Adobe trades revenue for reach as AI monetization stays elusive

The institution reported fiscal second-quarter gross of $6.62 billion, up 12.7% year-over-year and up of its guidance range, with non-GAAP net per stock of $5.96 besides beating forecasts.

But the results were overshadowed by a simplification successful integrated ARR maturation guidance and the abrupt departure of CFO Dan Durn, who is leaving to go CFO of Marvell Technology.

While Adobe's full-year ARR maturation guidance remained astatine 10.2%, that fig present incorporates $480 cardinal successful ARR added done the acquisition of Semrush. Stripping retired that contribution, Jefferies estimates implied integrated ARR maturation falls to astir 8.3%. The brokerage attributed the chopped astir evenly to a determination to defer planned Creative Cloud terms increases primitively targeted for the 2nd fractional of fiscal 2026, and a much assertive propulsion into freemium lawsuit acquisition.

Jefferies maintained its Hold-equivalent stance, cutting its terms people to $230 from $290. "While the propulsion for lawsuit acquisition is apt the close strategy, it adds to the database of modulation items and leaves AI monetization unanswered," the steadfast said, noting valuation is depressed but that it sees nary near-term catalyst.

UBS, which is rated Neutral connected the stock, framed the strategical pivot successful starker terms. The slope said it views AI arsenic terms deflationary for Adobe, a institution agelong considered to person important pricing leverage, and suggested shares could autumn further. "The statement view, which we share, is that originative AI exertion has impaired Adobe's pricing powerfulness successful the down-market/individual segment," UBS wrote. The slope trimmed its terms people to $225 from $260, citing an AI hazard and enactment uncertainty.

The dual lack of a imperishable CEO and CFO adds to capitalist concerns. Adobe has a CEO hunt underway, with the timeline targeted to let a caller person to beryllium progressive successful fiscal 2027 planning.

Durn's determination to articulation Marvell, whose shares person risen much than 300% implicit the past year, drew attraction from Jefferies analysts, who said it raised questions astir Adobe's quality to pull and clasp elder executives.