Earnings Results: Adobe earnings top Wall Street estimates, while sales forecast is roughly in line

Adobe Inc. shares traded between slight gains and losses in the extended session Thursday after the company topped Wall Street estimates for the quarter and provided a revenue outlook that was roughly in line with estimates.

Adobe shares
sought direction after hours, trading within a low-single-digit percent range, following a 0.3% decline to close the regular session at $552.16.

The company reported third-quarter net income of $1.4 billion, or $3.05 a share, compared with $1.14 billion, or $2.42 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $4.09 a share, compared with $3.40 a share in the year-ago period.

Revenue rose to $4.89 billion from $4.43 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast adjusted third-quarter earnings of $3.98 a share on revenue of $4.87 billion.

Adobe reported $3.59 billion in digital-media sales, while analysts expected $3.57 billion.

For the fourth quarter, Adobe forecast earnings of $4.10 to $4.15 a share, while analysts had estimated $4.06 a share, while the midpoint of its forecast revenue range rested at roughly $5 billion, about $2.4 million above the Wall Street consensus estimate.

Adobe’s digital media net new annualized recurring revenue of about $520 million forecast for the fourth quarter was, however, above the $462.1 million consensus estimate, according to FactSet data.

As it did last quarter, Adobe dropped its Firefly news just ahead of earnings. Ahead of its earnings report back in June, Adobe announced it planned to monetize Firefly, sending shares higher.

The commercial version of Firefly, announced Wednesday, implements a credit system to charge users when they use Firefly AI, Adobe’s new generative artificial-intelligence tool, in their applications, based on “the generated output’s computational cost and the value of the generative AI feature used.”

Adobe shares are up 64.1% year to date, while the tech-heavy Nasdaq Composite Index
is up 33.1%, the S&P 500
has advanced 17.3% and the iShares Expanded Tech-Software Sector exchange-traded fund
has advanced 40.2%.

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