Adobe Lifts FY25 Outlook After Higher Q2; But Stock Down

(RTTNews) - Software major Adobe Inc. issued third-quarter outlook and raised its fiscal 2025 earnings and revenue targets after reporting higher second-quarter profit, above market estimates, amid strong growth in the adoption of AI-powered and creative solutions.

Meanwhile, the shares were down nearly 2 in the extended trading on Thursday, and are currently losing in the pre-market activity on the NYSE.

Dan Durn, executive vice president and CFO, Adobe, said, "As a result of us driving strong performance in the first half of the year, we are pleased to raise Adobe's FY25 total revenue and EPS targets. We continue to invest in AI innovation across our customer groups to enhance value realization and expand the universe of customers we serve."

For the second quarter, Adobe projects earnings per share of $4.00 to $4.05 and adjusted earnings of $5.15 to $5.20 per share, on revenues of $5.875 billion to $5.925 billion.

The Wall Street analysts on average expect the company to report earnings of $5.18 per share on revenues of $5.90 billion. Analysts' estimates typically exclude special items.

Further, for fiscal 2025, the company now projects earnings per share of $16.30 to $16.50 and adjusted earnings per share of $20.50 to $20.70.

The company previously expected adjusted earnings of $20.20 to $20.50 per share.

Total revenues are now projected to be $23.50 billion to $23.60 billion, up from $23.30 billion to $23.55 billion expected earlier.

Analysts expect earnings of $20.63 per share on revenues of $23.55 billion.

In its second quarter, Adobe's profit increased from last year and beat the Street estimates.

The company's net income came in at $1.69 billion or $3.94 per share, higher than $1.57 billion or $3.49 per share last year.

Adjusted earnings were $2.17 billion or $5.06 per share for the period. Analysts had expected the company to earn $4.97 per share.

The company's revenue for the period rose 11 percent to $5.873 billion from $5.31 billion last year.

Subscription revenues grew to $5.64 billion from $5.06 billion a year ago.

Digital Media segment revenue was $4.35 billion, 11 percent year-over-year growth, or 12 percent in constant currency. Digital Media Annualized Recurring Revenue or ARR exiting the quarter was $18.09 billion, a 12.1 percent year-over-year growth.

Digital Experience segment revenue grew 10 percent, and digital Experience subscription revenue increased 11 percent.

Business Professionals and Consumers Group subscription revenue climbed 15 percent year-over-year, and Creative and Marketing Professionals Group subscription revenue went up 10 percent.

The company currently has $10.90 billion remaining of its $25 billion share repurchase authorization granted in March 2024.

In the after-hours trading on Thursday on the Nasdaq, Adobe shares lost 1.5 percent, after gaining around 0.2 percent in the day's regular trading.

In pre-market activity, the shares are currently trading 2.4 percent lower, at $403.90. For more earnings news, earnings calendar, and earnings for stocks, visit rttnews.com.