What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-01-15 compared with 2025-01-13 · 264 added, 243 removed, 1032 unchanged (33% of the section changed)

11 unchanged sentences

(In millions, except par value)

2024 December 1,

2025 November 29,

Current assets:

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Trade payables $ 417 $ 361

Accrued expenses 2,336 1,942

Accrued expenses and other current liabilities

Deferred revenue 6,905 6,131

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(In millions, except per share data)

2024 December 1,

2025 November 29,

2024 December 1,

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(In millions)

2024 December 1,

2025 November 29,

2024 December 1,

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Stock-based compensation — — 1,833 — — — — 1,833

Value of shares in deferred compensation plan — — — — — — 2 2

Balances at December 1, 2023

Balances at November 29, 2024

601 $ — $ 13,419 $ 38,470 $ ( 201 ) ( 160 ) $ ( 37,583 ) $ 14,105

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Stock-based compensation — — 1,942 — — — — 1,942

Value of shares in deferred compensation plan — — — — — — 3 3

Balances at November 28, 2025

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(In millions)

2024 December 1,

2025 November 29,

2024 December 1,

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Stock-based compensation 1,942 1,833 1,718

Reduction of operating lease right-of-use assets 77 72 83

Lease-related asset impairments

Deferred income taxes ( 512 ) ( 468 ) ( 426 )

Unrealized losses (gains) on investments, net ( 35 ) ( 10 ) 29

Other non-cash items 48 52 65

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Purchases of long-term investments, intangibles and other assets ( 134 ) ( 108 ) ( 53 )

Proceeds from sales of long-term investments and other assets 2 1 —

Other investing activities, net

Net cash provided by (used for) investing activities ( 1,187 ) 149 776

149 776 ( 570 )

Cash flows from financing activities:

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Adobe is a global technology company with a mission to change the world through personalized digital experiences.

For over four decades, Adobe’s innovations have transformed how individuals, teams, businesses, enterprises, institutions, and governments engage and interact across all types of media.

Our products, services and solutions are used around the world to imagine, create, manage, deliver, measure, optimize and engage with content across surfaces and fuel digital experiences.

We have a diverse user base that includes consumers, communicators, creative professionals, developers, students, small and medium businesses and enterprises.

We are also empowering creators by putting the power of artificial intelligence (“AI”) in their hands, and doing so in ways we believe are responsible.

Our products and services help unleash creativity, accelerate document productivity and power businesses in a digital world.

Adobe’s mission is to empower everyone to create.

We build innovative platforms and tools that unleash creativity, productivity and personalized customer experiences.

For over four decades, our innovations have transformed how people everywhere engage across all types of media.

Adobe’s solutions are the foundation of digital experiences, starting with the first creative spark, to the creation and development of all content and media, to the personalized delivery across every channel.

We have operations in the Americas;

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Fiscal years 2025, 2024 and 2023 were 52 -week years.

Our next 53-week year will be fiscal year 2027.

Reclassifications

Certain prior year amounts, which are not material, have been reclassified to conform to current year presentation in the Notes to Consolidated Financial Statements.

Certain prior year amounts, which are not material, have been reclassified to conform to current year presentation in the Consolidated Statements of Cash Flows and Notes to Consolidated Financial Statements.

Significant Accounting Policies

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Revenue is recognized when a contract exists between us and a customer and upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.

We enter into contracts that can include various combinations of products and services, which may be capable of being distinct and accounted for as separate performance obligations, or in the case of offerings such as cloud-enabled Creative Cloud and Document Cloud, accounted for as a single performance obligation.

We enter into contracts that can include various combinations of products and services, which may be capable of being distinct and accounted for as separate performance obligations, or as in the case of certain cloud-enabled software subscription offerings, accounted for as a single performance obligation.

Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Subscription, Product and Services Offerings

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Certain revenue arrangements provide customers with unilateral cancellation rights, or options to either renew monthly on-premise term-based licenses or use committed funds to purchase other Adobe products or services.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fully hosted subscription services (“SaaS”) allow customers to access hosted software during the contractual term without taking possession of the software.

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Revenue for subscriptions sold as a fee per period is recognized ratably over the contractual term as the customer simultaneously receives and consumes the benefit of the underlying service.

When cloud-enabled services are highly integrated and interrelated with on-premise software, such as in our cloud-enabled Creative Cloud and Document Cloud offerings, the individual components are not considered distinct and revenue is recognized ratably over the subscription period for which the cloud-enabled services are provided.

The subscription support plans related to those customer arrangements whose revenues we classify as subscription revenues represent stand-ready performance obligations.

Revenue from these subscription support plans is recognized ratably over their respective contractual terms and classified as subscription revenue.

When cloud-enabled services are highly integrated and interrelated with on-premise/on-device software, the individual components are not considered distinct and revenue is recognized ratably over the subscription period for which the cloud-enabled services are provided.

Subscription-based consulting services and subscription support plans related to those customer arrangements whose revenues we classify as subscription revenues represent stand-ready performance obligations.

Revenue from these service and support offerings is recognized ratably over their respective contractual terms and classified as subscription revenue.

Licenses for on-premise software may be purchased on a perpetual basis, as a subscription for a fixed period of time, or based on usage for certain of our original equipment manufacturer (“OEM”) and royalty agreements.

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Revenue from on-premise term license or term licensing arrangements with unilateral cancellation rights or monthly renewal options, and any associated maintenance and support, is classified as subscription revenue.

Our services and other revenue is comprised primarily of fees related to consulting, training, maintenance and support for certain on-premise licenses that are recognized at a point in time and our advertising offerings.

We typically sell our consulting contracts on a time-and-materials or fixed-fee basis.

Our services and other revenue is comprised primarily of fees related to project-based consulting and training, as well as maintenance and support for certain on-premise licenses that are recognized at a point in time and our advertising offerings.

We sell our project-based consulting contracts on a time-and-materials or fixed-fee basis.

These revenues are recognized as the services are performed for time-and-materials contracts and on a relative performance basis for fixed-fee contracts.

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Our transaction-based advertising offerings, where fees are based on a number of impressions per month and invoicing is aligned to the pattern of performance, customer benefit and consumption, are typically accounted for utilizing the “as-invoiced” practical expedient.

Our contracts with customers may include multiple goods and services.

For example, some of our offerings include both on-premise and/or on-device software licenses and cloud services.

