《Adobe2024年第一季度财报（英文版）（52页）.pdf》由会员分享，可在线阅读，更多相关《Adobe2024年第一季度财报（英文版）（52页）.pdf（52页珍藏版）》请在三个皮匠报告上搜索。
1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549_ FORM 10-Q(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 1,2024 orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT
2、OF 1934For the transition period from to Commission File Number:0-15175 ADOBE INC.(Exact name of registrant as specified in its charter)_Delaware77-0019522(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)345 Park Avenue,San Jose,California 95110-2704(Add
3、ress of principal executive offices and zip code)(408)536-6000(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading SymbolName of each exchange on which registeredCommon Stock,$0.0001 par value per shareADBENASDAQ_ Indi
4、cate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing r
5、equirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the re
6、gistrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“sm
7、aller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extend
8、ed transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No As of March 22,2024,448.0 million shar
9、es of the registrants common stock,$0.0001 par value per share,were issued and outstanding.ADOBE INC.FORM 10-Q TABLE OF CONTENTS Page No.PART IFINANCIAL INFORMATION Item 1.Condensed Consolidated Financial Statements:3 Condensed Consolidated Balance SheetsMarch 1,2024 and December 1,20233 Condensed C
10、onsolidated Statements of IncomeThree Months Ended March 1,2024 and March 3,20234Condensed Consolidated Statements of Comprehensive IncomeThree Months Ended March 1,2024 and March 3,20235Condensed Consolidated Statements of Stockholders EquityThree Months Ended March 1,2024 and March 3,20236 Condens
11、ed Consolidated Statements of Cash Flows Three Months Ended March 1,2024 and March 3,20237 Notes to Condensed Consolidated Financial Statements8Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations24Item 3.Quantitative and Qualitative Disclosures about Market Ri
12、sk36Item 4.Controls and Procedures36 PART IIOTHER INFORMATION Item 1.Legal Proceedings37Item 1A.Risk Factors37Item 2.Unregistered Sales of Equity Securities and Use of Proceeds49Item 5.Other Information49Item 6.Exhibits50Signature51Summary of Trademarks52 2PART IFINANCIAL INFORMATIONITEM 1.CONDENSED
13、 CONSOLIDATED FINANCIAL STATEMENTSADOBE INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In millions,except par value)March 1,2024December 1,2023(Unaudited)(*)ASSETSCurrent assets:Cash and cash equivalents$6,254$7,141 Short-term investments 566 701 Trade receivables,net of allowances for doubtful accounts
14、of$16 for both periods 2,057 2,224 Prepaid expenses and other current assets 1,131 1,018 Total current assets 10,008 11,084 Property and equipment,net 1,988 2,030 Operating lease right-of-use assets,net 366 358 Goodwill 12,803 12,805 Other intangibles,net 1,011 1,088 Deferred income taxes 1,310 1,19
15、1 Other assets 1,265 1,223 Total assets$28,751$29,779 LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade payables$300$314 Accrued expenses 1,569 1,942 Debt 1,497 Deferred revenue 5,975 5,837 Income taxes payable 123 85 Operating lease liabilities 73 73 Total current liabilities 9,537 8,251
16、 Long-term liabilities:Debt 2,138 3,634 Deferred revenue 135 113 Income taxes payable 668 514 Operating lease liabilities 378 373 Other liabilities 435 376 Total liabilities 13,291 13,261 Stockholders equity:Preferred stock,$0.0001 par value;2 shares authorized;none issued Common stock,$0.0001 par v
17、alue;900 shares authorized;601 shares issued;453 and 455 shares outstanding,respectively Additional paid-in capital 12,037 11,586 Retained earnings 33,809 33,346 Accumulated other comprehensive income(loss)(277)(285)Treasury stock,at cost(148 and 146 shares,respectively)(30,109)(28,129)Total stockho
18、lders equity 15,460 16,518 Total liabilities and stockholders equity$28,751$29,779 _(*)The condensed consolidated balance sheet as of December 1,2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by
19、 generally accepted accounting principles for complete financial statements.See accompanying notes to condensed consolidated financial statements.Table of Contents3ADOBE INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In millions,except per share data)(Unaudited)Three Months Ended March 1,2024March
20、3,2023Revenue:Subscription$4,916$4,373 Product 119 120 Services and other 147 162 Total revenue 5,182 4,655 Cost of revenue:Subscription 455 434 Product 5 8 Services and other 130 126 Total cost of revenue 590 568 Gross profit 4,592 4,087 Operating expenses:Research and development 939 827 Sales and
21、 marketing 1,352 1,301 General and administrative 352 331 Acquisition termination fee 1,000 Amortization of intangibles 42 42 Total operating expenses 3,685 2,501 Operating income 907 1,586 Non-operating income(expense):Interest expense(27)(32)Investment gains(losses),net 18 1 Other income(expense),
22、net 70 43 Total non-operating income(expense),net 61 12 Income before income taxes 968 1,598 Provision for income taxes 348 351 Net income$620$1,247 Basic net income per share$1.37$2.72 Shares used to compute basic net income per share 453 459 Diluted net income per share$1.36$2.71 Shares used to co
23、mpute diluted net income per share 456 460 See accompanying notes to condensed consolidated financial statements.Table of Contents4ADOBE INC.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In millions)(Unaudited)Three Months Ended March 1,2024March 3,2023Increase/(Decrease)Net income$620$1
24、,247 Other comprehensive income(loss),net of taxes:Available-for-sale securities:Unrealized gains/losses on available-for-sale securities 4 7 Derivatives designated as hedging instruments:Unrealized gains/losses on derivative instruments 3 (9)Reclassification adjustment for realized gains/losses on
25、derivative instruments 4 (16)Net increase(decrease)from derivatives designated as hedging instruments 7 (25)Foreign currency translation adjustments(3)4 Other comprehensive income(loss),net of taxes 8 (14)Total comprehensive income,net of taxes$628$1,233 See accompanying notes to condensed consolida
26、ted financial statements.Table of Contents5ADOBE INC.CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY(In millions)(Unaudited)Three Months Ended March 1,2024 Common StockAdditionalPaid-InCapitalRetainedEarningsAccumulatedOtherComprehensiveIncome(Loss)Treasury Stock SharesAmountSharesAmountTot
27、alBalances at December 1,2023 601$11,586$33,346$(285)(146)$(28,129)$16,518 Net income 620 620 Other comprehensive income(loss),net of taxes 8 8 Re-issuance of treasury stock under stock compensation plans (157)1 32 (125)Repurchases of common stock (3)(2,013)(2,013)Stock-based compensation 451 451 Va
28、lue of shares in deferred compensation plan 1 1 Balances at March 1,2024 601$12,037$33,809$(277)(148)$(30,109)$15,460 Three Months Ended March 3,2023 Common StockAdditionalPaid-InCapitalRetainedEarningsAccumulatedOtherComprehensiveIncome(Loss)Treasury Stock SharesAmountSharesAmountTotalBalances at D
29、ecember 2,2022 601$9,868$28,319$(293)(139)$(23,843)$14,051 Net income 1,247 1,247 Other comprehensive income(loss),net of taxes (14)(14)Re-issuance of treasury stock under stock compensation plans (131)2 36 (95)Repurchases of common stock (5)(1,400)(1,400)Stock-based compensation 416 416 Value of sh
30、ares in deferred compensation plan 1 1 Balances at March 3,2023 601$10,284$29,435$(307)(142)$(25,206)$14,206 See accompanying notes to condensed consolidated financial statements.Table of Contents6ADOBE INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited)Three Months Ended Mar
31、ch 1,2024March 3,2023Cash flows from operating activities:Net income$620$1,247 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation,amortization and accretion 212 212 Stock-based compensation 451 416 Reduction of operating lease right-of-use assets 18 21 Defe
32、rred income taxes(116)(49)Unrealized losses(gains)on investments,net(13)3 Other non-cash items 1 (5)Changes in operating assets and liabilities,net of acquired assets and assumed liabilities:Trade receivables,net 166 269 Prepaid expenses and other assets(173)(258)Trade payables(12)(55)Accrued expens
33、es and other liabilities(332)(323)Income taxes payable 192 152 Deferred revenue 160 63 Net cash provided by operating activities 1,174 1,693 Cash flows from investing activities:Maturities of short-term investments 135 254 Proceeds from sales of short-term investments 4 33 Purchases of property and
34、equipment(37)(101)Purchases of long-term investments,intangibles and other assets(38)(30)Proceeds from sale of long-term investments and other assets 2 Net cash provided by investing activities 66 156 Cash flows from financing activities:Repurchases of common stock(2,000)(1,400)Proceeds from re-issu
35、ance of treasury stock 97 69 Taxes paid related to net share settlement of equity awards(222)(164)Repayment of debt (500)Other financing activities,net(3)(19)Net cash used for financing activities(2,128)(2,014)Effect of foreign currency exchange rates on cash and cash equivalents 1 1 Net change in c
36、ash and cash equivalents(887)(164)Cash and cash equivalents at beginning of period 7,141 4,236 Cash and cash equivalents at end of period$6,254$4,072 Supplemental disclosures:Cash paid for income taxes,net of refunds$205$214 Cash paid for interest$47$55 See accompanying notes to condensed consolidat
37、ed financial statements.Table of Contents7NOTE 1.BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESWe have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S.Securities and Exchange Commission(the“SEC”).P
38、ursuant to these rules and regulations,we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States(“GAAP”).In managements opinio
39、n,we have made all adjustments(consisting only of normal,recurring adjustments,except as otherwise indicated)necessary to fairly present our financial position,results of operations and cash flows.Our interim period operating results do not necessarily indicate the results that may be expected for a
40、ny other interim period or for the full fiscal year.These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 1,2023 on file with the SEC(our“Annual
41、 Report”).Use of EstimatesIn preparing the condensed consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the SEC,we must make estimates and judgments that affect the amounts reported in the condensed consolidated financial st
42、atements and accompanying notes.Actual results may differ materially from these estimates.Significant Accounting PoliciesThere have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report.Recent Accounting Pron
43、ouncements Not Yet EffectiveIn November 2023,the Financial Accounting Standards Board(“the FASB”)issued Accounting Standards Update(“ASU”)No.2023-07,Segment Reporting,which expands annual and interim disclosure requirements for reportable segments,primarily through enhanced disclosures about signifi
44、cant segment expenses.The updated standard is effective for our annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026.Early adoption is permitted.We are currently evaluating the impact that the updated standard will have on our financial statement
