What You Need to Know Ahead of Adobe’s Earnings Report
Key Takeaways
- Adobe is set to report fiscal third-quarter earnings after the bell Thursday.
- Analysts expect Adobe to report rising revenue and earnings from the year-ago period, in part thanks to growth fueled by demand for artificial intelligence.
- The company could also provide updates on its artificial intelligence integration and monetization efforts.
Adobe (ADBE) is scheduled to release its fiscal third-quarter results after the bell Thursday, with investors likely watching to see whether the company can build on its momentum with artificial intelligence (AI).
Analysts expect the software company to post third-quarter revenue of $5.37 billion, up 10% year-over-year, according to estimates compiled by Visible Alpha. Net income is projected to rise 12% to $1.57 billion, or $3.51 per share.
| Analyst Estimates for Q3 2024 | Q2 2024 | Q3 2023 | |
| Revenue | $5.37 billion | $5.31 billion | $4.89 billion |
| Diluted EPS | $3.51 | $3.49 | $3.05 |
| Net Income | $1.57 billion | $1.57 billion | $1.4 billion |
Key Metric: Digital Media Revenue
Adobe’s Digital Media arm, which includes Creative Cloud subscriptions, delivered net-new annualized recurring revenue (ARR) of $487 million in the second quarter, up from $470 million a year earlier. The gains helped Adobe post better-than-expected results, sending shares up over 14% the day after the numbers landed.
Analysts are projecting a slight decline in net new Digital Media ARR in the third quarter, to $462 million, according to Visible Alpha. Oppenheimer analysts suggested investors could still see a “reacceleration” of the measure in the second half of the year.
Business Spotlight: AI Integration
Investors will also likely watch for updates on the monetization of Adobe’s AI offerings, with the company previously noting that many Creative Cloud subscribers are upgrading their plans to access Firefly, its generative AI model. In addition to Firefly, the company introduced generative AI into Document Cloud as well as Adobe Express for business.
The company may also unveil new AI services at its Adobe MAX conference in October. Oppenheimer analysts said they expect the possible reveal of “generative video, editing, and audio dubbing solutions approaching beta.”
Shares of Adobe have surged nearly 23% since the company released its stronger-than-expected results for the second quarter, though they’ve still lost roughly 5% this year so far.
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Conclusion
As Adobe prepares to release its fiscal third-quarter results, investors are eagerly awaiting the company’s performance, particularly in relation to its artificial intelligence initiatives. With analysts expecting rising revenue and earnings, fueled by the demand for AI, Adobe has the potential to continue its positive momentum. Additionally, updates on the monetization of AI offerings and potential new AI services at the Adobe MAX conference could further drive investor interest. Despite a slight decline in net new Digital Media ARR projected for the third quarter, there is optimism for a reacceleration in the second half of the year. Overall, Adobe’s earnings report will provide valuable insights into the company’s growth and future prospects.
