Adobe (ADBE) stock is lower out of the gate Thursday after the software giant reported a top- and bottom-line beat for its fiscal 2024 fourth quarter but issued guidance for fiscal 2025 that came up short of expectations.
In the three months ended November 29, Adobe's revenue increased 11.1% year over year to $5.6 billion. Its earnings per share (EPS) were up 12.6% from the year-ago period to $4.81.
"Adobe delivered record fiscal 2024 revenue, demonstrating strong demand and the mission-critical role Creative Cloud, Document Cloud and Experience Cloud play in fueling the artificial intelligence (AI) economy," said Adobe CEO Shantanu Narayen in a statement. "Our highly differentiated technology platforms, rapid pace of innovation, diversified go-to-market and the integration of our clouds position us for a great year ahead."
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The company's results topped analysts' expectations. Wall Street was anticipating revenue of $5.5 billion and earnings of $4.67 per share, according to Yahoo Finance.
For its new fiscal year, Adobe said it expects to achieve revenue in the range of $23.3 billion to $23.55 billion and earnings per share of $20.20 to $20.50. This is just shy of the $23.8 billion in revenue and $20.53 in earnings per share Wall Street is expecting.
For the first quarter of fiscal 2025, Adobe said revenue should arrive in the range of $5.63 billion to $5.68 billion and earnings per share of $4.95 to $5. This compares to analysts' forecast for revenue of $5.7 billion and earnings of $4.94 per share.
"Adobe's strategy, AI innovation and massive cross-cloud opportunity position us well for 2025 and beyond," said Dan Durn, chief financial officer at Adobe, in a statement.
Is Adobe stock a buy, sell or hold?
Adobe has been a long-term outperformer, but shares have struggled in 2024, and are down 23% for the year to date. Still, Wall Street is bullish on the tech stock.
According to S&P Global Market Intelligence, the average analyst target price for ADBE stock is $593.53, representing implied upside of over 20% to current levels
Financial services firm Oppenheimer maintained its Outperform rating (equivalent to a Buy) following Adobe's earnings release, but lowered its price target to $600 from $625.
"Adobe reported decent fiscal fourth-quarter results, though net new Creative Cloud annual recurring revenue only shows modest growth (partially from a tough year-over-year comparison with Acrobat), and initiated fiscal 2025 guidance below expectations," says Oppenheimer analyst Brian Schwartz.
He goes on to say that investors may see increased competition and slow monetization of AI offerings as hindering Adobe's growth and guidance.
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