|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
77-0019522
(I.R.S. Employer
Identification No.)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock, $0.0001 par value per share
|
ADBE
|
The NASDAQ Stock Market LLC
(NASDAQ Global Select Market) |
Large accelerated filer x
|
Accelerated filer o
|
Non-accelerated filer o
(Do not check if a smaller
reporting company)
|
Smaller reporting company o
|
Emerging growth company o
|
|
|
|
Page No.
|
PART I—FINANCIAL INFORMATION
|
|
|
Item 1.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 2.
|
|
|
Item 3.
|
|
|
Item 4.
|
|
|
|
|
|
PART II—OTHER INFORMATION
|
|
|
Item 1.
|
|
|
Item 1A.
|
|
|
Item 2.
|
|
|
Item 4.
|
|
|
Item 5.
|
|
|
Item 6.
|
|
|
|
||
|
|
May 31,
2019 |
|
November 30,
2018 |
||||
|
(Unaudited)
|
|
(*)
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,082,910
|
|
|
$
|
1,642,775
|
|
Short-term investments
|
1,396,069
|
|
|
1,586,187
|
|
||
Trade receivables, net of allowances for doubtful accounts of $12,379 and $14,981, respectively
|
1,272,668
|
|
|
1,315,578
|
|
||
Prepaid expenses and other current assets
|
590,998
|
|
|
312,499
|
|
||
Total current assets
|
5,342,645
|
|
|
4,857,039
|
|
||
Property and equipment, net
|
1,205,020
|
|
|
1,075,072
|
|
||
Goodwill
|
10,697,874
|
|
|
10,581,048
|
|
||
Purchased and other intangibles, net
|
1,917,149
|
|
|
2,069,001
|
|
||
Other assets
|
503,221
|
|
|
186,522
|
|
||
Total assets
|
$
|
19,665,909
|
|
|
$
|
18,768,682
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Trade payables
|
$
|
169,101
|
|
|
$
|
186,258
|
|
Accrued expenses
|
1,314,998
|
|
|
1,163,185
|
|
||
Debt
|
3,145,668
|
|
|
—
|
|
||
Income taxes payable
|
45,778
|
|
|
35,709
|
|
||
Deferred revenue
|
3,011,552
|
|
|
2,915,974
|
|
||
Total current liabilities
|
7,687,097
|
|
|
4,301,126
|
|
||
Long-term liabilities:
|
|
|
|
|
|||
Debt
|
987,938
|
|
|
4,124,800
|
|
||
Deferred revenue
|
122,522
|
|
|
137,630
|
|
||
Income taxes payable
|
637,733
|
|
|
644,101
|
|
||
Deferred income taxes
|
133,886
|
|
|
46,702
|
|
||
Other liabilities
|
165,040
|
|
|
152,209
|
|
||
Total liabilities
|
9,734,216
|
|
|
9,406,568
|
|
||
Stockholders’ equity:
|
|
|
|
|
|||
Preferred stock, $0.0001 par value; 2,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value; 900,000 shares authorized; 600,834 shares issued;
486,273 and 487,663 shares outstanding, respectively
|
61
|
|
|
61
|
|
||
Additional paid-in-capital
|
6,050,800
|
|
|
5,685,337
|
|
||
Retained earnings
|
13,183,938
|
|
|
11,815,597
|
|
||
Accumulated other comprehensive income (loss)
|
(144,364
|
)
|
|
(148,130
|
)
|
||
Treasury stock, at cost (114,561 and 113,171 shares, respectively), net of reissuances
|
(9,158,742
|
)
|
|
(7,990,751
|
)
|
||
Total stockholders’ equity
|
9,931,693
|
|
|
9,362,114
|
|
||
Total liabilities and stockholders’ equity
|
$
|
19,665,909
|
|
|
$
|
18,768,682
|
|
(*)
|
The condensed consolidated balance sheet as of November 30, 2018 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
May 31,
2019 |
|
June 1,
2018 |
|
May 31,
2019 |
|
June 1,
2018 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Subscription
|
$
|
2,456,097
|
|
|
$
|
1,923,131
|
|
|
$
|
4,761,064
|
|
|
$
|
3,716,489
|
|
Product
|
152,816
|
|
|
150,993
|
|
|
323,370
|
|
|
322,601
|
|
||||
Services and support
|
135,367
|
|
|
121,236
|
|
|
260,792
|
|
|
235,217
|
|
||||
Total revenue
|
2,744,280
|
|
|
2,195,360
|
|
|
5,345,226
|
|
|
4,274,307
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Subscription
|
296,476
|
|
|
186,355
|
|
|
584,507
|
|
|
351,040
|
|
||||
Product
|
9,345
|
|
|
10,779
|
|
|
21,450
|
|
|
23,656
|
|
||||
Services and support
|
101,667
|
|
|
84,210
|
|
|
198,817
|
|
|
165,550
|
|
||||
Total cost of revenue
|
407,488
|
|
|
281,344
|
|
|
804,774
|
|
|
540,246
|
|
||||
Gross profit
|
2,336,792
|
|
|
1,914,016
|
|
|
4,540,452
|
|
|
3,734,061
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
475,958
|
|
|
374,128
|
|
|
940,595
|
|
|
722,897
|
|
||||
Sales and marketing
|
848,927
|
|
|
646,215
|
|
|
1,630,445
|
|
|
1,227,172
|
|
||||
General and administrative
|
219,334
|
|
|
178,040
|
|
|
435,443
|
|
|
348,480
|
|
||||
Amortization of purchased intangibles
|
43,026
|
|
|
17,149
|
|
|
89,592
|
|
|
34,295
|
|
||||
Total operating expenses
|
1,587,245
|
|
|
1,215,532
|
|
|
3,096,075
|
|
|
2,332,844
|
|
||||
Operating income
|
749,547
|
|
|
698,484
|
|
|
1,444,377
|
|
|
1,401,217
|
|
||||
Non-operating income (expense):
|
|
|
|
|
|
|
|
|
|||||||
Interest and other income (expense), net
|
2,558
|
|
|
11,599
|
|
|
6,824
|
|
|
28,271
|
|
||||
Interest expense
|
(40,577
|
)
|
|
(20,363
|
)
|
|
(81,170
|
)
|
|
(40,262
|
)
|
||||
Investment gains (losses), net
|
(756
|
)
|
|
1,079
|
|
|
43,075
|
|
|
4,075
|
|
||||
Total non-operating income (expense), net
|
(38,775
|
)
|
|
(7,685
|
)
|
|
(31,271
|
)
|
|
(7,916
|
)
|
||||
Income before income taxes
|
710,772
|
|
|
690,799
|
|
|
1,413,106
|
|
|
1,393,301
|
|
||||
Provision for income taxes
|
78,179
|
|
|
27,632
|
|
|
106,272
|
|
|
147,058
|
|
||||
Net income
|
$
|
632,593
|
|
|
$
|
663,167
|
|
|
$
|
1,306,834
|
|
|
$
|
1,246,243
|
|
Basic net income per share
|
$
|
1.30
|
|
|
$
|
1.35
|
|
|
$
|
2.68
|
|
|
$
|
2.53
|
|
Shares used to compute basic net income per share
|
487,535
|
|
|
491,914
|
|
|
487,795
|
|
|
491,993
|
|
||||
Diluted net income per share
|
$
|
1.29
|
|
|
$
|
1.33
|
|
|
$
|
2.65
|
|
|
$
|
2.50
|
|
Shares used to compute diluted net income per share
|
492,212
|
|
|
498,252
|
|
|
493,200
|
|
|
499,166
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
May 31,
2019 |
|
June 1,
2018 |
|
May 31,
2019 |
|
June 1,
2018 |
||||||||
|
Increase/(Decrease)
|
|
Increase/(Decrease)
|
||||||||||||
Net income
|
$
|
632,593
|
|
|
$
|
663,167
|
|
|
$
|
1,306,834
|
|
|
$
|
1,246,243
|
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains / losses on available-for-sale securities
|
9,910
|
|
|
(1,721
|
)
|
|
22,312
|
|
|
(24,869
|
)
|
||||
Reclassification adjustment for recognized gains / losses on available-for-sale securities
|
67
|
|
|
75
|
|
|
192
|
|
|
197
|
|
||||
Net increase (decrease) from available-for-sale securities
|
9,977
|
|
|
(1,646
|
)
|
|
22,504
|
|
|
(24,672
|
)
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains / losses on derivative instruments
|
16,765
|
|
|
31,104
|
|
|
8,308
|
|
|
29,767
|
|
||||
Reclassification adjustment for recognized gains / losses on derivative instruments
|
(8,675
|
)
|
|
(37
|
)
|
|
(16,872
|
)
|
|
(2,177
|
)
|
||||
Net increase (decrease) from derivatives designated as hedging instruments
|
8,090
|
|
|
31,067
|
|
|
(8,564
|
)
|
|
27,590
|
|
||||
Foreign currency translation adjustments
|
(11,999
|
)
|
|
(48,712
|
)
|
|
(10,174
|
)
|
|
(20,327
|
)
|
||||
Other comprehensive income (loss), net of taxes
|
6,068
|
|
|
(19,291
|
)
|
|
3,766
|
|
|
(17,409
|
)
|
||||
Total comprehensive income, net of taxes
|
$
|
638,661
|
|
|
$
|
643,876
|
|
|
$
|
1,310,600
|
|
|
$
|
1,228,834
|
|
|
|
Three Months Ended May 31, 2019
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury Stock
|
|
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
Total
|
|||||||||||||||||
Balances at March 1, 2019
|
|
600,834
|
|
|
$
|
61
|
|
|
$
|
5,857,440
|
|
|
$
|
12,579,311
|
|
|
$
|
(150,432
|
)
|
|
(112,330
|
)
|
|
$
|
(8,414,895
|
)
|
|
$
|
9,871,485
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
632,593
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
632,593
|
|
||||||
Other comprehensive income (losses), net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,068
|
|
|
—
|
|
|
—
|
|
|
6,068
|
|
||||||
Re-issuance of treasury stock under stock compensation plans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,966
|
)
|
|
—
|
|
|
224
|
|
|
6,153
|
|
|
(21,813
|
)
|
||||||
Purchase of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,455
|
)
|
|
(750,000
|
)
|
|
(750,000
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
193,360
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
193,360
|
|
||||||
Balances at May 31, 2019
|
|
600,834
|
|
|
$
|
61
|
|
|
$
|
6,050,800
|
|
|
$
|
13,183,938
|
|
|
$
|
(144,364
|
)
|
|
(114,561
|
)
|
|
$
|
(9,158,742
|
)
|
|
$
|
9,931,693
|
|
|
|
Three Months Ended June 1, 2018
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury Stock
|
|
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
Total
|
|||||||||||||||||
Balances at March 2, 2018
|
|
600,834
|
|
|
$
|
61
|
|
|
$
|
5,208,588
|
|
|
$
|
9,830,399
|
|
|
$
|
(109,939
|
)
|
|
(107,954
|
)
|
|
$
|
(6,295,081
|
)
|
|
$
|
8,634,028
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
