Adobe shares surge on Q2 earnings beat and raised guidance

Shares of Adobe (ADBE) are surging after the company topped Wall Street earnings expectations for its fiscal second quarter and raised its full-year guidance. The software giant reported revenue of $5.31 billion ($5.29 billion expected) and adjusted earnings per share (EPS) of $4.48 ($4.40 per share expected).

Yahoo Finance's Seana Smith and Brad Smith break down the software company's earnings figures and how it's incorporating AI into its products.

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This post was written by Melanie Riehl

Video transcript

Time for some trending tickers.

Adobe surging this morning, the company is set for its biggest gain in nearly four years.

That's if these gains hold right now.

Now the company posting better than expected results, raising full year guidance here we have seen as that reaction play out in real time.

We've got shares up just around 15%.

When you take a look at the strong demand that the company is seeing now, their A I model.

It's called Firefly.

They've integrated this into a number of their products, including Photoshop, including Illustrator company, saying that renewals are the more expensive offerings that they're seeing, including that use of the Firefly but management.

I thought this was really key here in the call yesterday.

They were said in this release, saying that they're still in the early stages, making money from a I, and they're focused on converting the pipeline interest and awareness of a I into monetization.

And I think that really speaks to some of that excitement that we're seeing play out in the market today, Brad.

I mean, this is such a no brainer for Adobe to try and figure out how they can insert prompting capacity into so much of their creative elements and the platforms that they do have and that demand that you're talking about with the A i solutions that they're seeing across all of their customer segments.

Early success monetizing some of these new A i technologies across digital media, digital experience businesses and then ultimately here this is raising their annual di, uh, digital media net new, uh, annual recurring revenue that they're expecting to see also digital experience, subscription revenue and EPS target.

So all of these things considered.

That's what's factoring into the stock price here today.

And I, I think going forward, as you think about all of the, uh, the perhaps efficiencies, this brings for a lot of digital marketers.

A lot of creative professionals out there that can essentially just make sure that they can leverage a prompt in the same platform that they've used for years now to say all right, generate uh, a picture of a corgi playing with dogecoin hopping into a lake and boom.

It's done just like that I. I think that's the strength of an adobe kind of mix of products as well