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, 2016 entitled “Adobe Reports Record Revenue” |
• | Adobe achieved record quarterly revenue of $1.38 billion, representing year-over-year growth of 25 percent. |
• | Diluted earnings per share were $0.50 on a GAAP-basis, and $0.66 on a non-GAAP basis. |
• | Digital Media segment revenue grew by 33 percent year-over-year to a record $932 million, with Creative revenue growing 44 percent year-over-year to a record $733 million. |
• | Strong Creative Cloud adoption drove Digital Media Annualized Recurring Revenue (“ARR”) to $3.13 billion exiting the quarter, an increase of $246 million. |
• | Adobe Marketing Cloud achieved strong bookings growth, and record revenue of $377 million that represents year-over-year growth of 21 percent. |
• | Year-over-year operating income grew 78 percent and net income grew 200 percent on a GAAP-basis; operating income and net income both grew 48 percent on a non-GAAP basis. |
• | Cash flow from operations was $498 million, and deferred revenue grew to $1.61 billion. |
• | The company repurchased approximately 1.5 million shares during the quarter, returning $133 million of cash to stockholders. |
Three Months Ended | |||||||
March 4, 2016 | February 27, 2015 | ||||||
Revenue: | |||||||
Subscription | $ | 1,070,250 | $ | 713,442 | |||
Product | 201,112 | 290,774 | |||||
Services and support | 111,973 | 104,965 | |||||
Total revenue | 1,383,335 | 1,109,181 | |||||
Cost of revenue: | |||||||
Subscription | 107,275 | 95,527 | |||||
Product | 20,299 | 19,703 | |||||
Services and support | 70,998 | 51,568 | |||||
Total cost of revenue | 198,572 | 166,798 | |||||
Gross profit | 1,184,763 | 942,383 | |||||
Operating expenses: | |||||||
Research and development | 237,204 | 215,509 | |||||
Sales and marketing | 474,891 | 392,741 | |||||
General and administrative | 146,935 | 145,081 | |||||
Restructuring and other charges | (419 | ) | 1,755 | ||||
Amortization of purchased intangibles | 18,394 | 14,272 | |||||
Total operating expenses | 877,005 | 769,358 | |||||
Operating income | 307,758 | 173,025 | |||||
Non-operating income (expense): | |||||||
Interest and other income (expense), net | 4,187 | 3,338 | |||||
Interest expense | (18,469 | ) | (14,545 | ) | |||
Investment gains (losses), net | (1,169 | ) | 1,430 | ||||
Total non-operating income (expense), net | (15,451 | ) | (9,777 | ) | |||
Income before income taxes | 292,307 | 163,248 | |||||
Provision for income taxes | 38,000 | 78,360 | |||||
Net income | $ | 254,307 | $ | 84,888 | |||
Basic net income per share | $ | 0.51 | $ | 0.17 | |||
Shares used to compute basic net income per share | 499,125 | 498,754 | |||||
Diluted net income per share | $ | 0.50 | $ | 0.17 | |||
Shares used to compute diluted net income per share | 505,676 | 507,526 |
March 4, 2016 | November 27, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 830,696 | $ | 876,560 | |||
Short-term investments | 3,267,192 | 3,111,524 | |||||
Trade receivables, net of allowances for doubtful accounts of $5,359 and $7,293, respectively | 599,207 | 672,006 | |||||
Prepaid expenses and other current assets | 238,295 | 161,802 | |||||
Total current assets | 4,935,390 | 4,821,892 | |||||
Property and equipment, net | 794,876 | 787,421 | |||||
Goodwill | 5,389,000 | 5,366,881 | |||||
Purchased and other intangibles, net | 518,686 | 510,007 | |||||
Investment in lease receivable | 80,439 | 80,439 | |||||
Other assets | 178,291 | 159,832 | |||||
Total assets | $ | 11,896,682 | $ | 11,726,472 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Trade payables | $ | 71,706 | $ | 93,307 | |||
Accrued expenses | 591,821 | 679,884 | |||||
Income taxes payable | 4,458 | 6,165 | |||||
Deferred revenue | 1,563,821 | 1,434,200 | |||||
Total current liabilities | 2,231,806 | 2,213,556 | |||||
Long-term liabilities: | |||||||
Debt | 1,916,831 | 1,907,231 | |||||
Deferred revenue | 44,839 | 51,094 | |||||
Income taxes payable | 261,305 | 256,129 | |||||
Deferred income taxes | 265,748 | 208,209 | |||||
Other liabilities | 94,951 | 88,673 | |||||
Total liabilities | 4,815,480 | 4,724,892 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.0001 par value; 2,000 shares authorized | — | — | |||||
Common stock, $0.0001 par value | 61 | 61 | |||||
Additional paid-in-capital | 4,292,486 | 4,184,883 | |||||
Retained earnings | 7,221,083 | 7,253,431 | |||||
