Adobe Stock Falls 10% After Earnings

Adobe’s stock took a hit, plunging 10% after the company reported its latest earnings results. While the software giant managed to beat both earnings and revenue expectations, the market’s reaction suggests that investors were hoping for more impressive numbers.

Beating Expectations, but Falling Short of Excitement

• Adobe reported earnings of $4.48 per share, surpassing the expected $4.38 per share.
• Revenue came in at $5.18 billion, slightly higher than the anticipated $5.15 billion.
• However, the market seems to have been expecting more from the company, leading to the sharp decline in the stock price.

Abandoned Figma Acquisition, but Paying the Price

Last quarter, Adobe abandoned its plans to acquire Figma, a popular design software company, for $20 billion. Despite the deal falling through, Adobe is still paying a $1 billion termination fee to Figma. This move, coupled with the earnings report that barely beat expectations, may have contributed to the market’s disappointment with Adobe’s performance.

Buyback and Guidance: Trying to Appease Investors

In a move to return value to shareholders, Adobe has announced a $25 billion buyback program. The company’s guidance for the second quarter, with revenue expected to be between $5.25 billion and $5.3 billion, and EPS of $4.35 to $4.40, was in line with market expectations. However, the market’s reaction suggests that investors were hoping for even stronger guidance and a more impressive performance from the company.