Document and Entity Information
Document and Entity Information - shares shares in Millions | 9 Months Ended | |
Sep. 03, 2021 | Sep. 24, 2021 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 3, 2021 | |
Document Transition Report | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-03 | |
Entity File Number | 0-15175 | |
Entity Central Index Key | 0000796343 | |
Entity Registrant Name | ADOBE INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 77-0019522 | |
Entity Address, Address Line One | 345 Park Avenue | |
Entity Address, City or Town | San Jose | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95110-2704 | |
City Area Code | 408 | |
Local Phone Number | 536-6000 | |
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Trading Symbol | ADBE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 475.8 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 03, 2021 | Nov. 27, 2020 | [1] |
Current assets: | |||
Cash and cash equivalents | $ 4,623 | $ 4,478 | |
Short-term investments | 1,541 | 1,514 | |
Trade receivables, net of allowances for doubtful accounts of $17 and $21, respectively | 1,545 | 1,398 | |
Prepaid expenses and other current assets | 910 | 756 | |
Total current assets | 8,619 | 8,146 | |
Property and equipment, net | 1,629 | 1,517 | |
Operating lease right-of-use assets, net | 452 | 487 | |
Goodwill | 11,838 | 10,742 | |
Other intangibles, net | 1,557 | 1,359 | |
Deferred income taxes | 1,190 | 1,370 | |
Other assets | 859 | 663 | |
Total assets | 26,144 | 24,284 | |
Current liabilities: | |||
Trade payables | 331 | 306 | |
Accrued expenses | 1,450 | 1,422 | |
Deferred revenue | 4,243 | 3,629 | |
Income taxes payable | 70 | 63 | |
Operating lease liabilities | 97 | 92 | |
Total current liabilities | 6,191 | 5,512 | |
Long-term liabilities: | |||
Debt | 4,122 | 4,117 | |
Deferred revenue | 142 | 130 | |
Income taxes payable | 533 | 529 | |
Deferred income taxes | 7 | 10 | |
Operating lease liabilities | 466 | 499 | |
Other liabilities | 269 | 223 | |
Total liabilities | 11,730 | 11,020 | |
Stockholders' equity: | |||
Preferred stock, $0.0001 par value; 2 shares authorized, none issued | 0 | 0 | |
Common stock, $0.0001 par value; 900 shares authorized; 601 shares issued; 476 and 479 shares outstanding, respectively | 0 | 0 | |
Additional paid-in-capital | 8,209 | 7,357 | |
Retained earnings | 22,750 | 19,611 | |
Accumulated other comprehensive income (loss) | (131) | (158) | |
Treasury stock, at cost (125 and 122 shares, respectively) | (16,414) | (13,546) | |
Total stockholders’ equity | 14,414 | 13,264 | |
Total liabilities and stockholders' equity | $ 26,144 | $ 24,284 | |
[1] | The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Millions, $ in Millions | Sep. 03, 2021 | Nov. 27, 2020 |
Stockholders' equity: | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 2 | 2 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 900 | 900 |
Common stock, shares issued | 601 | 601 |
Common stock, shares outstanding | 476 | 479 |
Treasury stock, shares | 125 | 122 |
Allowances for doubtful accounts | $ (17) | $ (21) |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | |
Revenue: | ||||
Subscription | $ 3,657 | $ 2,948 | $ 10,761 | $ 8,511 |
Product | 119 | 109 | 427 | 380 |
Services and other | 159 | 168 | 487 | 553 |
Total revenue | 3,935 | 3,225 | 11,675 | 9,444 |
Cost of revenue: | ||||
Subscription | 344 | 282 | 996 | 825 |
Product | 10 | 10 | 29 | 26 |
Services and other | 113 | 135 | 333 | 443 |
Total cost of revenue | 467 | 427 | 1,358 | 1,294 |
Gross profit | 3,468 | 2,798 | 10,317 | 8,150 |
Operating expenses: | ||||
Research and development | 651 | 566 | 1,883 | 1,630 |
Sales and marketing | 1,068 | 892 | 3,190 | 2,650 |
General and administrative | 265 | 230 | 811 | 725 |
Amortization of intangibles | 43 | 41 | 132 | 123 |
Total operating expenses | 2,027 | 1,729 | 6,016 | 5,128 |
Operating income | 1,441 | 1,069 | 4,301 | 3,022 |
Non-operating income (expense): | ||||
Interest expense | (27) | (28) | (85) | (89) |
Investment gains (losses), net | 7 | 10 | 20 | 7 |
Other income (expense), net | (3) | 9 | 1 | 39 |
