ADOBE INC. - Quarter Report: 2024 May (Form 10-Q)

See accompanying notes to condensed consolidated financial statements.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 2.

$ $ $ Cost of revenue Gross profit$ $ $ $ Gross profit as a percentage of revenue % % % %

Three months ended June 2, 2023

Revenue$ $ $ $ Cost of revenue Gross profit$ $ $ $ Gross profit as a percentage of revenue % % % %

Our segment results for the six months ended May 31, 2024 and June 2, 2023 were as follows:

(dollars in millions)

Digital
Media

Digital
Experience

Publishing and
Advertising

Total

Six months ended May 31, 2024

Revenue

Cost of revenue

Gross profit

Gross profit as a percentage of revenue

Six months ended June 2, 2023

Revenue

Cost of revenue

Gross profit

Gross profit as a percentage of revenue

Revenue by geographic area for the three and six months ended May 31, 2024 and June 2, 2023 were as follows:


	Three Months		Six Months
(in millions)	2024	2023	2024	2023
Americas	$	$	$	$
EMEA
APAC
Total	$	$	$	$

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

$ $ $ Document Cloud Total Digital Media revenue$ $ $ $

Subscription revenue by segment for the three and six months ended May 31, 2024 and June 2, 2023 were as follows:


	Three Months		Six Months
(in millions)	2024	2023	2024	2023
Digital Media	$	$	$	$
Digital Experience
Publishing and Advertising
Total subscription revenue	$	$	$	$

Contract Balances

A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before 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 May 31, 2024, the balance of trade receivables, net of allowances for doubtful accounts, was $ billion, inclusive of unbilled receivables of $ million. As of December 1, 2023, the balance of trade receivables, net of allowances for doubtful accounts, was $ billion, inclusive of unbilled receivables of $ million.

We 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 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. The allowance for doubtful accounts was $ million and $ million as of May 31, 2024 and December 1, 2023, respectively.

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 on 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 asset impairments were not material for the six months ended May 31, 2024. Contract assets were $ million and $ million as of May 31, 2024 and December 1, 2023, respectively.

Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services, 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 May 31, 2024, the balance of deferred revenue was $ billion, which includes $ million of refundable 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-refundable committed funds related to these agreements comprised approximately % of the total deferred revenue.

As of December 1, 2023, the balance of deferred revenue was $ billion. During the three and six months ended May 31, 2024, approximately $ billion and $ billion of revenue, respectively, was recognized that was included in the balance of deferred revenue as of December 1, 2023.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

billion. Non-cancellable and non-refundable funds related to some of our enterprise customer agreements referred to above comprised approximately % of the total remaining performance obligations. Approximately % of the remaining performance obligations, 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 year 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 contract acquisition costs were $ million and $ million as of May 31, 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 accrued expenses on the condensed consolidated balance sheets. Refund liabilities were $ million and $ million as of May 31, 2024 and December 1, 2023, respectively.

NOTE 3.

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 merger. In accordance with the terms of the termination agreement, we paid Figma a termination fee of $ billion. The termination fee was recorded in operating expenses in our condensed consolidated statements of income during the six months ended May 31, 2024, and was not tax-deductible for financial statement purposes.

NOTE 4.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

$ $ $ Cash equivalents:Money market funds Time deposits Total cash equivalents Total cash and cash equivalents Short-term fixed income securities:Asset-backed securities Corporate debt securities () U.S. agency securities U.S. Treasury securities () Total short-term investments () Total cash, cash equivalents and short-term investments$ $ $()$

Cash, cash equivalents and short-term investments consisted of the following as of December 1, 2023:

(in millions)

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Estimated
Fair Value

Current assets:

Cash

Cash equivalents:

Money market funds

Time deposits

Total cash equivalents

Total cash and cash equivalents

Short-term fixed income securities:

Asset-backed securities

Corporate debt securities

()

U.S. agency securities

()

U.S. Treasury securities

()

NOTE 5.

