Adobe shares slip as Q4 revenue guidance falls short despite a Q3 beat
Shares of Adobe Inc. fell more than 1% in after-hours trading today after a third-quarter beat from the creative software company came with a fourth-quarter revenue forecast whose midpoint fell below analyst expectations.
For the quarter ended on Aug. 28, Adobe reported adjusted earnings of $6.13 per share, up from $5.31 in the same quarter of the previous year, on record revenue of $6.76 billion, up 13% year-over-year. Analysts were expecting $6.08 per share on revenue of $6.69 billion.
Net income on an unadjusted basis rose 3%, to $1.83 billion, with a heavier tax charge eating most of the gain in pretax profit. Total annualized recurring revenue stood at $27.50 billion when the quarter closed. Operating cash flow of $2.52 billion was a third-quarter record, and the company put $2.23 billion into buying back about 9.5 million of its own shares.
On the earnings call, executives said annualized revenue from Adobe’s artificial intelligence-first products has passed $650 million after growing more than 150% in a year. Monthly active users across its creativity and productivity apps topped 1 billion during the quarter. Adobe has been building that audience partly through free tiers, which it warned in June would weigh on recurring revenue for a time, and creative freemium users alone now number more than 100 million, up over 70%.
