Adobe's AI Adoption Raises Investor Concerns Despite Strong Q2 Results

Adobe shares slide as investors skeptical of quicker AI-adoption returns

June 13 (Reuters) - Adobe's (ADBE.O), opens new tab shares dropped 7% in early trading on Friday as investors' concern that the company's AI adoption into its software tools could take longer to fetch returns, overshadowed a raised annual revenue forecast. "(We see) increasing concerns surrounding competitive pressures and a longer time horizon to reach notable AI monetization," said Angelo Zino, senior equity analyst at CFRA Research. The San Jose, California-based creative software veteran is relied on by creatives for its tools including Photoshop and Premiere Pro. The company said in April that it would add AI models from OpenAI and Google (GOOGL.O), opens new tab to Firefly, its generative AI tool. The tool allows users to create and edit images and videos for commercial purposes through basic text prompts without facing copyright challenges. "While guidance was raised and management remains positive around demand generation, it feels like it will take more time to prove out these (AI) initiatives and quiet concerns of competition around GenAI," RBC analysts said in a note. Adobe now expects full-year 2025 revenue between $23.50 billion and $23.60 billion, up from its prior estimates of $23.30 billion to $23.55 billion. At least five brokerages cut their price target on the Adobe stock following the second-quarter results. Including session's losses, the stock has fallen around 13% so far this year. The company's 12-month forward price-to-earnings ratio stands at 18.88, compared with Autodesk's (ADSK.O), opens new tab 29.16. Reporting by Twesha Dikshit in Bengaluru; Editing by Shailesh Kuber Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Business

Adobe raises annual forecasts on steady adoption of AI-powered tools

June 12 (Reuters) - Adobe (ADBE.O), opens new tab raised its full-year results forecast on Thursday, helped by continued demand for its AI-powered software tools that generate images and video content. The company, an industry veteran in the creative software market, is known for its flagship products, such as Photoshop and Premiere Pro, which have become essential tools for professionals worldwide. Despite a weak first quarter marked by budget constraints and project delays amid macroeconomic uncertainties, Jefferies analysts said demand seemed to start recovering in the second quarter as clients resumed stalled projects and adjusted to the changing environment, supporting ongoing growth targets. Adobe expects revenue to be between $23.50 billion and $23.60 billion in fiscal 2025, compared with its prior range of $23.30 billion to $23.55 billion. Excluding items, it raised its full-year profit to between $20.50 and $20.70 per share, from its prior range of $20.20 to $20.50 each. "We continue to invest in AI innovation across our customer groups to enhance value realization and expand the universe of customers we serve," finance chief Dan Durn said. In 2023, Adobe launched Firefly, which enables users to create, edit and enhance images and videos from simple text prompts. Powered by ethically sourced training from exclusively licensed or public domain images, Adobe Firefly expands the company's AI-driven creative tools, enabling users to accelerate ideation and content creation while ensuring brand safety and copyright compliance. Adobe said in April it was integrating image-generation AI models from OpenAI and Google into its Firefly app. Revenue for the second quarter stood at $5.87 billion, above the analysts' average estimate of $5.79 billion. Adobe's outlook for third-quarter results was also above estimates. Reporting by Harshita Mary Varghese in Bengaluru; Editing by Alan Barona Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Adobe Reports $5.87 Bn Q2 FY25 Revenue, CFO Highlights Continued AI Investments | AIM

