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Adobe Delivered Strong Q3 Earnings

Wednesday, September 21, 2011

Press release from the issuing company

SAN JOSE, Calif. - Adobe Systems Incorporated today reported financial results for its third quarter fiscal year 2011 ended Sept. 2, 2011.

Third Quarter Financial Highlights

  • Revenue was $1.013 billion.
  • GAAP diluted earnings per share were $0.39.  Non-GAAP diluted earnings per share were $0.55.
  • GAAP operating income was $274 million.  GAAP operating margin was 27.1 percent.  Non-GAAP operating income was $366 million.  Non-GAAP operating margin was 36.1 percent.
  • GAAP net income was $195 million.  Non-GAAP net income was $273 million.
  • Deferred revenue grew to $484 million.
  • Cash flow from operations was $325 million.
  • Adobe repurchased 3.6 million shares of stock during the quarter.

A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Executive Quotes
"Our industry is in the midst of a major transformation," said Shantanu Narayen, president and CEO of Adobe. "We are aligning around two large initiatives:  Content Authoring and Digital Marketing.  Each of these opportunities offers significant growth potential, and Adobe is well-positioned to be the market leader in both."

"We delivered strong earnings in Q3. At the high end of our financial targets for our fourth quarter, we will achieve our 10 percent annual revenue growth target as well as earnings growth of 20 percent for the fiscal year," said Mark Garrett, executive vice president and CFO of Adobe.

Financial Outlook
For the fourth quarter of fiscal 2011, Adobe is targeting revenue of $1.075 billion to $1.125 billion.

The Company's operating margin is targeted to be 26.5 percent to 29.5 percent on a GAAP basis, and 36 percent to 38 percent on a non-GAAP basis.  In addition, the Company is targeting its share count to be between 497 million and 499 million shares, and it is targeting non-operating expense between $17 million and $21 million.  Adobe's GAAP and non-GAAP tax rates are expected to be approximately 22 percent.

These targets lead to a fourth quarter diluted earnings per share target range of $0.41 to $0.50 on a GAAP basis, and an earnings per share target range of $0.57 to $0.64 on a non-GAAP basis.

Reconciliation between these GAAP and non-GAAP financial targets is provided at the end of this press release.

Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to revenue, operating margin, non-operating expense, tax rate, share count, earnings per share and our ability to align our business to successfully respond to changes in our industry, 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 develop, market and distribute new products and services or upgrades or enhancements to existing products and services that meet customer requirements, introduction of new products, services and business models by existing and new competitors, failure to successfully manage transitions to new business models and markets, continued uncertainty in economic conditions and the financial markets and other adverse changes in general political or economic conditions in any of the major countries in which Adobe does business, difficulty in predicting revenue from new businesses, failure to realize the anticipated benefits of past or future acquisitions, and difficulty in integrating such acquisitions, costs related to intellectual property acquisitions, disputes and litigation, inability to protect Adobe's intellectual property from third-party infringers, or unauthorized copying, use or disclosure, security vulnerabilities in our products and systems, interruptions or delays in our service or service from third-party service providers that host or deliver services, security or privacy breaches, or failure in data collection, failure to manage Adobe's sales and distribution channels and third-party customer service and technical support providers effectively, disruption of Adobe's business due to catastrophic events, risks associated with global operations, currency fluctuations, risks associated with our debt service obligations, changes in, or interpretations of, accounting principles, impairment of Adobe's goodwill or amortizable intangible assets, changes in, or interpretations of, tax rules and regulations, Adobe's inability to attract and retain key personnel, and impairment of Adobe's investment portfolio due to deterioration of the capital markets. For further discussion of these and other risks and uncertainties, individuals should refer to Adobe's SEC filings.

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 Sept. 2, 2011, which Adobe expects to file in Oct. 2011. Adobe does not undertake an obligation to update forward-looking statements.

 

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