Adobe's New AI Features Are Already Reaping Massive Profits

Following the release of its new generative AI features, Adobe Inc. released a new revenue and profit outlook for the current fiscal year.

The company has great expectations of the AI features, including the prediction that demand for them will boost its full-year revenue figures.

According to the company’s new forecast, sales for the current fiscal year ending in November will go up to $19.3 billion. Previously, the company said it expected $19.2 billion, which is a considerable increase of $100 million.

Furthermore, adjusted profits would take the price of the firm’s shares from $15.60 per share to $15.75. However, the analysts expect that the price per share would be $15.50 on sales of $19.3 billion.

Adobe’s Expansion into the AI Space was Successful Despite Skepticism

The increase comes after the company added generative AI features to its products. Adobe introduced enterprise-level subscriptions for its new tools only last week.

The subscriptions also brought legal assurance against any copyright claims. The company’s CEO, Shantanu Narayen, commented on the new move:

Adobe’s groundbreaking innovation positions us to lead the new era of generative AI given our rich datasets, foundation models and ubiquitous product interfaces.

The long-time top seller of software for professionals raised its revenue projections for the Digital Media unit that it offers, which includes a variety of creative software, such as Photoshop.

The new development already had a strong impact on the company’s shares, which surged by around 4% in extended trading. The shares initially closed at $490.91 in New York, which is their highest price since February last year.

After it revealed details of its AI strategy last month, the company also saw a 42% rally, which helped its investor overcome skepticism regarding its success in new technologies.

Many feared that Adobe would be unable to match the capabilities of startups specializing in these technologies, but Adobe has proved them wrong.

Adobe Continues to Pursue the Figma Acquisition Amid AI Wins

Simultaneously, the company also continued to fight to maintain its top spot in creative software. As part of it, Adobe proposed the acquisition of a design startup called Figma, which would cost around $20 billion.

Some complications involve this effort, which could result in a potential lawsuit from the United States regulators. However, the company’s officials intend to continue the talks with the EU, UK, and US regulators, confident that the sale could take place by the end of the year.

Even so, the Figma deal brought certain uncertainty, which did reflect on the firm’s shares. BMO Harris’ analyst, Keith Bachman, said that the deal could generate major cross-sell/upsell opportunities if the firm manages to close it.

Finally, it is worth noting that the company’s Thursday statement referenced a sales increase of 10% in the fiscal Q2, leading to a figure of $4.82 billion.

The figure exceeded the analysts’ expectations, as they expected a figure of $4.77 billion on average. The same is true when it comes to profit per share, which ended up being $3.91, compared to the expected $3.79.

Morgan Stanley’s analyst, Keith Weiss, praised the company, stating that it moved swiftly from the “AI loser” list to the AI winner list.

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