EX-99.1 2 adbeex991q221.htm EX-99.1 Document

Exhibit 99.1
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Investor Relations Contact
Jonathan Vaas
Adobe
ir@adobe.com
Public Relations Contact
Ashley Levine
Adobe
aslevine@adobe.com
FOR IMMEDIATE RELEASE
Adobe Reports Outstanding Second Quarter Results
Revenue Growth of 23% Year Over Year Drives Record $1.99 Billion Cash Flows from Operations
SAN JOSE, Calif. - June 17, 2021 - Adobe (Nasdaq:ADBE) today reported financial results for its second quarter fiscal year 2021 ended June 4, 2021.
Second Quarter Fiscal Year 2021 Financial Highlights
•Adobe achieved quarterly revenue of $3.84 billion in its second quarter of fiscal year 2021, which represents 23 percent year-over-year growth. Diluted earnings per share was $2.32 on a GAAP basis and $3.03 on a non-GAAP basis.
•Digital Media segment revenue was $2.79 billion, which represents 25 percent year-over-year growth. Creative revenue grew to $2.32 billion, representing 24 percent year-over-year growth. Document Cloud revenue was $469 million, representing 30 percent year-over-year growth.
•Digital Media Annualized Recurring Revenue (“ARR”) increased $518 million quarter-over-quarter to $11.21 billion exiting the quarter. Creative ARR grew to $9.53 billion and Document Cloud ARR grew to $1.68 billion.
•Digital Experience segment revenue was $938 million, representing 21 percent year-over-year growth. Digital Experience subscription revenue was $817 million, representing 25 percent year-over-year growth.
•GAAP operating income in the second quarter was $1.41 billion, and non-GAAP operating income was $1.76 billion. GAAP net income was $1.12 billion, and non-GAAP net income was $1.46 billion.
•Cash flows from operations were a record $1.99 billion.
•Remaining Performance Obligations (“RPO”) exiting the quarter were $12.23 billion, representing 23 percent year-over-year growth.
•Adobe repurchased approximately 2.1 million shares during the quarter.
A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.
Executive Quotes
“Adobe had an outstanding second quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform work, learn and play in a digital-first world,” said Shantanu Narayen, president and CEO, Adobe. “Our innovative product roadmap and unparalleled leadership in creativity, digital documents and customer experience management position us for continued success in 2021 and beyond.”
“Adobe delivered strong Digital Media annualized recurring revenue and Digital Experience bookings, as well as record cash flows from operations in Q2,” said John Murphy, executive vice president and CFO, Adobe. “The large market opportunity and momentum we are seeing across our creative, document and customer experience management businesses position us well to deliver another record year.”


Adobe Provides Third Quarter Financial Targets
Adobe today is providing third quarter financial targets factoring current macroeconomic conditions and expected return of summer seasonality associated with the months of June, July and August.
The following table summarizes Adobe’s third quarter fiscal year 2021 targets:
Total revenue~$3.88 billion
Digital Media segment revenue~22 percent year-over-year growth
Digital Media annualized recurring revenue (ARR)~$440 million of net new ARR
Digital Experience segment revenue~21 percent year-over-year growth
Digital Experience subscription revenue~25 percent year-over-year growth
Tax rate GAAP: ~19 percentNon-GAAP: ~16 percent
Share count ~480 million shares
Earnings per share GAAP: ~$2.27Non-GAAP: ~$3.00
A reconciliation between GAAP and non-GAAP targets is provided at the end of this press release.
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Adobe to Webcast Second Quarter Earnings Conference Call
Adobe will webcast its second quarter fiscal year 2021 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: www.adobe.com/ADBE. Earnings documents, including Adobe management’s prepared conference call remarks with slides and an investor datasheet are posted to Adobe’s investor relations website in advance of the conference call for reference. A reconciliation between GAAP and non-GAAP earnings results and financial targets is also provided on the website.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to business momentum, the effects of the COVID-19 pandemic on our business and results of operations, market trends, current macroeconomic conditions, customer success, revenue, operating margin, seasonality, annualized recurring revenue, tax rate on a GAAP and non-GAAP basis, earnings per share on a GAAP and non-GAAP basis, and share count, all of which involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure to compete effectively, failure to develop, acquire, market and offer products and services that meet customer requirements, introduction of new technology, information security and privacy, potential interruptions or delays in hosted services provided by us or third parties, macroeconomic conditions and economic impact of the COVID-19 pandemic, risks associated with cyber-attacks, complex sales cycles, risks related to the timing of revenue recognition from our subscription offerings, fluctuations in subscription renewal rates, failure to realize the anticipated benefits of past or future acquisitions, failure to effectively manage critical strategic third-party business relationships, changes in accounting principles and tax regulations, uncertainty in the financial markets and economic conditions in the countries where we operate, and other various risks associated with being a multinational corporation. For a discussion of these and other risks and uncertainties, please refer to Adobe’s Annual Report on Form 10-K for our fiscal year 2020 ended Nov. 27, 2020, and Adobe's Quarterly Reports on Form 10-Q issued in fiscal year 2021.
The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe’s Quarterly Report on Form 10-Q for our quarter ended June 4, 2021, which Adobe expects to file in late June 2021. Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.
About Adobe
Adobe is changing the world through digital experiences. For more information, visit www.adobe.com.
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©2021 Adobe. All rights reserved. Adobe, Creative Cloud, Document Cloud and the Adobe logo are either registered trademarks or trademarks of Adobe (or one of its subsidiaries) in the United States and/or other countries. All other trademarks are the property of their respective owners.










