10-QPeriod: Q3 FY2000

ADOBE INC. Quarterly Report for Q3 Ended Sep 1, 2000

Filed October 16, 2000For Securities:ADBE

Summary

Adobe Systems Incorporated reported a strong financial performance for the nine months and third quarter ended September 1, 2000. Revenue demonstrated significant year-over-year growth, driven by robust demand across key segments including Web Publishing and Print Publishing, with notable contributions from new product releases like Adobe Illustrator 9.0 and FrameMaker 6.0. The company also saw substantial revenue increases in its ePaper Solutions segment, largely due to strong Acrobat licensing. Net income and earnings per share showed healthy increases, reflecting effective cost management and growing top-line performance. Adobe's financial position remains solid, with increasing cash reserves and working capital, supporting ongoing investment in research and development and strategic acquisitions. Despite a dynamic market and increasing competition, Adobe maintains a positive outlook, targeting continued revenue growth and operating efficiencies. The company's strategy includes ongoing investment in new product development, particularly for the internet market, and expansion into new distribution channels. While facing challenges such as intense competition and potential market shifts, Adobe's diversified product portfolio and strong market positions across its segments provide a solid foundation for future performance.

Key Highlights

  • 1Revenue increased by 26% to $328.9 million in Q3 2000 compared to Q3 1999, and by 24% to $911.2 million for the nine months ended September 1, 2000.
  • 2Net income rose to $78.3 million ($0.61 per diluted share) in Q3 2000, a significant increase from $57.2 million ($0.44 per diluted share) in Q3 1999.
  • 3The Print Publishing segment was a key driver of growth, with revenue up 47% in Q3 2000, largely due to strong demand for Adobe Illustrator 9.0.
  • 4ePaper Solutions segment revenue grew by 47% in Q3 2000, driven by increased Acrobat licensing.
  • 5Research and development expenses increased by 28.3% in Q3 2000, reflecting continued investment in new product development.
  • 6The company repurchased approximately 3.4 million shares of common stock for $234.6 million in the first nine months of fiscal 2000.
  • 7Adobe acquired Glassbook, Inc., a developer of eBook software, for approximately $28 million in cash and assumed liabilities, signaling strategic investment in new markets.

Frequently Asked Questions

Adobe reported a 26% increase in revenue for the third quarter ended September 1, 2000, reaching $328.9 million, compared to $260.9 million in the same period last year. For the nine months ended September 1, 2000, revenue grew by 24% to $911.2 million, up from $733.7 million in the prior year.

Revenue growth was driven by strong performance across several segments. The Print Publishing segment saw a 47% increase in Q3 2000, attributed to demand for Adobe Illustrator 9.0 and FrameMaker 6.0. The ePaper Solutions segment also grew by 47% due to increased Acrobat licensing. The Web Publishing segment increased by 11% in Q3 2000, supported by new Web and Dynamic Media Collection products.

Adobe reported a net income of $78.3 million ($0.61 per diluted share) for the third quarter of fiscal 2000, an increase from $57.2 million ($0.44 per diluted share) in the third quarter of fiscal 1999. For the nine months, net income rose to $208.6 million ($1.63 per diluted share) from $140.4 million ($1.09 per diluted share) in the comparable period of the prior year.

Adobe acquired Glassbook, Inc., a developer of eBook software, for approximately $28 million. This acquisition signals Adobe's strategic interest in expanding its presence in the eBook and digital content distribution market. The company also announced a two-for-one stock split, effective October 24, 2000.