663,167
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
663,167
|
|
||||||
Other comprehensive income (losses), net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,291
|
)
|
|
—
|
|
|
—
|
|
|
(19,291
|
)
|
||||||
Re-issuance of treasury stock under
stock compensation plans |
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,500
|
)
|
|
—
|
|
|
194
|
|
|
5,646
|
|
|
(16,854
|
)
|
||||||
Purchase of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,639
|
)
|
|
(700,000
|
)
|
|
(700,000
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
145,587
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145,587
|
|
||||||
Value of shares in deferred compensation plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,054
|
)
|
|
(1,054
|
)
|
||||||
Balances at June 1, 2018
|
|
600,834
|
|
|
$
|
61
|
|
|
$
|
5,354,175
|
|
|
$
|
10,471,066
|
|
|
$
|
(129,230
|
)
|
|
(110,399
|
)
|
|
$
|
(6,990,489
|
)
|
|
$
|
8,705,583
|
|
|
|
Six Months Ended May 31, 2019
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Treasury Stock
|
|
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
Total
|
|||||||||||||||||
Balances at November 30, 2018
|
|
600,834
|
|
|
$
|
61
|
|
|
$
|
5,685,337
|
|
|
$
|
11,815,597
|
|
|
$
|
(148,130
|
)
|
|
(113,171
|
)
|
|
$
|
(7,990,751
|
)
|
|
$
|
9,362,114
|
|
Impacts of ASC 606 adoption
|
|
—
|
|
|
—
|
|
|
—
|
|
|
442,319
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
442,319
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,306,834
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,306,834
|
|
||||||
Other comprehensive income (losses), net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,766
|
|
|
—
|
|
|
—
|
|
|
3,766
|
|
||||||
Re-issuance of treasury stock under
stock compensation plans |
|
—
|
|
|
—
|
|
|
(8,008
|
)
|
|
(380,812
|
)
|
|
—
|
|
|
3,135
|
|
|
86,026
|
|
|
(302,794
|
)
|
||||||
Purchase of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,525
|
)
|
|
(1,250,000
|
)
|
|
(1,250,000
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
373,471
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
373,471
|
|
||||||
Value of shares in deferred compensation plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,017
|
)
|
|
(4,017
|
)
|
||||||
Balances at May 31, 2019
|
|
600,834
|
|
|
$
|
61
|
|
|
$
|
6,050,800
|
|
|
$
|
13,183,938
|
|
|
$
|
(144,364
|
)
|
|
(114,561
|
)
|
|
$
|
(9,158,742
|
)
|
|
$
|
9,931,693
|
|
|
|
Six Months Ended June 1, 2018
|
||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Treasury Stock
|
|
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
Total
|
|||||||||||||||||
Balances at December 1, 2017
|
|
600,834
|
|
|
$
|
61
|
|
|
$
|
5,082,195
|
|
|
$
|
9,573,870
|
|
|
$
|
(111,821
|
)
|
|
(109,572
|
)
|
|
$
|
(6,084,436
|
)
|
|
$
|
8,459,869
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,246,243
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,246,243
|
|
||||||
Other comprehensive income (losses), net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,409
|
)
|
|
—
|
|
|
—
|
|
|
(17,409
|
)
|
||||||
Re-issuance of treasury stock under
stock compensation plans |
|
—
|
|
|
—
|
|
|
(9,133
|
)
|
|
(348,729
|
)
|
|
—
|
|
|
3,439
|
|
|
100,039
|
|
|
(257,823
|
)
|
||||||
Purchase of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,266
|
)
|
|
(1,000,000
|
)
|
|
(1,000,000
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
281,113
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
281,113
|
|
||||||
Value of shares in deferred compensation plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,092
|
)
|
|
(6,092
|
)
|
||||||
Impacts of the U.S. Tax Cut and Jobs Act
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(318
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(318
|
)
|
||||||
Balances at June 1, 2018
|
|
600,834
|
|
|
$
|
61
|
|
|
$
|
5,354,175
|
|
|
$
|
10,471,066
|
|
|
$
|
(129,230
|
)
|
|
(110,399
|
)
|
|
$
|
(6,990,489
|
)
|
|
$
|
8,705,583
|
|
|
Six Months Ended
|
||||||
|
May 31,
2019 |
|
June 1,
2018 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
1,306,834
|
|
|
$
|
1,246,243
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||
Depreciation, amortization and accretion
|
290,508
|
|
|
152,882
|
|
||
Stock-based compensation
|
388,987
|
|
|
280,902
|
|
||
Deferred income taxes
|
(10,682
|
)
|
|
(400,069
|
)
|
||
Unrealized losses (gains) on investments, net
|
(39,978
|
)
|
|
(1,502
|
)
|
||
Other non-cash items
|
1,970
|
|
|
3,623
|
|
||
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
|
|
|
|
||||
Trade receivables, net
|
85,683
|
|
|
140,681
|
|
||
Prepaid expenses and other assets
|
(142,520
|
)
|
|
(106,612
|
)
|
||
Trade payables
|
(17,269
|
)
|
|
3,656
|
|
||
Accrued expenses
|
116,994
|
|
|
46,535
|
|
||
Income taxes payable
|
11,929
|
|
|
459,943
|
|
||
Deferred revenue
|
130,320
|
|
|
139,725
|
|
||
Net cash provided by operating activities
|
2,122,776
|
|
|
1,966,007
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchases of short-term investments
|
(139,346
|
)
|
|
(412,746
|
)
|
||
Maturities of short-term investments
|
320,629
|
|
|
352,078
|
|
||
Proceeds from sales of short-term investments
|
29,473
|
|
|
200,458
|
|
||
Acquisitions, net of cash acquired
|
(99,817
|
)
|
|
(14,614
|
)
|
||
Purchases of property and equipment
|
(210,760
|
)
|
|
(140,458
|
)
|
||
Purchases of long-term investments, intangibles and other assets
|
(23,680
|
)
|
|
(13,698
|
)
|
||
Proceeds from sale of long-term investments and other assets
|
1,656
|
|
|
2,897
|
|
||
Net cash used for investing activities
|
(121,845
|
)
|
|
(26,083
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Purchases of treasury stock
|
(1,250,000
|
)
|
|
(1,000,000
|
)
|
||
Proceeds from issuance of treasury stock
|
73,912
|
|
|
64,682
|
|
||
Taxes paid related to net share settlement of equity awards
|
(376,706
|
)
|
|
(322,505
|
)
|
||
Repayment of capital lease obligations
|
(3,219
|
)
|
|
(815
|
)
|
||
Net cash used for financing activities
|
(1,556,013
|
)
|
|
(1,258,638
|
)
|
||
Effect of foreign currency exchange rates on cash and cash equivalents
|
(4,783
|
)
|
|
628
|
|
||
Net increase in cash and cash equivalents
|
440,135
|
|
|
681,914
|
|
||
Cash and cash equivalents at beginning of period
|
1,642,775
|
|
|
2,306,072
|
|
||
Cash and cash equivalents at end of period
|
$
|
2,082,910
|
|
|
$
|
2,987,986
|
|
Supplemental disclosures:
|
|
|
|
|
|||
Cash paid for income taxes, net of refunds
|
$
|
107,938
|
|
|
$
|
73,508
|
|
Cash paid for interest
|
$
|
78,006
|
|
|
$
|
37,503
|
|
|
As of
November 30, 2018
|
|
ASC 606 Adoption Adjustments
|
|
As of
December 1, 2018
|
||||||
Assets
|
|
|
|
|
|
||||||
Trade receivables, net of allowances for doubtful accounts
|
$
|
1,315,578
|
|
|
$
|
43,028
|
|
|
$
|
1,358,606
|
|
Prepaid expenses and other current assets
|
312,499
|
|
|
186,220
|
|
|
498,719
|
|
|||
Other assets
|
186,522
|
|
|
273,421
|
|
|
459,943
|
|
|||
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Accrued expenses
|
1,163,185
|
|
|
30,358
|
|
|
1,193,543
|
|
|||
Deferred revenue, current
|
2,915,974
|
|
|
(52,842
|
)
|
|
2,863,132
|
|
|||
Deferred income taxes
|
46,702
|
|
|
82,834
|
|
|
129,536
|
|
|||
Retained earnings
|
$
|
11,815,597
|
|
|
$
|
442,319
|
|
|
$
|
12,257,916
|
|
•
|
We capitalized $413.2 million of contract acquisition costs comprised of sales and partner commission costs at adoption date (included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion), with a corresponding adjustment to retained earnings. We are amortizing these costs over their respective expected period of benefit.
|
•
|
Revenue for certain contracts that were previously deferred would have been recognized in periods prior to adoption under the new standard. Upon adoption, we recorded the following adjustments to our beginning balances to reflect the amount of revenue that will no longer be recognized in future periods for such contracts: an increase in unbilled receivables (included in trade receivables, net) of $24.8 million, an increase in contract assets (included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion) of $46.4 million and a decrease in deferred revenue of $52.8 million, with corresponding adjustments to retained earnings.
|
•
|
We recorded an increase to our opening deferred income tax liability of $82.8 million, with a corresponding adjustment to retained earnings, to record the tax effect of the above adjustments.
|
•
|
Further, we had other impacts to various accounts which resulted to an immaterial net reduction to our retained earnings.
