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(Bloomberg) — Adobe Inc. fell in the stock market after reporting disappointing results for the year, underscoring concerns that the software company could lose business due to the technology startup’s poor performance.
Information Read from Bloomberg
Revenue could be about $23.4 billion in the fiscal year ending in November 2025, the company said Wednesday in a statement. Earnings, excluding certain items, will be $20.20 a share to $20.50 a share. Analysts, on average, are estimating sales of $23.8 billion and adjusted earnings of $20.52 a share, according to Bloomberg data.
Adobe, known for its software for creative professionals, has been adding AI tools to its applications, such as embedding its own version, Firefly, in products like Photoshop. The company unveiled the AI video editing tool at its annual user conference in October, which has been integrated into the Premiere software update and is slowly making its way to the public.
The developer will soon introduce “a premium Firefly offering,” which includes videos, David Wadhwani, who heads the company’s production business, said at the conference after the release.
The most closely watched metric for the new software business — social media’s annual recurring revenue — will rise 11% in the fiscal year, in line with estimates. The improvement in guidance “is an ongoing process to establish new and expanded subscriptions,” Chief Financial Officer Dan Durn said on the call.
Adobe’s view may be cautious because of “the unknown speed at which the use of AI can develop,” wrote Anurag Rana, an analyst at Bloomberg Intelligence.
The shares fell nearly 9% in after-hours trading after closing at $549.93 in New York. The stock is down 7.8% this year, lagging behind its software peers and industry benchmarks. Marketers have expressed the usual concern that artificial intelligence tools from companies like OpenAI or Runway AI could take market share from Adobe.
While industry executives and customers are showing the value of Adobe’s new AI tools, “investors are not feeling the excitement,” Keith Weiss, an analyst at Morgan Stanley, said at the conference.
In the fourth fiscal quarter, Adobe reported that sales rose 11% to $5.61 billion. Profit, excluding other items, was $4.81 a share. Analysts, on average, earn $4.67 a share on revenue of $5.54 billion. The company ended the quarter with annualized digital revenue of $17.3 billion, slightly ahead of analysts’ estimates.
