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What’s happening: Shares of Adobe fell sharply on Thursday, after the company released its fiscal first-quarter results.
What happened: The software maker posted better-than-expected sales and earnings for the latest quarter.
Adobe’s stock came under pressure on concerns around the company falling behind competitors in the AI race.
How were the results: The San Jose, California-based company reported low double-digit growth in sales for the quarter ended February 28.
Why it matters: Adobe has recorded flat or slow year-on-year earnings growth for six consecutive quarters.
The company has been making heavy investments to integrate AI into its products like Photoshop to stay ahead of competition.
Annual recurring revenues for the company’s AI and add-on offerings stood at $125 million at the close of the quarter. The company’s CFO Dan Durn said the company is looking to double ARR by the end of fiscal 2025.
The company said its digital media revenues climbed 11% year-over-year, while digital experience revenues rose 10% year-over-year.
Remaining performance obligations came in at $19.69 billion during the first quarter.
“Adobe’s success over the next decade will be driven by customer-focused innovation and new offerings for creators, marketing professionals, business professionals and consumers,” CEO Shantanu Narayen said.
Adobe projected second-quarter revenues of $5.77 billion to $5.82 billion and adjusted earnings of $4.95 to $5 per share, broadly in-line with market projections.
Despite the sales and earnings beat, management reaffirmed their full-year revenue guidance revenue of $23.3 billion to$23.55 billion and adjusted earnings of $20.20 to $20.50 per share.
How shares responded: Adobe’s shares fell 13.9% to close at $377.84 on Thursday, following the release of quarterly earnings. The stock has lost around 30% over the past six months.
What to watch: Investors will continue watching Adobe’s investments in AI and how well the company is able to monetize its AI-backed products.
Context: The CAD/USD forex pair rose slightly this morning amid strength in crude oil prices.
Details: Investors have been cautious amid US President Donald Trump’s tariff threats, which now includes a proposed 200% tariff on alcoholic beverages from Europe.
Meanwhile, Trump’s steel and aluminium tariffs and Canada’s retaliatory tariffs are impacting cross-border supply chains.
Data released on Thursday showed total value of building permits in Canada fell by 3.2% to $12.8 billion in January, after an 11.6% surge in the previous month. The decline was lower than market expectations of a 5% downturn.
Earlier this week, the Bank of Canada lowered its key interest rate by 25bps to 2.75%.
A rise in the price of crude oil, one of Canada’s major exports, lent support to the loonie. WTI crude oil prices rose 0.5% to $66.88 a barrel this morning.
Strength in the US dollar weighed on the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose about 0.1% to 103.96 this morning.
The CAD/USD pair gained around 0.1% to 1.4435 this morning. The S&P/TSX Composite Index fell 0.90% to close at a four-month low of 24,203.23 on Thursday.
What to watch: Investors await the release of economic data on Canada’s manufacturing sales (1630 UAE Time), new motor vehicle sales (1630 UAE Time) and wholesale sales (1630 UAE Time) today. Analysts expect manufacturing sales in Canada to grow 2% in January, compared to a 0.3% gain in the previous month, while wholesale sales are projected to rise by 1.8% in January following a 0.2% decline in December.
Car registrations in Canada, which fell to 135,511 units in December from 161,535 units in the previous month, are expected to decline further to 128,000 units in January.
Other Markets: European indices closed mostly lower on Thursday, with the DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.48%, 0.64% and 0.15%, respectively, and the FTSE 100 up by 0.02%.
Russia has presented a list of demands to the US for a deal to end its ongoing war with Ukraine. The news sent the safe-haven US dollar index higher in forex trading this morning.
New Zealand’s BusinessNZ Performance of Manufacturing Index climbed to 53.9 in February, from 51.4 in the previous month. The region’s manufacturing activity recording its strongest growth since August 2022 lent support to the NZD/USD forex pair.
Peru’s central bank held its benchmark interest rate at 4.75%, sending the PEN/USD pair lower in forex trading this morning.
South Korea’s export prices rose 6.3% year-over-year in February, decelerating from the 8.6% surge in January, which exerted pressure on the KRW/USD forex pair.
Mexico’s industrial output fell by 2.9% year-over-year in January. This being much higher than market estimates of a 1.8% decline sent the MXN/USD pair lower in forex trading this morning.
Spain’s inflation rate (1200 UAE Time), Italy’s industrial production (1300 UAE Time), Brazil’s gross debt to GDP (1530 UAE Time), nominal budget balance (1530 UAE Time), retail sales (1600 UAE Time), PPI (1600 UAE Time), car production (1700 UAE Time) and new car registrations (1700 UAE Time), India’s bank loan growth (1530 UAE Time), deposit growth (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), Russia’s balance of trade (1700 UAE Time), Germany’s current account (1745 UAE Time), US Michigan consumer sentiment (1800 UAE Time), Michigan consumer expectations (1800 UAE Time), Michigan current conditions (1800 UAE Time), Michigan inflation expectations (1800 UAE Time), Baker Hughes oil rig count (2100 UAE Time) and Baker Hughes total rigs count (2100 UAE Time), as well as Argentina’s inflation rate (2300 UAE Time).
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