Adobe stated CEO Shantanu Narayen will step down after a successor has been appointed, and he’ll stay because the design software program firm’s chair. Shares tumbled 7% in prolonged buying and selling.
Narayen joined Adobe in 1988 as a vice chairman and basic supervisor, and he grew to become CEO in 2007. Under Narayen, Adobe pushed from software program licenses to subscriptions to its Creative Cloud utility bundle, and the corporate is now working to broaden by generative synthetic intelligence. He sought to amass fast-growing design software program firm Figma, however regulators pushed again, and the businesses called off the deal, leading to Adobe paying Figma a $1 billion breakup payment.
“On behalf of the Board, I want to recognize Shantanu’s contributions as CEO and architect of Adobe’s transformation over the past 18 years, and for positioning Adobe for success in the AI-driven era,” Frank Calderoni, Adobe’s lead impartial director, was quoted as saying in a statement. “As we take the next step in succession planning, we are focused on selecting the right leader for this next exciting chapter of the company’s growth and are grateful for Shantanu’s continued leadership as CEO to ensure a smooth transition.”
Narayen, 62, is lead impartial director of Pfizer along with his tasks at Adobe, the place he acquired $51 million in complete compensation for the 2025 fiscal yr, based on a filing. He owns $118 million in Adobe shares, based on FactSet.
In a memo to workers, Narayen wrote that he is staying on the board to assist the following Adobe CEO, simply as co-founders John Warnock and Charles “Chuck” Geschke did when he grew to become chief.
“What attracted me to Adobe 28 years ago was our leadership in creating new market categories, world-class products, a relentless desire to innovate in every functional area of the company and the people I met during the interview process,” Narayen wrote. “We have continued to create new markets, deliver world-class products, drive innovation in everything we do and attract and retain the best and brightest employees.”
On Narayen’s watch, Adobe’s inventory jumped greater than sixfold, whereas the S&P 500 is up about 350% over that stretch.
“Shantanu is a leader I’ve come to know and respect deeply,” Dylan Field, Figma’s co-founder and CEO, wrote in an X post. “He’s thoughtful, kind and relentless in pursuit of Adobe’s vision. Grateful for the time we spent together and wishing him all the best in the years ahead!”
Satya Nadella, CEO of Adobe associate Microsoft, congratulated Narayen.
“You’ve built one of the most important software companies in the world, and expanded what’s possible for creators, entrepreneurs, and brands everywhere,” Nadella wrote on X. “What has always stood out to me is the empathy you’ve brought to the creative process and the example you’ve set as a leader.”
In addition to creating the management announcement, Adobe reported robust quarterly outcomes and steerage.
Here’s how the corporate did compared with LSEG consensus:
- Earnings per share: $6.06 adjusted vs. $5.87 anticipated
- Revenue: $6.40 billion vs. $6.28 billion anticipated
Adobe’s income grew about 12% yr over yr within the fiscal first quarter, which ended on Feb. 27, based on a statement. Net revenue of $1.89 billion, or $4.60 per share, elevated from $1.81 billion, or $4.14 a share, in the identical quarter a yr in the past. Adjusted revenue excludes stock-based and deferred compensation expense.
Annualized income from AI-first merchandise greater than tripled, the corporate stated.
“That should be our next billion dollar business,” Narayen stated on a convention name with analysts
Adobe known as for $5.80 to $5.85 in fiscal second-quarter adjusted earnings per share on $6.43 billion to $6.48 billion in income. Analysts polled by LSEG had been in search of $5.68 per share and $6.42 billion in income.
Investors have been punishing software stocks due to considerations about disruption from generative AI fashions. Adobe shares are down almost 23% up to now in 2026 as of Thursday’s shut, whereas the S&P 500 index is down about 3% in the identical interval.
Adobe’s inventory is greater than 60% off its file from 2021 after dropping greater than 20% in every of the previous two years.
Revenue from subscriptions for artistic and advertising professionals totaled $4.39 billion, up 12% and above the $4.31 billion consensus amongst analysts polled by StreetAccount.
During the quarter, Adobe introduced the provision of Acrobat, Express and Photoshop apps for OpenAI’s ChatGPT assistant, together with an expanded partnership with promoting firm WPP.
Adobe had 850 million month-to-month customers throughout Acrobat, Creative Cloud, Express and Firefly in the course of the fiscal first quarter, up 17%, Narayen stated. The adoption is “a clear indication that we have both strong usage and a foundation for monetization,” he stated.
The Adobe Stock service that gives inventory pictures and different media, representing a e-book of enterprise of round $450 billion, declined extra sharply than administration had predicted in the course of the quarter.
“This shift is playing out more quickly than we had planned for, and our focus remains on giving customers meaningful choice between Stock and generative AI as they build their creative and marketing workflows,” David Wadhwani, president of Adobe’s creativity and productiveness enterprise, stated on the decision.
Adobe’s CEO search ought to take a number of months, Narayen stated.
— CNBC’s Ari Levy contributed to this report.
WATCH: What Jim Cramer thinks of the move in enterprise software stocks