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Condensed Consolidated Statements of Income
(In millions, except per share data; unaudited)
Three Months EndedSix Months Ended
June 4, 2021May 29, 2020June 4, 2021May 29, 2020
Revenue:
Subscription$3,520 $2,831 $7,104 $5,563 
Product153 128 308 271 
Services and other162 169 328 385 
Total revenue3,835 3,128 7,740 6,219 
Cost of revenue:
Subscription328 269 652 543 
Product9 9 19 16 
Services and other107 137 220 308 
Total cost of revenue444 415 891 867 
Gross profit3,391 2,713 6,849 5,352 
Operating expenses:
Research and development612 532 1,232 1,064 
Sales and marketing1,073 901 2,122 1,758 
General and administrative256 224 546 495 
Amortization of intangibles44 40 89 82 
Total operating expenses1,985 1,697 3,989 3,399 
Operating income1,406 1,016 2,860 1,953 
Non-operating income (expense):
Interest expense(28)(28)(58)(61)
Investment gains (losses), net8 — 13 (3)
Other income (expense), net— 12 4 30 
Total non-operating income (expense), net(20)(16)(41)(34)
Income before income taxes1,386 1,000 2,819 1,919 
Provision for (benefit from) income taxes270 (100)442 (136)
Net income$1,116 $1,100 $2,377 $2,055 
Basic net income per share$2.34 $2.28 $4.97 $4.26 
Shares used to compute basic net income per share478 481 478 482 
Diluted net income per share$2.32 $2.27 $4.93 $4.23 
Shares used to compute diluted net income per share481 485 482 486 

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Condensed Consolidated Balance Sheets
(In millions; unaudited)
June 4, 2021November 27, 2020
ASSETS
Current assets:
Cash and cash equivalents$4,250 $4,478 
Short-term investments1,518 1,514 
Trade receivables, net of allowances for doubtful accounts of $19 and $21, respectively
1,477 1,398 
Prepaid expenses and other current assets833 756 
Total current assets8,078 8,146 
Property and equipment, net1,573 1,517 
Operating lease right-of-use assets, net458 487 
Goodwill11,859 10,742 
Other intangibles, net1,641 1,359 
Deferred income taxes1,168 1,370 
Other assets805 663 
Total assets$25,582 $24,284 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade payables$312 $306 
Accrued expenses1,538 1,422 
Deferred revenue4,144 3,629 
Income taxes payable55 63 
Operating lease liabilities96 92 
Total current liabilities6,145 5,512 
Long-term liabilities:
Debt4,120 4,117 
Deferred revenue139 130 
Income taxes payable510 529 
Deferred income taxes80 10 
Operating lease liabilities477 499 
Other liabilities259 223 
Total liabilities11,730 11,020 
Stockholders’ equity:
Preferred stock— — 
Common stock— — 
Additional paid-in-capital7,877 7,357 
Retained earnings21,538 19,611 
Accumulated other comprehensive income (loss)(121)(158)
Treasury stock, at cost(15,442)(13,546)
Total stockholders’ equity13,852 13,264 
Total liabilities and stockholders’ equity$25,582 $24,284 
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Condensed Consolidated Statements of Cash Flows
(In millions; unaudited)
Three Months Ended
June 4, 2021May 29, 2020
Cash flows from operating activities:
Net income$1,116 $1,100 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion194 188 
Stock-based compensation260 227 
Unrealized investment (gains) losses, net(7)(1)
Other non-cash adjustments110 (137)
Changes in deferred revenue(2)(154)
Changes in other operating assets and liabilities317 (39)
Net cash provided by operating activities1,988 1,184 
Cash flows from investing activities:
Purchases, sales and maturities of short-term investments, net(10)176 
Purchases of property and equipment(95)(96)
Purchases and sales of long-term investments, intangibles and other assets, net(2)— 
Net cash provided by (used for) investing activities(107)80 
Cash flows from financing activities:
Repurchases of common stock(1,000)(850)
Taxes paid related to net share settlement of equity awards, net of proceeds from treasury stock re-issuances(89)(53)
Other financing activities, net9 2 
Net cash used for financing activities(1,080)(901)
Effect of exchange rate changes on cash and cash equivalents(3)(7)
Net increase in cash and cash equivalents798 356 
Cash and cash equivalents at beginning of period3,452 2,688 
Cash and cash equivalents at end of period$4,250 $3,044 



