150											$	6,150
Less: Current portion of debt, at par																					(850)												—
Fair value of interest rate swaps																					102												86
Unamortized discount and debt issuance costs																					(23)												(26)
Carrying value of long-term debt																					$	5,379											$	6,210
Current portion of debt, at par																					$	850											$	—
Unamortized discount and debt issuance costs																					(1)												—
Carrying value of current debt																					$	849											$	—

Senior Notes

Our senior notes rank equally with our other unsecured and unsubordinated indebtedness, and do not contain financial covenants. We may redeem the notes at any time, subject to a make-whole premium.

We have 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. The fair value of the interest rate swaps is included in the carrying value of our debt in the condensed consolidated balance sheets. See Note 5 for further details regarding our interest rate swap derivatives.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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 the first quarter of fiscal 2026, we reclassified the senior notes due February 1, 2027 as current debt in our condensed consolidated balance sheets.

For the senior notes issued in February 2020, upon the occurrence of certain change of control triggering events, we may be required to repurchase the notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. In addition, these notes include covenants that limit our ability to grant liens on assets and to enter into sale and leaseback transactions, subject to significant allowances.

Revolving Credit Agreement

In June 2022, we entered into a credit agreement (the “Revolving Credit Agreement”), providing for a five-year $1.5 billion senior unsecured revolving credit facility. The Revolving Credit Agreement provides for loans to Adobe and certain of its subsidiaries that may be designated from time to time as additional borrowers. Pursuant to the terms of the Revolving Credit Agreement, we may, subject to the agreement of lenders to provide additional commitments, obtain up to an additional $500 million in commitments, for a maximum aggregate commitment of $2 billion. As of February 27, 2026, there were no outstanding borrowings under this Revolving Credit Agreement.

Commercial Paper Program

In September 2023, we established a commercial paper program under which we may issue unsecured commercial paper up to a total of $3 billion outstanding at any time, with maturities of up to 397 days from the date of issue. The net proceeds from the issuance of commercial paper are expected to be used for general corporate purposes, which may include working capital, capital expenditures, acquisitions, stock repurchases, refinancing indebtedness or any other general corporate purposes. As of February 27, 2026, there were no outstanding borrowings under the commercial paper program.

ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 14. SEGMENT INFORMATION

We 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.

In the first quarter of fiscal 2026, we combined our former segments—Digital Media, Digital Experience and Publishing and Advertising—into a single operating and reportable segment due to changes in how management evaluates results and allocates resources, reflecting the Company’s shift to unified selling motions and integrated product innovation. Prior period information in the table below has been recast to reflect this change. Our Chief Executive Officer, the Company’s chief operating decision maker, reviews consolidated results, including net income, to assess segment performance and allocate resources. This information is primarily reviewed by comparing actual results to prior period results and to quarterly and annual forecasts. The measure of segment assets is reported on the condensed consolidated balance sheets as total assets.

Information about our single reportable segment revenue, net income and significant segment expenses for the three months ended February 27, 2026 and February 28, 2025 were as follows:

(dollars in millions)			2026						2025
Revenue			$	6,398					$	5,714
Less:
Cost of revenue(1)			630						550
Research and development expenses(1)			834						782
Sales and marketing expenses(1)			1,566						1,360
General and administrative expenses(1)			333						307
Stock-based and deferred compensation expense			514						469
Amortization of purchased intangibles			39						83
Loss contingency			62						—
Acquisition-related expenses			2						—
Non-operating (income) expense, net(2)			(4)						(19)
Income before income taxes			2,422						2,182
Provision for income taxes			533						371
Net income			$	1,889					$	1,811

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(1)Excludes stock-based and deferred compensation expenses, amortization of purchased intangibles, and certain loss contingencies and acquisition-related expenses, which are presented separately within this table.

(2)Includes interest income of $63 million and $80 million for the three months ended February 27, 2026 and February 28, 2025, respectively.

Further components of the Company’s measures of segment profitability and segment assets are included throughout the Company’s financial statements.