Adobe reported stronger-than-expected earnings for its fiscal first quarter, but the good news was overshadowed by a major leadership change.
The company announced that longtime CEO Shantanu Narayen will step down after leading the company for 18 years. Narayen will stay in the role until a successor is chosen and will remain chairman of the board.
After the announcement, Adobe shares fell about 6.7% in after-hours trading. The stock has already dropped around 23% this year and is far below its all-time high from 2021.
Despite the market reaction, Adobe posted solid financial results. The company reported adjusted earnings of $6.06 per share on $6.4 billion in revenue. Analysts had expected $5.87 per share on $6.28 billion in revenue.
Artificial intelligence is becoming a key topic for Adobe and the wider software industry. Some investors worry that new AI tools could replace traditional creative software.
Adobe is trying to show that its own AI products are gaining traction. The company said its AI-focused annual recurring revenue more than tripled compared to last year.
Looking ahead, Adobe expects second-quarter earnings between $5.80 and $5.85 per share, with revenue projected between $6.43 billion and $6.48 billion.
Even with strong earnings, investors remain cautious. The next CEO will likely face pressure to prove that Adobe can stay competitive in the fast-growing AI era.
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