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Adobe Lifts 2025 Revenue and Profit Outlook on AI and Design Software Demand

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Adobe (ADBE.O) raised its fiscal 2025 revenue and profit forecasts on Thursday, underscoring resilient demand for its creative software suite and growing monetization of its AI offerings. Shares rose about 3% in extended trading.

Forecast Upgrades

  • Revenue: Now expected at $23.65–$23.70 billion, up from $23.50–$23.60 billion.

  • Adjusted EPS: Raised to $20.80–$20.85, compared with prior guidance of $20.50–$20.70.

  • Q4 Guidance: Revenue of $6.08–$6.13 billion (in line with estimates) and EPS of $5.35–$5.40 (slightly above consensus $5.34).

Drivers of Growth

  • Adobe’s core products — Photoshop, Illustrator, InDesign, Acrobat — remain staples for enterprises, students, and creatives.

  • New user subscriptions continue to drive momentum, CFO Dan Durn told Reuters.

  • The company is leaning on its AI tool Firefly, which allows text-to-video and text-to-image generation, integrated into Adobe’s design platforms.

Challenges Ahead

  • Despite progress, Adobe’s shares are down 21% year-to-date, reflecting investor caution.

  • Analysts, including Jefferies, remain cautious about Firefly adoption, suggesting near-term revenue acceleration may be limited.

  • Competition from smaller, agile rivals like Figma is intensifying in the design collaboration space.

Recent Performance

  • Q3 revenue came in at $5.99 billion, topping estimates of $5.91 billion.

  • Adobe is under pressure to show returns on heavy AI investments, with investors watching closely how effectively Firefly translates into recurring revenue.

Chipmaker IQE Explores Sale After Slashing Earnings Guidance

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IQE (IQE.L), the British semiconductor materials maker supplying Apple’s iPhone facial recognition sensors, said Monday it is considering a potential sale after lowering its earnings outlook amid continued weakness in the smartphone market. The announcement sent its shares down more than 12% to a 16-year low.

The company now expects core earnings between a £5M loss and a £2M profit, compared with earlier guidance of £7.4M–£10M profit. Revenue is forecast at £90M–£100M, down from the previous range of £115.1M–£123M, citing contract delays in wireless and photonics. By comparison, IQE posted £8.1M profit on £118M revenue last year.

IQE said it has been approached by an undisclosed party regarding a potential acquisition, expanding its ongoing strategic review to include a sale. The company is also pursuing the previously announced sale of its Taiwan operations, with talks underway with prospective buyers.

The group, which has facilities in the U.K., U.S., and Taiwan, has struggled under declining smartphone demand and high levies on semiconductors. Data from IDC shows global smartphone sales grew just 1% in Q2, underscoring the headwinds for suppliers.

IQE has been working to cut debt and shift production to the U.S., hoping to better align with demand trends and navigate geopolitical trade pressures. But with shares tumbling to 7.64 pence, investors are questioning whether a sale is now the most viable path forward.