Adobe shares surge 15% for sharpest rally since 2020

Adobe shares surged 15% on Friday, the biggest gain since March 2020, after the software maker reported earnings and revenue that beat analysts' estimates.

After the bell on Thursday, Adobe reported adjusted earnings per share of $4.48, topping the LSEG consensus estimate of $4.39 per share. Revenue increased 10% from a year earlier to $5.31 billion, exceeding analysts' estimates of $5.29 billion.

CEO Shantanu Narayen attributed Adobe's record revenue to its strong growth across Creative Cloud, Document Cloud and Experience Cloud and its advancements in artificial intelligence.

"Our highly differentiated approach to AI and innovative product delivery are attracting an expanding universe of customers and providing more value to existing users," Narayen said in a press release on Thursday.

New annualized recurring revenue for the Digital Media business, which includes Creative Cloud subscriptions, came in at $487 million, beating the StreetAccount consensus of $437.4 million.

Adobe's results provide a contrast to what software investors have seen from many industry peers of late. Salesforce shares suffered their worst plunge since 2004 late last month after the cloud software vendor posted weaker-than-expected revenue and issued disappointing guidance. That same week, MongoDB, SentinelOne, UiPath and Veeva all pulled down their full-year revenue forecasts.

However, there were positive signs in the sector this week. Oracle shares rallied after the database company announced cloud deals with Google and OpenAI, even as fourth-quarter results fell short of Wall Street expectations. CrowdStrike jumped on Monday following the announcement after the close last Friday that the cybersecurity company would be added to the S&P 500.

JMP