45、disclosures.In December 2023,the FASB issued ASU No.2023-09,Income Taxes,which prescribes standardized categories and disaggregation of information in the reconciliation of provision for income taxes,requires disclosure of disaggregated income taxes paid,and modifies other income tax-related disclos
46、ure requirements.The updated standard is effective for us beginning with our fiscal year 2026 annual reporting period.Early adoption is permitted.We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.With the exception of the new standards
47、discussed above,there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 1,2024,as compared to the recent accounting pronouncements described in our Annual Report,that are of significance or potential significance to us.Tab
48、le of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)8NOTE 2.REVENUESegment InformationOur segment results for the three months ended March 1,2024 and March 3,2023 were as follows:(dollars in millions)Digital MediaDigital ExperiencePublishing and AdvertisingTotalThr
49、ee months ended March 1,2024Revenue$3,816$1,289$77$5,182 Cost of revenue 171 397 22 590 Gross profit$3,645$892$55$4,592 Gross profit as a percentage of revenue 96%69%71%89%Three months ended March 3,2023Revenue$3,395$1,176$84$4,655 Cost of revenue 142 404 22 568 Gross profit$3,253$772$62$4,087 Gross
50、 profit as a percentage of revenue 96%66%74%88%Revenue by geographic area for the three months ended March 1,2024 and March 3,2023 were as follows:(in millions)20242023Americas$3,110$2,779 EMEA 1,319 1,173 APAC 753 703 Total$5,182$4,655 Revenue by major offerings in our Digital Media reportable segm
51、ent for the three months ended March 1,2024 and March 3,2023 were as follows:(in millions)20242023Creative Cloud$3,066$2,761 Document Cloud 750 634 Total Digital Media revenue$3,816$3,395 Subscription revenue by segment for the three months ended March 1,2024 and March 3,2023 were as follows:(in mil
52、lions)20242023Digital Media$3,725$3,301 Digital Experience 1,164 1,042 Publishing and Advertising 27 30 Total subscription revenue$4,916$4,373 Contract BalancesA receivable is recorded when an unconditional right to invoice and receive payment exists,such that only the passage of time is required be
53、fore payment of consideration is due.Included in trade receivables on the condensed consolidated balance sheets are unbilled receivable balances which have not yet been invoiced,and are typically related to license revenue or services which are delivered prior to invoicing.As of March 1,2024,the bal
54、ance of trade receivables,net of allowances for doubtful accounts,was$2.06 billion,inclusive of unbilled receivables of$99 million.As of December 1,2023,the balance of trade receivables,net of allowances for doubtful accounts,was$2.22 billion,inclusive of unbilled receivables of$80 million.Table of
55、ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)9We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectible trade receivables and is based on both specific and general reserves.We maintain general reserves
56、on a collective basis by considering factors such as historical experience,credit-worthiness,the age of the trade receivable balances,current economic conditions and a reasonable and supportable forecast of future economic conditions.As of March 1,2024 and December 1,2023,the allowance for doubtful
57、accounts was$16 million for both periods.A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred.Contract assets are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion o
58、n the condensed consolidated balance sheets.We regularly review contract asset balances for impairment,considering factors such as historical experience,credit-worthiness,age of the balance,current economic conditions and a reasonable and supportable forecast of future economic conditions.Contract a
59、sset impairments were not material for the three months ended March 1,2024.Contract assets were$153 million and$141 million as of March 1,2024 and December 1,2023,respectively.Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription ser
60、vices,including non-cancellable and non-refundable committed funds and refundable customer deposits.Deferred revenue is recognized as revenue when transfer of control to customers has occurred.As of March 1,2024,the balance of deferred revenue was$6.11 billion,which includes$87 million of refundable
61、 customer deposits.Arrangements with some of our enterprise customers with non-cancellable and non-refundable committed funds provide options to either renew monthly on-premise term-based licenses or use some or all funds to purchase other Adobe products or services.Non-cancellable and non-refundabl
62、e committed funds related to these agreements comprised approximately 4%of the total deferred revenue.As of December 1,2023,the balance of deferred revenue was$5.95 billion.During the three months ended March 1,2024,approximately$2.67 billion of revenue was recognized that was included in the balanc
63、e of deferred revenue as of December 1,2023.Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized,which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods.As of March 1,2024,rem
64、aining performance obligations were approximately$17.58 billion.Non-cancellable and non-refundable funds related to some of our enterprise customer agreements referred to above comprised approximately 4%of the total remaining performance obligations.Approximately 68%of the remaining performance obli
65、gations,excluding the aforementioned enterprise customer agreements,are expected to be recognized over the next 12 months with the remainder recognized thereafter.Incremental costs of obtaining a contract with a customer are capitalized if we expect the benefit of those costs to be longer than one y
66、ear and primarily relate to sales commissions paid to our sales force personnel.Capitalized contract acquisition costs are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets.Capitalized
67、 contract acquisition costs were$707 million and$656 million as of March 1,2024 and December 1,2023,respectively.We record refund liabilities for amounts that may be subject to future refunds,which include sales returns reserves and customer rebates and credits.Refund liabilities are included in acc
68、rued expenses on the condensed consolidated balance sheets.Refund liabilities were$107 million and$111 million as of March 1,2024 and December 1,2023,respectively.Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)10NOTE 3.ACQUISITIONSFigmaOn Septemb
69、er 15,2022,we entered into a definitive merger agreement under which we intended to acquire Figma,Inc.(“Figma”)for approximately$20 billion,comprised of approximately half cash and half stock.On December 17,2023,we entered into a mutual termination agreement with Figma to terminate the proposed merg
70、er.In accordance with the terms of the termination agreement,we paid Figma a termination fee of$1 billion.The termination fee was recorded in operating expenses in our condensed consolidated statements of income during the three months ended March 1,2024,and was not tax-deductible for financial stat
71、ement purposes.NOTE 4.CASH,CASH EQUIVALENTS AND SHORT-TERM INVESTMENTSCash equivalents consist of highly liquid marketable securities with remaining maturities of three months or less at the date of purchase.We classify our investments in marketable debt securities as“available-for-sale.”We carry th
72、ese investments at fair value,based on quoted market prices or other readily available market information.Unrealized gains and unrealized non-credit-related losses of marketable debt securities are included in accumulated other comprehensive income,net of taxes,in our condensed consolidated balance
73、sheets.Unrealized credit-related losses are recorded to other income(expense),net in our condensed consolidated statements of income with a corresponding allowance for credit-related losses in our condensed consolidated balance sheets.Gains and losses are determined using the specific identification
74、 method and recognized when realized in our condensed consolidated statements of income.Cash,cash equivalents and short-term investments consisted of the following as of March 1,2024:(in millions)AmortizedCostUnrealizedGainsUnrealizedLossesEstimatedFair ValueCurrent assets:Cash$612$612 Cash equivale
75、nts:Money market funds 5,642 5,642 Total cash and cash equivalents 6,254 6,254 Short-term fixed income securities:Asset-backed securities 11 11 Corporate debt securities 337 (2)335 U.S.agency securities 13 (1)12 U.S.Treasury securities 213 (5)208 Total short-term investments 574 (8)566 Total cash,ca
76、sh equivalents and short-term investments$6,828$(8)$6,820 Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)11Cash,cash equivalents and short-term investments consisted of the following as of December 1,2023:(in millions)AmortizedCostUnrealizedGains
77、UnrealizedLossesEstimatedFair ValueCurrent assets:Cash$618$618 Cash equivalents:Money market funds 6,498 6,498 Time deposits 25 25 Total cash equivalents 6,523 6,523 Total cash and cash equivalents 7,141 7,141 Short-term fixed income securities:Asset-backed securities 15 15 Corporate debt securities
78、 438 (4)434 U.S.agency securities 13 (1)12 U.S.Treasury securities 247 (7)240 Total short-term investments 713 (12)701 Total cash,cash equivalents and short-term investments$7,854$(12)$7,842 See Note 5 for further information regarding the fair value of our financial instruments.The following table
79、summarizes the estimated fair value of short-term fixed income debt securities classified as short-term investments based on stated effective maturities as of March 1,2024:(in millions)EstimatedFair ValueDue within one year$440 Due between one and two years 123 Due between two and three years 3 Tota
80、l$566 We review our debt securities classified as short-term investments on a regular basis for impairment.For debt securities in unrealized loss positions,we determine whether any portion of the decline in fair value below the amortized cost basis is due to credit-related factors if we neither inte
81、nd to sell nor anticipate that it is more likely than not that we will be required to sell prior to recovery of the amortized cost basis.We consider factors such as the extent to which the market value has been less than the cost,any noted failure of the issuer to make scheduled payments,changes to
82、the rating of the security and other relevant credit-related factors in determining whether or not a credit loss exists.During the three months ended March 1,2024 and March 3,2023,we did not recognize an allowance for credit-related losses on any of our investments.Table of ContentsADOBE INC.NOTES T
83、O CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)12NOTE 5.FAIR VALUE MEASUREMENTSAssets and Liabilities Measured and Recorded at Fair Value on a Recurring BasisThe fair value of our financial assets and liabilities at March 1,2024 was determined using the following inputs:(in milli
84、ons)Fair Value Measurements at Reporting Date Using Quoted Pricesin ActiveMarkets forIdentical AssetsSignificantOtherObservableInputsSignificantUnobservableInputs Total(Level 1)(Level 2)(Level 3)Assets:Cash equivalents:Money market funds$5,642$5,642$Short-term investments:Asset-backed securities 11
