Adobe reported better-than-expected fiscal third-quarter financial results on Thursday night, but that wasn't enough to reignite market sentiment.
Investors fret about Adobe's future in an artificial-intelligence driven world. AI models are constantly evolving, and with that comes increased competition for creative software.
Shares were down 2% after fluctuating between gains and losses in after hours trading following the results.
Adobe posted fiscal third-quarter adjusted earnings of $6.13 per share on revenue of $6.76 billion. Analysts surveyed by FactSet were expecting earnings of $6.08 per share on revenue of $6.69 billion.
Adobe also said it expects fiscal fourth-quarter revenue to be between $6.8 billion and $6.85 billion, compared with analyst estimates of $6.84 billion. The company slightly raised its full fiscal year revenue forecast to between $26.58 billion to $26.63 billion, compared with prior estimates of $26.5 billion to $26.6 billion.
The software company has consistently reported better-than-expected earnings over the last few quarters, but that hasn't boosted investor sentiment. In fact, ahead of Wednesday's earnings, Adobe stock fell after 15 of the past 20 earnings reports, according to Dow Jones Market Data.
Adobe stock has fallen 29% this year.
The company is pushing back on investor concerns by releasing its own AI-powered updates. Adobe said on Wednesday that AI-first annual recurring revenue grew by more than 150% from the prior year.
"Adobe delivered record Q3 results, reflecting the strength of our AI innovation, expanding customer reach and leadership across creativity, productivity and customer experience," CEO Shantanu Narayen said in the earnings release.
On top of AI concerns, shareholders are watching Adobe as it prepares to go through a major leadership transition. The company announced last week that Anil Chakravarthy will take over as CEO in December after sharing in March that Narayen would be stepping down after 18 years. Chakravarthy is currently president of Adobe's Customer Experience Orchestration business and worldwide field operations.
The stock fell 6.7% on Sept. 4 after the announcement was made.
"Given the lengthy search, we think investors had begun expecting an external candidate," Piper Sandler analyst Billy Fitzsimmons wrote on Sept. 3.