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Adobe reports record revenue

Adobe Document Cloud Achieves Year-Over-Year Growth of 22 Percent

SAN JOSE, Calif.–(BUSINESS WIRE)–Adobe (Nasdaq:ADBE) today reported strong financial results for its second quarter fiscal year 2018 ended June 1, 2018.

Financial Highlights

  • Adobe achieved record quarterly revenue of $2.20 billion in its second quarter of fiscal year 2018, which represents 24 percent year-over-year revenue growth.
  • Diluted earnings per share was $1.33 on a GAAP-basis, and $1.66 on a non-GAAP basis. A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.
  • Digital Media segment revenue was $1.55 billion, with Creative revenue growing to $1.30 billion and Document Cloud achieving record revenue of $243 million, which represents 22 percent year-over-year growth.
  • Digital Media Annualized Recurring Revenue (“ARR”) grew to $6.06 billion exiting the quarter, a quarter-over-quarter increase of $343 million. Creative ARR grew to $5.37 billion, and Document Cloud ARR grew to $694 million.
  • Digital Experience segment revenue was $586 million, which represents 18 percent year-over-year growth.
  • Operating income grew 39 percent and net income grew 77 percent year-over-year on a GAAP-basis; operating income grew 33 percent and net income grew 62 percent year-over-year on a non-GAAP basis.
  • Cash flow from operations was $976 million, and deferred revenue grew 27 percent year-over-year to approximately $2.63 billion.
  • Adobe repurchased approximately 2.6 million shares during the quarter, returning $589 million of cash to stockholders.

Executive Quotes

“Adobe delivers all the capabilities to enable transformative digital experiences, including content creation and management, predictive analytics and commerce,” said Shantanu Narayen, president and CEO, Adobe. “Our record results in Q2 reflect continued execution against this significant opportunity where Adobe is the clear market leader.”

“Adobe delivered record revenue with strong earnings and cash flow, and we expect our momentum to continue in the second half of fiscal 2018,” said John Murphy, executive vice president and CFO, Adobe.

About Adobe

Adobe is changing the world through digital experiences. For more information, visit www.adobe.com.

© 2018 Adobe Systems Incorporated. All rights reserved. Adobe, Adobe Document Cloud and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners.

Condensed Consolidated Statements of Income

(In thousands, except per share data; unaudited)

Three Months Ended Six Months Ended
June 1,
2018
June 2,
2017
June 1,
2018
June 2,
2017
Revenue:
Subscription $ 1,923,131 $ 1,483,690 $ 3,716,489 $ 2,867,546
Product 150,993 171,545 322,601 354,930
Services and support 121,236 116,955 235,217 231,360
Total revenue 2,195,360 1,772,190 4,274,307 3,453,836
Cost of revenue:
Subscription 186,355 142,734 351,040 283,915
Product 10,779 15,488 23,656 29,821
Services and support 84,210 81,138 165,550 162,961
Total cost of revenue 281,344 239,360 540,246 476,697
Gross profit 1,914,016 1,532,830 3,734,061 2,977,139
Operating expenses:
Research and development 374,128 299,401 722,897 584,478
Sales and marketing 646,215 553,098 1,227,172 1,073,395
General and administrative 178,040 156,929 348,480 307,737
Amortization of purchased intangibles 17,149 19,320 34,295 38,448
Total operating expenses 1,215,532 1,028,748 2,332,844 2,004,058
Operating income 698,484 504,082 1,401,217 973,081
Non-operating income (expense):
Interest and other income (expense), net 11,599 5,154 28,271 12,360
Interest expense (20,363 ) (18,347 ) (40,262 ) (36,477 )
Investment gains (losses), net 1,079 1,729 4,075 4,286
Total non-operating income (expense), net (7,685 ) (11,464 ) (7,916 ) (19,831 )
Income before income taxes 690,799 492,618 1,393,301 953,250
Provision for income taxes 27,632 118,228 147,058 180,414
Net income $ 663,167 $ 374,390 $ 1,246,243 $ 772,836
Basic net income per share $ 1.35 $ 0.76 $ 2.53 $ 1.56
Shares used to compute basic net income per share 491,914 494,371 491,993 494,492
Diluted net income per share $ 1.33 $ 0.75 $ 2.50 $ 1.54
Shares used to compute diluted net income per share 498,252 500,351 499,166 501,032
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