Shares of Adobe dropped as much as 10% on Friday.In this video, I will go over Adobe's (ADBE -8.47%) third-quarter earnings report. Check out the short video to learn more, consider subscribing, and click the special offer link below.*Stock prices used were from the trading day of Sept. 12, 2024. The video was published on Sept. 12, 2024. ...

Q3 Earnings Season Overview - The Q3 earnings season officially starts with companies reporting results for fiscal quarters ending in August, including Oracle and Adobe [1] - Total Q3 earnings for the S&P 500 are expected to increase by +3.8% YoY on +4.6% higher revenues, following +10% earnings growth in the previous quarter [3] - Earnings estimates for Q3 have been revised down more significantly compared to recent periods, with 14 out of 16 Zacks sectors experiencing downward revisions [4] - Despite negative revisions, aggregate earnings for Q3 are expected to reach a new all-time quarterly record [4] Company Performance - Oracle's Q3 results were impressive, solidifying its position in the AI space, with shares up +55.4% YTD [1][2] - Adobe reported strong Q3 results with earnings up +25.8% YoY on +6.9% revenue growth, but shares declined due to underwhelming guidance [1] - Adobe shares are down -10.5% YTD, underperforming the Zacks Tech sector (+18.9%) and the S&P 500 (+17.1%) [2] Sector Expectations - The Tech and Finance sectors are the only ones with modestly rising earnings estimates for Q3 [4] - The Transportation, Energy, Business Services, and Aerospace sectors have seen the largest declines in earnings estimates [4] - For 2024, S&P 500 earnings are expected to grow +8% YoY, improving to +9.7% excluding the Energy sector [5] Construction Sector Outlook - Lennar is expected to report Q3 earnings of $3.62 per share on $9.29 billion in revenues, representing a -7.4% YoY decline in earnings and +6.4% revenue growth [6] - The Zacks Construction sector is expected to see Q3 earnings decline by -3% on +3.7% revenue growth, following +5.6% earnings growth in the previous quarter [8] - Full-year 2024 earnings for the Construction sector are expected to grow +1.1% YoY on +4.6% revenue growth, recovering from a -6.5% decline in 2023 [8] Broader Market Trends - Earnings growth for the S&P 500 is expected to accelerate in the coming periods, with double-digit gains projected for 2025 and 2026 [5] - The Construction sector's profitability has bottomed, with growth expected to resume from 2024 onwards [9]

Core Insights - Adobe's Firefly Services have achieved a milestone of 12 billion generations, emphasizing the company's commitment to AI-driven innovation in its Creative Cloud and Document Cloud platforms [1][2] - The third-quarter revenue increased by 11% to $5.41 billion, with digital experience subscription revenue growing by 12% to $1.23 billion, indicating strong financial performance [2] AI Integration and Product Development - Adobe's AI solutions are designed to be commercially safe and are rapidly integrated across its product portfolio, enhancing customer adoption and value realization [2] - New offerings like Adobe GenStudio and Firefly Services enable personalized content creation at scale, addressing content supply chain challenges [2] - Firefly-powered features in applications such as Photoshop, Illustrator, and Premiere Pro enhance user creativity and productivity [2] Advancements in Document Management - The introduction of AI Assistant in Adobe Acrobat has transformed user interaction with PDFs, allowing for conversations across multiple documents and supporting various formats [3] - There has been a 70% quarter-over-quarter growth in AI interactions, showcasing the increasing value derived from AI Assistant usage [3] Generative AI Applications - Adobe is leveraging generative AI to enhance content creation in Acrobat, integrating Firefly image generation into Edit PDF workflows [4] - The application of generative AI across different verticals is seen as having limitless potential, as demonstrated by Tata Consultancy Services' use of Adobe Premiere Pro and AI Assistant [4][5] Monetization Strategy - The current monetization model revolves around generative credits, with an increase in total credits consumed as new capabilities are integrated [6] - Company leadership is monitoring the evolution of the generative credits economy and is considering instituting caps in the future while focusing on user proliferation [6]

Key TakeawaysAdobe shares tumbled Friday amid concerns about the software maker's weaker-than-expected outlook.However, analysts were bullish on the stock, saying the company's projection was likely conservative, expecting it could benefit from artificial intelligence.They suggested subscription upgrades to access Firefly, Adobe's family of generative AI models, will be a key metric to watch. Adobe (ADBE) shares plunged nearly 9% Friday amid concerns about its weaker-than-expected outlook, but analysts were ...

Key TakeawaysThe S&P 500 advanced 0.5% on Friday, Sept. 13, 2024, amid growing expectations of a steeper rate cut by the Federal Reserve next week. Shares of online retailer Etsy jumped as the Biden administration proposed new rules to limit tariff exemptions that often benefit Chinese e-commerce companies.Adobe shares tumbled after the software giant issued a weaker-than-expected sales forecast for the current quarter. Major U.S. equities indexes climbed Friday to wrap up a week of gains as recent data on ...

Earnings and Revenue Performance - Adobe Inc reported third-quarter fiscal 2024 non-GAAP earnings of $4 65 per share beating the Zacks Consensus Estimate by 2 65% and improving 13 7% year-over-year [1] - Total revenues were $5 41 billion surpassing the Zacks Consensus Estimate of $5 37 billion and rising 11% year-over-year on both reported and constant-currency bases [1] - Subscription revenues accounted for 95 8% of total revenues at $5 18 billion up 11 6% year-over-year while product revenues declined 14 6% to $82 million and services & other revenues decreased 10 4% to $146 million [3] Segment Performance - Digital Media segment revenues were $4 billion up 11% year-over-year surpassing the Zacks Consensus Estimate of $3 97 billion with annualized recurring revenues (ARR) reaching $16 76 billion and net new ARR of $504 million [4] - Creative Cloud revenues were $3 19 billion up 10% year-over-year beating the Zacks Consensus Estimate of $3 18 billion with ARR at $13 45 billion driven by strong adoption across geographies and customer categories [5] - Document Cloud revenues were $807 million up 18% year-over-year surpassing the consensus mark of $791 million with ARR at $3 31 billion driven by strong momentum in the Acrobat ecosystem and enterprise sales [6] - Digital Experience segment revenues were $1 35 billion up 10% year-over-year beating the consensus mark of $1 33 billion with subscription revenues of $1 23 billion rising 12% year-over-year [7] Operating and Financial Metrics - Gross margin expanded 170 basis points (bps) year-over-year to 89 8% while operating expenses increased 9 5% to $2 86 billion but contracted 50 bps as a percentage of total revenues to 52 9% [8] - Adjusted operating margin expanded 30 bps year-over-year to 46 5% [8] - Cash and short-term investments were $7 5 billion as of Aug 30 2024 down from $8 1 billion as of May 31 2024 while trade receivables increased to $1 8 billion from $1 6 billion [9] - Cash generated from operations was $2 02 billion in the reported quarter up from $1 94 billion in the previous quarter [9] Guidance and Market Position - For fourth-quarter fiscal 2024 Adobe projects total revenues between $5 50 billion and $5 55 billion with Digital Media revenues expected between $4 09 billion and $4 12 billion and Digital Experience revenues between $1 36 billion and $1 38 billion [10] - Net new ARR in the Digital Media segment is projected to be $550 million with Digital Experience subscription revenues anticipated between $1 23 billion and $1 25 billion [10] - Non-GAAP earnings per share are expected between $4 63 and $4 68 for the fourth quarter [10] - Adobe faces stiff competition in the AI software space from tech giants and well-funded startups like Stability AI and Midjourney which may delay returns from its AI investments [2] - The ADBE stock has lost 1 7% year-to-date against the industry's rally of 13 6% and experienced an 8% slump in pre-market trading due to weaker fiscal fourth-quarter revenue outlook [2]

Weak guidance raised questions about the software company's competitiveness in the current AI-centric environment.After the closing bell Thursday, Adobe (ADBE -9.21%) reported results for its fiscal third quarter that topped analysts' expectations. Despite that, shares of business software company were trading more than 9% lower early Friday afternoon, and it appears that the company's disappointing guidance for the quarter currently underway was the key driver of the sell-off.Unexpected headwinds blowingI ...

Adobe TodayADBEAdobe$534.26 -52.29 (-8.91%) 52-Week Range$433.97▼$638.25P/E Ratio48.00Price Target$606.86Add to WatchlistInvestors needn’t worry about Adobe’s NASDAQ: ADBE near-term price action because of the longer-term value gains derived from its quality. Adobe investors should instead focus on the bullish longer-term price action. The chart of monthly prices shows this leading SaaS provider that monetizes AI today is in a solid uptrend. The uptrend is marked by high volatility in 2020-2022, resulting f ...

wwing I published my 'Strong Buy' thesis on Adobe Inc. (NASDAQ:ADBE) in June 2024, highlighting their strong AI positions in Firefly. Adobe released a strong Q3 result on September 12th after the bell, while they guided a weak growth in net new digital media annual recurring revenue (ARR) for Q4. Adobe is set to release their Firefly Video Model later this year, enabling creators to generate video powered by AI. I continue to believe Adobe's digital media and digital experience will remain relevant in the A ...

Adobe CEO Shantanu Narayen speaks during an interview with CNBC on the floor at the New York Stock Exchange in New York City, Feb. 20, 2024.Shares of Adobe fell more than 9% on Friday, a day after the company released third-quarter results that offered worse-than-expected guidance for the fourth quarter.Adobe reported $5.41 billion in revenue for the quarter, up 11% year-over-year and above the $5.37 billion expected by analysts according to LSEG. The company's net income for the period was $1.68 billion, o ...