News Summary
Adobe’s shares fell by more than 5% in Thursday’s trading after announcing fourth-quarter financial results that exceeded expectations, but the company’s guidance did not meet analysts’ forecasts. The software manufacturer indicated that higher prices may have a greater impact on demand than anticipated. Adobe also warned that it might face significant fines resulting from an investigation by the Federal Trade Commission.
Adobe Shares Decline After Fourth Quarter Results Announcement
Adobe shares (ADBE) fell by more than 5% in Thursday’s trading after announcing fourth-quarter financial results that surpassed expectations, but the company’s guidance did not meet analysts’ forecasts, and the company warned of potential fines from regulatory bodies in the United States.
Adobe’s Earnings and Revenue Forecasts for 2024
Adobe, the maker of software such as Photoshop and Illustrator, announced that it expects earnings per share in 2024 to range between $17.60 and $18. The analysts had predicted $18 per share. The company also expects its revenue to reach between $23.5 billion and $25.5 billion, while forecasts indicated $27.5 billion.
Impact of Reduced Spending on Adobe
Adobe has been negatively impacted by companies cutting expenses, and the company has raised prices, which affected demand. Adobe’s CEO, Shantanu Narayen, stated that the company is very confident in how it will continue to operate as a growth company and suggested that the impact of pricing may have been underestimated.
Adobe’s Fourth Quarter Results
In the fourth quarter, Adobe reported earnings per share of $4.27, with revenue up by 12% from last year to a record $5.05 billion. Both surpassed expectations.
Federal Investigation into Adobe
In a separate filing, the company indicated that it had been cooperating with the Federal Trade Commission (FTC) since June 2022 regarding Adobe’s disclosure and subscription practices under the Restore Online Shoppers’ Confidence Act. They added that last month, the FTC confirmed that it has the authority to “enter into consent negotiations to determine if it can reach a settlement regarding its investigation into these matters.” The company affirmed that it believes its practices are in compliance with the law. However, it drew attention to the fact that defending or resolving the issue “may involve significant financial costs or penalties and could have a material impact on our financial results and operations.”
Adobe Shares Decline
Adobe shares fell by 5.6% to $589.31 per share around 12:30 PM ET. Despite the decline on Thursday, Adobe’s shares have risen by almost three-quarters of their value this year.
Correction – December 14, 2023
This article has been updated to correct the referenced time frame.
Leave a Reply