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For second-quarter fiscal 2025, Adobe projects total revenues between $5.77 billion and $5.82 billion. The company expects non-GAAP earnings between $4.95 and $5 per share.
The Zacks Consensus Estimate for revenues is pegged at $5.79 billion, suggesting growth of 8.99% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged at $4.96 per share over the past 30 days, indicating 10.71% growth from the figure reported in the year-ago quarter.
ADBE’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average earnings surprise being 2.53%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Let us see how things have shaped up for ADBE stock prior to this announcement.
ADBE’s Q2 Segmental View is Encouraging
For the second quarter of fiscal 2025, Adobe expects Digital Media segment revenues between $4.27 billion and $4.30 billion. The Zacks Consensus Estimate for Digital Media segment revenues is pegged at $4.27 billion, suggesting 9.3% year-over-year growth.
Digital Experience segment revenues are anticipated to be in the range of $1.43-$1.45 billion. Experience Subscription revenues are expected to be in the range of $1.315-$1.325 billion.
The consensus mark for Digital Experience revenues is pegged at $1.43 billion, indicating 8.3% year-over-year growth. The Zacks Consensus Estimate for Digital Experience subscription revenues is pegged at $1.32 billion, indicating 9.6% year-over-year growth.
Factors to Note Prior to ADBE’s Q2 Earnings
Adobe’s strong Generative AI (GenAI) portfolio and a rich partner base, which includes the likes of Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) , are expected to have driven its top-line growth in the fiscal second quarter.
Adobe expanded its GenAI portfolio with the launch of Firefly Image Model 3, enhancements to vector models, richer design models and the all-new Firefly video model. The deep integration of these models into Adobe’s tools, such as Lightroom, Photoshop, Premiere, InDesign and Express, has improved the experiences for creative professionals globally.
Strong Adobe Express adoption by businesses is noteworthy. The increasing number of integrations into leading social, productivity and collaboration apps like ChatGPT, Google, Slack, Wix, Box, Hubspot and Webflow significantly increases Adobe Express’ customer reach.
Adobe’s Document Cloud AI Assistant is now available in Acrobat across desktop, web and mobile, and integrated into Chrome, Microsoft Teams and Edge extensions. Adobe GenStudio, which integrates Express, Firefly, Workfront, Experience Manager, Customer Journey Analytics and Journey Optimizer, is riding on strong adoption in the content supply chain for enterprises.
These factors are expected to have driven second-quarter fiscal 2025 results amid stiff competition and the sluggish monetization rate of Adobe’s GenAI solutions.
ADBE Shares Underperforms Sector, Industry
In the year-to-date period, Adobe shares have lost 6.4%, underperforming the broader Zacks Computer and Technology sector’s return of 1.4% and the Zacks Computer Software industry’s appreciation of 9.1%.
YTD Performance
Image Source: Zacks Investment Research
The ADBE stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.
In terms of the forward 12-month price/sales ratio, Adobe’s shares are trading at 7.22X, higher than the sector’s 6.37X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Can a Strong Portfolio and Rich Partner Base Drive ADBE?
A solid portfolio and differentiated approach to AI are attracting an expanding universe of customers across Adobe’s segments. In April, the company introduced the new Firefly app, an all-in-one AI-powered platform for content creation, integrating lifelike image, video, audio, and vector generation with unmatched creative control and seamless Creative Cloud integration.
Adobe’s expanded partnership with Amazon makes the Adobe Experience Platform available on Amazon Web Services. Partnerships with Google’s Campaign Manager 360, Meta Platforms, Microsoft Advertising, Snap and TikTok are key catalysts.
The integration of Acrobat PDF technology into Microsoft Edge and Alphabet’s Google Chrome is a major plus. Adobe is experiencing rising free-to-paid conversions on the back of its Acrobat extensions for Microsoft Edge and Google Chrome.
Adobe Stock Ahead of Q2 Results: Buy, Hold or Sell?
Adobe’s prospects benefit from strong demand for its creative products. Its Creative Cloud, Document Cloud and Adobe Experience Cloud products have been driving top-line growth.
However, Adobe is suffering from increasing competition in the GenAI space from the likes of OpenAI, as well as a lack of monetization of its AI solutions.
Adobe currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a favorable time to start accumulating the stock.
Image: Bigstock
Should You Buy, Sell, or Hold Adobe Stock Post Q2 Earnings?
Key Takeaways
Adobe (ADBE - Free Report) is set to report its second-quarter fiscal 2025 results on June 12.