'Adobe's AI innovation is transforming industries, enabling individuals and enterprises to achieve unprecedented levels of creativity.' Adobe reported record revenue of $5.87 billion for the second quarter of its fiscal year 2025, an 11% increase over the previous year. The increase in revenue was supported by ongoing demand for AI-driven software solutions that create images and video content. In Q2 (Mar- May), GAAP operating income was $2.11 billion, while non-GAAP operating income reached $2.67 billion. GAAP net income stood at $1.69 billion, and non-GAAP net income was $2.17 billion. Additionally, cash flows from operations were $2.19 billion. The diluted earnings per share were $3.94 on a GAAP basis and $5.06 on a non-GAAP basis. "Adobe's AI innovation is transforming industries, enabling individuals and enterprises to achieve unprecedented levels of creativity," Shantanu Narayen, chair and CEO of Adobe, said. He added that the company increased its FY25 revenue target. Meanwhile, the company's CFO and executive VP said they will continue to invest in AI innovation across customer groups to enhance value realisation and expand the universe of customers they serve. The revenue from the digital media segment totalled $4.35 billion, an 11% increase compared to the previous year or a 12% rise when adjusted for constant currency. The annualised recurring revenue (ARR) for digital media at the end of the quarter was $18.09 billion, indicating a 12.1% year-over-year growth. The digital experience segment achieved revenue of $1.46 billion, reflecting a 10% increase year-over-year, both as reported and in constant currency. Subscription revenue within the digital experience segment was $1.33 billion, demonstrating an 11% year-over-year growth, as reported and in constant currency. "Our strategy to deliver ground-breaking innovation for business professionals and consumers, and creative and marketing professionals, is delighting customers, and we are pleased to raise Adobe's FY25 revenue target," said Narayen. In its first quarter results, Adobe reported strong adoption of Firefly AI, which supports generative AI features in Creative Cloud, Document Cloud, and Experience Cloud. The "commercially safe and designed for enterprise use" Firefly models are integrated into Photoshop, Express, and Premiere Pro, enabling users to create AI-assisted images and designs. Adobe also provides a dedicated web application for Firefly. The organisation has established itself as a significant contender in India, helping various businesses across multiple industries, such as BFSI, automotive, retail, and aviation. AIM reported that Adobe Express usage in India has tripled over the previous year, fueled by mobile-first accessibility, support for regional languages, and templates that resonate with local culture.

Adobe shares slump 7% as investors skeptical of quicker AI-adoption returns

Adobe's stock experienced a 7% drop due to investor apprehension regarding the timeline for AI integration to yield profits, despite an increased annual revenue forecast. Concerns about competitive pressures and the monetization of AI initiatives have led to lowered price targets from several brokerages.Adobe's shares dropped 7% in early trading on Friday as investors' concern that the company's AI adoption into its software tools could take longer to fetch returns, overshadowed a raised annual revenue forecast. "(We see) increasing concerns surrounding competitive pressures and a longer time horizon to reach notable AI monetization," said Angelo Zino, senior equity analyst at CFRA Research. The San Jose, California-based creative software veteran is relied on by creatives for its tools including Photoshop and Premiere Pro. The company said in April that it would add AI models from OpenAI and Google to Firefly, its generative AI tool. The tool allows users to create and edit images and videos for commercial purposes through basic text prompts without facing copyright challenges. "While guidance was raised and management remains positive around demand generation, it feels like it will take more time to prove out these (AI) initiatives and quiet concerns of competition around GenAI," RBC analysts said in a note. Adobe now expects full-year 2025 revenue between $23.50 billion and $23.60 billion, up from its prior estimates of $23.30 billion to $23.55 billion. At least five brokerages cut their price target on the Adobe stock following the second-quarter results. Including session's losses, the stock has fallen around 13% so far this year. The company's 12-month forward price-to-earnings ratio stands at 18.88, compared with Autodesk's 29.16.

Adobe shares slide as investors skeptical of quicker AI-adoption returns

Adobe's shares dropped 7% in early trading on Friday as investors' concern that the company's AI adoption into its software tools could take longer to fetch returns, overshadowed a raised annual revenue forecast. "(We see) increasing concerns surrounding competitive pressures and a longer time horizon to reach notable AI monetization," said Angelo Zino, senior equity analyst at CFRA Research. The San Jose, California-based creative software veteran is relied on by creatives for its tools including Photoshop and Premiere Pro. The company said in April that it would add AI models from OpenAI and Google to Firefly, its generative AI tool. The tool allows users to create and edit images and videos for commercial purposes through basic text prompts without facing copyright challenges. "While guidance was raised and management remains positive around demand generation, it feels like it will take more time to prove out these (AI) initiatives and quiet concerns of competition around GenAI," RBC analysts said in a note. Adobe now expects full-year 2025 revenue between $23.50 billion and $23.60 billion, up from its prior estimates of $23.30 billion to $23.55 billion. At least five brokerages cut their price target on the Adobe stock following the second-quarter results. Including session's losses, the stock has fallen around 13% so far this year. The company's 12-month forward price-to-earnings ratio stands at 18.88, compared with Autodesk's 29.16.

