What made Adobe stock slide 10% on Thursday morning?

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Dec 16, 2021
  • Adobe Inc's sales topped estimates for the fiscal fourth quarter.
  • The software company's guidance came in weaker-than-expected.
  • Shares of the American multinational are down 10% on Thursday.

Adobe Inc (NASDAQ: ADBE) on Thursday said its revenue in the fiscal fourth quarter topped Street estimates. Shares still slid more than 10% on weaker-than-expected guidance.

Q4 financial performance

Adobe reported $1.23 billion in net income that translates to $2.57 per share. In the same quarter last year, its net income stood at a sharply higher $2.25 billion or $4.45 per share. On an adjusted basis, the computer software company earned $3.20 per share.

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The American multinational blamed “tax effects” for a hit to its net income. At $4.11 billion, revenue was up just over 20% year-over-year. Adobe’s EPS was in line with estimates, but revenue was $20 million above expectations.

Other notable figures include a 23% growth in digital experience revenue and a 21% increase in revenue from digital media. Cash flow from operations printed at a record $2.05 billion.

Guidance for the future

For the fiscal first quarter, Adobe now forecasts $3.35 of adjusted EPS on $4.23 billion in revenue, as per the earnings press release. In comparison, analysts were calling for a higher $3.39 in per-share earnings (adjusted) and $4.33 billion in revenue.

Its full-year guidance for $13.70 of adjusted EPS and $17.90 billion in revenue also came shy of the FactSet consensus for adjusted per-share earnings of $14.26 on $18.20 billion in revenue. According to CEO Shantanu Narayen:

Adobe’s record performance in Q4 resulted in fiscal 2021 revenue exceeding $15 billion. Adobe’s vision, category leadership, ground-breaking technology and large and loyal customer base position us well for fiscal 2022 and beyond.

Earlier this year, Adobe partnered with Walmart Inc to help the retail giant sell its marketplace software to smaller peers.

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