Adobe Inc (NASDAQ:ADBE) is expected to report fiscal third-quarter results largely in line with guidance, according to Jefferies, as investors weigh a surprise leadership change alongside ongoing questions about the software giant's ability to fend off disruption from AI-native tools.
Jefferies expects Adobe revenue of $6.7 billion, near guidance midpoint, implying 11.8% growth, a deceleration from 12.7% due to tougher comps despite Semrush's contribution. Operating margin is modeled at 44%, down year-over-year as Adobe prioritizes user acquisition over monetization. The firm expects reiterated fiscal 2026 ARR growth of 10.2%.
The earnings print comes as Adobe named Anil Chakravarthy, formerly head of its digital experience business, as its next CEO. Jefferies had expected David Wadhwani, head of Adobe's creative business, which represents roughly three-quarters of total revenue, to get the top job given his 19 years at the company and prior experience as CEO of AppDynamics.
Wadhwani is now departing Adobe for other opportunities, and Jefferies believes further executive departures and organizational changes are likely as Chakravarthy reshapes the company.
The firm also flagged the possibility of board changes to bring in deeper artificial intelligence expertise.
Software sector sentiment has improved since June as terminal value concerns eased, but Adobe shares remain down 17% year to date, compared with a 4% gain for the iShares Expanded Tech-Software ETF and a 13% gain for the S&P 500, as disruption risk from AI tools remains unresolved.
The stock has climbed 52% since its 52-week lows in June, though Jefferies says valuation remains depressed at roughly 10 times calendar 2027 enterprise value to free cash flow, the lowest multiple in the firm's large-cap software coverage.
Jefferies said a positive reception to the new CEO, a refreshed board and metrics showing resilience against AI threats could keep investors engaged, but the firm wants more convincing evidence that revenue growth can accelerate organically before turning more constructive.
