Adobe Disappoints Investors With Revenue Guidance — Blame Inflated AI Expectations

Adobe, the developer of applications for processing images, video and working with documents, limited itself to a rather restrained forecast for revenue dynamics in the current quarter, although investors were ready to count on the artificial intelligence factor, which is not alien to this company.

Image source: adobe.com

Adobe is scheduled to close its fiscal quarter in May, with revenue for the period expected to be between $5.77 billion and $5.82 billion. At the midpoint of the range, that’s slightly below the $5.8 billion analysts had been expecting. Management expects earnings per share to be between $4.95 and $5. That’s also below the analyst consensus of $5 per share. Against this backdrop, Adobe’s stock price fell about 3% in after-hours trading. It’s down 24% overall over the past 12 months. Investors have expressed concerns about growing competition in software that processes images and videos using artificial intelligence.

Adobe is pushing its Firefly AI model into popular apps Photoshop and Premiere. Last quarter, the company announced it would charge 50 cents for every AI-generated video and raised prices for some of its apps. Adobe’s revenue increased 10% to $5.71 billion in the quarter, beating analysts’ expectations. Its $19.7 billion backlog was just shy of the $19.8 billion that investors had expected.

The company’s revenue in the digital content segment increased by 11% to $4.23 billion. In the marketing and analytical software segment, revenue increased by 10% to $1.41 billion. In the current fiscal year, Adobe expects to earn between $23.3 billion and $23.6 billion and receive adjusted earnings per share from $20.2 to $20.5. The reporting structure for subscription revenue will be changed to take into account the division into corporate and private segments.