Adobe shares fall 9% on disappointing fourth-quarter guidance

Adobe shares fell a day after the software company reported third-quarter results that missed weak guidance.
The company said it expected to report revenue of between $5.5 billion and $5.55 billion in its fourth quarter, below the $5.61 billion expected by analysts polled by LSEG.
Analysts said that despite the forecasts, they still had a positive view on the stock.

Adobe shares fell more than 9% on Friday, a day after the software company reported third-quarter results that offered worse-than-expected guidance for the fourth quarter.

Adobe reported revenue of $5.41 billion for the quarter, up 11% from a year earlier and above the $5.37 billion analysts had expected, according to LSEG. The company’s net income for the period was $1.68 billion, or $3.76 per diluted share, compared with $1.40 billion, or $3.05 per share, in the year-ago period.

For its fourth quarter, Adobe expects revenue of $5.50 billion to $5.55 billion and earnings of $4.63 billion to $4.68 per share. Analysts polled by LSEG had expected revenue of $5.61 billion and earnings of $4.67 per share.

Goldman Sachs analysts reiterated their buy rating and $640 price target on the stock. They said Adobe’s disappointing outlook overshadows the strength of its core business, adding that the company is bolstered by the adoption of artificial intelligence and that its core growth drivers “remain intact.”

“While investors are likely concerned about the impact of the guidance on DM’s upcoming FY25 forecast and hesitant about the maturity of the business, we believe this reaction is overdone,” they wrote in a note Friday.

Bank of America analysts said Adobe reported somewhat mixed but overall healthy results and outlook.

They said Adobe is driving a “significant generation of AI” and argued that it is the only company other than Microsoft doing so “at scale at this stage of the cycle.”

“Our positive view on Adobe remains unchanged,” they wrote in a note Friday. “While we were hoping for a stronger outlook for digital media in the fourth quarter, our FY2026 estimates are still up on a better balance between creative cloud and document cloud.”

UBS analysts said Adobe’s fourth-quarter outlook was “uninspiring” but the sell-off appeared overblown.

“In our opinion, the print was not really a disaster,” they wrote Friday.

— CNBC’s Michael Bloom and Kif Leswing contributed to this report.