85、11 Corporate debt securities 335 335 U.S.agency securities 12 12 U.S.Treasury securities 208 208 Prepaid expenses and other current assets:Foreign currency derivatives 52 52 Other assets:Deferred compensation plan assets 246 246 Total assets$6,506$5,888$618$Liabilities:Accrued expenses:Foreign curre
86、ncy derivatives$4$4$Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)13The fair value of our financial assets and liabilities at December 1,2023 was determined using the following inputs:(in millions)Fair Value Measurements at Reporting Date Using
87、Quoted Pricesin ActiveMarkets forIdentical AssetsSignificantOtherObservableInputsSignificantUnobservableInputs Total(Level 1)(Level 2)(Level 3)Assets:Cash equivalents:Money market funds$6,498$6,498$Time deposits 25 25 Short-term investments:Asset-backed securities 15 15 Corporate debt securities 434
88、 434 U.S.agency securities 12 12 U.S.Treasury securities 240 240 Prepaid expenses and other current assets:Foreign currency derivatives 52 52 Other assets:Deferred compensation plan assets 206 206 Total assets$7,482$6,729$753$Liabilities:Accrued expenses:Foreign currency derivatives$4$4$See Note 4 f
89、or further information regarding the fair value of our financial instruments.Our fixed income available-for-sale debt securities consist of high quality,investment grade securities from diverse issuers with a weighted average credit rating of AA-.We value these securities based on pricing from indep
90、endent pricing vendors who use matrix pricing valuation techniques including market approach methodologies that model information generated by market transactions involving identical or comparable assets,as well as discounted cash flow methodologies.Inputs include quoted prices in active markets for
91、 identical assets or inputs other than quoted prices that are observable either directly or indirectly in determining fair value,including benchmark yields,issuer spreads off benchmark yields,interest rates and U.S.Treasury or swap curves.We therefore classify all of our fixed income available-for-s
92、ale securities as Level 2.We perform routine procedures such as comparing prices obtained from multiple independent sources to ensure that appropriate fair values are recorded.The fair values of our money market funds,time deposits and deferred compensation plan assets,which consist of money market
93、and other mutual funds,are based on quoted prices in active markets at the measurement date.Our over-the-counter foreign currency derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange and interest rate data at the measurement date.Our
94、 other current financial assets and current financial liabilities have fair values that approximate their carrying values.Assets and Liabilities Measured at Fair Value on a Nonrecurring BasisThe fair value of our senior notes was$3.40 billion as of March 1,2024,based on observable market prices in l
95、ess active markets and categorized as Level 2.See Note 14 for further details regarding our debt.Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)14NOTE 6.DERIVATIVE FINANCIAL INSTRUMENTSWe may use derivatives to partially offset our business expos
96、ure to foreign currency and interest rate risk on expected future cash flows and certain existing assets and liabilities.We do not use any of our derivative instruments for trading purposes.We enter into master netting arrangements to mitigate credit risk in derivative transactions by permitting net
97、 settlement of transactions with the same counterparty.We do not offset fair value amounts recognized for derivative instruments under master netting arrangements.We also enter into collateral security agreements with certain of our counterparties to exchange cash collateral when the net fair value
98、of certain derivative instruments fluctuates from contractually established thresholds.Cash Flow HedgesIn countries outside the United States,we transact business in U.S.Dollars and in various other currencies.We may use foreign exchange option contracts and forward contracts to hedge a portion of o
99、ur forecasted foreign currency denominated revenue and expenses.These foreign exchange contracts,carried at fair value,have maturities of up to 12 months.As of March 1,2024,we had net derivative losses on our foreign exchange option contracts expected to be recognized within the next 18 months,of wh
100、ich$7 million of net losses are expected to be recognized into revenue within the next 12 months.Non-Designated HedgesOur derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge monetary assets and liabilities denominated in non-
101、functional currencies.Fair value asset derivatives are included in prepaid expenses and other current assets and fair value liability derivatives are included in accrued expenses on our condensed consolidated balance sheets.The fair value of derivative instruments as of March 1,2024 and December 1,2
102、023 were as follows:(in millions)20242023 Fair Value AssetDerivativesFair ValueLiabilityDerivativesFair Value AssetDerivativesFair ValueLiabilityDerivativesDerivatives designated as hedging instruments:Foreign exchange option contracts$44$42$Foreign exchange forward contracts 4 1 Derivatives not des
103、ignated as hedging instruments:Foreign exchange forward contracts 4 4 9 4 Total derivatives$52$4$52$4 For the three months ended March 1,2024 and March 3,2023,gains and losses on derivative instruments,net of tax,recognized in our condensed consolidated statements of comprehensive income and the eff
104、ects of derivative instruments on our condensed consolidated statements of income were immaterial.Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)15NOTE 7.GOODWILL AND OTHER INTANGIBLESGoodwill as of March 1,2024 and December 1,2023 was$12.80 bill
105、ion and$12.81 billion,respectively.Other intangible assets subject to amortization as of March 1,2024 and December 1,2023 were as follows:(in millions)20242023 Gross Carrying AmountAccumulated AmortizationNetGross Carrying AmountAccumulated AmortizationNetCustomer contracts and relationships$1,204$(
106、650)$554$1,204$(619)$585 Purchased technology 884 (589)295 984 (647)337 Trademarks 376 (228)148 376 (217)159 Other 23 (9)14 22 (15)7 Other intangibles,net$2,487$(1,476)$1,011$2,586$(1,498)$1,088 Amortization expense related to other intangibles was$84 million and$96 million for the three months ende
107、d March 1,2024 and March 3,2023,respectively.Of these amounts,$42 million and$54 million were included in cost of revenue for the three months ended March 1,2024 and March 3,2023,respectively.As of March 1,2024,the estimated aggregate amortization expense in future periods was as follows:(in million
108、s)Fiscal YearOther Intangibles(1)Remainder of 2024$250 2025 300 2026 147 2027 106 2028 63 Thereafter 125 Total expected amortization expense$991 _(1)Excludes capitalized in-process research and development which is considered indefinite lived until the completion or abandonment of the associated res
109、earch and development efforts.NOTE 8.ACCRUED EXPENSESAccrued expenses as of March 1,2024 and December 1,2023 consisted of the following:(in millions)20242023Accrued compensation and benefits$592$535 Accrued bonuses 158 547 Accrued corporate marketing 125 132 Sales and use taxes 116 122 Refund liabil
110、ities 107 111 Other 471 495 Accrued expenses$1,569$1,942 Other primarily includes general business accruals,accrued hosting fees,royalties payable,and derivative collateral liabilities.Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)16NOTE 9.STOCK
111、-BASED COMPENSATIONRestricted Stock UnitsRestricted stock unit activity for the three months ended March 1,2024 was as follows:Number ofShares(in millions)Weighted AverageGrant Date Fair ValueAggregateFair Value(1)(in millions)Beginning outstanding balance 7.8$418.63 Awarded 2.3$605.02 Released(0.9)
112、$415.19 Forfeited(0.1)$442.35 Ending outstanding balance 9.1$466.10$5,191 Expected to vest 8.3$465.10$4,753 _(1)The aggregate fair value is calculated using the closing stock price as of March 1,2024 of$570.93.The total fair value of restricted stock units vested during the three months ended March
113、1,2024 was$541 million.Performance Shares In the first quarter of fiscal 2024,the Executive Compensation Committee of our Board of Directors(the“ECC”)approved the 2024 Performance Share Program,the terms of which are similar to the 2023 Performance Share Program that is still outstanding.For informa
114、tion regarding our outstanding Performance Share Programs,including the terms,see“Note 12.Stock-Based Compensation”of our Annual Report on Form 10-K for the fiscal year ended December 1,2023.As of March 1,2024,the performance shares awarded under our 2024,2023 and 2022 Performance Share Programs rem
115、ained outstanding and unvested.Performance share activity for the three months ended March 1,2024 was as follows:Number ofShares(in millions)Weighted AverageGrant Date Fair ValueAggregateFair Value(1)(in millions)Beginning outstanding balance 0.5$465.71 Awarded 0.2$645.40 Released(0.1)$463.22 Forfei
116、ted(0.1)$471.87 Ending outstanding balance 0.5$534.65$307 Expected to vest 0.5$532.23$274 _(1)The aggregate fair value is calculated using the closing stock price as of March 1,2024 of$570.93.Under our Performance Share Programs,participants generally have the ability to receive up to 200%of the tar
117、get number of shares originally granted.Shares released during the three months ended March 1,2024 resulted from 83%achievement of target for the 2021 Performance Share Program,as certified by the ECC in the first quarter of fiscal 2024.The total fair value of performance shares vested during the th
118、ree months ended March 1,2024 was$63 million.Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)17Employee Stock Purchase Plan SharesEmployees purchased 0.3 million shares at an average price of$299.89 and 0.2 million shares at an average price of$28
119、6.05 for the three months ended March 1,2024 and March 3,2023,respectively.The intrinsic value of shares purchased during the three months ended March 1,2024 and March 3,2023 was$96 million and$12 million,respectively.The intrinsic value is calculated as the difference between the market value on th
120、e date of purchase and the purchase price of the shares.Compensation CostsAs of March 1,2024,there was$3.90 billion of unrecognized compensation cost,adjusted for estimated forfeitures,related to non-vested stock-based awards and purchase rights which will be recognized over a weighted average perio
121、d of 2.50 years.Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.Total stock-based compensation costs included in our condensed consolidated statements of income for the three months ended March 1,2024 and March 3,2023 were as follows:(in millions)202
122、42023Cost of revenue$29$29 Research and development 229 209 Sales and marketing 129 122 General and administrative 64 56 Total$451$416 NOTE 10.ACCUMULATED OTHER COMPREHENSIVE INCOME(LOSS)The components of accumulated other comprehensive income(loss)and activity,net of related taxes,were as follows:(
123、in millions)December 1,2023Increase/DecreaseReclassification AdjustmentsMarch 1,2024Net unrealized gains/losses on available-for-sale securities$(12)$4$(1)$(8)Net unrealized gains/losses on derivative instruments designated as hedging instruments(26)3 4(2)(19)Cumulative foreign currency translation
