Adobe Shares Sink Despite Record Revenue. Should Investors Buy the Stock on the Dip?

Motley Fool12-16

Adobe shares sank as investors were disappointed in the company's guidance. The stock is growing revenue solidly, but investors want to see its AI innovation lead to faster growth. While...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2491836776?lang=en_US&edition=fundamental","thumbnail":"https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F800796%2Fgettyimages-1196171818.jpg&op=resize&w=165&h=104","is_english":true,"pubTime":"2024-12-16 08:00","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2491836776","market":"fut","top_or_hot":-1,"title":"Adobe Shares Sink Despite Record Revenue. Should Investors Buy the Stock on the Dip?","media":"Motley Fool","content":"<div>\n<p>Adobe shares sank as investors were disappointed in the company's guidance.\n\n\n\n\n\n\n\nThe stock is growing revenue solidly, but investors want to see its AI innovation lead to faster growth.\n\n\n\n\n\n\n\nWhile...</p>\n\n<a href=\"https://www.fool.com/investing/2024/12/15/adobe-shares-sink-despite-record-revenue-should-in/\">Source Link</a>\n\n</div>\n","source":"fool_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Adobe Shares Sink Despite Record Revenue. Should Investors Buy the Stock on the Dip?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAdobe Shares Sink Despite Record Revenue. Should Investors Buy the Stock on the Dip?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-16 08:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2024/12/15/adobe-shares-sink-despite-record-revenue-should-in/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Adobe shares sank as investors were disappointed in the company's guidance.\n\n\n\n\n\n\n\nThe stock is growing revenue solidly, but investors want to see its AI innovation lead to faster growth.\n\n\n\n\n\n\n\nWhile...</p>\n\n<a href=\"https://www.fool.com/investing/2024/12/15/adobe-shares-sink-despite-record-revenue-should-in/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"ISBC","symbol_name":"投资者银行","start_time":0,"source_url":"https://www.fool.com/investing/2024/12/15/adobe-shares-sink-despite-record-revenue-should-in/","article_id":"2491836776","we_media_id":null,"thumbnails":["https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F800796%2Fgettyimages-1196171818.jpg&op=resize&w=165&h=104"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2491836776","pubTimestamp":1734307200,"columns":[],"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"Adobe shares sank as investors were disappointed in the company's guidance.The stock is growing revenue solidly, but investors want to see its AI innovation lead to faster growth.While the company has a lot to prove, I think a move to tiered plans could better help its AI monetization efforts.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"ISBC":"投资者银行","ADBE":"Adobe"},"translate_title":"尽管收入创纪录，Adobe股价仍下跌。投资者应该逢低买入该股吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ADBE":1,"ISBC":1},"content_text":"Adobe shares sank as investors were disappointed in the company's guidance.\n\n\n\n\n\n\n\nThe stock is growing revenue solidly, but investors want to see its AI innovation lead to faster growth.\n\n\n\n\n\n\n\nWhile the company has a lot to prove, I think a move to tiered plans could better help its AI monetization efforts.\n\nDespite posting record revenue to close out its fiscal year ended Nov. 29, shares of Adobe (ADBE -1.88%) were sinking as investors were disappointed with the company's guidance. Adobe has been at the forefront of generative artificial intelligence (AI) with both its Creative Cloud suite of products that includes Photoshop, and with its Document Cloud business featuring Acrobat. However, its monetization strategy related to AI has been a bit behind.With its latest dip, the stock is now down about 18% year to date as of this writing. Let's take a close look at its results to see if this is a buying opportunity for investors going into 2025.Record revenue, but disappointing guidanceAdobe closed out its fiscal year showing solid growth, with revenue increasing 11% to $5.61 billion. That was solidly ahead of its prior guidance calling for revenue of between $5.5 billion to $5.55 billion. Its adjusted earnings per share (EPS), meanwhile, jumped nearly 13% to $4.81, ahead of its $4.63 to $4.68 forecast.Among its individual segments, Digital Media, which is home to both its Creative and Document Cloud businesses, saw revenue rise 12% to $4.15 billion. Within the segment, Document Cloud led the way with revenue jumping 17% to $843 million. Its larger Creative business saw revenue rise by 10% to $3.30 billion.The company generated $578 million in new Digital Media annualized recurring revenue (ARR), ending the quarter with Digital Media ARR of $17.33 billion. That was just 2% growth from the $569 million in new Digital Media ARR it generated last year.Adobe continued to hype its AI tools, saying AI image generations from its Firefly AI model continue to accelerate and have now crossed 16 billion cumulative generations. It recently launched its Firefly video model in beta, saying it saw massive interest in it, and it should be more broadly available in early 2025.Image source: Getty Images.Adobe's Digital Experience segment, which is involved in digital analytics and online marketing, saw its revenue increase by 10% to $1.4 billion, with digital experience subscription revenue jumping 13% to $1.27 billion. The company said it is seeing strong demand for its new Adobe GenStudio for Performance Marketing.While the quarter itself was solid, what disappointed investors was Adobe's guidance. For the fiscal year 2025, the company projected revenue of between $23.30 billion to $23.55 billion, representing growth of between 8% to 9%. That was below the analyst consensus, as compiled by LSEG, looking for revenue of $23.78 billion. It guided for adjusted EPS of between $20.20 and $20.50.For the fiscal first quarter, the company guided toward a revenue range of $5.63 billion to $5.68 billion, up from $5.18 billion a year ago and representing 9% to 10% growth. That was below the $5.73 billion analyst consensus. It's looking for adjusted EPS of between $4.95 to $5.Below is a chart of the company's fiscal Q1 and full-year guidance.MetricFiscal Q1 ForecastFiscal Year 2025 ForecastRevenue$5.63 billion to $5.68 billion$23.30 billion to $23.55 billionDigital Media segment revenue$4.17 billion to $4.20 billion$17.25 billion to $17.4 billionDigital Experience segment revenue$1.38 billion to $1.40 billion$5.8 billion to $5.9 billionAdjusted earnings per share$4.95 to $5.00$20.20 to $20.50Data source: Adobe earnings releases.Is the stock a rebound candidate?Adobe's stock has underperformed this year, and despite all of Adobe's talk of AI innovation, that innovation has not translated into accelerating revenue growth. Creative Cloud, its largest business, saw new ARR increase just 2% in the quarter, while it forecast decelerating revenue growth for 2025.The company is trying to balance drawing in new AI users versus its monetization of AI at the moment. That is currently leading to solid growth, but it hasn't lifted its revenue growth rate, which is what investors want to see. And while Adobe likely issued somewhat conservative guidance that it can beat, it gave no indication that its revenue growth could accelerate next year.Adobe has been using a credit model for using generative AI, and its biggest AI opportunity may be moving away from this model. On the call, the company mentioned that it has the opportunity to create more tiers across its Creative products, and that will likely be the better way to monetize its AI efforts.From a valuation standpoint, the stock currently trades at a forward price-to-earnings (P/E) ratio of 23.5 times fiscal year 2025 analyst estimates and a forward price-to-sales (P/S) multiple of under 9. That seems like a relatively attractive valuation.ADBE PE Ratio (Forward) data by YCharts.While I think Adobe still has a lot to prove, I like its product innovation roadmap, with things like Firefly video. More importantly, I think it can find a better monetization model through tiered plans. For this reason, I think investors can consider buying the dip in the stock.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":2,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2491836776"}