By Elias Schisgall
Adobe plans to focus on its "freemium" artificial-intelligence offerings in an effort to grow its user base at the expense of short-term annualized recurring revenue growth amid plans for its finance chief to step down.
Acquiring new customers through a frictionless onboarding process without immediate paywalls will be the best way to drive adoption of Adobe's AI products, Chief Executive Officer Shantanu Narayen said on an analyst call.
The company's second-quarter user numbers provide proof points for this shift, Narayen said. Acrobat and Express monthly active users grew to more than 850 million from 700 million year-over-year, while creative freemium monthly active users grew to more than 90 million from 50 million.
Still, the strategy will pressure Adobe's ARR in the second half of the year, executives said. ARR has become a closely watched metric for investors looking to see whether the company's AI investments are generating returns.
"This shift will come at the cost of short term ARR, but will accelerate user acquisition in MAU while building the foundation for long-term growth by removing friction from user onboarding, enabling deeper user engagement, and driving stronger lifetime value," Chief Financial Officer Dan Durn said. "We're confident that driving MAU, which has an impact on ARR, is the right trade-off and will drive future business growth."
Narayen sees an opportunity for Adobe to amass billions of Acrobat and Express users and hundreds of millions of users of the company's creative products.
Shares of Adobe fell 5.5% to $206.67 in after-hours trading on Thursday. The stock closed down 6.2% at $218.80, and has tumbled 37% this year.
The company also said that Durn is leaving on June 15. He will become CFO of the semiconductor company Marvell Technology. Steve Day, Adobe's senior vice president of corporate finance, will serve as interim chief financial officer.
Durn's exit compounds a coming leadership takeover at Adobe.
Narayen said in March that he would step down once his successor has been appointed, ending his 18-year tenure at the helm of the software company. The leadership changes leave Adobe searching for candidates to fill two top positions as the company which, like many software peers, faces pressure to prove to investors that it can capitalize on artificial-intelligence tools rather than be replaced by them.
Adobe also lifted its full-year financial targets, citing growing demand for its AI products.
The company now expects full-year revenue of between $26.5 billion and $26.6 billion, up from a range of $25.9 billion to $26.1 billion. It projected adjusted per-share earnings between $24.35 and $24.45, up from a range of $23.30 to $23.50.
Analysts polled by FactSet are expecting full-year adjusted earnings of $23.54 a share on revenue of $26.06 billion.
The company logged a second-quarter profit of $1.71 billion, or $4.25 a share, compared with $1.69 billion, or $3.94 a share, a year earlier.
Stripping out certain one-time items, the company reported adjusted earnings of $5.96, ahead of the $5.82 a share expected by analysts, according to FactSet.
Revenue rose 13% to $6.62 billion. Analysts polled by FactSet were expecting $6.45 billion.
The company ended the quarter with $27.1 billion in annualized recurring revenue, beating analyst expectations of $26.6 billion. The metric, closely watched by investors looking to judge the returns on Adobe's AI investments, includes around $480 million from Semrush Holdings, a brand visibility platform acquired by the company in April.
The results are "reflecting strong AI-driven demand across our customer groups," Narayen said.
For the current third quarter, the company is forecasting adjusted earnings of between $6.05 and $6.10 a share on revenue between $6.67 billion and $6.72 billion.
Analysts are expecting $5.77 in adjusted earnings on $6.52 billion in revenue.
Write to Elias Schisgall at elias.schisgall@wsj.com
(END) Dow Jones Newswires
June 11, 2026 19:21 ET (23:21 GMT)
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