10-QPeriod: Q2 FY2021

ADOBE INC. Quarterly Report for Q2 Ended Mar 5, 2021

Filed March 31, 2021For Securities:ADBE

Summary

Adobe Inc. reported strong financial performance for the first quarter of fiscal year 2021, ending March 5, 2021. Total revenue reached $3.905 billion, a 26% increase year-over-year, primarily driven by robust subscription revenue growth, particularly in the Digital Media and Digital Experience segments. Net income saw a significant jump of 32% to $1.26 billion, or $2.61 per diluted share. The company's Annual Recurring Revenue (ARR) for Digital Media also showed healthy growth, reaching $10.69 billion. Adobe's balance sheet remains solid, with substantial cash and investments and a strong equity position, further bolstered by the successful acquisition of Workfront in December 2020, which is expected to contribute to future growth in the Digital Experience segment. The company continues to return capital to shareholders through its share repurchase program.

Financial Highlights

55 data points
Beta

Revenue

$3.90B

88.6% Gross Margin

Net Income

$1.26B

32.3% Net Margin

EPS (Diluted)

$2.61

Total Assets

$24.98B

Cash & Equivalents

$3.45B

Free Cash Flow

$1.71B

Financial Statements
Beta
Revenue$3.90B
Cost of Revenue$447.00M
Gross Profit$3.46B
Operating Expenses$2.00B
Operating Income$1.45B
Interest Expense$30.00M
Net Income$1.26B
EPS (Basic)$2.63
EPS (Diluted)$2.61
Shares Outstanding (Basic)478.80M
Shares Outstanding (Diluted)482.90M

Key Highlights

  • 1Total revenue increased by 26% year-over-year to $3.905 billion, driven by strong performance in the Digital Media and Digital Experience segments.
  • 2Subscription revenue, the primary revenue driver, grew by 31% year-over-year to $3.584 billion.
  • 3Net income increased by 32% to $1.261 billion, resulting in diluted EPS of $2.61.
  • 4Digital Media ARR reached $10.69 billion, up 4% from the prior fiscal year-end, with Creative ARR at $9.12 billion and Document Cloud ARR at $1.57 billion.
  • 5Digital Experience revenue grew 24% year-over-year to $934 million, with subscription revenue up 27%.
  • 6The acquisition of Workfront in December 2020 for approximately $1.52 billion is expected to enhance the Digital Experience segment.
  • 7Cash flow from operations was strong, providing $1.77 billion in the quarter, indicating robust operational health.

Frequently Asked Questions

Adobe reported total revenue of $3.905 billion for the first quarter of fiscal 2021, representing a significant 26% increase compared to $3.091 billion in the same period of the prior fiscal year. This growth was primarily fueled by a 31% increase in subscription revenue.

The Digital Media segment revenue grew 32% year-over-year to $2.859 billion, driven by strong performance in Creative Cloud and Document Cloud. The Digital Experience segment revenue increased by 24% year-over-year to $934 million, benefiting from subscription growth and the recent acquisition of Workfront.

Adobe acquired Workfront in December 2020 for approximately $1.52 billion. The company began integrating Workfront into its Digital Experience segment in Q1 FY2021. The acquisition is expected to contribute to revenue growth and enhance Adobe's workflow and work management capabilities within its Digital Experience offerings.

Adobe continues to execute its stock repurchase program. During the three months ended March 5, 2021, the company repurchased approximately 1.9 million shares for $950 million. Additionally, the Board of Directors authorized a new repurchase program of up to $15 billion through fiscal year 2024.