SAN JOSE, Calif.--(BUSINESS WIRE)--Adobe (Nasdaq:ADBE) today reported financial results for its second quarter fiscal year 2016 ended June 3, 2016.
Second Quarter Financial Highlights
Adobe achieved record quarterly revenue of $1.40 billion, representing year-over-year growth of 20 percent.
Diluted earnings per share were $0.48 on a GAAP-basis, and $0.71 on a non-GAAP basis.
Digital Media segment revenue grew by 26 percent year-over-year to a record $943 million, with Creative revenue growing 37 percent year-over-year to a record $755 million.
Strong Creative Cloud and Document Cloud adoption drove Digital Media Annualized Recurring Revenue ( ARR ) to $3.41 billion exiting the quarter, a quarter-over-quarter increase of $285 million.
Adobe Marketing Cloud achieved record revenue of $385 million that represents year-over-year growth of 18 percent.
Year-over-year operating income grew 78 percent and net income grew 66 percent on a GAAP-basis; operating income grew 45 percent and net income grew 48 percent on a non-GAAP basis.
Cash flow from operations was $489 million, and deferred revenue grew to $1.68 billion.
The company repurchased approximately 2.2 million shares during the quarter, returning $205 million 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.
Executive Quotes
Adobes cloud solutions are powering digital transformation at the worlds biggest brands, educational institutions and government agencies, said Shantanu Narayen, Adobe president and chief executive officer. Our record revenue reflects our market leadership and the exploding demand for digital experience solutions.
Record revenue with strong profit and cash flow highlight our second quarter results, said Mark Garrett, Adobe executive vice president and chief financial officer. Based on our first half performance and momentum, we're on track to meet or exceed all of our annual fiscal year 2016 targets.
Adobe to Webcast Earnings Conference Call
Adobe will webcast its second quarter fiscal year 2016 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: www.adobe.com/ADBE. Earnings documents, including Adobe management's prepared conference call remarks with slides, financial targets and an investor datasheet are posted to Adobe's investor relations website in advance of the conference call for reference. A reconciliation between GAAP and non-GAAP earnings results and financial targets is also provided on the website.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to product adoption and innovation, business momentum, revenue, profit, annualized recurring revenue, bookings, earnings per share and operating cash flow, all of 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 offer products and services that meet customer requirements, introduction of new products, services and business models by competitors, failure to successfully manage transitions to new business models and markets, risks associated with the timing of revenue recognition, uncertainty in economic conditions and the financial markets, risks associated with our cloud strategy, fluctuations in subscription renewal rates, risks associated with cyber-attacks and information security, potential interruptions or delays in hosted services provided by us or third parties, and failure to realize the anticipated benefits of past or future acquisitions. For a discussion of these and other risks and uncertainties, please refer to Adobe's Annual Report on Form 10-K for our fiscal year 2015 ended Nov. 27, 2015, and Adobes Quarterly Reports on Form 10-Q issued in fiscal year 2016.
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 June 3, 2016, which Adobe expects to file in June 2016.
Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.
About Adobe Systems Incorporated
Adobe is changing the world through digital experiences. For more information, visit www.adobe.com.
2016 Adobe Systems Incorporated. All rights reserved. Adobe, Creative Cloud and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners.
Condensed Consolidated Statements of Income
(In thousands, except per share data; unaudited)
Three Months Ended Six Months Ended
June 3, May 29, June 3, May 29,
2016 2015 2016 2015
Revenue:
Subscription $ 1,083,708 $ 773,963 $ 2,153,958 $ 1,487,405
Product 196,500 274,538 397,612 565,312
Services and support 118,501 113,657 230,474 218,622
Total revenue 1,398,709 1,162,158 2,782,044 2,271,339
Cost of revenue:
Subscription 115,399 103,694 222,674 199,221
Product 15,756 21,467 36,055 41,170
Services and support 70,924 60,012 141,922 111,580
Total cost of revenue 202,079 185,173 400,651 351,971
Gross profit 1,196,630 976,985 2,381,393 1,919,368
Operating expenses:
Research and development 232,484 208,047 469,688 423,556
Sales and marketing 462,789 426,998 937,680 819,739
General an
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SAN JOSE, Calif.--(BUSINESS WIRE)--Adobe (Nasdaq:ADBE) today reported financial results for its second quarter fiscal year 2016 ended June 3, 2016. 
