EX-99.1 2 adbeex991q321.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 Record Revenue
Remaining Performance Obligations exiting the quarter were $12.6 billion, up 22 percent year over year
SAN JOSE, Calif. - Sept. 21, 2021 - Adobe (Nasdaq:ADBE) today reported financial results for its third quarter fiscal year 2021 ended Sept. 3, 2021.
Third Quarter Fiscal Year 2021 Financial Highlights
•Adobe achieved record revenue of $3.94 billion in its third quarter of fiscal year 2021, which represents 22 percent year-over-year growth.
•GAAP diluted earnings per share was $2.52, representing 28 percent year-over-year growth, and non-GAAP diluted earnings per share was $3.11, representing 21 percent year-over-year growth.
•Digital Media segment revenue was $2.87 billion, which represents 23 percent year-over-year growth. Creative revenue grew to $2.37 billion, representing 21 percent year-over-year growth. Document Cloud revenue was $493 million, representing 31 percent year-over-year growth.
•Digital Media Annualized Recurring Revenue (“ARR”) increased $455 million quarter over quarter to $11.67 billion exiting the quarter. Creative ARR grew to $9.87 billion and Document Cloud ARR grew to $1.79 billion.
•Digital Experience segment revenue was $985 million, representing 26 percent year-over-year growth. Digital Experience subscription revenue was $864 million, representing 29 percent year-over-year growth.
•GAAP operating income in the third quarter was $1.44 billion, and non-GAAP operating income was $1.81 billion. GAAP net income was $1.21 billion, and non-GAAP net income was $1.50 billion.
•Cash flows from operations were $1.42 billion.
•Remaining Performance Obligations (“RPO”) exiting the quarter were $12.63 billion, representing 22 percent year-over-year growth.
•Adobe repurchased approximately 1.7 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 another outstanding quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform storytelling, learning and conducting business in a digital-first world,” said Shantanu Narayen, president and CEO, Adobe. “Our talented employees, category-defining innovation and product leadership uniquely position us for continued momentum and success.”
“We drove record revenues and strong profitability in the quarter, demonstrating our ability to succeed in a dynamic environment,” said John Murphy, executive vice president and CFO, Adobe. “Our operational rigor and data-driven insights enable us to execute while we continue to invest across massive market opportunities.”


Adobe Provides Fourth Quarter Financial Targets
Adobe today is providing fourth quarter financial targets factoring current macroeconomic conditions and expected year-end seasonal strength.
The following table summarizes Adobe’s fourth quarter fiscal year 2021 targets:
Total revenue~$4.07 billion
Digital Media segment revenue~20 percent year-over-year growth
Digital Media annualized recurring revenue (ARR)~$550 million of net new ARR
Digital Experience segment revenue~22 percent year-over-year growth
Digital Experience subscription revenue~26 percent year-over-year growth
Tax rate GAAP: ~17 percentNon-GAAP: ~16 percent
Share count ~480 million shares
Earnings per share GAAP: ~$2.52Non-GAAP: ~$3.18
A reconciliation between GAAP and non-GAAP targets is provided at the end of this press release.
Adobe to Webcast Third Quarter Earnings Conference Call
Adobe will webcast its third 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.
Adobe Announces Fourth Quarter Earnings Call and Financial Analyst Meeting
Adobe will host its fourth quarter and fiscal year 2021 earnings conference call and financial analyst meeting online on Dec. 16, at 8:00 a.m. Pacific Time. During the meeting, Adobe will provide an overview of its strategy and financial targets for fiscal year 2022.
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 Sept. 3, 2021, which Adobe expects to file in late Sept. 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 EndedNine Months Ended
September 3, 2021August 28, 2020September 3, 2021August 28, 2020
Revenue:
Subscription$3,657 $2,948 $10,761 $8,511 
Product119 109 427 380 
Services and other159 168 487 553 
Total revenue3,935 3,225 11,675 9,444 
Cost of revenue:
Subscription344 282 996 825 
Product10 10 29 26 
Services and other113 135 333 443 
Total cost of revenue467 427 1,358 1,294 
Gross profit3,468 2,798 10,317 8,150 
Operating expenses:
Research and development651 566 1,883 1,630 
Sales and marketing1,068 892 3,190 2,650 
General and administrative265 230 811 725 
Amortization of intangibles43 41 132 123 
Total operating expenses2,027 1,729 6,016 5,128 
Operating income1,441 1,069 4,301 3,022 
Non-operating income (expense):
Interest expense(27)(28)(85)(89)
Investment gains (losses), net7 10 20 7 
Other income (expense), net(3)9 1 39 
Total non-operating income (expense), net(23)(9)(64)(43)
Income before income taxes1,418 1,060 4,237 2,979 
Provision for (benefit from) income taxes206 105 648 (31)
Net income$1,212 $955 $3,589 $3,010 
Basic net income per share$2.54 $1.99 $7.51 $6.25 
Shares used to compute basic net income per share477 480 478 481 
Diluted net income per share$2.52 $1.97 $7.45 $6.20 
Shares used to compute diluted net income per share481 485 481 486 

