Adobe Crumbles After Reporting Q4 Results Above Estimates: Here's Why

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  • Adobe shares fell after it reported fourth-quarter earnings and revenue that beat estimates, but its guidance fell short of expectations.
  • The software maker said the Rising prices may have had a greater impact on demand than expected.
  • Adobe also warned that it could face substantial fines following an investigation by the Federal Trade Commission.

Shares of Adobe (ADBE) plunged more than 5% in intraday trading Thursday after reporting fiscal fourth-quarter results that beat estimates, but its forecast missed expectations and publisher software has warned of potential fines from US regulators.

The maker of Photoshop, Illustrator and other programs said it expects 2024 earnings per share (EPS) of between $17.60 and $18. Analysts expected $18 per share. It projects revenue of between $23.5 billion and $25.5 billion, compared to estimates of $27.5 billion.

Adobe has been negatively affected by reducing business expenses. The company also raised prices, which weighed on demand. CEO Shantanu Narayen said Adobe was extremely confident about continued growth and suggested the impact on pricing may have been overestimated.

In the fourth quarter, Adobe posted EPS of $4.27, with revenue up 12% from last year to a record $5.05 billion. Both exceeded expectations.

In a separate filing, the company said that since June 2022, the company has cooperated with the Federal Trade Commission (FTC) regarding Adobe's disclosure and subscription practices relating to Restore Online Shoppers' ; Confidence Act. He added that last month the FTC asserted that it had the authority “to enter into consent negotiations to determine whether a settlement regarding their investigation of these matters could be reached.”

The company said it believed its practices complied with the law. However, it noted that defending or resolving the case “could involve significant monetary costs or penalties and could have a material impact on our financial results and operations.”

The actions of Adobe were down 5.6% at 589.31 per share around 12:30 p.m. AND. Despite Thursday's drop, Adobe shares have added nearly three-quarters of their value this year.


Correction—Dec. 14, 2023:This article has been updated to correct the time period described.


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