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 16, 2014 entitled “Adobe Reports Q3 FY2014 Financial Results” |
• | Adobe achieved revenue of $1.005 billion, within its targeted range of $975 million to $1.025 billion. |
• | Adobe exited Q3 with 2 million 810 thousand paid Creative Cloud subscriptions, an increase of 502 thousand when compared to the number of subscriptions as of the end of Q2 fiscal year 2014. |
• | Creative Annualized Recurring Revenue (“ARR”) grew to $1.40 billion, and total Digital Media ARR grew to $1.62 billion. |
• | Adobe Marketing Cloud quarterly revenue was $290 million with strong bookings growth. |
• | Diluted earnings per share were $0.09 on a GAAP-basis, and $0.28 on a non-GAAP basis. |
• | Cash flow from operations was $269 million and deferred revenue grew to a record $997 million. |
• | 63 percent of Adobe’s Q3 revenue was from recurring sources. |
• | The company repurchased approximately 1.9 million shares during the quarter, returning approximately $133 million of cash to stockholders. |
Three Months Ended | Nine Months Ended | ||||||||||||||
August 29, 2014 | August 30, 2013 | August 29, 2014 | August 30, 2013 | ||||||||||||
Revenue: | |||||||||||||||
Products | $ | 349,151 | $ | 582,178 | $ | 1,299,852 | $ | 1,902,866 | |||||||
Subscription | 547,373 | 299,346 | 1,447,630 | 778,133 | |||||||||||
Services and support | 108,885 | 113,595 | 326,255 | 332,542 | |||||||||||
Total revenue | 1,005,409 | 995,119 | 3,073,737 | 3,013,541 | |||||||||||
Cost of revenue: | |||||||||||||||
Products | 23,172 | 32,564 | 75,169 | 111,351 | |||||||||||
Subscription | 86,670 | 71,656 | 247,549 | 200,763 | |||||||||||
Services and support | 47,882 | 42,856 | 138,419 | 126,927 | |||||||||||
Total cost of revenue | 157,724 | 147,076 | 461,137 | 439,041 | |||||||||||
Gross profit | 847,685 | 848,043 | 2,612,600 | 2,574,500 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 212,049 | 208,700 | 630,666 | 621,435 | |||||||||||
Sales and marketing | 406,475 | 388,673 | 1,243,446 | 1,188,914 | |||||||||||
General and administrative | 141,676 | 128,043 | 409,798 | 381,766 | |||||||||||
Restructuring and other charges | 201 | (791 | ) | 498 | 24,203 | ||||||||||
Amortization of purchased intangibles | 13,108 | 13,064 | 40,012 | 38,295 | |||||||||||
Total operating expenses | 773,509 | 737,689 | 2,324,420 | 2,254,613 | |||||||||||
Operating income | 74,176 | 110,354 | 288,180 | 319,887 | |||||||||||
Non-operating income (expense): | |||||||||||||||
Interest and other income (expense), net | 1,454 | 1,732 | 7,162 | 4,246 | |||||||||||
Interest expense | (13,361 | ) | (16,747 | ) | (47,054 | ) | (50,786 | ) | |||||||
Investment gains (losses), net | 669 | (2,079 | ) | 813 | (5,476 | ) | |||||||||
Total non-operating income (expense), net | (11,238 | ) | (17,094 | ) | (39,079 | ) | (52,016 | ) | |||||||
Income before income taxes | 62,938 | 93,260 | 249,101 | 267,871 | |||||||||||
Provision for income taxes | 18,252 | 10,258 | 68,842 | 43,206 | |||||||||||
Net income | $ | 44,686 | $ | 83,002 | $ | 180,259 | $ | 224,665 | |||||||
Basic net income per share | $ | 0.09 | $ | 0.16 | $ | 0.36 | $ | 0.45 | |||||||
Shares used to compute basic net income per share | 498,468 | 504,116 | 497,782 | 502,039 | |||||||||||
Diluted net income per share | $ | 0.09 | $ | 0.16 | $ | 0.35 | $ | 0.44 | |||||||
Shares used to compute diluted net income per share | 507,811 | 514,058 | 508,575 | 513,155 |
August 29, 2014 | November 29, 2013 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 903,329 | $ | 834,556 | |||
Short-term investments | 2,616,868 | 2,339,196 | |||||
Trade receivables, net of allowances for doubtful accounts of $7,879 and $10,228, respectively | 528,331 | 599,820 | |||||
Deferred income taxes | 79,713 | 102,247 | |||||
Prepaid expenses and other current assets | 151,227 | 170,110 | |||||
Total current assets | 4,279,468 | 4,045,929 | |||||
Property and equipment, net | 785,856 | 659,774 | |||||
Goodwill | 4,746,781 | 4,771,981 | |||||
Purchased and other intangibles, net | 490,839 | 605,254 | |||||
Investment in lease receivable | 80,439 | 207,239 | |||||
Other assets | 110,297 | 90,121 | |||||
Total assets | $ | 10,493,680 | $ | 10,380,298 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Trade payables | $ | 53,791 | $ | 62,096 | |||
Accrued expenses | 630,679 | 656,939 | |||||
Debt and capital lease obligations | 606,426 | 14,676 | |||||
Accrued restructuring | 2,351 | 6,171 | |||||
Income taxes payable | 4,438 | 10,222 | |||||
Deferred revenue | 947,563 | 775,544 | |||||