Adobe Stock Undervalued, Says Analyst As It Breaks From Cautious Tech Pack, Lifts Guidance - Adobe (NASDAQ:ADBE)

Adobe Inc. ADBE stock fell on Friday, erasing Thursday's gains from its positive second-quarter earnings report. Adobe reported quarterly revenue of $5.87 billion, up 11%, beating analyst estimates of $5.79 billion. The company reported quarterly adjusted earnings of $5.06 per share, beating estimates of $4.96 per share. Digital Media revenue climbed 11%, and Digital Experience revenue increased by 10%. Also Read: Adobe Q2 Earnings: Revenue Beat, EPS Beat, Raised FY Guidance, Continued Investments In AI Innovation Adobe expects third-quarter revenue of $5.88 billion-$5.93 billion versus estimates of $5.87 billion. The company anticipates third-quarter adjusted earnings of $5.15-$5.20 per share versus estimates of $5.10. Adobe raised expectations for full-year 2025 revenue to $23.5-$23.6 billion, up from prior guidance of $23.3 billion-$23.55 billion. Adobe also raised its full-year adjusted earnings guidance to $20.50-$20.70 per share, up from a previous guidance of $20.20-$20.50 per share. Analysts are anticipating full-year revenue of $23.44 billion and full-year earnings of $20.36 per share. Wall Street analysts rerated the stock. Goldman Sachs analyst Kash Rangan reiterated a Buy rating on Adobe with a price forecast of $570. Bank of America Securities analyst Brad Sills maintained a Buy rating on Adobe and raised the price forecast from $424 to $475. Piper Sandler analyst Brent Bracelin reiterated an Overweight rating on Adobe with a price forecast of $500. Goldman Sachs: Despite the quarter's outperformance and +1% raise to fiscal 2025 Digital Media revenue, the stock is indicated -2% after hours, Rangan noted as investors contemplate the durability of Adobe's double-digit topline growth and the tangibility of its AI revenue contribution. Yet, the analyst remained encouraged by Adobe's growth prospects given Adobe Experience Platform (AEP) and Apps subscription revenue growth of +40% Y/Y, Express proving a reliable engine adding 8,000+ businesses (+6x Y/Y), accelerating AI adoption, with Firefly App first-time subscribers +30% Q/Q. Rangan said that Adobe's AI strategy is evolving to play a larger role in the company's growth narrative. First, AI has the potential to stabilize the core business by infusing value-enhancing capabilities across the product suite, enabling upsell opportunities into higher-priced SKUs such as CC Pro, the analyst said. Early evidence from the core CC suite is promising, which Rangan noted as a compelling proof point. Further, as AI-standalone SKUs surpass a $250 million run-rate at an accelerated pace, the analyst noted the potential for incremental consumption-based revenue to become additive to topline growth. Rangan continues to view Adobe as well-positioned to benefit as Gen-AI spending moves from Infrastructure into Platform and Application layers. Bank of America Securities: The second-quarter results and outlook reflect solid execution in a sluggish software demand backdrop, Sills noted. The analyst said that AI optionality for the business is very much intact. As per Sill, total revenue of $5.89 billion topped the outlook by ~$100 million, driven by a balanced upside across Digital Media and Digital Experience. The analyst said Digital Media ARR growth of 12.1% topped the outlook for 11%. Much of the Digital Media strength came from Document Cloud, with strength in Acrobat AI Assistant, Premium, and Express, Sills said. He said that the Document Cloud business continues to lead the way with AI monetization. However, as per Sills, new offerings such as the Firefly app and Photoshop mobile are beginning to gain traction in the creative business. Also, the company added 8,000 new customers on Adobe Express, demonstrating solid top of funnel traction, the analyst said. A fiscal 2026 outlook boost contrasts with most software companies, implying a more resilient, diversified business and good execution on growth initiatives, Sills said. While top-of-funnel conversion and AI revenue are not inflecting, they are building and likely to drive a gradually improving growth rate over time, the analyst said. Sills's thesis is that the current attractive low valuation compensates for the wait for an anticipated improvement in growth. Piper Sandler: Another quarter of steady execution, evident by the $78 million revenue beat on 11% constant currency growth (versus $57 million prior four-year average) and 9 cents EPS beat, appears 'good enough' for the large-cap value investor cohort, Bracelin noted. However, the analyst said the more skeptical growth investor cohort could remain on the sidelines based on the implied fourth-quarter growth outlook that could further moderate to ~8%, with full-year ARR growth expected to moderate to 11% (versus 12% currently). Bracelin continues to see Adobe as one of the more attractive software franchises for value-orientated investors. The analyst said Adobe's AI book of business is a bright spot as AI-first products are tracking ahead of the $250 million ending ARR target for fiscal 2025. Price Action: ADBE stock is trading lower by 5.69% to $390.15 at last check Friday. Read Next: Rising AI, Analytics Budgets Could Lift Microsoft, Snowflake, Datadog Photo by Mats Wiklund via Shutterstock ADBEAdobe Inc$391.86-5.28%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. 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Adobe Reports Record Q2 Revenue Growth | The Motley Fool

