Company Announces Plan to Repurchase $1.6 Billion of Stock
San Jose — Adobe Systems Incorporated (Nasdaq:ADBE) today reported financial results for its second quarter fiscal year 2010 ended June 4, 2010.
In the second quarter of fiscal 2010, Adobe achieved record revenue of $943.0 million, compared to $704.7 million reported for the second quarter of fiscal 2009 and $858.7 million reported in the first quarter of fiscal 2010. This represents 34 percent year-over-year revenue growth. Adobe’s second quarter revenue target range was $875 to $925 million.
“Record revenue and our strong Q2 financial performance were driven by the successful launch of Creative Suite 5,” said Shantanu Narayen, president and CEO of Adobe. “Our growth is being fueled by the explosion of digital content across all media and devices.“
Second Quarter Fiscal 2010 GAAP Results
Adobe’s GAAP diluted earnings per share for the second quarter of fiscal 2010 were $0.28, based on 533.3 million weighted average shares. This compares with GAAP diluted earnings per share of $0.24 reported in the second quarter of fiscal 2009 based on 528.0 million weighted average shares, and GAAP diluted earnings per share of $0. 24 reported in the first quarter of fiscal 2010 based on 532.6 million weighted average shares.
GAAP operating income was $227.3 million in the second quarter of fiscal 2010, compared to $161.4 million in the second quarter of fiscal 2009 and $176.8 million in the first quarter of fiscal 2010. As a percent of revenue, GAAP operating income in the second quarter of fiscal 2010 was 24.1 percent, compared to 22.9 percent in the second quarter of fiscal 2009 and 20.6 percent in the first quarter of fiscal 2010.
GAAP net income was $148.6 million for the second quarter of fiscal 2010, compared to $126.1 million reported in the second quarter of fiscal 2009 and $127.2 million in the first quarter of fiscal 2010.
Second Quarter Fiscal 2010 Non-GAAP Results
Adobe’s non-GAAP diluted earnings per share for the second quarter of fiscal 2010 were $0.44. This compares with non-GAAP diluted earnings per share of $0.35 reported in the second quarter of fiscal 2009 and non-GAAP diluted earnings per share of $0.40 reported in the first quarter of fiscal 2010.
Adobe’s non-GAAP operating income was $334.5 million in the second quarter of fiscal 2010, compared to
$237.7 million in the second quarter of fiscal 2009 and $289.3 million in the first quarter of fiscal 2010. As a percent of revenue, non-GAAP operating income in the second quarter of fiscal 2010 was 35.5 percent, compared to 33.7 percent in both the second quarter of fiscal 2009 and the first quarter of fiscal 2010.
Non-GAAP net income was $234.2 million for the second quarter of fiscal 2010, compared to $185.0 million in the second quarter of fiscal 2009 and $211.7 million in the first quarter of fiscal 2010.
Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
Third Quarter Fiscal 2010 Financial Targets
For the third quarter of fiscal 2010, Adobe is targeting revenue of $950 million to $1 billion. The Company’s operating margin is targeted to be 25.5 percent to 27.5 percent on a GAAP basis, and 36 percent to 37 percent on a non-GAAP basis. In addition, the Company is targeting its share count to be between 532 million and 534 million shares, and it is targeting non-operating expense between $12.5 million and $13.5 million. Adobe’s GAAP and non-GAAP tax rate is expected to be approximately 25 percent.
These targets lead to a third quarter diluted earnings per share target range of $0.32 to $0.37 on a GAAP basis, and an earnings per share target range of $0.46 to $0.50 on a non-GAAP basis.
Reconciliation between these GAAP and non-GAAP financial targets is provided at the end of this press release.
Stock Repurchase Program
Adobe also announced its Board of Directors has granted authority for the Company to repurchase up to $1.6 billion in common stock through the end of fiscal 2012. This new program modifies the existing share-based program to offset dilution to a dollar-based authority.
“This stock repurchase program reaffirms our confidence and optimism in the long-term future of Adobe, and our commitment to returning value to our stockholders,” said Mark Garrett, executive vice president and chief financial officer of Adobe.
About Adobe Systems Incorporated
Adobe revolutionizes how the world engages with ideas and information – anytime, anywhere and through any medium. For more information, visit www.adobe.com.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to revenue, operating margin, non-operating expense, tax rate, share count, earnings per share, anticipated stock repurchases and business momentum, 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 new products and services or upgrades or enhancements to existing products and services that meet customer requirements, introduction of new products, services and business models by existing and new competitors, failure to successfully manage transitions to new business models and markets, the economic downturn and continued uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which Adobe does business, difficulty in predicting revenue from new businesses, failure to realize the anticipated benefits of past or future acquisitions, and difficulty in integrating such acquisitions, costs related to intellectual property acquisitions, disputes and litigation, inability to protect Adobe’s intellectual property from third-party infringers, or unauthorized copying, use or disclosure, security vulnerabilities in our products and systems, interruptions or delays in our service or service from third-party service providers that host or deliver services, security or privacy breaches, or failure in data collection, failure to manage Adobe’s sales and distribution channels and third-party customer service and technical support providers effectively, disruption of Adobe’s business due to catastrophic events, risks associated with global operations, currency fluctuations, risks associated with our debt service obligations, changes in, or interpretations of, accounting principles, impairment of Adobe’s goodwill or amortizable intangible assets, changes in, or interpretations of, tax rules and regulations, Adobe’s inability to attract and retain key personnel, impairment of Adobe’s investment portfolio due to deterioration of the capital markets, and market risks associated with Adobe’s equity investments. For further discussion of these and other risks and uncertainties, individuals should refer to Adobe’s SEC filings.
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 Quarterly Report on Form 10-Q for our second quarter ended June 4, 2010, which the Company expects to file in July 2010. Adobe does not undertake an obligation to update forward-looking statements.