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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 2, 2022
 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to                   
 
Commission File Number: 0-15175
 
ADOBE INC.
(Exact name of registrant as specified in its charter)
________________________________
Delaware77-0019522
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

345 Park Avenue, San Jose, California 95110-2704
(Address of principal executive offices and zip code)

(408536-6000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.0001 par value per shareADBENASDAQ
________________________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes   No
As of September 23, 2022, 464.9 million shares of the registrant’s common stock, $0.0001 par value per share, were issued and outstanding.



ADOBE INC.
FORM 10-Q
 
TABLE OF CONTENTS
 
  Page No.

PART I—FINANCIAL INFORMATION
 
Item 1.

 

 



 

 

Item 2.

Item 3.

Item 4.


 PART II—OTHER INFORMATION
 
Item 1.

Item 1A.

Item 2.

Item 4.

Item 5.

Item 6.





 
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Table of Contents
PART I—FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ADOBE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value)
 September 2,
2022
December 3,
2021
(Unaudited)(*)
ASSETS
Current assets:  
Cash and cash equivalents$3,870 $3,844 
Short-term investments1,894 1,954 
Trade receivables, net of allowances for doubtful accounts of $24 and $16, respectively
1,723 1,878 
Prepaid expenses and other current assets1,002 993 
Total current assets8,489 8,669 
Property and equipment, net1,858 1,673 
Operating lease right-of-use assets, net414 443 
Goodwill12,756 12,668 
Other intangibles, net1,548 1,820 
Deferred income taxes799 1,085 
Other assets880 883 
Total assets$26,744 $27,241 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:  
Trade payables$316 $312 
Accrued expenses1,629 1,736 
Debt500  
Deferred revenue4,829 4,733 
Income taxes payable76 54 
Operating lease liabilities88 97 
Total current liabilities7,438 6,932 
Long-term liabilities: 
Debt3,627 4,123 
Deferred revenue114 145 
Income taxes payable510 534 
Deferred income taxes3 5 
Operating lease liabilities426 453 
Other liabilities253 252 
Total liabilities12,371 12,444 
Stockholders’ equity: 
Preferred stock, $0.0001 par value; 2 shares authorized; none issued
  
Common stock, $0.0001 par value; 900 shares authorized; 601 shares issued; 
467 and 475 shares outstanding, respectively
  
Additional paid-in-capital9,548 8,428 
Retained earnings27,158 23,905 
Accumulated other comprehensive income (loss)(224)(137)
Treasury stock, at cost (134 and 126 shares, respectively)
(22,109)(17,399)
Total stockholders’ equity14,373 14,797 
Total liabilities and stockholders’ equity$26,744 $27,241 
_________________________________________
(*)    The condensed consolidated balance sheet as of December 3, 2021 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
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ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
 Three Months EndedNine Months Ended
 September 2,
2022
September 3,
2021
September 2,
2022
September 3,
2021
Revenue: 
Subscription$4,128 $3,657 $12,156 $10,761 
Product126 119 417 427 
Services and other179 159 508 487 
Total revenue4,433 3,935 13,081 11,675 
 
Cost of revenue:
Subscription413 344 1,216 996 
Product8 10 27 29 
Services and other125 113 354 333 
Total cost of revenue546 467 1,597 1,358 
Gross profit3,887 3,468 11,484 10,317 
 
Operating expenses:
Research and development775 651 2,214 1,883 
Sales and marketing1,266 1,068 3,671 3,190 
General and administrative319 265 879 811 
Amortization of intangibles43 43 127 132 
Total operating expenses2,403 2,027 6,891 6,016 
 Operating income1,484 1,441 4,593 4,301 
 
Non-operating income (expense):
Interest expense(28)(27)(84)(85)
Investment gains (losses), net(6)7 (23)20 
Other income (expense), net6 (3)5 1 
Total non-operating income (expense), net(28)(23)(102)(64)
Income before income taxes1,456 1,418 4,491 4,237 
Provision for income taxes320 206 911 648 
Net income$1,136 $1,212 $3,580 $3,589 
Basic net income per share$2.42 $2.54 $7.60 $7.51 
Shares used to compute basic net income per share469 477 471 478 
Diluted net income per share$2.42 $2.52 $7.57 $7.45 
Shares used to compute diluted net income per share469 481 473 481 


  See accompanying notes to condensed consolidated financial statements.