124、adjustments(247)(3)(250)Total accumulated other comprehensive income(loss),net of taxes$(285)$4$4$(277)_(1)Reclassification adjustments for gains/losses on available-for-sale securities are classified in other income(expense),net.(2)Reclassification adjustments for gains/losses on foreign currency h
125、edges are classified in revenue or operating expenses,depending on the nature of the underlying transaction,and reclassification adjustments for gains/losses on Treasury lock hedges are classified in interest expense.Taxes related to each component of other comprehensive income(loss)for the three mo
126、nths ended March 1,2024 and March 3,2023 were immaterial.NOTE 11.STOCK REPURCHASE PROGRAMTo facilitate our stock repurchase program,designed to return value to our stockholders and minimize dilution from stock issuances,we may repurchase our shares in the open market or enter into structured repurch
127、ase agreements with third parties.In December 2020,our Board of Directors granted authority to repurchase up to$15 billion in our common stock through the end of fiscal 2024.During the three months ended March 1,2024 and March 3,2023,we entered into accelerated share repurchase agreements(“ASRs”)wit
128、h large financial institutions whereupon we provided them with prepayments of$2 billion and$1.4 billion,respectively.Under the terms of our ASRs,the financial institutions agree to deliver a portion of shares to us at contract Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STAT
129、EMENTS(Continued)(Unaudited)18inception and the remaining shares at settlement.The total number of shares delivered and average purchase price paid per share are determined upon settlement based on the Volume Weighted Average Price(“VWAP”)over the term of the ASR,less an agreed upon discount.We also
130、 enter into structured stock repurchase agreements in which financial institutions agree to deliver shares to us at monthly intervals during the respective contract terms,and the number of shares delivered each month are determined based on the total notional amount of the contracts,the number of tr
131、ading days in the intervals and the VWAP during the intervals,less an agreed upon discount.During the three months ended March 1,2024,we repurchased a total of 3.1 million shares,including approximately 0.6 million shares at an average price of$626.68 through a structured repurchase agreement entere
132、d into during fiscal 2023,as well as 2.5 million shares from the initial delivery of the ASR entered into during the three months ended March 1,2024.During the three months ended March 3,2023,we repurchased a total of 5.0 million shares,including approximately 1.8 million shares at an average price
133、of$330.52 through a structured repurchase agreement entered into during fiscal 2022,as well as 3.2 million shares from the initial delivery of the ASR entered into during the three months ended March 3,2023.For the three months ended March 1,2024,the prepayments were classified as treasury stock,a c
134、omponent of stockholders equity on our condensed consolidated balance sheets,at the payment date,though only shares physically delivered to us by March 1,2024 were excluded from the computation of net income per share.As of March 1,2024,a portion of the$2 billion prepayment under our outstanding ASR
135、 was evaluated as an unsettled forward contract indexed to our own stock,classified within stockholders equity.Subsequent to March 1,2024,the outstanding ASR was settled which resulted in total repurchases of 3.5 million shares at an average price of$578.11.Subsequent to March 1,2024,our Board of Di
136、rectors granted us additional authority to repurchase up to$25 billion in our common stock through March 14,2028.Thereafter,as part of both the December 2020 and March 2024 stock repurchase authorities,we entered into an ASR with a large financial institution whereupon we provided them with a prepay
137、ment of$2.5 billion and received an initial delivery of 3.6 million shares,which represents approximately 75%of our prepayment.Upon completion of the$2.5 billion ASR,$22.65 billion remains under our March 2024 authority and there is no remaining balance under our December 2020 authority.NOTE 12.NET
138、INCOME PER SHAREThe following table sets forth the computation of basic and diluted net income per share for the three months ended March 1,2024 and March 3,2023:(in millions,except per share data)20242023Net income$620$1,247 Shares used to compute basic net income per share 452.8 459.0 Dilutive pot
139、ential common shares from stock plans and programs 3.5 0.5 Shares used to compute diluted net income per share 456.3 459.5 Basic net income per share$1.37$2.72 Diluted net income per share$1.36$2.71 Anti-dilutive potential common shares 0.9 6.2 Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDA
140、TED FINANCIAL STATEMENTS(Continued)(Unaudited)19NOTE 13.COMMITMENTS AND CONTINGENCIESIndemnificationsIn the ordinary course of business,we provide indemnifications of varying scope to customers and channel partners against claims of intellectual property infringement made by third parties arising fr
141、om the use of our products and from time to time,we are subject to claims by our customers under these indemnification provisions.Historically,costs related to these indemnification provisions have not been significant and we are unable to estimate the maximum potential impact of these indemnificati
142、on provisions on our future results of operations.To the extent permitted under Delaware law,we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is or was serving at our request in such capacity.The indemnification period
143、 covers all pertinent events and occurrences during the officers or directors lifetime.The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited;however,we have director and officer insurance coverage that reduces our exposure an
144、d enables us to recover a portion of any future amounts paid.We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.Legal ProceedingsWe are subject to legal proceedings,claims,including claims relating to intellectual property,co
145、mmercial,employment and other matters,and investigations,including government investigations,that arise in the ordinary course of our business.Some of these disputes,legal proceedings and investigations may include speculative claims for substantial or indeterminate amounts of damages.We consider al
146、l claims on a quarterly basis in accordance with GAAP and based on known facts assess whether potential losses are considered reasonably possible or probable and estimable.Based upon this assessment,we then evaluate disclosure requirements and whether to accrue for such claims in our financial state
147、ments.This determination is then reviewed and discussed with the Audit Committee of the Board of Directors.We make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.These provisions are reviewed at least qua
148、rterly and adjusted to reflect the impacts of negotiations,settlements,rulings,advice of legal counsel and other information and events pertaining to a particular case.As of March 1,2024,we accrued provisions for legal liabilities that were probable and estimable,which were not material to our finan
149、cial statements.Unless otherwise specifically disclosed in this note,we have determined that no disclosure is required related to any claim against us because:(a)there is not a reasonable possibility that a loss exceeding amounts already recognized(if any)may be incurred with respect to such claim;(
150、b)a reasonably possible loss or range of loss cannot be estimated;or(c)such estimate is immaterial.All legal costs associated with litigation are expensed as incurred.Litigation is inherently unpredictable.However,we believe that we have valid defenses with respect to the legal matters pending again
151、st us.It is possible,nevertheless,that our consolidated financial position,results of operations or cash flows could be negatively affected by an unfavorable resolution of one or more of such proceedings,claims or investigations.Since June 2022,we have been cooperating with the Federal Trade Commiss
152、ion(the“FTC”)staff in response to a Civil Investigative Demand seeking information regarding our disclosure and subscription cancellation practices relative to the Restore Online Shoppers Confidence Act.In November 2023,the FTC staff asserted that they had the authority to enter into consent negotia
153、tions to determine if a settlement regarding their investigation of these issues could be reached.Since then,we have attempted to engage constructively with the FTC to resolve this matter.On March 20,2024,we were informed that the FTC had voted to authorize a filing of the case.It is not clear wheth
154、er a settlement may be in reach,and we intend to continue seeking to engage constructively with the FTC.The defense or resolution of this matter could involve significant monetary costs or penalties and have a significant impact on our financial results and operations.There can be no assurance that
155、we will be successful in negotiating a favorable settlement or in litigation.Any remedies or compliance requirements could adversely affect our ability to operate our business or have a materially adverse impact on our financial results.At this stage,we are unable to estimate a reasonably possible f
156、inancial loss or range of any potential financial loss,if any,as a result of this investigation.Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)20On October 20,2023,a securities class action captioned Pembroke Pines Firefighters&Police Officers Pe
157、nsion Fund et al v.Adobe,Inc.et al,Case No.1:23-cv-09260,was filed in the U.S.District Court for the Southern District of New York(the“Securities Action”)naming Adobe and certain of our current and former officers as defendants.The Securities Action purports to be brought on behalf of purchasers of
158、the Companys stock between July 23,2021 and September 22,2022(the“Class Period”).The complaint,which was amended on February 23,2024,alleges that certain public statements made by Adobe during the Class Period related to competition from Figma and the adequacy of Adobes existing offerings to counter
159、 harms Adobe may have faced due to Figmas growing market position were materially false and misleading.The Securities Action seeks unspecified compensatory damages,attorneys fees and costs,and extraordinary equitable and/or injunctive relief.On November 16,2023,a shareholder derivative action captio
160、ned Shah v.Narayen et al,Case No.1:23-cv-01315,was filed in the U.S.District Court for the District of Delaware(the“Shah Action”),purportedly on behalf of Adobe.On January 3,2024,a second shareholder derivative action captioned Gervat v.Narayen et al,Case No.1:24-cv-00006,was filed in the U.S.Distri
161、ct Court for the District of Delaware(the“Gervat Action”),purportedly on behalf of Adobe.On January 24,2024,the Court consolidated the Shah and Gervat Actions(together,the“Consolidated Derivative Action”).On January 18,2024,a shareholder derivative action captioned Sbriglio v.Narayen et al.,Case No.
