10-QPeriod: Q3 FY2011

ADOBE INC. Quarterly Report for Q3 Ended Jun 3, 2011

Filed June 29, 2011For Securities:ADBE

Summary

Adobe Systems Incorporated reported solid financial performance for the quarter ending June 3, 2011. Total revenue increased by 9% year-over-year to $1,023.2 million, driven by strong growth in its Enterprise segment (up 34%) and Omniture segment (up 26%), as well as continued adoption of its Creative Suite 5.5 products. Net income also saw a substantial increase of 54% to $229.4 million, reflecting improved operational efficiency and revenue growth. The company maintained a healthy cash position, with cash and cash equivalents increasing to $827.5 million. Adobe continues to invest in research and development and sales and marketing, signaling a focus on future growth and product innovation. The company also repurchased a significant amount of its stock, demonstrating a commitment to returning value to shareholders.

Financial Highlights

54 data points
Beta

Revenue

$1.02B

89.3% Gross Margin

Net Income

$229.44M

22.4% Net Margin

EPS (Diluted)

$0.45

Total Assets

$8.34B

Cash & Equivalents

$827.48M

Free Cash Flow

$351.83M

Financial Statements
Beta
Revenue$1.02B
Cost of Revenue$109.20M
Gross Profit$913.98M
Operating Expenses$637.25M
Operating Income$276.72M
Interest Expense$16.73M
Net Income$229.44M
EPS (Basic)$0.46
EPS (Diluted)$0.45
Shares Outstanding (Basic)499.69M
Shares Outstanding (Diluted)506.28M

Key Highlights

  • 1Total revenue grew 9% year-over-year to $1,023.2 million for the three months ended June 3, 2011.
  • 2Net income increased by 54% to $229.4 million compared to the same period in the prior year.
  • 3The Enterprise segment showed robust growth of 34%, indicating successful integration of recent acquisitions and strategy execution.
  • 4Subscription revenue, particularly from the Omniture segment, continued its upward trend, growing 18% year-over-year.
  • 5Adobe maintained a strong liquidity position, with cash and cash equivalents totaling $827.5 million.
  • 6The company actively engaged in its stock repurchase program, buying back $545.0 million worth of stock in the six-month period.
  • 7Investment in Research and Development increased by 10%, highlighting a commitment to innovation.

Frequently Asked Questions

Revenue growth was driven by a combination of factors, including strong performance in the Enterprise segment (up 34%), continued adoption of the Omniture online marketing suite (up 26%), and the ongoing success of the Adobe Creative Suite 5 (CS5) product line. Services and support revenue also saw a significant increase of 51%.

Adobe demonstrated significant profitability improvement. Net income rose by 54% year-over-year to $229.4 million for the three months ended June 3, 2011. The effective tax rate also decreased significantly from 23.5% to 11.5% due to one-time tax benefits and the reinstatement of the federal research and development tax credit.

Adobe maintains a strong financial position. Cash and cash equivalents increased to $827.5 million, and short-term investments stood at $1,798.0 million. Working capital also improved to $2,338.9 million, indicating ample resources to meet short-term obligations and fund operations.

Adobe is actively returning capital to shareholders through its stock repurchase program. In the first six months of fiscal 2011, the company repurchased approximately $545.0 million worth of its common stock through structured repurchase agreements, demonstrating a commitment to enhancing shareholder value.