Adobe unveils tepid guidance as investors eye AI monetization path

March 13, 2025 09:21 PM AEDT | By Investing

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Adobe unveils tepid guidance as investors eye AI monetization path

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Investing.com - Adobe (NASDAQ:ADBE) shares slipped in premarket U.S. trading on Thursday after the Photoshop-owner provided a tepid, albeit in line, outlook relative to Wall Street expectations.

The figures from the maker of software for creative professionals were broadly received positively by analysts, although Evercore ISI noted that the results did little to boost the investment case around the stock.

Artificial intelligence has become a central focus for the company, with the technology seen as a major enhancement for its products and a path towards fending off start-up rivals in an increasingly competitive market.

Investors have been keen, however, for Adobe to unveil more information around when it expects to deliver monetary returns on its investments in AI.

Still, in a note to clients, analysts at Mizuho argued that "the breadth of Adobe's AI monetization is being underappreciated by the Street and that it should become more apparent" in the second half of the year.

"While we assume that competition remains a risk factor that must be closely monitored, we also assume no material changes" to its base investment case following the returns, the Mizuho analysts said.

Annual recurring revenue at Adobe's AI and add-on services, which include offerings like Acrobat AI assistant and GenStudio for Performance Marketing, stood at $125 million at the end of its first quarter. Adobe executives also expect its AI book of business to double by the end of its 2025 fiscal year, Mizuho noted.

Adjusted earnings per share came in at $5.08 on revenue of $5.71 billion. Analysts polled by Investing.com anticipated per-share income of $4.97 on sales of $5.66 billion.

The firm guided for second-quarter revenue of $5.77 billion to $5.82 billion, roughly meeting analysts' expectations, according to LSEG data cited by Reuters. It also reiterated its forecast for full-year revenue of $23.30 billion to $23.55 billion, versus estimates of $23.51 billion.

(Yasin Ebrahim contributed reporting.)

This article first appeared in Investing.com

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