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    ADBE   US00724F1012

ADOBE INC.

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Adobe : Q3 FY2021 earnings press release

09/21/2021 | 04:12pm EDT

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 percent

Non-GAAP: ~16 percent

Share count

~480 million shares

Earnings per share

GAAP: ~$2.52

Non-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.

###

©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.

2

Condensed Consolidated Statements of Income (In millions, except per share data; unaudited)

Three Months Ended

Nine Months Ended

September 3, 2021

August 28, 2020

September 3, 2021

August 28, 2020

Revenue:

Subscription .......................................................................

$

3,657

$

2,948

$

10,761

$

8,511

Product...............................................................................

119

109

427

380

Services and other..............................................................

159

168

487

553

Total revenue................................................................

3,935

3,225

11,675

9,444

Cost of revenue:

Subscription .......................................................................

344

282

996

825

Product...............................................................................

10

10

29

26

Services and other..............................................................

113

135

333

443

Total cost of revenue.....................................................

467

427

1,358

1,294

Gross profit............................................................................

3,468

2,798

10,317

8,150

Operating expenses:

Research and development ...............................................

651

566

1,883

1,630

Sales and marketing...........................................................

1,068

892

3,190

2,650

General and administrative................................................

265

230

811

725

Amortization of intangibles................................................

43

41

132

123

Total operating expenses..............................................

2,027

1,729

6,016

5,128

Operating income .................................................................

1,441

1,069

4,301

3,022

Non-operating income (expense):

Interest expense.................................................................

(27)

(28)

(85)

(89)

Investment gains (losses), net............................................

7

10

20

7

Other income (expense), net .............................................

(3)

9

1

39

Total non-operating income (expense), net .................

(23)

(9)

(64)

(43)

Income before income taxes.................................................

1,418

1,060

4,237

2,979

Provision for (benefit from) income taxes ............................

206

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 share ...........

477

480

478

481

Diluted net income per share ...............................................

$

2.52

$

1.97

$

7.45

$

6.20

Shares used to compute diluted net income per share ........

481

485

481

486

3

Condensed Consolidated Balance Sheets (In millions; unaudited)

September 3, 2021

November 27, 2020

ASSETS

Current assets:

Cash and cash equivalents ................................................................................................................

$

4,623

$

4,478

Short-terminvestments.....................................................................................................................

1,541

1,514

Trade receivables, net of allowances for doubtful accounts of $17 and $21, respectively ..................

1,545

1,398

Prepaid expenses and other current assets.......................................................................................

910

756

Total current assets ......................................................................................................................

8,619

8,146

Property and equipment, net ...............................................................................................................

1,629

1,517

Operating lease right-of-useassets, net................................................................................................

452

487

Goodwill ...............................................................................................................................................

11,838

10,742

Other intangibles, net...........................................................................................................................

1,557

1,359

Deferred income taxes .........................................................................................................................

1,190

1,370

Other assets..........................................................................................................................................

859

663

Total assets...................................................................................................................................

$

26,144

$

24,284

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Trade payables ..................................................................................................................................

$

331

$

306

Accrued expenses..............................................................................................................................

1,450

1,422

Deferred revenue ..............................................................................................................................

4,243

3,629

Income taxes payable........................................................................................................................

70

63

Operating lease liabilities ..................................................................................................................

97

92

Total current liabilities..................................................................................................................

6,191

5,512

Long-term liabilities:

Debt...................................................................................................................................................

4,122

4,117

Deferred revenue ..............................................................................................................................

142

130

Income taxes payable........................................................................................................................

533

529

Deferred income taxes ......................................................................................................................

7

10

Operating lease liabilities ..................................................................................................................

466

499

Other liabilities ..................................................................................................................................

269

223

Total liabilities ..............................................................................................................................

11,730

11,020

Stockholders' equity:

Preferred stock ..................................................................................................................................

-

-

Common stock ..................................................................................................................................

-

-

Additional paid-in-capital..................................................................................................................

8,209

7,357

Retained earnings..............................................................................................................................

22,750

19,611

Accumulated other comprehensive income (loss) ...........................................................................

(131)

(158)

Treasury stock, at cost .......................................................................................................................

(16,414)

(13,546)

Total stockholders' equity ............................................................................................................

14,414

13,264

Total liabilities and stockholders' equity ......................................................................................

$

26,144

$

24,284

4

Condensed Consolidated Statements of Cash Flows (In millions; unaudited)

Three Months Ended

September 3, 2021

August 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 accretion......................................................................................

193

191

Stock-basedcompensation............................................................................................................

280

232

Unrealized investment (gains) losses, net......................................................................................

(4)

(9)

Other non-cashadjustments .........................................................................................................

(72)

25

Changes in deferred revenue.........................................................................................................

102

(12)

Changes in other operating assets and liabilities...........................................................................

(296)

54

Net cash provided by operating activities................................................................................

1,415

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, net...........................................................................................................

20

(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 equivalents..........................................................................................

373

723

Cash and cash equivalents at beginning of period .............................................................................

4,250

3,044

Cash and cash equivalents at end of period .......................................................................................

$

4,623

$

3,767

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Adobe Inc. published this content on 21 September 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 September 2021 20:11:08 UTC.


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