Adobe slides as 2025 guidance falls short of expectations

Adobe (NASDAQ:ADBE) shares fell nearly 6.5% in late trading on Wednesday after the Photoshop creator issued guidance for fiscal 2025 that fell short of Wall Street’s expectations.

Looking to the next fiscal year, Adobe expects adjusted earnings to fall within a range of $20.20 to $20.50 per share, with the midpoint of $20.35 below the $20.52 per share estimate. The company anticipates a revenue shortfall next year of around $200M due to foreign exchange headwinds “and a smaller impact of the continued move to subscriptions from perpetual offerings.”

Revenue for the full-year is expected to be between $23.3B and $23.55B, below the $23.8B estimate.

Included in that is the company’s Digital Media segment, which is forecast to be between $17.25B and $17.4B in sales. Its Digital Experience segment is expected to generate revenue between $5.8B and 5.9B for the full year.

Looking to the first-quarter, Adobe expects to earn between $4.95 and $5 per share on an adjusted basis, with the midpoint of $4.97 above the $4.95 per share estimate. Sales are forecast to be between $5.63B and $5.68B, with the $5.665B midpoint below the $5.72B consensus.

Digital Media is expected to generate between $4.17B and $4.2B in sales, while the Digital Experience segment should see revenue between $1.38B and $1.4B.

Fourth-quarter results

For the period ending November 29, Adobe said it earned an adjusted $4.81 per share as revenue rose 11% year-over-year to $5.61B. Analysts expected the company to earn $4.67 per share on $5.54B in revenue.

Digital Media revenue rose 12% year-over-year during the period to $4.15B, including $3.3B in Creative revenue. Document cloud revenue rose 17% from a year ago to $843M.

Net new Digital Media ARR was $578M during the period, as Adobe ended the quarter with $17.33B in net new ARR in the segment. Creative ARR grew to $13.85B, while Document Cloud ARR ended the period at $3.48B.

Digital Experience segment revenue rose 10% year-over-year to come in at $1.4B.

Adobe said it ended the quarter with $19.96B in remaining performance obligations.

The company will host a 5 p.m. EST conference call to discuss the results.