Adobe Reports Record Revenue

PRESS RELEASE:

SAN JOSE, Calif. — (adobe​.com) — June 14, 2007 — Adobe Systems Incorporated (Nasdaq:ADBE) today report­ed finan­cial results for its sec­ond quar­ter of fis­cal 2007 end­ed June 1, 2007. Adobe achieved record rev­enue of $745.6 mil­lion, com­pared to $635.5 mil­lion report­ed for the sec­ond quar­ter of fis­cal 2006 and $649.4 mil­lion report­ed in the first quar­ter of fis­cal 2007. This rep­re­sents 17 per­cent year-over-year rev­enue growth. Adobe’s sec­ond quar­ter rev­enue tar­get range was $700 to $740 million.

“Q2 was a strong quar­ter, dri­ven by the record per­for­mance of both our Creative Suite prod­ucts and Acrobat,” said Bruce Chizen, chief exec­u­tive offi­cer of Adobe. “Assuming con­tin­ued busi­ness momen­tum, we expect to exceed our orig­i­nal fis­cal year rev­enue and prof­it targets.”

GAAP Results

Adobe’s GAAP dilut­ed earn­ings per share for the sec­ond quar­ter of fis­cal 2007 were $0.25, based on 603.4 mil­lion weight­ed aver­age shares. This com­pares with GAAP dilut­ed earn­ings per share of $0.20 report­ed in the sec­ond quar­ter of fis­cal 2006 based on 613.8 mil­lion weight­ed aver­age shares, and GAAP dilut­ed earn­ings per share of $0.24 report­ed in the first quar­ter of fis­cal 2007 based on 604.2 mil­lion weight­ed aver­age shares. Adobe’s sec­ond quar­ter GAAP earn­ings per share tar­get range was $0.23 to $0.26.

GAAP oper­at­ing income was $180.4 mil­lion in the sec­ond quar­ter of fis­cal 2007, com­pared to $147.9 mil­lion in the sec­ond quar­ter of fis­cal 2006 and $146.3 mil­lion in the first quar­ter of fis­cal 2007. As a per­cent of rev­enue, GAAP oper­at­ing income in the sec­ond quar­ter of fis­cal 2007 was 24.2 per­cent, com­pared to 23.3 per­cent in the sec­ond quar­ter of fis­cal 2006 and 22.5 per­cent in the first quar­ter of fis­cal 2007.

GAAP net income was $152.5 mil­lion for the sec­ond quar­ter of fis­cal 2007, com­pared to $123.1 mil­lion report­ed in the sec­ond quar­ter of fis­cal 2006, and $143.9 mil­lion in the first quar­ter of fis­cal 2007.

Non-GAAP Results

Non-GAAP dilut­ed earn­ings per share for the sec­ond quar­ter of fis­cal 2007 were $0.37. This com­pares with non-GAAP dilut­ed earn­ings per share of $0.31 report­ed in the sec­ond quar­ter of fis­cal 2006, and non-GAAP dilut­ed earn­ings per share of $0.30 report­ed in the first quar­ter of fis­cal 2007. Adobe’s sec­ond quar­ter non-GAAP earn­ings per share tar­get range was $0.34 to $0.36.

Adobe’s non-GAAP oper­at­ing income was $282.1 mil­lion in the sec­ond quar­ter of fis­cal 2007, com­pared to $243.1 mil­lion in the sec­ond quar­ter of fis­cal 2006 and $223.8 mil­lion in the first quar­ter of fis­cal 2007. As a per­cent of rev­enue, non-GAAP oper­at­ing income in the sec­ond quar­ter of fis­cal 2007 was 37.8 per­cent, com­pared to 38.3 per­cent in the sec­ond quar­ter of fis­cal 2006 and 34.5 per­cent in the first quar­ter of fis­cal 2007.

Non-GAAP net income was $223.2 mil­lion for the sec­ond quar­ter of fis­cal 2007, com­pared to $189.4 mil­lion in the sec­ond quar­ter of fis­cal 2006, and $183.6 mil­lion in the first quar­ter of fis­cal 2007.

