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Financials : Banks | Large Cap Value
Company profile

Bank of America Corporation is a bank holding company and a financial holding company. The Company is a financial institution, serving individual consumers and others with a range of banking, investing, asset management and other financial and risk management products and services. The Company, through its banking and various non-bank subsidiaries, throughout the United States and in international markets, provides a range of banking and non-bank financial services and products through four business segments: Consumer Banking, which comprises Deposits and Consumer Lending; Global Wealth & Investment Management, which consists of two primary businesses: Merrill Lynch Global Wealth Management and U.S. Trust, Bank of America Private Wealth Management; Global Banking, which provides a range of lending-related products and services; Global Markets, which offers sales and trading services, and All Other, which consists of equity investments, residual expense allocations and other.

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$26.11
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63,354,498

Adobe Reports Record Revenue

4:05 pm ET June 11, 2020 (BusinessWire) Print

Adobe (Nasdaq:ADBE) today reported financial results for its second quarter fiscal year 2020 ended May 29, 2020.

Second Quarter Fiscal Year 2020 Financial Highlights

Adobe achieved record quarterly revenue of $3.13 billion in its second quarter of fiscal year 2020, which represents 14 percent year-over-year growth. Diluted earnings per share was $2.27 on a GAAP basis, and $2.45 on a non-GAAP basis. Digital Media segment revenue was $2.23 billion, which represents 18 percent year-over-year growth. Creative revenue grew to $1.87 billion and Document Cloud revenue was $360 million. Digital Media Annualized Recurring Revenue ("ARR") grew to $9.17 billion exiting the quarter, a quarter-over-quarter increase of $443 million. Creative ARR grew to $7.93 billion, and Document Cloud ARR grew to $1.24 billion. Digital Experience segment revenue was $826 million, representing 5 percent year-over-year growth. Digital Experience subscription revenue was $707 million, representing 8 percent year-over-year growth. Digital Experience subscription revenue, excluding Advertising Cloud revenue, grew 18 percent year-over-year. GAAP operating income in the second quarter was $1.02 billion, and non-GAAP operating income was $1.34 billion. GAAP net income was $1.10 billion, and non-GAAP net income was $1.19 billion. Cash flows from operations was $1.18 billion. Remaining Performance Obligation exiting the quarter was $9.92 billion. Adobe repurchased approximately 2.6 million shares during the quarter.

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

Executive Quotes

"Adobe's strategy to empower customers to create the world's content, automate critical document processes and enable enterprises to engage with their customers digitally, drove record revenue in Q2," said Shantanu Narayen, president and CEO, Adobe. "The tectonic shift towards 'all things digital' across all customer segments globally will serve as a tailwind to our growth initiatives as we emerge from this crisis."

"Adobe delivered another quarter of record revenue and expanding profitability despite the challenging environment, demonstrating the resiliency of our business model," said John Murphy, executive vice president and CFO, Adobe. "We drove record Digital Media net new ARR for Q2, highlighting how mission-critical creative and document solutions are in engaging remotely."

Advertising Cloud Update

Adobe also announced that given the macroeconomic environment, it significantly accelerated in Q2 its previously stated strategy of eliminating low-margin Advertising Cloud transaction-driven offerings. The company will continue to offer its Advertising Cloud software solutions. The macroeconomic environment and this strategic shift impacted Advertising Cloud targeted revenue in Q2 by approximately $50 million.

Adobe Provides Third Quarter Financial Targets

Adobe today is providing third quarter financial targets factoring current macroeconomic conditions, continued impacts of the pandemic, typical Q3 summer seasonality and its updated strategy for Advertising Cloud.

The following table summarizes Adobe's third quarter fiscal year 2020 targets.

                                                                 Approximately $3.15 billion
 Total revenue
------------------------------------------------- -------------------------------------------------------
                                                       Approximately 16 percent year-over-year growth
 Digital Media segment revenue
------------------------------------------------- -------------------------------------------------------
                                                          Approximately $340 million of net new ARR
 Digital Media annualized recurring revenue (ARR)
------------------------------------------------- -------------------------------------------------------
                                                                     Flat year-over-year
 Digital Experience segment revenue
------------------------------------------------- -------------------------------------------------------
 Digital Experience subscription revenue            5% year-over-year growth   14% year-over-year growth
                                                                             (excluding Advertising Cloud)
------------------------------------------------- ------------------------- ------------------------------
                                                       GAAP:  10 percent         Non-GAAP:  10 percent
 Tax rate
------------------------------------------------- ------------------------- ------------------------------
                                                                      485 million shares
 Share count
------------------------------------------------- -------------------------------------------------------

In light of the macroeconomic environment and the strategic shifts for Advertising Cloud, Adobe is withdrawing the annual fiscal 2020 targets provided in December 2019.

