Adobe Inc. gave a disappointing forecast for revenue growth in the current quarter despite a recent focus on monetizing its new generative artificial intelligence features.
Sales in the period ending in May will be $5.77 billion to $5.82 billion, the company said in a statement Wednesday. Analysts, on average, projected $5.8 billion. Excluding certain items, profit will be $4.95 per share to $5 per share, while the average projection is $5.
Adobe, a top maker of software for creative professionals, is incorporating its AI model, Firefly, into apps such as Photoshop and Premiere. Investors have debated whether generative AI will make the products more attractive and indispensable or fuel the rise of AI-native competitors. During the quarter, Adobe announced it would charge about 50 cents for AI-generated videos and separately announced price hikes for some of its applications.
Shares fell about 5% in extended trading after closing at $438.60 in New York. Adobe’s stock has fallen 24% over the past 12 months. Investor sentiment is driven primarily by Adobe’s views of AI, “which have become increasingly intertwined with concerns about competition,” wrote Matthew Swanson, an analyst at RBC Capital Markets.
Adobe is scheduled to hold an event for investors next week at which the company is expected to provide additional long-range financial information and more details about its AI strategy.
Fiscal first-quarter revenue rose 10% to $5.71 billion, higher than the $5.66 billion expected by Wall Street. Remaining performance obligations, a metric of future sales, were $19.7 billion, compared with analysts’ average estimate of $19.8 billion, according to data compiled by Bloomberg.
The digital media unit, which includes Adobe’s flagship creative and document-processing software, reported an 11% rise in sales, to $4.23 billion. Revenue from the unit that includes marketing and analytics software rose 10% to $1.41 billion.
“Adobe’s success over the next decade will be driven by customer-focused innovation and new offerings for creators, marketing professionals, business professionals and consumers,” Chief Executive Officer Shantanu Narayen said in the statement. “Adobe is well positioned to take advantage of the acceleration of the creative economy powered by AI and we are reaffirming our fiscal 2025 financial targets.”
In December, Adobe gave a fiscal year outlook for revenue of $23.3 billion to $23.6 billion and adjusted profit of $20.20 per share to $20.50 per share.
The company also said it would change the way it reports subscription revenue, and would now declare data in two groups: “business professionals and consumers” and “creative and marketing professionals.”
