As technology companies navigate the rapidly evolving landscape of artificial intelligence, industry giants are increasingly under pressure to demonstrate robust financial performance and strategic innovation. This backdrop of heightened competition and technological advancement sets the stage for Adobe Inc.‘s (NASDAQ:ADBE) latest financial results, which have captured the attention of analysts and investors alike.
Shares of Adobe were trading higher on Friday, after the company reported upbeat fiscal third-quarter results on Thursday.
Here are some takeaways from analysts who attended.
- Piper Sandler analyst Brent Bracelin reiterated an Overweight rating, while reducing the price target from $500 to $470.
- RBC Capital Markets analyst Matthew Swanson maintained an Outperform rating and price target of $430.
- Stifel analyst Parker Lane reaffirmed a Buy rating and price target of $480.
- DA Davidson analyst Gil Luria reiterated a Buy rating and price target of $500.
- Citizens JMP Securities analyst Patrick Walravens maintained a Market Outperform rating on the stock.
Check out other analyst stock ratings.
Piper Sandler: Adobe reported total revenues of $6.0 billion, delivering a "solid" beat of $88 million, versus an average beat of $68 million over the prior four quarters, Bracelin said in a note. Subscription growth accelerated to 12% year-on-year, from 11% in the previous quarter, he added.
"We are encouraged to see the combination of new product tailwinds and tight cost controls can sustain double-digit EPS growth even as overall top-line growth moderates below 10%," the analyst wrote. He expressed concern, however, that the company's model is still at a nascent stage, with a transition to an AI-influenced product suite, while there is uncertainty in the AI space.
RBC Capital Markets: Adobe delivered a "clean" beat and reached $250 million in AI-direct annual recurring revenues (ARR) a quarter ahead of schedule, Swanson said.
The company reached its first $125 million in AI-direct ARR in around 5 quarters, while the next $125 million was achieved in only two, the analyst stated. "While questions around GenAI monetization and competition remain in focus, it feels like sentiment may have started to turn a corner," he further wrote.
Stifel: Adobe recorded RPO (remaining performance obligations) of $20.44 billion exiting the fiscal third quarter, up 13% year-on-year, Lane said. AI-first ARR surpassed the company's year-end target of $250 million a quarter early, he added.
AI-first ARR includes contributions from Acrobat AI Assistant, Firefly App, Firefly Services, and GenStudio, the analyst stated. "AI proliferation and pricing benefits set the company up for continued subscription growth in the near double-digits exiting the year and into 2026," he further wrote.
DA Davidson: Adobe's revenue beat was driven by 11.6% growth in digital media revenues to $4.46 billion, which surpassed the consensus of $4.39 billion, Luria said. The company benefited from strong adoption of its Firefly app by individuals and Firefly services by enterprises, which helped it surpass $250 million in AI-first ARR, he added.
Adobe's non-GAAP operating margins came in at 46.3%, beating the consensus of 45.2%, "driven by top line outperformance and disciplined expense management," the analyst wrote. Non-GAAP earnings grew 14% year-on-year to $5.31 per share, topping consensus by 14 cents per share, he further wrote.
Citizens JMP Securities: Adobe's revenue growth of 11% year-on-year came in flat versus the fiscal second quarter, Walravens said. While Digital Media revenue growth accelerated to 12%, from 11% in the previous quarter, Digital Experience revenue growth of 9% marked a sequential slowdown from 10%, he added.
Management guided to fiscal fourth-quarter revenues of $6.075-$6.125 billion and non-GAAP earnings of $5.35-$5.40 per share, broadly in line with consensus estimates, the analyst stated. "Adobe is in a race to cement its leadership position in the AI era against high-growth challengers," like Canva and Figma Inc (NYSE:FIG), he further wrote.
ADBE Price Action: Adobe shares were up 0.43% at $352.05 at the time of publication on Friday. The stock is trading near its 52-week low of $330.04, according to Benzinga Pro data.
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