Shares of Adobe Stock are gaining strength as the software company beats estimates for the second quarter

Digital media and marketing software company Adobe (ADBE) late Thursday topped analyst estimates for its fiscal second quarter and raised its full-year guidance. Adobe shares rose in extended trading.

The San Jose, California-based company earned an adjusted $4.48 per share on sales of $5.31 billion in the quarter ended May 31. Analysts polled by FactSet expected earnings of $4.39 per share on sales of $5.29 billion. Year-over-year, Adobe’s profits increased by 15% and sales by 10%.

Adobe’s second-quarter results “were driven by strong growth in Creative Cloud, Document Cloud and Experience Cloud,” CEO Shantanu Narayen said in a press release.

He added: “Our highly differentiated approach to AI and the delivery of innovative products are attracting more customers and providing greater value to existing users.”

ADBE shares are rising

Adobe shares jumped more than 14% to 524.52 in after-hours trading today. During Thursday’s regular session, ADBE shares fell 0.3% to close at 458.74.

Adobe stock has lagged in 2024. Year to date through Thursday’s close, ADBE shares are down 23%.

“Adobe delivered outstanding results in the second quarter, enabling us to raise our annual goals,” said Dan Durn, CFO, in a statement. “Our market-leading products, strong execution and world-class financial discipline position us well for the second half of 2024 and beyond.”

However, sales tips lag in views

For the full fiscal year, Adobe now expects to earn adjusted earnings of $18.10 per share on sales of $21.45 billion. This is based on the midpoint of his guidance. Analysts had been modeling Adobe earnings of $18 per share on sales of $21.47 billion.

For its fiscal third quarter, Adobe projected adjusted earnings of $4.53 per share on sales of $5.36 billion. These numbers form the midpoint of his projections. Wall Street expected earnings of $4.47 per share on sales of $5.4 billion, according to FactSet.

Downgraded version of Adobe Stock

On Monday, Melius Research analyst Ben Reitzes downgraded Adobe stock to hold from buy. He said Adobe shares may tread water “for some time.”

Reitzes questioned whether Adobe would be able to monetize its generative AI tools aimed at creative and marketing professionals.

Adobe also faces increased competition from upstart rivals such as Canva and Figma.

Adobe stock has an average IBD Composite Rating of 51 out of 99, according to IBD Stock Checkup.

The IBD Composite Rating is a combination of key fundamental and technical indicators that help investors evaluate a stock’s strengths. Top growth stocks have a Composite Rating of 90 or higher.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more articles on consumer technology, software and semiconductor stocks.

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