Performance exceeding expectations fails to hide AI anxiety: Adobe CEO resigns after 18 years at the helm, stock price drops over 7% in after-hours trading.

Facing deep concerns in the market about whether it can continue to lead in the age of artificial intelligence, Adobe CEO Shantanu Narayen will step down from his helm at the creative software giant. On the same day, the company released its first-quarter report, with revenue and performance exceeding market expectations. Adobe announced on Thursday that the 62-year-old Narayen will step down after 18 years as CEO, but will remain in his position until a successor is chosen, and will continue to serve as chairman of the board. Grace Harmon, an analyst at market research firm Emarketer, said in an email, "The CEO transition raises questions about strategic continuity, capital allocation priorities, and the pace of innovation. Investors may closely watch whether the new leadership can strike a balance between steady execution and aggressive AI investments, especially as competition in the creative and enterprise AI fields heats up." The stock closed at $269.78 in New York on Thursday, falling by about 7.33% in after-hours trading at the time of writing. Since 2026, Adobe's stock price has fallen by approximately 23%, nearing a three-year low. As the developer of professional tools like Photoshop, Adobe is seen as part of application software companies like Salesforce and Atlassian, facing challenges from AI newcomers in acquiring new customers. In order to maintain its large market share, Adobe has been working to integrate AI tools into its creative and marketing software, and has introduced a series of AI models aimed at generating copyright-free images. During Narayen's tenure, the company experienced tremendous growth. Since taking on the role at the end of 2007, Adobe's annual revenue has grown nearly sixfold to about $24 billion, and the number of employees has increased from around 7,000 to over 30,000. He is often seen as one of the pioneers leading the software industry's successful transition to a subscription model, where customers pay recurring fees for product suites rather than making one-time purchases of individual apps. Microsoft Corporation CEO Satya Nadella wrote on the social platform X that Narayen had a "legendary journey" at Adobe. Dylan Field, CEO of Figma, which Adobe attempted to acquire in 2022, said Narayen is "thoughtful, warm, and steadfast in his pursuit of the Adobe vision." However, in recent years, investors have been increasingly questioning Narayen's leadership direction. Generative AI has made it possible to create visual media without the need for Adobe's expensive products. Many popular AI creative tools, such as Alphabet Inc. Class C's Veo 3 AI model, are developed by competitors. Frank Calderoni, the board's lead independent director tasked with finding a successor, said, "We are focused on selecting the right leader for the company's next exciting growth chapter and thank Shantanu for his continued leadership as CEO to ensure a smooth transition." Narayen said during a conference call after the financial report release that annual recurring revenue for products prioritizing artificial intelligence like Firefly had more than doubled in the first quarter compared to the same period last year. In September last year, the company stated that sales of these products had surpassed $250 million. On the same day, Adobe forecasted revenue for the current quarter ending in May to be between $6.43 billion and $6.48 billion, with analysts' average estimate at $6.43 billion; projected adjusted earnings per share ranged from $5.80 to $5.85, with the average estimate at $5.70. In the first quarter ended February 27, revenue increased by 12% to $6.4 billion, surpassing analysts' average estimate of $6.28 billion. Adjusted earnings per share were $6.06, exceeding the average estimate of $5.88. Of this, creative and marketing professionals contributed $4.39 billion in subscription revenue, while business professionals and consumers contributed $1.78 billion. Industry analyst Anurag Rana wrote that Narayen's departure overshadowed what had been a solid performance. "Since early last year, Adobe's financial metrics have hardly changed significantly, but the stock price has fallen by nearly 40% - this is likely a key reason for the planned CEO transition."