Adobe loses its veteran CEO as Wall Street's nervous AI ticks are again on show despite record revenues reported by the firm

Did the ludicrous ‘SaaSpocalypse’ fervor claim a notable CEO scalp yesterday? No, no, it didn’t, that but that wasn’t about to stop online scuttlebutt to that effect following the news that after 18 years at the helm, Adobe boss Shantanu Narayen is quitting as the firm continues to struggle to convince Wall Street about its AI strategy.

Narayen will be sticking around until a replacement is found - the search is only just beginning - and will transition to being Chairman after that. In a note employees, he emphasized that this was not the end:

This is not a goodbye by any means, but a time for reflection. 

But a smooth, planned transition and a reassurance of continuity on tap for his successor was not enough for the red-braces brigade on Wall Street. For example, Morgan Stanley cautioned in a note to clients:

The loss of an iconic leader at a time of peak uncertainty around the future of software more broadly, and the positioning of Adobe specifically in this new gen AI world, is bound to further investor uncertainty and anxiety around the shares.


This, despite Adobe turning in good Q1 earnings that saw record levels of total revenue and double-digit growth in customer subscriptions. Revenue of $6.4 billion, was up 12% year-on-year, while total customer group subscription revenue in the quarter hit $6.17 billion, up 13%. Net income was $1.889 billion, up from $1.811 billion a year ago.

But this wasn't enough to prevent the share price sliding as Wall Street had another of its by now all-too-customary fits of the vapors over AI direction. 

Narayan, on his 100th post-earnings analyst call, tried his best to calm jitter, saying: 

What attracted me to Adobe 28 years ago remains unchanged: our leadership in creating new market categories, world-class products, a relentless drive to innovate in every functional area of the company and our employees who continue to invent the future. 

The privilege of leading this company has been the greatest honor of my career, and I'm committed to setting it up for its next decade of growth with the right leader and executive team in partnership with the Board while driving our fiscal '26 strategic priorities. Our mission to empower everyone to create represents an even larger opportunity in the AI era. 

He added:

I'd be remiss if I didn't say that I'm even more excited about what we've been accomplishing as it relates to the AI transformation and the opportunity ahead of us, so we're going to stay really focused on capitalizing on that opportunity.

But frankly, he might as well have saved his breath and just chanted, ‘Wibble, wibble, wibble’ for all the good it did.

Successes

Still, he tried his best to focus attention on Adobe’s performance in Q1:

We're ruthlessly focused on monthly active users as an indicator of adoption and success for Acrobat and Express, Creative Cloud applications and Adobe Firefly across different surfaces, including desktop, web, mobile and LLM platforms. In Q1, we surpassed 850 million monthly active users of Acrobat, Creative Cloud, Express and Firefly, achieving 17% year-over-year growth, a clear indication that we have both strong usage and a foundation for monetization.

Other stats of note - or what should have been of note - during the call: 

• Global customer wins in the enterprise in Q1 included Centene, Danske Bank, Deutsche Bank, Heineken, HP, MongoDB, Nordstrom, Paramount, Pilot Travel Centers, RACQ, Revlon, Sherwin-Williams, Southwest Airlines, Stagwell, Target, TUI Travel Group and WPP.
• Firefly Enterprise new customer acquisition grew 50% year-on-year.
• Generative credit consumption is growing at over 45% quarter-over-quarter.
• Subscription revenue for Business Professionals & Consumers was $1.78 billion, growing 15% year-on-year.
• Creative & Marketing Professionals subscription revenue hit $4.39 billion in Q1, growing 11% year-on-year.
• Adobe Express is now used in 99% of US Fortune 500 companies.
• Subscription revenue for Adobe Experience Platform and native apps grew over 30% year-on-year
• During the 2026 Super Bowl, Adobe-enabled experiences peaked with more than 8 billion analytics server hits, 21 million concurrent viewers, 34 million page views, and 1.5 million video requests per minute.

In terms of Adobe’s enterprise play, Narayen pitches this as an area of strength for the firm:  

People are looking at it and, with AI, everybody wants to know how you transform your business. Every CEO that I talk to wants to ensure that they deal with the next generation of consumers and attract them as well as what they want to do then is say, ‘How do I ensure that from my marketing spend, I'm getting as much breadth as I can, as well as how much automation and productivity in terms of revenue?’

For now, what he calls the “AI-first sort of book of business” has tripled, but there’s a lot more to do, he argued: 

That should be our next billion-dollar business.

But getting there will be someone else's job. 

My take

Narayen has had an epic run as CEO - 18 years and counting isn’t to be sniffed at if you’re not the founder. And he’s not going to vanish as he kept telling analysts:

I'm not done yet. Make no mistake, I'm going to be laser-focused on continuing to drive the company until we have a new CEO and to make sure they are successful.

As for the timing of his departure, nothing to see here or dark ulterior motives in play,  he insists:

There never would have been a good time given how much Adobe is part of me. So I do want to start off with that. And in many ways, I've always believed that my role is looking around the corner, whether it's positioning the company for the future or about product and leadership. And as we've said many times, on product, I feel really good about how we've transformed our road map based on this AI and customer audiences, the new products are both exciting and groundbreaking.

And for whoever succeeds him, Narayen has some advice:

At our core, we're always going to be a product company. I think taking advantage and looking around the corner as it relates to the immense opportunity that AI has across creativity and marketing is the real opportunity for not just the CEO, but the company as well. And I think from my perspective, it's a massively scaled business right now, so just continuing to have a growth agenda.

Onwards!