Adobe reports Q3 revenue up 13% YoY to $6.76B, vs. $6.7B est., AI-first annual recurring revenue up 150% YoY, and forecasts Q4 revenue slightly below estimates (Anzar Mehraj/Reuters)
Adobe (ADBE.O) beat Wall Street estimates for third-quarter revenue on Thursday, as demand for its AI-integrated products and tools continued to grow.
NEW YORK: Adobe exceeded Wall Street's expectations for third-quarter revenue on Thursday, driven by increased demand for its AI-infused products and tools, though it provided a fourth-quarter revenue forecast with a midpoint below analysts' projections. Shares of the San Jose, California-based firm declined 1.9% in extended trading.
Adobe has been incorporating AI functionalities into its creative and customer-experience products to maintain its competitive edge against emerging rivals. The company's annual recurring revenue from AI-first products surged more than double year-over-year in the quarter. Adobe disclosed quarterly revenue of $6.76 billion, surpassing analysts' average estimate of $6.70 billion, as reported by LSEG data.
Adobe's revenue beat may alleviate some investor concerns over the company's positioning, according to Emarketer analyst Grace Harmon. For the fourth quarter, Adobe projected revenue between $6.80 billion and $6.85 billion, with the midpoint of $6.825 billion slightly lower than the estimated $6.85 billion. Despite this, the cautious fourth-quarter guidance raises questions about Adobe's competitive standing and the approach of its new CEO as AI reshapes the creative software industry.
Adobe is contending with rising competition from AI-powered design tools as rivals like Figma and Canva broaden their offerings. Adjusted profit for the quarter was $6.13 per share, exceeding analysts' estimate of $6.09. Adobe is also managing a series of leadership transitions. The company recently appointed Anil Chakravarthy as its next CEO, while Shantanu Narayen will assume the role of executive chair on December 1.
Additionally, chief financial officer Dan Durn departed the company in June to join Marvell Technology as finance chief, replaced on an interim basis by Steve Day, senior vice president of corporate finance. David Wadhwani, president of Adobe's Creativity and Productivity business, is scheduled to depart on September 27.
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