StockSelector.com
  Research, Select, & Monitor Monday, October 23, 2017 10:20:00 PM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
Adobe Systems, Inc.$172.16($3.48)(1.98%)

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 Adobe Reports Record Revenue
   Thursday, March 16, 2017 4:05:00 PM ET

Adobe (ADBE ) today reported financial results for its first quarter fiscal year 2017 ended March 3, 2017.

Financial Highlights

-- Adobe achieved record quarterly revenue of $1.68 billion in its first quarter of fiscal year 2017.

-- Diluted earnings per share was $0.80 on a GAAP-basis, and $0.94 on a non-GAAP basis.

-- Digital Media segment revenue was $1.14 billion, with record Creative revenue growing to $942 million.

-- Strong Creative Cloud and Document Cloud adoption and retention drove Digital Media Annualized Recurring Revenue ("ARR") to $4.25 billion exiting the quarter, a quarter-over-quarter increase of $265 million.

-- Adobe Marketing Cloud achieved record revenue of $477 million.

-- Operating income grew 52 percent and net income grew 57 percent year-over-year on a GAAP-basis; operating income grew 40 percent and net income grew 42 percent year-over-year on a non-GAAP basis.

-- Cash flow from operations was a record $730 million, and deferred revenue grew to approximately $2.1 billion.

-- The company repurchased approximately 2.2 million shares during the quarter, returning $238 million of cash to stockholders.

A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.

Executive Quotes

"Whether you’re a designer, student, enterprise or government agency, reimagining your customer experience has become a critical part of every digital transformation strategy," said Shantanu Narayen, president and CEO of Adobe. "Adobe’s mission to help our customers design and deliver great experiences has never been more relevant as is reflected in our outstanding Q1 results."

"Adobe achieved record revenue, profit and cash flow in Q1," said Mark Garrett, Adobe executive vice president and chief financial officer. "Our solid execution and business momentum combined with strong market tailwinds give us confidence in our ability to continue to deliver strong financial results. We remain bullish about our prospects for the rest of 2017 and beyond."

Adobe to Webcast Earnings Conference Call

Adobe will webcast its first quarter fiscal year 2017 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, financial targets 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 product and technology innovation, relevance of our products to our customers, business and market momentum, revenue, annualized recurring revenue, bookings, earnings per share and operating cash flow, 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 develop, market and offer products and services that meet customer requirements, introduction of new products, services and business models by competitors, failure to successfully manage transitions to new business models and markets, uncertainty in economic conditions and the financial markets, fluctuations in subscription renewal rates, complex and unpredictable sales cycles for some enterprise offerings, risks associated with cyber-attacks and information security, potential interruptions or delays in hosted services provided by us or third parties, changes in accounting principles, and failure to realize the anticipated benefits of past or future acquisitions. 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 2016 ended Dec. 2, 2016, and Adobe’s Quarterly Reports on Form 10-Q issued in fiscal year 2017.

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 March 3, 2017, which Adobe expects to file in March 2017.

Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.

About Adobe Systems Incorporated

Adobe is changing the world through digital experiences. For more information, visit www.adobe.com.

(C) 2017 Adobe Systems Incorporated. All rights reserved. Adobe and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners.

                                                     
Condensed Consolidated Statements of Income
(In thousands, except per share data; unaudited)
                                                                          
                                                                                                                Three Months Ended
                                                                         ------------------------------------------------------------------------------------------------
                                                                                   March 3, 2017 (*)                         March 4, 2016
                                                                         -------------------------------------                     --------------------------------------
Revenue:
   Subscription                                                              $ 1,383,856                                                $ 1,070,250
   Product                                                                       183,385                                                    201,112
   Services and support                                                          114,405                                 111,973  
                                                                         ------------------------------------                      -------------------------------------
      Total revenue                                                            1,681,646                               1,383,335  
                                                                         ------------------------------------                      -------------------------------------
                                                                                                                                    
Cost of revenue:
   Subscription                                                                  141,181                                                    107,275
   Product                                                                        14,333                                                     20,299
   Services and support                                                           81,823                                  70,998  
                                                                         ------------------------------------                      -------------------------------------
      Total cost of revenue                                                      237,337                                 198,572  
                                                                         ------------------------------------                      -------------------------------------
                                                                                                                                    
Gross profit                                                                   1,444,309                                                  1,184,763
                                                                                                                                    