Determining whether the software licenses and the cloud services are distinct from each other, and therefore performance obligations to be accounted for separately, or not distinct from each other, and therefore part of a single performance obligation, may require significant judgment.

We have concluded that the on-premise/on-device software licenses and cloud services provided in our Creative Cloud and Document Cloud subscription offerings are not distinct from each other such that revenue from each offering should be recognized ratably over the subscription period for which the cloud services are provided.

In reaching this conclusion, we considered the nature of our

Our contracts with customers may include promises to transfer multiple products and services.

Determining whether products and services are distinct performance obligations to be accounted for separately or combined as part of a single performance obligation may require significant judgment, primarily for our solutions that include both on-premise and/or on-device software licenses and cloud services.

We have concluded that certain subscription offerings, which include both on-premise/on-device software licenses and cloud services, represent a single, highly integrated performance obligation.

This conclusion reflects the high degree of integration, interdependency and interrelation between the software and the cloud services, such that customers receive the intended benefit only when these components operate together.

The nature of our promise to customers is to deliver a complete end-to-end solution, and the intended functionality and workflow efficiencies cannot be obtained from either the software or the cloud services on a standalone basis.

Accordingly, revenue for these offerings is recognized ratably over the subscription period during which the cloud services are provided.

Standalone selling price is established by maximizing the amount of observable inputs, primarily actual historical selling prices for performance obligations where available, and includes consideration of factors such as go-to-market model and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

promise to Creative Cloud and Document Cloud customers, which is to provide a complete end-to-end creative design or document workflow solution that operates seamlessly across multiple devices and teams.

We fulfill this promise by providing access to a solution that integrates cloud-based and on-premise/on-device features that, together through their integration, provide functionalities, utility and workflow efficiencies that could not be obtained from either the on-premise/on-device software or cloud services on their own.

Cloud-based features that are integral to our Creative Cloud and Document Cloud offerings and that work together with the on-premise/on-device software include, but are not limited to:

Creative Cloud Libraries, which enable customers to access their work, settings, preferences and other assets seamlessly across desktop and mobile devices and collaborate across teams in real time;

shared reviews which enable simultaneous editing and commenting of digital assets across desktop, mobile and web;

automatic cloud rendering of a design which enables it to be worked on in multiple mediums;

and Sensei, Adobe’s cloud-hosted artificial intelligence and machine learning framework, which enables features such as automated photo-editing, photograph content-awareness, natural language processing, optical character recognition and automated document tagging.

Individual products may have multiple values for standalone selling price depending on factors such as where they are sold and what channel they are sold through.

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We regularly evaluate whether there have been changes in the underlying assumptions and data used to determine the amortization period.

When revenue arrangements include components of third-party goods and services, for example in transactions which involve resale, fulfillment or providing advertising impressions to our end customer, we evaluate whether we are the principal, and report revenues on a gross basis, or an agent, and report revenues on a net basis.

In this assessment, we consider if we obtain control of the specified goods or services before they are transferred to the customer by evaluating indicators such as which party is primarily responsible for fulfilling the promise to provide the goods or services, which party has discretion in establishing price and the underlying terms and conditions between the parties to the transaction.

When revenue arrangements include components of third-party products and services, for example in transactions which involve resale, fulfillment or providing advertising impressions to our end customer, we evaluate whether we are the principal, and report revenues on a gross basis, or an agent, and report revenues on a net basis.

In this assessment, we consider if we obtain control of the specified products or services before they are transferred to the customer by evaluating indicators such as which party is primarily responsible for fulfilling the promise to provide the products or services, which party has discretion in establishing price and the underlying terms and conditions between the parties to the transaction.

We offer limited rights of return, rebates and price protection of our products under various policies and programs with our distributors, resellers and/or end-user customers.

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This estimate can be affected by the amount of a particular product in the channel, the rate of sell-through, product plans and other factors.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Although our subscription contracts are generally non-cancellable, a limited number of customers have the right to cancel their contracts by providing prior written notice to us of their intent to cancel the remainder of the contract term and consumers have a period of time to terminate certain agreements without penalty.

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We do not estimate variable consideration for our sales and usage-based license royalty agreements, consistent with the associated exception for sales and usage-based royalties for the license of intellectual property under the revenue recognition standard.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property and Equipment

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If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair values of our reporting units are greater than the carrying amounts, then the quantitative goodwill impairment test is not performed.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

If the qualitative assessment indicates that the quantitative analysis should be performed, we then evaluate goodwill for impairment by comparing the fair value of each of our reporting units to its carrying value, including the associated goodwill.

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When such events or changes in circumstances occur, we assess recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows.

If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on any excess of the carrying amount over the fair value of the assets.

If the future undiscounted cash flows are less than the carrying

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

amount of these assets, we recognize an impairment loss based on any excess of the carrying amount over the fair value of the assets.

We use the asset and liability method of accounting for income taxes.

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Advertising costs are expensed as incurred.

Advertising expenses for fiscal 2024, 2023 and 2022 were $ 1.04 billion, $ 970 million and $ 1.04 billion, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Advertising expenses for fiscal 2025, 2024 and 2023 were $ 1.37 billion, $ 1.04 billion and $ 970 million, respectively.

Foreign Currency Translation

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Additionally, we hedge our net recognized foreign currency monetary assets and liabilities with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We recognize all derivative instruments as either assets or liabilities in our Consolidated Balance Sheets and measure them at fair value.

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Accordingly, we will not recognize any consideration received as revenue until termination or substantive completion of the services.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recent Accounting Pronouncements Not Yet Effective

Recently Adopted Accounting Guidance

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The updated standard is effective for our annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026.

Early adoption is permitted.

We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

Beginning with our annual reporting for fiscal 2025, we adopted the updated standard on a retrospective basis.

The adoption of this standard did not have a material impact on our Consolidated Financial Statements and related disclosures.

See Note 2 for further information regarding our reportable segments .

There have been no other new accounting pronouncements made effective during fiscal 2025 that have significance, or potential significance, to our Consolidated Financial Statements and related disclosures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recent Accounting Pronouncements Not Yet Effective

In December 2023, the FASB issued ASU No.

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We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during fiscal 2024 that are of significance or potential significance to us.

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 during fiscal 2025 that are of significance or potential significance to us.

