Shantanu Narayen, who has led Adobe since 2007 after joining the company in 1988, will step down as Chief Executive Officer once a successor is named. However, he will remain Chairman of the Board to support the transition. Under his leadership, the group profoundly transformed its business model by shifting from software licenses to subscriptions with Creative Cloud. Adobe now intends to accelerate its growth by betting on generative artificial intelligence. Nevertheless, the announcement was met with a cool reception from the markets, with the stock falling approximately 6% in extended trading.

For the quarter ended February 27, the company reported results that beat forecasts. Adjusted EPS reached $6.06, a bit above the $5.87 expected by analysts, while revenue stood at $6.40bn, above the consensus of $6.28bn. Revenue grew by approximately 12% y-o-y, driven notably by subscriptions for creative and marketing professionals, which generated $4.39bn against the $4.31bn anticipated. Despite this performance, Adobe shares have lost nearly 23% YTD, amid investor caution regarding uncertainties related to the rise of generative AI.

For Q2, Adobe anticipates adjusted EPS of between $5.80 and $5.85 and revenue between $6.43bn and $6.48bn, above market expectations. The company also announced the availability of its Acrobat, Express, and Photoshop applications within OpenAI's ChatGPT assistant, as well as an expanded partnership with the advertising group WPP. Executives are set to detail these results and their outlook during a conference call scheduled for later today.