Adobe (ADBE.O) shares surged late Thursday after the creative and marketing software company reported better-than-expected results for its latest quarter while also raising its outlook for the fiscal year ending November.

Adobe's revenue for the quarter reached $5.31 billion, up 10% from the same period last year. That was slightly higher than the company's forecast range of $5.25 billion to $5.3 billion and higher than the Wall Street consensus forecast of $5.29 billion tracked by FactSet.

Adobe shares rose 14% in after-hours trading following the report.

The strong results were the latest in a string of bullish AI-related developments that investors have been watching this week. It started with Apple (AAPL.O) unveiling its new "Apple Smart" AI strategy on Monday, which helped drive a nearly 9% gain in shares. It was followed by positive earnings news from Oracle (ORCL.N) on Tuesday and Broadcom (AVGO.O) on Wednesday, with both companies providing positive AI-related earnings commentary. Adobe's strong report appears to have further fueled optimism about AI-related stocks.

"We are driving strong usage, value and demand for our AI solutions across all customer segments and seeing early commercial success of new AI technologies in our Digital Media and Digital Experience businesses," Chief Executive Officer Shantanu Narayen said in prepared remarks for the company's quarterly conference call.

Net new digital media annual recurring revenue -- a key, closely watched metric for Adobe -- was $487 million, well ahead of the company's forecast of $440 million. Total digital media ARR at the end of the quarter reached $16.25 billion.

Adjusted earnings per share were $4.48, above Adobe's forecast of $4.35 to $4.40 and above Wall Street's consensus estimate of $4.39. Under generally accepted accounting principles, Adobe's earnings per share would have been $3.49.

The company's Digital Experience segment had revenue of $1.33 billion, at the high end of Adobe's guidance range of $1.31 billion to $1.33 billion. The Digital Media segment had revenue of $3.91 billion, also beating the company's own guidance of $3.87 billion to $3.9 billion and the Wall Street consensus of $3.89 billion.

"It was an excellent performance from top to bottom," Adobe CFO Dan Durn told Barron's. "We had an excellent first half and carried that momentum into the second half, all based on innovation across our clouds, delivering real productivity gains for our customers through generative AI."

Adobe did not provide specific measures of how its AI efforts have contributed to financial results to date. Durn said the company will do so at some point, but added that it is still early and the company wants to be "very cautious" in this process. He also noted that usage of the company's tools continues to increase, with 9 billion images created using Firefly AI software to date, and more images created in May than in any previous month.

For the next quarter, Adobe expects revenue between $5.33 billion and $5.38 billion, with new digital media net ARR of $460 million. The company expects digital media segment revenue of $3.95 billion to $3.98 billion, and digital experience segment revenue of $1.325 billion to $1.345 billion. Adobe expects adjusted earnings per share of $4.50 to $4.55 next quarter.

Wall Street consensus expectations for the next quarter are for total revenue of $5.4 billion, new digital media net ARR of $458.5 million, digital media revenue of $3.99 billion, digital experience revenue of $1.34 billion, and adjusted EPS of $4.47.

For the full fiscal year, Adobe now expects revenue of $21.4 billion to $21.5 billion, up from its previous forecast of $21.3 billion to $21.5 billion. The company expects annual new digital media net ARR of $1.95 billion, up from $1.9 billion previously.

For the full year, the company now expects adjusted earnings per share of $18 to $18.20, up from $17.60 to $18 previously.

The article is forwarded from: Jinshi Data