Table of Contents
Digital media and marketing software company Adobe (ADBE) late Thursday beat Wall Street’s targets for the fiscal third quarter, but expectations for the current period fell short of estimates. ADBE shares fell in extended trading.
↑
X
Harris-Trump debate: four tips for investors
The San Jose, California-based company earned adjusted earnings of $4.65 per share on revenue of $5.41 billion in the quarter ended Aug. 30. Analysts polled by FactSet expected earnings of $4.53 per share on revenue of $5.37 billion in the third quarter. On a year-over-year basis, Adobe’s revenue rose 14%, while revenue rose 11%.
For the current quarter, Adobe expects adjusted earnings of $4.66 per share on revenue of $5.53 billion. That’s based on the midpoint of his prospects. Wall Street expected earnings of $4.67 per share on revenue of $5.6 billion in the fiscal fourth quarter. Adobe’s guidance would translate into year-over-year growth of 9% in profits and 10% in revenue.
Adobe’s earnings growth has slowed for four consecutive quarters, with this trend expected to extend to five consecutive quarters in the fourth quarter.
Adobe Stock outbreak fakeout
In after-hours trading on the stock market today, Adobe shares fell more than 9% to 528.93. During the regular session, ADBE stock rose 1.1% to close at 586.55.
On September 3, ADBE stock reached a buy point of 580.55 on a cup-with-handle basis, according to IBD market wave. But it ended the regular session that day below the buy point. It returned to the buy zone on Tuesday.
After-hours trading activity Thursday points to another failed breakout attempt.
Adobe touts leadership in artificial intelligence
“Adobe’s record performance in the third quarter is a testament to our continued innovation and commitment to delivering value to our customers,” CEO Shantanu Narayen said in a press release. press release. “With groundbreaking AI improvements in Creative Cloud, Document Cloud and Experience Cloud, we are empowering millions of users worldwide.”
Chief Financial Officer Dan Durn highlighted the company’s cash flow and remaining performance obligations (RPO).
“In the third quarter, Adobe generated cash flows of over $2 billion and ended the quarter with a record RPO, demonstrating the power of combining growth with world-class profitability,” said Durn. “Given the enormous markets we catalyze, I am confident in our ability to drive growth and leadership in the industry.”
ADBE Stock ranks first in the group
Adobe has added generative artificial intelligence tools to its creative and marketing software products. Among application software companies, Adobe is one of the few to successfully monetize generative AI, Deutsche Bank analyst Brad Zelnick said in a client note last week.
On Wednesday, Adobe gave a preview of its progress generative AI video capabilitiespowered by the Adobe Firefly Video Model. Firefly-powered text-to-video and image-to-video capabilities will be available later this year, the company said.
ADBE stock ranks first among six stocks in IBD’s Computer Software-Desktop industry group, according to IBD inventory check. Adobe has an IBD Composite Rating of 89 out of 99.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer tech, software and semiconductor stocks.
You might also like:
Arm Holdings stock is called ‘top pick’ in AI opportunity
AppLovin Stock Rises on Price Target Hike for AI and E-Commerce Growth
Apple Intelligence will not be available at the launch of iPhone 16
Stocks to buy and watch: top IPOs, large and small caps, growth stocks
View stocks on the leader list near a buy point