Adobe stock slips on soft fourth-quarter revenue guidance

Adobe reported third-quarter results on Thursday that beat Wall Street expectations for sales and earnings, but the stock slid 10% in extended trading on fourth-quarter guidance that came up short.

Here is how Adobe did for the quarter ending in August versus LSEG consensus estimates:

• Revenue: $5.41 billion vs. $5.37 billion expected
• Earnings per share: $4.65 adjusted vs. $4.53 estimated

Adobe said it expected earnings per share between $4.63 and $4.68 on revenue of between $5.5 billion and $5.55 billion in the fourth quarter. Analysts polled by LSEG were expecting a forecast of $4.67 in earnings per share on $5.61 billion of sales.

Adobe said it recorded $1.68 billion of net income during the quarter, or $3.76 per diluted share. That is up from $1.40 billion, or $3.05 per share, in the year-ago period.

Adobe’s biggest line of business, Digital Media, which includes the company’s Creative Cloud subscriptions that use generative artificial intelligence called Firefly, grew 11% on an annual basis to sales of $4 billion.

In total, Adobe recorded $5.18 billion in subscription revenue during the quarter, up 11% year over year.