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

Adobe to Webcast Earnings Conference Call

Adobe will webcast its second quarter fiscal year 2020 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 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 business momentum, the effects of the COVID-19 pandemic on our business and results of operations, market trends, customer success, revenue, profitability, operating margin, seasonality, annualized recurring revenue, non-operating other expense, tax rate on a GAAP and non-GAAP basis, earnings per share on a GAAP and non-GAAP basis, and share count, 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 compete effectively, failure to develop, acquire, market and offer products and services that meet customer requirements, introduction of new technology, information security and privacy, potential interruptions or delays in hosted services provided by us or third parties, macroeconomic conditions and economic impact of the COVID-19 pandemic, risks associated with cyber-attacks, complex sales cycles, risks related to the timing of revenue recognition from our subscription offerings, fluctuations in subscription renewal rates, failure to realize the anticipated benefits of past or future acquisitions, failure to effectively manage critical strategic third-party business relationships, changes in accounting principles and tax regulations, uncertainty in the financial markets and economic conditions in the countries where we operate, and other various risks associated with being a multinational corporation. 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 2019 ended Nov. 29, 2019, and Adobe's Quarterly Reports on Form 10-Q issued in fiscal year 2020.

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 May 29, 2020, which Adobe expects to file in June 2020. Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.

About Adobe

Adobe is changing the world through digital experiences. For more information, visit www.adobe.com.

(C)2020 Adobe. All rights reserved. Adobe and the Adobe logo are either registered trademarks or trademarks of Adobe (or one of its subsidiaries) in the United States and/or other countries. All other trademarks are the property of their respective owners.

Condensed Consolidated Statements of Income
(In millions, except per share data; unaudited)
                                                                                                                                              
                                                                                     Three Months Ended                                                                                                            Six Months Ended
                                                  ------------------------------------------------------------------------------------------------------------------------                            ----------------------------------------------------------------------------------------------------------------
                                                     May 29, 2020                                           May 31, 2019                                       May 29, 2020                                       May 31, 2019
                                                  ------------------------------------------------------                        ----------------------------------------------                        ----------------------------------------------                        ----------------------------------------------
Revenue:                                                                                                                                                   
                                                                     $          2,874                        $  2,456                        $  5,699                        $  4,761  
   Subscription
                                                               128          153          271          323  
   Product
                                                               126          135          249          261  
   Services and support
                                                  -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                             3,128        2,744        6,219        5,345  
      Total revenue
                                                  -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                                                                                                        
Cost of revenue:                                                                                                                                           
                                                               317          296          672          585  
   Subscription
                                                                 9            9           16           21  
   Product
                                                                89          102          179          199  
   Services and support
                                                  -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                               415          407          867          805  
      Total cost of revenue
                                                  -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                                                                                                        
Gross profit                                                 2,713        2,337        5,352        4,540  
                                                                                                                                        
Operating expenses:                                                                                                                                        
                                                               532          476        1,064          941  
   Research and development
                                                               901          849        1,758        1,630  
   Sales and marketing
                                                               224          219          495          435  
   General and administrative
                                                                40           43           82           90  
   Amortization of intangibles
                                                  -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                             1,697        1,587        3,399        3,096  
      Total operating expenses
                                                  -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                                                                                                        
Operating income                                             1,016          750        1,953        1,444  
                                                                                                                                        
Non-operating income (expense):                                                                                                                            
                                                               (28 )                           (40 )                           (61 )                           (81 )
   Interest expense
                                                    --           (1 )                            (3 )                            43  
   Investment gains (losses), net
                                                                12            2           30            7  
   Other income (expense), net
                                                  -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
                                                               (16 )                           (39 )                           (34 )                           (31 )
      Total non-operating income (expense), net
                                                  -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
Income before income taxes                                   1,000          711        1,919        1,413  
Provision for (benefit from) income taxes                     (100 )                            78         (136 )                           106  
                                                  -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
Net income                                                           $          1,100                        $    633                        $  2,055                        $  1,307  
                                                  ==================== ============== ====================                      ==================== ====== ====================                      ==================== ====== ====================                      ==================== ====== ====================
Basic net income per share                                           $           2.28                        $   1.30                        $   4.26                        $   2.68  
                                                  ==================== ============== ====================                      ==================== ====== ====================                      ==================== ====== ====================                      ==================== ====== ====================
Shares used to compute basic net income per share              481          488          482          488  
                                                  ==================== ============== ====================                      ==================== ====== ====================                      ==================== ====== ====================                      ==================== ====== ====================
Diluted net income per share                                         $           2.27                        $   1.29                        $   4.23                        $   2.65  
                                                  ==================== ============== ====================                      ==================== ====== ====================                      ==================== ====== ====================                      ==================== ====== ====================
Condensed Consolidated Balance Sheets
(In millions; unaudited)
                                                                                                                 