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Condensed Consolidated Balance Sheets
(In millions; unaudited)
September 3, 2021November 27, 2020
ASSETS
Current assets:
Cash and cash equivalents$4,623 $4,478 
Short-term investments1,541 1,514 
Trade receivables, net of allowances for doubtful accounts of $17 and $21, respectively
1,545 1,398 
Prepaid expenses and other current assets910 756 
Total current assets8,619 8,146 
Property and equipment, net1,629 1,517 
Operating lease right-of-use assets, net452 487 
Goodwill11,838 10,742 
Other intangibles, net1,557 1,359 
Deferred income taxes1,190 1,370 
Other assets859 663 
Total assets$26,144 $24,284 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade payables$331 $306 
Accrued expenses1,450 1,422 
Deferred revenue4,243 3,629 
Income taxes payable70 63 
Operating lease liabilities97 92 
Total current liabilities6,191 5,512 
Long-term liabilities:
Debt4,122 4,117 
Deferred revenue142 130 
Income taxes payable533 529 
Deferred income taxes7 10 
Operating lease liabilities466 499 
Other liabilities269 223 
Total liabilities11,730 11,020 
Stockholders’ equity:
Preferred stock— — 
Common stock— — 
Additional paid-in-capital8,209 7,357 
Retained earnings22,750 19,611 
Accumulated other comprehensive income (loss)(131)(158)
Treasury stock, at cost(16,414)(13,546)
Total stockholders’ equity14,414 13,264 
Total liabilities and stockholders’ equity$26,144 $24,284 
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Condensed Consolidated Statements of Cash Flows
(In millions; unaudited)
Three Months Ended
September 3, 2021August 28, 2020
Cash flows from operating activities:
Net income$1,212 $955 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion193 191 
Stock-based compensation280 232 
Unrealized investment (gains) losses, net(4)(9)
Other non-cash adjustments(72)25 
Changes in deferred revenue102 (12)
Changes in other operating assets and liabilities(296)54 
Net cash provided by operating activities1,415 1,436 
Cash flows from investing activities:
Purchases, sales and maturities of short-term investments, net(28)(191)
Purchases of property and equipment(95)(126)
Purchases and sales of long-term investments, intangibles and other assets, net(10)2 
Net cash used for investing activities(133)(315)
Cash flows from financing activities:
Repurchases of common stock(1,000)(500)
Proceeds from treasury stock re-issuances, net of taxes paid related to net share
settlement of equity awards		81 103 
Other financing activities, net20 (17)
Net cash used for financing activities(899)(414)
Effect of exchange rate changes on cash and cash equivalents(10)16 
Net increase in cash and cash equivalents373 723 
Cash and cash equivalents at beginning of period4,250 3,044 
Cash and cash equivalents at end of period$4,623 $3,767 



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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
September 3,
2021		August 28,
2020		June 4,
2021
Operating income:
GAAP operating income$1,441 $1,069 $1,406 
Stock-based and deferred compensation expense287 244 269 
Amortization of intangibles83 90 87 
Non-GAAP operating income$1,811 $1,403 $1,762 
Net income:
GAAP net income$1,212 $955 $1,116 
Stock-based and deferred compensation expense287 244 269 
Amortization of intangibles83 90 87 
Investment (gains) losses, net(7)(10)(8)
Income tax adjustments(79)(33)(8)
Non-GAAP net income$1,496 $1,246 $1,456 
Diluted net income per share:
GAAP diluted net income per share$2.52 $1.97 $2.32 
Stock-based and deferred compensation expense0.60 0.50 0.56 
Amortization of intangibles0.17 0.19 0.18 
Investment (gains) losses, net(0.01)(0.02)(0.02)
Income tax adjustments(0.17)(0.07)(0.01)
Non-GAAP diluted net income per share$3.11 $2.57 $3.03 
Shares used in computing diluted net income per share
481 485 481 

The following table shows Adobe’s GAAP third quarter fiscal year 2021 tax rate reconciled to the non-GAAP tax rate included in this release.
Third Quarter
Fiscal 2021
Effective income tax rate:
GAAP effective income tax rate14.5 %
Income tax adjustments2.5 
Stock-based and deferred compensation expense(0.8)
Amortization of intangibles(0.2)
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 fourth quarter fiscal year 2021 financial targets reconciled to the non-GAAP financial targets included in this release.
Fourth Quarter
Fiscal 2021
Diluted net income per share:
GAAP diluted net income per share$2.52 
Stock-based and deferred compensation expense0.58 
Amortization of intangibles0.17 
Income tax adjustments(0.09)
Non-GAAP diluted net income per share$3.18 
Shares used to compute diluted net income per share480 
Fourth Quarter
Fiscal 2021
Effective income tax rate:
GAAP effective income tax rate17.0 %
Stock-based and deferred compensation expense(0.9)
Amortization of intangibles(0.1)
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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