Adobe shares drop 14% on disappointing 2025 revenue guidance

Adobe shares fell 14% on Thursday, their biggest drop since September 2022, after the software vendor gave disappointing revenue guidance.

First fiscal quarter sales will be between $5.63 billion and $5.68 billion, Adobe said in its fourth quarter. earnings report Wednesday evening. Analysts on average had expected revenue of $5.73 billion, according to LSEG.

Analysts at TD Cowen downgraded the stock to hold from buy, while Wells Fargo maintained its buy rating following what it called a “frustrating 24” for the company. The stock is now down 20% for the year, trailing the Nasdaq, which is up 33% and broke the 20,000 mark for the first time on Wednesday.

While Adobe’s forecasts trailed estimates, the company’s fourth-quarter results beat expectations.

Adjusted earnings per share were $4.81, beating the average analyst estimate of $4.66, according to LSEG. Fourth-quarter revenue increased 11% to $5.61 billion, beating the average estimate of $5.54 billion.

Monetizing creative artificial intelligence, particularly in standalone offerings like Firefly image creation or complementary Creative Cloud offerings, has been central to Adobe’s growth strategy.

Analysts at Deutsche Bank maintained a buy rating, but lowered their price target to $600 from $650.

“These results and guidance require some faith for the rest of the year ahead,” the analysts wrote. However, they said: “We see clear evidence that Adobe is one of the few application software companies currently monetizing creative AI in our coverage.”