Adobe Inc (NASDAQ:ADBE) stock rallies 14.19% (As on June 14, 11:14:35 AM UTC-4, Source: Google Finance) after the company reported earnings and revenue that topped estimates and lifted full-year guidance as more businesses and consumers take to its artificial intelligence-powered editing tools amid signs of an easing economy. Net-new annualized recurring revenue for the Digital Media business that includes Creative Cloud subscriptions came in at $487 million, above the StreetAccount consensus of $437.4 million. During the quarter, Adobe announced the availability of a service for fine-tuning the company’s Firefly generative artificial intelligence models to deliver image content consistent with clients’ brand guidelines. The company reported digital media revenue of $3.91 billion, above estimates of $3.89 billion. Creative revenue grew to $3.13 billion, representing 10 percent year-over-year growth or 11 percent in constant currency. Document Cloud revenue was $782 million, representing 19 percent year-over-year growth as reported and in constant currency. Remaining Performance Obligations (“RPO”) exiting the quarter were $17.86 billion.
ADBE in the second quarter of FY 24 has reported the adjusted earnings per share of $4.48, beating the analysts’ estimates for the adjusted earnings per share of $4.39, according to LSEG consensus. The company had reported the adjusted revenue growth of 10 percent to $5.31 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $5.29 billion.
The company called for adjusted earnings per share of $4.50 to $4.55 for the fiscal third quarter, with $5.33 billion to $5.38 billion in revenue. Analysts polled by LSEG were looking for $4.48 in adjusted earnings per share and $5.4 billion in revenue.
Adobe bumped up its view for the 2024 fiscal year, calling for full-year adjusted earnings per share between $18.00 and $18.20 and revenue of $21.40 billion to $21.50 billion. Analysts surveyed by LSEG had projected $18.02 per share in adjusted earnings and $21.46 billion in revenue. The forecast in March was $17.60 to $18.00 in adjusted earnings per share, with $21.30 billion to $21.50 billion in revenue.
Adobe’s outlook reflects that its AI efforts are paying off as clients hike spending on its software products such as Premiere Pro, Animate and After Effects, which are used by creative professionals in a variety of fields.
The company said in April it plans to incorporate an AI tool to generate images in its popular Photoshop software, amid heating competition from the likes of OpenAI, Stability AI and Midjourney.