Accumulated other comprehensive income (loss) | (151,679 | ) | (169,080 | ) | |||
Treasury stock, at cost (100,141 and 103,025 shares, respectively), net of reissuances | (4,280,749 | ) | (4,267,715 | ) | |||
Total stockholders' equity | 7,081,202 | 7,001,580 | |||||
Total liabilities and stockholders' equity | $ | 11,896,682 | $ | 11,726,472 |
Three Months Ended | |||||||
March 4, 2016 | February 27, 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 254,307 | $ | 84,888 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and accretion | 81,200 | 79,635 | |||||
Stock-based compensation expense | 92,306 | 84,193 | |||||
Unrealized investment (gains) losses, net | 2,047 | (9,687 | ) | ||||
Changes in deferred revenue | 123,366 | 19,044 | |||||
Changes in other operating assets and liabilities | (55,699 | ) | (75,058 | ) | |||
Net cash provided by operating activities | 497,527 | 183,015 | |||||
Cash flows from investing activities: | |||||||
Purchases, sales and maturities of short-term investments, net | (160,856 | ) | 152,402 | ||||
Purchases of property and equipment | (46,200 | ) | (35,546 | ) | |||
Purchases and sales of long-term investments, intangibles and other assets, net | (51,786 | ) | (14,885 | ) | |||
Acquisitions, net of cash | — | (800,342 | ) | ||||
Net cash used for investing activities | (258,842 | ) | (698,371 | ) | |||
Cash flows from financing activities: | |||||||
Purchases of treasury stock | (150,000 | ) | (200,000 | ) | |||
Cost of issuance of treasury stock, net | (149,251 | ) | (93,697 | ) | |||
Proceeds from debt | — | 989,280 | |||||
Repayment of debt and capital lease obligations | — | (602,189 | ) | ||||
Debt issuance costs | — | (7,718 | ) | ||||
Excess tax benefits from stock-based compensation | 14,859 | 33,599 | |||||
Net cash provided by (used for) financing activities | (284,392 | ) | 119,275 | ||||
Effect of exchange rate changes on cash and cash equivalents | (157 | ) | (8,435 | ) | |||
Net decrease in cash and cash equivalents | (45,864 | ) | (404,516 | ) | |||
Cash and cash equivalents at beginning of period | 876,560 | 1,117,400 | |||||
Cash and cash equivalents at end of period | $ | 830,696 | $ | 712,884 |
Three Months Ended | |||||||||||
March 4, 2016 | February 27, 2015 | November 27, 2015 | |||||||||
Operating income: | |||||||||||
GAAP operating income | $ | 307,758 | $ | 173,025 | $ | 290,434 | |||||
Stock-based and deferred compensation expense | 91,690 | 86,597 | 81,705 | ||||||||
Restructuring and other charges | (419 | ) | 1,755 | 521 | |||||||
Amortization of purchased intangibles and technology license arrangements | 36,264 | 33,791 | 37,678 | ||||||||
Non-GAAP operating income | $ | 435,293 | $ | 295,168 | $ | 410,338 | |||||
Net income: | |||||||||||
GAAP net income | $ | 254,307 | $ | 84,888 | $ | 222,705 | |||||
Stock-based and deferred compensation expense | 91,690 | 86,597 | 81,705 | ||||||||
Restructuring and other charges | (419 | ) | 1,755 | 521 | |||||||
Amortization of purchased intangibles and technology license arrangements | 36,264 | 33,791 | 37,678 | ||||||||
Investment (gains) losses, net | 1,169 | (1,430 | ) | (622 | ) | ||||||
Gain on sale of property assets | — | — | (21,415 | ) | |||||||
Income tax adjustments | (50,403 | ) | 18,728 | (8,674 | ) | ||||||
Non-GAAP net income | $ | 332,608 | $ | 224,329 | $ | 311,898 | |||||
Diluted net income per share: | |||||||||||
GAAP diluted net income per share | $ | 0.50 | $ | 0.17 | $ | 0.44 | |||||
Stock-based and deferred compensation expense | 0.18 | 0.17 | 0.16 | ||||||||
Amortization of purchased intangibles and technology license arrangements | 0.07 | 0.07 | 0.07 | ||||||||
Gain on sale of property assets | — | — | (0.04 | ) | |||||||
Income tax adjustments | (0.09 | ) | 0.03 | (0.01 | ) | ||||||
Non-GAAP diluted net income per share | $ | 0.66 | $ | 0.44 | $ | 0.62 | |||||
Shares used in computing diluted net income per share | 505,676 | 507,526 | 506,012 |
Three Months Ended | ||
March 4, 2016 | ||
Effective income tax rate: | ||
GAAP effective income tax rate | 13.0 | % |
Stock-based and deferred compensation expense | (2.1 | )% |
Amortization of purchased intangibles and technology license arrangements | (0.9 | )% |
Retroactive reinstatement of 2015 R&D tax credit | 9.0 | % |
Resolution of income tax examinations | 2.0 | % |
Non-GAAP effective income tax rate | 21.0 | % |