Total non-operating income (expense), net | (23) | (9) | (64) | (43) |
Income before income taxes | 1,418 | 1,060 | 4,237 | 2,979 |
Provision for (benefit from) income taxes | 206 | 105 | 648 | (31) |
Net income | $ 1,212 | $ 955 | $ 3,589 | $ 3,010 |
Basic net income per share | $ 2.54 | $ 1.99 | $ 7.51 | $ 6.25 |
Shares used to compute basic net income per share | 476.7 | 480.2 | 477.8 | 481.3 |
Diluted net income per share | $ 2.52 | $ 1.97 | $ 7.45 | $ 6.20 |
Shares used to compute diluted net income per share | 480.7 | 484.9 | 481.5 | 485.8 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net income | $ 1,212 | $ 955 | $ 3,589 | $ 3,010 | |
Available-for-sale securities: | |||||
Unrealized gains / losses on available-for-sale securities | (1) | 1 | (4) | 8 | |
Reclassification adjustment for recognized gains / losses on available-for-sale securities | 0 | 0 | 0 | (1) | |
Net increase (decrease) from available-for-sale securities | (1) | 1 | (4) | 7 | |
Derivatives designated as hedging instruments: | |||||
Unrealized gains / losses on derivative instruments | 12 | (33) | 5 | (31) | |
Reclassification adjustment for realized gains / losses on derivative instruments | 5 | 2 | 26 | [1] | (3) |
Net increase (decrease) from derivatives designated as hedging instruments | 17 | (31) | 31 | (34) | |
Foreign currency translation adjustments | (26) | 72 | 0 | 62 | |
Other comprehensive income (loss), net of taxes | (10) | 42 | 27 | 35 | |
Total comprehensive income, net of taxes | $ 1,202 | $ 997 | $ 3,616 | $ 3,045 | |
[1] | Reclassification adjustments for gains / losses on foreign currency hedges are classified in revenue and reclassification adjustments for gains / losses on Treasury lock hedges are classified in interest expense. |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | |
Beginning balances at Nov. 29, 2019 | $ 10,530 | $ 0 | $ 6,504 | $ 14,829 | $ (188) | $ (10,615) | |
Beginning balances, shares at Nov. 29, 2019 | 601 | ||||||
Beginning Treasury stock, shares at Nov. 29, 2019 | (118) | ||||||
Net income | 3,010 | 3,010 | |||||
Other comprehensive income (loss), net of taxes | 35 | 35 | |||||
Re-issuance of treasury stock under stock compensation plans | (328) | 15 | (456) | $ 113 | |||
Re-issuance of treasury stock under stock compensation plans, shares | 4 | ||||||
Repurchases of common stock | $ (2,200) | $ (2,200) | |||||
Repurchase of common stock, shares | (6.5) | (7) | |||||
Stock-based compensation | $ 676 | 676 | |||||
Value of shares in deferred compensation plan | (10) | $ (10) | |||||
Ending balances at Aug. 28, 2020 | 11,713 | $ 0 | 7,195 | 17,383 | (153) | $ (12,712) | |
Ending balances, shares at Aug. 28, 2020 | 601 | ||||||
Ending Treasury stock, shares at Aug. 28, 2020 | (121) | ||||||
Beginning balances at May. 29, 2020 | 10,881 | $ 0 | 6,892 | 16,428 | (195) | $ (12,244) | |
Beginning balances, shares at May. 29, 2020 | 601 | ||||||
Beginning Treasury stock, shares at May. 29, 2020 | (121) | ||||||
Net income | 955 | 955 | |||||
Other comprehensive income (loss), net of taxes | 42 | 42 | |||||
Re-issuance of treasury stock under stock compensation plans | 103 | 71 | 0 | $ 32 | |||
Re-issuance of treasury stock under stock compensation plans, shares | 1 | ||||||
Repurchases of common stock | (500) | $ (500) | |||||
Repurchase of common stock, shares | (1) | ||||||
Stock-based compensation | 232 | 232 | |||||
Ending balances at Aug. 28, 2020 | 11,713 | $ 0 | 7,195 | 17,383 | (153) | $ (12,712) | |
Ending balances, shares at Aug. 28, 2020 | 601 | ||||||
Ending Treasury stock, shares at Aug. 28, 2020 | (121) | ||||||
Beginning balances at Nov. 27, 2020 | 13,264 | [1] | $ 0 | 7,357 | 19,611 | (158) | $ (13,546) |
Beginning balances, shares at Nov. 27, 2020 | 601 | ||||||
Beginning Treasury stock, shares at Nov. 27, 2020 | (122) | ||||||
Net income | 3,589 | 3,589 | |||||
Other comprehensive income (loss), net of taxes | 27 | 27 | |||||
Re-issuance of treasury stock under stock compensation plans | (312) | 52 | (450) | $ 86 | |||
Re-issuance of treasury stock under stock compensation plans, shares | 3 | ||||||
