XML 23 R9.htm IDEA: XBRL DOCUMENT v3.21.4
Revenue
 12 Months Ended
Dec. 03, 2021
Revenues [Abstract]  
Revenue REVENUE
Segment Information
We report segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments.
Our Chief Executive Officer, the chief operating decision maker, reviews revenue and gross margin information for each of our reportable segments, but does not review operating expenses on a segment by segment basis. In addition, with the exception of goodwill, we do not identify or allocate our assets by the reportable segments. 
Our business is organized into the following reportable segments:
•Digital Media—Our Digital Media segment provides products, services and solutions that enable individuals, teams and enterprises to create, publish and promote their content anywhere and accelerate their productivity by modernizing how they view, share, engage with and collaborate on documents and creative content. Our customers include creative professionals, including photographers, video editors, graphic and experience designers and game developers, communicators, including content creators, students, marketers and knowledge workers, and consumers.
•Digital Experience—Our Digital Experience segment provides an integrated platform and set of applications and services that enable brands and businesses to create, manage, execute, measure, monetize and optimize customer
experiences that span from analytics to commerce. Our customers include marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers and executives across the C-suite.
•Publishing and Advertising—Our Publishing and Advertising segment contains legacy products and services that address diverse market opportunities, including eLearning solutions, technical document publishing, web conferencing, document and forms platform, web application development, high-end printing and our Adobe Advertising Cloud offerings.
Our segment revenue and results for fiscal 2021, 2020 and 2019 were as follows:
(dollars in millions)Digital
Media		Digital
Experience		Publishing and
Advertising		Total
Fiscal 2021
Revenue$11,520 $3,867 $398 $15,785 
Cost of revenue429 1,321 115 1,865 
Gross profit$11,091 $2,546 $283 $13,920 
Gross profit as a percentage of revenue96 %66 %71 %88 %
Fiscal 2020
Revenue$9,233 $3,125 $510 $12,868 
Cost of revenue352 1,126 244 1,722 
Gross profit$8,881 $1,999 $266 $11,146 
Gross profit as a percentage of revenue96 %64 %52 %87 %
Fiscal 2019
Revenue$7,707 $2,795 $669 $11,171 
Cost of revenue290 1,056 327 1,673 
Gross profit$7,417 $1,739 $342 $9,498 
Gross profit as a percentage of revenue96 %62 %51 %85 %
We generally categorize revenue by geographic area based on where the customer manages their utilization of our offerings. Revenue by geographic area for fiscal 2021, 2020 and 2019 were as follows:
(in millions)202120202019
Americas:   
United States$8,104 $6,745 $5,903 
Other892 709 603 
Total Americas8,996 7,454 6,506 
EMEA4,252 3,400 2,975 
APAC2,537 2,014 1,690 
Revenue$15,785 $12,868 $11,171 
Revenue by major offerings in our Digital Media reportable segment for fiscal 2021, 2020 and 2019 were as follows:
(in millions)202120202019
Creative Cloud$9,546 $7,736 $6,482 
Document Cloud1,974 1,497 1,225 
Total Digital Media revenue$11,520 $9,233 $7,707 
Subscription revenue by segment for fiscal 2021, 2020 and 2019 were as follows:
(in millions)202120202019
Digital Media $11,048 $8,813 $7,208 
Digital Experience3,379 2,660 2,280 
Publishing and Advertising146 153 146 
Total subscription revenue$14,573 $11,626 $9,634 
Contract Balances
Trade Receivables
A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Timing of revenue recognition may differ from the timing of invoicing to customers. Certain performance obligations may require payment before delivery of the license or service to the customer. Included in trade receivables on the Consolidated Balance Sheets are unbilled receivable balances which have not yet been invoiced, and are typically related to license revenue or services which are delivered prior to invoicing. As of December 3, 2021, the balance of trade receivables, net of allowances for doubtful accounts, was $1.88 billion, inclusive of unbilled receivables of $82 million. As of November 27, 2020, the balance of trade receivables, net of allowance for doubtful accounts, was $1.40 billion, inclusive of unbilled receivables of $84 million.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectible trade receivables and is based on both specific and general reserves. We maintain general reserves on a collective basis by considering factors such as historical experience, credit-worthiness, the age of the trade receivable balances, current economic conditions and a reasonable and supportable forecast of future economic conditions.