|
|
As reported
|
|
Adjustments
|
|
Balances without ASC 606 adoption impact
|
||||||
Revenue
|
|
|
|
|
|
||||||
Subscription
|
$
|
2,456,097
|
|
|
$
|
(6,444
|
)
|
|
$
|
2,449,653
|
|
Product
|
152,816
|
|
|
(19,148
|
)
|
|
133,668
|
|
|||
Services and support
|
135,367
|
|
|
(304
|
)
|
|
135,063
|
|
|||
Total revenue
|
2,744,280
|
|
|
(25,896
|
)
|
|
2,718,384
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Sales and marketing
|
848,927
|
|
|
8,068
|
|
|
856,995
|
|
|||
Provision for income taxes
|
78,179
|
|
|
(3,747
|
)
|
|
74,432
|
|
|||
Net income
|
$
|
632,593
|
|
|
$
|
(30,370
|
)
|
|
$
|
602,223
|
|
Basic net income per share
|
$
|
1.30
|
|
|
$
|
(0.06
|
)
|
|
$
|
1.24
|
|
Diluted net income per share
|
$
|
1.29
|
|
|
$
|
(0.07
|
)
|
|
$
|
1.22
|
|
|
As reported
|
|
Adjustments
|
|
Balances without ASC 606 adoption impact
|
||||||
Revenue
|
|
|
|
|
|
||||||
Subscription
|
$
|
4,761,064
|
|
|
$
|
(4,237
|
)
|
|
$
|
4,756,827
|
|
Product
|
323,370
|
|
|
(42,028
|
)
|
|
281,342
|
|
|||
Services and support
|
260,792
|
|
|
(1,075
|
)
|
|
259,717
|
|
|||
Total revenue
|
5,345,226
|
|
|
(47,340
|
)
|
|
5,297,886
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Sales and marketing
|
1,630,445
|
|
|
16,936
|
|
|
1,647,381
|
|
|||
Provision for income taxes
|
106,272
|
|
|
(4,957
|
)
|
|
101,315
|
|
|||
Net income
|
$
|
1,306,834
|
|
|
$
|
(59,423
|
)
|
|
$
|
1,247,411
|
|
Basic net income per share
|
$
|
2.68
|
|
|
$
|
(0.12
|
)
|
|
$
|
2.56
|
|
Diluted net income per share
|
$
|
2.65
|
|
|
$
|
(0.12
|
)
|
|
$
|
2.53
|
|
|
As reported
|
|
Adjustments
|
|
Balances without ASC 606 adoption impact
|
||||||
Assets
|
|
|
|
|
|
||||||
Trade receivables, net of allowances for doubtful accounts
|
$
|
1,272,668
|
|
|
$
|
(73,370
|
)
|
|
$
|
1,199,298
|
|
Prepaid expenses and other current assets
|
590,998
|
|
|
(190,282
|
)
|
|
400,716
|
|
|||
Other assets
|
503,221
|
|
|
(306,265
|
)
|
|
196,956
|
|
|||
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Accrued expenses
|
1,314,998
|
|
|
(36,444
|
)
|
|
1,278,554
|
|
|||
Deferred revenue, current
|
3,011,552
|
|
|
58,244
|
|
|
3,069,796
|
|
|||
Deferred revenue, long-term
|
122,522
|
|
|
(2,183
|
)
|
|
120,339
|
|
|||
Deferred income taxes
|
133,886
|
|
|
(87,792
|
)
|
|
46,094
|
|
|||
Retained earnings
|
$
|
13,183,938
|
|
|
$
|
(501,742
|
)
|
|
$
|
12,682,196
|
|
|
Digital
Media
|
|
Digital
Experience
|
|
Publishing
|
|
Total
|
||||||||
Three months ended May 31, 2019
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
1,890,151
|
|
|
$
|
783,542
|
|
|
$
|
70,587
|
|
|
$
|
2,744,280
|
|
Cost of revenue
|
70,734
|
|
|
331,675
|
|
|
5,079
|
|
|
407,488
|
|
||||
Gross profit
|
$
|
1,819,417
|
|
|
$
|
451,867
|
|
|
$
|
65,508
|
|
|
$
|
2,336,792
|
|
Gross profit as a percentage of revenue
|
96
|
%
|
|
58
|
%
|
|
93
|
%
|
|
85
|
%
|
||||
Three months ended June 1, 2018
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
1,546,424
|
|
|
$
|
585,952
|
|
|
$
|
62,984
|
|
|
$
|
2,195,360
|
|
Cost of revenue
|
54,760
|
|
|
220,696
|
|
|
5,888
|
|
|
281,344
|
|
||||
Gross profit
|
$
|
1,491,664
|
|
|
$
|
365,256
|
|
|
$
|
57,096
|
|
|
$
|
1,914,016
|
|
Gross profit as a percentage of revenue
|
96
|
%
|
|
62
|
%
|
|
91
|
%
|
|
87
|
%
|
|
Digital
Media
|
|
Digital
Experience
|
|
Publishing
|
|
Total
|
||||||||
Six months ended May 31, 2019
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
3,666,794
|
|
|
$
|
1,526,818
|
|
|
$
|
151,614
|
|
|
$
|
5,345,226
|
|
Cost of revenue
|
138,929
|
|
|
655,383
|
|
|
10,462
|
|
|
804,774
|
|
||||
Gross profit
|
$
|
3,527,865
|
|
|
$
|
871,435
|
|
|
$
|
141,152
|
|
|
$
|
4,540,452
|
|
Gross profit as a percentage of revenue
|
96
|
%
|
|
57
|
%
|
|
93
|
%
|
|
85
|
%
|
||||
Six months ended June 1, 2018
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
3,006,985
|
|
|
$
|
1,140,059
|
|
|
$
|
127,263
|
|
|
$
|
4,274,307
|
|
Cost of revenue
|
110,229
|
|
|
419,488
|
|
|
10,529
|
|
|
540,246
|
|
||||
Gross profit
|
$
|
2,896,756
|
|
|
$
|
720,571
|
|
|
$
|
116,734
|
|
|
$
|
3,734,061
|
|
Gross profit as a percentage of revenue
|
96
|
%
|
|
63
|
%
|
|
92
|
%
|
|
87
|
%
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Americas
|
$
|
1,599,176
|
|
|
$
|
1,239,553
|
|
|
$
|
3,109,071
|
|
|
$
|
2,410,234
|
|
EMEA
|
729,342
|
|
|
621,796
|
|
|
1,432,303
|
|
|
1,209,064
|
|
||||
APAC
|
415,762
|
|
|
334,011
|
|
|
803,852
|
|
|
655,009
|
|
||||
Total
|
$
|
2,744,280
|
|
|
$
|
2,195,360
|
|
|
$
|
5,345,226
|
|
|
$
|
4,274,307
|
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Creative Cloud
|
$
|
1,594,019
|
|
|
$
|
1,303,463
|
|
|
$
|
3,088,907
|
|
|
$
|
2,532,958
|
|
Document Cloud
|
296,132
|
|
|
242,961
|
|
|
577,887
|
|
|
474,027
|
|
||||
Total
|
$
|
1,890,151
|
|
|
$
|
1,546,424
|
|
|
$
|
3,666,794
|
|
|
$
|
3,006,985
|
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Digital Media
|
$
|
1,773,669
|
|
|
$
|
1,425,919
|
|
|
$
|
3,437,308
|
|
|
$
|
2,760,578
|
|
Digital Experience
|
654,048
|
|
|
469,406
|
|
|
1,265,976
|
|
|
900,273
|
|
||||
Publishing
|
28,380
|
|
|
27,806
|
|
|
57,780
|
|
|
55,638
|
|
||||
Total
|
$
|
2,456,097
|
|
|
$
|
1,923,131
|
|
|
$
|
4,761,064
|
|
|
$
|
3,716,489
|
|
(in thousands)
|
Amount
|
|
Weighted Average Useful Life (years)
|
||
Customer contracts and relationships
|
$
|
577,500
|
|
|
11
|
Purchased technology
|
444,500
|
|
|
7
|
|
Backlog
|
105,500
|
|
|
2
|
|
Non-competition agreements
|
12,100
|
|
|
2
|
|
Trademarks
|
328,500
|
|
|
9
|
|
Total identifiable intangible assets
|
1,468,100
|
|
|
|
|
Net liabilities assumed
|
(194,588
|
)
|
|
N/A
|
|
Goodwill (1)
|
3,459,256
|
|
|
N/A
|
|
Total estimated purchase price
|
$
|
4,732,768
|
|
|
|
(1)
|
Non-deductible for tax-purposes.
|
(in thousands)
|
Amount
|
|
Weighted Average Useful Life (years)
|
||
Customer contracts and relationships
|
$
|
208,000
|
|
|
8
|
Purchased technology
|
84,200
|
|
|
5
|
|
In-process research and development (1)
|
39,100
|
|
|
N/A
|
|
Trademarks
|
21,100
|
|
|
3
|
|
Other intangibles
|
43,400
|
|
|
3
|
|
Total identifiable intangible assets
|
395,800
|
|
|
|
|
Net liabilities assumed
|
(68,182
|
)
|
|
N/A
|
|
Goodwill (2)
|
1,316,983
|
|
|
N/A
|
|
Total estimated purchase price
|
$
|
1,644,601
|
|
|
|
(1)
|
Capitalized as purchased technology and are considered indefinite lived until the completion or abandonment of the associated research and development efforts. During the first quarter of fiscal 2019, one of the associated in-process research and development efforts was completed and another one was abandoned. The respective related amortization and write-off were each immaterial.
|
(2)
|
Non-deductible for tax-purposes.
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
400,023
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400,023
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
144,563
|
|
|
—
|
|
|
(8
|
)
|
|
144,555
|
|
||||
Money market mutual funds
|
1,474,933
|
|
|
—
|
|
|
—
|
|
|
1,474,933
|
|
||||
Municipal securities
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
||||
Time deposits
|
57,400
|
|
|
—
|
|
|
—
|
|
|
57,400
|
|
||||
U.S. agency securities
|
4,999
|
|
|
—
|
|
|
—
|
|
|
4,999
|
|
||||
Total cash equivalents
|
1,682,895
|
|
|
—
|
|
|
(8
|
)
|
|
1,682,887
|
|
||||
Total cash and cash equivalents
|
2,082,918
|
|
|
—
|
|
|
(8
|
)
|
|
2,082,910
|
|
||||
Short-term fixed income securities:
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
61,145
|
|
|
59
|
|
|
(80
|
)
|
|
61,124
|
|
||||
Corporate debt securities
|
1,314,844
|
|
|
804
|
|
|
(3,616
|
)
|
|
1,312,032
|
|
||||
Foreign government securities
|
2,399
|
|
|
—
|
|
|
(6
|
)
|
|
2,393
|
|
||||
Municipal securities
|
20,499
|
|
|
47
|
|
|
(26
|
)
|
|
20,520
|
|
||||
Total short-term investments
|
1,398,887
|
|
|
910
|
|
|
(3,728
|
)
|
|
1,396,069
|
|
||||
Total cash, cash equivalents and short-term investments
|
$
|
3,481,805
|
|
|
$
|
910
|
|
|
$
|
(3,736
|
)
|
|
$
|
3,478,979
|
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
368,564
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
368,564
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
||||||
Money market mutual funds
|
1,234,188
|
|
|
—
|
|
|
—
|
|
|
1,234,188
|
|
||||
Time deposits
|
40,023
|
|
|
—
|
|
|
—
|
|
|
40,023
|
|
||||
Total cash equivalents
|
1,274,211
|
|
|
—
|
|
|
—
|
|
|
1,274,211
|
|
||||
Total cash and cash equivalents
|
1,642,775
|
|
|
—
|
|
|
—
|
|
|
1,642,775
|
|
||||
Short-term fixed income securities:
|
|
|
|
|
|
|
|
|
|||||||
Asset-backed securities
|
41,875
|
|
|
—
|
|
|
(367
|
)
|
|
41,508
|
|
||||
Corporate debt securities
|
1,546,860
|
|
|
44
|
|
|
(24,696
|
)
|
|
1,522,208
|
|
||||
Foreign government securities
|
4,179
|
|
|
—
|
|
|
(24
|
)
|
|
4,155
|
|
||||
Municipal securities
|
18,601
|
|
|
1
|
|
|
(286
|
)
|
|
18,316
|
|
||||
Total short-term investments
|
1,611,515
|
|
|
45
|
|
|
(25,373
|
)
|
|
1,586,187
|
|
||||
Total cash, cash equivalents and short-term investments
|
$
|
3,254,290
|
|
|
$
|
45
|
|
|
$
|
(25,373
|
)
|
|
$
|
3,228,962
|
|
|
2019
|
|
2018
|
||||||||||||
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||
Corporate debt securities
|
$
|
178,253
|
|
|
$
|
(43
|
)
|
|
$
|
538,109
|
|
|
$
|
(7,966
|
)
|
Asset-backed securities
|
5,501
|
|
|
—
|
|
|
6,696
|
|
|
(54
|
)
|
||||
Municipal securities
|
1,942
|
|
|
—
|
|
|
6,599
|
|
|
(81
|
)
|
||||
Total
|
$
|
185,696
|
|
|
$
|
(43
|
)
|
|
$
|
551,404
|
|
|
$
|
(8,101
|
)
|
|
2019
|
|
