[NEW YORK] Adobe gave a disappointing outlook for revenue growth in the current quarter despite a recent focus on monetising its new generative artificial intelligence (AI) features.
Sales in the period ending in May will be US$5.77 billion to US$5.82 billion, the company said on Wednesday (Mar 12). Analysts, on average, estimated US$5.8 billion. Profit, excluding some items, will be US$4.95 a share to US$5 a share, compared with the average projection of US$5.
Adobe, the top maker of software for creative professionals, has been incorporating its AI model, Firefly, into apps such as Photoshop and Premiere. Investors have debated whether generative AI will make the products more lucrative and indispensable, or fuel the rise of AI-native competitors. During the quarter, Adobe announced it would charge about 50 US cents per AI-generated video and separately announced price increases for some of its applications.
Shares declined about 3 per cent in extended trading after closing at US$438.60 in New York. Adobe’s stock has slipped 24 per cent over the past 12 months. Investor sentiment has primarily been driven by views of Adobe’s AI, “which has become increasingly interconnected with concerns around competition”, wrote Matthew Swanson, an analyst at RBC Capital Markets.
Adobe is scheduled to host an event for investors next week in which the company is expected to provide additional long-range financial information and more details of its AI strategy.
Fiscal first-quarter revenue increased 10 per cent to US$5.71 billion, topping the US$5.66 billion anticipated by Wall Street. Remaining performance obligations, a metric of future sales, were US$19.7 billion, compared with analysts’ average estimate of US$19.8 billion, according to data compiled by Bloomberg.
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The digital media unit, which includes Adobe’s flagship creative and document-processing software, posted a 11 per cent increase in sales to US$4.23 billion. Revenue from the unit that includes marketing and analytics software rose 10 per cent to US$1.41 billion.
“Adobe’s success over the next decade will be driven by customer-focused innovation and new offerings for creators, marketing professionals, business professionals and consumers,” chief executive officer Shantanu Narayen said. “Adobe is well-positioned to capitalise on the acceleration of the creative economy driven by AI and we are reaffirming our FY2025 financial targets.”
In December, gave a fiscal year outlook for revenue of US$23.3 billion to US$23.6 billion and adjusted profit of US$20.20 a share to US$20.50 a share.
The company also said it would change the way it reports subscription revenue, and would now announce the data in two groups: “business professionals and consumers” and “creative and marketing professionals”. BLOOMBERG