162、24-cv-429458,was filed in California Superior Court(the“Sbriglio Action”),purportedly on behalf of Adobe.On January 29,2024,a shareholder derivative action captioned Roy v.Narayen et al.,No.1:24-cv-00633,was filed in the U.S.District Court for the Southern District of New York,(the“Roy Action,”and t
163、ogether with the Consolidated Derivative Action and the Sbriglio Action,the“Derivative Actions”),purportedly on behalf of Adobe.The Derivative Actions are based largely on the same alleged facts and circumstances as the Securities Action,and name certain of our current and former officers and member
164、s of our Board of Directors as defendants and Adobe as a nominal defendant.The Derivative Actions together allege claims for breach of fiduciary duty and/or aiding and abetting breach of fiduciary duties,unjust enrichment,waste of corporate assets,abuse of control,and violations of Section 10(b)(and
165、 Rule 10b-5 promulgated thereunder),Section 20(a),and/or Section 21D of the Securities Exchange Act of 1934,as amended,and seek recovery of unspecified damages,restitution,and attorneys fees and costs,as well as disgorgement of profits and certain payments and benefits,in the case of the Gervat Acti
166、on,and improvements to Adobes corporate governance and internal procedures,in the case of the Shah Action,on behalf of Adobe.We dispute the allegations of wrongdoing in the Securities Action and the Derivative Actions and intend to vigorously defend ourselves in these matters.In view of the complexi
167、ty and ongoing and uncertain nature of the outstanding proceedings and inquiries,at this time we are unable to estimate a reasonably possible financial loss or range of financial loss,if any,that we may incur to resolve or settle the Securities Action and the Derivative Actions.In connection with di
168、sputes relating to the validity or alleged infringement of third-party intellectual property rights,including patent rights,we have been,are currently and may in the future be subject to claims,negotiations or complex,protracted litigation.Intellectual property disputes and litigation may be very co
169、stly and can be disruptive to our business operations by diverting the attention and energies of management and key technical personnel.Although we have successfully defended or resolved past litigation and disputes,we may not prevail in any ongoing or future litigation and disputes.Third-party inte
170、llectual property disputes could subject us to significant liabilities,require us to enter into royalty and licensing arrangements on unfavorable terms,prevent us from licensing certain of our products or offering certain of our services,subject us to injunctions restricting our sale of products or
171、services,cause severe disruptions to our operations or the markets in which we compete,or require us to satisfy indemnification commitments with our customers including contractual provisions under various license arrangements and service agreements.Table of ContentsADOBE INC.NOTES TO CONDENSED CONS
172、OLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)21NOTE 14.DEBTThe carrying value of our borrowings as of March 1,2024 and December 1,2023 were as follows:(dollars in millions)Issuance DateDue DateEffective Interest Rate202420231.90%2025 NotesFebruary 2020February 20252.07%$500$500 3.25%2025 Notes
173、January 2015February 20253.67%1,000 1,000 2.15%2027 NotesFebruary 2020February 20272.26%850 850 2.30%2030 NotesFebruary 2020February 20302.69%1,300 1,300 Total debt outstanding,at par$3,650$3,650 Less:Current portion of debt,at par(1,500)Unamortized discount and debt issuance costs(12)(16)Carrying v
174、alue of long-term debt$2,138$3,634 Current portion of debt,at par$1,500$Unamortized discount and debt issuance costs(3)Carrying value of current debt$1,497$Senior Notes In January 2015,we issued$1 billion of senior notes due February 1,2025.The related discount and issuance costs are amortized to in
175、terest expense over the term of the notes using the effective interest method.Interest is payable semi-annually,in arrears,on February 1 and August 1.In February 2020,we issued$500 million of senior notes due February 1,2025,$850 million of senior notes due February 1,2027 and$1.30 billion of senior
176、 notes due February 1,2030.Our total proceeds were used for general corporate purposes including repayment of debt instruments due in fiscal 2020.The related discount and issuance costs are amortized to interest expense over the respective terms of the notes using the effective interest method.Inter
177、est is payable semi-annually,in arrears,on February 1 and August 1.During the first quarter of fiscal 2024,we reclassified the senior notes due February 1,2025 as current debt in our condensed consolidated balance sheets.As of March 1,2024,the carrying value of our current debt was$1.50 billion,net
178、of the related discount and issuance costs.We intend to refinance the current portion of our debt on or before the due date.Our senior notes rank equally with our other unsecured and unsubordinated indebtedness.We may redeem the notes at any time,subject to a make-whole premium.In addition,upon the
179、occurrence of certain change of control triggering events,we may be required to repurchase the notes,at a price equal to 101%of their principal amount,plus accrued and unpaid interest to the date of repurchase.The notes do not contain financial covenants but include covenants that limit our ability
180、to grant liens on assets and to enter into sale and leaseback transactions,subject to significant allowances.Revolving Credit AgreementIn June 2022,we entered into a credit agreement(“Revolving Credit Agreement”),providing for a five-year$1.5 billion senior unsecured revolving credit facility,which
181、replaced our previous five-year$1 billion senior unsecured revolving credit agreement entered into in October 2018.The Revolving Credit Agreement provides for loans to Adobe and certain of its subsidiaries that may be designated from time to time as additional borrowers.Pursuant to the terms of the
182、Revolving Credit Agreement,we may,subject to the agreement of lenders to provide additional commitments,obtain up to an additional$500 million in commitments,for a maximum aggregate commitment of$2 billion.At our election,loans under the Revolving Credit Agreement will bear interest at either(i)term
183、 Secured Overnight Financing Rate(“SOFR”),plus a margin,(ii)adjusted daily SOFR,plus a margin,(iii)alternative currency rate,plus a margin,or(iv)base rate,which is defined as the highest of(a)the federal funds rate plus 0.50%,(b)the agents prime rate,or(c)term SOFR plus 1.00%.The margin for term SOF
184、R,adjusted Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)22daily SOFR and alternative currency rate loans is based on our debt ratings,and ranges from 0.460%to 0.900%.In addition,facility fees determined according to our debt ratings are payable
185、 on the aggregate commitments,regardless of usage,quarterly in an amount ranging from 0.040%to 0.100%per annum.We are permitted to permanently reduce the aggregate commitment under the Revolving Credit Agreement at any time.Subject to certain conditions stated in the Revolving Credit Agreement,Adobe
186、 and any of its subsidiaries designated as additional borrowers may borrow,prepay and re-borrow amounts at any time during the term of the Revolving Credit Agreement.The Revolving Credit Agreement contains customary representations,warranties,affirmative and negative covenants,including events of de
187、fault and indemnification provisions in favor of the lenders.The negative covenants include restrictions regarding the incurrence of liens and indebtedness,certain merger transactions,dispositions and other matters,all subject to certain exceptions.The facility will terminate and all amounts owing t
188、hereunder will be due and payable on the maturity date unless(a)the commitments are terminated earlier upon the occurrence of certain events,including an event of default,or(b)the maturity date is further extended upon our request,subject to the agreement of the lenders.As of March 1,2024,there were
189、 no outstanding borrowings under this Revolving Credit Agreement.Commercial Paper ProgramIn September 2023,we established a commercial paper program under which we may issue unsecured commercial paper up to a total of$3 billion outstanding at any time,with maturities of up to 397 days from the date
190、of issue.The net proceeds from the issuance of commercial paper are expected to be used for general corporate purposes,which may include working capital,capital expenditures,acquisitions,stock repurchases,refinancing indebtedness or any other general corporate purposes.As of March 1,2024,there were
191、no outstanding borrowings under the commercial paper program.Term Loan Credit AgreementIn January 2023,we entered into a delayed draw term loan credit agreement(the“Term Loan Credit Agreement”),providing for a senior unsecured term loan of up to$3.5 billion for the purpose of partially funding the p
192、urchase price for our intended acquisition of Figma and the related fees and expenses.During the three months ended March 1,2024,we entered into a mutual termination agreement with Figma to terminate the previously announced merger agreement.Consequently,the Term Loan Credit Agreement was terminated
193、.There were no outstanding borrowings under the Term Loan Credit Agreement at the time of termination.Table of ContentsADOBE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)(Unaudited)23ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe
194、following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto.In addition to historical information,this Quarterly Report on Form 10-Q contains forward-looking statements,including statements regarding product plans,future growth,market opp
195、ortunities,fluctuations in foreign currency exchange rates,strategic investments,industry positioning,customer acquisition and retention,the amount of annualized recurring revenue and revenue growth.In addition,when used in this report,the words“will,”“expects,”“could,”“would,”“may,”“anticipates,”“i
196、ntends,”“plans,”“believes,”“seeks,”“targets,”“estimates,”“looks for,”“looks to,”“continues”and similar expressions,as well as statements regarding our focus for the future,are generally intended to identify forward-looking statements.Each of the forward-looking statements we make in this report invo
197、lves risks and uncertainties that could cause actual results to differ materially from these forward-looking statements.Factors that might cause or contribute to such differences include,but are not limited to,those discussed in the section titled“Risk Factors”in Part II,Item 1A of this report.The r
198、isks described herein and in other documents we file from time to time with the U.S.Securities and Exchange Commission(the“SEC”),including our Annual Report on Form 10-K for fiscal 2023,should be carefully reviewed.Undue reliance should not be placed on these forward-looking statements,which speak o
199、nly as of the date of this Quarterly Report on Form 10-Q.We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document,except as required by law.BUSINESS OVERVIEWAdobe is a global technology company w
200、ith a mission to change the world through personalized digital experiences.For over four decades,Adobes innovations have transformed how individuals,teams,businesses,enterprises,institutions,and governments engage and interact across all types of media.Our products,services and solutions are used ar
201、ound the world to imagine,create,manage,deliver,measure,optimize and engage with content across surfaces and fuel digital experiences.We have a diverse user base that includes consumers,communicators,creative professionals,developers,students,small and medium businesses and enterprises.We are also e
202、mpowering creators by putting the power of artificial intelligence(“AI”)in their hands,and doing so in ways we believe are responsible.Our products and services help unleash creativity,accelerate document productivity and power businesses in a digital world.We have operations in the Americas;Europe,
203、Middle East and Africa(“EMEA”);and Asia-Pacific(“APAC”).OPERATIONS OVERVIEWFor our first quarter of fiscal 2024,we experienced strong demand across our Digital Media and Digital Experience offerings,driven by our innovative product roadmap.As we execute on our long-term growth initiatives,with focus
204、 on delivering product innovation and driving adoption and usage of our AI-powered solutions,we have continued to experience growth in software-based subscription revenue across our portfolio of offerings.Digital MediaIn our Digital Media segment,we are a market leader with Creative Cloud,our subscr
205、iption-based offering which provides desktop tools,mobile applications(“apps”)and cloud-based services for designing,creating and publishing rich content and immersive 3D experiences.Creative Cloud includes Adobe Express,a web and mobile app designed to enable a broad spectrum of users,including nov
206、ice content creators,communicators and creative professionals,to create,edit and customize content quickly and easily with content-first,task-based solutions.In September 2023,we released Adobe Firefly,a group of creative generative AI models designed to generate high quality images and text effects
207、.Adobe Firefly-powered generative AI features are also available across Creative Cloud apps including Adobe Photoshop and Adobe Express.Creative Cloud delivers value with deep,cross-product integration,frequent product updates and feature enhancements,cloud-enabled services including storage and syn
208、cing of files across users devices,machine learning and artificial intelligence,access to marketplace,social and community-based features with our Adobe Stock and Behance services,app creation capabilities,tools which assist with enterprise deployments and team collaboration,and affordable pricing f
209、or cost-sensitive customers.We offer Creative Cloud for individuals,students,teams and enterprises.We expect Creative Cloud will drive sustained long-term revenue growth through a continued expansion of our customer base by attracting new users with new features and products like Adobe Express and A
210、dobe Firefly that make creative tools accessible to first-time creators and communicators,and delivering new features and technologies to existing customers with our latest releases such as share for review and generative AI capabilities.We have also built out a marketplace for Creative Cloud subscr
211、ibers to enable the delivery and purchase of stock content in our Adobe Stock service.Overall,our strategy with Creative Cloud is designed to enable us to Table of Contents24increase our revenue with existing users,continue to attract new customers,and grow our recurring and predictable revenue stre
212、am that is recognized ratably.We continue to implement strategies that are designed to accelerate awareness,consideration and purchase of subscriptions to our Creative Cloud offerings.These strategies include increasing the value Creative Cloud users receive,such as offering new and enhanced desktop
213、,web and mobile apps,as well as targeted promotions and offers that attract past customers and potential users to experience and ultimately subscribe to Creative Cloud.Because of the shift towards Creative Cloud subscriptions and Enterprise Term License Agreements(“ETLAs”),revenue from perpetual lic
