Adobe forecast fourth-quarter revenue to decline to $5.50–$5.55 billion, below London Stock Exchange Group (LSEG) analysts’ expectations, due to its restrained technology spending. The company faces weak demand for its AI tools and pressure from AI startups. Adobe shares fell 9.2% in after-market trading.
Image source: Adobe
Adobe, founded in 1982, is the largest provider of software for graphic designers, audio and video editors. High interest rates and economic turbulence are forcing it to cut costs, which has a negative impact on business growth. Adobe’s position is also being put under additional pressure by competitors such as Stability AI and Midjourney, which offer similar AI services for generating images based on user text queries.
For the fourth quarter, Adobe expects revenue in the range of $5.50 to $5.55 billion, compared with London Stock Exchange Group analysts’ forecast of $5.61 billion. Quarterly earnings will range from $4.63 to $4.68 per share, compared with with a forecast of $4.67. Despite this, Adobe announced the Adobe Firefly Video Model, a new tool for creating videos using generative AI, scheduled for a limited launch later this year. This product is designed to strengthen Adobe’s position in the segment of AI solutions for creative audiences.
Adobe’s financial results for the third quarter ended August 30 showed mixed dynamics: revenue amounted to $5.41 billion, exceeding LSEG analysts’ estimates of $5.37 billion. However, the company’s operating expenses rose to $2.86 billion compared to $2.61 billion a year ago previously.