Digital media and marketing software firm Adobe late Thursday topped analyst estimates for its fiscal second quarter and raised its outlook for the full year. Adobe stock surged in extended trading.
The San Jose, Calif.-based company earned an adjusted $4.48 a share on sales of $5.31 billion in the quarter ended May 31. Analysts polled by FactSet had expected earnings of $4.39 a share on sales of $5.29 billion. On a year-over-year basis, Adobe earnings rose 15% while sales increased 10%.
Adobe's Q2 results were "driven by strong growth across Creative Cloud, Document Cloud and Experience Cloud," Chief Executive Shantanu Narayen said in a news release.
He added, "Our highly differentiated approach to AI and innovative product delivery are attracting an expanding universe of customers and providing more value to existing users."
ADBE Stock Pops Higher
In after-hours trading on the stock market today, Adobe stock jumped more than 14% to 524.52. During the regular session Thursday, ADBE stock dipped 0.3% to close at 458.74.
Adobe stock has been a laggard in 2024. Year to date through Thursday's close, ADBE stock was down 23%.
"Adobe delivered outstanding Q2 results, positioning us to raise our annual targets," Chief Financial Officer Dan Durn said in the release. "Our market-leading products, strong execution and world-class financial discipline position us well for the second half of 2024 and beyond."
But Sales Guidance Lags Views
For the full fiscal year, Adobe now expects to earn an adjusted $18.10 a share on sales of $21.45 billion. That's based on the midpoint of its guidance. Analysts had been modeling Adobe earnings of $18 a share on sales of $21.47 billion.
For the fiscal third quarter, Adobe predicted adjusted earnings of $4.53 a share on sales of $5.36 billion. Those figures are the midpoints of its outlook. Wall Street had been expecting earnings of $4.47 a share on sales of $5.4 billion, according to FactSet.
Adobe Stock Downgraded
On Monday, Melius Research analyst Ben Reitzes downgraded Adobe stock to hold from buy. He said Adobe stock could tread water "for a while."
Reitzes questioned whether Adobe will be able to monetize its generative artificial-intelligence tools for creative and marketing professionals.
Adobe also faces increased competition from upstart rivals like Canva and Figma.
Adobe stock has a middling IBD Composite Rating of 51 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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