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 June 16, 2015 entitled “Adobe Reports Record Revenue” |
• | Adobe achieved record quarterly revenue of $1.16 billion. |
• | Digital Media Annualized Recurring Revenue (“ARR”) grew to $2.35 billion exiting the quarter, driven by an increase in Creative ARR of $230 million to $2.02 billion. |
• | Adobe Marketing Cloud achieved revenue of $327 million. |
• | Diluted earnings per share were $0.29 on a GAAP-basis, and $0.48 on a non-GAAP basis. |
• | Year-over-year, operating income grew 43 percent and net income grew 67 percent on a GAAP-basis; operating income grew 28 percent and net income grew 30 percent on a non-GAAP basis. |
• | Cash flow from operations was $471 million, and deferred revenue grew to an all-time high of $1.23 billion. |
• | The company repurchased approximately 2.6 million shares during the quarter, returning $200 million of cash to stockholders. |
Three Months Ended | Six Months Ended | ||||||||||||||
May 29, 2015 | May 30, 2014 | May 29, 2015 | May 30, 2014 | ||||||||||||
Revenue: | |||||||||||||||
Subscription | $ | 773,963 | $ | 476,694 | $ | 1,487,405 | $ | 900,257 | |||||||
Products | 274,538 | 479,247 | 565,312 | 950,701 | |||||||||||
Services and support | 113,657 | 112,267 | 218,622 | 217,370 | |||||||||||
Total revenue | 1,162,158 | 1,068,208 | 2,271,339 | 2,068,328 | |||||||||||
Cost of revenue: | |||||||||||||||
Subscription | 103,694 | 84,147 | 199,221 | 160,879 | |||||||||||
Products | 21,467 | 24,499 | 41,170 | 51,997 | |||||||||||
Services and support | 60,012 | 46,258 | 111,580 | 90,537 | |||||||||||
Total cost of revenue | 185,173 | 154,904 | 351,971 | 303,413 | |||||||||||
Gross profit | 976,985 | 913,304 | 1,919,368 | 1,764,915 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 208,047 | 209,092 | 423,556 | 418,617 | |||||||||||
Sales and marketing | 426,998 | 426,830 | 819,739 | 836,971 | |||||||||||
General and administrative | 130,208 | 129,138 | 275,289 | 268,122 | |||||||||||
Restructuring and other charges | 34 | (366 | ) | 1,789 | 297 | ||||||||||
Amortization of purchased intangibles | 18,081 | 13,352 | 32,353 | 26,904 | |||||||||||
Total operating expenses | 783,368 | 778,046 | 1,552,726 | 1,550,911 | |||||||||||
Operating income | 193,617 | 135,258 | 366,642 | 214,004 | |||||||||||
Non-operating income (expense): | |||||||||||||||
Interest and other income (expense), net | 3,739 | 2,563 | 7,077 | 5,708 | |||||||||||
Interest expense | (16,605 | ) | (17,103 | ) | (31,150 | ) | (33,693 | ) | |||||||
Investment gains (losses), net | 223 | 553 | 1,653 | 144 | |||||||||||
Total non-operating income (expense), net | (12,643 | ) | (13,987 | ) | (22,420 | ) | (27,841 | ) | |||||||
Income before income taxes | 180,974 | 121,271 | 344,222 | 186,163 | |||||||||||
Provision for income taxes | 33,481 | 32,744 | 111,841 | 50,590 | |||||||||||
Net income | $ | 147,493 | $ | 88,527 | $ | 232,381 | $ | 135,573 | |||||||
Basic net income per share | $ | 0.30 | $ | 0.18 | $ | 0.47 | $ | 0.27 | |||||||
Shares used to compute basic net income per share | 499,290 | 497,931 | 499,022 | 497,439 | |||||||||||
Diluted net income per share | $ | 0.29 | $ | 0.17 | $ | 0.46 | $ | 0.27 | |||||||
Shares used to compute diluted net income per share | 505,582 | 506,687 | 507,061 | 508,227 |
May 29, 2015 | November 28, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 956,147 | $ | 1,117,400 | |||
Short-term investments | 2,457,101 | 2,622,091 | |||||
Trade receivables, net of allowances for doubtful accounts of $7,226 and $7,867, respectively | 502,617 | 591,800 | |||||
Deferred income taxes | 71,218 | 95,279 | |||||
Prepaid expenses and other current assets | 191,314 | 175,758 | |||||
Total current assets | 4,178,397 | 4,602,328 | |||||
Property and equipment, net | 785,199 | 785,123 | |||||
Goodwill | 5,388,971 | 4,721,962 | |||||
Purchased and other intangibles, net | 583,198 | 469,662 | |||||
Investment in lease receivable | 80,439 | 80,439 | |||||
Other assets | 149,179 | 126,315 | |||||
Total assets | $ | 11,165,383 | $ | 10,785,829 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Trade payables | $ | 56,539 | $ | 68,377 | |||
Accrued expenses | 647,784 | 683,866 | |||||
Debt and capital lease obligations | — | 603,229 | |||||
Accrued restructuring | 1,695 | 17,120 | |||||
Income taxes payable | 55,473 | 23,920 | |||||
Deferred revenue | 1,175,542 | 1,097,923 | |||||
