MW Adobe disappoints investors in this crucial metric, and shares fall nearly 9%

By Claudia Assis

The software company also forecast adjusted earnings below Wall Street's hopes

Adobe Inc. on late Wednesday forecast weaker sales for the next year, clouding otherwise better earnings and making investors worry anew about its prospects amid rising competition in the artificial-intelligence arena.

Adobe $(ADBE)$ called for revenue between $23.30 billion and $23.55 billion for fiscal 2025, including revenue of between $17.25 billion to $17.40 billion for its key digital-media segment.

That's below Wall Street expectations for revenue around $23.78 billion, including about $17.65 billion for the digital-media unit, according to analysts polled by FactSet.

Adobe shares fell nearly 9% in the extended session Wednesday, after ending the regular trading day up 0.5%.

Chief Executive Shantanu Narayen focused on the current-quarter and fiscal 2024 results, saying that Adobe's "highly differentiated technology platforms, rapid pace of innovation, diversified go-to-market and the integration of our clouds" position the company for "a great year ahead."

The software company forecast adjusted earnings of $20.20 to $20.50 for its next fiscal year, which was also below the FactSet consensus for $20.52.

For the fiscal fourth quarter, Adobe reported digital media's revenue at $4.15 billion, a 12% increase year over year. Quarterly revenue for the document-cloud unit rose 17% to $843 million, while revenue from the creative segment added 10% to $3.30 billion.

Overall, the software company reported sales of $5.61 billion for the fiscal fourth quarter, up 11% year over year. Adjusted for one-time items, it earned $4.81 a share in the quarter.

Analysts polled by FactSet expected the company to report adjusted earnings of $4.67 on sales of $5.54 billion.

-Claudia Assis

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December 11, 2024 16:42 ET (21:42 GMT)

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