Shares in Adobe Inc fell almost 7% after it announced its Chief Executive Officer (CEO) would step down, despite posting record results for the first quarter of the 2026 financial year (Q1 FY26).
The global software company, which created the PDF format, said Shantanu Narayen had decided to transition from his position as CEO after 18 years, once a successor was appointed, but would remain Chair of the Board.
Lead Independent Director Frank Calderoni will Chair a special committee to direct the process to consider internal and external candidates.
Adobe (NASDAQ: ADBE) shares closed $3.92 (1.43%) lower at US$269.78 on Thursday (Friday AEDT), capitalising the company at US$109.97 trillion (A$1.55 trillion), before diving $18.26 (6.77%) in after-hours trading to $251.52.
The company also announced net income rose 4% to $1.889 billion in the three months ended 27 February, and diluted income per share increased 11% to $4.60 on revenue which climbed 12% to $6.4 billion.
“Adobe delivered record Q1 results with AI-first ARR (annualised recurring revenue) more than tripling year over year (to $26.06 billion) and subscription revenue growing 13%,” Narayen said in a news release.
“Our mission to empower everyone to create represents an even larger opportunity as content powers all experiences in the AI (artificial intelligence) era.”
Executive Vice President and Chief Financial Officer Dan Durn said Adobe delivered subscription revenue of $6.2 billion and record Q1 cash flow of $2.96 billion.
“As we accelerate AI-powered capabilities across creativity, productivity and customer experience orchestration, Adobe is well positioned for continued profitable growth,” Dan said.
Business Professionals & Consumers subscription revenue grew 16% to $1.78 billion, while Creative & Marketing Professionals subscription revenue rose 12% to $4.39 billion.
The company also forecast second-quarter revenue of between $6.43 billion and $6.48 billion, compared with estimates of $6.43 billion, according to data compiled by LSEG.
First-quarter revenue of $6.40 billion beat estimates of $6.28 billion.
Established in 1982, the San Jose, California-based company is best known for tools used in creative work, digital documents and online marketing, such as Adobe Photoshop, Adobe InDesign and Adobe Acrobat.