Adobe (ADBE -6.58%) reported Q2 FY2025 results on June 12, 2025, posting record revenue of $5.87 billion, up 11% year over year, non-GAAP EPS of $5.06, up 13% year over year, and raising FY2025 revenue as well as GAAP and non-GAAP EPS targets. Management highlighted accelerated AI monetization and strong user growth, set against ongoing product innovation and successful market expansion across both Digital Media and Experience segments. The following analysis distills distinct strategic, operational, and financial insights directly impacting the company's long-term investment thesis. Artificial intelligence (AI)-influenced annual recurring revenue (ARR) is tracking in the billions, while AI-direct ARR from products such as Acrobat AI Assistant, Firefly, and GenStudio is on pace to surpass the initial $250 million FY2025 target. Monthly active users (MAUs) across Acrobat, Express, and related offerings exceeded 700 million, with Express capability adoption inside Acrobat scaled approximately 11x year over year, and generative AI features usage grew more than 3x year over year. "While our AI-influenced ARR is already contributing billions of dollars, our AI book of business from AI products, such as Acrobat AI Assistant, Firefly app and services, and Gen Studio for performance marketing, is tracking ahead of the $250 million ending ARR target by the end of fiscal 2025." -- Shantanu Narayen, Chair and CEO The successful commercialization and deep user engagement from AI-driven products indicate a durable competitive advantage in both monetization velocity and product differentiation, reinforcing Adobe's leadership as the creative industry migrates toward AI-centric workflows. Regulatory scrutiny of AI-generated content and rising industry litigation around copyright train models -- illustrated by lawsuits filed by Walt Disney and Comcast's NBCUniversal against AI image generator Midjourney -- have increased enterprise sensitivity to IP risk. Adobe underpins its Firefly models with commercially safe training data, including stock and other content it has access to, and compensates contributors, supporting widespread enterprise adoption and mitigating legal risk. "... we have trained our Firefly models, as many of you know, on stock and other content that we have access to. We do have a contributor fund that pays out to those individuals. And as a result, we feel like we're in a very advantaged position when it comes to people choosing Model Health, especially in enterprises." -- David Wadhwani, President of Digital Media This strategic focus on content provenance and transparent creator compensation enhances long-term enterprise adoption and positions Adobe as a safe harbor amid regulatory uncertainty, and reduces the risk of abrupt revenue headwinds from legal challenges. Subscription revenue for the Business Professionals and Consumers group surged 15% year over year in Q2, while Creative Cloud Pro -- offering greater value at higher price points -- has already launched in North America, with global rollout underway. MAU growth for the combined Acrobat and Express funnel accelerated above 25% year over year, while Firefly app traffic grew over 30% quarter over quarter, and paid subscriptions nearly doubled. "... we've been able to introduce the Creative Cloud Pro plan, which is a higher-priced plan, but has a lot more value integrated into the ecosystem of the desktop applications. But it also comes with the Firefly application as well. Then in the context of enterprises, we're seeing a huge growth of Firefly services and GenStudio for automation of that content." -- David Wadhwani, President of Digital Media This granular "stratification" unlocks the ability to both upsell higher-value tiers and broaden market access, expanding the total addressable market while supporting double-digit top-line growth and margin durability for Adobe. Management forecasts total revenue of $5.875 billion-$5.925 billion (GAAP) for Q3 FY2025, GAAP EPS of $4-$4.50, and non-GAAP EPS of $5.01-$5.20, with an adjusted operating margin of approximately 45.5%. Full-year FY2025 targets raised to $23.5 billion-$23.6 billion in total revenue, $17.45 billion-$17.5 billion Digital Media revenue, 12.1% Digital Media ending ARR growth, and $20.50-$20.70 non-GAAP EPS; AI-direct ARR set to exceed $250 million. Management reaffirmed Digital Experience subscription revenue guidance, and continued aggressive product innovation cadence across AI, mobile, and automation, ensuring robust near-term and structural long-term growth levers are in place.