Repurchases of common stock | $ (2,950) | $ (2,950) | |||||
Repurchase of common stock, shares | (5.6) | (6) | |||||
Stock-based compensation | $ 800 | 800 | |||||
Value of shares in deferred compensation plan | (4) | $ (4) | |||||
Ending balances at Sep. 03, 2021 | 14,414 | $ 0 | 8,209 | 22,750 | (131) | $ (16,414) | |
Ending balances, shares at Sep. 03, 2021 | 601 | ||||||
Ending Treasury stock, shares at Sep. 03, 2021 | (125) | ||||||
Beginning balances at Jun. 04, 2021 | 13,852 | $ 0 | 7,877 | 21,538 | (121) | $ (15,442) | |
Beginning balances, shares at Jun. 04, 2021 | 601 | ||||||
Beginning Treasury stock, shares at Jun. 04, 2021 | (124) | ||||||
Net income | 1,212 | 1,212 | |||||
Other comprehensive income (loss), net of taxes | (10) | (10) | |||||
Re-issuance of treasury stock under stock compensation plans | 81 | 52 | 0 | $ 29 | |||
Re-issuance of treasury stock under stock compensation plans, shares | 1 | ||||||
Repurchases of common stock | (1,000) | $ (1,000) | |||||
Repurchase of common stock, shares | (2) | ||||||
Stock-based compensation | 280 | 280 | |||||
Value of shares in deferred compensation plan | (1) | $ (1) | |||||
Ending balances at Sep. 03, 2021 | $ 14,414 | $ 0 | $ 8,209 | $ 22,750 | $ (131) | $ (16,414) | |
Ending balances, shares at Sep. 03, 2021 | 601 | ||||||
Ending Treasury stock, shares at Sep. 03, 2021 | (125) | ||||||
[1] | The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 03, 2021 | Aug. 28, 2020 | ||
Cash flows from operating activities: | |||
Net income | $ 3,589 | $ 3,010 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation, amortization and accretion | 583 | 567 | |
Stock-based compensation | 800 | 676 | |
Reduction of operating lease right-of-use assets | 53 | 65 | |
Deferred income taxes | 120 | (284) | |
Unrealized losses (gains) on investments, net | (11) | (4) | |
Other non-cash items | 3 | 37 | |
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | |||
Trade receivables, net | (105) | 187 | |
Prepaid expenses and other assets | (423) | (281) | |
Trade payables | 18 | 19 | |
Accrued expenses and other liabilities | (47) | (15) | |
Income taxes payable | 13 | 20 | |
Deferred revenue | 571 | (52) | |
Net cash provided by operating activities | 5,164 | 3,945 | |
Cash flows from investing activities: | |||
Purchases of short-term investments | (881) | (764) | |
Maturities of short-term investments | 701 | 674 | |
Proceeds from sales of short-term investments | 138 | 123 | |
Acquisitions, net of cash acquired | (1,470) | 0 | |
Purchases of property and equipment | (249) | (316) | |
Purchases of long-term investments, intangibles and other assets | (37) | (8) | |
Proceeds from sale of long-term investments and other assets | 0 | 8 | |
Net cash used for investing activities | (1,798) | (283) | |
Cash flows from financing activities: | |||
Repurchases of common stock | (2,950) | (2,200) | |
Proceeds from re-issuance of treasury stock | 290 | 270 | |
Taxes paid related to net share settlement of equity awards | (602) | (599) | |
Proceeds from issuance of debt | 0 | 3,144 | |
Repayment of debt | 0 | (3,150) | |
Other financing activities, net | 39 | (13) | |
Net cash used for financing activities | (3,223) | (2,548) | |
Effect of foreign currency exchange rates on cash and cash equivalents | 2 | 3 | |
Net increase in cash and cash equivalents | 145 | 1,117 | |
Cash and cash equivalents at beginning of period | 4,478 | [1] | 2,650 |
Cash and cash equivalents at end of period | 4,623 | 3,767 | |
Supplemental disclosures: | |||
Cash paid for income taxes, net of refunds | 589 | 200 | |
Cash paid for interest | $ 100 | $ 88 | |