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ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months EndedNine Months Ended
 September 2,
2022
September 3,
2021
September 2,
2022
September 3,
2021
Increase/(Decrease)Increase/(Decrease)
Net income$1,136 $1,212 $3,580 $3,589 
Other comprehensive income (loss), net of taxes:
Available-for-sale securities:
Unrealized gains / losses on available-for-sale securities(6)(1)(35)(4)
Derivatives designated as hedging instruments:
Unrealized gains / losses on derivative instruments
107 12 193 5 
Reclassification adjustment for realized gains / losses on derivative instruments(47)5 (89)26 
Net increase (decrease) from derivatives designated as hedging instruments60 17 104 31 
Foreign currency translation adjustments(83)(26)(156) 
Other comprehensive income (loss), net of taxes(29)(10)(87)27 
Total comprehensive income, net of taxes$1,107 $1,202 $3,493 $3,616 


See accompanying notes to condensed consolidated financial statements.


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ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited)
Three Months Ended September 2, 2022
 
  Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
 Treasury Stock 
 SharesAmountSharesAmountTotal
Balances at June 3, 2022
601 $ $9,102 $26,022 $(195)(130)$(20,944)$13,985 
Net income— — — 1,136 — — — 1,136 
Other comprehensive income (loss),
net of taxes
— — — — (29)— — (29)
Re-issuance of treasury stock under stock compensation plans
— — 68  — 1 35 103 
Repurchases of common stock— — — — — (5)(1,200)(1,200)
Stock-based compensation— — 378 — — — — 378 
Balances at September 2, 2022
601 $ $9,548 $27,158 $(224)(134)$(22,109)$14,373 



Three Months Ended September 3, 2021
 
  Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
 Treasury Stock 
 SharesAmountSharesAmountTotal
Balances at June 4, 2021
601 $ $7,877 $21,538 $(121)(124)$(15,442)$13,852 
Net income
— — — 1,212 — — — 1,212 
Other comprehensive income (loss),
net of taxes
— — — — (10)— — (10)
Re-issuance of treasury stock under stock compensation plans
— — 52  — 1 29 81 
Repurchases of common stock— — — — — (2)(1,000)(1,000)
Stock-based compensation— — 280 — — — — 280 
Value of shares in deferred compensation plan
— — — — — — (1)(1)
Balances at September 3, 2021
601 $ $8,209 $22,750 $(131)(125)$(16,414)$14,414 
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ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited)
Nine Months Ended September 2, 2022
   Common StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
 Treasury Stock 
 SharesAmountSharesAmountTotal
Balances at December 3, 2021
601 $ $8,428 $23,905 $(137)(126)$(17,399)$14,797 
Net income— — — 3,580 — — — 3,580 
Other comprehensive income (loss),
net of taxes
— — — — (87)— — (87)
Re-issuance of treasury stock under stock compensation plans
— — 68 (327)— 3 86 (173)
Repurchases of common stock— — — — — (11)(4,800)(4,800)
Stock-based compensation— — 1,052 — — — — 1,052 
Value of shares in deferred compensation plan
— — — — — — 4 4 
Balances at September 2, 2022
601 $ $9,548 $27,158 $(224)(134)$(22,109)$14,373 



Nine Months Ended September 3, 2021
 
  Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
 Treasury Stock 
 SharesAmountSharesAmountTotal
Balances at November 27, 2020
601 $ $7,357 $19,611 $(158)(122)$(13,546)$13,264 
Net income
— — — 3,589 — — — 3,589 
Other comprehensive income (loss),
net of taxes
— — — — 27 — — 27 
Re-issuance of treasury stock under stock compensation plans
— — 52 (450)— 3 86 (312)
Repurchases of common stock— — — — — (6)(2,950)(2,950)
Stock-based compensation— — 800 — — — — 800 
Value of shares in deferred compensation plan
— — — — — — (4)(4)
Balances at September 3, 2021
601 $ $8,209 $22,750 $(131)(125)$(16,414)$14,414 


See accompanying notes to condensed consolidated financial statements.
7

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ADOBE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Nine Months Ended
 September 2,
2022
September 3,
2021
Cash flows from operating activities:  
Net income$3,580 $3,589 
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation, amortization and accretion641 583 
Stock-based compensation1,052 800 
Reduction of operating lease right-of-use assets63 53 
Deferred income taxes282 120 
Unrealized losses (gains) on investments, net33 (11)
Other non-cash items8 3 
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Trade receivables, net146 (105)
Prepaid expenses and other assets(133)(423)
Trade payables11 18 
Accrued expenses and other liabilities(237)(47)
Income taxes payable2 13 
Deferred revenue65 571 
Net cash provided by operating activities5,513 5,164 
Cash flows from investing activities:  
Purchases of short-term investments(703)(881)
Maturities of short-term investments497 701 
Proceeds from sales of short-term investments221 138 
Acquisitions, net of cash acquired(126)(1,470)
Purchases of property and equipment(351)(249)
Purchases of long-term investments, intangibles and other assets(39)(37)
Net cash used for investing activities(501)(1,798)
Cash flows from financing activities:  
Repurchases of common stock(4,800)(2,950)
Proceeds from re-issuance of treasury stock278 290 
Taxes paid related to net share settlement of equity awards(451)(602)
Other financing activities, net59 39 
Net cash used for financing activities(4,914)(3,223)
Effect of foreign currency exchange rates on cash and cash equivalents(72)2 
Net change in cash and cash equivalents26 145 
Cash and cash equivalents at beginning of period3,844 4,478 
Cash and cash equivalents at end of period$3,870 $4,623 
Supplemental disclosures: 
Cash paid for income taxes, net of refunds$486 $589 
Cash paid for interest$101 $100 


