Adobe Inc (NASDAQ:ADBE) stock fell 12.88% (As on December 12, 11:30:50 AM UTC-4, Source: Google Finance) after the company gave a disappointing annual sales outlook, underscoring anxieties that the creative software company may lose business to emerging artificial intelligence-based startups. The digital media unit, which includes Adobe’s flagship creative and document-processing software, posted a 12% increase in sales to $4.15 billion in the quarter ended Nov. 29. Document Cloud revenue was $843 million, representing 17 percent year-over-year growth as reported and in constant currency. Creative revenue grew to $3.30 billion, representing 10 percent year-over-year growth or 11 percent in constant currency. Net new Digital Media Annualized Recurring Revenue (“ARR”) was $578 million, exiting the quarter with Digital Media ARR of $17.33 billion. Document Cloud ARR grew to $3.48 billion and Creative ARR grew to $13.85 billion. Digital Experience segment revenue was $1.40 billion, representing 10 percent year-over-year growth as reported and in constant currency. Digital Experience subscription revenue was $1.27 billion, representing 13 percent year-over-year growth or 12 percent in constant currency.

ADBE in the fourth quarter of FY 24 has reported the adjusted earnings per share of $4.81, beating the analysts’ estimates for the adjusted earnings per share of $4.67. The company had reported the adjusted revenue growth of 11 percent to $5.61 billion in the fourth quarter of FY 24, beating the analysts’ estimates for revenue of $5.54 billion. The company delivered non-GAAP operating income was $2.60 billion and non-GAAP net income was $2.13 billion. The company generated record cash flows from operations were $2.92 billion. Remaining Performance Obligations (“RPO”) exiting the quarter were $19.96 billion.

Revenue will be about $23.4 billion in the fiscal year ending in November 2025. Earnings, excluding some items, will be $20.20 a share to $20.50 a share. Analysts, on average, estimated sales of $23.8 billion and adjusted profit of $20.52 a share, according to data compiled by Bloomberg. For fiscal 2025, the company expects Digital Media segment revenue to be in the range of $17.25 billion to $17.40 billion, Digital Media ending ARR growth to be 11.0% year over year, Digital Experience segment revenue to be between $5.80 billion to $5.90 billion and Digital Experience subscription revenue of $5.375 billion to $5.425 billion.

For fiscal Q1, the company said it anticipates that adjusted EPS of $4.95 to $5.00, topping estimates of $4.94, while revenue was guided in a range of $5.63B to $5.68B, missing estimates of $5.72B.