Adobe sinks as CEO departs after 18 years at the helm, overshadowing solid Q1 results
ARR exited the quarter up 10.9% from this time last year, a slight slowdown that might compound AI concerns.
Adobe is down 9% in premarket trading on Friday after the company announced that longtime CEO Shantanu Narayen will be stepping down after 18 years at the helm of the design giant.
The company reported an otherwise solid set of results for its fiscal first quarter, though its slowing growth on annual recurring revenue may compound concerns on Wall Street that AI will be a long-term headwind to growth.
Per Adobe’s press release, Narayen will leave the top job after a successor has been appointed, and will remain as chair of the board. Under his leadership, Adobe successfully transitioned from a legacy software player selling one-time licenses to a subscription giant, which its stock jumping more than sixfold, beating the S&P 500’s 350% rise over the same period.
Despite continued concerns about the impact of AI disruption on software stocks like Adobe, the company reported a solid set of results for the quarter ended February 27, 2026, with:
A record revenue of $6.4 billion, topping Wall Street’s consensus estimate of $6.28 billion (compiled by Bloomberg).
Adjusted earnings per share of $6.06, vs. analyst forecasts for $5.88.
In Q2, Adobe expects:
Total revenue in the range of $6.43 billion to $6.48 billion, vs. analyst expectations of $6.45 billion.
Adjusted EPS between $5.80 and $5.85, beating Wall Street estimates of $5.77.
Adobe’s annualized recurring revenue exited the quarter at a run rate of $26.06 billion, a 10.9% year-over-year uptick. That’s a slowdown from the 13.5% growth in the previous quarter. Before the earnings release, RBC Capital Markets analyst Matthew Swanson wrote in a note to clients, “We continue to believe that ARR re-acceleration remains the focus for investors to get more constructive.”