$ $ $ Time deposits Short-term investments:Asset-backed securities Corporate debt securities U.S. agency securities U.S. Treasury securities Prepaid expenses and other current assets: Foreign currency derivatives Other assets: Deferred compensation plan assets Total assets$ $ $ $

Liabilities:

Accrued expenses:

Foreign currency derivatives

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

$ $ $ Time deposits Short-term investments: Asset-backed securities Corporate debt securities U.S. agency securities U.S. Treasury securities Prepaid expenses and other current assets: Foreign currency derivatives Other assets: Deferred compensation plan assets Total assets$ $ $ $

Liabilities:

Accrued expenses:

Foreign currency derivatives

See Note 4 for 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 independent 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 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-sale 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 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 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 Basis

The fair value of our senior notes was $ billion as of May 31, 2024, based on observable market prices in less active markets and categorized as Level 2. See Note 14 for further details regarding our debt.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 6.

months.

As of May 31, 2024, we had net derivative losses on our foreign currency cash flow hedges expected to be recognized within the next months, of which $ million of net losses are expected to be recognized into revenue within the next 12 months.

Non-Designated Hedges

Our 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-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.

$ $ $ Foreign exchange forward contracts Derivatives not designated as hedging instruments: Foreign exchange forward contracts Total derivatives$ $ $ $

For the three and six months ended May 31, 2024 and June 2, 2023, gains and losses on derivative instruments, net of tax, recognized in our condensed consolidated statements of comprehensive income and the effects of derivative instruments on our condensed consolidated statements of income were immaterial.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 7.

billion and $ billion, respectively. During the second quarter of fiscal 2024, we completed our annual goodwill impairment test associated with our reporting units and determined there was impairment of goodwill. $()$ $ $()$ Purchased technology () () Trademarks () () Other () ()

Other intangibles, net

$ $()$ $ $()$

Amortization expense related to other intangibles was $ million and $ million for the three and six months ended May 31, 2024, respectively. Comparatively, amortization expense related to other intangibles was $ million and $ million for the three and six months ended June 2, 2023, respectively. Of these amounts, $ million and $ million were included in cost of revenue for the three and six months ended May 31, 2024, respectively, and $ million and $ million were included in cost of revenue for the three and six months ended June 2, 2023, respectively.

2025 2026 2027 2028 Thereafter Total expected amortization expense$

_________________________________________

(1)Excludes capitalized in-process research and development which is considered indefinite lived until the completion or abandonment of the associated research and development efforts.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 8.

$ Accrued bonuses Accrued corporate marketing

Sales and use taxes

Refund liabilities Other Accrued expenses$ $

Other primarily includes general business accruals, accrued hosting fees, royalties payable, and derivative collateral liabilities.

NOTE 9.

$ Awarded $ Released()$ Forfeited()$ Ending outstanding balance $ $ Expected to vest $ $

_________________________________________

The total fair value of restricted stock units vested during the six months ended May 31, 2024 was $ 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 information 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 May 31, 2024, the performance shares awarded under our 2024, 2023 and 2022 Performance Share Programs remained outstanding and unvested.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

$ Awarded $ Released()$ Forfeited()$ Ending outstanding balance $ $ Expected to vest $ $

_________________________________________

Under our Performance Share Programs, participants generally have the ability to receive up to % of the target number of shares originally granted. Shares released during the six months ended May 31, 2024 resulted from % 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 six months ended May 31, 2024 was $ million.

Employee Stock Purchase Plan Shares

Employees purchased million shares at an average price of $ and million shares at an average price of $ for the six months ended May 31, 2024 and June 2, 2023, respectively. The intrinsic value of shares purchased during the six months ended May 31, 2024 and June 2, 2023 was $ million and $ million, respectively. The intrinsic value is calculated as the difference between the market value on the date of purchase and the purchase price of the shares.