See accompanying notes to condensed consolidated financial statements.
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 3, 2021 on file with the SEC (our “Annual Report”).
Use of Estimates
In preparing the condensed consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the SEC, we must make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ materially from these estimates.
Fiscal Year
Our fiscal year is a 52- or 53-week year that ends on the Friday closest to November 30. Our financial results for the nine months ended September 3, 2021 benefited from an extra week in the first quarter of fiscal 2021 due to our 52/53 week financial calendar whereby fiscal 2022 is a 52-week year compared with fiscal 2021 which was a 53-week year.
Significant Accounting Policies
There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report.
Adopted Accounting Guidance and Accounting Pronouncements Not Yet Effective
There have been no recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the nine months ended September 2, 2022 that are of significance or potential significance to us.
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
NOTE 2.  REVENUE
Segment Information
Our segment results for the three months ended September 2, 2022 and September 3, 2021 were as follows:
(dollars in millions)Digital
Media
Digital
Experience
Publishing and
Advertising
Total
Three months ended September 2, 2022
Revenue$3,232 $1,120 $81 $4,433 
Cost of revenue136 385 25 546 
Gross profit$3,096 $735 $56 $3,887 
Gross profit as a percentage of revenue96 %66 %69 %88 %
Three months ended September 3, 2021
Revenue$2,865 $985 $85 $3,935 
Cost of revenue106 334 27 467 
Gross profit$2,759 $651 $58 $3,468 
Gross profit as a percentage of revenue96 %66 %68 %88 %
Our segment results for the nine months ended September 2, 2022 and September 3, 2021 were as follows:
(dollars in millions)Digital
Media
Digital
Experience
Publishing and
Advertising
Total
Nine months ended September 2, 2022
Revenue$9,542 $3,272 $267 $13,081 
Cost of revenue411 1,111 75 1,597 
Gross profit$9,131 $2,161 $192 $11,484 
Gross profit as a percentage of revenue96 %66 %72 %88 %
Nine months ended September 3, 2021
Revenue$8,511 $2,857 $307 $11,675 
Cost of revenue303 972 83 1,358 
Gross profit$8,208 $1,885 $224 $10,317 
Gross profit as a percentage of revenue96 %66 %73 %88 %
Revenue by geographic area for the three and nine months ended September 2, 2022 and September 3, 2021 were as follows:
Three MonthsNine Months
(in millions)2022202120222021
Americas $2,600 $2,242 $7,570 $6,651 
EMEA1,143 1,061 3,436 3,139 
APAC690 632 2,075 1,885 
Total$4,433 $3,935 $13,081 $11,675 
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
Revenue by major offerings in our Digital Media reportable segment for the three and nine months ended September 2, 2022 and September 3, 2021 were as follows:
Three MonthsNine Months
(in millions)2022202120222021
Creative Cloud$2,625 $2,372 $7,778 $7,069 
Document Cloud607 493 1,764 1,442 
Total Digital Media revenue$3,232 $2,865 $9,542 $8,511 
Subscription revenue by segment for the three and nine months ended September 2, 2022 and September 3, 2021 were as follows:
Three MonthsNine Months
(in millions)2022202120222021
Digital Media $3,116 $2,757 $9,190 $8,156 
Digital Experience981 864 2,874 2,493 
Publishing and Advertising31 36 92 112 
Total subscription revenue$4,128 $3,657 $12,156 $10,761 
Contract Balances
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. Included in trade receivables on the condensed 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 September 2, 2022, the balance of trade receivables, net of allowances for doubtful accounts, was $1.72 billion, inclusive of unbilled receivables of $97 million. 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.
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. The allowance for doubtful accounts was $24 million and $16 million as of September 2, 2022 and December 3, 2021, respectively.
A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. 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 condensed consolidated balance sheets. We regularly review contract asset balances for impairment, considering factors such as historical experience, credit-worthiness, age of the balance, current economic conditions and a reasonable and supportable forecast of future economic conditions. Contract asset impairments were not material for the nine months ended September 2, 2022. Contract assets were $80 million and $85 million as of September 2, 2022 and December 3, 2021, respectively.
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. As of September 2, 2022, the balance of deferred revenue was $4.94 billion, which includes $33 million of refundable customer deposits. 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.
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
As of December 3, 2021, the balance of deferred revenue was $4.88 billion. During the three and nine months ended September 2, 2022, approximately $873 million and $4.37 billion of revenue, respectively, was recognized that was included in the balance of deferred revenue as of December 3, 2021.
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. As of September 2, 2022, remaining performance obligations were approximately $14.11 billion. Non-cancellable and non-refundable 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 73% 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.
