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Company Achieves Record Quarterly Revenue Across Creative Cloud, Document Cloud and Experience Cloud
SAN JOSE, Calif. - March 23, 2021 - Adobe (Nasdaq:ADBE) today reported financial results for its first quarter fiscal year 2021 ended March 5, 2021.
First Quarter Fiscal Year 2021 Financial Highlights
•Adobe achieved record quarterly revenue of $3.91 billion in its first quarter of fiscal year 2021, which represents 26 percent year-over-year growth. Diluted earnings per share was $2.61 on a GAAP basis, representing 33 percent year-over-year growth,
and $3.14 on a non-GAAP basis, representing 38 percent year-over-year growth.
•Digital Media segment revenue was $2.86 billion, which represents 32 percent year-over-year growth. Creative revenue grew to $2.38 billion, representing 31 percent year-over-year growth. Document Cloud revenue was $480 million, representing 37 percent year-over-year growth.
•Digital Media Annualized Recurring Revenue (“ARR”) increased $435 million quarter-over-quarter to $10.69 billion exiting the quarter. Creative ARR grew to $9.12 billion and Document Cloud ARR grew to $1.57 billion.
•Digital Experience segment revenue was $934 million, representing 24 percent year-over-year growth. Digital Experience subscription revenue was $812 million, representing 27 percent year-over-year growth.
•GAAP
operating income in the first quarter was $1.45 billion, and non-GAAP operating income was $1.83 billion. GAAP net income was $1.26 billion, and non-GAAP net income was $1.52 billion.
•Cash flows from operations were $1.77 billion.
•Remaining Performance Obligation (“RPO”) exiting the quarter was $11.61 billion, representing 17 percent year-over-year growth.
•Adobe repurchased approximately 1.9 million shares during the quarter.
Adobe’s first quarter fiscal 2021 results benefited from an extra week in the quarter due to the company’s 52/53 week financial calendar whereby fiscal 2021 is a 53-week year compared with fiscal 2020, which was a 52-week
year.
A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.
Executive Quotes
“Adobe drove record Q1 revenue and we are raising our annual targets based on the tremendous opportunity across our business and our continued confidence in our global execution,” said Shantanu Narayen, president and CEO, Adobe. “Adobe’s Creative Cloud, Document Cloud
and Experience Cloud have become mission critical
to all customer segments—from students to individuals to large enterprises—across the world.”
“Our execution in the first quarter was strong, driving accelerated revenue growth and earnings,” said John Murphy, executive vice president and CFO, Adobe. “Adobe is unique in its ability to drive both top-line and bottom-line growth with strong cash flows and margins.”
Adobe Provides Second Quarter Financial Targets
The following table summarizes Adobe’s second quarter fiscal year 2021 targets:
Total revenue
~$3.72
billion
Digital Media segment revenue
~21 percent year-over-year growth
Digital Media annualized recurring revenue (ARR)
~$450 million of net new ARR
Digital Experience segment revenue
~18 percent year-over-year growth
Digital Experience subscription revenue
~20 percent year-over-year growth
Tax rate
GAAP: ~19.5 percent
Non-GAAP: ~16 percent
Share
count
~482 million shares
Earnings per share
GAAP: ~$2.09
Non-GAAP: ~$2.81
Adobe Provides Updated Fiscal 2021 Annual Targets
Adobe today is providing updated fiscal 2021 annual targets, factoring in the company’s strong first quarter business performance and the momentum reflected in the company’s second quarter targets.
The following table summarizes Adobe’s updated fiscal year 2021 targets:
Total
revenue
~$15.45 billion
Digital Media segment revenue
~22 percent year-over-year growth
Digital Media annualized recurring revenue (ARR)
~$1.8 billion of net new ARR
Digital Experience segment revenue
~20 percent year-over-year growth
Digital Experience subscription revenue
~23 percent year-over-year growth
Tax rate
GAAP: ~17.5 percent
Non-GAAP:
~16 percent
Share count
~481 million shares
Earnings per share
GAAP: ~$9.13
Non-GAAP: ~$11.85
A reconciliation between GAAP and non-GAAP targets is provided at the end of this press release.
