Design software company Adobe ADBE raised its annual revenue and profit forecasts thanks to robust demand in its digital media unit, which includes subscription products such as Photoshop, Acrobat, and Illustrator, among others.
Total revenue for the quarter came in at $5.99 billion, setting a record and beating expectations. About three-quarters of that coming from the company’s digital media unit, which grew 12% year-over-year to $4.46 billion, demonstrating the staying power of its subscription software, even in the face of new generative AI competition.
Meanwhile, Non-GAAP EPS was $5.31/sh, also beating expectations. With those strong results, Adobe upsized its full year guidance, now forecasting for $23.65 to $23.70 billion in revenue and $16.53 to $16.58 in Non-GAAP EPS.
The results gave investors something to cheer amid a months-long slide in the company’s stock. Adobe had fell 21.1% year-to-date going into its Thursday earnings, largely due to the impact of generative AI tools. Bloomberg warned earlier that the company’s quarterly results risked highlighting the company’s “AI laggard status.”
However, instead, the company credited AI for its strong earnings. Crediting “AI-influenced products” for the strong quarter, CEO Shantanu Narayen said that annual recurring revenue from the products surpassed $5 billion in the latest quarter.
Adobe’s AI push might feel a little contradictory given the stances of creators and users, but the company has pushed forward, seeking to quench investors’ demands. Efforts to push out new AI products have been met by a vocal crowd of Adobe users, who protested changes to the company’s terms and conditions last year.
The company responded by emphasizing “ethical AI” with its own AI model, Adobe Firefly, which is “designed to be commercially safe” and only trained on “content where [they] have permission or rights to do so.” Notably, the company does not train Firefly on customer content.
Adobe stock rose 3.44% in after hours.
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