2018
|
||||||||||||
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||
Corporate debt securities
|
$
|
940,760
|
|
|
$
|
(3,581
|
)
|
|
$
|
969,701
|
|
|
$
|
(16,730
|
)
|
Asset-backed securities
|
24,847
|
|
|
(80
|
)
|
|
34,812
|
|
|
(313
|
)
|
||||
Municipal securities
|
8,725
|
|
|
(26
|
)
|
|
11,532
|
|
|
(205
|
)
|
||||
Foreign government securities
|
2,393
|
|
|
(6
|
)
|
|
4,154
|
|
|
(24
|
)
|
||||
Total
|
$
|
976,725
|
|
|
$
|
(3,693
|
)
|
|
$
|
1,020,199
|
|
|
$
|
(17,272
|
)
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Due within one year
|
$
|
612,044
|
|
|
$
|
610,831
|
|
Due between one and two years
|
587,933
|
|
|
586,542
|
|
||
Due between two and three years
|
136,276
|
|
|
136,058
|
|
||
Due after three years
|
62,634
|
|
|
62,638
|
|
||
Total
|
$
|
1,398,887
|
|
|
$
|
1,396,069
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||
|
|
|
Quoted Prices
in Active
Markets for
Identical Assets
|
|
Significant
Other
Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
||||||||
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
$
|
144,555
|
|
|
$
|
—
|
|
|
$
|
144,555
|
|
|
$
|
—
|
|
Money market mutual funds
|
1,474,933
|
|
|
1,474,933
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
1,000
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
||||
Time deposits
|
57,400
|
|
|
57,400
|
|
|
—
|
|
|
—
|
|
||||
U.S. agency securities
|
4,999
|
|
|
—
|
|
|
4,999
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
61,124
|
|
|
—
|
|
|
61,124
|
|
|
—
|
|
||||
Corporate debt securities
|
1,312,032
|
|
|
—
|
|
|
1,312,032
|
|
|
—
|
|
||||
Foreign government securities
|
2,393
|
|
|
—
|
|
|
2,393
|
|
|
—
|
|
||||
Municipal securities
|
20,520
|
|
|
—
|
|
|
20,520
|
|
|
—
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency derivatives
|
30,241
|
|
|
—
|
|
|
30,241
|
|
|
—
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
|
|||||||
Deferred compensation plan assets
|
81,749
|
|
|
4,121
|
|
|
77,628
|
|
|
—
|
|
||||
Total assets
|
$
|
3,190,946
|
|
|
$
|
1,536,454
|
|
|
$
|
1,654,492
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives
|
$
|
2,149
|
|
|
$
|
—
|
|
|
$
|
2,149
|
|
|
$
|
—
|
|
Other liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap derivatives
|
2,964
|
|
|
—
|
|
|
2,964
|
|
|
—
|
|
||||
Total liabilities
|
$
|
5,113
|
|
|
$
|
—
|
|
|
$
|
5,113
|
|
|
$
|
—
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||
|
|
|
Quoted Prices
in Active
Markets for
Identical Assets
|
|
Significant
Other
Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
||||||||
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
1,234,188
|
|
|
$
|
1,234,188
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Time deposits
|
40,023
|
|
|
40,023
|
|
|
—
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|||||||
Asset-backed securities
|
41,508
|
|
|
—
|
|
|
41,508
|
|
|
—
|
|
||||
Corporate debt securities
|
1,522,208
|
|
|
—
|
|
|
1,522,208
|
|
|
—
|
|
||||
Foreign government securities
|
4,155
|
|
|
—
|
|
|
4,155
|
|
|
—
|
|
||||
Municipal securities
|
18,316
|
|
|
—
|
|
|
18,316
|
|
|
—
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives
|
44,259
|
|
|
—
|
|
|
44,259
|
|
|
—
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation plan assets
|
68,988
|
|
|
3,895
|
|
|
65,093
|
|
|
—
|
|
||||
Total assets
|
$
|
2,973,645
|
|
|
$
|
1,278,106
|
|
|
$
|
1,695,539
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives
|
$
|
816
|
|
|
$
|
—
|
|
|
$
|
816
|
|
|
$
|
—
|
|
Other liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap derivatives
|
9,744
|
|
|
—
|
|
|
9,744
|
|
|
—
|
|
||||
Total liabilities
|
$
|
10,560
|
|
|
$
|
—
|
|
|
$
|
10,560
|
|
|
$
|
—
|
|
|
2019
|
|
2018
|
||||||||||||
|
Fair Value
Asset
Derivatives
|
|
Fair Value
Liability
Derivatives
|
|
Fair Value
Asset
Derivatives
|
|
Fair Value
Liability
Derivatives
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange option contracts(1) (2)
|
$
|
27,254
|
|
|
$
|
—
|
|
|
$
|
40,191
|
|
|
$
|
—
|
|
Interest rate swap (3)
|
—
|
|
|
2,964
|
|
|
—
|
|
|
9,744
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forward contracts (1)
|
2,987
|
|
|
2,149
|
|
|
4,068
|
|
|
816
|
|
||||
Total derivatives
|
$
|
30,241
|
|
|
$
|
5,113
|
|
|
$
|
44,259
|
|
|
$
|
10,560
|
|
(1)
|
Fair value asset derivatives included in prepaid expenses and other current assets and fair value liability derivatives included in accrued expenses on our consolidated balance sheets.
|
(2)
|
Hedging effectiveness expected to be recognized into income within the next twelve months.
|
(3)
|
Included in other liabilities on our condensed consolidated balance sheets.
|
|
2019
|
|
2018
|
||||||||||||
|
Foreign
Exchange Option Contracts |
|
Foreign
Exchange Forward Contracts |
|
Foreign
Exchange Option Contracts |
|
Foreign
Exchange Forward Contracts |
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) recognized in OCI, net of tax(1)
|
$
|
16,765
|
|
|
$
|
—
|
|
|
$
|
31,104
|
|
|
$
|
—
|
|
Net gain (loss) reclassified from accumulated OCI into income, net of tax(2)
|
$
|
8,990
|
|
|
$
|
—
|
|
|
$
|
337
|
|
|
$
|
—
|
|
Net gain (loss) recognized in income(3)
|
$
|
(12,127
|
)
|
|
$
|
—
|
|
|
$
|
(12,084
|
)
|
|
$
|
—
|
|
Derivatives not designated as hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) recognized in income(4)
|
$
|
—
|
|
|
$
|
2,887
|
|
|
$
|
—
|
|
|
$
|
2,784
|
|
|
2019
|
|
2018
|
||||||||||||
|
Foreign
Exchange Option Contracts |
|
Foreign
Exchange Forward Contracts |
|
Foreign
Exchange Option Contracts |
|
Foreign
Exchange Forward Contracts |
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) recognized in OCI, net of tax(1)
|
$
|
8,308
|
|
|
$
|
—
|
|
|
$
|
29,767
|
|
|
$
|
—
|
|
Net gain (loss) reclassified from accumulated OCI into income, net of tax(2)
|
$
|
17,491
|
|
|
$
|
—
|
|
|
$
|
1,359
|
|
|
$
|
—
|
|
Net gain (loss) recognized in income(3)
|
$
|
(24,269
|
)
|
|
$
|
—
|
|
|
$
|
(22,410
|
)
|
|
$
|
—
|
|
Derivatives not designated as hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) recognized in income(4)
|
$
|
—
|
|
|
$
|
1,368
|
|
|
$
|
—
|
|
|
$
|
(877
|
)
|
(1)
|
Net change in the fair value of the effective portion classified in other comprehensive income (“OCI”).
|
(2)
|
Effective portion classified as revenue.
|
(3)
|
Ineffective portion and amount excluded from effectiveness testing classified in interest and other income (expense), net.
|
(4)
|
Classified in interest and other income (expense), net.
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Purchased technology
|
$
|
774,307
|
|
|
$
|
(170,752
|
)
|
|
$
|
603,555
|
|
|
$
|
750,286
|
|
|
$
|
(118,812
|
)
|
|
$
|
631,474
|
|
Customer contracts and relationships
|
$
|
1,247,138
|
|
|
$
|
(397,340
|
)
|
|
$
|
849,798
|
|
|
$
|
1,329,432
|
|
|
$
|
(416,176
|
)
|
|
$
|
913,256
|
|
Trademarks
|
384,855
|
|
|
(50,039
|
)
|
|
334,816
|
|
|
384,855
|
|
|
(25,968
|
)
|
|
358,887
|
|
||||||
Acquired rights to use technology
|
59,906
|
|
|
(46,683
|
)
|
|
13,223
|
|
|
58,966
|
|
|
(48,770
|
)
|
|
10,196
|
|
||||||
Backlog
|
147,000
|
|
|
(46,565
|
)
|
|
100,435
|
|
|
147,300
|
|
|
(13,299
|
)
|
|
134,001
|
|
||||||
Other intangibles
|
23,807
|
|
|
(8,485
|
)
|
|
15,322
|
|
|
51,096
|
|
|
(29,909
|
)
|
|
21,187
|
|
||||||
Total other intangible assets
|
$
|
1,862,706
|
|
|
$
|
(549,112
|
)
|
|
$
|
1,313,594
|
|
|
$
|
1,971,649
|
|
|
$
|
(534,122
|
)
|
|
$
|
1,437,527
|
|
Purchased and other intangible assets, net
|
$
|
2,637,013
|
|
|
$
|
(719,864
|
)
|
|
$
|
1,917,149
|
|
|
$
|
2,721,935
|
|
|
$
|
(652,934
|
)
|
|
$
|
2,069,001
|
|
Fiscal Year
|
|
Purchased
Technology
|
|
Other Intangible
Assets
|
||||
Remainder of 2019
|
$
|
63,578
|
|
|
$
|
131,537
|
|
|
2020
|
125,931
|
|
|
237,337
|
|
|||
2021
|
103,698
|
|
|
149,829
|
|
|||
2022
|
86,880
|
|
|
134,436
|
|
|||
2023
|
76,876
|
|
|
134,245
|
|
|||
Thereafter
|
146,592
|
|
|
526,210
|
|
|||
Total expected amortization expense
|
$
|
603,555
|
|
|
$
|
1,313,594
|
|
|
2019
|
|
2018
|
||||
Accrued compensation and benefits
|
$
|
402,157
|
|
|
$
|
313,874
|
|
Accrued bonuses
|
143,380
|
|
|
216,007
|
|
||
Accrued media costs
|
121,738
|
|
|
124,849
|
|
||
Sales and marketing allowances
|
48,737
|
|
|
44,968
|
|
||
Accrued corporate marketing
|
105,282
|
|
|
66,186
|
|
||
Accrued building rent
|
74,168
|
|
|
61,544
|
|
||
Taxes payable
|
63,106
|
|
|
57,525
|
|
||
Royalties payable
|
50,815
|
|
|
51,529
|
|
||
Accrued interest expense
|
29,887
|
|
|
29,481
|
|
||
Other
|
275,728
|
|
|
197,222
|
|
||
Accrued expenses
|
$
|
1,314,998
|
|
|
$
|
1,163,185
|
|
|
2019
|
|
Beginning outstanding balance
|
8,668
|
|
Awarded
|
3,731
|
|
Released
|
(3,221
|
)
|
Forfeited
|
(386
|
)
|
Ending outstanding balance
|
8,792
|
|
|
Number of
Shares
(thousands)
|
|
Weighted
Average
Remaining
Contractual
Life
(years)
|
|
Aggregate
Intrinsic
Value(*)
(millions)
|
|||
2019
|
|
|
|
|
|
|||
Restricted stock units outstanding
|
8,792
|
|
|
1.44
|
|
$
|
2,381.8
|
|
Restricted stock units expected to vest
|
7,950
|
|
|
1.37
|
|
$
|
2,153.5
|
|
2018
|
|
|
|
|
|
|
|
|
Restricted stock units outstanding
|
9,046
|
|
|
1.36
|
|
$
|
2,273.3
|
|
Restricted stock units expected to vest
|
8,224
|
|
|
1.30
|
|
$
|
2,066.9
|
|
(*)
|
The intrinsic value is calculated as the market value as of the end of the fiscal period. As reported by the NASDAQ Global Select Market, the market values as of May 31, 2019 and June 1, 2018 were $270.90 and $251.31, respectively.