Compensation Costs

As of May 31, 2024, there was $ billion of unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock-based awards and purchase rights which will be recognized over a weighted average period of years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.

$ $ $ Research and development Sales and marketing General and administrative Total$ $ $ $

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 10.

)$ $

(1)

$()

Net unrealized gains / losses on derivative instruments designated as hedging instruments

()

(2)

()Cumulative foreign currency translation adjustments()() ()

Total accumulated other comprehensive income (loss), net of taxes

$()$ $ $()

_________________________________________

(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 hedges 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 and six months ended May 31, 2024 and June 2, 2023 were immaterial.

NOTE 11.

billion in our common stock, which became fully utilized during the six months ended May 31, 2024. In March 2024, our Board of Directors granted additional authority to repurchase up to $ billion in our common stock through March 14, 2028.

During the six months ended May 31, 2024 and June 2, 2023, we entered into accelerated share repurchase agreements (“ASRs”) with large financial institutions whereupon we provided them with prepayments totaling $ billion and $ billion, respectively. Under the terms of our ASRs, the financial institutions agree to deliver a portion of shares to us at contract inception 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.

During the six months ended June 2, 2023, we also entered into a structured stock repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $ billion. Under the terms of our structured stock repurchase agreements, the 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 trading days in the intervals and the VWAP during the intervals, less an agreed upon discount.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

ASR entered into in December 2023

ASR entered into in March 2024

(1)

Total shares delivered

Six months ended June 2, 2023

Structured stock repurchase agreements entered into in fiscal 2022 and the six months ended June 2, 2023

ASR entered into in December 2022

Total shares delivered

_________________________________________

(1) During the six months ended May 31, 2024, we received the initial delivery of shares under the ASR entered into in March 2024, which remained outstanding as of May 31, 2024. Subsequent to May 31, 2024, the outstanding ASR was settled which resulted in total repurchases of million shares at an average price of $.

Prepayments for stock repurchases are classified as treasury stock, a component of stockholders’ equity on our condensed consolidated balance sheets, at the payment date, though only shares physically delivered to us by the end of the respective period are excluded from the computation of net income per share. As of May 31, 2024, a portion of the $ billion prepayment under the ASR entered into in March 2024 was evaluated as an unsettled forward contract indexed to our own stock, classified within stockholders’ equity.

Subsequent to May 31, 2024, as part of the March 2024 stock repurchase authority, we entered into an ASR with a large financial institution whereupon we provided them with a prepayment of $ billion and received an initial delivery of million shares, which represents approximately % of our prepayment. Upon completion of this $ billion ASR, $ billion remains under our March 2024 stock repurchase authority.

NOTE 12.

$ $ $ Shares used to compute basic net income per share Dilutive potential common shares from stock plans and programs )

Senior Notes

In January 2015, we issued $ billion of senior notes due February 1, 2025. The related discount and issuance costs are amortized to interest 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 $ million of senior notes due February 1, 2025, $ million of senior notes due February 1, 2027 and $ billion of senior notes due February 1, 2030. The related discount and issuance costs are amortized to interest expense over the respective terms of the notes using the effective interest method. Interest is payable semi-annually, in arrears, on February 1 and August 1.

In April 2024, we issued $ million of senior notes due April 4, 2027, $ million of senior notes due April 4, 2029 and $ million of senior notes due April 4, 2034. Our total proceeds of approximately $ billion, net of an issuance discount of $ million and total issuance costs of $ million. The related discount and issuance costs are amortized to interest expense over the respective terms of the notes using the effective interest method. Interest is payable semi-annually, in arrears, on April 4 and October 4.

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 May 31, 2024, the carrying value of our current debt was $ billion, net of the related discount and issuance costs. Though we intend to refinance the current portion of our debt on or before the due date, the timing of the refinancing may be impacted by market conditions.

Our senior notes rank equally with our other unsecured and unsubordinated indebtedness, and do not contain financial covenants. We may redeem the notes at any time, subject to a make-whole premium.

