Adobe Inc ( ADBE ) issued a strong quarterly revenue outlook, a sign that the software maker's investments in artificial intelligence (AI) capabilities are starting to bear fruit. Adobe said in a statement Thursday that it expects revenue to be between $6.08 billion and $6.13 billion in the quarter ending in November. Analysts' previous average expectations were only at the lower end of that range.
Earnings per share, excluding certain items, are expected to be $5.35 to $5.40, above analysts' average estimate of $5.33. The San Jose, California-based company also raised its annual guidance.
Adobe has been working to integrate artificial intelligence capabilities, often based on its own generative models, into its industry-standard products, such as Photoshop. Currently, this move is driving growth in the company's performance.
Adobe CEO Shantanu Narayen said in a statement that annual recurring revenue from AI-influenced products has exceeded $5 billion. “Adobe is a leader in creative applications of artificial intelligence,” he said.
Adobe shares rose 4.3% in pre-market trading after closing at $350.55 during the regular trading session. The company's shares had fallen 21% this year as of Thursday's close.
Morgan Stanley analyst Keith Weiss pointed out that before the release of this performance report, investors had been worried about whether Adobe could achieve profitability with its artificial intelligence innovation.
Wall Street's overall attitude toward app makers has cooled significantly in recent months amid concerns about competition from artificial intelligence-focused companies. Adobe, long a leader in creative software, is facing growing pressure from startups like Canva and native AI tools like Midjourney.
In the third quarter of fiscal 2025, which ended on August 29, Adobe's revenue rose 11% year-over-year to $5.99 billion, beating analysts' expectations of $5.91 billion. Earnings per share, excluding items such as stock-based compensation expenses, were $5.31, also above the average estimate of $5.18.
Sales in the digital media unit, which includes Adobe's flagship creative and document processing software, rose 12% year over year to $4.46 billion. This core segment has annual recurring revenue of $18.6 billion.