Adobe Inc. provided a sales outlook that met analysts’ expectations, but disappointed investors who expected demand for the company’s artificial intelligence tools would boost revenue.
(Bloomberg) — Adobe Inc. provided a sales outlook that met analysts’ expectations, but disappointed investors who expected demand for the company’s artificial intelligence tools would boost revenue.
Sales will be $4.98 billion to $5.03 billion in the period ending in November, the San Jose, California-based company said Thursday in a statement. Analysts, on average, projected $5 billion, according to data compiled by Bloomberg. Profit, excluding some items, will be as much as $4.15 a share, compared with the average estimate of $4.06.
Adobe, the longtime leader in creative software for graphic arts professionals, is adding generative AI features throughout its products. Citing the new tools, the company is raising prices for its products beginning Nov. 1, and will charge additional fees for power-users of the AI features. Analysts expect the new AI pricing to lift revenue quickly, with Jake Roberge, an analyst at William Bair, estimating the bump at more than $600 million over the next year. Bloomberg Intelligence’s Anurag Rana projects a 10% sales increase in the first year of availability.
“We are unleashing a new era of AI-enhanced creativity around the world with innovations across our product portfolio,” Chief Executive Officer Shantanu Narayen said in the statement.
Some analysts expressed caution about whether the price increase would affect demand. “We do see more risk around this year’s price increase given the company just raised prices 18 months ago, and the competitive landscape is rapidly evolving,” Tyler Radke, an analyst at Citigroup, wrote ahead of the results.
The company said fiscal fourth-quarter sales in the Digital Media unit, which includes signature offerings such as Photoshop, will be as much as $3.7 billion, beating the average estimate of $3.66 billion. Revenue in the Digital Experience unit, which includes marketing and analytics software, will be about $1.26 billion, meeting the average projection.
The shares were little changed in extended trading after closing at $552.16 in New York. The stock has rallied 64% this year.
Fiscal third-quarter sales increased 10% to $4.89 billion, exceeding the average projection of $4.87 billion. Profit, excluding some items, was $4.09 a share, compared with the average estimate of $3.98.
Digital Media revenue gained 11% to $3.59 billion in the period ended Sept. 1. Sales in Digital Experience jumped 10% to $1.23 billion.
The company, fighting to keep its top spot in creative software, has proposed a $20 billion acquisition of design startup Figma. That effort has been complicated by an in-depth review and potential lawsuit from US regulators.
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