|
|
2019
|
||||
|
Shares
Granted
|
|
Maximum
Shares Eligible
to Receive
|
||
Beginning outstanding balance
|
1,148
|
|
|
2,296
|
|
Awarded
|
722
|
|
(1)
|
614
|
|
Achieved
|
(830
|
)
|
(2)
|
(830
|
)
|
Forfeited
|
(23
|
)
|
|
(46
|
)
|
Ending outstanding balance
|
1,017
|
|
|
2,034
|
|
(1)
|
Included in the 0.7 million shares awarded during the six months ended May 31, 2019 were 0.4 million shares awarded for the final achievement of the 2016 Performance Share program. The remaining awarded shares were for the 2019 Performance Share Program.
|
(2)
|
Shares achieved under our 2016 Performance Share Program resulted from 200% achievement of target.
|
|
2019
|
|
2018
|
Expected life (in years)
|
0.5 - 2.0
|
|
0.5 - 2.0
|
Volatility
|
35% - 37%
|
|
26% - 27%
|
Risk free interest rate
|
2.47% - 2.63%
|
|
1.54% - 1.89%
|
|
|
2019
|
|
2018
|
||||||||||||
Income Statement Classifications
|
|
Option
Grants
and Stock
Purchase
Rights
|
|
Restricted
Stock Units and
Performance
Share
Awards
|
|
Option
Grants
and Stock
Purchase
Rights
|
|
Restricted
Stock Units and
Performance
Share
Awards
|
||||||||
Cost of revenue—subscription
|
$
|
1,500
|
|
|
$
|
6,491
|
|
|
$
|
729
|
|
|
$
|
4,526
|
|
|
Cost of revenue—services and support
|
1,757
|
|
|
4,152
|
|
|
1,647
|
|
|
2,680
|
|
|||||
Research and development
|
8,771
|
|
|
86,123
|
|
|
5,301
|
|
|
63,608
|
|
|||||
Sales and marketing
|
10,087
|
|
|
58,525
|
|
|
5,443
|
|
|
42,747
|
|
|||||
General and administrative
|
2,189
|
|
|
24,705
|
|
|
1,350
|
|
|
17,346
|
|
|||||
Total
|
$
|
24,304
|
|
|
$
|
179,996
|
|
|
$
|
14,470
|
|
|
$
|
130,907
|
|
|
|
2019
|
|
2018
|
||||||||||||
Income Statement Classifications
|
|
Option
Grants
and Stock
Purchase
Rights
|
|
Restricted
Stock Units and
Performance
Share
Awards
|
|
Option
Grants
and Stock
Purchase
Rights
|
|
Restricted
Stock Units and
Performance
Share
Awards
|
||||||||
Cost of revenue—subscription
|
$
|
2,890
|
|
|
$
|
11,673
|
|
|
$
|
1,497
|
|
|
$
|
8,470
|
|
|
Cost of revenue—services and support
|
3,755
|
|
|
7,969
|
|
|
3,663
|
|
|
5,666
|
|
|||||
Research and development
|
17,216
|
|
|
161,942
|
|
|
10,649
|
|
|
117,681
|
|
|||||
Sales and marketing
|
20,440
|
|
|
110,772
|
|
|
10,763
|
|
|
81,595
|
|
|||||
General and administrative
|
5,470
|
|
|
46,860
|
|
|
2,830
|
|
|
38,088
|
|
|||||
Total
|
$
|
49,771
|
|
|
$
|
339,216
|
|
|
$
|
29,402
|
|
|
$
|
251,500
|
|
|
November 30,
2018 |
|
Increase / Decrease
|
|
Reclassification Adjustments
|
|
May 31,
2019 |
||||||||
Net unrealized gains / losses on available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains on available-for-sale securities
|
$
|
44
|
|
|
$
|
883
|
|
|
$
|
(16
|
)
|
|
$
|
911
|
|
Unrealized losses on available-for-sale securities
|
(25,374
|
)
|
|
21,429
|
|
|
208
|
|
|
(3,737
|
)
|
||||
Total net unrealized gains / losses on available-for-sale securities
|
(25,330
|
)
|
|
22,312
|
|
|
192
|
|
(1)
|
(2,826
|
)
|
||||
Net unrealized gains / losses on derivative instruments designated as hedging instruments
|
21,732
|
|
|
8,308
|
|
|
(16,872
|
)
|
(2)
|
13,168
|
|
||||
Cumulative foreign currency translation adjustments
|
(144,532
|
)
|
|
(10,174
|
)
|
|
—
|
|
|
(154,706
|
)
|
||||
Total accumulated other comprehensive income (loss), net of taxes
|
$
|
(148,130
|
)
|
|
$
|
20,446
|
|
|
$
|
(16,680
|
)
|
|
$
|
(144,364
|
)
|
(1)
|
Reclassification adjustments for gains / losses on available-for-sale securities are classified in interest and other income (expense), net.
|
(2)
|
Reclassification adjustments for gains / losses on derivative instruments are classified in revenue.
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Reclassification adjustments on derivative instruments
|
$
|
(98
|
)
|
|
$
|
(100
|
)
|
|
(193
|
)
|
|
(1,626
|
)
|
||
Subtotal derivatives designated as hedging instruments
|
(98
|
)
|
|
(100
|
)
|
|
(193
|
)
|
|
(1,626
|
)
|
||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,742
|
)
|
||||
Total taxes, other comprehensive income
|
$
|
(98
|
)
|
|
$
|
(100
|
)
|
|
$
|
(193
|
)
|
|
$
|
(3,368
|
)
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
632,593
|
|
|
$
|
663,167
|
|
|
$
|
1,306,834
|
|
|
$
|
1,246,243
|
|
Shares used to compute basic net income per share
|
487,535
|
|
|
491,914
|
|
|
487,795
|
|
|
491,993
|
|
||||
Dilutive potential common shares:
|
|
|
|
|
|
|
|
||||||||
Unvested restricted stock units and performance share awards
|
4,141
|
|
|
6,212
|
|
|
4,931
|
|
|
7,019
|
|
||||
ESPP and stock options
|
536
|
|
|
126
|
|
|
474
|
|
|
154
|
|
||||
Shares used to compute diluted net income per share
|
492,212
|
|
|
498,252
|
|
|
493,200
|
|
|
499,166
|
|
||||
Basic net income per share
|
$
|
1.30
|
|
|
$
|
1.35
|
|
|
$
|
2.68
|
|
|
$
|
2.53
|
|
Diluted net income per share
|
$
|
1.29
|
|
|
$
|
1.33
|
|
|
$
|
2.65
|
|
|
$
|
2.50
|
|
|
|
|
|
|
|
|
|
||||||||
Anti-dilutive potential common shares (1)
|
78
|
|
|
25
|
|
|
309
|
|
|
76
|
|
(1)
|
Potential common stock equivalents not included in the calculation of diluted net income per share as the effect would have been anti-dilutive.
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest and other income (expense), net:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
$
|
16,278
|
|
|
$
|
25,771
|
|
|
$
|
32,349
|
|
|
$
|
48,401
|
|
Foreign exchange gains (losses)
|
(13,692
|
)
|
|
(14,222
|
)
|
|
(25,549
|
)
|
|
(20,111
|
)
|
||||
Realized gains on fixed income investment
|
13
|
|
|
6
|
|
|
16
|
|
|
190
|
|
||||
Realized losses on fixed income investment
|
(80
|
)
|
|
(81
|
)
|
|
(208
|
)
|
|
(386
|
)
|
||||
Other
|
39
|
|
|
125
|
|
|
216
|
|
|
177
|
|
||||
Interest and other income (expense), net
|
$
|
2,558
|
|
|
$
|
11,599
|
|
|
$
|
6,824
|
|
|
$
|
28,271
|
|
Interest expense
|
$
|
(40,577
|
)
|
|
$
|
(20,363
|
)
|
|
$
|
(81,170
|
)
|
|
$
|
(40,262
|
)
|
Investment gains (losses), net:
|
|
|
|
|
|
|
|
|
|||||||
Realized investment gains
|
$
|
957
|
|
|
$
|
503
|
|
|
$
|
44,615
|
|
|
$
|
4,497
|
|
Realized investment losses
|
(130
|
)
|
|
—
|
|
|
(130
|
)
|
|
—
|
|
||||
Unrealized investment gains
|
—
|
|
|
576
|
|
|
—
|
|
|
—
|
|
||||
Unrealized investment losses
|
(1,583
|
)
|
|
—
|
|
|
(1,410
|
)
|
|
(422
|
)
|
||||
Investment gains (losses), net
|
$
|
(756
|
)
|
|
$
|
1,079
|
|
|
$
|
43,075
|
|
|
$
|
4,075
|
|
Non-operating income (expense), net
|
$
|
(38,775
|
)
|
|
$
|
(7,685
|
)
|
|
$
|
(31,271
|
)
|
|
$
|
(7,916
|
)
|
Creative ARR
|
Annual Value of Creative Cloud Subscriptions and Services
+
Annual Creative ETLA Contract Value
|
|
Document Cloud ARR
|
Annual Value of Document Cloud Subscriptions and Services
+
Annual Document Cloud ETLA Contract Value
|
|
Digital Media ARR
|
Creative ARR
+
Document Cloud ARR
|
•
|
Adobe Advertising Cloud—delivers an end-to-end platform for managing advertising across traditional TV and digital formats, and simplifies the delivery of video, display and search advertising across channels and screens.
|
•
|
Adobe Analytics Cloud—enables businesses to move from insights to actions in real time by uniquely integrating audiences as the core system of intelligence for the enterprise; makes data available across all Adobe clouds through the capture, aggregation, rationalization and understanding of vast amounts of disparate data and then translating that data into singular customer profiles; includes Adobe Analytics and Adobe Audience Manager.
|
•
|
Adobe Marketing Cloud—provides an integrated set of solutions to help marketers differentiate their brands and engage their customers, helping businesses manage, personalize, and orchestrate campaigns and customer journeys; includes Adobe Experience Manager (“AEM”), Adobe Campaign, Adobe Target, Marketo Engagement Platform and Adobe Primetime.
|
•
|
Adobe Commerce Cloud—provides digital commerce, order management and predictive intelligence based on a unified commerce platform enabling shopping experiences across a wide array of industries.
|
•
|
Total Digital Media ARR of approximately $7.47 billion as of May 31, 2019 increased by $763 million, or 11%, from $6.71 billion as of November 30, 2018. The change in our Digital Media ARR is primarily due to stronger new user adoption of our Creative Cloud and Adobe Document Cloud offerings.
|
•
|
Creative revenue during the three months ended May 31, 2019 of $1.59 billion increased by $290.6 million, or 22% compared to the year-ago period. The increase was primarily due to the increase in subscription revenue associated with our Creative Cloud offerings.
|
•
|
Adobe Experience Cloud revenue of $783.5 million during the three months ended May 31, 2019 increased by $197.6 million, or 34%, compared to the year-ago period. The increase was primarily due to the increase in subscription revenue driven by the addition of Marketo and Magento, which we acquired in the later part of fiscal 2018.
|
•
|
Our total deferred revenue of $3.13 billion as of May 31, 2019 increased by $80.5 million, or 3%, from $3.05 billion as of November 30, 2018 primarily due to increases in new contracts and the timing of renewals related to our Digital Experience offerings and acquired deferred revenue from Marketo and Magento.
