Adobe shares jump 17% due to outstanding earning and an increase in annual guidance
Adobe's stock price rose 17% in post market trading on Thursday due to the company's earnings and revenue exceeding expectations, and an increase in its full year guidance.
Due to excellent financial reports and strong outlook, Adobe's stock price surged.
Surpassing financial report data
Adobe's stock price rose 17% in post market trading on Thursday due to the company's earnings and revenue exceeding expectations, and an increase in its full year guidance. According to the latest quarterly financial report (as of May 31), Adobe's earnings per share were $4.48, exceeding expectations of $4.39 and revenue of $5.31 billion, also exceeding expectations of $5.29 billion.Outlook for the third quarter and full year
Adobe expects adjusted earnings per share for the third quarter to be $4.50 to $4.55, with revenue ranging from $5.33 billion to $5.38 billion. This forecast is slightly lower than the analyst's expected earnings per share of $4.48 and revenue of $5.4 billion. However, Adobe has raised its forecast for the 2024 fiscal year, with adjusted earnings per share ranging from $18.00 to $18.20 and revenue between $21.4 billion and $21.5 billion, higher than analysts' expectations of $18.02 per share and $21.46 billion in revenue.
The growth of digital media business
The digital media business (including Creative Cloud subscriptions) added annual recurring revenue of $487 million, higher than market expectations of $437 million.
David Wadhwani, President of Adobe's Digital Media Business, stated during a conference call that subscribers to Creative Cloud are upgrading their plans to use Firefly's features. Adobe has announced a service to fine tune the company's Firefly generative AI model to provide content that aligns with customer brand guidelines.
Economic environment and market response
Although other software companies such as SentinelOne, UiPath, and Veeva have recently lowered their annual revenue guidance due to economic weakness and corporate interest in artificial intelligence development, Adobe's CEO Shantanu Narayen stated that there are no noteworthy economic changes.
Before Adobe released its financial report, its stock price has fallen 23% so far this year, while the S&P 500 index has risen by about 14%.
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