Segment Information

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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 chief operating decision maker, reviews revenue and gross margin information for each of our reportable segments, but does not review operating expenses on a segment by segment basis.

In addition, with the exception of goodwill, we do not identify or allocate our assets by the reportable segments.

Our business is organized into the following 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 include creative professionals, including photographers, video editors, graphic and experience designers and game developers;

communicators, including content creators, students, marketers and knowledge workers;

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 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, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers and executives across the C-suite.

• 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our segment revenue and results for fiscal 2024, 2023 and 2022 were as follows:

Our segment results for fiscal 2025, 2024 and 2023 were as follows:

(dollars in millions) Digital

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Gross profit as a percentage of revenue 95 % % 67 % % 71 % % 88 % %

See the Consolidated Statements of Income for a reconciliation of consolidated gross profit to consolidated income before income taxes.

We generally categorize revenue by geographic area based on where the customer manages their utilization of our offerings.

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Revenue $ 23,769 $ 21,505 $ 19,409

Revenue by major offerings in our Digital Media reportable segment for fiscal 2024, 2023 and 2022 were as follows:

(in millions) 2024 2023 2022

Creative Cloud $ 12,682 $ 11,517 $ 10,459

Document Cloud 3,182 2,699 2,383

Total Digital Media revenue $ 15,864 $ 14,216 $ 12,842

Subscription revenue by segment for fiscal 2025, 2024 and 2023 were as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Digital Media and Digital Experience subscription revenue by customer group for fiscal 2025, 2024 and 2023 were as follows:

(in millions) 2025 2024 2023

Creative & Marketing Professionals

$ 16,303 $ 14,749 $ 13,425

Business Professionals & Consumers

6,495 5,662 4,744

Total Digital Media and Digital Experience subscription revenue $ 22,798 $ 20,411 $ 18,169

Contract Balances

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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.

As of December 1, 2023, the balance of trade receivables, net of allowances for doubtful accounts, was $ 2.22 billion, inclusive of unbilled receivables of $ 80 million.

As of November 29, 2024, the balance of trade receivables, net of allowances for doubtful accounts, was $ 2.07 billion, inclusive of unbilled receivables of $ 66 million.

Allowance for Doubtful Accounts

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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 $ 14 million and $ 16 million as of November 29, 2024 and December 1, 2023, respectively.

The allowance for doubtful accounts was $ 13 million and $ 14 million as of November 28, 2025 and November 29, 2024, respectively.

Contract Assets

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Contract asset impairments were not material in fiscal 2025 and 2024.

Contract assets were $ 248 million and $ 141 million as of November 29, 2024 and December 1, 2023, respectively.

Contract assets were $ 241 million and $ 248 million as of November 28, 2025 and November 29, 2024, respectively.

Deferred Revenue and Remaining Performance Obligations

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In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component.

The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, such as invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and not to receive financing from our customers.

The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, such as invoicing at the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

beginning of a subscription term with revenue recognized ratably over the contract period, and not to receive financing from our customers.

Any potential financing fees are considered insignificant in the context of our contracts.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 1, 2023, the balance of deferred revenue was $ 5.95 billion.

As of November 29, 2024, the balance of deferred revenue was $ 6.26 billion.

Significant movements in the deferred revenue balance during the period consisted of increases due to payments received prior to transfer of control of the underlying performance obligations to the customer, which were offset by decreases due to revenue recognized in the period.

During the year ended November 29, 2024, approximately $ 5.87 billion of revenue was recognized that was included in the balance of deferred revenue as of December 1, 2023.

During the year ended November 28, 2025, approximately $ 6.14 billion of revenue was recognized that was included in the balance of deferred revenue as of November 29, 2024.

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.

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We did not incur any impairment losses for all periods presented.

Capitalized contract acquisition costs were $ 717 million and $ 656 million as of November 29, 2024 and December 1, 2023, of which $ 464 million and $ 422 million was long-term and included in other assets in the Consolidated Balance Sheets, respectively.

Capitalized contract acquisition costs were $ 721 million and $ 717 million as of November 28, 2025 and November 29, 2024, of which $ 464 million was long-term and included in other assets in the Consolidated Balance Sheets for both periods.

The remaining balance of the capitalized costs to obtain contracts was current and included in prepaid expenses and other current assets.

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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 on the Consolidated Balance Sheets.

Refund liabilities were $ 141 million and $ 111 million as of November 29, 2024 and December 1, 2023, respectively.

Refund liabilities are included in accrued expenses and other current liabilities on the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Consolidated Balance Sheets.

Refund liabilities were $ 137 million and $ 141 million as of November 28, 2025 and November 29, 2024, respectively.

Significant Customers

For all periods presented, there were no customers that represented at least 10% of net revenue or that were responsible for over 10% of our trade receivables.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On September 15, 2022, we entered into a definitive merger agreement under which we intended to acquire Figma, Inc.

(“Figma”) for approximately $ 20 billion, comprised of approximately half cash and half stock.

On December 17, 2023, we entered into a mutual termination agreement with Figma to terminate the proposed merger.

In accordance with the terms of the termination agreement, we paid Figma a termination fee of $ 1 billion.

The termination fee was recorded in operating expenses in our Consolidated Statements of Income during fiscal 2024, and was not tax-deductible for financial statement purposes.

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

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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, net of taxes, in our Consolidated Balance Sheets.

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 Consolidated Balance Sheets.

Unrealized credit-related losses are recorded to other income (expense), net in our Consolidated Statements of Income with a corresponding allowance for credit-related losses in our Consolidated Balance Sheets.

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Short-term fixed income securities:

Asset-backed securities 4 — — 4

Corporate debt securities 914 — — 914

agency securities 11 — — 11

Treasury securities 250 — — 250

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash, cash equivalents and short-term investments consisted of the following as of December 1, 2023:

Cash, cash equivalents and short-term investments consisted of the following as of November 29, 2024:

(in millions)

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Cash equivalents:

Corporate debt securities 41 — — 41

Money market funds 6,726 — — 6,726

Time deposits 57 — — 57

Treasury securities 2 — — 2

Total cash equivalents 6,826 — — 6,826

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Total cash, cash equivalents and short-term investments $ 7,887 $ — $ ( 1 ) $ 7,886

See Note 5 for further information regarding the fair value of our financial instruments.

See Not e 4 f or 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 November 28, 2025:

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Due between one and two years 101

Total $ 1,164

We review our debt securities classified as short-term investments on a regular basis for impairment.

