Adobe’s CFO departs while company also searches for new CEO

[SAN FRANCISCO] Adobe said that its chief financial officer would depart, leaving the company without a top tier of veteran leadership after CEO Shantanu Narayen announced in March that he would step aside.

CFO Dan Durn is exiting his post on Monday (Jun 15), Adobe said on Thursday. The company is continuing to search for a new CEO to succeed Narayen, who has held the job for 18 years.

Bloomberg reported earlier this month that David Wadhwani and Anil Chakravarthy, the heads of Adobe’s two main business units, were the leading in-house candidates to become the company’s next CEO. The software maker has also hired a search firm to find external candidates who could be suited to running the company in the AI era.

Separately, chipmaker Marvell Technology announced that Durn would be joining its staff. Adobe said Steve Day, senior vice-president of corporate finance, would serve as interim CFO until a successor is hired.

The CFO announcement overshadowed Adobe’s quarterly results and an outlook for the current period that surpassed analysts’ expectations.

“Whenever you have a CEO transition, you do not necessarily want a CFO transition at the same time,” Gil Luria, an analyst at DA Davidson, said. “Clearly, investors right now are uneasy with a transition in both of those positions.”

The shares declined about 6 per cent in extended trading after closing at US$218.80 in New York. The stock has dropped about 37 per cent this year, and is hovering near its lowest level in seven years.

Adobe’s Photoshop and other software have long been the standard for creative and marketing professionals. But in recent years, the company has faced increasing questions from Wall Street about whether it will be disrupted by artificial intelligence-based products.

Generative AI has made it easier to create visual media without Adobe’s expensive offerings and many of the most popular new AI tools, such as Google’s video-generating models, are built by competitors.

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To stave off its rivals, Adobe has integrated AI throughout its platform in the form of well-used features and its own models for media generation.

Sales from AI-first products have exceeded US$500 million, Narayen said on Thursday on a conference call with analysts.

In September, the company said that those tools had generated more than US$250 million in revenue.

The search for the next CEO is “progressing well”, and the goal is to have the new leader in place for planning the new fiscal year, which begins in December, he said.

In the fiscal second quarter, which ended May 29, sales gained 13 per cent to US$6.6 billion. That compared with analysts’ average estimate of US$6.5 billion, according to data compiled by Bloomberg. Subscription sales to creative and marketing professionals were US$4.5 billion, while tools for business and consumers generated US$1.9 billion.

Profit, excluding some items, was US$5.96 a share. Annual recurring revenue across the company was US$27.1 billion. Both metrics topped analysts’ estimates.

Adobe also said that revenue will be US$6.67 billion to US$6.72 billion in the period ending in August. Adjusted earnings will be US$6.05 to US$6.10 a share. BLOOMBERG