Adobe CEO Shantanu Narayen will step down once a successor is appointed, the company announced Thursday, with Narayen transitioning to the role of chairman. Shares of the design software giant fell 7% in extended trading following the news.
Narayen, who joined Adobe in 1998 and ascended to the CEO position in 2007, has been instrumental in the company’s strategic pivot from perpetual software licenses to a subscription-based model with its Creative Cloud suite. Under his leadership, Adobe has also been aggressively pursuing expansion through generative artificial intelligence, a burgeoning frontier for creative software. This strategic push was notably highlighted by the attempted acquisition of fast-growing design platform Figma, a deal that ultimately collapsed under regulatory scrutiny, resulting in Adobe paying Figma a $1 billion termination fee.
“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,” said Frank Calderoni, Adobe’s lead independent director, in a company 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, also serves as the lead independent director for Pfizer and earned $51 million in total compensation for fiscal year 2025. He holds approximately $118 million in Adobe shares. In a memo to employees, Narayen expressed his commitment to supporting the incoming CEO, mirroring the mentorship he received from Adobe’s co-founders, John Warnock and Charles “Chuck” Geschke, when he took the helm.
“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.”
During Narayen’s tenure, Adobe’s stock performance has significantly outpaced the broader market, surging more than sixfold while the S&P 500 has seen approximately a 350% increase over the same period.
Industry peers have acknowledged Narayen’s impact. Dylan Field, co-founder and CEO of Figma, lauded Narayen in an X post, describing him as “thoughtful, kind and relentless in pursuit of Adobe’s vision.” Satya Nadella, CEO of Microsoft, another key Adobe partner, congratulated Narayen on “build[ing] one of the most important software companies in the world, and expand[ing] what’s possible for creators, entrepreneurs, and brands everywhere.” Nadella particularly highlighted Narayen’s “empathy you’ve brought to the creative process and the example you’ve set as a leader.”
The leadership transition announcement coincided with Adobe reporting robust quarterly financial results and offering an optimistic outlook. For the fiscal first quarter, the company posted earnings per share of $6.06, exceeding the LSEG consensus estimate of $5.87. Revenue reached $6.40 billion, surpassing the expected $6.28 billion.
Adobe’s revenue demonstrated a healthy 12% year-over-year growth in the first quarter, which concluded on February 27th. Net income climbed to $1.89 billion, or $4.60 per share, up from $1.81 billion, or $4.14 per share, in the prior year’s comparable quarter. The company noted that annualized revenue from its AI-first products more than tripled, a segment Narayen confidently described as “our next billion dollar business.”
Looking ahead to the fiscal second quarter, Adobe projected adjusted earnings per share between $5.80 and $5.85, with revenue anticipated to range from $6.43 billion to $6.48 billion. These figures generally align with, or slightly exceed, analyst expectations.
Despite these positive financial indicators, the software sector has faced headwinds as investors grapple with concerns surrounding potential disruption from generative AI models. Adobe’s stock, for instance, has experienced a nearly 23% decline year-to-date as of Thursday’s close, underperforming the S&P 500’s slight dip. The company’s stock is also significantly off its 2021 peak, having experienced substantial pullbacks in recent years.
Subscription revenue for creative and marketing professionals remained a strong point, totaling $4.39 billion, a 12% increase and exceeding analyst consensus. During the quarter, Adobe further integrated its offerings into the generative AI ecosystem by announcing the availability of Acrobat, Express, and Photoshop applications for OpenAI’s ChatGPT assistant, alongside an expanded partnership with advertising firm WPP.
Narayen reported that Adobe reached 850 million monthly users across its Acrobat, Creative Cloud, Express, and Firefly platforms in the fiscal first quarter, marking a 17% increase. He described this adoption rate as “a clear indication that we have both strong usage and a foundation for monetization.”
However, the Adobe Stock service, a significant business segment representing approximately $450 billion, experienced a sharper decline in performance than management had projected. David Wadhwani, president of Adobe’s creativity and productivity business, acknowledged this trend on a conference call, stating, “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.”
Adobe anticipates the CEO search process will take several months.
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