Adobe’s traditional stock business is declining more quickly than expected, with management attributing the shift to customer “choice” that results in displacement. Firefly is cannibalizing the photo library faster than predicted, pressuring the stock photography revenue line. Adobe’s Stock photography arm is about $450 million in revenue, while total ARR is $26.06 billion. Removing the stock business implies ARR growth would be 11.2% rather than 10.9%. Firefly ARR ended above $250 million and grew rapidly, with video generative actions rising more than 8x year-over-year. Total monthly active users across multiple products exceeded 850 million, and AI-first ARR more than tripled. Q1 revenue rose to $6.40 billion, non-GAAP EPS beat expectations, and operating cash flow increased to $2.96 billion. FY2026 guidance implies a low P/E range around 10x to 12x.
"“our traditional stock business saw a steeper decline than we expected. This shift is playing out more quickly than we had planned for”. CFO Dan Durn called the drop “greater-than-anticipated”. Firefly is cannibalizing the photo library faster than predicted. CEO Shantanu Narayen, who announced he is stepping down after 18 years, framed it as customers exercising “choice,” which is the polite word for displacement."
"Adobe's Stock photography arm is a $450 million revenue line. Total ARR is $26.06 billion. Strip the stock business out and ARR growth would have been 11.2% instead of 10.9%. Firefly ARR ended above $250 million, growing 75% quarter-over-quarter, with video generative actions running more than 8x year-over-year. Total monthly active users across Acrobat, Creative Cloud, Express, and Firefly crossed 850 million, up 17% year-over-year. AI-first ARR more than tripled. The cannibal is winning."
"Q1 revenue of $6.40 billion grew 11.97% year-over-year, non-GAAP EPS landed at $6.06 against a $5.87 estimate, and operating cash flow rose 19.18% to $2.96 billion. FY2026 guidance calls for non-GAAP EPS of $23.30 to $23.50, putting forward P/E around 10x to 12x. Trailing P/E is 1"
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