Adobe’s Revenue Forecast Is Below Estimates Due To Antitrust Issues

(CTN News) – Adobe, the creator of Photoshop, announced on Wednesday that it is currently under regulatory scrutiny due to its subscription models.

Additionally, the company’s projected annual and quarterly revenue fell below expectations, resulting in a decline of over 5% in after-hours trading for its shares.

According to a regulatory filing, Adobe has been cooperating with the Federal Trade Commission (FTC) since June 2022. The FTC had issued a civil investigative demand, seeking information about Adobe’s disclosure and subscription cancellation practices.

Adobe stated that in November 2023,

The FTC staff claimed the authority to engage in consent negotiations. These negotiations aim to determine if a settlement can be reached regarding the ongoing investigation. Currently, Adobe is actively engaged in discussions with the FTC.

The potential impact of this matter on the company’s financial results and operations could result in significant monetary costs or penalties, according to the company.

Additionally, the competition regulator in Britain has initiated an investigation into the acquisition of Figma, a cloud-based designer platform, with preliminary objections and concerns regarding competition raised by the European Commission and the Competition and Markets Authority.

Adobe has expressed strong disagreement with these findings and is actively responding to the regulators. Despite this, the company’s revenue forecast for the current quarter falls slightly below analysts’ expectations, with a range of $5.10 billion to $5.15 billion compared to an average estimate of $5.19 billion.

Furthermore, the revenue forecast for fiscal 2024 is also below estimates, ranging from $21.30 billion to $21.50 billion.

The company attributes this to reduced spending by individuals and firms due to inflation and higher interest rates. Additionally, the recent price hikes implemented by Adobe in November have further impacted demand for its offerings.

However, the company did report a fourth-quarter adjusted profit of $4.27 per share, slightly exceeding estimates, and its revenue for the three months ended Dec. 1 was marginally above expectations.

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