Adobe earnings top estimates, Q2 outlook disappoints
Adobe (ADBE) reported fiscal first quarter results that topped Wall Street estimates on both the top and bottom lines. The software company reported adjusted earnings per share of $4.48 compared to estimates of $4.38. Revenue of $5.18 billion barely topped the $5.14 billion expectation.
Adobe's outlook for the second quarter, however, fell shy of estimates, with the company predicting revenue of $5.25 billion to $5.30 billion, short of the expected $5.31 billion.
The company also announced a $25 billion stock buyback program.
Yahoo Finance's Julie Hyman and Josh Lipton discuss the breaking details.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Stephanie Mikulich.
Video Transcript
JULIE HYMAN: We got some breaking. Earnings news from Adobe. The numbers just hitting the wire here.
And the company, it looks like earnings per share ahead of analysts' estimates. Revenue ahead of analysts' estimates a $25 million stock repurchase program. So why you might ask, are the shares lower?
Well, it looks like the second quarter forecast is what's to blame here. So let's go through the numbers here. That was sort of the top line, headlines here.
First quarter, adjusted earnings per share $4.48, $0.10 ahead of estimates. Revenue rising 11% quarter over quarter here, and also ahead of analyst estimates. But the company's forecast for the second quarter revenue is at most $5.3 billion.
Analysts have been looking for $5.31 billion. And specifically, in its digital media business, which is the larger part of its business seeing revenue of at most 3.9 billion in the second quarter. Again, there a slight shortfall to the $3.91 billion that analysts had been anticipating.
And the $25 billion stock buyback authorization, not enough of a carrot, if you will, to cushion the blow perhaps of that forecast. The other thing I noticed here, even Shantanu Narayen, who is the chair and CEO in the statement talks about the strong momentum, harnessing the power of generative AI. I did look for the word Firefly, which I'm sure will come up on the call. That is their generative AI product. But not mentioned at least yet in the statement.
JOSH LIPTON: Yeah, it's interesting because this stock, I mean, obviously, lower here at least initially in the after hours. It was already in the red this year heading into the print, Julie. At least one thing we know one big thing investors have been concerned about is Adobe and whether it's actually going to benefit or be disadvantaged in this new AI era.
This idea, there are will be new AI tools that's going to commoditize the platform. Not everybody, of course, believes that including a very smart financial analyst will be talking to shortly who covers Adobe.
JULIE HYMAN: Yeah, and there have been certainly some defenders of the stock for sure. But yeah, there are a lot of questions. And there were also some recent reports that its generative AI software suffered from some of the same issues, if you will, as some of Google's generative AI image generation software, in particular, of historical images that didn't make sense, for example, that were generated on the part of Qs. So still a lot of questions about some of these products.
JOSH LIPTON: Meanwhile, the market's under pressure today. But--
