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 March 17, 2015 entitled “Adobe Reports Strong Q1 FY2015 Financial Results” |
• | Adobe achieved revenue of $1.11 billion, above the high end of the targeted range of $1.05 billion to $1.10 billion. |
• | Adobe added 517 thousand net new Creative Cloud subscriptions in the quarter, which represents 28 percent year-over-year growth when compared to net new subscription additions in Q1 fiscal year 2014. |
• | Creative Annualized Recurring Revenue (“ARR”) grew to $1.79 billion, and total Digital Media ARR grew to $2.09 billion. |
• | Adobe Marketing Cloud revenue was $311 million. |
• | Diluted earnings per share were $0.17 on a GAAP-basis, and $0.44 on a non-GAAP basis. |
• | Cash flow from operations was $183 million and deferred revenue grew to a record $1.18 billion. |
• | A record 70 percent of Adobe’s Q1 revenue was from recurring sources, compared to 52 percent of Q1 revenue in fiscal 2014. |
• | The company repurchased approximately 2.4 million shares during the quarter, returning $174 million of cash to stockholders. |
Three Months Ended | |||||||
February 27, 2015 | February 28, 2014 | ||||||
Revenue: | |||||||
Subscription | $ | 713,442 | $ | 423,563 | |||
Products | 290,774 | 471,454 | |||||
Services and support | 104,965 | 105,103 | |||||
Total revenue | 1,109,181 | 1,000,120 | |||||
Cost of revenue: | |||||||
Subscription | 95,527 | 76,732 | |||||
Products | 19,703 | 27,498 | |||||
Services and support | 51,568 | 44,279 | |||||
Total cost of revenue | 166,798 | 148,509 | |||||
Gross profit | 942,383 | 851,611 | |||||
Operating expenses: | |||||||
Research and development | 215,509 | 209,525 | |||||
Sales and marketing | 392,741 | 410,141 | |||||
General and administrative | 145,081 | 138,984 | |||||
Restructuring and other charges | 1,755 | 663 | |||||
Amortization of purchased intangibles | 14,272 | 13,552 | |||||
Total operating expenses | 769,358 | 772,865 | |||||
Operating income | 173,025 | 78,746 | |||||
Non-operating income (expense): | |||||||
Interest and other income (expense), net | 3,338 | 3,145 | |||||
Interest expense | (14,545 | ) | (16,590 | ) | |||
Investment gains (losses), net | 1,430 | (409 | ) | ||||
Total non-operating income (expense), net | (9,777 | ) | (13,854 | ) | |||
Income before income taxes | 163,248 | 64,892 | |||||
Provision for income taxes | 78,360 | 17,846 | |||||
Net income | $ | 84,888 | $ | 47,046 | |||
Basic net income per share | $ | 0.17 | $ | 0.09 | |||
Shares used to compute basic net income per share | 498,754 | 496,948 | |||||
Diluted net income per share | $ | 0.17 | $ | 0.09 | |||
Shares used to compute diluted net income per share | 507,526 | 508,340 |
February 27, 2015 | November 28, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 712,884 | $ | 1,117,400 | |||
Short-term investments | 2,463,936 | 2,622,091 | |||||
Trade receivables, net of allowances for doubtful accounts of $7,201 and $7,867, respectively | 532,427 | 591,800 | |||||
Deferred income taxes | 60,470 | 95,279 | |||||
Prepaid expenses and other current assets | 202,442 | 175,758 | |||||
Total current assets | 3,972,159 | 4,602,328 | |||||
Property and equipment, net | 784,314 | 785,123 | |||||
Goodwill | 5,396,174 | 4,721,962 | |||||
Purchased and other intangibles, net | 629,317 | 469,662 | |||||
Investment in lease receivable | 80,439 | 80,439 | |||||
Other assets | 146,019 | 126,315 | |||||
Total assets | $ | 11,008,422 | $ | 10,785,829 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Trade payables | $ | 71,670 | $ | 68,377 | |||
Accrued expenses | 564,211 | 683,866 | |||||
Debt and capital lease obligations | 64 | 603,229 | |||||
Accrued restructuring | 2,580 | 17,120 | |||||
Income taxes payable | 19,934 | 23,920 | |||||
Deferred revenue | 1,129,701 | 1,097,923 | |||||
Total current liabilities | 1,788,160 | 2,494,435 | |||||
Long-term liabilities: | |||||||
Debt | 1,901,554 | 911,086 | |||||
Deferred revenue | 53,568 | 57,401 | |||||
Accrued restructuring | 4,495 | 5,194 | |||||
Income taxes payable | 245,063 | 125,746 | |||||
Deferred income taxes | 348,644 | 342,315 | |||||
Other liabilities | 77,918 | 73,747 | |||||
Total liabilities | 4,419,402 | 4,009,924 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.0001 par value; 2,000 shares authorized | — | — | |||||