                                                                                              May 29, 2020                                             November 29, 2019
                                                                                           ------------------------------------------------------                        ------------------------------------------------------
                                          ASSETS                                                                                    
                                                                                                                 
Current assets:                                                                                                                     
                                                                                                              $          3,044                        $          2,650  
   Cash and cash equivalents
                                                                                                      1,307                1,527  
   Short-term investments
                                                                                                      1,366                1,535  
   Trade receivables, net of allowances for doubtful accounts of $22 and $10, respectively
                                                                                                        932                  783  
   Prepaid expenses and other current assets
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                      6,649                6,495  
      Total current assets
                                                                                                                 
Property and equipment, net                                                                           1,387                1,293  
Operating lease right-of-use assets, net                                                                489       --  
Goodwill                                                                                             10,695               10,691  
Other intangibles, net                                                                                1,535                1,721  
Deferred income taxes                                                                                   231       --  
Other assets                                                                                            617                  562  
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                              $         21,603                        $         20,762  
      Total assets
                                                                                           ==================== ============== ====================                      ==================== ============== ====================
                                                                                                                 
              LIABILITIES AND STOCKHOLDERS' EQUITY                                                       
                                                                                                                 
Current liabilities:                                                                                                                
                                                                                                              $            289                        $            209  
   Trade payables
                                                                                                      1,303                1,399  
   Accrued expenses
                                                                                             --                3,149  
   Debt
                                                                                                      3,321                3,378  
   Deferred revenue
                                                                                                        166                   56  
   Income taxes payable
                                                                                                         85       --  
   Operating lease liabilities
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                      5,164                8,191  
      Total current liabilities
                                                                                                                                    
    
Long-term liabilities:                                                                                                              
                                                                                                      4,114                  989  
   Debt
                                                                                                        140                  123  
   Deferred revenue
                                                                                                        503                  616  
   Income taxes payable
                                                                                                        107                  140  
   Deferred income taxes
                                                                                                        498       --  
   Operating lease liabilities
                                                                                                        196                  173  
   Other liabilities
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                     10,722               10,232  
      Total liabilities
                                                                                                                                    
    
Stockholders' equity:                                                                                    
                                                                                             --       --  
   Preferred stock
                                                                                             --       --  
   Common stock
                                                                                                      6,892                6,504  
   Additional paid-in-capital
                                                                                                     16,428               14,829  
   Retained earnings
                                                                                                       (195 )                                  (188 )
   Accumulated other comprehensive income (loss)
                                                                                                    (12,244 )                               (10,615 )
   Treasury stock, at cost
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                     10,881               10,530  
      Total stockholders' equity
                                                                                           -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Condensed Consolidated Statements of Cash Flows
(In millions; unaudited)
                                                                                               
                                                                                                                                                        Three Months Ended
                                                                                                                 --------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    May 29, 2020                                               May 31, 2019
                                                                                                                 ------------------------------------------------------                        ------------------------------------------------------
Cash flows from operating activities:                                                                                                                     
                                                                                                                                    $          1,100                        $            633  
   Net income
                                                                                                                                                          
   Adjustments to reconcile net income to net cash provided by operating activities:
                                                                                                                              188                  188  
      Depreciation, amortization and accretion
                                                                                                                              227                  204  
      Stock-based compensation
                                                                                                                               (1 )                                     2  
      Unrealized investment (gains) losses, net
                                                                                                                             (137 )                                     9  
      Other non-cash adjustments
                                                                                                                             (154 )                                   (84 )
      Changes in deferred revenue
                                                                                                                              (39 )                                   157  
      Changes in other operating assets and liabilities
                                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                            1,184                1,109  
         Net cash provided by operating activities
                                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                          
    
Cash flows from investing activities:                                                                                                                     
                                                                                                                              176                  100  
   Purchases, sales and maturities of short-term investments, net
                                                                                                                              (96 )                                   (85 )
   Purchases of property and equipment
                                                                                                                   --                   (5 )
   Purchases and sales of long-term investments, intangibles and other assets, net
                                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                               80                   10  
         Net cash provided by investing activities
                                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                          
    
Cash flows from financing activities:                                                                                                                     
                                                                                                                             (850 )                                  (750 )
   Purchases of treasury stock
                                                                                                                              (53 )                                   (22 )
   Taxes paid related to net share settlement of equity awards, net of proceeds from treasury stock re-issuances
                                                                                                                                2       --  
   Other financing activities, net
                                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                             (901 )                                  (772 )
         Net cash used for financing activities
                                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Effect of exchange rate changes on cash and cash equivalents                                                                   (7 )                                    (3 )
                                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Net increase in cash and cash equivalents                                                                                     356                  344  
Cash and cash equivalents at beginning of period                                                                            2,688                1,739  
                                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Non-GAAP Results
(In millions, except per share data)
The following table shows Adobe's GAAP results reconciled to non-GAAP results included in this release.
                            
