(Reuters) - Adobe (NASDAQ:ADBE) forecast second-quarter revenue below analysts' estimates on Thursday following stiff competition and weak demand for its artificial intelligence-integrated photography, illustration and video software amid a tough economy.
The company's shares fell more than 10% after the bell.
Companies and individuals have shifted focus to cutting costs amid high interest rates and a tough economy, pressuring growth at the Photoshop software maker that has been investing in AI tools to attract more users.
Adobe has incorporated AI features into its offerings such as document reader Acrobat, Photoshop and Premiere Pro. The company said last month it has introduced a new AI assistant for Reader and Acrobat.
The company also faces competition from startups such as Stability AI and Midjourney, which offer AI services similar to Adobe such as generating images using text prompts.
Adobe forecast second-quarter revenue between $5.25 billion and $5.30 billion, below analysts' estimates of $5.31 billion, according to LSEG data.
For the first quarter, the company's revenue rose more than 11% to $5.18 billion, beating estimates of $5.14 billion.
Adobe also announced a new $25 billion stock repurchase program on Thursday.
On an adjusted basis, the company forecast second-quarter earnings per share between $4.35 and $4.40, the midpoint of which was in line with expectations.
Adobe had terminated its $20-billion deal for cloud-based designer platform Figma in December after hitting several regulatory roadblocks.
Adobe's first-quarter operating expenses, which included a termination fee of $1 billion related to the Figma deal, increased to about $3.69 billion.