214、ensing of our Creative products has been immaterial to our business.We are also a market leader with our Document Cloud offerings built around our Adobe Acrobat family of products,with a set of integrated mobile apps and cloud-based document services which enable users to create,collaborate,review,a
215、pprove,sign and track documents regardless of platform or application source type.Document Cloud,which enhances the way people manage critical documents at home,in the office and across devices,includes Adobe Acrobat,Adobe Acrobat Sign and Adobe Scan.Adobe Acrobat is offered both through subscriptio
216、n and perpetual licenses,and is also included in our Creative Cloud All Apps subscription offering.As part of our Creative Cloud and Document Cloud strategies,we utilize a data-driven operating model(“DDOM”)and our Adobe Experience Cloud solutions to raise awareness of our products,drive new custome
217、r acquisition,engagement and retention,and optimize customer journeys,which continue to contribute strong product-led growth in the business.Annualized Recurring Revenue(“ARR”)is currently the key performance metric our management uses to assess the health and trajectory of our overall Digital Media
218、 segment.ARR should be viewed independently of revenue,deferred revenue and remaining performance obligations as ARR is a performance metric and is not intended to be combined with any of these items.We adjust our reported ARR on an annual basis to reflect any exchange rate changes.Our reported ARR
219、results in the current fiscal year are based on currency rates set at the beginning of the year and held constant throughout the year for measurement purposes.We calculate ARR as follows:Creative ARRAnnual Value of Creative Cloud Subscriptions and Services+Annual Creative ETLA Contract Value Documen
220、t Cloud ARRAnnual Value of Document Cloud Subscriptions and Services+Annual Document Cloud ETLA Contract ValueDigital Media ARRCreative ARR+Document Cloud ARRCreative ARR exiting the first quarter of fiscal 2024 was$12.78 billion,up from$12.49 billion at the end of fiscal 2023.Document Cloud ARR exi
221、ting the first quarter of fiscal 2024 was$2.98 billion,up from$2.84 billion at the end of fiscal 2023.Total Digital Media ARR grew to$15.76 billion at the end of the first quarter of fiscal 2024,up from$15.33 billion at the end of fiscal 2023.Our success in driving growth in ARR has positively affec
222、ted our revenue growth.Creative revenue in the first quarter of fiscal 2024 was$3.07 billion,up from$2.76 billion in the first quarter of fiscal 2023,representing 11%year-over-year growth.Document Cloud revenue in the first quarter of fiscal 2024 was$750 million,up from$634 million in the first quar
223、ter of fiscal 2023,representing 18%year-over-year growth.Total Digital Media segment revenue grew to$3.82 billion in the first quarter of fiscal 2024,up from$3.40 billion in the first quarter of fiscal 2023,representing 12%year-over-year growth driven by strong net new user growth.Digital Experience
224、We are a market leader in the fast-growing category addressed by our Digital Experience segment.The Adobe Experience Cloud apps and services are designed to manage customer journeys,enable personalized experiences at scale and deliver intelligence for businesses of any size in any industry.Our diffe
225、rentiation and competitive advantage are strengthened by our ability to use the Adobe Experience Platform to integrate our comprehensive set of solutions.Table of Contents25Adobe Experience Cloud delivers solutions for our customers across the following strategic growth pillars:Data insights and aud
226、iences.Our products,including Adobe Analytics,Customer Journey Analytics,Adobe Product Analytics,and our Real-time Customer Data Platform,deliver actionable data in real time to provide highly tailored and adaptive experiences across platforms.Content and commerce.Our products help customers manage,
227、deliver,monetize,and optimize content delivery through Adobe Experience Manager and build multi-channel commerce experiences for B2B and B2C customers on a single platform with Adobe Commerce.Customer journeys.Our products help businesses manage,test,target and personalize customer journeys delivere
228、d as campaigns across B2B and B2C use cases,including through Adobe Marketo Engage,Adobe Campaign,Adobe Target and Adobe Journey Optimizer.Marketing planning and workflow.Our products help businesses intelligently measure,optimize,and plan marketing investments through the Adobe Mix Modeler,and allo
229、w businesses to strategically plan,manage,collaborate,and execute on workflows for marketing campaigns and other projects at speed and scale with our enterprise work management app,Adobe Workfront.In addition to chief marketing officers,chief revenue officers and digital marketers,users of our Digit
230、al Experience solutions include advertisers,campaign managers,publishers,data analysts,content managers,social marketers,marketing executives and information management and technology executives.These customers often are involved in workflows that integrate other Adobe products,such as our Digital M
231、edia offerings.By combining the creativity of our Digital Media business with the science of our Digital Experience business,such as with our new Adobe GenStudio solution,we help our customers to more efficiently and effectively make,manage,measure and monetize their content across every channel wit
232、h an end-to-end workflow and feedback loop.We utilize a direct sales force to market and license our Digital Experience solutions,as well as an extensive ecosystem of partners,including marketing agencies,systems integrators and independent software vendors that help license and deploy our solutions
233、 to their customers.We have made significant investments to broaden the scale and size of all of these routes to market,and our recent financial results reflect the success of these investments and our experience-led growth strategy.Digital Experience revenue was$1.29 billion in the first quarter of
234、 fiscal 2024,up from$1.18 billion in the first quarter of fiscal 2023,representing 10%year-over-year growth.Driving this growth was the increase in subscription revenue,which grew to$1.16 billion in the first quarter of fiscal 2024 from$1.04 billion in the first quarter of fiscal 2023,representing 1
235、2%year-over-year growth.Macroeconomic ConditionsAs a corporation with an extensive global footprint,we are subject to risks and exposures from the evolving macroeconomic environment,including the effects of increased global inflationary pressures and interest rates,fluctuations in foreign currency e
236、xchange rates,potential economic slowdowns or recessions and geopolitical pressures,including the unknown impacts of current and future trade regulations.We continuously monitor the direct and indirect impacts of these circumstances on our business and financial results.While our revenue and earning
237、s are relatively predictable as a result of our subscription-based business model,the broader implications of these macroeconomic events on our business,results of operations and overall financial position,particularly in the long term,remain uncertain.See Risk Factors for further discussion of the
238、possible impact of these macroeconomic issues on our business.Table of Contents26CRITICAL ACCOUNTING POLICIES AND ESTIMATESIn preparing our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States(“GAAP”)and pursuant to the rules an
239、d regulations of the SEC,we make assumptions,judgments and estimates that affect the reported amounts of assets,liabilities,revenue and expenses,and related disclosures of contingent assets and liabilities.We base our assumptions,judgments and estimates on historical experience and various other fac
240、tors that we believe to be reasonable under the circumstances.Actual results could differ materially from these estimates under different assumptions or conditions.We evaluate our assumptions,judgments and estimates on a regular basis.We also discuss our critical accounting policies and estimates wi
241、th the Audit Committee of the Board of Directors.We believe that the assumptions,judgments and estimates involved in the accounting for revenue recognition and income taxes have the greatest potential impact on our condensed consolidated financial statements.These areas are key components of our res
242、ults of operations and are based on complex rules requiring us to make judgments and estimates,and consequently,we consider these to be our critical accounting policies.Historically,our assumptions,judgments and estimates relative to our critical accounting policies have not differed materially from
243、 actual results.There have been no significant changes in our critical accounting policies and estimates during the three months ended March 1,2024,as compared to the critical accounting policies and estimates disclosed in Managements Discussion and Analysis of Financial Condition and Results of Ope
244、rations included in our Annual Report on Form 10-K for the year ended December 1,2023.Recent Accounting PronouncementsSee Note 1 of our notes to condensed consolidated financial statements for information regarding recent accounting pronouncements that are of significance or potential significance t
245、o us.RESULTS OF OPERATIONSFinancial Performance SummaryTotal Digital Media ARR of approximately$15.76 billion as of March 1,2024 increased by$432 million,or 3%,from$15.33 billion as of December 1,2023.Creative revenue during the three months ended March 1,2024 of$3.07 billion increased by$305 millio
246、n,or 11%,compared to the year-ago period.Document Cloud revenue during the three months ended March 1,2024 of$750 million increased by$116 million,or 18%,compared to the year-ago period.Digital Experience revenue of$1.29 billion during the three months ended March 1,2024 increased by$113 million,or
247、10%,compared to the year-ago period.Remaining performance obligations of$17.58 billion as of March 1,2024 increased by$369 million,or 2%,from$17.22 billion as of December 1,2023.Cost of revenue of$590 million during the three months ended March 1,2024 increased by$22 million,or 4%,compared to the ye
248、ar-ago period.Operating expenses of$3.69 billion during the three months ended March 1,2024 increased by$1.18 billion,or 47%,compared to the year-ago period primarily due to the$1 billion termination fee which resulted from termination of the Figma transaction.Net income of$620 million during the th
249、ree months ended March 1,2024 decreased by$627 million,or 50%,compared to the year-ago period.Cash flows from operations of$1.17 billion during the three months ended March 1,2024 decreased by$519 million,or 31%,compared to the year-ago period.Table of Contents27Revenue for the Three Months Ended Ma
250、rch 1,2024 and March 3,2023(dollars in millions)Three Months 20242023%ChangeSubscription$4,916$4,373 12%Percentage of total revenue 95%94%Product 119 120 (1)%Percentage of total revenue 2%3%Services and other 147 162 (9)%Percentage of total revenue 3%3%Total revenue$5,182$4,655 11%SubscriptionOur su
251、bscription revenue is comprised primarily of fees we charge for our subscription and hosted service offerings,and related support,including Creative Cloud and certain of our Adobe Experience Cloud and Document Cloud services.We primarily recognize subscription revenue ratably over the term of agreem
252、ents with our customers,beginning with commencement of service.Subscription revenue related to certain offerings,where fees are based on a number of transactions and invoicing is aligned to the pattern of performance,customer benefit and consumption,are recognized on a usage basis.We have the follow
253、ing reportable segments:Digital Media,Digital Experience,and Publishing and Advertising.Subscription revenue by reportable segment for the three months ended March 1,2024 and March 3,2023 is as follows:(dollars in millions)Three Months20242023%ChangeDigital Media$3,725$3,301 13%Digital Experience 1,
254、164 1,042 12%Publishing and Advertising 27 30 (10)%Total subscription revenue$4,916$4,373 12%ProductOur product revenue is comprised primarily of fees related to licenses for on-premise software purchased on a perpetual basis,for a fixed period of time or based on usage for certain of our original e
255、quipment manufacturer and royalty agreements.We primarily recognize product revenue at the point in time the software is available to the customer,provided all other revenue recognition criteria are met.Services and OtherOur services and other revenue is comprised primarily of fees related to consul
256、ting,training,maintenance and support for certain on-premise licenses that are recognized at a point in time and our advertising offerings.We typically sell our consulting contracts on a time-and-materials or fixed-fee basis.These revenues are recognized as the services are performed for time-and-ma
257、terials contracts and on a relative performance basis for fixed-fee contracts.Training revenues are recognized as the services are performed.Our maintenance and support offerings,which entitle customers,partners and developers to receive desktop product upgrades and enhancements or technical support
258、,depending on the offering,are generally recognized ratably over the term of the arrangement.Transaction-based advertising revenue is recognized on a usage basis as we satisfy the performance obligations to our customers.Table of Contents28Segment Information(dollars in millions)Three Months 2024202
259、3%ChangeDigital Media$3,816$3,395 12%Percentage of total revenue 74%73%Digital Experience 1,289 1,176 10%Percentage of total revenue 25%25%Publishing and Advertising 77 84 (8)%Percentage of total revenue 1%2%Total revenue$5,182$4,655 11%Digital MediaRevenue by major offerings in our Digital Media re
260、portable segment for the three months ended March 1,2024 and March 3,2023 were as follows:(dollars in millions)Three Months20242023%ChangeCreative Cloud$3,066$2,761 11%Document Cloud 750 634 18%Total Digital Media revenue$3,816$3,395 12%Revenue from Digital Media increased$421 million during the thr
261、ee months ended March 1,2024 as compared to the three months ended March 3,2023 driven by increases in revenue associated with our Creative and Document Cloud subscription offerings due to continued demand amid an increasingly digital environment,strong engagement across customer segments and migrat
262、ing our customers to higher valued subscription offerings with increased revenue per subscription.Digital ExperienceRevenue from Digital Experience increased$113 million during the three months ended March 1,2024 as compared to the three months ended March 3,2023 primarily due to net new additions a
263、cross our subscription offerings.Geographical Information(dollars in millions)Three Months 20242023%ChangeAmericas$3,110$2,779 12%Percentage of total revenue 60%60%EMEA 1,319 1,173 12%Percentage of total revenue 25%25%APAC 753 703 7%Percentage of total revenue 15%15%Total revenue$5,182$4,655 11%Over
264、all revenue during the three months ended March 1,2024 increased in all geographic regions as compared to the three months ended March 3,2023.Within each geographic region,the fluctuations in revenue by reportable segment were attributable to the factors noted in the segment information above.Includ
265、ed in the overall change in revenue for the three months ended March 1,2024 as compared to the three months ended March 3,2023 were impacts associated with foreign currency and our foreign currency hedging program.During the three months ended March 1,2024 as compared to the year-ago period,the U.S.
