Company Achieves First $3 Billion Quarter

San Jose, Calif. – Adobe today reported financial results for its first quarter fiscal year 2020 ended Feb. 28, 2020.

First Quarter Fiscal Year 2020 Financial Highlights

• Adobe achieved record quarterly revenue of $3.09 billion in its first quarter of fiscal year 2020, which represents 19 percent year-over-year growth. Diluted earnings per share was $1.96 on a GAAP basis, and $2.27 on a non-GAAP basis. Adobe’s earnings per share results factor an expense charge related to the cancellation of corporate events including Adobe Summit due to the COVID-19 situation, which impacted both GAAP and non-GAAP earnings per share by $0.07 in the quarter.
• Digital Media segment revenue was $2.17 billion, which represents 22 percent year-over-year growth. Creative revenue grew to $1.82 billion and Document Cloud revenue was $351 million. Digital Media Annualized Recurring Revenue (“ARR”) grew to $8.73 billion exiting the quarter, a quarter-over-quarter increase of $400 million. Creative ARR grew to $7.58 billion, and Document Cloud ARR grew to $1.15 billion.
• Digital Experience segment revenue was $858 million, representing 15 percent year-over-year growth.
• GAAP operating income in the first quarter was $937 million, and non-GAAP operating income was $1.25 billion. GAAP net income was $955 million, and non-GAAP net income was $1.11 billion.
• Cash flow from operations was $1.32 billion.
• Remaining Performance Obligation exiting the quarter was $9.91 billion.
• Adobe repurchased approximately 2.4 million shares during the quarter.
• A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.

Executive Quotes

"We delivered a record Q1 and our first $3 billion quarter," said Shantanu Narayen, president and CEO, Adobe. “Our strategy in light of the COVID-19 situation has been to ensure the well-being of our employees, serve our customers and focus on our long-term opportunity.”

"Adobe delivered strong revenue, earnings and cash flow in our first quarter," said John Murphy, executive vice president and CFO, Adobe. "Our recurring revenue model and the real-time visibility we have into our business uniquely positions Adobe to manage through an uncertain environment."

Adobe Provides Second Quarter Fiscal Year 2020 Financial Targets

Adobe today is providing second quarter financial targets that factor the expected impact of the global uncertainty caused by the COVID-19 situation based on the latest data and information available. While the company’s revenue and earnings are relatively predictable as a result of its subscription-based business model, Adobe expects it will be impacted in the following areas:

• Enterprises deferring bookings decisions, delaying consulting services implementations and reducing marketing spend;
• Consumers reducing spending in countries more adversely impacted by the COVID-19 situation; and
• Software license revenue driven by channel partners.
• These impacts are expected to be more prominent in countries and industries most affected by the crisis.

The following table summarizes Adobe’s second quarter fiscal year 2020 targets.

Total revenue: Approximately $3.175 billion
Digital Media segment revenue: Approximately 19 percent year-over-year growth
Digital Media annualized recurring revenue (ARR): Approximately $385 million of net new ARR
Digital Experience segment revenue: Approximately 12 percent year-over-year growth
Tax rate: GAAP: ~(10) percent
Non-GAAP: ~10 percent
Share count: ~486 million shares
Earnings per share: GAAP: ~$2.10 Non-GAAP: ~$2.35

Adobe to Webcast Earnings Conference Call

Adobe will webcast its first quarter fiscal year 2020 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.