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Adobe's Cloud Innovations Drive Strong Q4 and FY13 Financial Results

For immediate release

Creative Cloud Subscriptions Accelerate to More Than 1.4 Million; Adobe Marketing Cloud Surpasses Revenue of $1 Billion in 2013

SAN JOSE, Calif. — Dec. 12, 2013 Adobe (Nasdaq:ADBE) today reported financial results for its fourth quarter and fiscal year 2013 ended Nov. 29, 2013.  The Company also provided a financial outlook for fiscal year 2014 and long-term growth targets for key areas of its business.

Fourth Quarter Financial Highlights

  • Adobe achieved revenue of $1.04 billion, within its targeted range of $1 billion to $1.05 billion.
  • Adobe exited Q4 with 1 million 439 thousand paid Creative Cloud subscriptions, an increase of 402 thousand when compared to the number of subscriptions as of the end of Q3 fiscal year 2013, and enterprise adoption of Creative Cloud was stronger than expected.
  • Creative Annualized Recurring Revenue (“ARR”) grew to $768 million, and total Digital Media ARR grew to $911 million.
  • Adobe Marketing Cloud quarterly revenue was $316.2 million, representing 38 percent year-over-year growth.
  • Diluted earnings per share were $0.13 on a GAAP-basis, and $0.32 on a non-GAAP basis.
  • Cash flow from operations was $315.0 million.
  • Deferred revenue grew by $94.7 million to a record $828.8 million.
  • The company repurchased 7.9 million shares during the quarter, returning approximately $405 million of cash to stockholders.

Fiscal Year 2013 Financial Highlights

  • Adobe achieved revenue of $4.06 billion and generated $1.15 billion in cash flow from operations during the year.
  • Creative Cloud subscriptions grew by 1.1 million and Document Services subscriptions doubled to more than 1.6 million.  In addition, the company added more than $700 million in Digital Media ARR during the year.
  • Adobe Marketing Cloud achieved a record $1.02 billion in annual revenue, representing 26 percent year-over-year growth.
  • The company repurchased 21.6 million shares during the year, returning approximately $1 billion of cash to stockholders.
  • Adobe published other key highlights from its recent fiscal year in an Adobe By The Numbers FY2013 infographic.

A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.

Executive Quotes
“Adobe has redefined the Creative and Digital Marketing categories with its industry-leading Cloud offerings,” said Shantanu Narayen, president and chief executive officer, Adobe.  “Creative Cloud and Adobe Marketing Cloud are the clear market leaders and are poised for accelerated growth.”

“We are leading the software industry in transitioning our business to the Cloud, which is enabling us to target higher top-line growth and greater recurring revenue,” said Mark Garrett, executive vice president and chief financial officer, Adobe. “We are raising our long-term revenue growth targets, with a compound annual revenue growth rate of 20 percent between fiscal year 2014 and fiscal year 2016.”

Company Provides Growth Targets as Part of Multi-Year Financial Outlook
For the first quarter of fiscal 2014, Adobe is targeting revenue of $950 million to $1 billion.  On a diluted earnings per share basis, the company is targeting a range of $0.02 to $0.08 on a GAAP basis, and $0.22 to $0.28 on a non-GAAP basis.  Adobe expects its share count to be between 511 million and 513 million shares, and is targeting non-operating expense between $18 million and $20 million.  Adobe's tax rate is expected to be approximately 26 percent on a GAAP-basis and approximately 21 percent on a non-GAAP basis.

For fiscal year 2014, Adobe is targeting total revenue to be essentially flat with revenue achieved in fiscal year 2013.  On a diluted earnings per share basis, the company is targeting approximately $0.27 on a GAAP-basis, and approximately $1.10 on a non-GAAP basis.

Adobe provided new long-term revenue growth rate targets for its business.  The company expects to achieve a 20 percent compound annual growth rate (“CAGR”) between fiscal year 2014 and fiscal year 2016.  To achieve this goal, Adobe said it is targeting a 20 percent CAGR in its Digital Media business and a 25 percent CAGR in its Adobe Marketing Cloud business during that timeframe.  As part of these growth targets, the company said it could achieve non-GAAP earnings per share of approximately $2.00 in fiscal year 2015 and at least $3.00 in fiscal year 2016.

A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.

Adobe to Webcast Earnings Conference Call
Adobe will webcast its fourth quarter and fiscal year 2013 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: www.adobe.com/ADBE.  PDFs containing Adobe management’s prepared earnings call remarks,  financial targets and conference call slides have been posted to Adobe’s investor relations website in advance of the conference call for reference.

A reconciliation between GAAP and non-GAAP financial targets is also provided on the website.

Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to the transition of our business as we migrate to a subscription model, adoption of Creative Cloud, growth in recurring revenue, revenue, earnings per share on a GAAP and non-GAAP basis, share count, non-operating expense, and tax rate on a GAAP and non-GAAP basis, 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 products and services that meet customer requirements, introduction of new products and business models by competitors, failure to successfully manage transitions to new business models and markets, including our increased emphasis on a cloud and subscription strategy, fluctuations in subscription renewal or upgrade rates, continued uncertainty in economic conditions and the financial markets, risks associated with cyber-attacks and information security, difficulty in predicting revenue from new businesses and the potential impact on our financial results from changes in our business models, and failure to realize the anticipated benefits of past or future acquisitions.

For a discussion of these and other risks and uncertainties, please refer to Adobe’s Annual Report on Form 10-K for fiscal year 2012, and Adobe’s Quarterly Reports on Form 10-Q issued in fiscal year 2013.

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 Annual Report on Form 10-K for our year ended Nov. 29, 2013, which Adobe expects to file in Jan. 2014.

Adobe assumes no obligation to, and does not currently intend to, update these 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: 54k)

Condensed Consolidated Balance Sheets (PDF: 49k)

Condensed Consolidated Statements of Cash Flows (PDF: 44k)

Non-GAAP Results (PDF: 54k)

 

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© 2013 Adobe Systems Incorporated. All rights reserved. Adobe, the Adobe logo, Creative Cloud and Adobe Marketing Cloud 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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Adobe Systems Incorporated
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