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Adobe CEO Blames Time for Poor Forecast Following Stock Drop

Adobe chairman and chief executive officer Shantanu Narayen on Thursday expressed confidence in the company’s future, telling CNBC’s Jim Kramer that the software maker’s weaker-than-expected forecasts do not signal problems for its business.

Narayen’s comments on Mad Money came shortly after Adobe fell 10.2% in Thursday’s session as investors reacted negatively to financial forecasts of the company for the first quarter of fiscal year 2022 and full year.

“The core business remains as healthy as it was,” Narayen said, referring to the 2022 targets. “I think when you get $ 15 billion [revenue] companies, the only thing people may not have fully understood is how foreign exchange is moving against us, but the core business is still extremely strong. ”

The US dollar has been strengthening against a basket of foreign currencies for several months, which could have a huge impact on companies that do a significant portion of their business abroad. FactSet estimates that the US accounts for just over 52% of Adobe’s revenues.

Adobe projects revenue of $ 4.23 billion for the first fiscal quarter, which will run through February 2022. Wall Street analysts estimated revenue at $ 4.34 billion in the first quarter, according to Refinitiv. Adobe predicts $ 17.9 billion in annual revenue, less than $ 18.16 billion analysts expected.

Narayen also said Adobe investors should keep in mind that the company’s first quarter will be 13 weeks this year, up from 14 weeks in fiscal 2021. Overall, Adobe is returning to a 52-week fiscal year after having an extra week in the 2021 calendar.

“When you do quarterly comparisons, you have to remember that it is 14 weeks versus 13 weeks, and as I mentioned earlier, there is some foreign exchange, and perhaps we could explain that. [better]and also … grinding the acquisition, ”Narayen said.

After looking at these variables and looking at the ongoing digitization of society, Narayen said he likes where Adobe is. In addition to its well-known Creative Cloud programs like Photoshop, Adobe also offers a range of marketing and e-commerce tools.

“Digital technology will change everything we know about how we live today, whether it be work, play or play,” he said. “All three of our businesses are actually at the best point of what can happen in this particular space.”

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