For second-quarter fiscal 2025, Adobe projects total revenues between $5.77 billion and $5.82 billion. The company expects non-GAAP earnings between $4.95 and $5 per share.
The Zacks Consensus Estimate for revenues is pegged at $5.79 billion, suggesting growth of 8.99% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged at $4.96 per share over the past 30 days, indicating 10.71% growth from the figure reported in the year-ago quarter.
ADBE’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average earnings surprise being 2.53%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Adobe Inc. Price and EPS Surprise
Adobe Inc. price-eps-surprise | Adobe Inc. Quote
Let us see how things have shaped up for ADBE stock prior to this announcement.
ADBE’s Q2 Segmental View is Encouraging
For the second quarter of fiscal 2025, Adobe expects Digital Media segment revenues between $4.27 billion and $4.30 billion. The Zacks Consensus Estimate for Digital Media segment revenues is pegged at $4.27 billion, suggesting 9.3% year-over-year growth.
Digital Experience segment revenues are anticipated to be in the range of $1.43-$1.45 billion. Experience Subscription revenues are expected to be in the range of $1.315-$1.325 billion.
The consensus mark for Digital Experience revenues is pegged at $1.43 billion, indicating 8.3% year-over-year growth. The Zacks Consensus Estimate for Digital Experience subscription revenues is pegged at $1.32 billion, indicating 9.6% year-over-year growth.
Factors to Note Prior to ADBE’s Q2 Earnings
Adobe’s strong Generative AI (GenAI) portfolio and a rich partner base, which includes the likes of Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) , are expected to have driven its top-line growth in the fiscal second quarter.
Adobe expanded its GenAI portfolio with the launch of Firefly Image Model 3, enhancements to vector models, richer design models and the all-new Firefly video model. The deep integration of these models into Adobe’s tools, such as Lightroom, Photoshop, Premiere, InDesign and Express, has improved the experiences for creative professionals globally.
Strong Adobe Express adoption by businesses is noteworthy. The increasing number of integrations into leading social, productivity and collaboration apps like ChatGPT, Google, Slack, Wix, Box, Hubspot and Webflow significantly increases Adobe Express’ customer reach.
Adobe’s Document Cloud AI Assistant is now available in Acrobat across desktop, web and mobile, and integrated into Chrome, Microsoft Teams and Edge extensions. Adobe GenStudio, which integrates Express, Firefly, Workfront, Experience Manager, Customer Journey Analytics and Journey Optimizer, is riding on strong adoption in the content supply chain for enterprises.
These factors are expected to have driven second-quarter fiscal 2025 results amid stiff competition and the sluggish monetization rate of Adobe’s GenAI solutions.
ADBE Shares Underperforms Sector, Industry
In the year-to-date period, Adobe shares have lost 6.4%, underperforming the broader Zacks Computer and Technology sector’s return of 1.4% and the Zacks Computer Software industry’s appreciation of 9.1%.
YTD Performance
Image Source: Zacks Investment Research
The ADBE stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.
In terms of the forward 12-month price/sales ratio, Adobe’s shares are trading at 7.22X, higher than the sector’s 6.37X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Can a Strong Portfolio and Rich Partner Base Drive ADBE?
A solid portfolio and differentiated approach to AI are attracting an expanding universe of customers across Adobe’s segments. In April, the company introduced the new Firefly app, an all-in-one AI-powered platform for content creation, integrating lifelike image, video, audio, and vector generation with unmatched creative control and seamless Creative Cloud integration.
Adobe’s expanded partnership with Amazon makes the Adobe Experience Platform available on Amazon Web Services. Partnerships with Google’s Campaign Manager 360, Meta Platforms, Microsoft Advertising, Snap and TikTok are key catalysts.
The integration of Acrobat PDF technology into Microsoft Edge and Alphabet’s Google Chrome is a major plus. Adobe is experiencing rising free-to-paid conversions on the back of its Acrobat extensions for Microsoft Edge and Google Chrome.
Adobe Stock Ahead of Q2 Results: Buy, Hold or Sell?
Adobe’s prospects benefit from strong demand for its creative products. Its Creative Cloud, Document Cloud and Adobe Experience Cloud products have been driving top-line growth.
However, Adobe is suffering from increasing competition in the GenAI space from the likes of OpenAI, as well as a lack of monetization of its AI solutions.
Adobe currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a favorable time to start accumulating the stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.