Adobe Earnings Live: Will ADBE Stock Soar After Tonight’s Q2 Earnings?
Key Points
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As of 5:15 p.m. ET Adobe shares are down .3% after beating the prior quarter and raising full year guidance. The live blog below will continue posting updates following Adobe’s earnings release.
Live Updates
No Major News to Report from Adobe's Conference Call
Adobe’s conference call has concluded and no major movements happened with the stock. Overall, it appears this quarter will do little to settle the debate over the company’s stock. Earlier, we shared the major bull case (check our write-up before live updates for a YouTube link).
The company continues growing at double-digit rates, yet fears that growth could quickly slow will remain as AI continues to scale in capability.
We’ll continue to have coverage on Adobe on 24/7 Wall St. in the coming weeks and months.
Likely Headed for a Flat Open Tomorrow
As of 5:20 p.m. ET, Adobe shares are close to flat, down .34%. If you’re a bull, that’s not what you’d like to see after a beat and raise. However, the stock was down 1.7% an hour ago, so it has regained some losses.
Keep This Page Open for a Post-Conference Call Analysis
After Adobe’s conference call we’ll post an analysis of any new findings and commentary (if available from Wall Street). Make sure to keep this page open and we should have another significant update at around 5:45 p.m. ET.
Maybe RPO?
As we continue reviewing Adobe’s earnings – here’s a thought on what could be leading to its share price heading south after an initial pop:
- RPO: Adobe’s ‘Remaining Performance Obligations’ (RPO) were flat at $19.69 billion and remain down from $19.96 billion in Q4 of last year. RPO is similar to a ‘backlog’ for cloud companies, so there could be some read-through on subscription weakness moving forward.
Adobe Continues Aggressively Repurchasing Shares
In Q2 Adobe repurchased $3.5 billion worth of shares. The company granted a $25 billion reauthorization program in March 2024 and has $10.9 billion remaining. You’d hope the company would have been aggressive last quarter as shares sunk as low as $332 per share.
ADBE Now Down 1.7%
The steady drop after Adobe’s post-earnings jump continues. Shares are now down 1.7% as of 4:29 p.m. ET.
Adobe Now DOWN
And it’s a fast reversal for Adobe, which initially popped 5%.
What could be the negative anchor on company shares? Full year revenue guidance was raised to $23.5 billion to $23.6 billion, which is above expectations of $23.46 billion. In addition, full year EPS of $20.60 at the midpoint is above Wall Street estimates of $20.36 billion.
These numbers feel ‘good enough’ to us to lead to gains tomorrow for a ‘battleground stock’ where Wall Street debates whether its moat could be wittled away. Yet, shares continue to drop. We’ll keep digging into reactions from Wall Street and updating this blog.
Growth Rates
Here’s some growth rates for key areas of Adobe’s results:
- Revenue: Up 11% year-over-year
- Adjusted EPS: Up 13% year-over-year
- Digital Media ARR: Up 12% year-over-year
Adobe’s share price initially spike but is now up .8%. While investors were initially happy about Q2 results, guidance for Q3 may be weighing on results.
Stay on this page as we’ll continue providing analysis.
The Numbers...
Here’s the numbers that matter…
Second quarter:
- Adjusted EPS: $5.06 vs. $4.97 Wall Street Estimates
- Revenue: $5.87 billion vs. $5.798 billion
Adobe Up 4%
As of 4:07 p.m. ET Adobe shares are up 4%. We’ll get the numbers and give you some analysis.
Massive Internet Outage
Ahead of Adobe’s earnings there’s a massive outage of cloud services that’s brought down the share prices of several notable companies like Cloudflare (NYSE: NET).
Adobe flat headed into earnings
As of 3:35 p.m. ET, Adobe is trading in-line with the market headed into today’s earnings. The company’s stock is up .21% while the broader Nasdaq is trading up .18%.
Adobe (Nasdaq: ADBE | ADBE Price Prediction) is reporting earnings after the bell today. Here are a few key numbers Wall Street expects, according to S&P CapitalIQ:
- EPS: $4.97 (normalized)
- GAAP EPS: $3.87
- Revenue: $5.798 Billion
Adobe has become a ‘battleground stock’ with bulls arguing it is undervalued while bears argue that AI will erode the company’s moat.
Let’s look at some key themes for today’s earnings.
Key Earnings Themes
The bull case for Adobe is best illustrated by a recent presentation at the Sohn conference. We’ve embedded it below, but it’s a must watch for any investor who own Adobe.
The presentation makes a few key points:
- Adobe has a strategic position in generative AI and provides rights-cleared AI outputs that will see significant demand in the years to come.
- It also argues that Adobe is an AI leader that’s underappreciated with $3.5 billion in recurring revenue that’s attributable to AI.
- Finally, it also presents that Adobe has significant upside potential that could reach $700 per share if it re-rates to be a beneficiary of AI rather than a company whose moat is being eroded.
The Bear Case
Of course, the bear case is that Adobe under threat as each iteration of AI becomes more powerful. OpenAI recently released new image generation tools that captivated the Internet. The question is whether Adobe’s current product becomes a feature of leading AI models, and creatives shift their spending toward paying for AI subscriptions and using cheaper editing software.
Eric Bleeker has been investing for more than 20 years. He began his career working at Microsoft before joining Motley Fool, one of the largest publishers of financial research. In his 15 years at Motley Fool Eric served as the General Manager for Fool.com and led coverage in the Technology & Telecom sector. In addition, he was a featured columnist and has hosted dozens of investing seminars attended by more than a million total investors. Eric has more than 1,000 financial bylines to his name and has been featured in The Wall Street Journal, CNBC, Fox Business, and many other leading publications. He is currently focused on artificial intelligence investing and is a CFA Charterholoder.
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