                                                                                                                          Three Months Ended
                                              ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 May 29, 2020                                               May 31, 2019                                           February 28, 2020
                                              ------------------------------------------------------                        ------------------------------------------------------                        --------------------------------------------------
Operating income:                                                                                                              
                                                                                                            
GAAP operating income                                            $          1,016                        $            750                        $        937  
Stock-based and deferred compensation expense              227                  204              214  
Amortization of intangibles                                 92                   96               94  
                                              -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ---------- --------------------
Non-GAAP operating income                                        $          1,335                        $          1,050                        $      1,245  
                                              ==================== ============== ====================                      ==================== ============== ====================                      ==================== ========== ====================
                                                                                                            
Net income:                                                                                                                    
                                                                                                            
GAAP net income                                                  $          1,100                        $            633                        $        955  
Stock-based and deferred compensation expense              227                  204              214  
Amortization of intangibles                                 92                   96               94  
Investment (gains) losses, net                  --                    1                3  
Income tax adjustments                                    (232 )                                   (33 )                              (159 )
                                              -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ---------- --------------------
Non-GAAP net income                                              $          1,187                        $            901                        $      1,107  
                                              ==================== ============== ====================                      ==================== ============== ====================                      ==================== ========== ====================
                                                                                                            
Diluted net income per share:                                                                                                  
                                                                                                            
GAAP diluted net income per share                                $           2.27                        $           1.29                        $       1.96  
Stock-based and deferred compensation expense             0.47                 0.41             0.44  
Amortization of intangibles                               0.19                 0.20             0.19  
Investment (gains) losses, net                  --       --             0.01  
Income tax adjustments                                   (0.48 )                                 (0.07 )                             (0.33 )
                                              -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ---------- --------------------
Non-GAAP diluted net income per share                            $           2.45                        $           1.83                        $       2.27  
                                              ==================== ============== ====================                      ==================== ============== ====================                      ==================== ========== ====================
                                                                                                            

The following table shows Adobe's second quarter fiscal year 2020 GAAP tax rate reconciled to the non-GAAP tax rate included in this release.

                                                      Second Quarter
                                                                           Fiscal 2020
                                              -----------------------------------------------------------------
Effective income tax rate:                     
                            
GAAP effective income tax rate                  (10.0 )                    %
Trading structure change                         22.5    
Income tax adjustments                           (1.0 )                     
Stock-based and deferred compensation expense    (1.1 )                     
Amortization of intangibles                      (0.4 )                     
                                              -------------------- ----- -------------------- --------------------

Reconciliation of GAAP to Non-GAAP Financial Targets (Shares in millions)

The following table shows Adobe's third quarter fiscal year 2020 GAAP earnings per share target reconciled to the non-GAAP financial target included in this release.

                                                       Third Quarter
                                                                           Fiscal 2020
                                              -----------------------------------------------------------------
Diluted net income per share:                  
                            
GAAP diluted net income per share             $                     1.78    
Stock-based and deferred compensation expense    0.50    
Amortization of intangibles                      0.19    
Income tax adjustments                          (0.07 )                     
                                              -------------------- ----- -------------------- --------------------
Non-GAAP diluted net income per share         $                     2.40    
                                              ==================== ===== ==================== ====================
                            

Use of Non-GAAP Financial Information

Adobe continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Adobe uses non-GAAP financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. Adobe's management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adobe presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Adobe's operating results. Adobe believes these non-GAAP financial measures are useful because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. This allows institutional investors, the analyst community and others to better understand and evaluate our operating results and future prospects in the same manner as management.

Adobe's management believes it is useful for itself and investors to review, as applicable, both GAAP information as well as non-GAAP measures, which may exclude items such as stock-based and deferred compensation expenses, restructuring and other charges, amortization of intangibles, investment gains and losses, the related tax impact of all of these items, income tax adjustments, and the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes. Adobe uses these non-GAAP measures in order to assess the performance of Adobe's business and for planning and forecasting in subsequent periods. Whenever such a non-GAAP measure is used, Adobe provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed above.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200611005773/en/

SOURCE: Adobe

Investor Relations Contact 
Jonathan Vaas
Adobe
ir@adobe.com


Public Relations Contact 
Lea Anna Cardwell
Adobe
cardwell@adobe.com

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