By Zaheer Kachwala
(Reuters) -Adobe forecast second-quarter revenue in line with Wall Street expectations on Wednesday, as it grapples with slower monetization of its artificial intelligence offerings while facing tough competition from startups.
Shares of the company fell around 3% in extended trading.
The company expects second-quarter revenue to be between $5.77 billion and $5.82 billion, in line with analysts’ expectations, according to data compiled by LSEG.
Adobe reaffirmed its annual revenue forecast and its CEO said the company is “well positioned to capitalize on the acceleration of the creative economy driven by AI.”
Analysts and investors are watching for when Adobe will be able to ramp the monetization of its generative AI products, as it invests heavily in distinguishing itself from rivals by infusing sharper AI editing tools into its vast portfolio.
“I think guidance is rough and I think people are questioning, is the AI monetization quick enough?” said Parker Snook, senior research analyst at M Science.
In an attempt to break ahead of an increasingly competitive market, Adobe has been aggressively integrating AI into its software to boost the appeal of products such as Photoshop, which is used by professionals across a variety of industries.
Last month, the company said it would bring versions of its Photoshop app to mobile phones to boost accessibility and drive more subscriptions.
Analysts say this move could help Adobe break into a more casual and vast non-professional user base, strengthening its position against other mobile alternatives like Picsart, InShot, or Photoroom, among others.
The company reported revenue of $5.71 billion, beating estimates of $5.66 billion.
It reported digital media revenue of $4.23 billion for the first quarter, above analysts’ estimates of $4.19 billion.
On an adjusted basis, the company earned $5.08 per share, compared with estimates of $4.97 per share.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Alan Barona)
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