For the senior notes issued in January 2015 and February 2020, upon the occurrence of certain change of control triggering events, we may be required to repurchase the notes, at a price equal to % of their principal amount, plus accrued and unpaid interest to the date of repurchase. In addition, these notes include covenants that limit our ability to grant liens on assets and to enter into sale and leaseback transactions, subject to significant allowances.

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ADOBE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

$ billion senior unsecured revolving credit facility, which replaced our previous $ 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 Revolving Credit Agreement, we may, subject to the agreement of lenders to provide additional commitments, obtain up to an additional $ million in commitments, for a maximum aggregate commitment of $ billion. At our election, loans under the Revolving Credit Agreement will bear interest at either (i) term 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 %, (b) the agent’s prime rate, or (c) term SOFR plus %. The margin for term SOFR, adjusted daily SOFR and alternative currency rate loans is based on our debt ratings, and ranges from % to %. In addition, facility fees determined according to our debt ratings are payable on the aggregate commitments, regardless of usage, quarterly in an amount ranging from % to % 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 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 default 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 thereunder 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 May 31, 2024, there were outstanding borrowings under this Revolving Credit Agreement.

Commercial Paper Program

In September 2023, we established a commercial paper program under which we may issue unsecured commercial paper up to a total of $ billion outstanding at any time, with maturities of up to days from the date 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 May 31, 2024, there were outstanding borrowings under the commercial paper program.

Term Loan Credit Agreement

In 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 $ billion for the purpose of partially funding the purchase price for our intended acquisition of Figma and the related fees and expenses. During the six months ended May 31, 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. There were outstanding borrowings under the Term Loan Credit Agreement at the time of termination.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The 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 opportunities, 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,” “intends,” “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 involves 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 risks 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 only 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 OVERVIEW

Adobe is a global technology company with a mission to change the world through personalized digital experiences. For over four decades, Adobe’s 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 around 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 empowering 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, Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”).

OPERATIONS OVERVIEW

For our second 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 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 Media

In our Digital Media segment, we are a market leader with Creative Cloud, our subscription-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 novice content creators, communicators and creative professionals, to create, edit and customize content quickly and easily with content-first, task-based solutions. Creative Cloud also includes Adobe Firefly, a group of creative generative AI models designed to generate high quality images and text effects. 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 syncing 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 for 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 Adobe 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 subscribers 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

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increase our revenue with existing users, continue to attract new customers, and grow our recurring and predictable revenue stream 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, 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 licensing 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, approve, 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 subscription and perpetual licenses, and is also included in our Creative Cloud All Apps subscription offering. In April 2024, we introduced Acrobat AI Assistant, a new generative AI-powered product designed to deliver insights and enhance productivity through interactive document experiences, which is available as an add-on subscription to our Adobe Acrobat and Adobe Acrobat Reader products.

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 customer 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 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 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 ARR			Annual Value of Creative Cloud Subscriptions and Services + Annual Creative ETLA Contract Value
Document Cloud ARR			Annual Value of Document Cloud Subscriptions and Services + Annual Document Cloud ETLA Contract Value
Digital Media ARR			Creative ARR + Document Cloud ARR

Creative ARR exiting the second quarter of fiscal 2024 was $13.11 billion, up from $12.49 billion at the end of fiscal 2023. Document Cloud ARR exiting the second quarter of fiscal 2024 was $3.15 billion, up from $2.84 billion at the end of fiscal 2023. Total Digital Media ARR grew to $16.25 billion at the end of the second quarter of fiscal 2024, up from $15.33 billion at the end of fiscal 2023.

Our success in driving growth in ARR has positively affected our revenue growth. Creative revenue in the second quarter of fiscal 2024 was $3.13 billion, up from $2.85 billion in the second quarter of fiscal 2023, representing 10% year-over-year growth. Document Cloud revenue in the second quarter of fiscal 2024 was $782 million, up from $659 million in the second quarter of fiscal 2023, representing 19% year-over-year growth. Total Digital Media segment revenue grew to $3.91 billion in the second quarter of fiscal 2024, up from $3.51 billion in the second quarter of fiscal 2023, representing 11% year-over-year growth driven by strong net new user growth.

