Adobe reported first-quarter fiscal year 2025 revenue of $5.71 billion, a 10% increase year-over-year, surpassing analyst estimates of $5.66 billion. Non-GAAP diluted earnings per share (EPS) reached $5.08, exceeding the estimated $4.97. The Digital Media segment grew 11% to $4.23 billion, and the Digital Experience segment increased 10% to $1.41 billion.
Despite these beats, investor sentiment was impacted by the company's remaining performance obligations (RPO) of $19.69 billion, which fell short of analyst estimates. Additionally, while Adobe reaffirmed its full fiscal year 2025 targets of $23.30 billion to $23.55 billion in total revenue and non-GAAP EPS of $20.20 to $20.50, the guidance for Q2 FY2025 revenue of $5.77 billion to $5.82 billion was only in line with expectations.
The market reacted negatively, with shares declining significantly, as concerns lingered about the slower-than-expected monetization of Adobe's artificial intelligence investments and a perceived lack of near-term momentum. Chief Financial Officer Dan Durn expressed confidence in the company's AI strategy, noting that new AI-first standalone and add-on innovations exited the quarter with over $125 million in ending Annual Recurring Revenue (ARR) book of business.
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