Adobe Tumbles as Full-Year Revenue Forecast Trails Estimates

(Bloomberg) — Adobe Inc. projected revenue for the first fiscal quarter and full year 2022 that fell short of analysts estimates, sending shares tumbling as much as 10%.

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Sales will reach about $4.23 billion in the current period, which ends in February, the San Jose, California-based company said in a statement Thursday. Analysts, on average, estimated $4.36 billion, according to data compiled by Bloomberg. Profit, excluding some items, could hit as high as $3.35 a share, compared with the average estimate of $3.40. For the fiscal year, Adobe expects revenue to hit $17.9 billion and earnings to reach $13.70 per share. Wall Street projected sales of $18.2 billion and profit of $14.20.

San Jose, California-based Adobe said its projections factor in the strengthening of the U.S. dollar against foreign currencies and a longer first quarter and fiscal year.

Adobe has long dominated the market in digital design software for professionals, but faces greater competition as it offers tools to make it easier for everyday users to create graphics, videos and other online content. Chief Executive Officer Shantanu Narayen also has sought to expand the company’s products for marketing and analytics.

But there are many such products available and analysts say Adobe currently lags behind some rivals.

“Most investors are still a little more cautious there, it’s viewed as a distant runner-up to Salesforce in that space,” Guggenheim Partners director Ken Wong said before the results were released. “If there is a way to improve the narrative, growth trajectory of the business, it’s probably going to come from digital experience.”

Shares tumbled to as low as $567.13 Thursday morning in New York. They had gained about 26% this year through the market close Wednesday.

Alongside the earnings announcement, Adobe said it would promote Anil Chakravarthy, the current general manager for its marketing and analytics business, to president of that division. David Wadhwani, the current chief business officer and executive vice president of digital media, was also elevated to president of that unit.

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In the three months ended Dec. 3, Adobe said revenue increased 20% to $4.11 billion and profit, excluding some items, was $3.20 a share in the period. Both measures were better than analysts’ average estimates.

(Updates with shares trading in first paragraph.)

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