[1] | The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 03, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Pursuant 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 accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, 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 any 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 November 27, 2020 on file with the SEC (our “Annual Report”). Use of Estimates In 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 statements and accompanying notes. Actual results may differ materially from these estimates. Fiscal Year Our fiscal year is a 52- or 53-week year that ends on the Friday closest to November 30. Our financial results for the nine months ended September 3, 2021 benefited from an extra week in the first quarter of fiscal 2021 due to our 52/53 week financial calendar whereby fiscal 2021 is a 53-week year compared with fiscal 2020 which was a 52-week year. Reclassifications In the fourth quarter of fiscal 2020, we moved our Advertising Cloud offerings from our Digital Experience segment into our new Publishing and Advertising segment, which combined our Advertising Cloud offerings with our previous Publishing segment. This realignment is consistent with how we manage our Digital Experience segment to better reflect the strategic shift related to Advertising Cloud and to align with our overall core value proposition of delivering on customer experience management. Further, we reclassified revenue and related cost of revenue of our Advertising Cloud offerings from subscription to services and other on our condensed consolidated statements of income. Financial information for all periods presented has been updated to reflect these reclassifications. Significant Accounting Policies There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report. Recently Adopted Accounting Guidance On June 16, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326). The FASB subsequently issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. These updates require the measurement and recognition of expected credit losses for financial assets held at amortized cost, which include our trade receivables and contract assets. The standard also requires that we recognize credit impairment losses related to our available-for-sale debt securities through an allowance for credit losses instead of a reduction in the cost basis. On November 28, 2020, the beginning of our fiscal year 2021, we adopted the accounting requirements of the updated standard utilizing the modified retrospective method of transition. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Recent Accounting Pronouncements Not Yet Effective There have been no other recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 3, 2021, as compared to the recent accounting pronouncements described in our Annual Report, that are of significance or potential significance to us. |
Revenue
Revenue | 9 Months Ended |
Sep. 03, 2021 | |
Revenue [Abstract] | |
Revenue | REVENUE Segment Information Our segment results for the three months ended September 3, 2021 and August 28, 2020 were as follows: (dollars in millions) Digital Digital Publishing and Total Three months ended September 3, 2021 Revenue $ 2,865 $ 985 $ 85 $ 3,935 Cost of revenue 106 334 27 467 Gross profit $ 2,759 $ 651 $ 58 $ 3,468 Gross profit as a percentage of revenue 96 % 66 % 68 % 88 % Three months ended August 28, 2020 Revenue $ 2,337 $ 779 $ 109 $ 3,225 Cost of revenue 87 285 55 427 Gross profit $ 2,250 $ 494 $ 54 $ 2,798 Gross profit as a percentage of revenue 96 % 63 % 50 % 87 % Our segment results for the nine months ended September 3, 2021 and August 28, 2020 were as follows: (dollars in millions) Digital Digital Publishing and Total Nine months ended September 3, 2021 Revenue $ 8,511 $ 2,857 $ 307 $ 11,675 Cost of revenue 303 972 83 1,358 Gross profit $ 8,208 $ 1,885 $ 224 $ 10,317 Gross profit as a percentage of revenue 96 % 66 % 73 % 88 % Nine months ended August 28, 2020 Revenue $ 6,738 $ 2,306 $ 400 $ 9,444 Cost of revenue 258 837 199 1,294 Gross profit $ 6,480 $ 1,469 $ 201 $ 8,150 Gross profit as a percentage of revenue 96 % 64 % 50 % 86 % Revenue by geographic area for the three and nine months ended September 3, 2021 and August 28, 2020 were as follows: Three Months Nine Months (in millions) 2021 2020 2021 2020 Americas $ 2,242 $ 1,873 $ 6,651 $ 5,481 EMEA 1,061 851 3,139 2,493 APAC 632 501 1,885 1,470 Total $ 3,935 $ 3,225 $ 11,675 $ 9,444 Revenue by major offerings in our Digital Media reportable segment for the three