Adobe Local time gave a lukewarm outlook for sales in 2024 on Wednesday, disappointing investors who expected new generatingAIThe tools will quickly boost the software company's performance.
Revenue for the fiscal year ending December 2024 will be about $21.4 billion, the company said. Profit after certain items will be as high as $18 per share. On average, analysts expect sales of $21.7 billion and an adjusted profit of $18 per share.
Wall Street expects Adobe to be among the first to move from generative AI One of the software giants benefiting from the technology boom, which responds to prompts to produce unique text or images. In recent months, the Adobe has announced a new version of its AI model Firefly, raised prices and focused its October user conference on the technology. The company cited "significant up-selling of our new Firefly products to large customers," a comment prepared based on a conference call following the release of the results.
However, that enthusiasm was shattered by the annual outlook. Shares fell about 6% in after-hours trading after closing in New York at $624.26. The stock has risen 85% this year as "investors seem to be very happy with Adobe's ability to utilize generative AI," Morgan Stanley analyst Keith Weiss wrote before the results were announced.
Adobe's digital media division will report new-year recurring revenue of $1.9 billion, the company said. Compared with the average analyst's estimate of $2.02 billion, Evercore analyst Kirk Materne wrote in a report after the results were released that the lack of outlook for that metric was "clearly" a disappointment in investor reaction.
"The guidance indicates that It may take Adobe longer than expected to realize the important contribution of its generative AI products," wrote Bloomberg analyst Anurag Rana.
CEO Shantanu Narayen responded to a series of questions from analysts about the guidance during a conference call. "I don't see any indication, either economically or competitively, that we're not poised for another great year," Narayen said.
Several analysts said Adobe is known for giving a conservative annual outlook. "We set our expectations in a cautious way - there's an opportunity to do better," Chief Financial Officer Dan Durn said on a conference call.
For the fiscal fourth quarter ended December 1, sales increased 12% to $5.05 billion. Earnings after certain items were $4.27 per share.
Digital Media segment sales increased 131 TP3T to $3.72 billion for the period. Segment revenue, which includes marketing and analytics software, increased 101 TP3T to $1.27 billion.
Adobe announced plans to acquire design software startup Figma more than a year agoThe acquisition has been stalled by global regulatory scrutiny. Late last month, Adobe was preparing a settlement to appease European regulators, while the U.S. Department of Justice was said to be preparing a lawsuit to block the deal.
The company said it 'strongly disagrees' with the findings issued by the UK competition regulator last month and looks forward to the US Department of Justice's decision.
In addition, Adobe disclosed in a filing that the U.S. Federal Trade Commission has been investigating the company's subscription cancelation practices for more than a year. Resolving the issue "could involve significant monetary costs or penalties and could have a material impact on our financial results and operations," Adobe said.