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Adobe Reports Record Revenue

For immediate release

Q3 Performance Driven by Strong Momentum with Creative Suite, Omniture and Enterprise Products

SAN JOSE, Calif. — Sept. 21, 2010 Adobe Systems Incorporated (Nasdaq:ADBE) today reported strong financial results for its third quarter fiscal year 2010 ended Sept. 3, 2010.

In the third quarter of fiscal 2010, Adobe achieved record revenue of $990.3 million, compared to $697.5 million reported for the third quarter of fiscal 2009 and $943.0 million reported in the second quarter of fiscal 2010.  This represents 42 percent year-over-year revenue growth.  Adobe’s third quarter revenue target range was $950 million to $1 billion.

“Strong performance in each of our major businesses contributed to record revenue and strong earnings in Q3,” said Shantanu Narayen, president and CEO of Adobe.  “We remain bullish about Adobe's long-term role in enabling the transformation of content and applications across industries.”

Third Quarter Fiscal 2010 GAAP Results
Adobe’s GAAP diluted earnings per share for the third quarter of fiscal 2010 were $0.44, based on 523.2 million weighted average shares. This compares with GAAP diluted earnings per share of $0.26 reported in the third quarter of fiscal 2009 based on 531.8 million weighted average shares, and GAAP diluted earnings per share of $0.28 reported in the second quarter of fiscal 2010 based on 533.3 million weighted average shares.

GAAP operating income was $302.0 million in the third quarter of fiscal 2010, compared to $167.6 million in the third quarter of fiscal 2009 and $227.3 million in the second quarter of fiscal 2010.  As a percent of revenue, GAAP operating income in the third quarter of fiscal 2010 was 30.5 percent, compared to 24.0 percent in the third quarter of fiscal 2009 and 24.1 percent in the second quarter of fiscal 2010.

GAAP net income was $230.1 million for the third quarter of fiscal 2010, compared to $136.0 million reported in the third quarter of fiscal 2009 and $148.6 million in the second quarter of fiscal 2010.


Third Quarter Fiscal 2010 Non-GAAP Results
Adobe’s non-GAAP diluted earnings per share for the third quarter of fiscal 2010 were $0.54.  This compares with non-GAAP diluted earnings per share of $0.35 reported in the third quarter of fiscal 2009 and non-GAAP diluted earnings per share of $0.44 reported in the second quarter of fiscal 2010.

Adobe’s non-GAAP operating income was $384.9 million in the third quarter of fiscal 2010, compared to 
$237.1 million in the third quarter of fiscal 2009 and $334.5 million in the second quarter of fiscal 2010.  As a percent of revenue, non-GAAP operating income in the third quarter of fiscal 2010 was 38.9 percent, compared to 34.0 percent in the third quarter of fiscal 2009 and 35.5 percent in the second quarter of fiscal 2010.

Non-GAAP net income was $284.0 million for the third quarter of fiscal 2010, compared to $186.1 million in the third quarter of fiscal 2009 and $234.2 million in the second quarter of fiscal 2010.

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

Fourth Quarter Fiscal 2010 Financial Targets
For the fourth quarter of fiscal 2010, Adobe is targeting revenue of $950 million to $1 billion.  The Company’s operating margin is targeted to be 27 percent to 30 percent on a GAAP basis, and 37 percent to 38 percent on a non-GAAP basis.  In addition, the Company is targeting its share count to be between 516 million and 520 million shares, and it is targeting non-operating expense between $14 million and $19 million.  Adobe’s GAAP and non-GAAP tax rate is expected to be approximately 24.5 percent.

These targets lead to a fourth quarter diluted earnings per share target range of $0.35 to $0.41 on a GAAP basis, and an earnings per share target range of $0.48 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.

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 business momentum, 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 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, impairment of Adobe’s investment portfolio due to deterioration of the capital markets, and market risks associated with Adobe’s equity investments. 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 third quarter ended Sept. 3, 2010, which Adobe expects to file in October 2010. Adobe does not undertake an obligation to update forward-looking statements.

About Adobe Systems Incorporated
Adobe revolutionizes how the world engages with ideas and information – anytime, anywhere and through any medium. For more information, visit www.adobe.com.

Condensed Consolidated Statements of Income
(PDF: 27k)

Condensed Consolidated Statements of Cash Flows
(PDF: 26k)

Condensed Consolidated Balance Sheets
(PDF: 26k)

Non-GAAP Results
(PDF: 34k)

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© 2010 Adobe Systems Incorporated. All rights reserved.  Adobe, Creative Suite, Omniture and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners.

 

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