Adobe Shares rose 15% on Friday, the largest gain since March 2020, after the software maker reported earnings and revenue that beat analysts' estimates.
After the stock market closed on Thursday, Adobe reported Adjusted earnings per share were $4.48, beating the LSEG consensus estimate of $4.39 per share. Revenue rose 10% 12 months over 12 months to $5.31 billion, beating analyst estimates of $5.29 billion.
CEO Shantanu Narayen attributed Adobe's record revenue to strong growth in Creative Cloud, Document Cloud and Experience Cloud, in addition to advances in artificial intelligence.
“Our highly differentiated approach to AI and the delivery of innovative products attracts a growing range of customers and provides added value to existing users,” said Narayen in a Press release on Thursday.
New recurring revenue from the Digital Media business, which incorporates Creative Cloud subscriptions, was $487 million, beating the StreetAccount consensus of $437.4 million.
Adobe's results contrast with what software investors have seen from a lot of its industry peers recently. Foreclosure Shares suffered their worst decline since 2004 late last month after the cloud software provider reported weaker-than-expected revenue and issued disappointing forecasts. In the identical week MongoDBSentinelOne, UiPath and Veeva have all lowered their full-year revenue forecasts.
Nevertheless, there have been positive signs within the industry this week. oracle Shares recovered after the database company announced cloud deals with Google and OpenAI, regardless that fourth-quarter results fell in need of Wall Street expectations. CrowdStrike jumped on Monday following an announcement after the market closed last Friday that the cybersecurity company can be added to the S&P 500.
Analysts at JMP, who rate Adobe at “hold,” wrote in a note following the discharge of the earnings report that the corporate’s results were encouraging despite a difficult economic environment and increasing competition within the design software space.
“We like how Adobe is integrating AI capabilities across its product portfolio,” the analysts wrote.
Meanwhile, analysts at Piper Sandler barely raised their revenue forecasts for fiscal 2024 by $73 million and for 2025 by $71 million.
“Customer response to recent innovations has been encouraging, as the increasing availability of AI-powered solutions is expected to drive further user acquisition” and better average revenue per user, wrote Piper Sandler analysts, who recommend buying the stock.
Even after Friday's rally, Adobe stock remains to be down 12% year-on-year, closing at $525.31.
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