Adobe drops 11% as software maker says halting sales in Russia will cut annual revenue

• Shares of Adobe fell 11% on Wednesday following the software maker’s revenue warning for fiscal 2022.
• Adobe sees annual revenue drop by $75 million after halting sales in Russia and Belarus.
• The company continues to provide digital media services in Ukraine.

Adobe stock fell sharply on Wednesday after the maker of Photoshop and other creativity software products said suspending sales in Russia would affect its revenue, a move after Moscow launched a war against Ukraine. .

Shares of Adobe fell 11% to $416.47, before crossing the intraday bearish rate to 9.4%. The overall large-cap tech stock went into a bear market on the Nasdaq Composite this year, after the stock was down nearly 18% through Tuesday’s regular session in 2022.

Revenue is expected to drop by $75 million in fiscal 2022, the company said late on Tuesday in its fiscal first-quarter report. Adobe said in early March that Russia’s attack on Ukraine prompted it to immediately halt new sales of its products and services in Russia and Belarus. It also ended access to its Creative Cloud, Document Cloud and Experience Cloud products to Russian government-controlled media outlets.

Adobe is still providing digital media services in Ukraine, but digital media is estimated to cut $12 million in annual recurring revenue.

“International events and widespread uncertainty created a murky picture for FY22, particularly exiting Russia and Belarus,” Goldman Sachs analyst Kash Rangan said in a research note late Tuesday. “While we acknowledge the effects of the Ukraine/Russia conflict … we note that these changes are less operational changes and demand remains strong in various market segments.”

Looking at Adobe’s recent market performance, Goldman lowered its price target from $710 to $605. It said Adobe is still on track to double revenue over the long term, potentially leading the company to enter the top ranks of software makers and reach at least $40 billion in revenue.

For its fiscal first quarter, Adobe posted adjusted earnings per share of $3.37, 3 cents ahead of the FactSet consensus forecast. Revenue reached $4.26 billion, slightly ahead of expectations of $4.24 billion.

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