|
•
|
Cost of revenue of $407.5 million during the three months ended May 31, 2019 increased by $126.1 million, or 45%, compared to the year-ago period primarily due to increases in amortization of purchased intangibles and hosting services and data center costs.
|
•
|
Operating expenses of $1.59 billion during the three months ended May 31, 2019 increased by $371.7 million, or 31%, compared to the year-ago period primarily due to increases in base compensation and related benefits costs and stock-based compensation expense associated with headcount growth, and marketing spend. Contributing to these increases were the additions of Magento and Marketo in the later part of fiscal 2018.
|
•
|
Net income of $632.6 million during the three months ended May 31, 2019 decreased by $30.6 million, or 5%, compared to the year-ago period primarily due to increases in provision for income taxes and interest expense.
|
•
|
Net cash flow from operations of $2.12 billion during the six months ended May 31, 2019 increased by $156.8 million, or 8%, compared to the year-ago period primarily due to higher net income, coupled with a smaller increase in taxes payable.
|
(dollars in millions)
|
Three Months
|
|
|
|
Six Months
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Subscription
|
$
|
2,456.1
|
|
|
$
|
1,923.1
|
|
|
28
|
%
|
|
$
|
4,761.0
|
|
|
$
|
3,716.5
|
|
|
28
|
%
|
Percentage of total revenue
|
89
|
%
|
|
88
|
%
|
|
|
|
|
89
|
%
|
|
87
|
%
|
|
|
|
||||
Product
|
152.8
|
|
|
151.0
|
|
|
1
|
%
|
|
323.4
|
|
|
322.6
|
|
|
*
|
|
||||
Percentage of total revenue
|
6
|
%
|
|
7
|
%
|
|
|
|
|
6
|
%
|
|
8
|
%
|
|
|
|
||||
Services and support
|
135.4
|
|
|
121.3
|
|
|
12
|
%
|
|
260.8
|
|
|
235.2
|
|
|
11
|
%
|
||||
Percentage of total revenue
|
5
|
%
|
|
5
|
%
|
|
|
|
|
5
|
%
|
|
5
|
%
|
|
|
|
||||
Total revenue
|
$
|
2,744.3
|
|
|
$
|
2,195.4
|
|
|
25
|
%
|
|
$
|
5,345.2
|
|
|
$
|
4,274.3
|
|
|
25
|
%
|
(*)
|
Percentage is less than 1%.
|
(dollars in millions)
|
Three Months
|
|
|
|
Six Months
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Digital Media
|
$
|
1,773.7
|
|
|
$
|
1,425.9
|
|
|
24
|
%
|
|
$
|
3,437.2
|
|
|
$
|
2,760.6
|
|
|
25
|
%
|
Digital Experience
|
654.0
|
|
|
469.4
|
|
|
39
|
%
|
|
1,266.0
|
|
|
900.3
|
|
|
41
|
%
|
||||
Publishing
|
28.4
|
|
|
27.8
|
|
|
2
|
%
|
|
57.8
|
|
|
55.6
|
|
|
4
|
%
|
||||
Total subscription revenue
|
$
|
2,456.1
|
|
|
$
|
1,923.1
|
|
|
28
|
%
|
|
$
|
4,761.0
|
|
|
$
|
3,716.5
|
|
|
28
|
%
|
(dollars in millions)
|
Three Months
|
|
|
|
Six Months
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Digital Media
|
$
|
1,890.2
|
|
|
$
|
1,546.4
|
|
|
22
|
%
|
|
$
|
3,666.8
|
|
|
$
|
3,006.9
|
|
|
22
|
%
|
Percentage of total revenue
|
69
|
%
|
|
70
|
%
|
|
|
|
|
69
|
%
|
|
70
|
%
|
|
|
|
||||
Digital Experience
|
783.5
|
|
|
586.0
|
|
|
34
|
%
|
|
1,526.8
|
|
|
1,140.1
|
|
|
34
|
%
|
||||
Percentage of total revenue
|
28
|
%
|
|
27
|
%
|
|
|
|
|
28
|
%
|
|
27
|
%
|
|
|
|
||||
Publishing
|
70.6
|
|
|
63.0
|
|
|
12
|
%
|
|
151.6
|
|
|
127.3
|
|
|
19
|
%
|
||||
Percentage of total revenue
|
3
|
%
|
|
3
|
%
|
|
|
|
|
3
|
%
|
|
3
|
%
|
|
|
|
||||
Total revenue
|
$
|
2,744.3
|
|
|
$
|
2,195.4
|
|
|
25
|
%
|
|
$
|
5,345.2
|
|
|
$
|
4,274.3
|
|
|
25
|
%
|
(dollars in millions)
|
Three Months
|
|
|
|
Six Months
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Americas
|
$
|
1,599.2
|
|
|
$
|
1,239.6
|
|
|
29
|
%
|
|
$
|
3,109.1
|
|
|
$
|
2,410.2
|
|
|
29
|
%
|
Percentage of total revenue
|
58
|
%
|
|
57
|
%
|
|
|
|
|
58
|
%
|
|
57
|
%
|
|
|
|
||||
EMEA
|
729.3
|
|
|
621.8
|
|
|
17
|
%
|
|
1,432.3
|
|
|
1,209.1
|
|
|
18
|
%
|
||||
Percentage of total revenue
|
27
|
%
|
|
28
|
%
|
|
|
|
|
27
|
%
|
|
28
|
%
|
|
|
|
||||
APAC
|
415.8
|
|
|
334.0
|
|
|
24
|
%
|
|
803.8
|
|
|
655.0
|
|
|
23
|
%
|
||||
Percentage of total revenue
|
15
|
%
|
|
15
|
%
|
|
|
|
|
15
|
%
|
|
15
|
%
|
|
|
|
||||
Total revenue
|
$
|
2,744.3
|
|
|
$
|
2,195.4
|
|
|
25
|
%
|
|
$
|
5,345.2
|
|
|
$
|
4,274.3
|
|
|
25
|
%
|
(in millions)
|
Three Months
|
|
Six Months
|
||||
Revenue impact:
|
Increase/(Decrease)
|
||||||
Euro
|
$
|
(22.5
|
)
|
|
$
|
(29.2
|
)
|
British Pound
|
(7.4
|
)
|
|
(11.2
|
)
|
||
Japanese Yen
|
(2.9
|
)
|
|
(1.5
|
)
|
||
Other currencies
|
(12.5
|
)
|
|
(18.2
|
)
|
||
Total revenue impact
|
(45.3
|
)
|
|
(60.1
|
)
|
||
Hedging impact:
|
|
|
|
||||
Euro
|
7.3
|
|
|
13.2
|
|
||
British Pound
|
1.0
|
|
|
2.7
|
|
||
Japanese Yen
|
0.7
|
|
|
1.6
|
|
||
Total hedging impact
|
9.0
|
|
|
17.5
|
|
||
Total impact
|
$
|
(36.3
|
)
|
|
$
|
(42.6
|
)
|
(dollars in millions)
|
Three Months
|
|
|
|
Six Months
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Subscription
|
$
|
296.5
|
|
|
$
|
186.3
|
|
|
59
|
%
|
|
$
|
584.5
|
|
|
$
|
351.0
|
|
|
67
|
%
|
Percentage of total revenue
|
11
|
%
|
|
8
|
%
|
|
|
|
11
|
%
|
|
8
|
%
|
|
|
||||||
Product
|
9.3
|
|
|
10.8
|
|
|
(14
|
)%
|
|
21.5
|
|
|
23.7
|
|
|
(9
|
)%
|
||||
Percentage of total revenue
|
*
|
|
|
*
|
|
|
|
|
|
*
|
|
|
1
|
%
|
|
|
|
||||
Services and support
|
101.7
|
|
|
84.2
|
|
|
21
|
%
|
|
198.8
|
|
|
165.5
|
|
|
20
|
%
|
||||
Percentage of total revenue
|
4
|
%
|
|
4
|
%
|
|
|
|
|
4
|
%
|
|
4
|
%
|
|
|
|
||||
Total cost of revenue
|
$
|
407.5
|
|
|
$
|
281.3
|
|
|
45
|
%
|
|
$
|
804.8
|
|
|
$
|
540.2
|
|
|
49
|
%
|
(*)
|
Percentage is less than 1%.
|
|
% Change
2019-2018 QTD |
|
% Change
2019-2018 YTD |
||
Amortization of purchased intangibles
|
20
|
%
|
|
23
|
%
|
Hosting services and data center costs
|
14
|
|
|
15
|
|
Media costs
|
4
|
|
|
6
|
|
Royalty costs
|
6
|
|
|
5
|
|
Incentive compensation, cash and stock-based
|
4
|
|
|
4
|
|
Base compensation and related benefits associated with headcount
|
5
|
|
|
5
|
|
Software licenses
|
2
|
|
|
3
|
|
Various individually insignificant items
|
4
|
|
|
6
|
|
Total change
|
59
|
%
|
|
67
|
%
|
|
% Change
2019-2018 QTD |
|
% Change
2019-2018 YTD |
||
Base compensation and related benefits associated with headcount
|
11
|
%
|
|
10
|
%
|
Incentive compensation, cash and stock-based
|
7
|
|
|
8
|
|
Professional and consulting fees
|
(1
|
)
|
|
(1
|
)
|
Various individually insignificant items
|
4
|
|
|
3
|
|
Total change
|
21
|
%
|
|
20
|
%
|
(dollars in millions)
|
Three Months
|
|
|
|
Six Months
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Research and development
|
$
|
476.0
|
|
|
$
|
374.1
|
|
|
27
|
%
|
|
$
|
940.6
|
|
|
$
|
722.9
|
|
|
30
|
%
|
Percentage of total revenue
|
17
|
%
|
|
17
|
%
|
|
|
|
|
18
|
%
|
|
17
|
%
|
|
|
|
||||
Sales and marketing
|
848.9
|
|
|
646.2
|
|
|
31
|
%
|
|
1,630.5
|
|
|
1,227.1
|
|
|
33
|
%
|
||||
Percentage of total revenue
|
31
|
%
|
|
29
|
%
|
|
|
|
31
|
%
|
|
29
|
%
|
|
|
||||||
General and administrative
|
219.3
|
|
|
178.0
|
|
|
23
|
%
|
|
435.4
|
|
|
348.5
|
|
|
25
|
%
|
||||
Percentage of total revenue
|
8
|
%
|
|
8
|
%
|
|
|
|
8
|
%
|
|
8
|
%
|
|
|
||||||
Amortization of purchased intangibles
|
43.0
|
|
|
17.2
|
|
|
**
|
|
|
89.6
|
|
|
34.3
|
|
|
**
|
|
||||
Percentage of total revenue
|
2
|
%
|
|
1
|
%
|
|
|
|
2
|
%
|
|
1
|
%
|
|
|
||||||
Total operating expenses
|
$
|
1,587.2
|
|
|
$
|
1,215.5
|
|
|
31
|
%
|
|
$
|
3,096.1
|
|
|
$
|
2,332.8
|
|
|
33
|
%
|
(**)
|
Percentage is not meaningful.