Operating expenses:
   Research and development                                                      285,077                                                    237,204
   Sales and marketing                                                           520,297                                                    474,891
   General and administrative                                                    150,808                                                    146,516
   Amortization of purchased intangibles                                          19,128                                  18,394  
                                                                         ------------------------------------                      -------------------------------------
      Total operating expenses                                                   975,310                                 877,005  
                                                                         ------------------------------------                      -------------------------------------
                                                                                                                                    
Operating income                                                                 468,999                                                    307,758
                                                                                                                                    
Non-operating income (expense):
   Interest and other income (expense), net                                        7,206                                                      4,187
   Interest expense                                                              (18,130 )                                                  (18,469 )
   Investment gains (losses), net                                                  2,557                                  (1,169 )
                                                                         ------------------------------------                      -------------------------------------
      Total non-operating income (expense), net                                   (8,367 )                                                  (15,451 )
                                                                         ------------------------------------                      -------------------------------------
Income before income taxes                                                       460,632                                                    292,307
Provision for income taxes                                                        62,186                                  38,000  
                                                                         ------------------------------------                      -------------------------------------
Net income                                                                   $   398,446                             $   254,307  
                                                                         ===== ========= ====================                      ====== ========= ====================
Basic net income per share                                                   $      0.81                             $      0.51  
                                                                         ===== ========= ====================                      ====== ========= ====================
Shares used to compute basic net income per share                                494,612                                 499,125  
                                                                         ====================================                      =====================================
Diluted net income per share                                                 $      0.80                             $      0.50  
                                                                         ===== ========= ====================                      ====== ========= ====================
Shares used to compute diluted net income per share                              500,861                                 505,676  
                                                                         ====================================                      =====================================
_________________________________________
(*)   We early adopted ASU No. 2016-09, Improvements to Employee
                         Share-Based Payment Accounting, during the first quarter of
                         fiscal 2017. As required by the standard, excess tax benefits
                         recognized on stock-based compensation expense were reflected in
                         our provision for income taxes rather than paid-in capital on a
                         prospective basis. We recorded excess tax benefits within our
                         provision for income taxes, rather than paid-in capital, during
                         the three months ended March 3, 2017.
                          
                                                                                                                   
Condensed Consolidated Balance Sheets
(In thousands, except par value; unaudited)
                                                                                                                                                           
                                                                                                           March 3, 2017                                              December 2, 2016
                                                                                             ----------------------------------------                     ----------------------------------------
                                 ASSETS
                                                                                                                                                           
Current assets:
   Cash and cash equivalents                                                                       $  1,068,896                                                 $  1,011,315
   Short-term investments                                                                             3,578,721                                                    3,749,985
   Trade receivables, net of allowances for doubtful accounts of $8,265                                 850,840                                                      833,033
   and $6,214, respectively
   Prepaid expenses and other current assets                                                            257,105                                   245,441  
                                                                                             ---------------------------------------                      ---------------------------------------
      Total current assets                                                                            5,755,562                                                    5,839,774
                                                                                                                                                           
Property and equipment, net                                                                             821,730                                                      816,264
Goodwill                                                                                              5,753,575                                                    5,406,474
Purchased and other intangibles, net                                                                    489,202                                                      414,405
Investment in lease receivable                                                                           80,439                                                       80,439
Other assets                                                                                            144,275                                   139,890  
                                                                                             ---------------------------------------                      ---------------------------------------
      Total assets                                                                                 $ 13,044,783                              $ 12,697,246  
                                                                                             ======= ========== ====================                      ======= ========== ====================
                                                                                                                                                           
                  LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                                                                                                           
Current liabilities:
   Trade payables                                                                                  $    191,484                                                 $     88,024
   Accrued expenses                                                                                     763,012                                                      739,630
   Income taxes payable                                                                                  11,565                                                       38,362
   Deferred revenue                                                                                   1,988,008                                 1,945,619  
                                                                                             ---------------------------------------                      ---------------------------------------
      Total current liabilities                                                                       2,954,069                                                    2,811,635
                                                                                                                                                           
Long-term liabilities:
   Debt                                                                                               1,884,074                                                    1,892,200
   Deferred revenue                                                                                      72,238                                                       69,131
   Income taxes payable                                                                                 148,796                                                      184,381
   Deferred income taxes                                                                                286,407                                                      217,660
   Other liabilities                                                                                    110,509                                    97,404  
                                                                                             ---------------------------------------                      ---------------------------------------
      Total liabilities                                                                               5,456,093                                                    5,272,411
                                                                                                                                                           
