Adobe, known for Photoshop, posted a record first-quarter revenue this year despite concerns over a "software end-times theory." Even though revenue beat market expectations, shares plunged more than 7% on news that Shantanu Narayen, who has led the company for 18 years, would step down from the front lines as CEO.
U.S. software corporations Adobe said on the 12th (local time) that revenue for the first quarter of fiscal year 2026 (Dec. last year to Feb. this year) rose about 12% year over year to $6.4 billion (about 9.52 trillion won). It hit a record high on a quarterly revenue basis.
The market, however, focused more on the CEO change than Adobe's solid results. In a memo to employees that day, CEO Narayen announced the decision to retire, saying, "Over the coming months, I will work with the board to select a successor and ensure a smooth transition."
CEO Narayen is credited with driving Adobe's growth during the tenure. Joining Adobe in 1988, Narayen took the helm in 2007 and expanded the user base by shifting Photoshop, the leading image-editing tool, from one-off software sales to a cloud-based subscription model. After stepping down as CEO, he plans to continue as chair of the board.
Since the start of the CEO's tenure, over 18 years, company revenue has grown sixfold to $25 billion, and the workforce has increased from about 7,000 to 30,000. During this period, Adobe's share price rose more than sixfold, outpacing the 350% gain of the S&P 500.
Analysts say the outlook that AI will encroach on the corporate software market—the "SaaSpocalypse" (software as a service + apocalypse)—likely influenced CEO Narayen's decision to resign, even as the chief architect of Adobe's growth.
In recent years, with the emergence of Generative AI tools like Google Nanobanana, expectations have grown that Photoshop could be replaced, sending Adobe's shares down nearly 40% over the past year. On top of that, latecomers such as Figma and Canva have rolled out AI-powered editing tools in succession, heightening concerns that Adobe's position is weakening. Adobe has also strengthened its AI strategy by launching its own image-generation AI, "Firefly," but many say it has not been enough to quell market concerns.
In the market, some analysts said the sharp recent drop in Adobe's share price increased pressure for a management change. Anurag Rana, an analyst at Bloomberg Intelligence, said, "The stock's poor performance over the past year is likely a primary reason for the CEO change."