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Short-term investments:

Asset-backed securities 4 — 4 —

Corporate debt securities 914 — 914 —

agency securities 11 — 11 —

Treasury securities 250 — 250 —

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Foreign currency derivatives 62 — 62 —

Interest rate swap derivatives 2 — 2 —

Other assets:

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Foreign currency derivatives

Interest rate swap derivatives 92 — 92 —

Total assets $ 6,404 $ 4,034 $ 2,370 $ —

Accrued expenses:

Accrued expenses and other current liabilities:

Foreign currency derivatives $ 94 $ — $ 94 $ —

Interest rate swap derivatives

Other liabilities:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of our financial assets and liabilities at December 1, 2023 was determined using the following inputs:

The fair value of our financial assets and liabilities at November 29, 2024 was determined using the following inputs:

(in millions)

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Cash equivalents:

Corporate debt securities $ 41 $ — $ 41 $ —

Money market funds 6,726 6,726 — —

Time deposits 57 57 — —

Treasury securities

Short-term investments:

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Deferred compensation plan assets 283 283 — —

Foreign currency derivatives

Total assets $ 7,511 $ 7,066 $ 445 $ —

Accrued expenses:

Accrued expenses and other current liabilities:

Foreign currency derivatives $ 9 $ — $ 9 $ —

Other liabilities:

Foreign currency derivatives

Total liabilities $ 11 $ — $ 11 $ —

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

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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 derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange and interest rate data 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 $ 5.51 billion as of November 29, 2024, based on observable market prices in less active markets and categorized as Level 2.

The fair value of our senior notes was $ 6.18 billion as of November 28, 2025, excluding the associated interest rate swaps, based on observable market prices in less active markets and categorized as Level 2.

See Note 17 for further details regarding our debt.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DERIVATIVE FINANCIAL INSTRUMENTS

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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 on our Consolidated Balance Sheets.

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 Consolidated Balance Sheets.

Cash Flow Hedges

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These foreign exchange contracts, carried at fair value, have maturities of up to 24 months.

As of November 29, 2024 and December 1, 2023, total notional amounts of outstanding cash flow hedges were $ 5.51 billion and $ 2.83 billion, respectively, hedging exposures denominated in Euros, Japanese Yen, British Pounds, Indian Rupees, Australian Dollars and Canadian Dollars.

As of November 28, 2025 and November 29, 2024, gross notional amounts of outstanding cash flow hedges were $ 5.97 billion and $ 5.51 billion, respectively, hedging exposures denominated in Euros, Japanese Yen, British Pounds, Indian Rupees, Australian Dollars and Canadian Dollars.

In June 2019, we entered into Treasury lock agreements with large financial institutions which fixed benchmark U.S.

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See Note 17 for further details regarding our debt.

As of November 29, 2024, we had net derivative gains on our foreign currency cash flow hedges expected to be recognized within the next 36 months, of which $ 64 million of net gains are expected to be recognized into revenue within the next 12 months and $ 1 million of net losses are expected to be recognized into operating expenses within the next 12 months.

As of November 28, 2025, we had net derivative losses on our foreign currency cash flow hedges expected to be recognized within the next 36 months, of which $ 44 million of net losses are expected to be recognized into revenue within the next 12 months and $ 5 million of net losses are expected to be recognized into operating expenses within the next 12 months.

We also had net derivative losses on our Treasury lock agreements, of which $ 3 million is expected to be recognized into interest expense within the next 12 months.

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For fiscal 2025, 2024 and 2023, there were no net gains or losses recognized in income relating to hedges of forecasted transactions that did not occur.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Hedges

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 Secured Overnight Financing Rate Overnight Index Swap Rate (“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 $ 2.70 billion 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.

See Note 17 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 Consolidated Statements of Income with a corresponding offset to the value of the senior notes being hedged.

Non-Designated Hedges

2 unchanged sentences

Changes in the fair value of the underlying assets and liabilities associated with the hedged risk are generally offset by the changes in the fair value of the related contracts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of November 29, 2024, total notional amounts of outstanding foreign currency forward contracts hedging monetary assets and liabilities were $ 381 million, primarily hedging exposures denominated in Indian Rupees, Australian Dollars, British Pounds and Euros.

As of December 1, 2023, total notional amounts of outstanding contracts were $ 998 million, primarily hedging exposures denominated in Euros, Indian Rupees, British Pounds and Australian Dollars.

At November 29, 2024 and December 1, 2023, the outstanding balance sheet hedging derivatives had maturities of 180 days or less.

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 for the current portion and other liabilities for the long-term portion on our Consolidated Balance Sheets.

The fair value of derivative instruments as of November 29, 2024 and December 1, 2023 were as follows:

As of November 28, 2025, gross notional amounts of outstanding foreign currency forward contracts hedging monetary assets and liabilities were $ 563 million, primarily hedging exposures denominated in Euros, Indian Rupees, Australian Dollars and British Pounds.

As of November 29, 2024, gross notional amounts of outstanding contracts were $ 381 million, primarily hedging exposures denominated in Indian Rupees, Australian Dollars, British Pounds and Euros.

At November 28, 2025 and November 29, 2024, the outstanding balance sheet hedging derivatives had maturities of 180 days or less.

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 Consolidated Balance Sheets.

The fair value of derivative instruments as of November 28, 2025 and November 29, 2024 were as follows:

(in millions)

5 unchanged sentences

$ 82 $ 99 $ 128 $ 10

Interest rate swaps

Derivatives not designated as hedging instruments:

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Total derivatives $ 178 $ 108 $ 129 $ 11

Gains (losses) on derivative instruments, net of tax, recognized in our Consolidated Statements of Comprehensive Income for fiscal 2024, 2023 and 2022 were as follows:

Unrealized gains (losses) on derivative instruments, net of tax, recognized in our Consolidated Statements of Comprehensive Income for fiscal 2025, 2024 and 2023 were as follows:

(in millions) 2025 2024 2023

2 unchanged sentences

$ ( 132 ) $ 89 $ ( 12 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The effects of derivative instruments on our Consolidated Statements of Income for fiscal 2025, 2024 and 2023 were as follows:

10 unchanged sentences

Other income (expense), net $ 9 $ 3 $ 12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following as of November 29, 2024 and December 1, 2023:

Property and equipment, net, consisted of the following as of November 28, 2025 and November 29, 2024:

(in millions) 2025 2024

9 unchanged sentences

Depreciation and amortization expense of property and equipment for fiscal 2025, 2024 and 2023 was $ 236 million, $ 239 million and $ 235 million, respectively.

