SAN JOSE, Calif.--June 16, 2005-- Adobe Systems Incorporated today reported strong financial results for its second quarter ended June 3, 2005.
In the second quarter of fiscal 2005, Adobe achieved record revenue of $496.0 million, compared to $410.1 million reported for the second quarter of fiscal 2004, and $472.9 million reported in the first quarter of fiscal 2005. On a year-over-year basis, this represents 21 percent revenue growth. Adobe's second quarter revenue target range was $475 to $495 million.
"Adobe's performance in Q2 reflects our third consecutive quarter of record revenue, demonstrating continued execution against our strategy," said Bruce Chizen, CEO. "Our planned acquisition of Macromedia will further enhance our ability to deliver an industry-defining technology platform and enable us to offer a wider range of solutions to customers and industries around the world."
GAAP diluted earnings per share for the second quarter of fiscal 2005 were $0.29. Non-GAAP diluted earnings per share, which excludes the net tax impact of the planned repatriation of certain foreign earnings, and investment losses from the Company's venture program, were $0.28.
GAAP net income was $149.8 million for the second quarter of fiscal 2005, compared to $109.4 million reported in the second quarter of fiscal 2004, and $151.9 million in the first quarter of fiscal 2005.
Non-GAAP net income, which excludes, as applicable, the net tax impact of the planned repatriation of certain foreign earnings, and investment gains and losses, was $142.9 million for the second quarter of fiscal 2005, compared to $108.8 million in the second quarter of fiscal 2004, and $133.8 million in the first quarter of fiscal 2005.
GAAP diluted earnings per share for the second quarter of fiscal 2005 were $0.29 based on 508.2 million weighted average shares. This compares with GAAP diluted earnings per share of $0.22 reported in the second quarter of fiscal 2004, based on 493.9 million weighted average shares, and GAAP diluted earnings per share of $0.30 reported in the first quarter of fiscal 2005, based on 506.2 million weighted average shares.
Adobe's GAAP and non-GAAP operating income was $182.2 million in the second quarter of fiscal 2005, compared to $141.8 million in the second quarter of fiscal 2004 and $170.7 million in the first quarter of fiscal 2005. As a percent of revenue, GAAP and non-GAAP operating income in the second quarter of fiscal 2005 were 36.7 percent, compared to 34.6 percent in the second quarter of fiscal 2004 and 36.1 percent in the first quarter of fiscal 2005.
Company Provides Update on Status of Macromedia Acquisition
On April 18, 2005, Adobe announced a definitive agreement to acquire Macromedia (Nasdaq:MACR - News). Adobe said today the integration planning process between the two companies is well underway and continues to anticipate the acquisition will close in the Fall of 2005. The Company also indicated its pre-merger notification and report form under the Hart-Scott-Rodino Act is currently being reviewed by the Department of Justice, and said it expects to file a registration statement on Form S-4 in the next few weeks.
On June 13, 2005 a stockholder derivative complaint was filed by a purported Adobe stockholder in the Superior Court of the State of California for the County of Santa Clara. The complaint names Adobe and its board of directors as defendants and alleges breach of fiduciary duty in connection with Adobe's plan to acquire Macromedia in light of Macromedia's recent restatement of its financial results for its fiscal years 1999-2004. Adobe management believes the complaint is without merit and intends to defend the matter vigorously.
Adobe is maintaining a Website as an ongoing source of information regarding the Macromedia acquisition at http://www.adobe.com/aboutadobe/invrelations/adobeandmacromedia.html.
Adobe Provides Third Quarter Financial Targets
For the third quarter of fiscal 2005, Adobe announced it is targeting revenue of $470 to $490 million, which represents approximately 16 to 21 percent year-over-year growth. The Company is also targeting gross margin of approximately 94 percent, and GAAP and non-GAAP operating margin ranges of approximately 34 to 36 percent.
As a percent of revenue, Adobe is targeting third quarter expenses as follows:
Research & Development -- approximately 20 percent
Sales & Marketing -- approximately 29 to 31 percent
General & Administrative -- approximately 9 percent
In addition, Adobe is targeting its share count range to be between 511 and 513 million shares in the third quarter of fiscal 2005. The Company also is targeting other income in its third quarter to be approximately $9 to $10 million, and a tax rate of 25 percent. These targets lead to third quarter GAAP and non-GAAP earnings per share target ranges of $0.25 to $0.27.
Adobe currently believes targeted non-GAAP earnings per share and non-GAAP operating margin results will not differ materially from targeted GAAP results.
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