Adobe shares fall on weak Q4 revenue forecasts

Adobe reported third-quarter results Thursday that beat Wall Street expectations for sales and profit, but shares fell 10% in extended trading as fourth-quarter guidance fell short of expectations.

Here’s how Adobe fared during the quarter ending in August compared to LSEG consensus estimates:

• Revenue:$5.41 billion versus the expected $5.37 billion
• Earnings per share:$4.65 adjusted vs. $4.53 estimated

Adobe said it expected earnings per share of $4.63 billion to $4.68 billion on revenue of $5.50 billion to $5.55 billion in the fourth quarter. Analysts polled by LSEG had forecast earnings per share of $4.67 on sales of $5.61 billion.

Adobe said it posted net income of $1.68 billion for the quarter, or $3.76 per diluted share. That’s up from $1.4 billion, or $3.05 per share, in the year-ago period.

Adobe’s largest business line, Digital Media, which includes the company’s Creative Cloud subscriptions that use generative artificial intelligence called Firefly, grew 11% annually to $4 billion in sales.

In total, Adobe recorded $5.18 billion in subscription revenue during the quarter, up 11% year over year.