SAN JOSE, Calif. - Adobe Systems Incorporated today reported financial results for its second quarter fiscal year 2011 ended June 3, 2011.

Second Quarter Financial Highlights

• Revenue grew 9 percent year-over-year to $1.023 billion.  The Company's targeted revenue range was $970 million to $1.020 billion.
• GAAP diluted earnings per share grew 61 percent year-over-year to $0.45.  Non-GAAP diluted earnings per share grew 25 percent year-over-year to $0.55.
• GAAP operating income grew 22 percent year-over-year to $276.7 million.  GAAP operating margin was 27.0 percent, compared to 24.1 percent in Q2 fiscal 2010.  Non-GAAP operating income grew 13 percent year-over-year to $376.4 million.  Non-GAAP operating margin was 36.8 percent, compared to 35.5 percent in Q2 fiscal 2010.
• GAAP net income grew 54 percent year-over-year to $229.4 million.  Non-GAAP net income grew 20 percent to $279.9 million.
• Deferred revenue grew to $482.0 million, compared to $443.4 million as of the end of Q1 fiscal 2011.
• Cash flow from operations was $389.3 million.
• Adobe repurchased 13.7 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 strong Q2 performance demonstrates our strategy of enabling users to make, manage and measure great digital experiences is resonating with our customers," said Shantanu Narayen, president and CEO of Adobe.

"Given our execution in Q2 against our large growth opportunities, we are reaffirming our 10 percent revenue growth objective in fiscal year 2011," said Mark Garrett, executive vice president and CFO of Adobe.

Second Quarter Fiscal 2011 Product Highlights

• In Content Authoring, Creative Suite 5.5 shipped during Q2, maintaining the strong revenue run-rate that Creative Suite 5 had established in the previous four quarters.
• In Digital Marketing Optimization, Omniture achieved record revenue, along with year-over-year bookings growth in excess of 20 percent.
• In Customer Experience Management, Enterprise segment revenue grew 34 percent year-over-year.
• Acrobat achieved 17 percent year-over-year growth.

Financial Outlook
For the third quarter of fiscal 2011, Adobe is targeting revenue of $1 billion to $1.050 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 501 million and 503 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 third quarter diluted earnings per share target range of $0.35 to $0.42 on a GAAP basis, and an earnings per share target range of $0.50 to $0.56 on a non-GAAP basis.

Adobe also reaffirmed it is targeting approximately 10 percent revenue growth in fiscal year 2011, and expects its full year operating margin to be approximately 27.5 percent on a GAAP basis, and approximately 37 percent on a non-GAAP basis.

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