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Digital Experience

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 differentiation and competitive advantage are strengthened by our ability to use the Adobe Experience Platform to integrate our comprehensive set of solutions.

Adobe Experience Cloud delivers solutions for our customers across the following strategic growth pillars:

•Data insights and audiences. Our products, including Adobe Analytics, Customer Journey Analytics, Adobe Product Analytics, Adobe Mix Modeler, and our Real-time Customer Data Platform, deliver actionable data in real time to provide highly tailored and adaptive experiences across platforms.

•Content, commerce and workflows. Our products help customers manage, deliver, monetize, and optimize content delivery through Adobe Experience Manager; build multi-channel commerce experiences for B2B and B2C customers on a single platform with Adobe Commerce; and 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.

•Customer journeys. Our products help businesses manage, test, target and personalize customer journeys delivered as campaigns across B2B and B2C use cases, including through Adobe Marketo Engage, Adobe Campaign, Adobe Target and Adobe Journey Optimizer.

In addition to chief marketing officers, chief revenue officers and digital marketers, users of our Digital 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 Media 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 with 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 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 $1.33 billion in the second quarter of fiscal 2024, up from $1.22 billion in the second quarter of fiscal 2023, representing 9% year-over-year growth. Driving this growth was the increase in subscription revenue, which grew to $1.20 billion in the second quarter of fiscal 2024 from $1.07 billion in the second quarter of fiscal 2023, representing 13% year-over-year growth.

Macroeconomic Conditions

As 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 exchange 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 earnings 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 possible impact of these macroeconomic issues on our business.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In preparing our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and 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 factors 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 with 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 results 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 actual results.

There have been no significant changes in our critical accounting policies and estimates during the six months ended May 31, 2024, as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 1, 2023.

Recent Accounting Pronouncements

See Note 1 of our notes to condensed consolidated financial statements for information regarding recent accounting pronouncements that are of significance or potential significance to us.

RESULTS OF OPERATIONS

Financial Performance Summary

•Total Digital Media ARR of approximately $16.25 billion as of May 31, 2024 increased by $919 million, or 6%, from $15.33 billion as of December 1, 2023.

•Creative revenue during the three months ended May 31, 2024 of $3.13 billion increased by $274 million, or 10%, compared to the year-ago period. Document Cloud revenue during the three months ended May 31, 2024 of $782 million increased by $123 million, or 19%, compared to the year-ago period.

•Digital Experience revenue of $1.33 billion during the three months ended May 31, 2024 increased by $105 million, or 9%, compared to the year-ago period.

•Remaining performance obligations of $17.86 billion as of May 31, 2024 increased by $644 million, or 4%, from $17.22 billion as of December 1, 2023.

•Cost of revenue of $598 million during the three months ended May 31, 2024 increased by $26 million, or 5%, compared to the year-ago period.

•Operating expenses of $2.83 billion during the three months ended May 31, 2024 increased by $206 million, or 8%, compared to the year-ago period.

•Net income of $1.57 billion during the three months ended May 31, 2024 increased by $278 million, or 21%, compared to the year-ago period.

•Cash flows from operations of $3.11 billion during the six months ended May 31, 2024 decreased by $718 million, or 19%, compared to the year-ago period, primarily due to payment of the $1 billion Figma termination fee during the first quarter of fiscal 2024.

