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Adobe shares slid to a multi-year low—the lowest since January 2019—as investors await the company’s second-quarter earnings. Analysts expect about $5.81 a share on roughly $6.45 billion in revenue, with growth around 15% on earnings and 10% on revenue year over year, while investors weigh AI-driven demand against continued softness in older software segments; the earnings report is slated after the bell today.
Adobe topped Q1 FY2026 estimates with EPS of $6.06 and revenue of $6.4 billion (up 12.1%), driven by AI-first ARR growth; ARR reached $26.06 billion and operating cash flow was a record $2.96 billion. Subscription revenue rose across segments, while CEO Shantanu Narayen said he will step down after a successor is named. For Q2, guidance calls for revenue of $6.43–$6.48 billion and adjusted EPS of $5.80–$5.85, and despite the beat the stock fell in after-hours trading as investors weigh the outlook and leadership transition. Analysts’ Hold rating with a ~$370 target suggests meaningful upside remains but sentiment is mixed.
Adobe is purchasing videos to develop its AI text-to-video generator, offering $120 to its network of photographers and artists for videos of people engaged in everyday actions to source assets for AI training, in an effort to catch up to competitors like OpenAI.
Shares of Adobe (ADBE) dropped 9.3% after the company reported weaker-than-expected full-year revenue guidance and provided a weaker outlook for digital media net new ARR and digital experience subscription revenue. The company also disclosed regulatory scrutiny over its subscription models, which could have a material impact on its financial results and operations. Despite beating analysts' revenue and earnings expectations, the weak guidance and regulatory issue introduced uncertainty, leading to the stock market's negative reaction.