ADBE · 10-Q · 2026Q3 · Full report
Gross Margin Drivers
ADOBE INC. · 2026-09-22 · Importance 60 · Surprise 40 · In source text
Third-quarter cost of revenue increased 19% year over year to $763 million from $642 million, outpacing the 13% revenue increase. Nine-month cost of revenue increased to $2.14 billion from $1.90 billion. Subscription cost increases were primarily attributable to hosting services and data-center costs, compensation costs, and AI inferencing costs included in network infrastructure expenses. The higher infrastructure and AI-related costs pressured gross margin despite subscription revenue growth of 14%.
Key facts
- Cost of revenue was $763 million during the three months ended August 28, 2026, an increase of $121 million, or 19%, compared to the year-ago period. source
- Cost of subscription revenue increased primarily due to hosting services and data center costs, compensation costs, amortization of intangibles and various individually insignificant items. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | realized | -1.8% | Cost of revenue was $763 million during the three months ended August 28, 2026, an increase of $121 million, or 19%, compared to the… |