Total current liabilities | 2,245,248 | 1,525,648 | |||||
Long-term liabilities: | |||||||
Debt and capital lease obligations | 901,830 | 1,499,297 | |||||
Deferred revenue | 48,975 | 53,268 | |||||
Accrued restructuring | 5,776 | 7,717 | |||||
Income taxes payable | 141,473 | 132,545 | |||||
Deferred income taxes | 344,715 | 375,634 | |||||
Other liabilities | 74,403 | 61,555 | |||||
Total liabilities | 3,762,420 | 3,655,664 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.0001 par value; 2,000 shares authorized | — | — | |||||
Common stock, $0.0001 par value | 61 | 61 | |||||
Additional paid-in-capital | 3,675,629 | 3,392,696 | |||||
Retained earnings | 6,850,790 | 6,928,964 | |||||
Accumulated other comprehensive income | 20,067 | 46,103 | |||||
Treasury stock, at cost (102,235 and 104,573 shares, respectively), net of reissuances | (3,815,287 | ) | (3,643,190 | ) | |||
Total stockholders' equity | 6,731,260 | 6,724,634 | |||||
Total liabilities and stockholders' equity | $ | 10,493,680 | $ | 10,380,298 |
Three Months Ended | |||||||
August 29, 2014 | August 30, 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 44,686 | $ | 83,002 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and accretion | 80,154 | 82,175 | |||||
Stock-based compensation expense | 82,986 | 76,094 | |||||
Unrealized investment (gains) losses, net | (576 | ) | 2,825 | ||||
Changes in deferred revenue | 67,934 | 35,885 | |||||
Changes in other operating assets and liabilities | (6,664 | ) | (64,456 | ) | |||
Net cash provided by operating activities | 268,520 | 215,525 | |||||
Cash flows from investing activities: | |||||||
Purchases, sales and maturities of short-term investments, net | (110,346 | ) | 262,478 | ||||
Purchases of property and equipment | (54,966 | ) | (46,798 | ) | |||
Purchases and sales of long-term investments, intangibles and other assets, net | (5,082 | ) | (4,896 | ) | |||
Acquisitions, net of cash | — | (608,019 | ) | ||||
Net cash used for investing activities | (170,394 | ) | (397,235 | ) | |||
Cash flows from financing activities: | |||||||
Purchases of treasury stock | (125,000 | ) | (400,000 | ) | |||
Proceeds from reissuance of treasury stock, net | 91,500 | 162,663 | |||||
Repayment of debt and capital lease obligations | (3,372 | ) | (10,034 | ) | |||
Excess tax benefits from stock-based compensation | 27,078 | — | |||||
Net cash used for financing activities | (9,794 | ) | (247,371 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (2,027 | ) | 1,756 | ||||
Net increase (decrease) in cash and cash equivalents | 86,305 | (427,325 | ) | ||||
Cash and cash equivalents at beginning of period | 817,020 | 1,246,410 | |||||
Cash and cash equivalents at end of period | $ | 903,325 | $ | 819,085 |
Three Months Ended | |||||||||||
August 29, 2014 | August 30, 2013 | May 30, 2014 | |||||||||
Operating income: | |||||||||||
GAAP operating income | $ | 74,176 | $ | 110,354 | $ | 135,258 | |||||
Stock-based and deferred compensation expense | 83,682 | 81,111 | 83,600 | ||||||||
Restructuring and other charges | 201 | (791 | ) | (366 | ) | ||||||
Amortization of purchased intangibles | 31,780 | 32,315 | 31,835 | ||||||||
Non-GAAP operating income | $ | 189,839 | $ | 222,989 | $ | 250,327 | |||||
Net income: | |||||||||||
GAAP net income | $ | 44,686 | $ | 83,002 | $ | 88,527 | |||||
Stock-based and deferred compensation expense | 83,682 | 81,111 | 83,600 | ||||||||
Restructuring and other charges | 201 | (791 | ) | (366 | ) | ||||||
Amortization of purchased intangibles | 31,780 | 32,315 | 31,835 | ||||||||
Investment (gains) losses | (669 | ) | 2,079 | (553 | ) | ||||||
Income tax adjustments | (19,114 | ) | (33,336 | ) | (16,771 | ) | |||||
Non-GAAP net income | $ | 140,566 | $ | 164,380 | $ | 186,272 | |||||
Diluted net income per share: | |||||||||||
GAAP diluted net income per share | $ | 0.09 | $ | 0.16 | $ | 0.17 | |||||
Stock-based and deferred compensation expense | 0.16 | 0.16 | 0.16 | ||||||||
Amortization of purchased intangibles | 0.06 | 0.06 | 0.06 | ||||||||
Income tax adjustments | (0.03 | ) | (0.06 | ) | (0.02 | ) | |||||
Non-GAAP diluted net income per share | $ | 0.28 | $ | 0.32 | $ | 0.37 | |||||
Shares used in computing diluted net income per share | 507,811 | 514,058 | 506,687 |
Three Months Ended | ||
August 29, 2014 | ||
Effective income tax rate: | ||
GAAP effective income tax rate | 29.0 | % |
Stock-based and deferred compensation expense | (4.5 | ) |
Amortization of purchased intangibles | (1.7 | ) |
Income tax adjustments | (1.8 | ) |
Non-GAAP effective income tax rate | 21.0 | % |