What You Need To Know Ahead of Adobe's Earnings Report

Adobe (ADBE) is set to announce its first-quarter earnings for the 2024 fiscal year after the bell on Thursday, with analysts expecting double-digit growth in Adobe's Digital Media segment, as well as additional details on potential gains from artificial intelligence (AI).

Analysts project Adobe's revenue to come in at $5.14 billion for the first quarter of fiscal 2024, up from the previous quarter and year-ago period, according to estimates compiled by Visible Alpha.

Net income is expected to be $2 billion, an increase from $1.75 billion in the fiscal first quarter of 2023, while diluted earnings per share (EPS) are projected at $4.37, compared to $3.80 in the same period a year earlier. Both figures would be in line with the company's guidance for the quarter.

Key Metrics: Digital Media Revenue Growth

Adobe's Digital Media segment posted $3.72 billion in revenue in the fourth quarter, representing 13% year-over-year growth.

Jefferies analysts project the Digital Media segment's revenue for the first quarter of 2024 could come in at $3.79 billion, which would represent 11.5% year-over-year growth, extending the company's fourth-quarter streak.

The analysts noted website traffic growth and content creation activity could contribute to gains for the segment.

Business Spotlight: AI Impact

Adobe is also expected to provide investors with more details about how the creative software company can benefit amid the AI boom.

The company offers Adobe Firefly, a family of generative AI (GenAI) models "to boost creativity and speed up workflows in Adobe products, giving you a creative co-pilot to accelerate ideation, exploration, and production."

Adobe Firefly brings GenAI tech to the company's products including Creative Cloud and Adobe Acrobat, with Adobe's AI image generation offerings rivaling Microsoft-backed (MSFT) OpenAI's DALL-E.

Jefferies analysts indicated that they "expect ADBE to recover as it shares more details on its video AI roadmap," which could come during the earnings call or at the company's annual investor meeting on March 26.

"We do expect a beat for FQ1 as well as positive metrics on Firefly AI adoption," the analysts wrote, saying that they anticipate "the added clarity to return ADBE as a top beneficiary of AI."

Adobe shares were 0.8% higher at $578.50 about half an hour before Thursday's opening bell. The stock is little changed since the start of the year but has gained more than 70% over the past year.

UPDATE-March 14, 2024: This article has been updated with the latest share price information.