Adobe Inc (NASDAQ:ADBE) stock rose 0.70% (As on December 11, 11:29:22 AM UTC-4, Source: Google Finance) after the company forecast fiscal 2026 revenue and profit above Wall Street expectations on Wednesday, signaling strong demand for the Photoshop maker’s design tools and increasing monetization for its artificial intelligence offerings. Since the launch of ChatGPT in 2022, Adobe has made heavy bets on generative AI with its Firefly tool, which can be integrated across the company’s Creative Cloud suite to create images and videos, in an attempt to draw users in. While Adobe’s products have become a staple for students, creatives and enterprises, the company is grappling with rising competition in the industry it dominates, with AI proliferation allowing rivals to rapidly grow their businesses and win contracts. Adobe is seeing strong growth in AI adoption, with monthly active users for its freemium offerings increasing 35% year over year to over 70 million. In its push into the ad market, last month, Adobe said it would acquire Semrush, opens new tab for $1.9 billion to help marketers better understand how their brands are seen by online consumers through searches on websites and GenAI bots such as ChatGPT and Gemini.
Moreover, Digital Media segment revenue grew 11% year-over-year to $4.62 billion. Digital Experience segment revenue grew 9% year-over-year $1.52 billion. Experience subscription revenue grew 11% year-over-year $1.41 billion. Business Professionals & Consumers subscription revenue grew 15% year-over-year $1.72 billion. Creative & Marketing Professionals subscription revenue was $4.25 billion, which represents 11% year-over-year growth, or 10% in constant currency.
ADBE in the fourth quarter of FY25 has reported the adjusted earnings per share of $5.50, beating the analysts’ estimates for the adjusted earnings per share of $5.39. The company had reported the adjusted revenue growth of 10 percent to $6.19 billion in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $6.11 billion. The company posted non-GAAP operating income of $2.82 billion and non-GAAP net income was $2.29 billion for the quarter. ADBE generated record cash flows from operations were $3.16 billion. Exiting the quarter, Remaining Performance Obligations (“RPO”) were $22.52 billion, and Current Remaining Performance Obligations “cRPO”) were 65%.
The company expects annual revenue between $25.90 billion and $26.10 billion, compared with estimates of $25.87 billion, according to data compiled by LSEG. On an adjusted basis, Adobe expects annual earnings per share of between $23.30 and $23.50, above estimates of $23.34 per share.