Adobe CEO Shantanu Narain speaks during an interview with CNBC on the floor at the New York Stock Exchange on February 20, 2024.
Brendan McDiarmid | Reuters
Adobe Shares rose 15% on Friday, the biggest gain since March 2020, after the software maker reported earnings and revenue that beat analysts' estimates.
After the bell on Thursday, Adobe reported adjusted earnings per share of $4.48, beating LSEG's estimate of $4.39 per share. Revenue rose 10% from a year earlier to $5.31 billion, beating analysts' estimates of $5.29 billion.
CEO Shantanu Narain attributed Adobe's record revenue to its strong growth across Creative Cloud, Document Cloud, Experience Cloud, and progress in artificial intelligence.
“Our highly diversified approach to AI and delivering innovative products appeals to an expanding universe of customers and provides greater value to existing users,” Narain said in a press release on Thursday.
New annual recurring revenue for the digital media business, which includes Creative Cloud subscriptions, was $487 million, beating the StreetAccount consensus of $437.4 million.
Adobe's results offer a contrast to what software investors have seen from many of their industry peers recently. Sales force Shares suffered their worst decline since 2004 late last month after the cloud software vendor posted weaker-than-expected revenue and issued disappointing guidance. In the same week, MongoDBSentinelOne, UiPath and Veeva all cut their full-year revenue forecasts.
However, there were positive signs in the sector this week. inspiration Shares rose after the database company announced cloud deals with… Google and OpenAI, although fourth-quarter results fell short of Wall Street expectations. Crowd Strike It jumped on Monday following the post-close announcement last Friday that the cybersecurity company was being added to the S&P 500.
JMP analysts, which have the equivalent of a hold rating for Adobe, wrote in a note after the earnings report that the company's results were up despite a tough economic environment and increased competition in design software.
“We like how Adobe is integrating AI functionality across its product suite,” the analysts wrote.
Meanwhile, analysts from Piper Sandler slightly raised their revenue estimates by $73 million for fiscal 2024 and by $71 million for 2025.
“Customer reactions to recent innovations have been encouraging, as increased availability of AI-driven solutions is expected to drive increased user acquisition” and improve average revenue per user, wrote Piper Sandler analysts, who recommended buying the stock.
Even after Friday's rise, Adobe shares remained down 12% on the year. The stock closed at $525.31.
