Adobe Inc. has released a restrained sales forecast for next year, which has caused investors to be disappointed. who expected that the new tools of generative artificial intelligence would provide intensive growth in the indicators of activity of this software developer.
The specified firm’s statement, released on Wednesday, December 13, indicates that in the fiscal year ending in December 2024, revenue will be about $21.4 billion. Earnings are also projected, which, except for some items, will be $18 per share. At the same time, analysts expected sales to reach $21.7 billion.
Wall Street assumes that Adobe will be one of the first beneficiaries of the hype around next-generation artificial intelligence technologies among major software developers. Experts are confident in the company’s ability to create AI-based tools that can generate high-quality and unique text materials and images in response to user requests.
Over the past few months, Adobe has repeatedly announced a new version of its Firefly artificial intelligence model. Also this year, the company has revised its pricing policy towards increasing the cost of products offered to consumers.
Adobe dedicated the October user conference to AI technology. During this event, the company reported a significant increase in sales of the service of access to Firefly among large customers.
The firm’s autumn statements were optimistic and seemed to send a signal of positive prospects, but the annual forecast published this week overshadowed the vision of the future. Against the background of Adobe’s expectations, which do not contain signs of enthusiasm, the company’s share price in New York showed a decrease of about 6%.
At the same time, since the beginning of this year, the price of the firm’s securities has increased by 85%. Keith Weiss, an analyst at Morgan Stanley, commenting on the result, said that investors are probably very pleased with the company’s ability to monetize generative artificial intelligence.
Adobe’s forecast for next year predicts that the revenue of the digital media unit, which creates software for solving creative tasks such as Photoshop and Illustrator, will reach $1.9 billion. This figure differs from the expectations of analysts, who assumed that the revenue of the mentioned arm of the company would be $2.02 billion.
Adobe, for unknown reasons, did not publish a forecast for earnings related to the subscription and renewal of subscriptions to brand products by customers. Kirk Materne, an analyst at Evercore, said that the lack of this data is a clear disappointment that will cause a reaction from investors.
Bloomberg Intelligence expert Anurag Rana says that Adobe management assumes that the company will take longer than expected to get a full-fledged result from products with generative artificial intelligence.
Adobe Chief Executive Officer Shantanu Narayen, during a conference call with analysts, said that the firm does not see anything on the horizon to indicate that it is not ready to spend another great year. It was noted separately that there are no negative prerequisites either from an economic point of view or from the point of view of competition.
Analysts noted that for Adobe, a conservative annual forecast is something like a traditional practice. Dan Durn, the company’s chief financial officer, said in this context that the brand is reasonably formulating expectations.
In the fourth fiscal quarter ended December 1, the sales figures of the firm increased by 12% year-on-year, amounting to $5.05 billion. The digital media unit of the company sales for the mentioned period also showed a positive dynamic. This figure amounted to $3.72 billion, an increase of 13%.
The revenue of the unit Adobe, which develops marketing and analytics software, amounted to $1.27 billion for the specified period. This indicator increased by 10%.
Adobe planned to acquire software development startup Figma Inc. This transaction was not implemented due to inspections by global regulators. At the same time, the acquisition of a startup is still possible. At the end of last month, the company began taking measures aimed at meeting the requirements of European regulators. At the same time, the media reported that the US Justice Department is preparing a lawsuit to block the deal.
Adobe has stated its categorical disagreement with the conclusions of the British competition regulator. The US Federal Trade Commission is also currently investigating the firm’s subscription cancellation practices. Adobe noted that the settlement of this issue may entail monetary costs or penalties. This circumstance may have an impact on the company’s financial results and operations.
As we have reported earlier, Adobe Launches Photoshop’s Web Version With AI Tools.
