(Bloomberg) — Adobe Inc., the biggest maker of creative design software, reiterated its forecasts for the current quarter even while projecting 2023 revenue that fell just short of analysts’ estimates, relieving investors who feared economic uncertainty would hinder demand.
(Bloomberg) — Adobe Inc., the biggest maker of creative design software, reiterated its forecasts for the current quarter even while projecting 2023 revenue that fell just short of analysts’ estimates, relieving investors who feared economic uncertainty would hinder demand.
Exchange rates and the strong US dollar are expected to cause a 4% headwind to sales growth in 2023, and about a $700 million downward revaluation to the company’s digital media annual-recurring revenue, the company said.
Adobe generates more than 40% of its sales overseas. Speaking during the company’s presentation Tuesday to analysts, Chief Executive Officer Shantanu Narayen said the forecast was muted by the economic environment.
“CEO confidence has clearly come down a little bit,” Narayen said, citing customer concerns about inflation, the continuing war in Ukraine and a potential recession.
Adobe said the forecast doesn’t include Figma Inc., a product design rival the company announced last month it would acquire for $20 billion.
Analysts were surprised by the price tag, the highest ever for a private software company, and suggested competitors were making greater inroads than previously thought. The San Jose, California-based company’s shares have declined 21% since the Figma deal was announced, closing Tuesday at $292.98 in New York.
Fiscal-year sales will be about $19.2 billion, the company said in a statement.
Profit, excluding some items, will be as much as $15.45 a share for the period ending in November 2023. Analysts, on average, projected earnings of $15.53 a share on revenue of $19.8 billion.
The company also affirmed its fiscal fourth-quarter guidance of about $4.5 billion in sales and earnings, excluding some items, of $3.50 a share.
Shares gained about 3.2% in extended trading after the announcement.
Adobe’s fiscal-year forecast for its digital media segment, which includes its marquee creative software, missed estimates, strengthening the argument that the Figma acquisition “shows a sense of urgency to counter slowing growth in its Creative Cloud unit,” wrote Bloomberg Intelligence’s Anurag Rana.
Adobe is looking to expand its slate of web-based products to attract more casual users and product designers, a market that has gravitated in recent years to companies such as Canva Inc., Lightricks Ltd.
and Figma. During Adobe’s annual product conference earlier Tuesday, the company introduced changes to its flagship Photoshop image-editing program to add more collaboration tools, artificial intelligence features and web capability.
Narayen touted the release of Adobe Express, the company’s browser-based solution for quick media editing, during the event.
The company said the service has had 20 million sign-ups since launch. “We were probably a little late,” Narayen said. “But it’s here and it’s awesome.”
(Updates with analyst’s comments in the sixth paragraph.)
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