Property and equipment, net, by geographic area as of November 29, 2024 and December 1, 2023 was as follows:

Property and equipment, net, by geographic area as of November 28, 2025 and November 29, 2024 was as follows:

(in millions) 2025 2024

2 unchanged sentences

Property and equipment, net $ 1,873 $ 1,936

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We 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) 2025 2024 2023

Cash 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.

As of November 28, 2025, the maturities of lease liabilities under operating leases were as follows:

(in millions)

Fiscal Year Operating Leases

Thereafter 93

Total lease liabilities

Imputed interest ( 47 )

Present value of lease liabilities $ 438

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

GOODWILL AND OTHER INTANGIBLES

7 unchanged sentences

Foreign currency translation

Balances at December 1, 2023

( 1 ) ( 16 ) — ( 17 )

Foreign currency translation

Balances at November 29, 2024

$ 3,889 $ 8,501 $ 398 $ 12,788

Acquisitions 14 — — 14

Foreign currency translation

Balances at November 28, 2025

2 unchanged sentences

We did not identify any events or changes in circumstances since the performance of our annual goodwill impairment test that would require us to perform another goodwill impairment test during the fiscal year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other intangibles, net, as of November 29, 2024 and December 1, 2023 were as follows:

Other intangibles, net, as of November 28, 2025 and November 29, 2024 were as follows:

(dollars in millions)

13 unchanged sentences

Other Intangibles

Thereafter 61

Total expected amortization expense $ 495

ACCRUED EXPENSES

Accrued expenses as of November 29, 2024 and December 1, 2023 consisted of the following:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities as of November 28, 2025 and November 29, 2024 consisted of the following:

(in millions) 2025 2024

Accrued compensation and benefits $ 646 $ 535

Accrued bonuses 575 547

Accrued compensation costs

$ 1,345 $ 1,221

Accrued corporate marketing 197 176

Derivative collateral liabilities

Sales and use taxes payable

Refund liabilities 137 141

Sales and use taxes

Excise taxes payable

Fair value of derivative liabilities

Derivative collateral liabilities

Other 511 426

Accrued expenses $ 2,336 $ 1,942

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accrued expenses and other current liabilities

$ 2,648 $ 2,336

Other primarily includes general business accruals, accrued interest expense and royalties payable.

Income before income taxes for fiscal 2025, 2024 and 2023 consisted of the following:

17 unchanged sentences

$ 1,604 $ 1,371 $ 1,371

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reconciliation of Provision for Income Taxes

9 unchanged sentences

Tax settlements ( 55 ) ( 85 ) ( 14 )

State tax expense, net of federal benefit 171 139 132

Stock-based compensation 90 ( 23 ) 29

Acquisition termination fee

State tax expense, net of federal benefit 139 132 113

Other 18 22 42

1 unchanged sentence

$ 1,604 $ 1,371 $ 1,371

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred Tax Assets and Liabilities

The tax effects of the temporary differences that gave rise to significant portions of the deferred tax assets and liabilities as of November 29, 2024 and December 1, 2023 were as follows:

The 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)

3 unchanged sentences

Net operating loss and capital loss carryforwards

Accrued liabilities

Intangible assets 93 117

Reserves and accruals 129 125

Operating lease liabilities 79 97

Stock-based compensation 70 66

Operating lease liabilities 68 79

Benefits relating to tax positions 59 64

11 unchanged sentences

As of November 28, 2025, we had federal and state tax credit carryforwards of approximately $ 146 million and $ 412 million, respectively, as well as state net operating loss carryforwards of approximately $ 410 million.

We also had federal and state capital loss carryforwards of $ 1.15 billion mainly from the Figma acquisition termination fee which was not deductible for financial statement purposes.

The majority of the state tax credits can be carried forward indefinitely, and the remaining federal and state tax loss and credit carryforwards will expire in various years from fiscal 2025 through 2040.

Certain tax loss and credit carryforwards are subject to an annual limitation and/or are reduced by a valuation allowance.

The majority of the state tax credits can be carried forward indefinitely, and the remaining net operating loss and credit carryforwards will expire in

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

various years from fiscal 2026 through 2039.

We also had federal and state capital loss carryforwards of $ 1.13 billion, most of which will expire in 2029.

Certain tax loss and credit carryforwards are subject to limitations and/or are reduced by a valuation allowance.

The net carrying amount of such assets is expected to be fully realized.

In assessing the realizability of deferred tax assets, management determined that it is more likely than not that we will not fully realize certain available tax assets in domestic and foreign jurisdictions.

In assessing the realizability of deferred tax assets, management determined that it is more likely than not that we will not fully realize certain available tax assets.

Deferred tax assets are offset by a valuation allowance to the extent it is more likely than not that they are not expected to be realized.

As of November 29, 2024, we continue to maintain a valuation allowance of $ 725 million primarily related to certain state credits and federal capital loss carryforwards.

For fiscal 2024, the increase in the valuation allowance was $ 321 million, mainly related to the capital loss generated from the Figma acquisition termination fee.

As of November 28, 2025, we continue to maintain a valuation allowance of $ 806 million primarily related to certain U.S.

state and federal credits and capital loss carryforwards.

For fiscal 2025, the increase in the valuation allowance was $ 81 million.

As we repatriate foreign earnings for use in the United States, the distributions will generally be exempt from federal income taxes.

As of November 28, 2025, the cumulative amount of foreign earnings considered permanently reinvested upon which taxes have not been provided, and the corresponding unrecognized deferred tax liability, was not material.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounting for Uncertainty in Income Taxes

7 unchanged sentences

Tax settlements — ( 20 )

Foreign exchange gains and losses — 5

Ending balance $ 693 $ 683

Our policy is to record interest and penalties related to uncertain tax positions within the provision for income taxes.

As of November 29, 2024 and December 1, 2023, the combined amounts of accrued interest and penalties included in long-term income taxes payable related to tax positions taken on our tax returns were not material.

While we file federal, state and local income tax returns globally, our major tax jurisdictions are Ireland, California and the United States.

