Third Party Software

Adobe hits $11 billion in annual revenue, a new company record

Record Fourth Quarter Contributes to 24 Percent Year-Over-Year Annual Growth

SAN JOSE, Calif.–Adobe (Nasdaq:ADBE) today reported financial results for its fourth quarter and fiscal year 2019 ended Nov. 29, 2019.

In its fourth quarter of fiscal year 2019, Adobe achieved record quarterly revenue of $2.99 billion, which represents 21 percent year-over-year growth. In fiscal year 2019, Adobe achieved record annual revenue of $11.17 billion, which represents 24 percent year-over-year growth.


“Adobe’s phenomenal performance in Q4 capped a record fiscal 2019 with revenue exceeding $11 billion,” said Shantanu Narayen, president and CEO, Adobe. “Adobe’s vision, category leadership, continuous product innovation and large and loyal customer base position us well for 2020 and beyond.”

“Adobe delivered another year of strong revenue growth and expanding profitability resulting in record earnings,” said John Murphy, executive vice president and CFO, Adobe. “We are bullish about our opportunities and our ability to continue to deliver strong top- and bottom-line growth.”

Fourth Quarter Fiscal Year 2019 Financial Highlights

  • Adobe achieved record quarterly revenue of $2.99 billion in its fourth quarter of fiscal year 2019, which represents 21 percent year-over-year growth. Diluted earnings per share was $1.74 on a GAAP-basis, and $2.29 on a non-GAAP basis.
  • Digital Media segment revenue was $2.08 billion, which represents 22 percent year-over-year growth. Creative revenue grew to $1.74 billion and Document Cloud revenue was $339 million. Digital Media Annualized Recurring Revenue (“ARR”) grew to $8.40 billion exiting the quarter, a quarter-over-quarter increase of $539 million. Creative ARR grew to $7.31 billion, and Document Cloud ARR grew to $1.09 billion.
  • Digital Experience segment revenue was $859 million, representing 24 percent year-over-year growth.
  • GAAP operating income in the fourth quarter was $970 million, and non-GAAP operating income was $1.27 billion. GAAP net income was $852 million, and non-GAAP net income was $1.12 billion.
  • Cash flow from operations was a record $1.38 billion.
  • Remaining Performance Obligation was $9.82 billion, a quarter-over-quarter increase of $1.05 billion.
  • Adobe repurchased approximately 2.8 million shares during the quarter.

Fiscal Year 2019 Financial Highlights

  • Adobe achieved record annual revenue of $11.17 billion in fiscal year 2019, representing 24 percent year-over-year growth.
  • The company reported annual GAAP diluted earnings per share of $6.00 and non-GAAP diluted earnings per share of $7.87.
  • Digital Media segment revenue was $7.71 billion, with Creative and Document Cloud achieving record annual revenue of
  • $6.48 billion and $1.22 billion, respectively. Digital Media ARR grew by $1.69 billion during the year.
  • Digital Experience segment revenue was $3.21 billion, representing 31 percent year-over-year growth, and subscription bookings grew by more than 20 percent during the year.
  • Operating income grew 15 percent and net income grew 14 percent year-over-year on a GAAP-basis; operating income grew
  • 23 percent and net income grew 15 percent year-over-year on a non-GAAP basis.
  • Adobe generated a record $4.42 billion in operating cash flow during the year.
  • The company repurchased 9.9 million shares during the year, returning $2.7 billion of cash to stockholders.

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

Adobe Provides Fiscal Year and First Quarter 2020 Financial Targets

The following table summarizes Adobe’s fiscal year 2020 targets.

Adobe fiscal year 2020 revenue ~$13.15 billion
Digital Media segment revenue ~19 percent year-over-year growth
Digital Media annualized recurring revenue (ARR) ~$1.55 billion of net new ARR
Digital Experience segment revenue ~16 percent year-over-year growth
Digital Experience subscription revenue* ~18 percent year-over-year growth
Digital Experience subscription bookings** >20 percent year-over-year growth
Tax rate GAAP: ~11% | Non-GAAP: ~11%
Share count ~486 million shares
Earnings per share GAAP: ~$7.40 | Non-GAAP: ~$9.75

* Includes revenue from SaaS, managed service, ratable term, usage based, and subscription service offerings for Digital Experience
** Includes annualized subscription value of SaaS, managed service, term and subscription service offerings under contract for Data & Insights, Content & Commerce and Customer Journey Management solutions

The following table summarizes Adobe’s first quarter fiscal year 2020 targets.

