CMB International published a research report indicating that Adobe (ADBE.US) expects an 11% year-on-year increase in revenue for the fourth quarter of fiscal year 2024, reaching $5.61 billion, in line with market expectations. Non-GAAP net profit is expected to grow 9% year-on-year to $2.13 billion, slightly higher than the general market expectation of $2.08 billion.
During the period, the net increase in annual recurring revenue (ARR) from Digital Media recorded $0.578 billion, a 2% year-on-year increase, which narrowed from the 9% growth in the third quarter. CMB believes this may raise investor concerns about whether the company's AI applications are slowing down and worries about whether the profitability outlook will weaken. The management set guidance for fiscal year 2025, expecting revenue to grow 8% to 10% year-on-year, with digital media ARR revenue expected to grow by 11%, meaning the total net increase in ARR for the year is expected to be $1.9 billion, a decrease of 5% year-on-year.
The report indicates that Adobe's slow monetization pace affects market sentiment, downgrading its Non-GAAP net profit forecast for fiscal years 2025 to 2026 by 2%, with the target price reduced from $645 to $634.5, while maintaining a 'Buy' rating.