We are subject to the examination of our income tax returns by various domestic and foreign tax authorities with 2020 being the earliest fiscal year open for examination in all of our major tax jurisdictions.

As of November 28, 2025 and November 29, 2024, the combined amounts of accrued interest and penalties included in long-term income taxes payable related to tax positions taken on our tax returns were not material.

While we file federal, state and local income tax returns globally, our major tax jurisdictions are the United States, California and Ireland.

We are subject to the examination of our income tax returns by various domestic and foreign tax authorities with 2021 being the earliest fiscal year open for examination in our major tax jurisdictions.

We regularly assess the likelihood of outcomes resulting from examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result.

4 unchanged sentences

Although the timing of resolution, settlement and closing of audits is not certain, it is reasonably possible that the underlying unrecognized tax benefits may decrease by up to $ 40 million over the next 12 months.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

BENEFIT PLANS

13 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

five, ten, or fifteen-year annual installments.

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.

1 unchanged sentence

Undistributed deferred compensation is recorded as other liabilities on our Consolidated Balance Sheets.

As of November 29, 2024 and December 1, 2023, the invested amounts under the plan totaled $ 283 million and $ 206 million, respectively.

As of November 29, 2024 and December 1, 2023, undistributed deferred compensation due to participants totaled $ 297 million and $ 222 million, respectively.

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.

STOCK-BASED COMPENSATION

10 unchanged sentences

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.

Each type of performance goal is weighted

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

7 unchanged sentences

If the market value of our common stock at the end of a purchase period is lower than the market value at the beginning of the offering period, participants are rolled over into the subsequent offering, resulting in a reset of the offering price and the twenty-four month offering period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The ESPP will continue until the earlier of termination by the Board of Directors or the date on which all of the shares available for issuance under the plan have been issued.

11 unchanged sentences

We use the Black-Scholes option pricing model to determine the fair value of ESPP purchase rights.

The determination of the grant date fair value of our ESPP purchase rights is affected by our stock price as well as assumptions regarding a number of complex and subjective variables.

The determination of the grant date fair value of our ESPP purchase rights is affected by our stock price as well as assumptions regarding a number of variables.

These variables include our expected stock price volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, a risk-free interest rate and any expected dividends.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Summary of Restricted Stock Units

3 unchanged sentences

Fair Value Aggregate

Fair Value (1)

(in millions)

7 unchanged sentences

Expected to vest 7.3 $ 436.93 $ 2,331 1.31

_________________________________________

(1) The aggregate fair value is calculated using the closing stock price as of November 29, 2024 of $ 515.93 .

The weighted average grant date fair values of restricted stock units granted during fiscal 2025, 2024 and 2023 were $ 407.67 , $ 579.87 and $ 376.83 , respectively.

The total fair value of restricted stock units vested during fiscal 2025, 2024 and 2023 was $ 1.35 billion, $ 1.87 billion and $ 1.71 billion, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Summary of Performance Shares

3 unchanged sentences

Fair Value Aggregate

Fair Value (1)

(in millions)

7 unchanged sentences

Expected to vest 0.5 $ 501.33 $ 171 1.00

_________________________________________

(1) The aggregate fair value is calculated using the closing stock price as of November 29, 2024 of $ 515.93 .

Shares released during fiscal 2024 resulted from 83 % achievement of target for the 2021 Performance Share Program, as certified by the ECC in the first quarter of fiscal 2024.

Shares released during fiscal 2025 resulted from overall payout at 79 % of target for the 2022 Performance Share Program, as certified by the ECC in the first quarter of fiscal 2025.

The weighted average grant date fair values of performance share awards granted during fiscal 2025, 2024 and 2023 were $ 448.63 , $ 645.40 and $ 437.58 , respectively.

7 unchanged sentences

The estimated compensation cost is based on the fair value of our common stock on the date of grant.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Compensation costs for our performance share awards which are contingent upon achievement of relative total stockholder return are recognized, net of estimated forfeitures, on a straight-line basis over the requisite performance period or service period of the entire award, whichever is longer.

4 unchanged sentences

Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total stock-based compensation costs included in our Consolidated Statements of Income for fiscal 2025, 2024 and 2023 were as follows:

9 unchanged sentences

The components of accumulated other comprehensive income (loss) and activity, net of related taxes, for fiscal 2025 were as follows:

(in millions) December 1,

(in millions) November 29,

2024 Increase / Decrease Reclassification Adjustments November 28,

5 unchanged sentences

_________________________________________

(1) Reclassification adjustments for gains / losses on available-for-sale securities are classified in other income (expense), net.

(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) were immaterial for the fiscal years presented.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 December 2020, our Board of Directors granted authority to repurchase up to $ 15 billion in our common stock, which became fully utilized during fiscal 2024.

In March 2024, our Board of Directors granted additional authority to repurchase up to $25 billion in our common stock through March 14, 2028.

During fiscal 2024, 2023 and 2022, we entered into accelerated share repurchase agreements (“ASRs”) with large financial institutions whereupon we provided them with prepayments totaling $ 9.5 billion, $ 1.4 billion and $ 2.4 billion, respectively.

Under the terms of our ASRs, the financial institutions agree to deliver a portion of shares to us at contract inception and the remaining shares at settlement.

The total number of shares delivered and average purchase price paid per share are determined upon settlement based on the Volume Weighted Average Price (“VWAP”) over the term of the ASR, less an agreed upon discount.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During fiscal 2023 and 2022, we also entered into structured stock repurchase agreements with large financial institutions whereupon we provided them with prepayments totaling $ 3 billion and $ 4.15 billion, respectively.

Under the terms of these structured stock repurchase agreements, the financial institutions agree to deliver shares to us at monthly intervals during the respective contract terms, and the number of shares delivered each month are determined based on the total notional amount of the contracts, the number of trading days in the intervals and the VWAP during the intervals, less an agreed upon discount.

In March 2024, our Board of Directors granted authority to repurchase up to $ 25 billion in our common stock through March 14, 2028.

In September 2025, we entered into a stock repurchase arrangement with a large financial institution to execute up to $ 2.5 billion in open market repurchases, which remained partially outstanding as of November 28, 2025.

Upon completion of this arrangement, $ 5.90 billion remains under our March 2024 stock repurchase authority.