Adobe Q1 fiscal year 2020 revenue ~$3.04 billion
Digital Media segment revenue ~19 percent year-over-year growth
Digital Media annualized recurring revenue (ARR) ~$360 million of net new ARR
Digital Experience segment revenue ~15 percent year-over-year growth
Tax rate GAAP: ~5% | Non-GAAP: ~11%
Share count ~489 million shares
Earnings per share GAAP: ~$1.76 | Non-GAAP: ~$2.23

ERHP

EOS RP
May 9, 2013
369
256
San Diego
erhp.smugmug.com
I wonder how much of this was due to them offering the entire suite at a fraction of the previous monthly fee. That's money they likely would not have gotten under normal pricing because people will use other products at that price point. Many of those people will likely ditch it once their plan goes back to full price.
 

privatebydesign

Would you take advice from a cartoons stuffed toy?
Jan 29, 2011
8,089
1,415
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Then lower the &@#* monthly subscription rates!!
Because what other pro level software designed and built for professional use can you get for $7.90 a month? Indeed what else can you get for $7.90 a month? My Pandora subscription is $9.99!

I wonder how much of this was due to them offering the entire suite at a fraction of the previous monthly fee. That's money they likely would not have gotten under normal pricing because people will use other products at that price point. Many of those people will likely ditch it once their plan goes back to full price.
A comparatively small amount, look at their financials and you will see they are what they say they are, a predominantly professional software tool marketed to professional users, meaning users who use Adobe software to earn their living.
 

Graphic.Artifacts

EOS 7D MK II
Aug 1, 2017
486
305
You really have to admire Adobe. I thought the subscription model was a terrible idea and I figured the entire desktop software sector was facing a slow lingering demise. I sure got that wrong. Not only have they boosted their own bottom line they have reinvigorate the entire sector. Those that don’t want to pay the subscription fee now have better alternatives to Adobe then have ever existed in the past.
 

LSXPhotog

EOS RP
Apr 2, 2015
386
218
www.diossiphotography.com
Anytime I see people complaining about a $10 a month subscription to the industry standard photo editing suite that used to cost upwards of $700 make me laugh incredibly hard. I spend $120 a year now on two programs that are always up to date with the latest cameras/lens profiles BEFORE anyone else. Get over it. You can't steal the software anymore and I'm saving hundreds every year while sharing licenses between 3 computers without a problem (desktop and two different travel laptops).
 

slclick

135 LSD
Dec 17, 2013
3,375
908
You really have to admire Adobe. I thought the subscription model was a terrible idea and I figured the entire desktop software sector was facing a slow lingering demise. I sure got that wrong. Not only have they boosted their own bottom line they have reinvigorate the entire sector. Those that don’t want to pay the subscription fee now have better alternatives to Adobe then have ever existed in the past.
You would think the low low land price in Lehi Utah would get passed on to the little guy but noooooooo
 

Dantana

EOS RP
Jan 29, 2013
267
108
Los Angeles, CA
www.flickr.com
Because what other pro level software designed and built for professional use can you get for $7.90 a month? Indeed what else can you get for $7.90 a month? My Pandora subscription is $9.99!


A comparatively small amount, look at their financials and you will see they are what they say they are, a predominantly professional software tool marketed to professional users, meaning users who use Adobe software to earn their living.
Exactly.

And I'm sure a good chunk of revenue was from Enterprise and Teams Subscription Licensing that lets an entire company use their tools, the way a few hundred people around me are using them right now.
 

AlanF

Canon 5DSR II
Aug 16, 2012
5,987
3,668
Nice to know that there are so many philanthropists on CR who are so happy to donate their few dollars per month to Adobe to add to its corporate billions.
 

privatebydesign

Would you take advice from a cartoons stuffed toy?
Jan 29, 2011
8,089
1,415
119
Nice to know that there are so many philanthropists on CR who are so happy to donate their few dollars per month to Adobe to add to its corporate billions.
As opposed to Canon, Google, AT&T, power companies, car companies etc etc etc. Like all the others my relationship is transactional, they make something and I choose to buy it (which is not the definition of philanthropy), I have other options but honestly feel the very modest monthly payment is good value. I can understand other people not thinking that specific equation is worth it for their photography, but to suggest the corporate capitalist model between Adobe and their customers is different than any of the others is rather disingenuous. Adobe never asked for a bailout! Indeed they were in dire financial straights and were really forced into the subscription model.
 

Graphic.Artifacts

EOS 7D MK II
Aug 1, 2017
486
305
Did I prefer it when lightroom was pretty much free. Sure. However, Adobe's subscription model, which gives so many people night-sweats, has created a window for other software developers in the space to offer lower cost "single purchase" alternatives and they've respsonded with some excellent new offerings.

If you like Adobe's products and pricing great. Personally I think it's a pretty good value. If you don't, there are now lots of alternatives.

Adobe has forced it's customers to either find value in their products or find alternatives. Looks like a win for everybody as far as I can tell.

If you just want somebody to hate; cable companies are a good place to start in my opinion.
 

Dantana

EOS RP
Jan 29, 2013
267
108
Los Angeles, CA
www.flickr.com
I guess it's all perspective. The Adobe subscriptions are inexpensive compared to the Autodesk subscriptions. Maya runs $195/month on its own. So, even at $50/month for the Adobe Suite at full price, it seems like a bargain. $9/month for Lightroom? That seems like a no brainer.