Adobe stock slips on soft fourth-quarter revenue guidance

Adobe reported third-quarter results on Thursday that beat Wall Street expectations for sales and earnings, but the stock slid 10% in extended trading on fourth-quarter guidance that came up short.

Here’s how Adobe did for the quarter ending in August versus LSEG consensus estimates:

• Revenue: $5.41 billion, vs. $5.37 billion expected
• Earnings per share: $4.65, adjusted, vs. $4.53 estimated

Adobe said it expected earnings per share between $4.63 and $4.68 on revenue in the fourth quarter of between $5.5 billion and $5.55 billion. Analysts polled by LSEG were expecting a forecast of $4.67 of earnings on $5.61 billion of sales.

Adobe said it recorded $1.68 billion of net income during the quarter, or $3.76 per diluted share. That’s up from $1.40 billion, or $3.05 per share in the year-ago period.

Adobe’s biggest line of business, Digital Media, which includes the company’s Creative Cloud subscriptions that use generative AI called Firefly, grew 11% on an annual basis to sales of $4 billion.

In total, Adobe recorded $5.18 billion in subscription revenue during the quarter, up 11% year-over-year.