Common stock, $0.0001 par value | 61 | 61 | |||||
Additional paid-in-capital | 3,897,838 | 3,778,495 | |||||
Retained earnings | 6,756,803 | 6,924,294 | |||||
Accumulated other comprehensive income (loss) | (103,810 | ) | (8,094 | ) | |||
Treasury stock, at cost (100,786 and 103,350 shares, respectively), net of reissuances | (3,961,872 | ) | (3,918,851 | ) | |||
Total stockholders' equity | 6,589,020 | 6,775,905 | |||||
Total liabilities and stockholders' equity | $ | 11,008,422 | $ | 10,785,829 |
Three Months Ended | |||||||
February 27, 2015 | February 28, 2014 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 84,888 | $ | 47,046 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and accretion | 79,635 | 77,636 | |||||
Stock-based compensation expense | 84,193 | 82,750 | |||||
Unrealized investment (gains) losses, net | (9,687 | ) | 975 | ||||
Changes in deferred revenue | 19,044 | 52,275 | |||||
Changes in other operating assets and liabilities | (75,058 | ) | (9,009 | ) | |||
Net cash provided by operating activities | 183,015 | 251,673 | |||||
Cash flows from investing activities: | |||||||
Purchases, sales and maturities of short-term investments, net | 152,402 | (61,746 | ) | ||||
Purchases of property and equipment | (35,546 | ) | (29,393 | ) | |||
Purchases and sales of long-term investments, intangibles and other assets, net | (14,885 | ) | (3,283 | ) | |||
Acquisitions, net of cash | (800,342 | ) | — | ||||
Net cash used for investing activities | (698,371 | ) | (94,422 | ) | |||
Cash flows from financing activities: | |||||||
Purchases of treasury stock | (200,000 | ) | (200,000 | ) | |||
Cost of reissuance of treasury stock, net | (93,697 | ) | (53,776 | ) | |||
Proceeds from debt | 989,280 | — | |||||
Repayment of debt and capital lease obligations | (602,189 | ) | (4,433 | ) | |||
Debt issuance costs | (7,718 | ) | — | ||||
Excess tax benefits from stock-based compensation | 33,599 | — | |||||
Net cash provided by (used for) financing activities | 119,275 | (258,209 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (8,435 | ) | 318 | ||||
Net decrease in cash and cash equivalents | (404,516 | ) | (100,640 | ) | |||
Cash and cash equivalents at beginning of period | 1,117,400 | 834,556 | |||||
Cash and cash equivalents at end of period | $ | 712,884 | $ | 733,916 |
Three Months Ended | |||||||||||
February 27, 2015 | February 28, 2014 | November 28, 2014 | |||||||||
Operating income: | |||||||||||
GAAP operating income | $ | 173,025 | $ | 78,746 | $ | 124,505 | |||||
Stock-based and deferred compensation expense | 86,597 | 83,549 | 85,025 | ||||||||
Restructuring and other charges | 1,755 | 663 | 19,385 | ||||||||
Amortization of purchased intangibles | 33,791 | 32,054 | 31,331 | ||||||||
Loss contingency | — | 10,000 | — | ||||||||
Non-GAAP operating income | $ | 295,168 | $ | 205,012 | $ | 260,246 | |||||
Net income: | |||||||||||
GAAP net income | $ | 84,888 | $ | 47,046 | $ | 88,136 | |||||
Stock-based and deferred compensation expense | 86,597 | 83,549 | 85,025 | ||||||||
Restructuring and other charges | 1,755 | 663 | 19,385 | ||||||||
Amortization of purchased intangibles | 33,791 | 32,054 | 31,331 | ||||||||
Investment (gains) losses | (1,430 | ) | 409 | (343 | ) | ||||||
Loss contingency | — | 10,000 | — | ||||||||
Income tax adjustments | 18,728 | (22,383 | ) | (27,872 | ) | ||||||
Non-GAAP net income | $ | 224,329 | $ | 151,338 | $ | 195,662 | |||||
Diluted net income per share: | |||||||||||
GAAP diluted net income per share | $ | 0.17 | $ | 0.09 | $ | 0.17 | |||||
Stock-based and deferred compensation expense | 0.17 | 0.16 | 0.17 | ||||||||
Restructuring and other charges | — | — | 0.04 | ||||||||
Amortization of purchased intangibles | 0.07 | 0.06 | 0.06 | ||||||||
Loss contingency | — | 0.02 | — | ||||||||
Income tax adjustments | 0.03 | (0.03 | ) | (0.05 | ) | ||||||
Non-GAAP diluted net income per share | $ | 0.44 | $ | 0.30 | $ | 0.39 | |||||
Shares used in computing diluted net income per share | 507,526 | 508,340 | 507,451 |
Three Months Ended | ||
February 27, 2015 | ||
Effective income tax rate: | ||
GAAP effective income tax rate | 48.0 | % |
One-time charge related to acquisition | (42.0 | ) |
Retroactive reinstatement of 2014 R&D tax credit | 16.0 | |
Income tax adjustments | (1.0 | ) |
Non-GAAP effective income tax rate | 21.0 | % |