Delaware | 0-15175 | 77-0019522 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
ADOBE SYSTEMS INCORPORATED | ||
By: | /s/ MARK GARRETT | |
Mark Garrett | ||
Executive Vice President and Chief Financial Officer |
Exhibit No. | Description | |
99.1 | Press release issued on September 17, 2013 entitled “Adobe Creative Cloud Surpasses One Million Subscriptions in Q3” |
• | Adobe achieved revenue of $995.1 million, within its targeted range of $975 million to $1.025 billion. The acquisition of Neolane during the quarter contributed approximately $6 million of revenue to third quarter results. |
• | Diluted earnings per share were $0.16 on a GAAP-basis, and $0.32 on a non-GAAP basis. |
• | Operating income was $110.4 million and net income was $83.0 million on a GAAP basis. Operating income was $223.0 million and net income was $164.4 million on a non-GAAP basis. |
• | Cash flow from operations was $215.5 million. |
• | Deferred revenue grew by $42.7 million to a record $734.0 million. |
• | Adobe exited Q3 with 1 million 31 thousand paid Creative Cloud subscriptions, an increase of 331 thousand when compared to the number of subscriptions as of the end of Q2 fiscal year 2013, and enterprise adoption of Creative Cloud was stronger than expected. |
• | Creative Annualized Recurring Revenue (“ARR”) grew to $546 million, and total Digital Media ARR grew to $655 million. |
• | Including revenue from Neolane, Adobe Marketing Cloud quarterly revenue was $254.9 million, representing 28 percent year-over-year growth. Excluding revenue from Neolane, Adobe Marketing Cloud year-over-year growth was 25 percent. |
Three Months Ended | Nine Months Ended | ||||||||||||||
August 30, 2013 | August 31, 2012 | August 30, 2013 | August 31, 2012 | ||||||||||||
Revenue: | |||||||||||||||
Products | $ | 582,178 | $ | 810,457 | $ | 1,902,866 | $ | 2,490,000 | |||||||
Subscription | 299,346 | 172,920 | 778,133 | 478,669 | |||||||||||
Services and support | 113,595 | 97,203 | 332,542 | 281,580 | |||||||||||
Total revenue | 995,119 | 1,080,580 | 3,013,541 | 3,250,249 | |||||||||||
Cost of revenue: | |||||||||||||||
Products | 32,564 | 27,234 | 111,351 | 92,976 | |||||||||||
Subscription | 71,656 | 56,191 | 200,763 | 159,794 | |||||||||||
Services and support | 42,856 | 36,196 | 126,927 | 106,034 | |||||||||||
Total cost of revenue | 147,076 | 119,621 | 439,041 | 358,804 | |||||||||||
Gross profit | 848,043 | 960,959 | 2,574,500 | 2,891,445 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 208,700 | 189,145 | 621,435 | 547,776 | |||||||||||
Sales and marketing | 388,673 | 368,556 | 1,188,914 | 1,113,978 | |||||||||||
General and administrative | 128,043 | 110,249 | 381,766 | 323,533 | |||||||||||
Restructuring and other charges | (791 | ) | 2,374 | 24,203 | (2,642 | ) | |||||||||
Amortization of purchased intangibles | 13,064 | 12,331 | 38,295 | 36,374 | |||||||||||
Total operating expenses | 737,689 | 682,655 | 2,254,613 | 2,019,019 | |||||||||||
Operating income | 110,354 | 278,304 | 319,887 | 872,426 | |||||||||||
Non-operating income (expense): | |||||||||||||||
Interest and other income (expense), net | 1,732 | 1,217 | 4,246 | (2,696 | ) | ||||||||||
Interest expense | (16,747 | ) | (17,253 | ) | (50,786 | ) | (50,720 | ) | |||||||
Investment gains (losses), net | (2,079 | ) | 944 | (5,476 | ) | 9,153 | |||||||||
