Adobe Reports First Quarter Financial Results

SAN JOSE, Calif.— Adobe Systems Incorporated (Nasdaq:ADBE) today reported financial results for its first quarter ended Feb. 27, 2009.

In the first quarter of fiscal 2009, Adobe achieved revenue of $786.4 million, compared to $890.4 million reported for the first quarter of fiscal 2008 and $915.3 million reported in the fourth quarter of fiscal 2008.

“In this tough economic environment, we are pleased we were able to manage expenses to deliver solid Q1 earnings and margin results,” said Shantanu Narayen, president and CEO. “We believe the major market trends driving our business remain intact, and we will continue to focus on innovation and investing in new growth businesses to increase the strategic value we provide our customers.”
First Quarter Fiscal 2009 GAAP Results

Adobe’s GAAP diluted earnings per share for the first quarter of fiscal 2009 were $0.30, based on 527.8 million weighted average shares. This compares with GAAP diluted earnings per share of $0.38 reported in the first quarter of fiscal 2008 based on 571.3 million weighted average shares, and GAAP diluted earnings per share of $0.46 reported in the fourth quarter of fiscal 2008 based on 534.9 million weighted average shares.

GAAP operating income was $207.9 million in the first quarter of fiscal 2009, compared to $275.4 million in the first quarter of fiscal 2008 and $273.2 million in the fourth quarter of fiscal 2008. As a percent of revenue, GAAP operating income in the first quarter of fiscal 2009 was 26.4 percent, compared to 30.9 percent in the first quarter of fiscal 2008 and 29.8 percent in the fourth quarter of fiscal 2008.

GAAP net income was $156.4 million for the first quarter of fiscal 2009, compared to $219.4 million reported in the first quarter of fiscal 2008 and $245.9 million in the fourth quarter of fiscal 2008.
First Quarter Fiscal 2009 Non-GAAP Results

Non-GAAP diluted earnings per share for the first quarter of fiscal 2009 were $0.45. This compares with non-GAAP diluted earnings per share of $0.48 reported in the first quarter of fiscal 2008 and non-GAAP diluted earnings per share of $0.60 reported in the fourth quarter of fiscal 2008.

Adobe’s non-GAAP operating income was $295.0 million in the first quarter of fiscal 2009, compared to $359.0 million in the first quarter of fiscal 2008 and $374.9 million in the fourth quarter of fiscal 2008. As a percent of revenue, non-GAAP operating income in the first quarter of fiscal 2009 was 37.5 percent, compared to 40.3 percent in the first quarter of fiscal 2008 and 41.0 percent in the fourth quarter of fiscal 2008.

Non-GAAP net income was $236.8 million for the first quarter of fiscal 2009, compared to $273.0 million in the first quarter of fiscal 2008 and $320.9 million in the fourth quarter of fiscal 2008.

Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
Second Quarter Fiscal 2009 Financial Targets

For the second quarter of fiscal 2009, Adobe is targeting Q2 revenue of $675 million to $725 million, an operating margin of 21 percent to 26 percent on a GAAP basis, and an operating margin of 32 percent to 36 percent on a non-GAAP basis.

In addition, Adobe is targeting its share count to be between 528 million and 530 million. The Company also is targeting non-operating income to be between $1 million and $2 million. Adobe’s GAAP and non-GAAP tax rates are expected to be approximately 24 percent.

These targets lead to a second quarter diluted earnings per share target range of $0.20 to $0.27 on a GAAP basis, and an earnings per share target range of $0.31 to $0.38 on a non-GAAP basis.

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