Recently, Shantanu Narayen, Adobe’s long-time chief executive, said he will step down once a successor is found. His 18-year tenure unfolded in two distinct acts.
The first was a triumph. He remade Adobe from a boxed-software vendor into a subscription powerhouse, lifting revenue from about $3 billion in 2007 to more than $24 billion by 2025. The second was a reckoning. As generative artificial intelligence (AI) and collaborative tools reshaped the industry, Adobe faced a sharp valuation decline, a high-profile regulatory setback and rising doubts about whether its moat can withstand a new generation of AI-native rivals.
Valuation reckoning
When Narayen took over as chief executive in late 2007, Adobe was valued at about $24 billion. The global financial crisis soon cut that to roughly $11 billion at the trough, before a recovery to around $15 billion by 2010.
The inflection point came in 2011, when Adobe began shifting from boxed software to monthly subscriptions through its Creative Cloud platform. Investors were initially skeptical. Over time, the model gained traction. By 2018, Adobe’s market value had crossed $100 billion. It peaked in 2021 at about $322 billion, more than thirteen times its value when Narayen took charge.
The final stretch of his tenure proved more turbulent. Between the end of 2023 and March 2026, Adobe’s market value fell from $272 billion to about $101 billion. Two factors drove the slide: regulators blocked Adobe’s planned $20 billion acquisition of design startup Figma in 2023, and investors grew concerned that generative AI tools could erode demand for Adobe’s core products.
Even so, over Narayen’s tenure, the Adobe stock returned more than 540%, equivalent to an average annual gain of about 18.3%, outperforming the S&P 500 over the same period.
Subscription's limits
When Narayen became chief executive, Adobe generated $3.16 billion in annual revenue largely from software licences, one-time purchases that often cost thousands of dollars upfront. That model was already under strain as cloud-based rivals such as Salesforce gained traction with subscription software delivered over the internet. Narayen pushed Adobe to follow.
The transition was contentious. In 2013, Adobe eliminated perpetual licences, prompting customer backlash. A petition opposing the move drew nearly 50,000 signatures. Revenue fell 7.9% that year, reflecting the shift from upfront payments to recurring subscriptions. Growth resumed the following year and returned to double digits by 2015. By 2025, subscriptions accounted for about 95% of total revenue.
Artificial intelligence has introduced a new phase of change. In 2025, Adobe required users to upgrade to higher-tier plans, priced roughly 17% higher per month, to access AI features, triggering fresh resistance. The deeper question is whether the per-seat subscription model can hold as AI automates more creative work. If customers need fewer seats or subscribe for shorter periods, the revenue base Adobe spent a decade building could come under pressure.
Workforce pivot
As Adobe expanded beyond tools such as Photoshop and Acrobat to become a broader enterprise software provider, selling marketing, analytics, and commerce infrastructure, its revenues grew and its workforce scaled.
Headcount rose from about 3,000 when Narayen took over to 31,360 by November 2025. The workforce is geographically distributed: the US accounts for about 36% of employees, concentrated in leadership and research roles, while India makes up roughly 29%, with engineering centred in Noida and Bengaluru. Part of that expansion came through acquisitions. Adobe spent more than $15 billion on companies such as Omniture, Marketo, and Magento, building out its Digital Experience segment and adding teams focused on enterprise customers.
The pandemic years accelerated this growth. As businesses and individuals moved more of their work online, demand for digital tools surged. Adobe added more than 3,400 employees in each of 2022 and 2023 to meet that demand.
The current shift to AI is unfolding differently. Hiring has slowed to fewer than 800 net additions annually in 2024 and 2025, with recruitment focused on AI roles.
Empire buying
Narayen’s acquisition strategy aimed to turn Adobe from a maker of creative tools into a platform that could produce, deliver, and measure digital content end to end.
The early deals laid the foundation. In 2009, Adobe acquired Omniture, a web analytics firm, for $1.8 billion. The deal was questioned at the time, but became the basis of Adobe Analytics and the starting point of the Digital Experience business. A year later, Adobe bought Day Software for $240 million, which became Adobe Experience Manager, a platform for managing and publishing content at enterprise scale.
A second wave of acquisitions was larger and more contested. In 2018, Adobe paid $1.68 billion for Magento and $4.75 billion for Marketo. The deals were intended to strengthen Adobe’s position against Salesforce and Oracle in enterprise marketing and commerce.
The largest transaction of the Narayen era did not close. In 2022, Adobe agreed to acquire Figma, a browser-based design and collaboration tool, for $20 billion, rising to about $30 billion including stock. Regulators in the UK and the European Union blocked the deal in 2023 on competition grounds.
Outsourced ambition
The largest technology firms, Microsoft, Google, Amazon, and Facebook, are committing billions to the AI race. Investors increasingly treat capital expenditure as a proxy for preparedness.
Adobe is not playing that game. Its capital spending has declined from 2.5% of revenue in 2022 to 0.8% in 2025. Salesforce spends about twice as much, 1.4% of revenue, and ServiceNow spends 6.5-7.8%, around eight times Adobe’s rate in 2025. Adobe’s model delivers higher margins. In 2025, it reported a gross margin of 89% and a net margin of 30%, compared with 18% at Salesforce.
Much of the infrastructure that Adobe does not build, it rents. The computing power behind its AI tools, including Firefly, is provided by Microsoft Azure and Amazon Web Services. This keeps capital costs low but creates dependence. Both providers offer competing AI tools. If either raises prices or prioritizes its own products, Adobe has limited room to respond without owning the infrastructure its AI features rely on.
Narayen’s successor will inherit that trade-off.
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