Adobe CEO Shantanu Narayen speaks during an interview with CNBC at the New York Stock Exchange on February 20, 2024.
Brendan McDermid | Reuters
Adobe Shares fell as much as 11% in extended trading on Thursday after the design software maker posted strong fiscal first-quarter results but fell slightly short of quarterly revenue forecasts.
Here’s how the company performed, compared to estimates from analysts surveyed by LSEG, formerly known as Refinitiv:
- Earning per share: $4.48 adjusted versus $4.38 expected
- Income: $5.18 billion versus the expected $5.14 billion
According to a release, Adobe’s revenue grew 11% year over year in the quarter ended March 1. Net income fell to $620 million, or $1.36 per share, from $1.25 billion, or $2.71 per share, in the same quarter a year ago.
During the quarter, Adobe abandoned its $20 billion acquisition of design software startup Figma after U.K. regulators found competition concerns. The company paid Figma a $1 billion termination fee. Adobe has announced an early release of an artificial intelligence assistant for its Reader and Acrobat apps.
Meanwhile, in February OpenAI announced Sora, which can generate a video based on a person’s written description. Adobe will work with OpenAI around Sora, David Wadhwani, president of Adobe’s digital media business, said on the earnings call.
“You will obviously see us develop our model,” he said. “You’ll see others develop a template. This creates an advantage, because the more people generate video clips, the more they need to edit that content.”
Adobe expects fiscal second-quarter earnings of $4.35 to $4.40 per share on an adjusted basis, on revenue of $5.25 to $5.30 billion. The middle of the range implies 9% growth. Analysts polled by LSEG expected $4.38 per share and $5.31 billion in revenue.
Product improvements in the Adobe Express app, the Firefly Services AI offering and the new Acrobat assistant should lead to an acceleration of digital media annualized recurring revenue in the second half of the year, Wadhwani said.
The company said it will set aside $25 billion for stock buybacks.
Disregarding the after-hours movement, Adobe shares have fallen 4% this year, while the S&P 500 has gained 8% over the same period.
