Adobe Inc. anticipates second-quarter revenue to fall below analysts' projections, citing stiff competition and subdued demand for its AI-integrated creative software. The company's photography, illustration, and video tools have faced challenges amidst a sluggish economy, with both businesses and individuals prioritizing cost-cutting measures. Despite Adobe's efforts to enhance its offerings with AI features, including its popular applications like Acrobat, Photoshop, and Premiere Pro, growth has been constrained.

The emergence of competitors like Stability AI and Midjourney, offering similar AI services such as image generation through text prompts, has intensified market competition for Adobe. The company's second-quarter revenue projection of $5.25 billion to $5.30 billion falls short of analysts' expectations of $5.31 billion, according to data from the London Stock Exchange Group (LSEG). Despite a promising first-quarter revenue increase of over 11% to $5.18 billion, surpassing estimates, Adobe faces ongoing challenges in sustaining growth amidst evolving market dynamics.

In response to these challenges, Adobe announced a new $25 billion stock repurchase program, aiming to shore up investor confidence. The company forecasts second-quarter earnings per share between $4.35 and $4.40, aligning with market expectations. However, Adobe's operating expenses for the first quarter, including a $1 billion termination fee related to the abandoned Figma deal, surged to approximately $3.69 billion. Despite setbacks like the failed acquisition attempt, Adobe remains committed to navigating competitive landscapes and delivering value to shareholders amid economic uncertainties.