Adobe Inc. shares tumbled nearly 9% in after-hours trading on Wednesday (Thursday AEDT), after the software giant’s fiscal fourth-quarter earnings report and tepid guidance disappointed Wall Street.
Despite Adobe's Q4 non-GAAP earnings of $4.81 per share and revenue of $5.61 billion, which beat analysts' estimates, the company's outlook for fiscal 2025 came up short.
Adobe forecast weaker sales for the next year, overshadowing otherwise better earnings and left investors concerned about Adobe's ability to effectively monetise its AI offerings and fend off rising competition from generative AI platforms.
Adobe projected fiscal 2025 revenue in the range of $23.30 billion to $23.55 billion, lower than the consensus estimate of $23.78 billion, and key digital media revenue of $17.25 billion to $17.40 billion.
Meanwhile, the company's non-GAAP earnings guidance of $20.20 to $20.50 per share narrowly missed analysts' expectations of $20.54 per share.
The company said the lacklustre outlook was driven by headwinds from foreign exchange rates and the ongoing transition from perpetual licensing to subscription-based models.
Chief Executive Shantanu Narayen called out the current-quarter and fiscal 2024 results, saying that Adobe's "highly differentiated technology platforms, rapid pace of innovation, diversified go-to-market and the integration of our clouds" position the company for "a great year ahead".