SAN JOSE, Calif. — Adobe Systems Incorporated (Nasdaq:ADBE) today reported financial results for its second quarter of fiscal year 2012 ended June 1, 2012.
Second Quarter Financial Highlights
- Revenue in Q2 FY2012 was $1.124 billion, which represents 10 percent year-over-year growth
- Diluted earnings per share were $0.45 on a GAAP-basis, and $0.60 on a non-GAAP basis.
- Operating income was $305.1 million and net income was $223.9 million on a GAAP-basis. Operating income was $404.4 million and net income was $299.6 million on a non-GAAP basis.
- Deferred revenue grew by $43.9 million quarter-over-quarter to a total of $592.8 million.
- Cash flow from operations was $448.2 million.
A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
“Our strong Q2 results were driven by the successful launch of Creative Cloud and Creative Suite 6, strong Acrobat revenue and 35 percent year-over-year revenue growth in our Digital Marketing Suite business,” said Shantanu Narayen, president and CEO of Adobe. “These results demonstrate our leadership in the Digital Media and Digital Marketing markets.”
“The initial transition to Creative Cloud exceeded our targets, demonstrating that creative professionals see significant value in the new subscription-based offering,” said Mark Garrett, executive vice president and CFO of Adobe. “Over the long-term, this bodes well for our business, as it increases our recurring revenue and enables Adobe to interact more closely with our customers.”
Adobe provided financial targets for the third quarter of fiscal 2012 and updated its full year fiscal 2012 targets. These targets reflect a weaker demand forecast in Europe.
For the third quarter of fiscal 2012, Adobe is targeting revenue of $1.075 billion to $1.125 billion. On a diluted earnings per share basis, the company is targeting a range of $0.38 to $0.43 on a GAAP basis, and $0.56 to $0.61 on a non-GAAP basis.
Adobe is targeting its Q3 share count to be between 501 million and 502 million shares, and it is targeting non-operating expense between $18 million and $20 million. Adobe’s tax rate is expected to be approximately 23.5 percent on a GAAP basis and 22.5 percent on a non-GAAP basis.
For fiscal year 2012, the company narrowed its annual revenue growth target to a range of six to seven percent, versus its prior target range of six to eight percent. Adobe also adjusted its annual GAAP diluted earnings per share target range to $1.69 to $1.76 from its prior targeted range of $1.63 to $1.73; and its non-GAAP diluted earnings per share target range to $2.40 to $2.46 from its prior targeted range of $2.38 to $2.48.
A reconciliation between GAAP and non-GAAP financial targets is provided at the end of this press release.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to revenue, non-operating expense, tax rate, share count, earnings per share, increases in recurring revenue and our ability to execute against our strategy in our key growth areas, 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, including our increased emphasis on a cloud strategy, fluctuations in subscription renewal or upgrade rates, continued uncertainty in economic conditions and the financial markets and other adverse changes in general political or economic 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, increasing regulatory focus on privacy issues, 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, Adobe’s ability to comply with new laws and regulations globally, and costs associated with such compliance, 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, and impairment of Adobe’s investment portfolio due to deterioration of the capital markets. 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 quarter ended June 1, 2012, which Adobe expects to file later in June 2012. Adobe does not undertake an obligation to update forward-looking statements.