Creative Cloud, Marketing Cloud

Adobe Reports Q3 FY2014 Financial Results

Creative Cloud and Adobe Marketing Cloud Adoption Accelerates

SAN JOSE, Calif.   Adobe (Nasdaq:ADBE) today reported financial results for its third quarter of fiscal year 2014 ended Aug. 29, 2014.

Third Quarter Financial Highlights

  • Adobe achieved revenue of $1.005 billion, within its targeted range of $975 million to $1.025 billion.
  • Adobe exited Q3 with 2 million 810 thousand paid Creative Cloud subscriptions, an increase of 502 thousand when compared to the number of subscriptions as of the end of Q2 fiscal year 2014.
  • Creative Annualized Recurring Revenue (“ARR”) grew to $1.40 billion, and total Digital Media ARR grew to $1.62 billion.
  • Adobe Marketing Cloud quarterly revenue was $290 million with strong bookings growth.
  • Diluted earnings per share were $0.09 on a GAAP-basis, and $0.28 on a non-GAAP basis.
  • Cash flow from operations was $269 million and deferred revenue grew to a record $997 million.
  • 63 percent of Adobe’s Q3 revenue was from recurring sources.
  • The company repurchased approximately 1.9 million shares during the quarter, returning approximately $133 million of cash to stockholders.

A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.

Executive Quotes

“Adoption of Creative Cloud and Adobe Marketing Cloud continues to accelerate,” said Shantanu Narayen, president and chief executive officer, Adobe.  “We are the leader in both of these high-growth categories and have a rapidly growing pipeline, setting us up for a strong finish to the year in Q4.”

“In Q3, 63 percent of our revenue was recurring, demonstrating the continued success of our business model transformation,” said Mark Garrett, executive vice president and chief financial officer, Adobe.  “In addition to momentum with Creative Cloud adoption, our team drove strong bookings growth with Adobe Marketing Cloud.”

Adobe to Webcast Earnings Conference Call

Adobe will webcast its third quarter fiscal year 2014 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website:  Earnings documents, including Adobe management’s prepared conference call remarks with slides, financial targets and an investor datasheet are posted to Adobe’s investor relations website in advance of the conference call for reference.  A reconciliation between GAAP and non-GAAP earnings results and financial targets is also provided on the website.

Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including those related to business momentum, the strength of our cloud business and growth of our revenue, recurring revenue and bookings, all of 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 products and services that meet customer requirements, introduction of new products and business models by competitors, failure to successfully manage transitions to new business models and markets, fluctuations in subscription renewal rates, risks associated with cyber-attacks and information security, uncertainty in economic conditions and the financial markets, and failure to realize the anticipated benefits of past or future acquisitions.

For a discussion of these and other risks and uncertainties, please refer to Adobe’s Annual Report on Form 10-K for our fiscal year 2013 ended Nov. 29, 2013 and Adobe’s Quarterly Reports on Form 10-Q issued in fiscal year 2014.

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 Aug. 29, 2014, which Adobe expects to file in Sept. 2014.

Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.