ADBE: Adobe Stock Crashes 12% on Weak Guidance, Net Income Slashed in Half to $620M

Software maker paid $1 billion to design platform Figma as the two didn’t make it to the final line with their acquisition plans.

Key Points:

• Adobe shares nosedive 12% to $503.
• Weak guidance threw investors off.
• Stock is down 1.6% on the year.
• Adobe stock ADBE lost 12% in after-hours trading Thursday following the company’s quarterly update. The software maker posted a 50% drop in net income to $620 million from $1.25 billion in the year-ago quarter. During the three months through February, Adobe scrapped the $20-billion acquisition of design tools startup Figma, paying $1 billion in termination fees.
• Despite the big-ticket penalty, Adobe posted solid earnings figures. Revenue for the quarter landed at $5.18 billion, up 11%, and enough to beat consensus calls of $5.14 billion. Earnings per share landed at $4.48 adjusted against $4.38 expected. “We’ve done an incredible job harnessing the power of generative AI to deliver groundbreaking innovation across our product portfolio,” CEO Shantanu Narayen said in a statement.
• What threw investors off was Adobe’s forward-looking guidance. The company projected revenue for the May quarter to land between $5.25 billion and $5.3 billion, below Wall Street’s $5.31 billion expected. Profits on an adjusted basis are projected to be between $4.35 and $4.40 a share, meeting analysts’ consensus calls for $4.38. Ahead of Friday’s opening bell, Adobe shares are down 1.6% on the year but up 70% in the past 12 months.