ADOBE beat Wall Street estimates for third-quarter (Q3) revenue on Thursday, helped by growing demand for its artificial intelligence (AI)-integrated products and tools, but gave a fourth-quarter revenue forecast whose midpoint was slightly below expectations.
Shares of the San Jose, California-based company fell 1.9 percent in extended trading.
The company has been adding AI features across its creative and customer-experience products to defend its position against newer rivals. Annual recurring revenue from AI-first products more than doubled year over year in the quarter.
Adobe reported quarterly revenue of $6.76 billion, above analysts’ average estimate of $6.70 billion, according to LSEG data.
“Adobe’s beat on revenue expectations could ease some investor concerns that the company has lost its footing,” Emarketer analyst Grace Harmon said.
For the fourth quarter, Adobe forecast revenue of $6.80 billion to $6.85 billion, with the midpoint of $6.825 billion slightly below analysts’ estimate of $6.85 billion.
Still, the soft fourth-quarter guidance raises questions about Adobe’s competitive position and the strategy its new CEO will pursue as AI transforms the creative software market, Harmon added.
Adobe faces growing competition from AI-powered design tools as rivals such as Figma and Canva expand their offerings.
Adjusted profit was $6.13 per share for the quarter, above analysts’ estimate of $6.09.
Adobe is also navigating a series of leadership changes. The Photoshop maker last week named Anil Chakravarthy as its next CEO, while longtime Chief Executive Shantanu Narayen will become executive chairman on Dec. 1.
Separately, CFO Dan Durn left the company in June to join Marvell Technology as finance chief and was 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 due to step down on Sept. 27.
