Adobe Reports Record Q1 Revenue, AI Growth as Narayen Plans to Step Down
Adobe, the U.S. software giant best known for Photoshop and Acrobat, reported a strong start to its fiscal year despite industry chatter about a “SaaSpocalypse.” For the quarter ended February, the company said revenue rose 12% year over year to $6.4 billion, the highest first-quarter figure in its history and above market forecasts of about $6.28 billion.
Segment details show durable demand for its core subscriptions. Creative and marketing professional subscriptions, including Photoshop and related tools, generated $4.39 billion in revenue, up 12% from a year earlier. Acrobat subscriptions for business professionals and consumers totaled $1.78 billion, up 16% year over year.
Adobe also highlighted rapid growth in AI-enabled services. Its annual recurring revenue from AI-based offerings more than tripled versus the prior-year period. The company also cited a quarterly operating cash flow of $2.96 billion, a record for any quarter.
The company posted an adjusted earnings per share of $6.06, topping 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, a bit above consensus estimates of $6.42 billion in revenue and $5.68 in EPS.
In a separate development, Adobe announced that CEO Shantanu Narayen has notified the board of his intention to step down from the CEO role, effective over a transition period. He will continue to serve as chairman of the board after the transition and will work with the board to select and oversee the executive successor. Narayen joined Adobe in 1998 and has led the company as CEO since 2007.
Shares moved lower after the earnings release, with more than a 7% decline in after-hours trading and the stock hovering around $250 as of 5 p.m. Eastern Time. Investors will be watching who succeeds Narayen and how the leadership transition might influence Adobe’s strategy in a fast-evolving software market.
Why this matters for the United States and global markets: Adobe’s results illustrate the ongoing resilience of the software-as-a-service model, even in the face of recent skepticism about AI-enabled tools and rising competition. The company’s strong AI-related ARR growth underscores demand for integrated design, marketing, and document workflows across industries. For U.S. investors, the leadership transition at a major tech company could affect stock sentiment in the software sector and signal how large, mature SaaS firms navigate governance and strategic shifts during a period of rapid AI adoption.