and nine months ended September 3, 2021 and August 28, 2020 were as follows: Three Months Nine Months (in millions) 2021 2020 2021 2020 Creative Cloud $ 2,372 $ 1,962 $ 7,069 $ 5,652 Document Cloud 493 375 1,442 1,086 Total $ 2,865 $ 2,337 $ 8,511 $ 6,738 Subscription revenue by segment for the three and nine months ended September 3, 2021 and August 28, 2020 were as follows: Three Months Nine Months (in millions) 2021 2020 2021 2020 Digital Media $ 2,757 $ 2,240 $ 8,156 $ 6,433 Digital Experience 864 669 2,493 1,964 Publishing and Advertising 36 39 112 114 Total $ 3,657 $ 2,948 $ 10,761 $ 8,511 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 September 3, 2021, the balance of trade receivables, net of allowances for doubtful accounts, was $1.55 billion, inclusive of unbilled receivables of $87 million. As of November 27, 2020, the balance of trade receivables, net of allowances for doubtful accounts, was $1.40 billion, inclusive of unbilled receivables of $84 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 $17 million and $21 million as of September 3, 2021 and November 27, 2020, 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 nine months ended September 3, 2021. Contract assets were $80 million and $81 million as of September 3, 2021 and November 27, 2020, 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 September 3, 2021, the balance of deferred revenue was $4.39 billion, which includes $30 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 5% of the total deferred revenue. As of November 27, 2020, the balance of deferred revenue was $3.76 billion. During the three and nine months ended September 3, 2021, approximately $611 million and $3.32 billion of revenue, respectively, was recognized that was included in the balance of deferred revenue as of November 27, 2020. 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 September 3, 2021, remaining performance obligations were approximately $12.63 billion. Non-cancellable and non-refundable funds related to some of our enterprise customer agreements referred to in the paragraph above comprised approximately 5% of the total remaining performance obligations. Approximately 73% 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 $610 million and $530 million as of September 3, 2021 and November 27, 2020, respectively. As part of our revenue reserves, 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 $109 million and $127 million as of September 3, 2021 and November 27, 2020, respectively. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 03, 2021 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS Frame.io In August 2021, we entered into a definitive agreement under which we expect to acquire Frame.io, a privately held company that provides a cloud-based video collaboration platform, for approximately $1.28 billion. The transaction is subject to regulatory approvals and customary closing conditions and is expected to close in the fourth quarter of fiscal 2021. Following the closing, we intend to integrate Frame.io into our Digital Media reportable segment. Workfront On December 7, 2020, we completed the acquisition of Workfront, a privately held company that provides a workflow platform, for approximately $1.52 billion of cash consideration. During the first quarter of fiscal 2021, we began integrating Workfront into our Digital Experience reportable segment. The table below represents the preliminary purchase price allocation to total identifiable intangible assets acquired and net liabilities assumed based on their respective estimated fair values as of December 7, 2020. The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the reporting date. Fair values associated with the net tax liabilities assumed and their related impact to goodwill were pending finalization as of the reporting date. (in millions) Amount Useful Life (years) Customer contracts and relationships $ 290 10 Purchased technology 100 3 Backlog 40 2 Trademarks 30 5 Total identifiable intangible assets 460 Net liabilities assumed (36) N/A Goodwill (1) 1,100 N/A Total purchase price $ 1,524 _________________________________________ (1) Non-deductible for tax-purposes. |