Stockholders’ equity:
   Preferred stock, $0.0001 par value; 2,000 shares authorized                                   --                                               --
   Common stock, $0.0001 par value                                                                           61                                                           61
   Additional paid-in-capital                                                                         4,719,966                                                    4,616,331
   Retained earnings                                                                                  8,299,362                                                    8,114,517
   Accumulated other comprehensive income (loss)                                                       (185,409 )                                                   (173,602 )
   Treasury stock, at cost (105,704 and 106,580 shares, respectively),                               (5,245,290 )                                                 (5,132,472 )
   net of reissuances
                                                                                             -----------------  --------------------                      -----------------  --------------------
      Total stockholders’ equity                                                                      7,588,690                                 7,424,835  
                                                                                             ---------------------------------------                      ---------------------------------------
      Total liabilities and stockholders’ equity                                                   $ 13,044,783                              $ 12,697,246  
                                                                                             ======= ========== ====================                      ======= ========== ====================
                                                                                                                                                                              
                                                                        
Condensed Consolidated Statements of Cash Flows
(In thousands; unaudited)
                                                                                             
                                                                                                                                   Three Months Ended
                                                                                            -------------------------------------------------------------------------------------------------
                                                                                                       March 3, 2017 (*)                         March 4, 2016
                                                                                            ---------------------------------------                     -------------------------------------
Cash flows from operating activities:
   Net income                                                                                     $   398,446                                                 $ 254,307
   Adjustments to reconcile net income to net cash provided by
   operating activities:
      Depreciation, amortization and accretion                                                         80,809                                                    81,200
      Stock-based compensation expense                                                                 98,310                                                    92,306
      Unrealized investment (gains) losses, net                                                        (1,021 )                                                   2,047
      Changes in deferred revenue                                                                      40,832                                                   123,366
      Changes in other operating assets and liabilities                                               112,994                                (55,699 )
                                                                                            --------------------------------------                      ------------------------------------
         Net cash provided by operating activities                                                    730,370                                497,527  
                                                                                            --------------------------------------                      ------------------------------------
                                                                                                                                                         
Cash flows from investing activities:
   Purchases, sales and maturities of short-term investments, net                                     169,320                                                  (160,856 )
   Purchases of property and equipment                                                                (30,903 )                                                 (46,200 )
   Purchases and sales of long-term investments, intangibles and other                                (17,673 )                                                 (51,786 )
   assets, net
   Acquisitions, net of cash                                                                         (459,626 )                                          --  
                                                                                            --------------------------------------                      ------------------------------------
         Net cash used for investing activities                                                      (338,882 )                                                (258,842 )
                                                                                            --------------------------------------                      ------------------------------------
                                                                                                                                                         
Cash flows from financing activities:
   Purchases of treasury stock                                                                       (200,000 )                                                (150,000 )
   Taxes paid related to net share settlement of equity awards, net of                               (131,227 )                                                (149,251 )
   proceeds from treasury stock reissuances
   Repayment of capital lease obligations                                                                (268 )                                          --
   Excess tax benefits from stock-based compensation                                           --                                 14,859  
                                                                                            --------------------------------------                      ------------------------------------
         Net cash used for financing activities                                                      (331,495 )                                                (284,392 )
                                                                                            --------------------------------------                      ------------------------------------
Effect of exchange rate changes on cash and cash equivalents                                           (2,412 )                                                    (157 )
                                                                                            --------------------------------------                      ------------------------------------
Net increase (decrease) in cash and cash equivalents                                                   57,581                                                   (45,864 )
Cash and cash equivalents at beginning of period                                                    1,011,315                                876,560  
                                                                                            --------------------------------------                      ------------------------------------
Cash and cash equivalents at end of period                                                        $ 1,068,896                              $ 830,696  
                                                                                            ======= ========= ====================                      ======= ======= ====================
_________________________________________
(*)   We early adopted ASU No. 2016-09, Improvements to Employee
                         Share-Based Payment Accounting, during the first quarter of
                         fiscal 2017. As required by the standard, excess tax benefits
                         recognized on stock-based compensation expense were reflected in
                         our provision for income taxes rather than paid-in capital on a
                         prospective basis. We also elected to prospectively apply the
                         change in presentation of excess tax benefits wherein excess tax
                         benefits recognized on stock-based compensation expense were
                         classified as operating activities in our condensed consolidated
                         statements of cash flows for the three months ended March 3, 2017.
                         Prior period classification of cash flows related to excess tax
                         benefits was not adjusted.
                          
