Adobe Systems Incorporated (NASDAQ: ADBE) announced their fourth quarter and fiscal year 2005 results recently. Total revenue for Adobe's fourth quarter was up 19% to $510.4 million from $429.5 million reported in the same period last year. Revenue was also up 5% from $487 million reported in the last quarter. Total revenue for the fiscal 2005 was $1.966 billion, 18% higher than $1.667 billion reported in the fiscal 2004. GAAP net income for the fourth quarter of fiscal 2005 was $156.3 million, compared to $113.5 million reported for the same period in 2004. Non-GAAP net income, which excludes the net tax impact of the repatriation of certain foreign earnings, and investment gains and losses, was $151.5 million for the fourth quarter of fiscal 2005, compared to $110.4 million in the fourth quarter of 2004. GAAP diluted earnings per share for the fourth quarter of fiscal 2005 were $0.31, compared to $0.23 reported in the same period last year.
Contents of this Summary
Quarter Highlights
Segment Performance
Guidance
Raine Radar
Q & A
Quarter Highlights
Following the end of the 2005 fiscal year, the company completed its acquisition of Macromedia, Inc Adobe Systems and Satyam have introduced the intelligent statements solution for financial services organizations Company announced the resignation of CFO Murray Demo as well as the appointment of Peg Wynn as a senior vice president of human resources and Garrett J. Ilg as the president of Adobe Japan
Operating income was up 31% from last year
The platform mix was 76% Windows and 24% Macintosh R & D expenses for the quarter were $94.65 million, compared to $80.1 million reported for the same period last year
During the fourth quarter, company launched Photoshop Elements (r) 4.0 and Premiere Elements (r) 2.0 Adobe repurchased 11.2 million shares at a cost of $345 million
GAAP Tax rate for the quarter was 24.6%
Cash and short-term investments were $1.7 billion, compared to $1.893 billion reported at the end of the third quarter
Geographic revenue distribution: 49% Americas, 32% EMEA, 19% Asia Segment Performance
Digital Imaging & Video
Adobe reported revenues for the segment of $114.7 million, compared to $118 million reported for the same period in 2004, and $95.6 million reported in the third quarter of fiscal 2005. According to the company, Photoshop posted a solid quarter with sequential revenue growth over Q3.
Creative Professional
Adobe reported revenues for the segment of $192.4 million, compared to $151.2 million reported for the same period in 2004. Creative suite product continued to be the major driver of the creative business.
Intelligent Documents
Adobe reported revenues for the segment of $181.1 million, compared to $139.9 million reported for the same period last year.
OEM PostScript & Other
Adobe reported revenues for the segment of $22.2 million, compared to $20.4 million reported for the same period in 2004.
Guidance
The company announced financial targets for the first quarter of fiscal 2006. Adobe is aiming for revenue to be $630 million to $660 million with GAAP EPS of between $0.13 and $0.16. For the full fiscal year 2006, the company is expecting revenue of approximately $2.7 billion with GAAP EPS of between $0.74 and $0.82.
Raine Radar
Adobe has seen yet another very successful quarter come and go. Investors in this company have much to be excited about both so far and going forward. There are plenty of areas the company will need to watch, including Microsoft and Apple, as well as any number of start-ups. With the addition of Macromedia and an extremely sound financial picture, the company will look to continue its momentum into it's 2006 fiscal year.
Q & A
The company expects to release a new product cycle during the year, but would not provide additional details for competitive reasons.
Adobe stated that Q3 seasonally weak in Europe and Japan and were stronger in fourth quarter.
The company expects the Acrobat and Creative Suite business to continue to accelerate on a sequential basis, and drive revenue in the first quarter.
Company said that foreign exchange had an adverse impact about $6 million on the revenue reported in the fourth quarter of fiscal 2005.
During the process of integrating Macromedia into the company, headcount will be reduced, primarily in R&D, sales & marketing, and administrative areas.
The company did not provided the specific impact of Macromedia on projected Non-GAAP EPS for 2006.
Adobe is aiming to have a replacement for CFO by the end of March, but current CFO Murray has agreed to stay a little longer if needed.
Adobe has found that bundled offerings are important in increasing the revenue per customer.
The company said that their server business grew significantly in the second half by 25% over the first half.
The company is looking to offer interesting ways of combining Adobe's traditional technology (such as PDF) with that of Macromedia (such as flash). One example would be designing vector-based graphics in Illustrator and then animating them into Flash.