266、Dollar primarily weakened against EMEA foreign currencies and strengthened against APAC foreign currencies,which resulted in a net decrease in revenue of approximately$1 million in U.S.Dollar equivalents.For the three months ended March 1,2024,we had net hedging losses from our cash flow hedging pro
267、gram of$4 million.Table of Contents29Cost of Revenue for the Three Months Ended March 1,2024 and March 3,2023(dollars in millions)Three Months 20242023%ChangeSubscription$455$434 5%Percentage of total revenue 9%9%Product 5 8 (38)%Percentage of total revenue*Services and other 130 126 3%Percentage of
268、 total revenue 3%3%Total cost of revenue$590$568 4%_(*)Percentage is less than 1%.SubscriptionCost of subscription revenue consists of third-party hosting services and data center costs,including expenses related to operating our network infrastructure.Cost of subscription revenue also includes comp
269、ensation costs associated with network operations,implementation,account management and technical support personnel,royalty fees,software costs and amortization of certain intangible assets.Cost of subscription revenue increased during the three months ended March 1,2024 as compared to the three mon
270、ths ended March 3,2023 due to the following:Components of%ChangeHosting services and data center costs 6%Royalty costs 2 Amortization of intangibles(3)Total change 5%ProductCost of product revenue is primarily comprised of third-party royalties,localization costs and costs associated with the manufa
271、cturing of our products.Services and OtherCost of services and other revenue is primarily comprised of compensation and contracted costs incurred to provide consulting services,training and product support,and hosting services and data center costs.Cost of services and other revenue increased during
272、 the three months ended March 1,2024 as compared to the three months ended March 3,2023 primarily due to increases in compensation costs,partially offset by decreases in professional and consulting fees.Table of Contents30Operating Expenses for the Three Months Ended March 1,2024 and March 3,2023(do
273、llars in millions)Three Months 20242023%ChangeResearch and development$939$827 14%Percentage of total revenue 18%18%Sales and marketing 1,352 1,301 4%Percentage of total revenue 26%28%General and administrative 352 331 6%Percentage of total revenue 7%7%Acquisition termination fee 1,000 *Percentage o
274、f total revenue 19%*Amortization of intangibles 42 42%Percentage of total revenue 1%1%Total operating expenses$3,685$2,501 47%_(*)Percentage is less than 1%.(*)Percentage is not meaningful.Research and Development Research and development expenses consist primarily of compensation and contracted cos
275、ts associated with software development,third-party hosting services and data center costs,related facilities costs and expenses associated with computer equipment and software used in development activities.Research and development expenses increased during the three months ended March 1,2024 as co
276、mpared to the three months ended March 3,2023 due to the following:Components of%ChangeBase compensation and related benefits 4%Incentive compensation,cash and stock-based 3 Hosting services and data center costs 4 Various individually insignificant items 3 Total change 14%Investments in research an
277、d development,including the recruiting and hiring of software developers,are critical to remain competitive in the marketplace and are directly related to continued timely development of new and enhanced offerings and solutions.We will continue to focus on long-term opportunities available in our en
278、d markets and make significant investments in the development of our subscription and service offerings,apps and tools.Sales and MarketingSales and marketing expenses consist primarily of compensation costs,amortization of contract acquisition costs,including sales commissions,travel expenses and re
279、lated facilities costs for our sales,marketing,order management and global supply chain management personnel.Sales and marketing expenses also include the costs of programs aimed at increasing revenue,such as advertising,trade shows and events,public relations and other market development programs.S
280、ales and marketing expenses increased during the three months ended March 1,2024 as compared to the three months ended March 3,2023 primarily due to increases in compensation costs.General and AdministrativeGeneral and administrative expenses consist primarily of compensation and contracted costs,tr
281、avel expenses and related facilities costs for our finance,facilities,human resources,legal,information services and executive personnel.General and administrative expenses also include outside legal and accounting fees,provision for bad debts,expenses associated with computer equipment and software
282、 used in the administration of the business,charitable contributions and various forms of insurance.Table of Contents31General and administrative expenses increased during the three months ended March 1,2024 as compared to the three months ended March 3,2023 primarily due to increases in compensatio
283、n costs,partially offset by decreases in professional and consulting fees.Acquisition Termination FeeDuring the three months ended March 1,2024,we incurred a$1 billion termination fee which resulted from termination of the Figma transaction.Non-Operating Income(Expense),Net for the Three Months Ende
284、d March 1,2024 and March 3,2023(dollars in millions)Three Months 20242023%ChangeInterest expense$(27)$(32)(16)%Percentage of total revenue(1)%(1)%Investment gains(losses),net 18 1*Percentage of total revenue*Other income(expense),net 70 43*Percentage of total revenue 1%1%Total non-operating income(e
285、xpense),net$61$12*_(*)Percentage is less than 1%.(*)Percentage is not meaningful.Interest ExpenseInterest expense represents interest associated with our debt instruments.Interest on our senior notes is payable semi-annually,in arrears,on February 1 and August 1.Investment Gains(Losses),NetInvestmen
286、t gains(losses),net consists principally of unrealized holding gains and losses associated with our deferred compensation plan assets.Other Income(Expense),Net Other income(expense),net consists primarily of interest earned on cash,cash equivalents and short-term fixed income investments.Other incom
287、e(expense),net also includes realized gains and losses on fixed income investments and foreign exchange gains and losses.Other income(expense),net increased during the three months ended March 1,2024 as compared to the three months ended March 3,2023 primarily due to increases in interest income dri
288、ven by higher average interest rates.Provision for Income Taxes for the Three Months Ended March 1,2024 and March 3,2023(dollars in millions)Three Months 20242023%ChangeProvision for income taxes$348$351 (1)%Percentage of total revenue 7%8%Effective tax rate 36%22%Our effective tax rate increased by
289、 approximately 14 percentage points for the three months ended March 1,2024,as compared to the three months ended March 3,2023,primarily due to the Figma acquisition termination fee incurred during the three months ended March 1,2024 which was not deductible for financial statement purposes.The incr
290、ease was partially offset by a net tax benefit related to stock-based compensation recorded during the three months ended March 1,2024,as compared to a net tax expense related to stock-based compensation recorded during the year-ago period.Our effective tax rate for the three months ended March 1,20
291、24 was higher than the U.S.federal statutory tax rate of 21%primarily due to the Figma acquisition termination fee which was not deductible for financial statement purposes and,to a Table of Contents32lesser extent,from state taxes partially offset by the net tax benefits from non-U.S.operations and
292、 the U.S.federal research tax credit.We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized based on evaluation of all available positive and negative evidence.On the basis of this evaluation,we continue to maintain a valuation allowance t
293、o reduce our deferred tax assets to the amount realizable.The total valuation allowance was$677 million as of March 1,2024,primarily related to certain state credits and capital loss carryforwards.We are a U.S.-based multinational company subject to tax in multiple domestic and foreign tax jurisdict
294、ions.The current U.S.tax law subjects the earnings of certain foreign subsidiaries to U.S.tax and generally allows an exemption from taxation for distributions from foreign subsidiaries.In the current global tax policy environment,the domestic and foreign governing bodies continue to consider,and in
295、 some cases introduce,changes in regulations applicable to corporate multinationals such as Adobe.As regulations are issued,we account for finalized regulations in the period of enactment.The provision from the U.S.Tax Act which requires us to capitalize and amortize research and development costs b
296、ecame effective in fiscal 2023.If the rule is not modified,there will continue to be an adverse impact on our effective rates for income taxes paid,which is partially offset by a benefit to our effective tax rates from the increase in the foreign-derived intangible income deduction.Accounting for Un
297、certainty in Income TaxesThe gross liabilities for unrecognized tax benefits excluding interest and penalties were$666 million and$330 million as of March 1,2024 and March 3,2023,respectively.If the total unrecognized tax benefits as of March 1,2024 and March 3,2023 were recognized,$502 million and$
298、214 million would decrease the respective effective tax rates.As of March 1,2024 and March 3,2023,the combined amounts of accrued interest and penalties included in long-term income taxes payable related to tax positions taken on our tax returns were not material.The timing of the resolution of inco
299、me tax examinations is highly uncertain as are the amounts and timing of tax payments that are part of any audit settlement process.These events could cause large fluctuations in the balance sheet classification of our tax assets and liabilities.We believe that within the next 12 months,it is reason
300、ably possible that either certain audits will conclude or statutes of limitations on certain income tax examination periods will expire,or both.Although the timing of resolution,settlement and closing of audits is not certain,it is reasonably possible that the underlying unrecognized tax benefits ma
