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Adobe Reports Record Revenue in Q1 Fiscal 2011
Adobe Systems Incorporated (Nasdaq:ADBE) today reported financial results for its first quarter ended March 4, 2011.
"Our record results in Q1 represent our sixth consecutive quarter of sequential revenue growth," said Shantanu Narayen, president and CEO of Adobe. "Adobe's vision for transforming how the world is creating, measuring and delivering digital experiences is resonating with our customers, and our solutions are enabling us to target large addressable markets that are fueling our growth."
First Quarter Fiscal 2011 GAAP Results
Adobe's GAAP diluted earnings per share for the first quarter of fiscal 2011 were $0.46, based on 511.3 million weighted average shares. This compares with GAAP diluted earnings per share of $0.24 reported in the first quarter of fiscal 2010 based on 532.6 million weighted average shares, and GAAP diluted earnings per share of $0.53 reported in the fourth quarter of fiscal 2010 based on 511.9 million weighted average shares.
GAAP operating income was $302.3 million in the first quarter of fiscal 2011, compared to $176.8 million in the first quarter of fiscal 2010 and $286.9 million in the fourth quarter of fiscal 2010. As a percent of revenue, GAAP operating income in the first quarter of fiscal 2011 was 29.4 percent, compared to 20.6 percent in the first quarter of fiscal 2010 and 28.5 percent in the fourth quarter of fiscal 2010.
GAAP net income was $234.6 million for the first quarter of fiscal 2011, compared to a GAAP net income of $127.2 million reported in the first quarter of fiscal 2010 and GAAP net income of $268.9 million in the fourth quarter of fiscal 2010.
First Quarter Fiscal 2011 Non-GAAP Results
Adobe's non-GAAP diluted earnings per share for the first quarter of fiscal 2011 were $0.58. This compares with non-GAAP diluted earnings per share of $0.40 reported in the first quarter of fiscal 2010 and non-GAAP diluted earnings per share of $0.56 reported in the fourth quarter of fiscal 2010.
Adobe's non-GAAP operating income was $400.1 million in the first quarter of fiscal 2011, compared to $289.3 million in the first quarter of fiscal 2010 and $384.0 million in the fourth quarter of fiscal 2010. As a percent of revenue, non-GAAP operating income in the first quarter of fiscal 2011 was 38.9 percent, compared to 33.7 percent in the first quarter of fiscal 2010 and 38.1 percent in the fourth quarter of fiscal 2010.
Non-GAAP net income was $298.1 million for the first quarter of fiscal 2011, compared to $211.7 million in the first quarter of fiscal 2010 and $285.7 million in the fourth quarter of fiscal 2010.
Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
Second Quarter Fiscal 2011 Financial Targets
"Our hearts go out to everyone in Japan. Although Adobe has a very diversified business, Japan is our second largest country from a revenue perspective and March is typically our biggest revenue month of the year there due to fiscal year-end spending. Given the uncertain business environment in Japan, we are being prudent and have reduced our revenue expectation for our second quarter by $50 million - or roughly one-third of our original Q2 revenue expectation for Japan," said Mark Garrett, executive vice president and CFO of Adobe.
For the second quarter of fiscal 2011, Adobe is now targeting revenue of $970 million to $1.02 billion.
The Company's operating margin is targeted to be 24.5 percent to 27.5 percent on a GAAP basis, and 34 percent to 36 percent on a non-GAAP basis. In addition, the Company is targeting its share count to be between 510 million and 512 million shares, and it is targeting non-operating expense between $16 million and $20 million. Adobe's GAAP and non-GAAP tax rates are expected to be approximately 22 percent.
These targets lead to a second quarter diluted earnings per share target range of $0.33 to $0.40 on a GAAP basis, and an earnings per share target range of $0.47 to $0.54 on a non-GAAP basis.
Reconciliation between these GAAP and non-GAAP financial targets is provided at the end of this press release.
Disclosure This press release contains forward-looking statements, including those related to revenue, operating margin, non-operating expense, tax rate, share count, earnings per share and business momentum, which involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure to develop, market and distribute new products and services or upgrades or enhancements to existing products and services that meet customer requirements, introduction of new products, services and business models by existing and new competitors, failure to successfully manage transitions to new business models and markets, continued uncertainty in economic conditions and the financial markets and other adverse changes in general political or economic conditions in any of the major countries in which Adobe does business, including the impact of the earthquakes and related events in Japan on Adobe, its customers, suppliers and partners, difficulty in predicting revenue from new businesses, failure to realize the anticipated benefits of past or future acquisitions, and difficulty in integrating such acquisitions, costs related to intellectual property acquisitions, disputes and litigation, inability to protect Adobe's intellectual property from third-party infringers, or unauthorized copying, use or disclosure, security vulnerabilities in our products and systems, interruptions or delays in our service or service from third-party service providers that host or deliver services, security or privacy breaches, or failure in data collection, failure to manage Adobe's sales and distribution channels and third-party customer service and technical support providers effectively, disruption of Adobe's business due to catastrophic events, risks associated with global operations, currency fluctuations, risks associated with our debt service obligations, changes in, or interpretations of, accounting principles, impairment of Adobe's goodwill or amortizable intangible assets, changes in, or interpretations of, tax rules and regulations, Adobe's inability to attract and retain key personnel, impairment of Adobe's investment portfolio due to deterioration of the capital markets, and market risks associated with Adobe's equity investments. For further discussion of these and other risks and uncertainties, individuals should refer to Adobe's SEC filings.
The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe's Quarterly Report on Form 10-Q for our quarter ended March 4, 2011, which Adobe expects to file in April 2011. Adobe does not undertake an obligation to update forward-looking statements.
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