Share repurchase activities for fiscal 2025, 2024 and 2023 were as follows:

Number of Shares Delivered

(in millions)

Average Price Paid Per Share

Structured stock repurchase agreement entered into in fiscal 2023 0.6 $ 626.68

ASR entered into in December 2023 3.5 $ 578.11

ASR entered into in March 2024 5.2 $ 475.94

ASR entered into in June 2024 4.6 $ 546.30

ASR entered into in September 2024 3.6 $ — (1)

Total shares delivered 17.5

Structured stock repurchase agreements entered into in fiscal 2023 and 2022 7.5 $ 429.65

ASR entered into in December 2022 4.0 $ 348.46

Total shares delivered 11.5

Structured stock repurchase agreements entered into in fiscal 2022 and 2021 10.4 $ 375.03

ASR entered into in December 2021 5.3 $ 451.55

Total shares delivered 15.7

Number of Shares Delivered

Accelerated share repurchase agreements 16.8 $ 6,250

Open market repurchases 14.0 5,031

Total 30.8 $ 11,281

Accelerated share repurchase agreements 16.9 $ 9,500

Other structured stock repurchases 0.6 — (1)

Total 17.5 $ 9,500

Accelerated share repurchase agreements 4.0 $ 1,400

Other structured stock repurchases 7.5 3,000

Total 11.5 $ 4,400

_________________________________________

(1) During fiscal 2024, we received the initial delivery of shares under the ASR entered into in September 2024, which remained outstanding as of November 29, 2024.

Subsequent to November 29, 2024, the outstanding ASR was settled which resulted in total repurchases of 5.0 million shares at an average price of $ 501.37 .

(1) During fiscal 2024, we received the final delivery of shares under a structured stock repurchase agreement entered into in fiscal 2023.

Under the terms of our accelerated share repurchase agreements, financial institutions agree to deliver a portion of shares to us at contract inception and the remaining shares at settlement.

Under the terms of our other structured stock repurchase agreements, financial institutions agree to deliver shares to us at monthly intervals during the respective contract terms, and the number of shares delivered each month are determined based on the total notional amount of the contracts, the number of trading days in the intervals and the VWAP during the intervals, less an agreed upon discount.

Prepayments for stock repurchases are classified as treasury stock, a component of stockholders’ equity on our 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.

As of November 29, 2024, a portion of the $ 2.5 billion prepayment under the ASR entered into in September 2024 was evaluated as an unsettled forward contract indexed to our own stock, classified within stockholders’ equity.

Subsequent to November 29, 2024, as part of the March 2024 stock repurchase authority, we entered into stock repurchase arrangements with a large financial institution which totaled $ 3.25 billion, including a $ 2.75 billion ASR and a trading plan under which we may execute up to $ 500 million in open market repurchases.

Under the ASR, we received an initial delivery of 4.5 million shares, which represents approximately 75 % of our $ 2.75 billion prepayment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19 unchanged sentences

Total $ 6,821

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 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.

We 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 $ 259 million, $ 246 million and $ 228 million in fiscal 2024, 2023 and 2022, respectively.

Royalty expense, which was recorded in

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Indemnifications

7 unchanged sentences

Legal Proceedings

We are subject to legal proceedings, claims, including claims relating to intellectual property, commercial, employment and other matters, and investigations, including government investigations, that arise in the ordinary course of our business.

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.

20 unchanged sentences

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.

The discovery phase is ongoing.

The defense or resolution of this matter could involve significant monetary costs or penalties and have a significant impact on our financial results and operations.

There can be no assurance that we will be successful in negotiating a favorable settlement or in litigation.

Any remedies or compliance requirements could adversely affect our ability to operate our business or have a materially adverse impact on our financial results.

At this stage, we are unable to estimate a reasonably possible financial loss or range of any potential financial loss, if any, as a result of this litigation.

There can be no assurance that we will be successful in negotiating a favorable settlement or in

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Any remedies or compliance requirements could adversely affect our ability to operate our business or have a materially adverse impact on our financial results.

On October 20, 2023, a securities class action captioned Pembroke Pines Firefighters & Police Officers Pension Fund et al v.

6 unchanged sentences

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 fully briefed as of May 23, 2024.

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.

13 unchanged sentences

1:24-cv-00633, was filed in the U.S.

District Court for the Southern District of New York, (the “Roy Action,” and together with the Consolidated Derivative Action and the Sbriglio Action, the “Derivative Actions”), purportedly on behalf of Adobe.

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 Action, and improvements to Adobe’s corporate governance and internal procedures, in the case of the Shah Action, on behalf of Adobe.

The Derivative Actions are presently stayed pending the final resolution of the motion to dismiss in the Securities Action.

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.

We dispute the allegations of wrongdoing in the Securities Action and the Derivative Actions and intend to vigorously defend ourselves in these matters.

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The carrying value of our borrowings as of November 29, 2024 and December 1, 2023 were as follows:

The carrying value of our borrowings as of November 28, 2025 and November 29, 2024 were as follows:

(dollars in millions) Issuance Date Due Date Effective Interest Rate 2025 2024

8 unchanged sentences

4.75 % 2028 Notes

January 2025 January 2028 4.93 % 800 —

4.80 % 2029 Notes

April 2024 April 2029 4.93 % 750 750

4.95 % 2030 Notes

January 2025 January 2030 5.09 % 700 —

2.30 % 2030 Notes

February 2020 February 2030 2.69 % 1,300 1,300

1 unchanged sentence

April 2024 April 2034 5.03 % 750 750

5.30 % 2035 Notes

January 2025 January 2035 5.40 % 500 —

Total debt outstanding, at par $ 6,150 $ 5,650

Current portion of debt, at par

Fair value of interest rate swaps

Unamortized discount and debt issuance costs ( 26 ) ( 21 )

3 unchanged sentences

Carrying value of current debt

In January 2015, we issued $ 1 billion of senior notes due February 1, 2025.

The related discount and issuance costs are amortized to interest expense over the term of the notes using the effective interest method.

Interest is payable semi-annually, in arrears, on February 1 and August 1.

In February 2020, we issued $ 500 million of senior notes due February 1, 2025, $ 850 million of senior notes due February 1, 2027 and $ 1.30 billion of senior notes due February 1, 2030.

The related discount and issuance costs are amortized to interest expense over the respective terms of the notes using the effective interest method.

Interest is payable semi-annually, in arrears, on February 1 and August 1.

