Consequently, the San Jose, California company's stock price declined by approximately 8% in extended trading.
The company projects annual revenue between $23.30 billion and $23.55 billion for 2025, falling short of the LSEG-reported consensus estimate of $23.78 billion.
Adobe also expects that fluctuations in foreign exchange rates and its transition to a subscription model will reduce its fiscal 2025 revenue by approximately $200 million.
In response to increasing competition from well-funded startups like Stability AI and Midjourney, Adobe is making substantial investments in AI-driven technologies for image and video generation.
Although Adobe had projected robust growth for the latter half of the year in June, its latest forecast suggests challenges in monetizing its AI initiatives.
Last year, Adobe introduced Firefly, a suite of generative AI models integrated into its various applications and products.
Recently, the firm deployed novel AI-powered software solutions providing clients with image generation capabilities leveraging Adobe's comprehensive stock image library.
Adobe projects first-quarter revenue in the range of $5.63 billion to $5.68 billion, slightly below the anticipated $5.73 billion.
In the fourth quarter, Adobe reported an 11% year-over-year revenue increase, reaching $5.61 billion and exceeding market projections of $5.54 billion.