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Revenue for the Three and Six Months Ended May 31, 2024 and June 2, 2023


(dollars in millions)	Three Months								Six Months
	2024			2023			% Change		2024			2023			% Change
Subscription	$	5,060		$	4,517		12	%	$	9,976		$	8,890		12	%
Percentage of total revenue	95		%	94		%			95		%	94		%
Product	104			130			(20)	%	223			250			(11)	%
Percentage of total revenue	2		%	3		%			2		%	3		%
Services and other	145			169			(14)	%	292			331			(12)	%
Percentage of total revenue	3		%	3		%			3		%	3		%
Total revenue	$	5,309		$	4,816		10	%	$	10,491		$	9,471		11	%

Subscription

Our subscription 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 agreements 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 following reportable segments: Digital Media, Digital Experience, and Publishing and Advertising. Subscription revenue by reportable segment for the three and six months ended May 31, 2024 and June 2, 2023 is as follows:


(dollars in millions)	Three Months						Six Months
	2024		2023		% Change		2024		2023		% Change
Digital Media	$	3,828	$	3,418	12	%	$	7,553	$	6,719	12	%
Digital Experience	1,204		1,070		13	%	2,368		2,112		12	%
Publishing and Advertising	28		29		(3)	%	55		59		(7)	%
Total subscription revenue	$	5,060	$	4,517	12	%	$	9,976	$	8,890	12	%

Product

Our 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 equipment 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 Other

Our services and other revenue is comprised primarily of fees related to consulting, 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-materials 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, 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.

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Segment Information


(dollars in millions)	Three Months								Six Months
	2024			2023			% Change		2024			2023			% Change
Digital Media	$	3,908		$	3,511		11	%	$	7,724		$	6,906		12	%
Percentage of total revenue	74		%	73		%			74		%	73		%
Digital Experience	1,327			1,222			9	%	2,616			2,398			9	%
Percentage of total revenue	25		%	25		%			25		%	25		%
Publishing and Advertising	74			83			(11)	%	151			167			(10)	%
Percentage of total revenue	1		%	2		%			1		%	2		%
Total revenue	$	5,309		$	4,816		10	%	$	10,491		$	9,471		11	%

Digital Media

Revenue by major offerings in our Digital Media reportable segment for the three and six months ended May 31, 2024 and June 2, 2023 were as follows:


(dollars in millions)	Three Months						Six Months
	2024		2023		% Change		2024		2023		% Change
Creative Cloud	$	3,126	$	2,852	10	%	$	6,192	$	5,613	10	%
Document Cloud	782		659		19	%	1,532		1,293		18	%
Total Digital Media revenue	$	3,908	$	3,511	11	%	$	7,724	$	6,906	12	%

Revenue from Digital Media increased $397 million and $818 million during the three and six months ended May 31, 2024 as compared to the three and six months ended June 2, 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 migrating our customers to higher valued subscription offerings with increased revenue per subscription.

Digital Experience

Revenue from Digital Experience increased $105 million and $218 million during the three and six months ended May 31, 2024 as compared to the three and six months ended June 2, 2023 primarily due to net new additions across our subscription offerings.

Geographical Information


(dollars in millions)	Three Months								Six Months
	2024			2023			% Change		2024			2023			% Change
Americas	$	3,188		$	2,879		11	%	$	6,298		$	5,658		11	%
Percentage of total revenue	60		%	60		%			60		%	60		%
EMEA	1,361			1,213			12	%	2,680			2,386			12	%
Percentage of total revenue	26		%	25		%			26		%	25		%
APAC	760			724			5	%	1,513			1,427			6	%
Percentage of total revenue	14		%	15		%			14		%	15		%
Total revenue	$	5,309		$	4,816		10	%	$	10,491		$	9,471		11	%

Overall revenue during the three and six months ended May 31, 2024 increased in all geographic regions as compared to the three and six months ended June 2, 2023. Within each geographic region, the fluctuations in revenue by reportable segment were attributable to the factors noted in the segment information above.

