Adobe offers tepid sales outlook despite growing AI optimism
ADOBE provided a sales outlook that met analysts’ expectations, but disappointed investors who expected demand for the company’s artificial intelligence (AI) tools would boost revenue.
Sales will be US$4.98 billion to US$5.03 billion in the period ending in November, the San Jose, California-based company said on Thursday (Sep 14). Analysts, on average, projected US$5 billion, according to data compiled by Bloomberg. Profit, excluding some items, will be as much as US$4.15 a share, compared with the average estimate of US$4.06.
Adobe, the longtime leader in creative software for graphic arts professionals, is adding generative AI features throughout its products. Citing the new tools, the company is raising prices for its products beginning Nov 1 and will charge additional fees for power users of the AI features. Analysts expect the new AI pricing to lift revenue quickly, with Jake Roberge, an analyst at William Bair, estimating the bump at more than US$600 million over the next year. Bloomberg Intelligence’s Anurag Rana projects a 10 per cent sales increase in the first year of availability.
“We are unleashing a new era of AI-enhanced creativity around the world with innovations across our product portfolio,” chief executive officer Shantanu Narayen said.
Some analysts expressed caution about whether the price increase would affect demand. “We do see more risk around this year’s price increase given the company just raised prices 18 months ago, and the competitive landscape is rapidly evolving,” Tyler Radke, an analyst at Citigroup, wrote ahead of the results.
The company said fiscal fourth-quarter sales in the Digital Media unit, which includes signature offerings such as Photoshop, will be as much as US$3.7 billion, beating the average estimate of US$3.66 billion. Revenue in the Digital Experience unit, which includes marketing and analytics software, will be about US$1.26 billion, meeting the average projection.
The shares were little changed in extended trading after closing at US$552.16 in New York. The stock has rallied 64 per cent this year.
Fiscal third-quarter sales increased 10 per cent to US$4.89 billion, exceeding the average projection of US$4.87 billion. Profit, excluding some items, was US$4.09 a share, compared with the average estimate of US$3.98.
Digital Media revenue gained 11 per cent to US$3.59 billion in the period ended Sep 1. Sales in Digital Experience jumped 10 per cent to US$1.23 billion.
The company, fighting to keep its top spot in creative software, has proposed a US$20 billion acquisition of design startup Figma. That effort has been complicated by an in-depth review and potential lawsuit from US regulators. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
