Adobe Inc., a leading software company, has presented a favorable forecast for its earnings and revenue for the first quarter and the fiscal year 2025 following stronger-than-expected fourth-quarter results. Despite these positive projections, the company's shares experienced a decline, dropping approximately 9% in after-hours trading on Wednesday. As of now, the shares are down about 11% in Nasdaq's pre-market trading.
This stock movement signifies that the revenue outlook fell short of some market expectations, according to media reports.
Shantanu Narayen, Adobe's Chairman and CEO, remarked, "Adobe achieved a record FY24 revenue, demonstrating the strong demand for our products and highlighting the essential role that Creative Cloud, Document Cloud, and Experience Cloud serve in the AI-driven economy. Our uniquely advanced technology platforms, pace of innovation, diversified marketing strategies, and our integration across clouds position us well for an outstanding year ahead."
Dan Durn, the Executive Vice President and CFO of Adobe, added that their strategic focus, innovations in AI, and significant cross-cloud opportunities prepare the company for success in 2025 and beyond.
For the upcoming first quarter, Adobe anticipates earnings per share (EPS) of $3.85 to $3.90, with adjusted EPS ranging from $4.95 to $5.00. The total revenue is expected to be between $5.63 billion and $5.68 billion.
According to data from Thomson Reuters, analysts generally predict the company's earnings at $4.96 per share, with revenues around $5.66 billion. Typically, these analyst estimates exclude special items.
In the same quarter of the previous year, Adobe reported earnings of $1.36 per share, with adjusted earnings of $4.48 per share, and total revenues amounted to $5.18 billion.
Looking ahead to fiscal 2025, Adobe projects EPS between $15.80 and $16.10, and adjusted EPS in the range of $20.20 to $20.50. Total revenue for the year is forecast to be between $23.30 billion and $23.55 billion. The current market consensus estimates EPS at $20.36 on revenues of $23.48 billion for the year.
Adobe anticipates a roughly $200 million negative impact on fiscal year 2025 revenue, attributed to foreign exchange effects and a smaller consequence of transitioning from perpetual offerings to subscription models.
In fiscal 2024, Adobe's EPS was reported at $12.36, with adjusted EPS at $18.42, and total revenues reaching $21.51 billion.
The company's net earnings for the fourth quarter reached $1.68 billion, or $3.79 per share, up from $1.48 billion, or $3.23 per share, in the previous year's fourth quarter. Adjusted earnings were $2.13 billion, or $4.81 per share, surpassing analyst expectations of $4.67 per share.
Revenue for the quarter increased by 11.1% to $5.606 billion, compared to $5.048 billion in the prior year.
On the Nasdaq, Adobe's shares closed Wednesday's regular trading session at $549.93, an increase of 0.53%. Following the trading session, the shares declined by 9.2% to $499.48. Currently, in pre-market activity, the shares are priced at $491, representing a 10.7% drop.
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