Adobe shares rose Wednesday after the digital media and marketing software firm reiterated its guidance for the current quarter but trimmed its outlook for 2023. ADBE stock has been in a funk over concerns about slowing growth.
At a financial analyst meeting late Tuesday, Adobe executives reaffirmed the company's targets for its fiscal fourth quarter and updated its growth strategy.
However, Adobe lowered its revenue goal for next year along with its estimate for annualized recurring revenue, or ARR, in its core digital media business. It cited unfavorable foreign exchange rates and macroeconomic challenges for the decreased outlook.
Adobe forecast fiscal 2023 revenue of $19.1 billion to $19.3 billion. Analysts had predicted $19.8 billion. Adobe's guidance excludes its pending $20 billion acquisition of Figma.
On the stock market today, ADBE stock rose 2.3% to close at 299.83.
Foreign Exchange Rates Cut Sales, Earnings
"Changes to foreign exchange rates are expected to result in an approximately 4% headwind to total revenue year-over-year growth rates in fiscal year 2023," Adobe said in a news release.
Foreign exchange rates also are seen reducing the ARR in its Digital Media business by about $700 million next year. Adobe now expects net new annualized recurring revenue in Digital Media of about $1.65 billion in fiscal 2023, vs. Wall Street's estimate of $2 billion.
For fiscal 2023, Adobe predicted adjusted earnings per share of $15.15 to $15.45. The midpoint of $15.30 was below analyst estimates for $15.53.
Chief Financial Officer Dan Durn told Investor's Business Daily that Adobe is better positioned than many companies in the current market. He says Adobe products are mission critical for creative professionals and companies digitally transforming their operations.
"We're excited about the momentum in the business," Durn said. "The company is well-diversified across products, routes to market and business models. We're a resilient business that's performing well."
ADBE Stock Climbs After Analyst Meeting
Cowen analyst Derrick Wood kept his outperform rating on ADBE stock but lowered his price target to 370 from 400.
In a note to clients, Wood said Adobe seems to have set a low bar with its fiscal 2023 guidance. Also, management did a better job explaining the rationale behind the Figma deal, Wood said.
Baird analyst Rob Oliver kept his neutral rating on ADBE stock. He cited macroeconomic pressures and Figma's dilutive impact to profit margins over the next few years for his cautious stance. However, he said Figma could be a transformational opportunity for Adobe.
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