Adobe Plunges to 7 Year Low on CEO Resignation, Muted Forecast
fliptop writes:
Troubled SaaS icon Adobe tumbled after hours, sending its stock to 7 year lows after the company announced that CEO Shantanu Narayen will resign from the creative software giant amid deep skepticism about the company's ability to survive and thrive in the AI era:
The CEO change "adds questions around strategic continuity, capital allocation priorities, and pace of innovation," Grace Harmon, an analyst at Emarketer, said in an email. "Investors will likely focus on whether incoming leadership maintains a balance between disciplined execution and aggressive AI investment, especially as competition in creative and enterprise AI intensifies."
The company also gave a sales forecast for the current quarter that just topped estimates, but failed to ease investor fears that the software maker is being left behind by new competitors.
In the fiscal first quarter, revenue increased 12% to $6.4 billion, compared with analysts' average estimate of $6.28 billion. Adjusted earnings were $6.06 a share in the period, which ended Feb. 27. The average projection was $5.88 a share.
Annual recurring revenue for the company's AI-first products such as Firefly more than tripled compared to the same period last year, Narayen said in a script prepared for a conference call scheduled after the results. In September, Adobe said sales from these products exceeded $250 million.
[...] The shares fell about 6% in extended trading after closing at $269.78 in New York. The stock has declined about 23% this year, and is about to drop the lowest level since 2019.
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