Will Higher Digital Media Revenues Aid Adobe Stock in Q4 Earnings?

Adobe’s ADBE fourth-quarter fiscal 2025 results, set to be reported on Dec. 10, are expected to reflect the benefits of higher Digital Media revenues.

Adobe expects fourth-quarter fiscal 2025 Digital Media segment revenues between $4.53 billion and $4.56 billion. The Digital Experience segment’s revenues are expected to be $1.495-$1.515 billion, with Digital Experience subscription revenues anticipated between $1.395 billion and $1.410 billion.

The Zacks Consensus Estimate for Adobe’s fiscal fourth-quarter Digital Media revenues is pegged at $4.41 billion, indicating year-over-year growth of 8.2%. The consensus mark for Digital Experience revenues is pegged at $1.402 billion, indicating a 10.8% year-over-year rise. The Zacks Consensus Estimate for Subscription revenues is currently pegged at $5.9 billion, indicating 10% year-over-year growth.

Adobe’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 2.54%. 

Adobe Inc. Revenue (TTM)

 

Adobe Inc. revenue-ttm | Adobe Inc. Quote

Click here to learn how Adobe’s overall fiscal fourth-quarter performance is likely to have been.

AI Push to Boost Adobe’s Digital Media Revenues

Adobe’s fiscal fourth-quarter Digital Media revenues are expected to have benefited from strong demand for AI-infused offerings, including Creative Cloud Pro and Acrobat, as well as AI-first products, including Firefly and Acrobat AI Assistant.

Digital Media revenues are expected to have benefited from strong use and monetization of Acrobat offerings, including AI assistant and Adobe’s newly launched Acrobat Studio. Increasing demand and usage of AI innovation in Adobe’s flagship applications like Photoshop, Premiere Pro and Illustrator as part of the new Creative Cloud Pro offering is noteworthy.

Adobe Suffers From Stiff Competition in the AI Space

ADBE’s AI business is minuscule compared with the likes of Microsoft MSFT, Alphabet GOOGL and Salesforce CRM. Microsoft’s Intelligent Cloud revenues are benefiting from growth in Azure AI services and a rise in the AI Copilot business. Alphabet’s focus on infusing AI heavily across its offerings, including Search and Google Cloud, has been a major growth driver. Salesforce’s strategy of continuous expansion of Gen AI offerings is helping it tap growth opportunities.

Adobe shares have underperformed Microsoft, Alphabet and Salesforce in the past year. While ADBE shares have dropped 38.1%, Alphabet and Microsoft shares have appreciated 78.9% and 10.1%, respectively. Salesforce shares have declined 26.2% over the past year.

Zacks Rank 

Adobe currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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