Cash, Cash Equivalents and Shor
Cash, Cash Equivalents and Short-Term Investments | 9 Months Ended |
Sep. 03, 2021 | |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | |
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS | 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 these 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 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 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 September 3, 2021: (in millions) Amortized Unrealized Unrealized Estimated Current assets: Cash $ 716 $ — $ — $ 716 Cash equivalents: Corporate debt securities 16 — — 16 Money market funds 3,739 — — 3,739 Time deposits 150 — — 150 U.S. Treasury securities 2 — — 2 Total cash equivalents 3,907 — — 3,907 Total cash and cash equivalents 4,623 — — 4,623 Short-term fixed income securities: Asset-backed securities 120 — — 120 Corporate debt securities 1,396 4 — 1,400 Municipal securities 21 — — 21 Total short-term investments 1,537 4 — 1,541 Total cash, cash equivalents and short-term investments $ 6,160 $ 4 $ — $ 6,164 Cash, cash equivalents and short-term investments consisted of the following as of November 27, 2020: (in millions) Amortized Unrealized Unrealized Estimated Current assets: Cash $ 849 $ — $ — $ 849 Cash equivalents: Corporate debt securities 28 — — 28 Money market funds 3,483 — — 3,483 Time deposits 118 — — 118 Total cash equivalents 3,629 — — 3,629 Total cash and cash equivalents 4,478 — — 4,478 Short-term fixed income securities: Asset-backed securities 105 1 — 106 Corporate debt securities 1,378 8 — 1,386 Foreign government securities 3 — — 3 Municipal securities 19 — — 19 Total short-term investments 1,505 9 — 1,514 Total cash, cash equivalents and short-term investments $ 5,983 $ 9 $ — $ 5,992 See Note 5 for further information regarding the fair value of our financial instruments. The following table summarizes the estimated fair value of short-term fixed income debt securities classified as short-term investments based on stated effective maturities as of September 3, 2021: (in millions) Estimated Due within one year $ 798 Due between one and two years 452 Due between two and three years 280 Due after three years 11 Total $ 1,541 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 03, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis The fair value of our financial assets and liabilities at September 3, 2021 was determined using the following inputs: (in millions) Fair Value Measurements at Reporting Date Using Quoted Prices Significant Significant Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents: Corporate debt securities $ 16 $ — $ 16 $ — Money market funds 3,739 3,739 — — Time deposits 150 150 — — U.S. Treasury securities 2 — 2 — Short-term investments: Asset-backed securities 120 — 120 — Corporate debt securities 1,400 — 1,400 — Municipal securities 21 — 21 — Prepaid expenses and other current assets: Foreign currency derivatives 48 — 48 — Other assets: Deferred compensation plan assets 152 5 147 — Total assets $ 5,648 $ 3,894 $ 1,754 $ — Liabilities: Accrued expenses: Foreign currency derivatives $ 5 $ — $ 5 $ — The fair value of our financial assets and liabilities at November 27, 2020 was determined using the following inputs: (in millions) Fair Value Measurements at Reporting Date Using Quoted Prices Significant Significant Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents: Corporate debt securities $ 28 $ — $ 28 $ — Money market funds 3,483 3,483 — — Time deposits 118 118 — — Short-term investments: Asset-backed securities 106 — 106 — Corporate debt securities 1,386 — 1,386 — Foreign government securities 3 — 3 — Municipal securities 19 — 19 — Prepaid expenses and other current assets: Foreign currency derivatives 15 — 15 — Other assets: Deferred compensation plan assets 116 7 109 — Total assets $ 5,274 $ 3,608 $ 1,666 $ — Liabilities: Accrued expenses: Foreign currency derivatives $ 4 $ — $ 4 $ — See Note 4 for further information regarding the fair value of our financial instruments. Our fixed income debt securities consist of high quality, investment grade securities from diverse issuers with a weighted average credit rating of A+. 