                                                              
Non-GAAP Results
(In thousands, except per share data)
The following tables show Adobe’s GAAP results reconciled to
non-GAAP results included in this release.
                                                                                   
                                                                                                                                                     Three Months Ended
                                                                                  ---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                March 3,                               March 4,                              December 2,
                                                                                                  2017                                                      2016                                                      2016
                                                                                  ----------------------------------                        ----------------------------------                        ----------------------------------
Operating income:
                                                                                                                                                                                                       
GAAP operating income                                                                   $ 468,999                                                 $ 307,758                                                 $ 472,280
Stock-based and deferred compensation expense                                             103,578                                                    91,690                                                    86,584
Restructuring and other charges                                                    --                                                      (419 )                                                    (285 )
Amortization of purchased intangibles and technology license                               35,464                                 36,264                                 31,143  
arrangements
                                                                                  --------------  --------------------                      --------------  --------------------                      --------------  --------------------
Non-GAAP operating income                                                               $ 608,041                              $ 435,293                              $ 589,722  
                                                                                  ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                       
Net income:
                                                                                                                                                                                                       
GAAP net income (*)                                                                     $ 398,446                                                 $ 254,307                                                 $ 399,613
Stock-based and deferred compensation expense                                             103,578                                                    91,690                                                    86,584
Restructuring and other charges                                                    --                                                      (419 )                                                    (285 )
Amortization of purchased intangibles and technology license                               35,464                                                    36,264                                                    31,143
arrangements
Investment (gains) losses, net                                                             (2,557 )                                                   1,169                                                    (1,385 )
Income tax adjustments                                                                    (63,209 )                                                 (50,403 )                                                 (63,118 )
                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------
Non-GAAP net income                                                                     $ 471,722                              $ 332,608                              $ 452,552  
                                                                                  ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                       
Diluted net income per share:
                                                                                                                                                                                                       
GAAP diluted net income per share (*)                                                   $    0.80                                                 $    0.50                                                 $    0.80
Stock-based and deferred compensation expense                                                0.21                                                      0.18                                                      0.17
Amortization of purchased intangibles and technology license                                 0.07                                                      0.07                                                      0.06
arrangements
Investment (gains) losses, net                                                              (0.01 )                                          --                                            --
Income tax adjustments                                                                      (0.13 )                                                   (0.09 )                                                   (0.13 )
                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------
Non-GAAP diluted net income per share                                                   $    0.94                              $    0.66                              $    0.90  
                                                                                  ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                       
Shares used in computing diluted net income per share                                     500,861                                                   505,676                                                   501,176
                                                                                                                                                                                                                       
                                                              
                                                                                            Three Months
                                                                                                Ended
                                                                                  ------------------------------
                                                                                            March 3, 2017
                                                                                  --------------------------------
Effective income tax rate:
                                                                                   
GAAP effective income tax rate (*)                                                      13.5                    %
Resolution of income tax examinations                                                    5.0
Stock-based and deferred compensation expense                                           (0.4 )
Amortization of purchased intangibles and technology license                            (0.1 )
arrangements
One-time charge related to acquisition                                                  (5.0 )
Income tax adjustments                                                                   8.0  
                                                                                  ---------- --------------------
Non-GAAP effective income tax rate (**)                                                 21.0                    %
                                                                                  ========== ====================
_________________________________________
(*)    We early adopted ASU No. 2016-09, Improvements to Employee
                          Share-Based Payment Accounting, during the first quarter of
                          fiscal 2017. As required by the standard, excess tax benefits
                          recognized on stock-based compensation expense were reflected in
                          our provision for income taxes rather than paid-in capital on a
                          prospective basis. We recorded excess tax benefits within our
                          provision for income taxes, rather than paid-in capital, during
                          the three months ended March 3, 2017.
                           
(**)                      Our non-GAAP effective income tax rate of 21% is an annualized rate
                          based on estimates for the entire fiscal year, whereas the GAAP
                          effective income tax rate of 13.5% is the rate for the quarter based
                          on tax events within the quarter. Income tax adjustments, which are
                          included in both GAAP and non-GAAP earnings, will fluctuate from
                          quarter-to-quarter but will normalize over the fiscal year due to
                          the timing of tax events including the timing of recognition of
                          excess tax benefits within each quarter.
                           

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, restructuring and other charges, amortization of purchased intangibles and certain activity in connection with technology license arrangements, 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.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170316006200r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170316006200/en/

SOURCE: Adobe

Investor Relations Contact 
Adobe 
Mike Saviage, 408-536-4416 
ir@adobe.com 
or 
Public Relations Contact 
Adobe 
Dan Berthiaume, 408-536-2584 
dberthia@adobe.com


Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2017 StockSelector.com. All rights reserved.