Adobe CEO blames timing for low guidance after stock hike

Adobe Chairman and CEO Shantanu Narayen on Thursday expressed confidence in the company’s future, telling CNBC’s Jim Cramer that weaker-than-expected forward guidance by software manufacturers does not signal problems for their business.

Narayen’s comment on “Mad Money” come soon Adobe shares fell 10.2% in Thursday trading, when investors react negatively to company’s financial forecast for the first quarter of fiscal 2022 and the full year.

“The underlying business is still doing just as well as it did in the beginning,” Narayen said, referring to the 2022 goals. “I guess when you’re $15 billion [revenue] company, something that perhaps people don’t quite understand is how forex is moving against us, but the underlying business is still extremely strong. “

The U.S. dollar has strengthened against a basket of foreign currencies for months, which could have an overwhelming impact on companies with a large percentage of their business overseas. According to FactSet estimates, the United States accounts for more than 52% of Adobe’s revenue.

Adobe projects $4.23 billion in revenue for its fiscal first quarter, which runs through February 2022. Wall Street analysts estimate Q1 revenue at $4.34 billion, according to Refinitiv. Adobe forecast full-year revenue of $17.9 billion, lighter than the $18.16 billion analysts expected.

Narayen also said Adobe investors should keep in mind that the company’s first quarter was 13 weeks this year, down from 14 weeks in fiscal 2021. Overall, Adobe is heading back to its 52-week fiscal year. after the 2021 calendar has an extra week.

“When you do a quarterly comparison, you have to keep in mind that it’s 14 weeks versus 13 weeks and, as I mentioned earlier, there’s a bit of forex and maybe we can explain that. [better], as well as … the outcome of an acquisition,” Narayen said.

After looking at those variables and looking at society’s ongoing digitalisation, Narayen said he likes Adobe’s position. In addition to popular Creative Cloud programs like Photoshop, Adobe is also behind a wide range of marketing and e-commerce tools.

“Digital, it’s going to change everything that we know about the way we live today whether it’s work, whether it’s entertainment, whether it’s games,” he said. “All three of our businesses are really at the benchmark of what’s going to happen in this particular space.”

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Emma James

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