Source: Jin10 Data

On Thursday evening, the creative and marketing software company announced better-than-expected quarterly earnings and raised its fiscal year forecast through November, resulting in a sharp rise in its stock price. This quarter, Adobe's revenue reached $5.31 billion, up 10% from the same period last year. This slightly exceeded the company's expected range of $5.25 billion to $5.3 billion and was higher than FactSet's consensus expectation of $5.29 billion on Wall Street. Adobe's stock rose 15% in pre-market trading after the report was released.$Adobe (ADBE.US)$This strong performance is the latest development of a series of bullish artificial intelligence developments that investors have been focusing on this week, beginning with Apple's announcement of its new 'Apple Intelligent' AI strategy on Monday, which pushed its stock price up nearly 9%. This was followed by positive AI-related earnings news from both companies on Tuesday and Wednesday. Adobe's impressive earnings report seems to have further strengthened people's optimism about AI-related stocks.

"We are driving strong usage, value and demand for our AI solutions across all customer segments and seeing early success commercializing new AI technologies in our digital media and digital experience businesses," CEO Shantanu Narayen said in a prepared statement for the company's quarterly conference call. Adobe's Net New Digital Media Annualized Recurring Revenue, a closely watched key indicator, was $487 million, far exceeding the company's forecast of $440 million. At the end of the quarter, the company's total Digital Media ARR reached $16.25 billion. Adjusted earnings per share were $4.48, higher than Adobe's estimated range of $4.35 to $4.40 and Wall Street's consensus expectation of $4.39. Adobe's earnings per share, according to generally accepted accounting principles, were $3.49. The revenue of Adobe's Digital Experience department was $1.33 billion, at the top end of Adobe's guidance range ($1.31 billion to $1.33 billion). The revenue of the Digital Media division was $3.91 billion, exceeding the company's own forecast of $3.87 billion to $3.9 billion and Wall Street's consensus forecast of $3.89 billion.

Adobe stock rose 15% during Friday's regular trading hours.

This strong performance is the latest development of a series of bullish artificial intelligence developments that investors have been focusing on this week$Apple (AAPL.US)$beginning with Apple's announcement of its new 'Apple Intelligent' AI strategy on Monday, which pushed its stock price up nearly 9%.$Oracle (ORCL.US)$This was followed by positive AI-related earnings news from both companies on Tuesday and Wednesday.$Broadcom (AVGO.US)$Adobe's impressive earnings report seems to have further strengthened people's optimism about AI-related stocks.

"We are driving strong usage, value and demand for our AI solutions across all customer segments and seeing early success commercializing new AI technologies in our digital media and digital experience businesses," CEO Shantanu Narayen said in a prepared statement for the company's quarterly conference call.

Adobe's Net New Digital Media Annualized Recurring Revenue, a closely watched key indicator, was $487 million, far exceeding the company's forecast of $440 million. At the end of the quarter, the company's total Digital Media ARR reached $16.25 billion.

Adjusted earnings per share were $4.48, higher than Adobe's estimated range of $4.35 to $4.40 and Wall Street's consensus expectation of $4.39. Adobe's earnings per share, according to generally accepted accounting principles, were $3.49.

The revenue of Adobe's Digital Experience department was $1.33 billion, at the top end of Adobe's guidance range ($1.31 billion to $1.33 billion). The revenue of the Digital Media division was $3.91 billion, exceeding the company's own forecast of $3.87 billion to $3.9 billion and Wall Street's consensus forecast of $3.89 billion.

"The performance from top to bottom was excellent," Adobe CFO Dan Durn said in an interview with Barron's. "We had a great first half and we're carrying that momentum into the second half, all of it relying on the innovation across our clouds, which is really driving productivity gains for our customers through generative AI."

Adobe did not provide specific measures of the financial impact of its AI efforts to date. Durn said the company will do so at some point, but added that it is still too early and the company wants to be "very cautious" about the process. He also noted that the usage of the company's tools continues to increase, with 9 billion images created using Firefly AI software to-date and image creation in May exceeding any other month on record.

For the next quarter, Adobe expects revenue between $5.33 billion and $5.38 billion and new Digital Media Net ARR of $460 million. The company expects Digital Media division revenue of between $3.95 billion and $3.98 billion and Digital Experience division revenue of between $1.325 billion and $1.345 billion. Adobe expects adjusted earnings per share for the next quarter to be between $4.50 and $4.55.

Wall Street's consensus expectation for the next quarter is $5.4 billion in total revenue, $458.5 million in new Digital Media Net ARR, $3.99 billion in Digital Media revenue and $1.34 billion in Digital Experience revenue, and adjusted earnings per share of $4.47.

For the entire fiscal year, Adobe now expects revenue of between $21.4 billion and $21.5 billion, higher than the previously predicted range of $21.3 billion to $21.5 billion. The company expects new Digital Media Net ARR for the year to be $1.95 billion, higher than the previous forecast of $1.9 billion. The company now expects adjusted earnings per share for the year to be between $18.00 and $18.20, higher than the previous range of $17.60 to $18.00.

The company now expects adjusted earnings per share of $18 to $18.20 for the entire year, higher than the previous $17.6 to $18.

Editor / jayden