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Adobe’s stock tumbles despite upbeat FQ4 results

Friday, December 13, 2024

Today’s headlines

What’s happening: Shares of Adobe fell sharply on Thursday, following the release of the company’s fiscal fourth-quarter results.

What happened: The computer software company reported better-than-expected sales and earnings for the latest quarter.

However, investors were disappointed by company’s revenue projections, which exerted pressure on the stock.

How were the results: The San Jose, California-based company reported strong results for the fiscal fourth quarter.

  • Revenues grew by 11% year-over-year to $5.61 billion, which topped consensus estimates of $5.54 billion.
  • Adjusted earnings came in at $4.81 per share, exceeding Wall Street expectations of $4.66 per share.

Why it matters: Adobe is investing heavily in AI technologies, including AI-driven image and video generation. The company announced a new AI tool to generate videos at its annual user conference in October.

Following the latest results, Adobe has now surpassed market expectations in eight straight quarters.

The company’s Digital Media revenues grew by 12% year-over-year, while Digital Experience revenues rose 10% year-over-year.

Adobe’s subscription revenue growth grew by 12.6% year-on-year to $5.4 billion, accelerating from 11.9% in the previous quarter. Remaining performance obligations (RPOs) grew by 16% year-over-year to $19.96 billion during the quarter.

“Adobe delivered record FY24 revenue, demonstrating strong demand and the mission-critical role Creative Cloud, Document Cloud and Experience Cloud play in fueling the AI economy,” CEO Shantanu Narayen said.

Despite reporting better-than-expected quarterly results, management announced their guidance short of expectations. Several analysts commented that Adobe is struggling with AI monetization, despite its huge investments.

The company guided to revenue of $5.63 billion to $5.68 billion for the fiscal first quarter, below consensus of $5.73 billion.

For fiscal 2025, Adobe projected revenues of $23.3 billion to $23.55 billion, versus expectations of $23.79 billion. The company also guided to adjusted earnings of $20.20 to $20.50 per share for the year, short of consensus of $20.55 per share.

How shares responded: Shares of Adobe tanked 13.7% to close at $474.63 after the company released its quarterly earnings. The stock has lost around 18% year to date.

What to watch: Investors will continue monitoring rising competition from emerging AI-based startups. Adobe’s efforts to monetize AI will also remain in focus.

The markets today

The euro in focus today ahead of the Eurozone’s industrial production data

Context: The EUR/USD forex pair fell on Thursday, as investors assessed the latest interest rate decision by the European Central Bank (ECB).

Details: The euro declined below the 1.05 level on Thursday, nearing two-year lows of $1.04 recorded in late November.

The ECB lowered its benchmark interest rate by 25 basis points, in-line with expectations. Policymakers also signalled further rate cuts next year. All three major rates were reduced by 25bps, which marked the fourth rate cut in the current cycle.

The ECB also lowered its GDP growth estimates, cutting its forecast by 0.1 percentage points to 0.7% for the current year and by 0.2 percentage points to 1.1% for 2025. Inflation is projected to gradually ease, from the estimated 2.4% this year to 2.1% in 2025.

On the economic data front, Germany’s current account surplus shrank to €12.5 billion in October, versus a gap of €21.3 billion in the previous month. This marked the lowest recording since May 2023.

The EUR/USD pair fell around 0.3% to 1.0467 on Thursday. The EUR/GBP gained around 0.4% to 0.8260. The STOXX Europe 600 Index shed 0.14% to close at 519.20.

What to watch: Investors await the release of industrial production data (1400 UAE Time) from the Eurozone today. Industrial production in the bloc, which contracted by 2% in September, is expected to decline by just 0.1% in October.

Other Markets: US trading indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.53%, 0.54% and 0.68%, respectively.

The news shaping the markets

Ukraine’s president Volodymyr Zelenskyy increased his demand for air defence systems, saying the country needs a dozen more Patriot systems in the ongoing war with Russia. The news sent the safe-haven US dollar index higher in forex trading this morning.


UK’s GfK Consumer Confidence Index rose by 1 point to a reading of -17 in December, signalling an improvement for the second straight month. However, consumer confidence remaining subdued exerting pressure on the GBP/USD forex pair.


Peru’s central bank kept its benchmark interest rate unchanged at 5%. The recent decision was based on the latest inflation report showing an acceleration to 2.3% for November, which sent the PEN/USD pair lower in forex trading this morning.


New Zealand’s BusinessNZ Performance of Manufacturing Index dipped to 45.5 in November, from 45.7 in the previous month. Factory activity declining to its weakest level since July 2024 exerted pressure on the NZD/USD forex pair.


Canada’s total value of building permits declined 3.1% to $12.61 billion in October, compared to an 11.5% jump in September, which sent the CAD/USD pair lower in forex trading this morning.

What else to watch today

Spain’s inflation rate (1200 UAE Time), India’s bank loan growth (1530 UAE Time), deposit growth (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), Brazil’s IBC-BR economic activity (1600 UAE Time), Canada’s capacity utilization (1730 UAE Time), manufacturing sales (1730 UAE Time), new motor vehicle sales (1730 UAE Time) and wholesale sales (1730 UAE Time), US export prices (1730 UAE Time), import prices (1730 UAE Time), Baker Hughes oil rig count (2200 UAE Time) and Baker Hughes total rigs count (2200 UAE Time), as well as Russia’s GDP growth rate (2000 UAE Time).


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