Adobe stock tanks 10% as Q1 earnings beat but guidance disappoints

Adobe Inc (NASDAQ: ADBE) is trading down in extended hours on Thursday even though it reported upbeat financial results for its first quarter.

Adobe stock down on muted guidance

The stock is taking a hit because $ADBE failed to impress with its future guidance. The software giant now forecasts revenue to fall between $5.25 billion and $5.30 billion on up to $4.40 of adjusted per-share earnings in its current quarter.

Analysts, in comparison, were at $5.31 billion and $4.38 a share, respectively. Still, Dan Durn – the chief financial officer of Adobe Inc said in a press release today:

As a result of our strong trajectory of growth and profitability, we are announcing a new $25 billion share repurchase program, which demonstrates [our] commitment to returning capital to our shareholders.

The multinational ended its Q1 with $17.58 billion of remaining performance obligations – up close to 16% versus the same quarter last year. Adobe stock is currently up nearly 60% versus a year ago.

Notable figures in Adobe Q1 earnings release

• Earned $620 million versus the year-ago $1.25 billion
• Per-share earnings also declined from $2.72 to $1.37
• Adjusted EPS printed at $4.48 as per the earnings report
• Revenue jumped 11% year-over-year to a record $5.18 billion
• Consensus was $4.38 a share on $5.15 billion in revenue

Adobe noted 10% annualised growth in its digital experience segment while its digital media revenue popped 12% in the first quarter. According to CEO Shantanu Narayen:

We’ve done an incredible job harnessing the power of generative AI to deliver groundbreaking innovation across our product portfolio.