|
|
% Change
2019-2018 QTD |
|
% Change
2019-2018 YTD |
||
Incentive compensation, cash and stock-based
|
12
|
%
|
|
12
|
%
|
Base compensation and related benefits associated with headcount
|
9
|
|
|
10
|
|
Professional and consulting fees
|
4
|
|
|
4
|
|
Various individually insignificant items
|
2
|
|
|
4
|
|
Total change
|
27
|
%
|
|
30
|
%
|
|
% Change
2019-2018 QTD |
|
% Change
2019-2018 YTD |
||
Marketing spend related to campaigns, events and overall marketing efforts
|
12
|
%
|
|
11
|
%
|
Base compensation and related benefits associated with headcount
|
9
|
|
|
10
|
|
Incentive compensation, cash and stock-based
|
5
|
|
|
5
|
|
Professional and consulting fees
|
1
|
|
|
2
|
|
Amortization of contract acquisition costs, including sales commissions
|
1
|
|
|
1
|
|
Various individually insignificant items
|
3
|
|
|
4
|
|
Total change
|
31
|
%
|
|
33
|
%
|
|
% Change
2019-2018 QTD |
|
% Change
2019-2018 YTD |
||
Professional and consulting fees
|
5
|
%
|
|
9
|
%
|
Incentive compensation, cash and stock-based
|
7
|
|
|
6
|
|
Base compensation and related benefits associated with headcount
|
4
|
|
|
4
|
|
Software licenses
|
1
|
|
|
2
|
|
Various individually insignificant items
|
6
|
|
|
4
|
|
Total change
|
23
|
%
|
|
25
|
%
|
(dollars in millions)
|
Three Months
|
|
|
|
Six Months
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Interest and other income (expense), net
|
$
|
2.6
|
|
|
$
|
11.6
|
|
|
(78
|
)%
|
|
$
|
6.8
|
|
|
$
|
28.3
|
|
|
(76
|
)%
|
Percentage of total revenue
|
*
|
|
|
1
|
%
|
|
|
|
*
|
|
|
1
|
%
|
|
|
||||||
Interest expense
|
(40.6
|
)
|
|
(20.4
|
)
|
|
99
|
%
|
|
(81.2
|
)
|
|
(40.3
|
)
|
|
101
|
%
|
||||
Percentage of total revenue
|
(1
|
)%
|
|
(1
|
)%
|
|
|
|
(2
|
)%
|
|
(1
|
)%
|
|
|
||||||
Investment gains (losses), net
|
(0.8
|
)
|
|
1.1
|
|
|
**
|
|
|
43.1
|
|
|
4.1
|
|
|
**
|
|
||||
Percentage of total revenue
|
*
|
|
|
*
|
|
|
|
|
|
1
|
%
|
|
*
|
|
|
|
|
||||
Total non-operating income (expense), net
|
$
|
(38.8
|
)
|
|
$
|
(7.7
|
)
|
|
**
|
|
|
$
|
(31.3
|
)
|
|
$
|
(7.9
|
)
|
|
**
|
|
(*)
|
Percentage is less than 1%.
|
(**)
|
Percentage is not meaningful.
|
(dollars in millions)
|
Three Months
|
|
|
|
Six Months
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Provision
|
$
|
78.2
|
|
|
$
|
27.6
|
|
|
183
|
%
|
|
$
|
106.3
|
|
|
$
|
147.1
|
|
|
(28
|
)%
|
Percentage of total revenue
|
3
|
%
|
|
1
|
%
|
|
|
|
2
|
%
|
|
3
|
%
|
|
|
||||||
Effective tax rate
|
11
|
%
|
|
4
|
%
|
|
|
|
8
|
%
|
|
11
|
%
|
|
|
|
As of
|
||||||
(in millions)
|
May 31, 2019
|
|
November 30, 2018
|
||||
Cash and cash equivalents
|
$
|
2,082.9
|
|
|
$
|
1,642.8
|
|
Short-term investments
|
$
|
1,396.1
|
|
|
$
|
1,586.2
|
|
Working capital
|
$
|
(2,344.5
|
)
|
|
$
|
555.9
|
|
Stockholders’ equity
|
$
|
9,931.7
|
|
|
$
|
9,362.1
|
|
|
Six Months Ended
|
||||||
(in millions)
|
May 31, 2019
|
|
June 1, 2018
|
||||
Net cash provided by operating activities
|
$
|
2,122.7
|
|
|
$
|
1,966.0
|
|
Net cash used for investing activities
|
(121.8
|
)
|
|
(26.1
|
)
|
||
Net cash used for financing activities
|
(1,556.0
|
)
|
|
(1,258.6
|
)
|
||
Effect of foreign currency exchange rates on cash and cash equivalents
|
(4.8
|
)
|
|
0.6
|
|
||
Net increase in cash and cash equivalents
|
$
|
440.1
|
|
|
$
|
681.9
|
|
•
|
the need for our sales representatives to educate customers about the use and benefit of large-scale deployments of our products and services, including technical capabilities, security features, potential cost savings and return on investment;
|
•
|
the desire of organizations to undertake significant evaluation processes to determine their technology requirements prior to making information technology expenditures;
|
•
|
the need for our representatives to spend a significant amount of time assisting potential customers in their testing and evaluation of our products and services;
|
•
|
intensifying competition within the industry;
|
•
|
the negotiation of large, complex, enterprise-wide contracts;
|
•
|
the need for our customers to obtain requisition approvals from various decision makers within their organizations due to the complexity of our solutions touching multiple departments within customers’ organizations; and
|
•
|
customer budget constraints, economic conditions and unplanned administrative delays.
|
•
|
inability to achieve the financial and strategic goals for the acquired and combined businesses;
|
•
|
difficulty in, and the cost of, effectively integrating the operations, technologies, products or services, and personnel of the acquired business;
|
•
|
entry into markets in which we have minimal prior experience and where competitors in such markets have stronger market positions;
|
•
|
disruption of our ongoing business and distraction of our management and other employees from other opportunities and challenges;
|
•
|
inability to retain personnel of the acquired business;
|
•
|
inability to retain key customers, distributors, vendors and other business partners of the acquired business;
|
•
|
inability to take advantage of anticipated tax benefits;
|
•
|
incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results;
|
•
|
elevated delinquency or bad debt write-offs related to receivables of the acquired business we assume;
|
•
|
increased accounts receivables collection times and working capital requirements associated with acquired business models;
|
•
|
additional costs of bringing acquired companies into compliance with laws and regulations applicable to a multinational corporation;
|
•
|
difficulty in maintaining controls, procedures and policies during the transition and integration;
|
•
|
impairment of our relationships with employees, customers, partners, distributors or third-party providers of our technologies, products or services;
|
•
|
failure of our due diligence processes to identify significant problems, liabilities or other challenges of an acquired company or technology;
|
•
|
exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an acquisition, such as claims from terminated employees, customers, former stockholders or other third parties;
|
•
|
incurring significant exit charges if products or services acquired in business combinations are unsuccessful;
|
•
|
inability to conclude that our internal controls over financial reporting are effective;
|
•
|
inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions;
|
•
|
the failure of strategic investments to perform as expected or to meet financial projections;
|
•
|
delay in customer and distributor purchasing decisions due to uncertainty about the direction of our product and service offerings; and
|
•
|
incompatibility of business cultures.
|
•
|
foreign currency fluctuations and controls;
|
•
|
international and regional economic, political and labor conditions, including any instability or security concerns abroad;
|
•
|
tax laws (including U.S. taxes on foreign subsidiaries);
|
•
|
increased financial accounting and reporting burdens and complexities;
|
•
|
changes in, or impositions of, legislative or regulatory requirements;
|
•
|
changes in laws governing the free flow of data across international borders;
|
•
|
failure of laws to protect our intellectual property rights adequately;
|
•
|
inadequate local infrastructure and difficulties in managing and staffing international operations;
|
•
|
delays resulting from difficulty in obtaining export licenses for certain technology, tariffs, quotas and other trade barriers;
|
•
|
the imposition of governmental economic sanctions on countries in which we do business or where we plan to expand our business;
|
•
|
costs and delays associated with developing products in multiple languages;
|
•
|
operating in locations with a higher incidence of corruption and fraudulent business practices; and
|
•
|
other factors beyond our control, such as terrorism, war, natural disasters and pandemics.
|
•
|
shortfalls in, or changes in expectations about our revenue, margins, earnings, Annualized Recurring Revenue (“ARR”), sales of our Adobe Experience Cloud offerings, or other key performance metrics;
|
•
|
changes in estimates or recommendations by securities analysts;
|
•
|
whether our results meet analysts’ expectations;
|
•
|
compression or expansion of multiples used by investors and analysts to value high technology SaaS companies;
|
•
|
the announcement of new products or services, product enhancements, service introductions, strategic alliances or significant agreements by us or our competitors;
|
•
|
the loss of large customers or our inability to increase sales to existing customers, retain customers or attract new customers;
|
•
|
recruitment or departure of key personnel;
|
•
|
variations in our or our competitors’ results of operations, changes in the competitive landscape generally and developments in our industry;
|
•
|
general socio-economic, political or market conditions; and
|
•
|
unusual events such as significant acquisitions by us or our competitors, divestitures, litigation, regulatory actions and other factors, including factors unrelated to our operating performance.
|
•
|
increasing our vulnerability to adverse changes in general economic and industry conditions;
|
•
|
requiring the dedication of a portion of our expected cash flow from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures and acquisitions; and
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and our industry.
|
Period
|
|
Shares
Repurchased
|
|
Average
Price
Per
Share
|
|
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans
|
|
Approximate
Dollar Value
that May
Yet be
Purchased
Under the
Plans
|
|
||||||
|
(in thousands, except average price per share)
|
|
|||||||||||||
Beginning repurchase authority(1)
|
|
|
|
|
|
|
$
|
7,509,146
|
|
|
|||||
March 2, 2019—March 29, 2019
|
|
|
|
|
|
|
|
|
|||||||
Shares repurchased
|
612
|
|
|
$
|
260.10
|
|
|
612
|
|
|
$
|
(159,146
|
)
|
|
|
March 30, 2019—April 26, 2019
|
|
|
|
|
|
|
|
|
|||||||
Shares repurchased
|
940
|
|
|
$
|
265.79
|
|
|
940
|
|
|
$
|
(250,000
|
)
|
(2)
|
|
April 27, 2019—May 31, 2019
|
|
|
|
|
|
|
|
|
|||||||
Shares repurchased
|
903
|
|
|
$
|
277.19
|
|
|
903
|
|
|
$
|
(250,263
|
)
|
(2)
|
|
Total
|
2,455
|
|
|
|
|
2,455
|
|
|
$
|
6,849,737
|
|
|
(1)
|
In May 2018, the Board of Directors granted authority to repurchase up to $8 billion in common stock through the end of fiscal 2021.
|
(2)
|
In March 2019, we entered into a structured stock repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $750 million. As of May 31, 2019, approximately $249.7 million of the prepayment remained under this agreement.
|
|
|
|
|
Incorporated by Reference**
|
|
|
|
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date
|
|
Exhibit Number
|
|
SEC File No.
|
|
Filed
Herewith
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
3.1
|
|
|
|
8-K
|
|
4/26/11
|
|
3.3
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
3.2
|
|
|
|
8-K
|
|
10/9/18
|
|
3.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
3.3
|
|
|
|
8-K
|
|
10/9/18
|
|
3.2
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
4.1
|
|
|
|
10-K
|
|
1/25/19
|
|
4.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
4.2
|
|
|
|
S-3
|
|
2/26/16
|
|
4.1
|
|
|
333-209764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
4.3
|
|
|
|
8-K
|
|
1/26/10
|
|
4.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
4.4
|
|
|
|
8-K
|
|
1/26/15
|
|
4.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.1A
|
|
|
|
10-Q
|
|
4/9/10
|
|
10.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.1B
|
|
|
|
10-K
|
|
1/23/09
|
|
10.3
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.1C
|
|
|
|
10-K
|
|
1/26/12
|
|
10.13
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.2
|
|
|
|
10-Q
|
|
6/29/16
|
|
10.3
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3A
|
|
|
|
8-K
|
|
4/13/18
|
|
10.2
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3B
|
|
|
|
8-K
|
|
12/20/10
|
|
99.4
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3C
|
|
|
|
10-Q
|
|
10/7/04
|
|
10.11
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3D
|
|
|
|
8-K
|
|
1/26/18
|
|
10.6
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3E
|
|
|
|
8-K
|
|
1/28/19
|
|
10.5
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3F
|
|
|
|
8-K
|
|
1/29/16
|
|
10.2
|
|
|
000-15175
|
|
|
|
|
|
|
Incorporated by Reference**
|
|
|
|
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date
|
|
Exhibit Number
|
|
SEC File No.