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 debt 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 and time deposits are based on the closing price of these assets as of the reporting date. We classify our money market funds and time deposits as Level 1. Our Level 2 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 deferred compensation plan assets consist of money market and other mutual funds. 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 debt was $4.36 billion as of September 3, 2021, based on observable market prices in less active markets and categorized as Level 2. See Note 14 for further details regarding our debt. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 03, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS We may use derivatives to partially offset our business exposure 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 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 of certain derivative instruments fluctuates from contractually established thresholds. Collateral posted is included in prepaid expenses and other current assets and collateral received is included in accrued expenses on our condensed consolidated balance sheets. Cash Flow Hedges In countries outside the United States, we transact business in U.S. Dollars and in various other currencies. We may use foreign exchange option contracts or forward contracts to hedge a portion of our forecasted foreign currency denominated revenue. These foreign exchange contracts, carried at fair value, have maturities of up to 12 months. In June 2019, we entered into Treasury lock agreements with large financial institutions which fixed benchmark U.S. Treasury rates for an aggregate notional amount of $1 billion of our future debt issuance. These derivative instruments hedged the impact of changes in the benchmark interest rate to future interest payments and were settled upon debt issuance in the first quarter of fiscal 2020. We incurred a loss related to the settlement of the instruments which is amortized to interest expense over the term of our debt due February 1, 2030. See Note 14 for further details regarding our debt. As of September 3, 2021, we had net derivative losses on our foreign exchange option contracts expected to be recognized within the next 18 months, of which $5 million of losses are expected to be recognized into revenue within the next 12 months. In addition, we had net derivative losses on our Treasury lock agreements, of which $4 million is expected to be recognized into interest expense 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. The fair value of derivative instruments on our condensed consolidated balance sheets as of September 3, 2021 and November 27, 2020 were as follows: (in millions) 2021 2020 Fair Value Fair Value Fair Value Fair Value Derivatives designated as hedging instruments: Foreign exchange option contracts (1) $ 44 $ — $ 12 $ — Derivatives not designated as hedging instruments: Foreign exchange forward contracts (1) 4 5 3 4 Total derivatives $ 48 $ 5 $ 15 $ 4 _________________________________________ (1) 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. Gains and losses on derivative instruments, net of tax, recognized in our condensed consolidated statements of comprehensive income for the three and nine months ended September 3, 2021 and August 28, 2020 were not material. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 9 Months Ended |
