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Adobe Reports Q1 FY2012 Financial Results

For immediate release

SAN JOSE, Calif. — March 19, 2012 Adobe Systems Incorporated (Nasdaq:ADBE) today reported financial results for its first quarter of fiscal year 2012 ended March 2, 2012.

First Quarter Financial Highlights

  • Revenue in Q1 FY2012 was $1.045 billion, which included $9.6 million of revenue from the acquisition of Efficient Frontier which closed in January 2012.
  • Diluted earnings per share were $0.37 on a GAAP-basis, and $0.57 on a non-GAAP basis.
  • Operating income was $289.0 million and net income was $185.2 million on a GAAP-basis.  Operating income was $386.7 million and net income was $284.5 million on a non-GAAP basis.
  • Deferred revenue grew by $17.3 million quarter-over-quarter to a total of $549.0 million.
  • Cash flow from operations was $314.4 million.

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

Executive Quotes
“Our strategy is to be the leader in Digital Media and Digital Marketing.  With the upcoming release of our Creative Suite and Creative Cloud offerings, and with the momentum we have in Digital Marketing, we remain confident about our ability to drive strong revenue and earnings growth,” said Shantanu Narayen, president and chief executive officer, Adobe.

“We delivered solid earnings in Q1, achieved revenue within our targeted range and began to build excitement for our upcoming creative product release,” said Mark Garrett, executive vice president and chief financial officer, Adobe.  “We are raising our fiscal year revenue and non-GAAP earnings growth targets due to the addition of Efficient Frontier.”

Financial Outlook
For the second quarter of fiscal 2012, Adobe is targeting revenue of $1.090 billion to $1.140 billion.  On a diluted earnings per share basis, the company is targeting a range of $0.37 to $0.43 on a GAAP basis, and $0.57 to $0.61 on a non-GAAP basis.

Adobe is targeting its Q2 share count to be between 502 million and 504 million shares, and it is targeting non-operating expense between $19 million and $21 million.  Adobe's tax rate is expected to be approximately 23.5 percent on a GAAP basis and 22.5 percent on a non-GAAP basis.

For fiscal year 2012, Adobe adjusted its annual financial targets due to the acquisition of Efficient Frontier.  The company increased its annual revenue growth target to a range of six to eight percent, versus its prior target range of four to six percent.  Adobe also adjusted its diluted earnings per share target range to $1.63 to $1.73 on a GAAP basis, and $2.38 to $2.48 on a non-GAAP basis.

A reconciliation between 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, non-operating expense, tax rate, share count, earnings per share and the success of upcoming product releases, 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, including our increased emphasis on a cloud strategy, fluctuations in subscription renewal or upgrade rates, continued uncertainty in economic conditions and the financial markets and other adverse changes in general political or economic 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, increasing regulatory focus on privacy issues, 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, Adobe’s ability to comply with new laws and regulations globally, and costs associated with such compliance, 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, and impairment of Adobe’s investment portfolio due to deterioration of the capital markets. 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 quarter ended March 2, 2012, which Adobe expects to file later in March 2012. Adobe does not undertake an obligation to update forward-looking statements.

About Adobe Systems Incorporated
Adobe is changing the world through digital experiences. For more information, visit www.adobe.com.

Condensed Consolidated Statements of Income
(PDF: 36k)

Condensed Consolidated Balance Sheets
(PDF: 37k)

Condensed Consolidated Statements of Cash Flows
(PDF: 34k)

Non-GAAP Results
(PDF: 60k)

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© 2012 Adobe Systems Incorporated. All rights reserved. Adobe 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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Contacts

Mike Saviage
Adobe Systems Incorporated
408-536-4416
ir@adobe.com

Jodi Sorensen
Adobe Systems Incorporated
408-536-2084
jsorensen@adobe.com