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Adobe to Webcast First Quarter
Earnings Conference Call
Adobe will webcast its first quarter fiscal year 2021 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: www.adobe.com/ADBE. Earnings documents, including Adobe management’s prepared conference call remarks with slides and an investor datasheet are posted to Adobe’s investor relations website in advance of the conference call for reference. A reconciliation between GAAP and non-GAAP earnings results and financial targets is also provided on
the website.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to business momentum, the financial impacts of the Workfront acquisition, the effects of the COVID-19 pandemic on our business and results of operations, our market opportunity, market trends, current macroeconomic conditions, customer success, revenue, operating margin, seasonality, annualized recurring revenue, tax rate on a GAAP and non-GAAP basis, earnings per share on a GAAP and non-GAAP basis, and share count, all of which involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute
to such differences include, but are not limited to: failure to compete effectively, failure to develop, acquire, market and offer products and services that meet customer requirements, introduction of new technology, information security and privacy, potential interruptions or delays in hosted services provided by us or third parties, macroeconomic conditions and economic impact of the COVID-19 pandemic, risks associated with cyber-attacks, complex sales cycles, risks related to the timing of revenue recognition from our subscription offerings, fluctuations in subscription renewal rates, failure to realize the anticipated benefits of past or future acquisitions, failure to effectively manage critical strategic third-party business relationships, changes in accounting principles and tax regulations, uncertainty in the financial markets and economic conditions in the countries where we operate, and other various risks associated with being a multinational corporation.
For a discussion of these and other risks and uncertainties, please refer to Adobe’s Annual Report on Form 10-K for our fiscal year 2020 ended Nov. 27, 2020, and Adobe's Quarterly Reports on Form 10-Q issued in fiscal year 2021.
The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe’s Quarterly Report on Form 10-Q for our quarter ended March 5, 2021, which Adobe expects to file in late March or early April 2021. Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.
About Adobe
Adobe
is changing the world through digital experiences. For more information, visit www.adobe.com.
Shares
used in computing diluted net income per share
483
488
484
The following table shows Adobe’s GAAP first quarter fiscal year 2021 tax rate reconciled to the non-GAAP tax rate included in this release.
First
Quarter Fiscal 2021
Effective income tax rate:
GAAP effective income tax rate
12.0
%
Income tax adjustments
5.5
Stock-based and deferred compensation expense
(1.1)
Amortization
of intangibles
(0.4)
Non-GAAP effective income tax rate
16.0
%
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Reconciliation of GAAP to Non-GAAP Financial Targets
(Shares in millions)
The
following tables show Adobe's second quarter fiscal year 2021 financial targets reconciled to the non-GAAP financial targets included in this release.
Second Quarter Fiscal 2021
Diluted net income per share:
GAAP diluted net income per share
$
2.09
Stock-based
and deferred compensation expense
0.57
Amortization of intangibles
0.18
Income tax adjustments
(0.03)
Non-GAAP diluted net income per share
$
2.81
Shares
used to compute diluted net income per share
482
Second Quarter Fiscal 2021
Effective income tax rate:
GAAP effective income tax rate
19.5
%
Stock-based
and deferred compensation expense
(1.4)
Amortization of intangibles
(0.1)
Income tax adjustments
(2.0)
Non-GAAP effective income tax rate
16.0
%
The
following tables show Adobe's updated fiscal year 2021 financial targets reconciled to the non-GAAP financial targets included in this release.
Fiscal Year 2021
Diluted net income per share:
GAAP diluted net income per share
$
9.13
Stock-based
and deferred compensation expense
2.33
Amortization of intangibles
0.71
Income tax adjustments
(0.32)
Non-GAAP diluted net income per share
$
11.85
Shares
used to compute diluted net income per share
481
Fiscal Year 2021
Effective income tax rate:
GAAP effective income tax rate
17.5
%
Stock-based
and deferred compensation expense
(1.4)
Amortization of intangibles
(0.1)
Non-GAAP effective income tax rate
16.0
%
Use of Non-GAAP Financial Information
Adobe
continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Adobe uses non-GAAP financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. Adobe's management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adobe presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Adobe's operating results. Adobe believes these non-GAAP financial measures are useful because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. This allows institutional investors, the
8
analyst
community and others to better understand and evaluate our operating results and future prospects in the same manner as management.
Adobe's management believes it is useful for itself and investors to review, as applicable, both GAAP information as well as non-GAAP measures, which may exclude items such as stock-based and deferred compensation expenses, amortization of intangibles, investment gains and losses, the related tax impact of all of these items, income tax adjustments, and the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes. Adobe uses these non-GAAP measures in order to assess the performance of Adobe's business and for planning and forecasting in subsequent periods. Whenever such a non-GAAP measure is used, Adobe provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related
GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed above.
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Dates Referenced Herein and Documents Incorporated by Reference