Adobe posts record revenue as AI fuels growth; Narayen to exit as CEO
Adobe reported a record quarterly revenue for its fiscal first quarter, signaling resilience in a software market wary of AI-driven disruption. The company posted revenue of $6.4 billion, up 12% from a year earlier and above market expectations of about $6.28 billion.
The growth was broad-based across major product lines. Creative and marketing subscriptions, including Photoshop, totaled $4.39 billion, up 12% year over year. Business and consumer subscriptions, such as Acrobat, reached $1.78 billion, up 16%. Adobe said its AI-based annual recurring revenue more than tripled from a year earlier, underscoring the rapid monetization of AI features across its stack. Operating cash flow reached $2.96 billion, a company record, while adjusted earnings per share were $6.06, beating Wall Street expectations of about $5.87.
For the second quarter, Adobe forecast revenue of $6.43 billion to $6.48 billion and adjusted EPS of $5.80 to $5.85, again above consensus estimates of roughly $6.42 billion in revenue and $5.68 in EPS. The outlook suggests continued momentum even as AI-related adoption and competition shape the sector.
News of a leadership shake-up overshadowed the earnings beat. Chief Executive Shantanu Narayen said in a memo to employees that he has informed the board of his decision to step down as CEO, and would work with the board over the coming months to identify a successor and to ensure a smooth transition. He will remain chairman of the board after stepping down. Narayen joined Adobe in 1998 and has served as CEO since 2007. He will conduct his 100th earnings conference call on the day of the transition.
Adobe’s stock has fallen roughly 23% this year amid broader worries that AI advances could disrupt established software players. Following the earnings release, shares extended losses in after-hours trading, tumbling more than 7% and trading around $250 by late afternoon New York time.
Why this matters to U.S. readers: Adobe is a major American software company whose results illuminate how enterprise software and creative tools are evolving amid rapid AI development. The results suggest that customers continue to invest in cloud subscriptions and AI-enabled features, even as markets gauge the extent of disruption from new AI entrants and platforms. For investors and policymakers, Adobe’s trajectory informs expectations for software capital expenditure, digital advertising and marketing tech budgets, and the resilience of long-term software licenses in a shifting AI landscape. The leadership transition at a marquee U.S. tech firm also matters for corporate governance and strategic direction in the sector.