01—Abstract
Summary
Summary of the 10-K filed January 21, 2020. Cited figures are marked; the original filing is the authoritative source.
Adobe Inc.'s 2019 10-K filing highlights a year of robust growth, driven by the successful transition to subscription-based models across its Digital Media and Digital Experience segments.
The company reported a significant increase in total revenue, primarily fueled by strong subscription revenue growth in both segments, with Creative Cloud and Adobe Experience Cloud showing notable year-over-year increases. Strategic acquisitions, including Marketo and Magento in the prior year, continued to contribute positively to the Digital Experience segment's performance. Adobe's focus on its two core strategic growth areas, Digital Media and Digital Experience, is evident in its operational and financial performance.
The company's commitment to innovation, particularly through its Adobe Sensei AI framework and expansion into emerging technologies like 3D and AR, positions it well for continued market leadership. Investors can look forward to Adobe's ongoing efforts to enhance customer engagement, expand its product offerings, and capitalize on the digital transformation trends shaping various industries.
02—Key points
Key Highlights
- Total revenue grew by 24% to $11.17 billion in fiscal year 2019, compared to $9.03 billion in fiscal year 2018.
- Digital Media segment revenue increased by 22% to $7.71 billion, driven by strong performance in Creative Cloud and Document Cloud subscription offerings.
- Digital Experience segment revenue saw a significant increase of 31% to $3.21 billion, boosted by subscription revenue from recent acquisitions like Marketo and Magento.
- Annualized Recurring Revenue (ARR) for the Digital Media segment reached $8.40 billion, a 25% increase from the prior year.
- The company continues to invest heavily in Research and Development (R&D) and Sales and Marketing, reflecting a commitment to innovation and market expansion.
- Adobe continues to execute its stock repurchase program, returning value to shareholders and managing dilution.
- The company's financial position remains strong, with significant cash, cash equivalents, and short-term investments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Adobe Inc. kept $0.26.
- Revenue$11.17B100.0%
- Cost of revenue−$1.67B15.0%
- Gross profit$9.50B85.0%
- Operating costs−$6.23B55.8%
- Operating income$3.27B29.3%
- Interest, other & tax−$317.0M2.8%
- Net income$2.95B26.4%
Where FY2019 revenue went
$11.17B- Operating costs: $6.23B, 56% of revenue
- Net income: $2.95B, 26% of revenue
- Cost of revenue: $1.67B, 15% of revenue
- Interest, other & tax: $317.0M, 2.8% of revenue
Kept 26% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed January 21, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $11.17B$9.03B | +23.7% |
| Cost of Revenue | $1.67B$1.20B | +40.0% |
| Gross Profit | $9.50B$7.83B | +21.2% |
| Operating Expenses | $6.23B$5.00B | +24.7% |
| Operating Income | $3.27B$2.84B | +15.1% |
| Interest Expense | $157.00M$89.00M | +76.4% |
| Net Income | $2.95B$2.59B | +13.9% |
| EPS (Basic) | $6.07$5.28 | +15.0% |
| EPS (Diluted) | $6.00$5.20 | +15.4% |
| Shares Outstanding (Basic) | 486.30M490.60M | −0.9% |
| Shares Outstanding (Diluted) | 491.60M497.80M | −1.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of Adobe's revenue growth in fiscal year 2019?
Adobe's revenue growth in fiscal year 2019 was primarily driven by strong subscription revenue from both its Digital Media segment (Creative Cloud and Document Cloud) and its Digital Experience segment (Adobe Experience Cloud). The company also benefited from the continued integration and performance of recently acquired businesses like Marketo and Magento.
How is Adobe managing its debt, particularly the upcoming maturities?
Adobe reported significant debt, including a $2.25 billion term loan and $900 million in senior notes maturing in early 2020. The company stated its intention to refinance these obligations on or before their respective due dates, indicating proactive financial management to address upcoming maturities.
What is Adobe's strategy for future growth?
Adobe's strategy focuses on its two key growth areas: Digital Media and Digital Experience. This includes expanding its customer base for subscription offerings like Creative Cloud and Document Cloud, driving innovation through AI and emerging technologies (like 3D and AR), and enhancing customer engagement across its Digital Experience Cloud solutions. The company also emphasizes a data-driven operating model and strategic partnerships to expand market reach.
What are the key risks identified by Adobe for its business?
Adobe identifies several key risks, including intense competition requiring continuous innovation and adaptation, the potential failure to develop or market new products that meet customer needs, cybersecurity threats and data breaches, the complexity and length of enterprise sales cycles, reliance on subscription renewals, and risks associated with operating as a multinational corporation, including currency fluctuations and evolving global regulations.
06—Continue