Adobe Reports AI-Fueled Earnings Beat | The Motley Fool

In its fiscal second quarter, Adobe reported 11% year-over-year revenue growth to $5.87 billion, which is the company's all-time high for a single quarter. The business generated $2.15 billion in free cash flow for the quarter, an excellent 37% free cash flow margin. Adobe operates its business in two segments: Digital Media and Digital Experience. Digital Media includes Adobe's signature Creative Cloud subscription product (Acrobat, Photoshop, Illustrator, etc.), and Digital Experience includes the company's Experience Cloud that is designed to help businesses manage their customer experiences. Both sides of the business grew at a double-digit year-over-year pace. Within the business, most of the statistics look impressive. Acrobat link sharing monthly active users grew more than 20% year over year, and use of generative AI features in Adobe Express tripled. Adobe's Firefly app saw traffic rise by 30% sequentially with paid subscriptions roughly doubling. Looking ahead, Adobe is expecting third quarter revenue in the range of $5.875 billion to $5.925 billion, which would represent another new company record, and adjusted EPS in a range of $5.15 to $5.20. Both are above analyst expectations. The company's full-year forecast is also slightly ahead of the consensus. The initial market reaction to Adobe's earnings report was volatile. The stock jumped as much as 6% in the moments following the earnings release, but quickly ran out of steam and settled a bit lower. As of 4:25 p.m., Adobe's stock was down by about 1.3% in after hours trading. It's not totally clear why the stock is under pressure. The company beat expectations on the top and bottom lines and also raised its guidance. However, the stock had already rebounded 25% from its April lows in just over two months, and while the company beat expectations, it was slight. It's worth noting that this reaction is before management's conference call, scheduled later in the afternoon. Depending on what is said, the call could certainly move the stock in one direction or another. Adobe has been investing aggressively in building out the AI capabilities of its product, so looking forward, investors will likely want to see these efforts result in a strong growth rate. However, with Adobe's stock trading for less than 20 times forward earnings estimates and revenue growth that's already in the double digits, any acceleration in growth could be a major catalyst for the stock.

Adobe shares slide as investors skeptical of quicker AI-adoption returns

"(We see) increasing concerns surrounding competitive pressures and a longer time horizon to reach notable AI monetization," said Angelo Zino, senior equity analyst at CFRA Research. The San Jose, California-based creative software veteran is relied on by creatives for its tools including Photoshop and Premiere Pro. The company said in April that it would add AI models from OpenAI and Google to Firefly, its generative AI tool. The tool allows users to create and edit images and videos for commercial purposes through basic text prompts without facing copyright challenges. "While guidance was raised and management remains positive around demand generation, it feels like it will take more time to prove out these (AI) initiatives and quiet concerns of competition around GenAI," RBC analysts said in a note. Adobe now expects full-year 2025 revenue between US$23.50 billion and US$23.60 billion, up from its prior estimates of $23.30 billion to US$23.55 billion. At least five brokerages cut their price target on the Adobe stock following the second-quarter results. Including session's losses, the stock has fallen around 13 per cent so far this year. The company's 12-month forward price-to-earnings ratio stands at 18.88, compared with Autodesk's 29.16. ---