|
|
Filed
Herewith
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3G
|
|
|
|
8-K
|
|
1/29/16
|
|
10.3
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3H
|
|
|
|
8-K
|
|
1/27/17
|
|
10.2
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3I
|
|
|
|
8-K
|
|
1/27/17
|
|
10.3
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3J
|
|
|
|
8-K
|
|
1/26/18
|
|
10.2
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3K
|
|
|
|
8-K
|
|
1/26/18
|
|
10.3
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3L
|
|
|
|
8-K
|
|
1/28/19
|
|
10.2
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3M
|
|
|
|
8-K
|
|
1/28/19
|
|
10.3
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3N
|
|
|
|
8-K
|
|
12/20/10
|
|
99.6
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3O
|
|
|
|
8-K
|
|
12/20/10
|
|
99.7
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.3P
|
|
|
|
8-K
|
|
12/20/10
|
|
99.8
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.4
|
|
|
|
8-K
|
|
12/11/14
|
|
10.2
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.5
|
|
|
|
10-Q
|
|
6/26/09
|
|
10.12
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.6
|
|
|
|
10-K
|
|
1/20/15
|
|
10.19
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.7
|
|
|
|
8-K
|
|
10/19/18
|
|
10.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference**
|
|
|
|
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date
|
|
Exhibit Number
|
|
SEC File No.
|
|
Filed
Herewith
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.8
|
|
|
|
8-K
|
|
10/19/18
|
|
10.2
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.9
|
|
|
|
10-Q
|
|
8/6/09
|
|
10.3
|
|
|
000-52076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.10
|
|
|
|
10-K
|
|
2/27/09
|
|
10.10
|
|
|
000-52076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.11
|
|
|
|
S-8
|
|
1/27/11
|
|
99.1
|
|
|
333-171902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.12
|
|
|
|
S-8
|
|
7/29/11
|
|
99.1
|
|
|
333-175910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.13
|
|
|
|
S-8
|
|
10/7/11
|
|
99.1
|
|
|
333-177229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.14
|
|
|
|
S-8
|
|
11/18/11
|
|
99.1
|
|
|
333-178065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.15
|
|
|
|
S-8
|
|
1/27/12
|
|
99.1
|
|
|
333-179221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.16A
|
|
|
|
S-8
|
|
1/23/13
|
|
99.1
|
|
|
333-186143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.16B
|
|
|
|
S-8
|
|
1/23/13
|
|
99.2
|
|
|
333-186143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.17
|
|
|
|
S-8
|
|
8/27/13
|
|
99.1
|
|
|
333-190846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.18
|
|
|
|
S-8
|
|
8/27/13
|
|
99.2
|
|
|
333-190846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.19A
|
|
|
|
S-8
|
|
9/26/14
|
|
99.1
|
|
|
333-198973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.19B
|
|
|
|
S-8
|
|
9/26/14
|
|
99.2
|
|
|
333-198973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.19C
|
|
|
|
S-8
|
|
9/26/14
|
|
99.3
|
|
|
333-198973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.20
|
|
|
|
S-8
|
|
3/13/15
|
|
99.1
|
|
|
333-202732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.21
|
|
|
|
S-1
|
|
3/26/14
|
|
10.2
|
|
|
333-194817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.22
|
|
|
|
S-1A
|
|
7/7/14
|
|
10.3
|
|
|
333-194817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference**
|
|
|
|
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date
|
|
Exhibit Number
|
|
SEC File No.
|
|
Filed
Herewith
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.23
|
|
|
|
S-8
|
|
6/27/18
|
|
99.14
|
|
|
333-225922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.24
|
|
|
|
8-K
|
|
12/14/17
|
|
10.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.25
|
|
|
|
8-K
|
|
1/29/16
|
|
10.5
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.26
|
|
|
|
8-K
|
|
1/29/16
|
|
10.4
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.27
|
|
|
|
8-K
|
|
1/27/17
|
|
10.5
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.28
|
|
|
|
8-K
|
|
1/26/18
|
|
10.5
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.29
|
|
|
|
8-K
|
|
1/28/19
|
|
10.4
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.30
|
|
|
|
10-K
|
|
1/19/16
|
|
10.32
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.31
|
|
|
|
10-K
|
|
1/20/17
|
|
10.32
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.32
|
|
|
|
10-K
|
|
1/22/18
|
|
10.29
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.33
|
|
|
|
8-K
|
|
1/24/19
|
|
10.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.34
|
|
|
|
8-K
|
|
9/21/18
|
|
2.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.35A
|
|
|
|
8-K
|
|
4/12/19
|
|
10.1
|
|
|
000-15175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.35B
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
10.35C
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
31.1
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference**
|
|
|
|
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Filing Date
|
|
Exhibit Number
|
|
SEC File No.
|
|
Filed
Herewith
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
31.2
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
32.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
32.2
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
101.INS
|
|
|
XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
101.SCH
|
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
101.LAB
|
|
|
XBRL Taxonomy Extension Labels
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
101.DEF
|
|
|
XBRL Taxonomy Extension Definition
|
|
|
|
|
|
|
|
|
|
X
|
*
|
|
Compensatory plan or arrangement.
|
||||||||||
|
|
|
||||||||||
**
|
|
References to Exhibits 10.9 and 10.10 are to filings made by Omniture, Inc.
|
||||||||||
|
|
|
||||||||||
†
|
|
The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Adobe Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.
|
||||||||||
|
|
|
||||||||||
††
|
|
References to Exhibits 10.21 and 10.22 are to filings made by TubeMogul, Inc.
|
|
ADOBE INC.
|
|
|
|
|
|
By:
|
/s/ JOHN MURPHY
|
|
|
John Murphy
|
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
Participant:
|
|
Date of Grant:
|
|
Vesting Commencement Date:
|
|
Number of Restricted Stock Units:
|
|
|
ADOBE INC
|
|
|
|
|
|
By:
|
|
|
|
Shantanu Narayen
|
|
|
Chief Executive Officer
|
Address:
|
345 Park Avenue
|
|
|
|
San Jose, CA 95110-2704 USA
|
2.
|
Number of Restricted Stock Units and Underlying Shares of Stock.
|
i.
|
withholding of that number of whole vested shares of Stock otherwise deliverable to you pursuant to this Award Agreement having a Fair Market Value not in excess of the amount of the withholding obligation for Tax-Related Items determined by the Company after considering required withholding rates and to the extent permitted under the Plan, the Company may determine such amount by considering other applicable withholding rates up to the maximum rate applicable in your jurisdiction. For tax purposes, you are deemed to have been issued the full number of shares of Stock subject to the vested Award, notwithstanding that a number of the shares of Stock are held back solely for the purpose of paying the Tax-Related Items;
|
ii.
|
withholding from proceeds of the sale of shares of Stock acquired upon vesting/settlement of the Award either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization);
|
iii.
|
tender by you of a payment in cash or check to the Participating Company Group (as applicable) of any amount of the Tax-Related Items;
|
iv.
|
withholding by any Participating Company of any amount of the Tax-Related Items from your wages of any other compensation owed to you by any Participating Company; and/or
|
v.
|
in the event this Award is settled in whole or in part in cash, withholding from the cash to be distributed to you in settlement of this Award.
|
i.
|
the Award and the shares of Stock subject to the Award, and the income from and value of the same, are not part of normal or expected compensation or salary for any purpose;
|
ii.
|
unless otherwise agreed with the Company, the Award and the shares of Stock subject to the Award, and any income from and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of a Participating Company other than the Company; provided, however, that your continued Service shall be required for vesting of the Restricted Stock Units as may be set forth in the Grant Notice and this Award Agreement; and
|
iii.
|
the Participating Company Group shall not be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the Award or of any amounts due to you pursuant to the settlement of the Award or the subsequent sale of any shares of Stock acquired upon settlement.
|
Participant:
|
|
Date of Grant:
|
|
Vesting Commencement Date:
|
|
Number of Restricted Stock Units:
|
|
|
ADOBE INC
|
|
|
|
|
|
By:
|
|
|
|
Shantanu Narayen
|
|
|
Chief Executive Officer
|
Address:
|
345 Park Avenue
|
|
|
|
San Jose, CA 95110-2704 USA
|
2.
|
Number of Restricted Stock Units and Underlying Shares of Stock.
|
i.
|
withholding of that number of whole vested shares of Stock otherwise deliverable to you pursuant to this Award Agreement having a Fair Market Value not in excess of the amount of the withholding obligation for Tax-Related Items determined by the Company after considering required withholding rates and to the extent permitted under the Plan, the Company may determine such amount by considering other applicable withholding rates up to the maximum rate applicable in your jurisdiction. For tax purposes, you are deemed to have been issued the full number of shares of Stock subject to the vested Award, notwithstanding that a number of the shares of Stock are held back solely for the purpose of paying the Tax-Related Items;
|
ii.
|
withholding from proceeds of the sale of shares of Stock acquired upon vesting/settlement of the Award either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization);
|
iii.
|
tender by you of a payment in cash or check to the Participating Company Group (as applicable) of any amount of the Tax-Related Items;
|
iv.
|
withholding by any Participating Company of any amount of the Tax-Related Items from your wages of any other compensation owed to you by any Participating Company; and/or
|
v.
|
in the event this Award is settled in whole or in part in cash, withholding from the cash to be distributed to you in settlement of this Award.
|
i.
|
the Award and the shares of Stock subject to the Award, and the income from and value of the same, are not part of normal or expected compensation or salary for any purpose;
|
ii.
|
unless otherwise agreed with the Company, the Award and the shares of Stock subject to the Award, and any income from and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of a Participating Company other than the Company; provided, however, that your continued Service shall be required for vesting of the Restricted Stock Units as may be set forth in the Grant Notice and this Award Agreement; and
|
iii.
|
the Participating Company Group shall not be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the Award or of any amounts due to you pursuant to the settlement of the Award or the subsequent sale of any shares of Stock acquired upon settlement.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Adobe Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: June 26, 2019
|
/s/ SHANTANU NARAYEN
|
|
Shantanu Narayen
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Adobe Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: June 26, 2019
|
/s/ JOHN MURPHY
|
|
John Murphy
|
|
Executive Vice President and
|
|
Chief Financial Officer
|
(1)
|
The Report, to which this certification is attached as Exhibit 32.1, fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Dated: June 26, 2019
|
/s/ SHANTANU NARAYEN
|
|
Shantanu Narayen
|
|
President and Chief Executive Officer
|
(1)
|
The Report, to which this certification is attached as Exhibit 32.2, fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Dated: June 26, 2019
|
/s/ JOHN MURPHY
|
|
John Murphy
|
|
Executive Vice President and
|
|
Chief Financial Officer
|