In April 2024, we issued $ 500 million of senior notes due April 4, 2027, $ 750 million of senior notes due April 4, 2029 and $ 750 million of senior notes due April 4, 2034.

In 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.

The related discount and issuance costs are amortized to interest expense over the respective terms of the notes using the effective interest method.

Interest is payable semi-annually, in arrears, on April 4 and October 4.

During the first quarter of fiscal 2024, we reclassified the senior notes due February 1, 2025 as current debt in our Consolidated Balance Sheets.

As of November 29, 2024, the carrying value of our current debt was $ 1.50 billion, net of the related discount and issuance costs.

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.

The fair value of the interest rate swaps is included in the carrying value of our debt in the Consolidated Balance Sheets.

See Note 5 for further details regarding our interest rate swap derivatives.

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.

For the senior notes issued in January 2015 and 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.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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, which replaced our previous five-year $ 1 billion senior unsecured revolving credit agreement entered into in October 2018.

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.

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As of November 28, 2025, there were no outstanding borrowings under the commercial paper program.

Term Loan Credit Agreement

In January 2023, we entered into a delayed draw term loan credit agreement (the “Term Loan Credit Agreement”), providing for a senior unsecured term loan of up to $ 3.5 billion for the purpose of partially funding the purchase price for our intended acquisition of Figma and the related fees and expenses.

During fiscal 2024, we entered into a mutual termination agreement with Figma to terminate the previously announced merger agreement.

Consequently, the Term Loan Credit Agreement was terminated.

There were no outstanding borrowings under the Term Loan Credit Agreement at the time of termination.

We lease certain facilities and data centers under non-cancellable operating lease arrangements that expire at various dates through 2034.

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 $ 106 million, $ 117 million and $ 121 million for fiscal 2024, 2023 and 2022, respectively.

We recognized operating lease expense in cost of revenue and operating expenses in our Consolidated Statements of Income.

Our operating lease expense includes variable lease costs and is net of sublease income, both of which are not material.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

There was no impairment recognized in the other periods presented.

Supplemental cash flow information for fiscal 2024, 2023 and 2022 related to operating leases was as follows:

(in millions) 2024 2023 2022

Cash paid for amounts included in the measurement of operating lease liabilities $ 85 $ 97 $ 107

Right-of-use assets obtained in exchange for operating lease liabilities $ 62 $ 32 $ 59

The weighted-average remaining lease term and weighted-average discount rate for our operating lease liabilities as of November 29, 2024 were 6 years and 2.69 %, respectively.

As of November 29, 2024, the maturities of lease liabilities under operating leases were as follows:

(in millions)

Fiscal Year Operating Leases

Thereafter 90

Total lease liabilities

Imputed interest ( 35 )

Present value of lease liabilities $ 428

NON-OPERATING INCOME (EXPENSE)

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Realized investment gains $ 16 $ 12 $ 6

Realized investment losses — — ( 1 )

Unrealized investment gains (losses), net 27 36 10

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We have audited the accompanying consolidated balance sheets of Adobe Inc.

and subsidiaries (the Company) as of November 29, 2024 and December 1, 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three fiscal year period ended November 29, 2024, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of November 28, 2025 and November 29, 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three fiscal year period ended November 28, 2025, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of November 28, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of November 29, 2024 and December 1, 2023, and the results of its operations and its cash flows for each of the fiscal years in the three fiscal year period ended November 29, 2024, in conformity with U.S.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of November 28, 2025 and November 29, 2024, and the results of its operations and its cash flows for each of the fiscal years in the three fiscal year period ended November 28, 2025, in conformity with U.S.

generally accepted accounting principles.

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Performance obligations in cloud-enabled software subscriptions

As discussed in Note 1 to the consolidated financial statements, cloud-enabled services are highly integrated and interrelated with on-premise or on-device software licenses in the Company’s Creative Cloud and Document Cloud subscription offerings.

Because of this, the cloud-based services and the on-premise/on-device software licenses are not considered distinct from each other and the applicable subscription is accounted for as a single performance obligation.

We identified the assessment of performance obligations in these cloud-enabled software subscription offerings as a critical audit matter.

A high degree of subjective auditor judgment was required to assess the nature of the Company’s Creative Cloud and Document Cloud offerings, their intended benefit to customers as an integrated offering, and the level of integration that exists between the cloud-enabled services and the on-premise/on-device licenses.

Sufficiency of audit evidence over revenue related to software subscriptions sold at the Company’s online store

As discussed in Note 2 to the consolidated financial statements, the Company recorded subscription revenue of $17.39 billion in its Digital Media segment, a portion of which related to software subscriptions sold at adobe.com, the Company’s online store.

Processing these orders is reliant upon information technology (IT) systems to record revenue.

We identified the evaluation of sufficiency of audit evidence over revenue related to software subscriptions sold at the Company’s online store as a critical audit matter.

The matter required a high degree of subjective auditor judgment due to the number of revenue-related IT systems involved.

Specifically, judgment was required to evaluate that revenue data was captured and aggregated throughout various IT systems.

Additionally, IT professionals with specialized skills and knowledge were required to evaluate the nature and extent of evidence obtained over this revenue.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of an internal control related to the assessment of distinct performance obligations.

We read the Creative Cloud and Document Cloud subscription offering agreements to understand the contractual terms and conditions.

We participated in product demonstrations and performed interviews with the Company’s product and engineering department to both understand and observe specific functionalities of the integrated offering and evaluate the nature of the promise made to the Company’s Creative Cloud and Document Cloud customers.

We evaluated the features and functionalities of the Creative Cloud and Document Cloud subscription that can be accessed only when using the on-premise/on-device software while connected to the Adobe cloud to assess that customers receive the intended benefit from each solution only as an integrated offering.

We applied auditor judgment to determine the nature and extent of procedures to be performed over this revenue.

We evaluated the design and tested the operating effectiveness of certain internal controls related to this revenue process, including controls related to IT.

We involved IT professionals with specialized skills and knowledge, who assisted in identifying and testing key IT configuration and IT interface controls for the various systems processing and recording these revenue transactions.

For a sample of transactions, we assessed the recorded revenue by comparing it with the relevant underlying documentation, including payment received, and delivery confirmation.

We evaluated the sufficiency of audit evidence obtained over this revenue by assessing the results of procedures performed.

We have served as the Company’s auditor since 1983.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data