Total current liabilities | 1,937,033 | 2,494,435 | |||||
Long-term liabilities: | |||||||
Debt | 1,904,376 | 911,086 | |||||
Deferred revenue | 52,613 | 57,401 | |||||
Accrued restructuring | 4,347 | 5,194 | |||||
Income taxes payable | 244,799 | 125,746 | |||||
Deferred income taxes | 326,922 | 342,315 | |||||
Other liabilities | 85,190 | 73,747 | |||||
Total liabilities | 4,555,280 | 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 | 3,994,652 | 3,778,495 | |||||
Retained earnings | 6,879,444 | 6,924,294 | |||||
Accumulated other comprehensive income (loss) | (129,473 | ) | (8,094 | ) | |||
Treasury stock, at cost (102,558 and 103,350 shares, respectively), net of reissuances | (4,134,581 | ) | (3,918,851 | ) | |||
Total stockholders' equity | 6,610,103 | 6,775,905 | |||||
Total liabilities and stockholders' equity | $ | 11,165,383 | $ | 10,785,829 |
Three Months Ended | |||||||
May 29, 2015 | May 30, 2014 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 147,493 | $ | 88,527 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and accretion | 85,929 | 77,653 | |||||
Stock-based compensation expense | 84,649 | 83,005 | |||||
Unrealized investment gains, net | (276 | ) | (352 | ) | |||
Changes in deferred revenue | 44,772 | 47,517 | |||||
Changes in other operating assets and liabilities | 108,917 | 71,186 | |||||
Net cash provided by operating activities | 471,484 | 367,536 | |||||
Cash flows from investing activities: | |||||||
Purchases, sales and maturities of short-term investments, net | 3,541 | (117,967 | ) | ||||
Purchases of property and equipment | (35,730 | ) | (27,198 | ) | |||
Purchases and sales of long-term investments, intangibles and other assets, net | (1,083 | ) | (2,767 | ) | |||
Acquisitions, net of cash | (5,637 | ) | — | ||||
Net cash used for investing activities | (38,909 | ) | (147,932 | ) | |||
Cash flows from financing activities: | |||||||
Purchases of treasury stock | (200,000 | ) | (150,000 | ) | |||
Proceeds of reissuance of treasury stock, net | 2,911 | 12,824 | |||||
Repayment of debt and capital lease obligations | — | (3,626 | ) | ||||
Debt issuance costs | (153 | ) | — | ||||
Excess tax benefits from stock-based compensation | 11,140 | 4,875 | |||||
Net cash used for financing activities | (186,102 | ) | (135,927 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (3,210 | ) | (573 | ) | |||
Net increase in cash and cash equivalents | 243,263 | 83,104 | |||||
Cash and cash equivalents at beginning of period | 712,884 | 733,916 | |||||
Cash and cash equivalents at end of period | $ | 956,147 | $ | 817,020 |
Three Months Ended | |||||||||||
May 29, 2015 | May 30, 2014 | February 27, 2015 | |||||||||
Operating income: | |||||||||||
GAAP operating income | $ | 193,617 | $ | 135,258 | $ | 173,025 | |||||
Stock-based and deferred compensation expense | 85,374 | 83,600 | 86,597 | ||||||||
Restructuring and other charges | 34 | (366 | ) | 1,755 | |||||||
Amortization of purchased intangibles | 40,080 | 31,835 | 33,791 | ||||||||
Non-GAAP operating income | $ | 319,105 | $ | 250,327 | $ | 295,168 | |||||
Net income: | |||||||||||
GAAP net income | $ | 147,493 | $ | 88,527 | $ | 84,888 | |||||
Stock-based and deferred compensation expense | 85,374 | 83,600 | 86,597 | ||||||||
Restructuring and other charges | 34 | (366 | ) | 1,755 | |||||||
Amortization of purchased intangibles | 40,080 | 31,835 | 33,791 | ||||||||
Investment (gains) losses | (223 | ) | (553 | ) | (1,430 | ) | |||||
Income tax adjustments | (30,829 | ) | (16,771 | ) | 18,728 | ||||||
Non-GAAP net income | $ | 241,929 | $ | 186,272 | $ | 224,329 | |||||
Diluted net income per share: | |||||||||||
GAAP diluted net income per share | $ | 0.29 | $ | 0.17 | $ | 0.17 | |||||
Stock-based and deferred compensation expense | 0.17 | 0.16 | 0.17 | ||||||||
Amortization of purchased intangibles | 0.08 | 0.06 | 0.07 | ||||||||
Income tax adjustments | (0.06 | ) | (0.02 | ) | 0.03 | ||||||
Non-GAAP diluted net income per share | $ | 0.48 | $ | 0.37 | $ | 0.44 | |||||
Shares used in computing diluted net income per share | 505,582 | 506,687 | 507,526 |
Three Months Ended | ||
May 29, 2015 | ||
Effective income tax rate: | ||
GAAP effective income tax rate | 18.5 | % |
Resolution of income tax examinations | 6.0 | |
Amortization of purchased intangibles, stock-based and deferred compensation expense | (2.5 | ) |
Income tax adjustments | (1.0 | ) |
Non-GAAP effective income tax rate | 21.0 | % |