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Adobe (ADBE -6%) is trading lower today despite reporting a strong Q4 (Nov) result last night. This digital document giant has now posted five consecutive double digit EPS beats following four small beats, so that is a good trend. Adobe also posted decent revenue upside. Notably, the company posted its first-ever $5 bln quarter. The guidance was more of a problem as Adobe guided revs below expectations for both Q1 (Feb) and FY24. It did provide upside EPS guidance for Q1, but the mid-point of FY24 EPS guidance was below expectations.

• Its Digital Media segment performed well with revenue rising 13% yr/yr (+14% CC) to $3.72 bln, which was nicely above prior guidance of $3.67-3.70 bln. DM is by far Adobe's larger segment, so people watch it closely. Adobe's other major segment is Digital Experience, which allows businesses to manage/track customer experiences using analytics. DE segment revenue grew 10% yr/yr (+11% CC) to $1.27 bln, which was at the high end of its $1.25-1.27 bln prior guidance.
• Adobe says global demand for content is accelerating and continues to be a tailwind for the business. Creative Cloud remains the creativity platform of choice for creators across imaging, photography, design, video, web, animation and 3D. Q4 was a record quarter for Creative Cloud, achieving $3 bln in revenue. Adobe is particularly excited about Firefly, its family of creative generative AI models. Results were helped by the release of three new Firefly models.
• On the Document Cloud side, Adobe says it's a leader in digital documents, powering all common document actions including editing, sharing, reviewing, scanning and signing. Business highlights include Acrobat Web growth, with monthly active users up 70+% yr/yr. Adobe is also seeing strong demand for Acrobat on mobile, with MAU surpassing 100 mln users in Q4.
• In terms of its pending Figma acquisition, which is used by millions of mobile and web developers, the US DOJ and the EU has been scrutinizing the deal based on anti-competitive concerns. Adobe remains excited about the strategic opportunity with Figma. Unfortunately, the EC has provided a preliminary statement of objections, and the CMA has issued provisional findings of competition concerns. Adobe strongly disagrees and is responding. Adobe expects a DOJ decision soon.

Overall, this was another very good quarter for Adobe. However, the lackluster guidance as FY24 gets underway is weighing on the stock today. In particular, the revenue guidance for Q1 was a letdown. Adobe typically guides in-line for revs for the next quarter, so even modest downside is spooking investors a bit. We also think the Figma deal update is also weighing on shares. There appear to be some hurdles on the regulatory review front. Also, we think maybe investors are using this report to lock in some profits given the recent run in the share price (+80% since mid-May).