Adobe shares rose late Thursday after the creative and marketing software company posted better-than-expected results for its latest quarter, raising guidance for the fiscal year ending in November.
For the quarter, Adobe posted revenue of $5.31 billion, up 10% from a year ago. That's slightly above the company's guidance range of $5.25 billion to $5.3 billion and slightly above the Wall Street consensus of $5.29 billion tracked by FactSet.
Adobe shares rose 14 percent in after-hours trading after the report.
The strong results are the latest in a string of rapid AI-related developments for investors this week. It all started with Apple's launch of its new “Apple Intelligence” AI strategy on Monday, with the news sparking a nearly 9% rally in the stock. That was followed by encouraging earnings reports from Oracle on Tuesday and Broadcom on Wednesday, with both companies providing AI-tinged earnings commentary. Adobe's strong report looks likely to fuel bullish sentiment on AI-related stocks.
“We are driving strong adoption, value and demand for our AI solutions across all customer segments and our digital media and digital experience businesses,” CEO Shantanu Narayan said in prepared remarks for the company's quarterly conference call. I'm seeing early success in monetizing new AI technologies.” call
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Annual net new digital media recurring revenue — a closely watched metric for Adobe — was $487 million, well above the company's forecast of $440 million. The company exited the quarter with a total digital media ARR of $16.25 billion.
Adjusted earnings were $4.48 per share, beating Adobe's projection of $4.35 to $4.40 per share and Wall Street's consensus view of $4.39 per share. Under generally accepted accounting principles, Adobe earned $3.49 per share.
The company's Digital Experience segment revenue was $1.33 billion, within Adobe's guidance range of $1.31 billion to $1.33 billion. Its digital media segment revenue was $3.91 billion, beating the company's own forecast of $3.87 billion to $3.9 billion and the Street consensus of $3.89 billion.
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For the August quarter, Adobe is projecting revenue of $5.33 billion to $5.38 billion, with digital media net new ARR of $460 million. The company sees Digital Media segment revenue of $3.95 billion to $3.98 billion, with Digital Experience revenue of $1.325 billion to $1.345 billion. Adobe projects adjusted earnings for the quarter of $4.50 to $4.55 per share.
The Wall Street consensus for the August quarter called for net new digital media ARR of $458.5 million, digital media revenue of $3.99 billion, digital experience revenue of $1.34 billion, and adjusted earnings per share of $4.47, for a total of $5.4 billion. What is the income demand?
For the full fiscal year, Adobe now sees revenue of $21.4 billion to $21.5 billion, up from a previous forecast of $21.3 billion to $21.5 billion. The company is forecasting net new digital media ARR for the year of $1.95 billion, up from $1.9 billion previously.
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And the company now sees adjusted earnings for the year of $18 to $18.20 per share, up from a previous range of $17.60 to $18 per share.
Write to Eric J. Savitz at eric.savitz@barrons.com.