301、y decrease by up to$70 million over the next 12 months.Our future effective tax rates may be materially affected by changes in the tax rates in jurisdictions where our income is earned,changes in jurisdictions in which our profits are determined to be earned and taxed,changes in the valuation of our
302、 deferred tax assets and liabilities,changes in or interpretation of tax rules and regulations in the jurisdictions in which we do business,or unexpected changes in business and market conditions that could reduce certain tax benefits.In addition,tax laws in the United States as well as other countr
303、ies and jurisdictions in which we conduct business are subject to change as new laws are passed and/or new interpretations are made available.These countries,governmental bodies,such as the European Commission of the European Union,and intergovernmental economic organizations,such as the Organizatio
304、n for Economic Cooperation and Development,have made or could make unprecedented assertions about how taxation is determined and,in some cases,have proposed or enacted new laws that are contrary to the way in which rules and regulations have historically been interpreted and applied.Changes in our o
305、perating landscape,such as changes in laws and/or interpretations of tax rules,could adversely affect our effective tax rates and/or cause us to respond by making changes to our business structure which could adversely affect our operations and financial results.Moreover,we are subject to the examin
306、ation of our income tax returns by domestic and foreign tax authorities.We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations.Our
307、 policy is to record interest and penalties related to unrecognized tax benefits in income tax expense.While we believe our tax estimates are reasonable,we cannot provide assurance that the final determination of any of these examinations will not have an adverse effect on our financial position and
308、 results of operations.Table of Contents33LIQUIDITY AND CAPITAL RESOURCESCash FlowsOur primary source of cash is receipts from revenue.Our primary uses of cash are general business expenses including payroll and related benefits costs,income taxes,marketing and third-party hosting services,as well a
309、s our stock repurchase program as described below.Other customary sources of cash include proceeds from maturities and sales of short-term investments.Other customary uses of cash include business acquisitions,repayment of maturing senior notes,purchases of property and equipment and payments for ta
310、xes related to net share settlement of equity awards.This data should be read in conjunction with our condensed consolidated statements of cash flows.As of(in millions)March 1,2024December 1,2023Cash and cash equivalents$6,254$7,141 Short-term investments$566$701 Working capital$471$2,833 Stockholde
311、rs equity$15,460$16,518 A summary of our cash flows is as follows:Three Months Ended(in millions)March 1,2024March 3,2023Net cash provided by operating activities$1,174$1,693 Net cash provided by investing activities 66 156 Net cash used for financing activities(2,128)(2,014)Effect of foreign curren
312、cy exchange rates on cash and cash equivalents 1 1 Net change in cash and cash equivalents$(887)$(164)Cash Flows from Operating ActivitiesNet cash provided by operating activities of$1.17 billion for the three months ended March 1,2024 was primarily comprised of net income adjusted for the net effec
313、t of non-cash items.During the three months ended March 1,2024,the Figma termination fee of$1 billion was paid using cash on hand.This had an adverse impact on net income and,consequently,on our cash flows from operations.Cash Flows from Investing ActivitiesNet cash provided by investing activities
314、of$66 million for the three months ended March 1,2024 was primarily due to maturities and sales of short-term investments partially offset by ongoing capital expenditures and investments of certain deferred compensation.Cash Flows from Financing ActivitiesNet cash used for financing activities of$2.
315、13 billion for the three months ended March 1,2024 was primarily due to payments for our common stock repurchases and taxes paid related to the net share settlement of equity awards.The above uses of cash were offset in part by proceeds from re-issuance of treasury stock related to our employee stoc
316、k purchase plan.See the section titled“Stock Repurchase Program”below.Liquidity and Capital Resources ConsiderationsOur existing cash,cash equivalents and investment balances may fluctuate during fiscal 2024 due to changes in our planned cash outlay.Cash from operations could also be affected by var
317、ious risks and uncertainties,including,but not limited to,risks detailed in the section titled“Risk Factors”in titled Part II,Item 1A of this report.Based on our current business plan and revenue prospects,we believe that our existing cash,cash equivalents and investment balances,our anticipated cas
318、h flows from operations and our available revolving credit facility will be sufficient to meet our working capital,operating resource expenditure and capital expenditure requirements for the next twelve months.Table of Contents34Our cash equivalent and short-term investment portfolio as of March 1,2
319、024 consisted of asset-backed securities,corporate debt securities,money market funds,U.S.agency securities and U.S.Treasury securities.We use professional investment management firms to manage a large portion of our invested cash.We expect to continue our investing activities,including short-term a
320、nd long-term investments,purchases of computer and server hardware to operate our network infrastructure,sales and marketing,product support and administrative staff,and facilities expansion.Furthermore,cash reserves may be used to repurchase stock under our stock repurchase program and to strategic
321、ally acquire companies,products or technologies that are complementary to our business.Revolving Credit AgreementWe have a$1.5 billion senior unsecured revolving credit agreement(the“Revolving Credit Agreement”)with a syndicate of lenders,providing for loans to us and certain of our subsidiaries thr
322、ough June 30,2027.Subject to the agreement of lenders,we may obtain up to an additional$500 million in commitments,for a maximum aggregate commitment of$2 billion.As of March 1,2024,there were no outstanding borrowings under the Revolving Credit Agreement and the entire$1.5 billion credit line remai
323、ns available for borrowing.Under the terms of our Revolving Credit Agreement,we are not prohibited from paying cash dividends unless payment would trigger an event of default or if one currently exists.We do not anticipate paying any cash dividends in the foreseeable future.Commercial Paper ProgramI
324、n September 2023,we established a commercial paper program under which we may issue unsecured commercial paper up to a total of$3 billion outstanding at any time,with maturities of up to 397 days from the date of issue.The net proceeds from the issuance of commercial paper are expected to be used fo
325、r general corporate purposes,which may include working capital,capital expenditures,acquisitions,stock repurchases,refinancing indebtedness or any other general corporate purposes.As of March 1,2024,there were no outstanding borrowings under the commercial paper program.Senior NotesWe have$3.65 bill
326、ion senior notes outstanding,which rank equally with our other unsecured and unsubordinated indebtedness.As of March 1,2024,the carrying value of our senior notes was$3.64 billion and our maximum commitment for interest payments was$276 million for the remaining duration of our outstanding senior no
327、tes.Interest is payable semi-annually,in arrears,on February 1 and August 1.Our senior notes do not contain any financial covenants.See Note 14 of our notes to condensed consolidated financial statements for further details regarding our debt.During the first quarter of fiscal 2024,we reclassified t
328、he senior notes due February 1,2025 as current debt in our condensed consolidated balance sheets.As of March 1,2024,the carrying value of our current debt was$1.50 billion,net of the related discount and issuance costs.We intend to refinance the current portion of our debt on or before the due date.
329、Contractual ObligationsOur principal commitments as of March 1,2024 consisted of purchase obligations resulting from agreements to purchase goods and services in the ordinary course of business and obligations under operating lease arrangements.During the first quarter of fiscal 2024,we executed agr
330、eements associated with certain of our long-term supplier commitments that increased our minimum purchase obligations by$2.3 billion through December 2028.There have been no other material changes in those obligations during the three months ended March 1,2024.Stock Repurchase ProgramTo facilitate o
331、ur stock repurchase program,designed to return value to our stockholders and minimize dilution from stock issuances,we may repurchase our shares in the open market or enter into structured repurchase agreements with third parties.In December 2020,our Board of Directors granted authority to repurchas
332、e up to$15 billion in our common stock through the end of fiscal 2024.During the three months ended March 1,2024,we entered into an accelerated share repurchase agreement(“ASR”)with a large financial institution whereupon we provided them with a prepayment of$2 billion and received an initial delive
333、ry of 2.5 million shares of our common stock.Subsequent to March 1,2024,the ASR was settled which resulted in total repurchases of 3.5 million shares at an average price of$578.11.During the three months ended March 1,2024,we repurchased a total of 3.1 million shares,including approximately 0.6 million shares at an average price of$626.68 through a structured repurchase agreement entered into duri
0731-84720580
sgpjbg002
工作日 9:30 - 18:00
报告分类
新质生产力
DeepSeek
低空经济
大模型
AI Agent
AI Infra
具身智能
自动驾驶
宠物
银发经济
人形机器人
企业出海
算力
微短剧
薪酬
白皮书
创新药
人工智能
AI产业
信息科技
互联网
消费经济
汽车交通
电商零售
传媒娱乐
医药健康
投资金融
能源环境
地产建筑
传统产业
英文报告
最新报告
中英对照
全文搜索
报告精选
PDF上传翻译
多格式文档互转
入驻&报告售卖
会员权益
机构报告
券商研报
财报库
专题合集
英文报告
数据图表
会议报告
其他资源
行业聚焦
芯片产业
热点概念
全球咨询智库
人工智能
500强
新质生产力
会议峰会
新能源汽车
企业年报
互联网
公司研究
行业综观
消费教育
科技通信
医药健康
人力资源
投资金融
汽车产业
物流地产
电子商务
传统产业
传媒营销
其它
2025低空经济/低空产业报告合集（共46套打包）
2025年智算中心/AIDC/AI数据中心研究报告合集（共33套打包）
AI读财报
年报
一季报
半年报
三季报
IPO招股书
社会责任报告
A股
IPO申报
港股
美股&全球
新三板
AI、科技与通信
广告、传媒与营销
消费、零售与支付
HR、文化与旅游
金融、保险与投资
能源、环境与工业
医疗制药与大健康
物流、地产与建筑
其他行业
AI ▪ 科技 ▪ 通信
数字化
金融财经
智能制造
电商传媒
地产建筑
医疗医学
能源化工
其他行业
收藏
下载
2025-04-21
数据
AI查数
行业数据
政策法规
商业模式
产业链
竞争格局
市场规模
产业概述
其它
2025年
扫码登录
手机快捷登录
账号登录
