Adobe late Wednesday beat analyst estimates for its fiscal first quarter but offered mixed guidance for the current period. Adobe stock fell in extended trading.
The digital media and marketing software maker earned an adjusted $5.08 a share on sales of $5.71 billion in the quarter ended Feb. 28. Analysts polled by FactSet had expected the San Jose, Calif.-based company to earn an adjusted $4.97 a share on sales of $5.66 billion. On a year-over-year basis, Adobe earnings rose 13% while sales increased 10%.
Adobe's fiscal Q1 results marked the company's sixth consecutive quarter of slowing or flat earnings growth on a year-over-year basis. Sales growth has been in a range of 10% to 11% for five straight quarters.
For the current quarter, its fiscal Q2, Adobe expects to earn an adjusted $4.98 a share on sales of $5.8 billion. That's based on the midpoint of its outlook. Analysts were modeling earnings of $5 a share on sales of $5.8 billion. The midrange of Adobe's targets would translate to year-over-year growth of 11% in earnings and 9% in sales.
Adobe also reaffirmed its prior guidance for the full fiscal year. It forecast earnings per share of $20.35, up 10.5%, on sales of $23.43 billion, up 8.9%, based on the midpoint of its outlook. However, Wall Street was modeling earnings of $20.39 a share on sales of $23.49 billion.
In after-hours trading on the stock market today, Adobe stock sank more than 4% to 419.15. During the regular session Wednesday, Adobe stock rose 1.1% to close at 438.60.
Estee Lauder Using Adobe Firefly
Shareholders have been waiting for Adobe's investments in generative artificial intelligence to reignite growth in the company's Creative Cloud, Document Cloud and Experience Cloud businesses.
"Adobe is well-positioned to capitalize on the acceleration of the creative economy driven by AI," Chief Executive Shantanu Narayen said in a news release.
Earlier Wednesday, Adobe announced that cosmetics giant Estee Lauder Companies has adopted Adobe Firefly generative AI technology for its digital marketing efforts. Estee Lauder is using Firefly to accelerate content production.
Adobe Firefly Services can handle repetitive tasks in workflows such as resizing and reformatting marketing assets for different media, Adobe said in a news release. Adobe has integrated Firefly with its Creative Cloud software.
Adobe stock has a middling IBD Composite Rating of 59 out of 99, according to IBD Stock Checkup. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
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