A rec­on­cil­i­a­tion between GAAP and non-GAAP results is pro­vid­ed at the end of this press release.

Adobe Provides Third Quarter Financial Targets

For the third quar­ter of fis­cal 2007, Adobe announced it is tar­get­ing rev­enue of $760 mil­lion to $800 mil­lion. The Company also is tar­get­ing a GAAP oper­at­ing mar­gin of approx­i­mate­ly 27 to 28 per­cent. On a non-GAAP basis, the Company is tar­get­ing an oper­at­ing mar­gin of approx­i­mate­ly 39 percent.

In addi­tion, Adobe is tar­get­ing its share count to be between 607 mil­lion and 609 mil­lion shares. The Company also is tar­get­ing oth­er income to be approx­i­mate­ly $21 mil­lion to $22 mil­lion, with a GAAP tax rate of approx­i­mate­ly 25 to 26 per­cent and a non-GAAP tax rate of approx­i­mate­ly 26 to 27 percent.

These tar­gets lead to a GAAP earn­ings per share tar­get range of approx­i­mate­ly $0.28 to $0.31. On a non-GAAP basis, the Company is tar­get­ing earn­ings per share of approx­i­mate­ly $0.39 to $0.41.

A rec­on­cil­i­a­tion between GAAP and non-GAAP 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, oper­at­ing mar­gin, oth­er income, tax rate, share count, earn­ings per share, and antic­i­pat­ed busi­ness momen­tum which involve risks and uncer­tain­ties that could cause actu­al results to dif­fer mate­ri­al­ly. Factors that might cause or con­tribute to such dif­fer­ences include, but are not lim­it­ed to: delays in devel­op­ment or ship­ment of Adobe’s new prod­ucts or major new ver­sions of exist­ing prod­ucts, intro­duc­tion of new prod­ucts by exist­ing and new com­peti­tors, fail­ure to suc­cess­ful­ly man­age tran­si­tions to new busi­ness mod­els and mar­kets, adverse changes in gen­er­al eco­nom­ic or polit­i­cal con­di­tions in any of the major coun­tries in which Adobe does busi­ness, dif­fi­cul­ty in pre­dict­ing rev­enue from new busi­ness­es, fail­ure to antic­i­pate and devel­op new prod­ucts in response to changes in demand for appli­ca­tion soft­ware, com­put­ers, print­ers, or oth­er non PC-devices, costs relat­ed to intel­lec­tu­al prop­er­ty acqui­si­tions, dis­putes and lit­i­ga­tion, inabil­i­ty to pro­tect Adobe’s intel­lec­tu­al prop­er­ty from unau­tho­rized copy­ing, use, dis­clo­sure or mali­cious attack, fail­ure to real­ize the antic­i­pat­ed ben­e­fits of past or future acqui­si­tions and dif­fi­cul­ty in inte­grat­ing such acqui­si­tions, changes to Adobe’s dis­tri­b­u­tion chan­nel, dis­rup­tion of Adobe’s busi­ness due to cat­a­stroph­ic events, risks asso­ci­at­ed with inter­na­tion­al oper­a­tions, fluc­tu­a­tions in for­eign cur­ren­cy exchange rates, changes in, or inter­pre­ta­tions of, account­ing prin­ci­ples, impair­ment of Adobe’s good­will or intan­gi­ble assets, unan­tic­i­pat­ed changes in, or inter­pre­ta­tions of, Adobe’s effec­tive tax rates, Adobe’s inabil­i­ty to attract and retain key per­son­nel, mar­ket risks asso­ci­at­ed with Adobe’s equi­ty invest­ments, and inter­rup­tions or ter­mi­na­tions in Adobe’s rela­tion­ships with turnkey assem­blers. 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 the sec­ond quar­ter end­ed June 1, 2007, which the Company expects to file in July, 2007. Adobe does not under­take an oblig­a­tion to update for­ward look­ing statements.
About Adobe Systems Incorporated

Adobe rev­o­lu­tion­izes how the world engages with ideas and infor­ma­tion – any­time, any­where, and through any medi­um. For more infor­ma­tion, vis­it www​.adobe​.com .