Adobe CEO Shantanu Narayen.
Linda Dimyan | CNBC
Adobe shares dropped greater than 6% in prolonged trading Wednesday after the software maker posted a lighter-than-expected forecast for 2024.
Here’s how the corporate did, in comparison with consensus estimates from LSEG, formerly referred to as Refinitiv:
- Earnings per share: $4.27, adjusted vs. $4.14 expected
- Revenue: $5.05 billion vs. $5.03 billion expected
Revenue grew almost 12% from a yr ago within the fiscal fourth quarter, which ended Dec. 1, based on a statement. Net income increased 26% to $1.48 billion, or $3.23 per share, up from $1.18 billion, or $2.53 per share, within the year-ago quarter.
While results for the newest quarters topped estimates, Adobe’s guidance for the brand new fiscal yr upset Wall Street.
Adobe called for fiscal 2024 earnings per share of $17.60 to $18 on $ $21.3 billion to $21.5 billion in revenue. Analysts polled by LSEG had expected $18 in adjusted earnings per share and $21.73 billion in revenue.
Executives proceed to look fastidiously at spending, Anil Chakravarthy, president of Adobe’s experience business that features marketing software, said on a conference call with analysts.
Adobe’s CEO, Shantanu Narayen, acknowledged questions on forward-looking recurring revenue the corporate could derive from subscriptions to the Creative Cloud software bundle. Through the quarter Adobe increased the prices of some subscriptions.
‘We’re extremely confident about how that continues to be a growth business, and maybe the pricing impact was overestimated,” Narayen said.
Also within the quarter, Adobe’s Firefly generative artificial intelligence features became available within the Photoshop and Illustrator programs for Creative Cloud subscribers. An enterprise version of the Firefly web app that may create images based on just a few words of human input also became available.
Adobe stays focused on closing the $20 billion Figma acquisition it announced in September 2022. The corporate said it disagrees with findings from regulators within the European Commission and the U.K. and that it’s responding to regulators. The U.S. Department of Justice has also been looking into the planned deal.
“While the DOJ doesn’t have a proper timeline to come to a decision whether to bring a grievance, we expect a call soon,” Narayen said.
The guidance doesn’t consider impact from Figma.
Adobe said in a separate regulatory filing that it has been working with the U.S. Federal Trade Commission on an inquiry over cancellation and subscription practices in reference to the Restore Online Shoppers’ Confidence Act. The FTC told the corporate in November that it had the authority to enter into consent negotiations to see if a settlement could possibly be reached, based on the filing. Adobe sees its past behavior as lawful and said the matter may need a cloth effect on financial performance.
Prior to the after-hours move, Adobe shares were up almost 86% this yr, outperforming the S&P 500 stock index, which has gained about 23%.
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