Total non-operating income (expense), net | (17,094 | ) | (15,092 | ) | (52,016 | ) | (44,263 | ) | |||||||
Income before income taxes | 93,260 | 263,212 | 267,871 | 828,163 | |||||||||||
Provision for income taxes | 10,258 | 61,855 | 43,206 | 217,721 | |||||||||||
Net income | $ | 83,002 | $ | 201,357 | $ | 224,665 | $ | 610,442 | |||||||
Basic net income per share | $ | 0.16 | $ | 0.41 | $ | 0.45 | $ | 1.23 | |||||||
Shares used to compute basic net income per share | 504,116 | 494,051 | 502,039 | 494,672 | |||||||||||
Diluted net income per share | $ | 0.16 | $ | 0.40 | $ | 0.44 | $ | 1.22 | |||||||
Shares used to compute diluted net income per share | 514,058 | 499,757 | 513,155 | 502,167 |
August 30, 2013 | November 30, 2012 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 819,085 | $ | 1,425,052 | |||
Short-term investments | 2,344,852 | 2,113,301 | |||||
Trade receivables, net of allowances for doubtful accounts of $10,481 and $12,643, respectively | 522,409 | 617,233 | |||||
Deferred income taxes | 47,710 | 59,537 | |||||
Prepaid expenses and other current assets | 128,495 | 116,237 | |||||
Assets held for sale | 23,573 | — | |||||
Total current assets | 3,886,124 | 4,331,360 | |||||
Property and equipment, net | 659,747 | 664,302 | |||||
Goodwill | 4,752,315 | 4,133,259 | |||||
Purchased and other intangibles, net | 637,957 | 545,036 | |||||
Investment in lease receivable | 207,239 | 207,239 | |||||
Other assets | 90,774 | 93,327 | |||||
Total assets | $ | 10,234,156 | $ | 9,974,523 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Trade payables | $ | 71,070 | $ | 49,759 | |||
Accrued expenses | 547,997 | 590,140 | |||||
Capital lease obligations | 17,462 | 11,217 | |||||
Accrued restructuring | 4,841 | 9,287 | |||||
Income taxes payable | 4,604 | 49,886 | |||||
Deferred revenue | 683,143 | 561,463 | |||||
Total current liabilities | 1,329,117 | 1,271,752 | |||||
Long-term liabilities: | |||||||
Debt and capital lease obligations | 1,502,369 | 1,496,938 | |||||
Deferred revenue | 50,932 | 58,102 | |||||
Accrued restructuring | 7,242 | 12,263 | |||||
Income taxes payable | 120,525 | 155,096 | |||||
Deferred income taxes | 328,310 | 265,106 | |||||
Other liabilities | 60,902 | 50,084 | |||||
Total liabilities | 3,399,397 | 3,309,341 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.0001 par value; 2,000 shares authorized | — | — | |||||
Common stock, $0.0001 par value | 61 | 61 | |||||
Additional paid-in-capital | 3,266,170 | 3,038,665 | |||||
Retained earnings | 6,878,216 | 7,003,003 | |||||
Accumulated other comprehensive income | 12,966 | 30,712 | |||||
Treasury stock, at cost (99,028 and 106,702 shares, respectively), net of re-issuances | (3,322,654 | ) | (3,407,259 | ) | |||
Total stockholders' equity | 6,834,759 | 6,665,182 | |||||
Total liabilities and stockholders' equity | $ | 10,234,156 | $ | 9,974,523 |
Three Months Ended | |||||||
August 30, 2013 | August 31, 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 83,002 | $ | 201,357 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and accretion | 82,175 | 74,110 | |||||
Stock-based compensation expense | 76,094 | 74,013 | |||||
Unrealized investment (gains) losses | 2,825 | (851 | ) | ||||
Changes in deferred revenue | 35,885 | (32,445 | ) | ||||
Changes in other operating assets and liabilities | (64,456 | ) | (52,844 | ) | |||
Net cash provided by operating activities | 215,525 | 263,340 | |||||
