Adobe Inc. (NASDAQ:ADBE), a leading company in digital media and marketing software, surpassed Wall Street’s expectations for its fiscal first quarter late Thursday. However, its projection for the forthcoming quarter failed to impress, leading to a decline in Adobe stock in after-hours trading.
Based in San Jose, California, Adobe reported adjusted earnings of $4.48 per share on revenue of $5.18 billion for the quarter ending March 1. These figures outperformed the predictions of analysts surveyed by FactSet, who had anticipated earnings of $4.38 per share on revenue of $5.14 billion. Comparatively, Adobe’s earnings and sales increased by 18% and 11%, respectively, on a year-over-year basis.
Looking ahead to the current quarter, Adobe forecasts adjusted earnings of $4.38 per share, aligning with analysts’ predictions at the guidance midpoint. However, its sales projection of $5.28 billion fell short of the consensus estimate of $5.31 billion for the fiscal second quarter. This is in contrast to the same quarter last year, where Adobe reported adjusted earnings of $3.91 per share on sales of $4.82 billion.
In addition, Adobe has announced the initiation of a new $25 billion share repurchase program.
Following the earnings report, Adobe stock experienced a sharp decline of over 10% to $511.84 in after-hours trading. During Thursday’s regular trading session, the stock slightly decreased by 0.5%, closing at $570.45.
“Adobe achieved record Q1 revenue, demonstrating strong momentum across Creative Cloud, Document Cloud, and Experience Cloud,” stated Shantanu Narayen, Adobe’s CEO, in a press release. “We’ve made remarkable progress leveraging generative AI to introduce significant innovations throughout our product lineup.”
Last month, Adobe stock faced downward pressure due to concerns that emerging generative artificial intelligence tools, such as OpenAI’s Sora, might impact its core software offerings for creative professionals. Nonetheless, Adobe is advancing its integration of proprietary generative AI technology, named Firefly, into its suite of creative software.
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Author Kristen Moran 
