Adobe Creative Cloud Surps One Million Subscriptionsin Q

Adobe Marketing Cloud Achieves Year-Over-Year Revenue Growth of 28 Percent

SAN JOSE, Calif. - Sept. 17, 2013 - Adobe (Nasdaq:ADBE) today reported financial results for its third quarter of fiscal year 2013 ended Aug. 30, 2013.

Third Quarter Financial Highlights

Adobe achieved revenue of $995.1 million, within its targeted range of $975 million to $1.025 billion. The acquisition of Neolane during the quarter contributed approximately $6 million of revenue to third quarter results.

Diluted earnings per share were $0.16 on a GAAP-basis, and $0.32 on a non-GAAP basis.

Operating income was $110.4 million and net income was $83.0 million on a GAAP basis. Operating income was $223.0 million and net income was $164.4 million on a non-GAAP basis.

Cash flow from operations was $215.5 million.

Deferred revenue grew by $42.7 million to a record $734.0 million.

Adobe exited Q3 with 1 million 31 thousand paid Creative Cloud subscriptions, an increase of 331 thousand when compared to the number of subscriptions as of the end of Q2 fiscal year 2013, and enterprise adoption of Creative Cloud was stronger than expected.

Creative Annualized Recurring Revenue ( ARR ) grew to $546 million, and total Digital Media ARR grew to $655 million.

Including revenue from Neolane, Adobe Marketing Cloud quarterly revenue was $254.9 million, representing 28 percent year-over-year growth. Excluding revenue from Neolane, Adobe Marketing Cloud year-over-year growth was 25 percent.

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

Executive Quotes

We exceeded one million subscriptions during Q3, demonstrating that the transition to Creative Cloud is happening sooner than expected, said Shantanu Narayen, president and chief executive officer, Adobe. We successfully completed the acquisition of Neolane, adding a critical cross-channel campaign management solution to the Adobe Marketing Cloud, which will further extend our leadership position in digital marketing.

Our customers are overwhelmingly choosing subscriptions instead of perpetual model licenses which is accelerating our business model transition, said Mark Garrett, executive vice president and chief financial officer, Adobe. During Q3, 41 percent of our revenue was recurring and we exited the quarter with record deferred revenue on our balance sheet. These results are building a stronger, more predictable revenue model for Adobe which will drive higher long-term growth.

Adobe to Webcast Earnings Conference Call

Adobe will webcast its third quarter fiscal year 2013 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: www.adobe.com/ADBE. A copy of Adobe management's prepared remarks, including financial targets and conference call slides, has been posted to Adobe's investor relations website in advance of the conference call for reference.

A reconciliation between GAAP and non-GAAP financial targets is also provided on the website.

Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including those related to the transition of our business as we migrate to a subscription model, adoption of Creative Cloud, growth in annualized recurring revenue and Adobe Marketing Cloud revenue and long-term revenue growth, 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 products and services that meet customer requirements, introduction of new products and business models by competitors, failure to successfully manage transitions to new business models and markets, including our increased emphasis on a cloud and subscription strategy, fluctuations in subscription renewal or upgrade rates, continued uncertainty in economic conditions and the financial markets, difficulty in predicting revenue from new businesses and the potential impact on our financial results from changes in our business models, 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 fiscal year 2012, and Adobe's Quarterly Reports on Form 10-Q issued in fiscal year 2013.

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 Aug. 30, 2013, which Adobe expects to file in Sept. 2013.

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.

Condensed Consolidated Statements of Income

(PDF: 54k)

Condensed Consolidated Balance Sheets

(PDF: 49k)

Condensed Consolidated Statements of Cash Flows

(PDF: 44k)

Non-GAAP Results

(PDF: 54k)

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