San Jose, Calif. — Adobe Systems Incorporated today reported financial results for its first quarter ended March 4, 2011.

In the first quarter of fiscal 2011, Adobe achieved record revenue of $1.028 billion, compared to $858.7 million reported for the first quarter of fiscal 2010 and $1.008 billion reported in the fourth quarter of fiscal 2010.  This represents 20 percent year-over-year revenue growth.  Adobe’s first quarter revenue target range was $1 billion to $1.05 billion.

“Our record results in Q1 represent our sixth consecutive quarter of sequential revenue growth,” said Shantanu Narayen, president and CEO of Adobe.  “Adobe’s vision for transforming how the world is creating, measuring and delivering digital experiences is resonating with our customers, and our solutions are enabling us to target large addressable markets that are fueling our growth.”

First Quarter Fiscal 2011 GAAP Results

Adobe’s GAAP diluted earnings per share for the first quarter of fiscal 2011 were $0.46, based on 511.3 million weighted average shares. This compares with GAAP diluted earnings per share of $0.24 reported in the first quarter of fiscal 2010 based on 532.6 million weighted average shares, and GAAP diluted earnings per share of $0.53 reported in the fourth quarter of fiscal 2010 based on 511.9 million weighted average shares.

GAAP operating income was $302.3 million in the first quarter of fiscal 2011, compared to $176.8 million in the first quarter of fiscal 2010 and $286.9 million in the fourth quarter of fiscal 2010.  As a percent of revenue, GAAP operating income in the first quarter of fiscal 2011 was 29.4 percent, compared to 20.6 percent in the first quarter of fiscal 2010 and 28.5 percent in the fourth quarter of fiscal 2010.

GAAP net income was $234.6 million for the first quarter of fiscal 2011, compared to a GAAP net income of $127.2 million reported in the first quarter of fiscal 2010 and GAAP net income of $268.9 million in the fourth quarter of fiscal 2010.

First Quarter Fiscal 2011 Non-GAAP Results

Adobe’s non-GAAP diluted earnings per share for the first quarter of fiscal 2011 were $0.58.  This compares with non-GAAP diluted earnings per share of $0.40 reported in the first quarter of fiscal 2010 and non-GAAP diluted earnings per share of $0.56 reported in the fourth quarter of fiscal 2010.

Adobe’s non-GAAP operating income was $400.1 million in the first quarter of fiscal 2011, compared to $289.3 million in the first quarter of fiscal 2010 and $384.0 million in the fourth quarter of fiscal 2010.  As a percent of revenue, non-GAAP operating income in the first quarter of fiscal 2011 was 38.9 percent, compared to 33.7 percent in the first quarter of fiscal 2010 and 38.1 percent in the fourth quarter of fiscal 2010.

Non-GAAP net income was $298.1 million for the first quarter of fiscal 2011, compared to $211.7 million in the first quarter of fiscal 2010 and $285.7 million in the fourth quarter of fiscal 2010.

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

Second Quarter Fiscal 2011 Financial Targets

“Our hearts go out to everyone in Japan. Although Adobe has a very diversified business, Japan is our second largest country from a revenue perspective and March is typically our biggest revenue month of the year there due to fiscal year-end spending. Given the uncertain business environment in Japan, we are being prudent and have reduced our revenue expectation for our second quarter by $50 million — or roughly one-third of our original Q2 revenue expectation for Japan,” said Mark Garrett, executive vice president and CFO of Adobe.

For the second quarter of fiscal 2011, Adobe is now targeting revenue of $970 million to $1.02 billion.

The Company’s operating margin is targeted to be 24.5 percent to 27.5 percent on a GAAP basis, and 34 percent to 36 percent on a non-GAAP basis.  In addition, the Company is targeting its share count to be between 510 million and 512 million shares, and it is targeting non-operating expense between $16 million and $20 million.  Adobe's GAAP and non-GAAP tax rates are expected to be approximately 22 percent.

These targets lead to a second quarter diluted earnings per share target range of $0.33 to $0.40 on a GAAP basis, and an earnings per share target range of $0.47 to $0.54 on a non-GAAP basis.

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