Adobe Inc. reported first-quarter earnings that exceeded Wall Street estimates but forecasted second-quarter revenue in line with expectations, raising investor concerns about the pace of its AI monetization efforts. Shares fell more than 4% in extended trading on Wednesday.
The software giant expects revenue between $5.77 billion and $5.82 billion for the second quarter, matching analyst forecasts compiled by LSEG. Despite reaffirming its annual revenue guidance, Adobe faces increasing competition from AI-driven startups as it seeks to strengthen its position in the evolving creative economy.
“I think guidance is rough, and I think people are questioning, is the AI monetization quick enough?” said Parker Snook, senior research analyst at M Science.
Adobe has been aggressively integrating generative AI into its flagship products, including Photoshop, to maintain a competitive edge. The company reported $125 million in annual recurring revenue (ARR) from AI and add-on offerings, with plans to double this figure by the end of fiscal 2025, according to CFO Dan Durn.
First-quarter revenue came in at $5.71 billion, surpassing estimates of $5.66 billion. Digital media revenue reached $4.23 billion, above the projected $4.19 billion, while adjusted earnings per share stood at $5.08, beating expectations of $4.97.
Analysts remain optimistic that Adobe’s continued AI-driven innovation will ease investor concerns over the transition. “As Adobe continues to deliver new products, we expect those concerns to be replaced by excitement,” said DA Davidson analyst Gil Luria.
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