Incremental costs of obtaining a contract with a customer are capitalized if we expect the benefit of those costs to be longer than one year and primarily relate to sales commissions paid to our sales force personnel. Capitalized contract acquisition costs are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. Capitalized contract acquisition costs were $649 million and $611 million as of September 2, 2022 and December 3, 2021, respectively.
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 condensed consolidated balance sheets. Refund liabilities were $105 million and $128 million as of September 2, 2022 and December 3, 2021, respectively.
NOTE 3.  ACQUISITIONS
Figma
Subsequent to September 2, 2022, we entered into a definitive agreement under which we intend to acquire Figma, Inc. (“Figma”) for approximately $20 billion, comprised of approximately half cash and half stock, subject to customary purchase price adjustments. Approximately 6 million additional restricted stock units will be granted to Figma’s Chief Executive Officer and employees that will vest over four years subsequent to closing. The transaction is subject to regulatory approvals and customary closing conditions, and is expected to close in 2023. We will be required to pay Figma a reverse termination fee of $1 billion if the transaction fails to receive regulatory clearance, assuming all other closing conditions have been satisfied or waived, or if it fails to close within 18 months from September 15, 2022.
Figma is a privately held company that provides a web-first collaborative product design platform. Following the closing, we intend to integrate Figma into our Digital Media reportable segment for financial reporting purposes.
Frame.io
On October 7, 2021, we completed the acquisition of Frame.io, a privately held company that provides a cloud-based video collaboration platform, for approximately $1.24 billion, primarily in cash consideration. The financial results of Frame.io have been included in our condensed consolidated financial statements since the date of the acquisition. Frame.io is reported as part of our Digital Media reportable segment.
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
The table below represents the final purchase price allocation to total identifiable intangible assets acquired and net liabilities assumed based on their respective estimated fair values as of October 7, 2021 and the associated estimated useful lives at that date. During the nine months ended September 2, 2022, we recorded purchase accounting adjustments that were not material based on changes to management’s estimates and assumptions in regards to the total purchase price and its related impact to goodwill.
(dollars in millions)AmountWeighted Average Useful Life (years)
Purchased technology$331 4
In-process research and development (1)
19 N/A
Trademarks4 3
Customer contracts and relationships3 10
Total identifiable intangible assets357 
Net liabilities assumed(36)N/A
Goodwill (2)
915 N/A
Total purchase price$1,236 
_________________________________________
(1)    Capitalized as purchased technology and considered indefinite lived until completion or abandonment of the associated research and development efforts.
(2)    Non-deductible for tax purposes.
Workfront
On December 7, 2020, we completed the acquisition of Workfront, a privately held company that provides a workflow platform, for approximately $1.52 billion of cash consideration. The financial results of Workfront have been included in our condensed consolidated financial statements since the date of the acquisition. Workfront is reported as part of our Digital Experience reportable segment.
The table below represents the final purchase price allocation to total identifiable intangible assets acquired and net liabilities assumed based on their estimated fair values as of December 7, 2020 and the associated estimated useful lives at that date.
(dollars in millions)AmountWeighted Average Useful Life (years)
Customer contracts and relationships$290 10
Purchased technology100 3
Backlog40 2
Trademarks30 5
Total identifiable intangible assets460 
Net liabilities assumed(31)N/A
Goodwill (1)
1,095 N/A
Total purchase price$1,524 
_________________________________________
(1)    Non-deductible for tax purposes.
Pro forma financial information has not been presented for these acquisitions as the impacts to our condensed consolidated financial statements were not material.
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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
NOTE 4.  CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash equivalents consist of highly liquid marketable securities with remaining maturities of three months or less at the date of purchase. We classify our investments in marketable debt securities as “available-for-sale.” We carry these investments at fair value, based on quoted market prices or other readily available market information. Unrealized gains and unrealized non-credit-related losses of marketable debt securities are included in accumulated other comprehensive income, net of taxes, in our condensed consolidated balance sheets. Unrealized credit-related losses are recorded to other income (expense), net in our condensed consolidated statements of income with a corresponding allowance for credit-related losses in our condensed consolidated balance sheets. Gains and losses are determined using the specific identification method and recognized when realized in our condensed consolidated statements of income.
Cash, cash equivalents and short-term investments consisted of the following as of September 2, 2022:
(in millions)Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Current assets:    
Cash$595 $ $ $595 
Cash equivalents:
Corporate debt securities21   21 
Money market funds3,202