During fiscal 2021, 2020 and 2019, our allowance for doubtful accounts activities were as follows:
(in millions)202120202019
Beginning balance$21 $10 $15 
Increase due to acquisition3 — — 
Adjustments to reserve balance(3)31 5 
Write-offs, net of recoveries(5)(20)(10)
Ending balance$16 $21 $10 
Contract Assets
A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets are typically related to subscription and hosted service contracts where the transaction price allocated to the satisfied performance obligations exceeds the value of billings to date. Contract assets are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the Consolidated Balance Sheets. We regularly review contract asset balances for impairment, considering factors such as historical experience, credit-worthiness, age of the balance and other economic or business factors. Contract asset impairments were not material in fiscal 2021. Contract assets were $85 million and $81 million as of December 3, 2021 and November 27, 2020, respectively.
Deferred Revenue and Remaining Performance Obligations
Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services, including non-cancellable and non-refundable committed funds and refundable customer deposits. Deferred revenue is recognized as revenue when transfer of control to customers has occurred. Customers are typically invoiced for these agreements in regular installments and revenue is recognized ratably over the contractual subscription period. The deferred revenue balance is influenced by several factors, including the compounding effects of renewals, invoice duration,
invoice timing, size and new business linearity within the quarter. Deferred revenue does not represent the total contract value of annual or multi-year non-cancellable subscription agreements.
Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, such as invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and not to receive financing from our customers. Any potential financing fees are considered insignificant in the context of our contracts.
As of December 3, 2021, the balance of deferred revenue was $4.88 billion, which includes $88 million of refundable customer deposits. Refundable customer deposits represent arrangements in which the customer has a unilateral cancellation right for which we are obligated to refund amounts paid related to products or services not yet delivered or provided at the time of cancellation on a prorated basis. Arrangements with some of our enterprise customers with non-cancellable and non-refundable committed funds provide options to either renew monthly on-premise term-based licenses or use some or all funds to purchase other Adobe products or services. Non-cancellable and non-refundable committed funds related to these agreements comprised approximately 5% of the total deferred revenue.
As of November 27, 2020, the balance of deferred revenue was $3.76 billion. Significant movements in the deferred revenue balance during the period consisted of increases due to payments received prior to transfer of control of the underlying performance obligations to the customer and deferred revenue assumed through acquisition, which were offset by decreases due to revenue recognized in the period. During the year ended December 3, 2021, approximately $3.55 billion of revenue was recognized that was included in the balance of deferred revenue as of November 27, 2020.
Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price allocated to remaining performance obligations is influenced by several factors, including the timing of renewals and average contract term. We applied practical expedients to exclude amounts related to performance obligations that are billed and recognized as they are delivered, optional purchases that do not represent material rights, sales- and usage-based royalties not yet consumed and any estimated amounts of variable consideration that are subject to constraint.
Remaining performance obligations were approximately $13.99 billion as of December 3, 2021. Non-cancellable and non-refundable committed funds related to some of our enterprise customer agreements referred to in the paragraph above comprised approximately 5% of the total remaining performance obligations. Approximately 72% of the remaining performance obligations, excluding the aforementioned enterprise customer agreements, are expected to be recognized over the next 12 months with the remainder recognized thereafter.
Contract Acquisition Costs
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs meet the requirements to be capitalized.
The costs capitalized are primarily sales commissions paid to our sales force personnel. Capitalized costs may also include portions of fringe benefits and payroll taxes associated with compensation for incremental costs to acquire customer contracts and incentive payments to partners.
Capitalized costs to obtain a contract are amortized over the expected period of benefit, which we have determined, based on analysis, to be 5 years. Amortization of capitalized costs are included in sales and marketing expense in our Consolidated Statements of Income. During fiscal 2021 and 2020, we amortized $212 million and $186 million of capitalized contract acquisition costs into sales and marketing expense, respectively. We did not incur any impairment losses in fiscal 2021 and 2020.
Capitalized contract acquisition costs were $611 million and $530 million as of December 3, 2021 and November 27, 2020, of which $406 million and $352 million was long-term and included in other assets in the Consolidated Balance Sheets,
respectively. The remaining balance of the capitalized costs to obtain contracts was current and included in prepaid expenses and other current assets.
Refund Liabilities
We record refund liabilities for amounts that may be subject to future refunds, which include sales returns reserves and customer rebates and credits. Refund liabilities are included in accrued expenses on the Consolidated Balance Sheets. Refund liabilities were $128 million and $127 million as of December 3, 2021 and November 27, 2020, respectively.
Significant Customers
For all periods presented, there were no customers that represented at least 10% of net revenue or that were responsible for over 10% of our trade receivables.