Included in the overall change in revenue for the three and six months ended May 31, 2024 as compared to the three and six months ended June 2, 2023 were impacts associated with foreign currency and our foreign currency hedging program. During the three and six months ended May 31, 2024 as compared to the year-ago periods, the U.S. Dollar primarily weakened against EMEA foreign currencies and strengthened against APAC foreign currencies, which resulted in a net decrease in revenue in U.S. Dollar equivalents of approximately $15 million and $16 million, respectively. For the three and six months ended May 31, 2024, we had net hedging losses from our cash flow hedging program of $5 million and $9 million, respectively.

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Cost of Revenue for the Three and Six Months Ended May 31, 2024 and June 2, 2023


(dollars in millions)	Three Months								Six Months
	2024			2023			% Change		2024			2023			% Change
Subscription	$	456		$	436		5	%	$	911		$	870		5	%
Percentage of total revenue	9		%	9		%			9		%	9		%
Product	8			8			—	%	13			16			(19)	%
Percentage of total revenue	*			*					*			*
Services and other	134			128			5	%	264			254			4	%
Percentage of total revenue	3		%	3		%			3		%	3		%
Total cost of revenue	$	598		$	572		5	%	$	1,188		$	1,140		4	%

_________________________________________

(*) Percentage is less than 1%.

Subscription

Cost 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 compensation 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 and six months ended May 31, 2024 as compared to the three and six months ended June 2, 2023 primarily due to increases in hosting services and data center costs, partially offset by decreases in amortization of intangibles.

Product

Cost of product revenue is primarily comprised of third-party royalties, localization costs and costs associated with the manufacturing of our products.

Services and Other

Cost 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 the three and six months ended May 31, 2024 as compared to the three and six months ended June 2, 2023 primarily due to increases in compensation costs.

Operating Expenses for the Three and Six Months Ended May 31, 2024 and June 2, 2023


(dollars in millions)	Three Months								Six Months
	2024			2023			% Change		2024			2023			% Change
Research and development	$	984		$	876		12	%	$	1,923		$	1,703		13	%
Percentage of total revenue	19		%	18		%			18		%	18		%
Sales and marketing	1,445			1,345			7	%	2,797			2,646			6	%
Percentage of total revenue	27		%	28		%			27		%	28		%
General and administrative	355			357			(1)	%	707			688			3	%
Percentage of total revenue	7		%	7		%			7		%	7		%


Acquisition termination fee	—			—			—	%	1,000			—			**
Percentage of total revenue	*			*					10		%	*
Amortization of intangibles	42			42			—	%	84			84			—	%
Percentage of total revenue	1		%	1		%			1		%	1		%
Total operating expenses	$	2,826		$	2,620		8	%	$	6,511		$	5,121		27	%

_________________________________________

(*) Percentage is less than 1%.

(**) Percentage is not meaningful.

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Research and Development

Research and development expenses consist primarily of compensation and contracted costs 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 and six months ended May 31, 2024 as compared to the three and six months ended June 2, 2023 due to the following:


	Components of % Change 2024-2023 QTD		Components of % Change 2024-2023 YTD
Hosting services and data center costs	5	%	5	%
Base compensation and related benefits	5		4
Incentive compensation, cash and stock-based	1		2
Various individually insignificant items	1		2
Total change	12	%	13	%

Investments in research and 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 end markets and make significant investments in the development of our subscription and service offerings, apps and tools.

Sales and Marketing

Sales and marketing expenses consist primarily of compensation costs, amortization of contract acquisition costs, including sales commissions, travel expenses and related 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.

Sales and marketing expenses increased during the three and six months ended May 31, 2024 as compared to the three and six months ended June 2, 2023 primarily due to increases in compensation costs.

General and Administrative

General and administrative expenses consist primarily of compensation and contracted costs, travel 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 used in the administration of the business, charitable contributions and various forms of insurance.