Cash flows from investing activities: | |||||||
Purchases, sales and maturities of short-term investments, net | 262,478 | (37,426 | ) | ||||
Purchases of property and equipment | (46,798 | ) | (77,432 | ) | |||
Purchases of long-term investments, intangibles and other assets, net of sales | (4,896 | ) | (4,362 | ) | |||
Acquisitions, net of cash | (608,019 | ) | — | ||||
Net cash used for investing activities | (397,235 | ) | (119,220 | ) | |||
Cash flows from financing activities: | |||||||
Purchases of treasury stock | (400,000 | ) | — | ||||
Re-issuance of treasury stock | 162,663 | 60,948 | |||||
Proceeds from debt and capital lease obligations | — | 3,152 | |||||
Repayment of debt and capital lease obligations | (10,034 | ) | (2,316 | ) | |||
Excess tax benefits from stock-based compensation | — | 1,172 | |||||
Net cash (used for) provided by financing activities | (247,371 | ) | 62,956 | ||||
Effect of exchange rate changes on cash and cash equivalents | 1,756 | 4,066 | |||||
Net (decrease) increase in cash and cash equivalents | (427,325 | ) | 211,142 | ||||
Cash and cash equivalents at beginning of period | 1,246,410 | 951,238 | |||||
Cash and cash equivalents at end of period | $ | 819,085 | $ | 1,162,380 |
Three Months Ended | |||||||||||
August 30, 2013 | August 31, 2012 | May 31, 2013 | |||||||||
Operating income: | |||||||||||
GAAP operating income | $ | 110,354 | $ | 278,304 | $ | 111,309 | |||||
Stock-based and deferred compensation expense | 81,111 | 80,682 | 79,624 | ||||||||
Restructuring and other charges | (791 | ) | 2,374 | 24,992 | |||||||
Amortization of purchased intangibles & technology license arrangements | 32,315 | 30,410 | 31,359 | ||||||||
Non-GAAP operating income | $ | 222,989 | $ | 391,770 | $ | 247,284 | |||||
Net income: | |||||||||||
GAAP net income | $ | 83,002 | $ | 201,357 | $ | 76,546 | |||||
Stock-based and deferred compensation expense | 81,111 | 80,682 | 79,624 | ||||||||
Restructuring and other charges | (791 | ) | 2,374 | 24,992 | |||||||
Amortization of purchased intangibles & technology license arrangements | 32,315 | 30,410 | 31,359 | ||||||||
Investment (gains) losses | 2,079 | (944 | ) | 4,245 | |||||||
Resolution of income tax examinations | 9,527 | — | — | ||||||||
Income tax adjustments | (42,863 | ) | (22,685 | ) | (33,915 | ) | |||||
Non-GAAP net income | $ | 164,380 | $ | 291,194 | $ | 182,851 | |||||
Diluted net income per share: | |||||||||||
GAAP diluted net income per share | $ | 0.16 | $ | 0.40 | $ | 0.15 | |||||
Stock-based and deferred compensation expense | 0.16 | 0.16 | 0.16 | ||||||||
Restructuring and other charges | — | — | 0.05 | ||||||||
Amortization of purchased intangibles & technology license arrangements | 0.06 | 0.06 | 0.06 | ||||||||
Investment (gains) losses | — | — | 0.01 | ||||||||
Resolution of income tax examinations | 0.02 | — | — | ||||||||
Income tax adjustments | (0.08 | ) | (0.04 | ) | (0.07 | ) | |||||
Non-GAAP diluted net income per share | $ | 0.32 | $ | 0.58 | $ | 0.36 | |||||
Shares used in computing diluted net income per share | 514,058 | 499,757 | 512,446 |
Three Months Ended | ||
August 30, 2013 | ||
Effective income tax rate: | ||
GAAP effective income tax rate | 11.0 | % |
Stock-based and deferred compensation expense | (1.0 | ) |
Resolution of income tax examinations | 11.0 | |
Non-GAAP effective income tax rate | 21.0 | % |