Summary
Adobe reported second quarter fiscal 2021 results for the period ended June 4, 2021. Revenue rose 22.6% year over year to $3.84 billion. Gross profit was $3.39 billion, up 25.0%. Operating income increased 38.4% to $1.41 billion. Net income was $1.12 billion, up 1.5%. Diluted EPS was $2.32, up 2.2%. Gross margin expanded to 88.4%, up 1.7 percentage points. Operating margin was 36.7%, up 4.2 percentage points. Operating cash flow reached a record $1.99 billion, up 67.9%. Capital expenditures were $95 million, down 1.0%. On a non-GAAP basis, operating income was $1.76 billion, net income was $1.46 billion, and diluted EPS was $3.03.
For the six months ended June 4, 2021, revenue was $7.74 billion, up 24.5%. Gross profit was $6.85 billion, up 28.0%. Operating income was $2.86 billion, up 46.4%. Net income was $2.38 billion, up 15.7%. Diluted EPS was $4.93, up 16.5%. Gross margin was 88.5%, up 2.4 percentage points. Operating margin was 37.0%, up 5.5 percentage points. Operating cash flow for the six months was $3.76 billion, up 49.9%. Capital expenditures for the six months were $154 million, down 18.9%.
Operational momentum centered on Digital Media. Management reported Digital Media ARR of $11.21 billion at quarter end, an increase of $518 million quarter over quarter. MD&A said total Digital Media ARR grew to $11.21 billion from $10.26 billion at the end of fiscal 2020. Creative ARR was $9.53 billion, up from $8.78 billion, and Document Cloud ARR was $1.68 billion, up from $1.47 billion. Digital Media segment revenue grew 25% year over year. Creative revenue grew 24% and Document Cloud revenue grew 30%. Digital Experience revenue grew 21% year over year, with Digital Experience subscription revenue up 25%. Remaining performance obligations exiting the quarter were $12.23 billion, up 23.3% year over year. Deferred revenue was $4.28 billion. The company completed the Workfront acquisition in December 2020 and began integrating it into the Digital Experience segment in the first quarter of fiscal 2021. Adobe also repurchased approximately 2.1 million shares during the quarter.
Adobe provided third quarter fiscal 2021 targets. Total revenue is expected to be $3.88 billion. Digital Media segment revenue is targeted to grow 22% year over year, with $440 million of net new Digital Media ARR. Digital Experience segment revenue is targeted to grow 21% year over year, and Digital Experience subscription revenue is targeted to grow 25% year over year. The company targets a non-GAAP tax rate of 16% and non-GAAP diluted EPS of $3.00. Share count is expected to be 480 million shares. The targets factor current macroeconomic conditions and the expected return of summer seasonality for June, July and August.
Risks remain broad. The forward-looking statements cite competition, product development and acquisition integration, new technology, information security and privacy, interruptions or delays in hosted services, macroeconomic conditions and the economic impact of the COVID-19 pandemic, cyber-attacks, complex sales cycles, timing of revenue recognition, subscription renewal rates, third-party business relationships, accounting and tax regulation changes, and uncertainty in financial markets. The MD&A also notes that the effective tax rate rose because the prior-year period included a one-time tax benefit from a change in the corporate tax trading structure. Tax examinations, including transfer pricing, and potential law changes could affect results. Foreign currency movements increased revenue in U.S. dollar equivalents by $94 million in the quarter and $156 million for the six months, partly offset by net hedging losses.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $3.83B | $3.09B | +24.1% | $3.13B | +22.6% |
| Gross profit | $3.39B | $2.64B | +28.5% | $2.71B | +25.0% |
| Gross margin | 88.4% | 85.4% | +3.0 pp | 86.7% | +1.7 pp |
| Sales & marketing | $1.07B | $857.0M | +25.2% | $901.0M | +19.1% |
| General & administrative | $256.0M | $271.0M | -5.5% | $224.0M | +14.3% |
| Total operating expenses | $1.99B | $1.70B | +16.6% | $1.70B | +17.0% |
| Operating income (loss) | $1.41B | $937.0M | +50.1% | $1.02B | +38.4% |
| Operating margin | 36.7% | 30.3% | +6.3 pp | 32.5% | +4.2 pp |
| Net income (loss) | $1.12B | $955.0M | +16.9% | $1.10B | +1.5% |
| Net margin | 29.1% | 30.9% | -1.8 pp | 35.2% | -6.1 pp |
| Diluted EPS | $2.32 | $1.96 | +$0.36 | $2.27 | +$0.05 |
Risks
The COVID-19 pandemic and related public health measures have materially affected how Adobe and its customers operate, and the duration and extent of future impact remain uncertain. Adobe has begun reopening offices and plans a hybrid work model, which may present real estate and operational challenges, and subscription revenue timing could delay the pandemic's effect on results.
Adobe is increasingly building AI into many offerings, and social and ethical issues relating to AI may cause reputational harm, competitive harm, or legal liability. Potential government regulation in AI ethics could increase R&D costs and slow adoption of AI features.
Adobe acquired Workfront in December 2020 and integrated it into Digital Experience, and MD&A notes revenue contribution from Workfront. The risk factor warns that acquisitions involve numerous risks, including failure to achieve financial and strategic goals, integration difficulties, and inability to retain key personnel or customers.
Some enterprise offerings, including Adobe Experience Cloud and Enterprise Term License Agreements, have extended and complex sales cycles, and COVID-19 restrictions have limited in-person negotiation. Adobe's enterprise sales pattern is uneven, with a higher percentage of quarterly sales occurring in the final weeks of each quarter.
Changes in tax rules or interpretations may adversely affect Adobe's effective tax rates, cash flows, and results. MD&A reported that the Q2 FY2021 effective tax rate increased to 20% from (10)% in the prior-year quarter, primarily due to a one-time prior-year tax benefit and geographic mix of international income.
Adobe increasingly uses third-party distribution platforms such as Apple's App Store and Google's Play Store for certain product offerings. Platform owners have wide discretion to change pricing, terms of service, and other policies, and may promote competing products, which could adversely affect financial results.
Adobe's Creative Cloud, Document Cloud, and Experience Cloud offerings are subscription-based, typically with terms of 1 to 36 months, and customers have no obligation to renew. Renewal rates may decline or fluctuate due to satisfaction, competition, pricing, or economic conditions, and Adobe cannot precisely forecast future renewal rates.
SaaS KPIs
All quarters →Creative ARR
Document Cloud ARR
Remaining Performance Obligations (RPO)
Digital Media ARR
Summary, forecast, risks and KPIs are extracted from ADOBE INC.'s SEC filings for Q2 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.