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Non-GAAP Results
(In millions, except per share data)
The following table shows Adobe’s GAAP results reconciled to non-GAAP results included in this release.
Three Months Ended
June 4,
2021		May 29,
2020		March 5,
2021
Operating income:
GAAP operating income$1,406 $1,016 $1,454 
Stock-based and deferred compensation expense269 227 286 
Amortization of intangibles87 92 89 
Non-GAAP operating income$1,762 $1,335 $1,829 
Net income:
GAAP net income$1,116 $1,100 $1,261 
Stock-based and deferred compensation expense269 227 286 
Amortization of intangibles87 92 89 
Investment (gains) losses, net(8)— (5)
Income tax adjustments(8)(232)(116)
Non-GAAP net income$1,456 $1,187 $1,515 
Diluted net income per share:
GAAP diluted net income per share$2.32 $2.27 $2.61 
Stock-based and deferred compensation expense0.56 0.47 0.59 
Amortization of intangibles0.18 0.19 0.19 
Investment (gains) losses, net(0.02)— (0.01)
Income tax adjustments(0.01)(0.48)(0.24)
Non-GAAP diluted net income per share$3.03 $2.45 $3.14 
Shares used in computing diluted net income per share
481 485 483 

The following table shows Adobe’s GAAP second quarter fiscal year 2021 tax rate reconciled to the non-GAAP tax rate included in this release.
Second Quarter
Fiscal 2021
Effective income tax rate:
GAAP effective income tax rate19.5 %
Income tax adjustments(2.0)
Stock-based and deferred compensation expense(1.1)
Amortization of intangibles(0.4)
Non-GAAP effective income tax rate16.0 %








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Reconciliation of GAAP to Non-GAAP Financial Targets
(Shares in millions)
The following tables show Adobe's third quarter fiscal year 2021 financial targets reconciled to the non-GAAP financial targets included in this release.
Third Quarter
Fiscal 2021
Diluted net income per share:
GAAP diluted net income per share$2.27 
Stock-based and deferred compensation expense0.60 
Amortization of intangibles0.17 
Income tax adjustments(0.04)
Non-GAAP diluted net income per share$3.00 
Shares used to compute diluted net income per share480 
Third Quarter
Fiscal 2021
Effective income tax rate:
GAAP effective income tax rate19.0 %
Stock-based and deferred compensation expense(1.4)
Amortization of intangibles(0.1)
Income tax adjustments(1.5)
Non-GAAP effective income tax rate16.0 %


Use of Non-GAAP Financial Information
Adobe continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Adobe uses non-GAAP financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. Adobe's management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adobe presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Adobe's operating results. Adobe believes these non-GAAP financial measures are useful because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. This allows institutional investors, the analyst community and others to better understand and evaluate our operating results and future prospects in the same manner as management.
Adobe's management believes it is useful for itself and investors to review, as applicable, both GAAP information as well as non-GAAP measures, which may exclude items such as stock-based and deferred compensation expenses, amortization of intangibles, investment gains and losses, the related tax impact of all of these items, income tax adjustments, and the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes. Adobe uses these non-GAAP measures in order to assess the performance of Adobe's business and for planning and forecasting in subsequent periods. Whenever such a non-GAAP measure is used, Adobe provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed above.
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