General and administrative expenses decreased during the three months ended May 31, 2024 as compared to the three months ended June 2, 2023 and increased during the six months ended May 31, 2024 as compared to the six months ended June 2, 2023 primarily due to the following:


		Components of % Change 2024-2023 QTD		Components of % Change 2024-2023 YTD
Incentive compensation, cash and stock-based		2	%	3	%
Base compensation and related benefits		3		2
Professional and consulting fees		(3)		(4)
Charitable contributions		(3)		(1)
150

(2,500)	(3)

22,650

_________________________________________

(1)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. In March 2024, our Board of Directors granted additional authority to repurchase up to $25 billion in our common stock through March 14, 2028. During the three months ended May 31, 2024, we fully utilized the remaining balance under the December 2020 stock repurchase authority and began utilizing our March 2024 stock repurchase authority to repurchase our common stock.

(2)In December 2023, 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 delivery of shares at contract inception representing a portion of the prepayment. Upon final settlement of this ASR in March 2024, we received an incremental delivery of 1.0 million shares of our common stock. Under this ASR, we repurchased a total of 3.5 million shares at an average price of $578.11.

(3)In March 2024, we entered into an ASR with a large financial institution whereupon we provided them with a prepayment of $2.5 billion and received an initial delivery of 3.6 million shares of our common stock at contract inception, representing a portion of the prepayment. Subsequent to May 31, 2024, this ASR was settled which resulted in total repurchases of 5.2 million shares at an average price of $475.94.

ITEM 5. OTHER INFORMATION

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ITEM 6. EXHIBITS

INDEX TO EXHIBITS

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

Filing Date

Exhibit Number

SEC File No.

Filed
Herewith

3.1

Restated Certificate of Incorporation of Adobe

8-K

4/26/11

3.3

000-15175

3.2

Certificate of Amendment to Restated Certificate of Adobe

8-K

10/9/18

3.1

000-15175

3.3

Amended and Restated Bylaws

8-K

1/18/22

3.1

000-15175

4.1

Forms of Global Note for Adobe Inc.'s 4.850% Notes due 2027, 4.800% Notes due 2029, and 4.950% Notes due 2034, together with an Officer’s Certificate setting forth the terms of the Notes

8-K

4/4/24

4.1

000-15175

10.1

2019 Equity Incentive Plan, as amended*

8-K

4/19/24

10.1

000-15175

10.2

Form of Non-Employee Director Grant Restricted Stock Unit Grant Notice and Award Agreement pursuant to 2019 Equity Incentive Plan*

31.1

Certification of Chief Executive Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2

Certification of Chief Financial Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1

Certification of Chief Executive Officer, as required by Rule 13a-14(b) of the Securities Exchange Act of 1934†

32.2

Certification of Chief Financial Officer, as required by Rule 13a-14(b) of the Securities Exchange Act of 1934†

101.INS

Inline XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema

101.CAL

Inline XBRL Taxonomy Extension Calculation

101.LAB

Inline XBRL Taxonomy Extension Labels

101.PRE

Inline XBRL Taxonomy Extension Presentation

101.DEF

Inline XBRL Taxonomy Extension Definition

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

___________________________

Management contract or compensatory plan or arrangement.

†

The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Adobe Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			ADOBE INC.

			By:			/s/ DANIEL DURN
						Daniel Durn
						Chief Financial Officer and
						Executive Vice President, Finance,
						Technology Services and Operations
						(Principal Financial Officer)

Date: June 26, 2024

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SUMMARY OF TRADEMARKS

The following trademarks of Adobe Inc. or its subsidiaries, which may be registered in the United States and/or other countries, are referenced in this Form 10-Q:

Acrobat

Acrobat Reader

Acrobat Sign

Adobe

Adobe Analytics

Adobe Campaign

Adobe Commerce

Adobe Experience Cloud

Adobe Express

Adobe Firefly

Adobe GenStudio

Adobe Mix Modeler

Adobe Scan

Adobe Stock

Adobe Target

Behance

Creative Cloud

Document Cloud

Journey Optimizer

Marketo

Marketo Engage

Photoshop

Workfront

All other trademarks are the property of their respective owners.

ADOBE INC. - Quarter Report: 2024 May (Form 10-Q)

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