Adobe issues tepid guidance: 'I'm not that surprised'

Adobe Inc (NASDAQ: ADBE) tanked about 7.0% in extended hours on Wednesday even though it reported better-than-expected results for its fourth financial quarter.

Why is Adobe stock down in after-hours?

Investors are punishing the stock primarily because the management issued future guidance that missed Street estimates.

Adobe is now calling for its revenue to fall between $21.33 billion and $21.5 billion in its fiscal 2024. Analysts, in comparison, were at $21.73 billion. According to Anurag Rana of Bloomberg Intelligence, though:

The multinational’s outlook for the current quarter also came in shy of expectations today. Adobe Inc has gained roughly 80% since it announced AI tools at its yearly developers conference in May.

Adobe is struggling with regulatory challenges

On Wednesday, Adobe also said that it is working with the Federal Trade Commission over a possible settlement which could incur “significant monetary costs” after having received a communication from the agency in November.

The Competition and Markets Authority of the United Kingdom also told the Nasdaq-listed firm recently that its Figma deal could hurt competition (find out more).

Adobe reported $1.91 billion in net new digital media annualised recurring revenue for its fiscal 2023 today. Senior technology analyst Anurag Rana added:

Notable figures in Adobe Q4 earnings release

• Earned $1.49 billion versus the year-ago $1.18 billion
• Per-share earnings also climbed from $2.53 to $3.23
• Adjusted EPS printed at $4.27 as per the press release
• Revenue jumped nearly 12% year-on-year to $5.05 billion
• Consensus was $4.13 a share on $5.0 billion in revenue
• Ended Q4 with $17.22 billion of remaining performance obligations

Adobe Inc noted a 10% and a 13% annualised growth in its digital experience and digital media revenues in the fourth quarter. Shantanu Narayen – its Chief Executive said in a press release today: