Adobe Stock Jumps As Creative Software Firm Beats Estimates

Core Insights - Adobe reported fiscal Q3 earnings of $5.31 per share on sales of $5.99 billion, exceeding analyst expectations of $5.18 per share and $5.92 billion in sales, with year-over-year earnings growth of 14% and sales growth of 11% [2][3] - For fiscal Q4, Adobe anticipates earnings of $5.38 per share on sales of $6.1 billion, slightly above Wall Street's expectations [3] - Adobe's AI-driven annualized recurring revenue (ARR) has surpassed $5 billion, with AI-first ARR exceeding $250 million, indicating strong growth in AI applications [4] Financial Performance - Adobe's fiscal Q3 adjusted earnings were $5.31 per share, with total sales of $5.99 billion [2] - The company expects fiscal Q4 adjusted earnings of $5.38 per share and sales of $6.1 billion, compared to $4.81 per share and $5.61 billion in the same quarter last year [3] - Adobe ended the quarter with $20.44 billion in remaining performance obligations (RPO) [4] Market Reaction - Adobe's stock rose 4% in after-hours trading to $364.60, following a slight increase to $350.55 during regular trading [5] - Year-to-date, Adobe's stock is down 21%, reflecting investor frustration and concerns regarding AI's impact on its business [6] AI Innovations - Nearly 90% of Adobe's top 50 enterprise accounts have adopted its AI-first innovations, with over 40% doubling their annualized recurring revenue spend since the start of fiscal 2023 [7] - Adobe announced the general availability of a suite of AI agents aimed at enhancing customer experiences across various platforms [8] Stock Ratings - Adobe holds a weak IBD Composite Rating of 52 out of 99, indicating challenges in key growth metrics compared to other stocks [8]