Adobe Systems (NASDAQ:ADBE) shares dropped more than 6% pre-market Thursday after the company reported FQ4 results and offered guidance.
Q4 EPS came in at $4.27, compared to the consensus estimate of $4.13. Revenue grew 12% year-over-year (up 13% year-over-year in constant currency) to $5.05 billion, compared to the consensus estimate of $5.01B.
Digital Media segment revenue grew 13% year-over-year to $3.72B. Within this segment, Creative revenue climbed to $3.00B, representing a 12% year-over-year growth. Document Cloud generated $721 million in revenue, a 16% increase from the previous year.
Digital Experience segment revenue was $1.27B, representing 10% year-over-year growth. Digital Experience subscription revenue grew 12% year-over-year to $1.12B.
“Adobe drove record revenue of $19.41 billion in FY23 and 17 percent year-over-year EPS growth, with strong momentum across Creative Cloud, Document Cloud and Experience Cloud,” said CEO Shantanu Narayen.
For Q1/24, the company expects EPS in the range of $4.35-$4.40, compared to the consensus of $4.26, and revenue in the range of $5.1-$5.15B, worse than the consensus of $5.19B.
For the full year, the company sees EPS at $17.60-$18.00, compared to the consensus of $18.00, and revenue at $21.3-$21.5B, worse than the consensus of $21.73B. Moreover, Adobe sees a new FY24 ARR at $1.9 billion, below the expected $2.02 billion.
Analysts commented that the results were "mixed."
"FQ4 was unexpectedly messy especially following a strong Q3 and Analyst Day, which may question the confidence level in growth durability. We’d expect the stock to take a breather here and we are lowering our estimates modestly, flowing in the softer guidance and smaller price tailwinds in FY23," analysts said.
Analysts at Jefferies hiked the price target by $40 to $700 per share.
"ADBE has a history of conservative ARR guide, with final actual beating initial guide by >$200M in 2 out of last 3 FYs and in pre-Covid FY19. FY24 is well positioned to repeat and could exceed $2.1B thanks to many drivers tied to Firefly gen AI adoption (price increases, rollout to more products and geos, enterprise ramp)," analysts at Jefferies said.
At least several other Wall Street brokerage firms raised their price target on Adobe, including Piper Sandler and Stifel.