Adobe Earnings Preview: The latest read on AI plays
2min read Adobe (ADBE) is set to release its highly anticipated Q3 earnings report on September 12, after the market closes, with a follow-up conference call at 5 PM ET. Analysts expect EPS to grow by 11% year-over-year to $4.53, with revenue projected to increase 10% to $5.37 billion. These results will be closely watched as they provide a crucial read on Adobe's strength, particularly in the AI space, with key growth drivers like Adobe Firefly and the company's AI-powered solutions. Adobe’s Q3 guidance for EPS is $4.50-4.55, with revenue guidance of $5.33-5.38 billion, signaling cautious optimism.
Key metrics to watch in the report include Adobe’s Digital Media annualized recurring revenue (ARR), which stood at $16.25 billion as of Q2, with $487 million of net new ARR. For Q3, the company has guided to net new Digital Media ARR of $460 million. Investors will also closely monitor performance in Adobe’s Document Cloud and Creative Cloud segments, which saw robust growth last quarter, bolstered by the introduction of AI tools like Firefly. Adobe's diversification across SMBs, enterprises, and geographies will be essential to assess its sustained growth momentum amid evolving market dynamics.
In Q2, Adobe’s Document Cloud revenue jumped 19% year-over-year, driven by strong demand for Acrobat subscriptions and new AI-driven features. Creative Cloud revenue grew 10%, reflecting ongoing innovation and customer acquisition, particularly around Adobe’s AI initiatives. The Q3 results will provide a deeper insight into how these segments are progressing, especially as AI becomes increasingly integral to Adobe’s strategy. Growth in Creative ARR, which reached $13.11 billion in Q2, will be a critical measure for investors looking to gauge the strength of Adobe’s AI-powered product offerings.
From a macroeconomic perspective, Adobe’s performance is expected to reflect its resilience, with the company emphasizing its mission-critical role for both individual consumers and enterprises. Analysts expect Adobe to continue executing well, converting its AI pipeline into revenue growth. With the stock up 14% since August and still trailing some of its tech peers year-to-date, Adobe’s Q3 results could be pivotal in reigniting investor confidence, particularly in the company’s ability to monetize AI innovations.
Looking ahead, the company’s annual MAX conference in October will also be a significant catalyst, especially as Adobe prepares to launch new generative AI models for 3D, video, and animation. Investors will be watching Adobe's guidance closely for any signs of further growth driven by AI adoption, as well as any updates on competitive dynamics, particularly against rivals like Canva and Figma. Overall, expectations are moderately positive, with analysts forecasting continued strength in Adobe’s AI initiatives and digital offerings heading into the final quarter of the year.
Adobe (ADBE) reported strong Q2 earnings, with revenue growing 10.2% year-over-year to a record $5.31 billion, beating expectations. Despite breaking its streak of six consecutive double-digit EPS beats, Adobe still delivered an EPS upside. The company's Digital Media segment performed well, with revenue rising 11% year-over-year, and its Document Cloud revenue jumped 19%, driven by strong demand for Acrobat subscriptions and increasing user engagement. Additionally, the Digital Experience segment saw a 9% revenue growth, with subscription strength across key categories.
Guidance was a key driver for the stock's 15% surge, as Adobe provided Q3 EPS guidance above expectations and raised its FY24 EPS outlook. Investors were reassured by the raised EPS guidance, which implies confidence in the company's performance for the second half of FY24. The company's ARR growth, particularly in Digital Media, was another highlight, with analysts noting the strength in new customer acquisitions and product releases. This positive guidance and strong performance helped push Adobe shares higher after a period of underperformance.