Adobe guidance will weigh on share multiples, says Oppenheimer

Oppenheimer says Adobe reported a strong fiscal Q3 results with upside to estimates, the fastest net new Digital Media annual recurring revenue growth in thirteen quarters, and five straight quarterly record operating margins. However, these positives were offset by soft Q4 net new Digital Media ARR guidance, partially from some expected Q4 deals closing in Q3 and Cyber Monday landing in Q1 of fiscal 2025 this year, the analyst tells investors in a research note. Opco believes the guidance suggests that the upside to the original fiscal 2024 net new ARR guidance will be at a lower magnitude than last year, and raises concerns that the reacceleration in the key bookings metric this quarter plus upside potential to the metric in Q4 won’t drive a meaningful revenue reacceleration next fiscal year. This development will weigh on the stock’s multiples, the firm contends.