Adobe shares slide as investors skeptical of quicker AI-adoption returns

(Reuters) -Adobe's shares dropped 7% in early trading on Friday as investors' concern that the company's AI adoption into its software tools could take longer to fetch returns, overshadowed a raised annual revenue forecast. "(We see) increasing concerns surrounding competitive pressures and a longer time horizon to reach notable AI monetization," said Angelo Zino, senior equity analyst at CFRA Research. The San Jose, California-based creative software veteran is relied on by creatives for its tools including Photoshop and Premiere Pro. The company said in April that it would add AI models from OpenAI and Google to Firefly, its generative AI tool. The tool allows users to create and edit images and videos for commercial purposes through basic text prompts without facing copyright challenges. "While guidance was raised and management remains positive around demand generation, it feels like it will take more time to prove out these (AI) initiatives and quiet concerns of competition around GenAI," RBC analysts said in a note. Adobe now expects full-year 2025 revenue between $23.50 billion and $23.60 billion, up from its prior estimates of $23.30 billion to $23.55 billion. At least five brokerages cut their price target on the Adobe stock following the second-quarter results. Including session's losses, the stock has fallen around 13% so far this year. The company's 12-month forward price-to-earnings ratio stands at 18.88, compared with Autodesk's 29.16. (Reporting by Twesha Dikshit in Bengaluru; Editing by Shailesh Kuber)

Adobe shares fall, investors skeptical of quicker AI-adoption returns

STORY: Shares of Adobe dropped as much as 7% Friday on concerns over when the software company will start seeing a boost to its business from new artificial intelligence features. That overshadowed its higher annual revenue forecast, which sent shares up after it reported results late Thursday. An analyst from CFRA Research said, "(We see) increasing concerns surrounding competitive pressures and a longer time horizon to reach notable AI monetization." The maker of Photoshop and Premiere Pro video editing software said in April that it would add AI models from OpenAI and Google to its generative AI tool. The tool - called Firefly - allows users to create and edit images and videos for commercial purposes through basic text prompts without facing copyright challenges Analysts from RBC said in a note that "it feels like it will take more time to prove out these (AI) initiatives and quiet concerns of competition around GenAI." At least five brokerages cut their price target on Adobe's stock following the second-quarter results.

Adobe raises annual forecasts on steady adoption of AI-powered tools

(Reuters) -Adobe raised its full-year results forecast on Thursday, helped by continued demand for its AI-powered software tools that generate images and video content. The company, an industry veteran in the creative software market, is known for its flagship products, such as Photoshop and Premiere Pro, which have become essential tools for professionals worldwide. Despite a weak first quarter marked by budget constraints and project delays amid macroeconomic uncertainties, Jefferies analysts said demand seemed to start recovering in the second quarter as clients resumed stalled projects and adjusted to the changing environment, supporting ongoing growth targets. Adobe expects revenue to be between $23.50 billion and $23.60 billion in fiscal 2025, compared with its prior range of $23.30 billion to $23.55 billion. Excluding items, it raised its full-year profit to between $20.50 and $20.70 per share, from its prior range of $20.20 to $20.50 each. "We continue to invest in AI innovation across our customer groups to enhance value realization and expand the universe of customers we serve," finance chief Dan Durn said. In 2023, Adobe launched Firefly, which enables users to create, edit and enhance images and videos from simple text prompts. Powered by ethically sourced training from exclusively licensed or public domain images, Adobe Firefly expands the company's AI-driven creative tools, enabling users to accelerate ideation and content creation while ensuring brand safety and copyright compliance. Adobe said in April it was integrating image-generation AI models from OpenAI and Google into its Firefly app. Revenue for the second quarter stood at $5.87 billion, above the analysts' average estimate of $5.79 billion. Adobe's outlook for third-quarter results was also above estimates. (Reporting by Harshita Mary Varghese in Bengaluru; Editing by Alan Barona)