Adobe(ADBE) - 2024 Q3 - Quarterly Report

Digital Media Performance - Creative ARR reached $13.45 billion at the end of Q3 fiscal 2024, up from$12.49 billion at the end of fiscal 2023[139] - Document Cloud ARR reached $3.31 billion at the end of Q3 fiscal 2024, up from$2.84 billion at the end of fiscal 2023[139] - Total Digital Media ARR grew to $16.76 billion at the end of Q3 fiscal 2024, up from$15.33 billion at the end of fiscal 2023[139] - Creative revenue in Q3 fiscal 2024 was $3.19 billion, a 10$2.91 billion in Q3 fiscal 2023[140] - Document Cloud revenue in Q3 fiscal 2024 was $807 million, an 18$685 million in Q3 fiscal 2023[140] - Total Digital Media segment revenue grew to $4.00 billion in Q3 fiscal 2024, an 11$3.59 billion in Q3 fiscal 2023[140] - Digital Media revenue increased by 11% to $3.995 billion for the three months ended August 30, 2024, driven by growth in Creative Cloud and Document Cloud subscriptions[161][162] - Revenue from Creative Cloud increased by 10$3.188 billion for the three months ended August 30, 2024, compared to $2.909 billion in the same period in 2023[162] Digital Experience Performance - Digital Experience revenue in Q3 fiscal 2024 was$1.35 billion, a 10% YoY increase from $1.23 billion in Q3 fiscal 2023[145] - Subscription revenue in Digital Experience grew to$1.23 billion in Q3 fiscal 2024, a 12% YoY increase from $1.10 billion in Q3 fiscal 2023[145] - Digital Experience revenue grew by 10$1.354 billion for the three months ended August 30, 2024, compared to $1.229 billion in the same period in 2023[161] Financial Performance - Net income in Q3 fiscal 2024 was$1.68 billion, a 20% YoY increase from $1.40 billion in Q3 fiscal 2023[152] - Remaining performance obligations reached$18.14 billion as of August 30, 2024, a 5% increase from $17.22 billion as of December 1, 2023[152] - Subscription revenue increased by 12$5.18 billion for the three months ended August 30, 2024, compared to $4.63 billion in the same period in 2023[154] - Total revenue grew by 11$5.41 billion for the three months ended August 30, 2024, compared to $4.89 billion in the same period in 2023[154] - Cost of subscription revenue decreased by 8$413 million for the three months ended August 30, 2024, compared to $447 million in the same period in 2023[168] - Total cost of revenue decreased by 4$554 million for the three months ended August 30, 2024, compared to $580 million in the same period in 2023[168] - Foreign currency impacts resulted in a net decrease in revenue of$33 million for the three months ended August 30, 2024, primarily due to the strengthening of the U.S. Dollar against APAC currencies[166] - Provision for income taxes increased by 5% to $358 million for the three months ended August 30, 2024, compared to$340 million in the same period in 2023[185] - The effective tax rate decreased to 18% for the three months ended August 30, 2024, compared to 20% in the same period in 2023[185] - The total valuation allowance for deferred tax assets was $723 million as of August 30, 2024, primarily related to certain state credits and capital loss carryforwards[187] Regional Revenue Performance - Americas region revenue increased by 10$3.241 billion for the three months ended August 30, 2024, compared to $2.943 billion in the same period in 2023[164] - EMEA region revenue grew by 14$1.405 billion for the three months ended August 30, 2024, compared to $1.229 billion in the same period in 2023[164] Operating Expenses - Research and development expenses increased by 16$1,022 million for the three months ended August 30, 2024, compared to $881 million in the same period in 2023[174] - Sales and marketing expenses increased by 7$1,431 million for the three months ended August 30, 2024, compared to $1,337 million in the same period in 2023[174] - General and administrative expenses increased by 4$366 million for the three months ended August 30, 2024, compared to $353 million in the same period in 2023[174] - Total operating expenses increased by 10$2,862 million for the three months ended August 30, 2024, compared to $2,613 million in the same period in 2023[174] Financial Transactions and Obligations - The company incurred a$1 billion acquisition termination fee during the nine months ended August 30, 2024, related to the termination of the Figma transaction[181] - Interest expense increased by 89% to $51 million for the three months ended August 30, 2024, compared to$27 million in the same period in 2023[182] - Other income (expense), net increased to $89 million for the three months ended August 30, 2024, compared to$67 million in the same period in 2023[182] - The company has a $1.5 billion senior unsecured revolving credit agreement, with no outstanding borrowings as of August 30, 2024[202] - The company issued$2 billion in senior notes in April 2024, with total senior notes outstanding at $5.65 billion as of August 30, 2024[204] - The company repurchased 12.9 million shares during the nine months ended August 30, 2024, with an average price ranging from$475.94 to $626.68 per share[208] - The company entered into a$2.5 billion accelerated share repurchase agreement subsequent to August 30, 2024, with $17.65 billion remaining under the March 2024 stock repurchase authority[209] - The company's minimum purchase obligations increased by$2.3 billion through December 2028 due to long-term supplier commitments[206] Cash and Investments - Cash and cash equivalents increased to $7.193 billion as of August 30, 2024, compared to$7.141 billion as of December 1, 2023[195] - Net cash provided by operating activities for the nine months ended August 30, 2024 was $5.135 billion, down from$5.705 billion in the same period in 2023[196] - Net cash used for financing activities was $5.223 billion for the nine months ended August 30, 2024, primarily due to stock repurchases and taxes related to equity awards[199] - The company's short-term investment portfolio as of August 30, 2024 included money market funds, U.S. Treasury securities, corporate debt securities, U.S. agency securities, and asset-backed securities[201] - The company has a$3 billion commercial paper program, with no outstanding borrowings as of August 30, 2024[203]