Creative software provider Adobe (ADBE) reported earnings for its second quarter of Fiscal Year 2025 that was followed by a guidance beat. Adjusted earnings per share came in at $5.06, which beat analysts’ consensus estimate of $4.97 per share.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
In addition, sales increased by 11% year-over-year, with revenue hitting $5.87 billion. This also beat analysts’ expectations of $5.8 billion. The bulk of the revenue, and the main growth driver, came from Adobe’s Digital Media segment, which grew 11% year-over-year to $4.35 billion.
Meanwhile, buybacks also helped push the EPS figure past estimates. During the second quarter, 8.6 million shares were repurchased by the company, therefore slightly increasing the share of the profits to the remaining investors. It is worth noting that Adobe regularly repurchases its shares each quarter.
2025 Outlook
Looking forward, management has provided the following guidance for 2025:
- Q3 Revenue of between $5.875 billion and $5.925 billion versus analysts’ estimates of $5.88 billion
- Q3 Adjusted EPS in the range of $5.15 to $5.20 compared to analysts’ estimates of $5.10
- FY25 Revenue of between $23.50 billion and $23.60 billion versus analysts’ estimates of $23.46 billion
- FY25 Adjusted EPS in the range of $20.50 to $20.70 compared to analysts’ estimates of $20.36
As we can see, the company’s outlook is worse than expected, as all metrics came in lower than expected at the midpoint. This is what led to the after-hours move in the stock price.
Is Adobe a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ADBE stock based on 21 Buys, eight Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ADBE price target of $519.88 per share implies 25.7% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