Sep. 03, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES Goodwill as of September 3, 2021 and November 27, 2020 was $11.84 billion and $10.74 billion, respectively. The increase was primarily due to our acquisition of Workfront in the first quarter of fiscal 2021. We continually monitor events and changes in circumstances that could indicate that the fair value of any one of our reporting units may more likely than not have fallen below its respective carrying amount. We have not identified any such events or changes in circumstances since the performance of our annual goodwill impairment test during the second quarter of fiscal 2021 that would require us to perform another goodwill impairment test. Other intangible assets subject to amortization as of September 3, 2021 and November 27, 2020 were as follows: (in millions) 2021 2020 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Customer contracts and relationships $ 1,233 $ (370) $ 863 $ 958 $ (289) $ 669 Purchased technology 730 (326) 404 756 (347) 409 Trademarks 372 (116) 256 384 (122) 262 Other 60 (26) 34 84 (65) 19 Other intangibles, net $ 2,395 $ (838) $ 1,557 $ 2,182 $ (823) $ 1,359 During the nine months ended September 3, 2021, other intangibles increased primarily due to identifiable intangible assets acquired through Workfront, partially offset by certain other intangibles associated with our previous acquisitions that became fully amortized and were removed from the condensed consolidated balance sheets. Amortization expense related to other intangibles was $83 million and $262 million for the three and nine months ended September 3, 2021, respectively. Comparatively, amortization expense related to other intangible assets was $92 million and $281 million for the three and nine months ended August 28, 2020, respectively. Of these amounts, $40 million and $130 million were included in cost of revenue for the three and nine months ended September 3, 2021, respectively, and $51 million and $158 million were included in cost of revenue for the three and nine months ended August 28, 2020, respectively. As of September 3, 2021, we expect amortization expense in future periods to be as follows: (in millions) Other Intangibles Remainder of 2021 $ 82 2022 313 2023 282 2024 238 2025 216 Thereafter 426 Total expected amortization expense $ 1,557 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 03, 2021 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses as of September 3, 2021 and November 27, 2020 consisted of the following: (in millions) 2021 2020 Accrued compensation and benefits $ 410 $ 375 Accrued bonuses 342 330 Refund liabilities 109 127 Accrued corporate marketing 98 134 Taxes payable 102 95 Accrued hosting fees 38 66 Royalties payable 40 34 Accrued interest expense 9 32 Other 302 229 Accrued expenses $ 1,450 $ 1,422 Other includes accrued media costs and general corporate accruals for local and regional expenses, including accruals for fees associated with the cancellation of corporate events. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 03, 2021 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Restricted Stock Units Restricted stock unit activity for the nine months ended September 3, 2021 was as follows: Number of Shares (in millions) Weighted Average Aggregate Fair Value (1) (in millions) Beginning outstanding balance 7.0 $ 285.69 Awarded 3.2 $ 487.17 Released (2.9) $ 264.98 Forfeited (0.5) $ 340.20 Ending outstanding balance 6.8 $ 384.92 $ 4,544 Expected to vest 6.2 $ 381.64 $ 4,143 _________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of September 3, 2021 of $666.59. The total fair value of restricted stock units vested during the nine months ended September 3, 2021 was $1.45 billion. Performance Shares In the first quarter of fiscal 2021, the Executive Compensation Committee of our Board of Directors approved the 2021 Performance Share Program, the terms of which are similar to prior year programs that are still outstanding. For information regarding our 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 November 27, 2020. As of September 3, 2021, the shares awarded under our 2021, 2020 and 2019 Performance Share Programs remain outstanding and are yet to be achieved. Performance share activity for the nine months ended September 3, 2021 was as follows: Number of Shares (in millions) Weighted Average Aggregate Fair Value (1) (in millions) Beginning outstanding balance 0.7 $ 333.85 Awarded 0.4 $ 325.24 Achieved (0.4) $ 218.55 Forfeited (0.1) $ 378.73 Ending outstanding balance 0.6 $ 408.58 $ 409 Expected to vest 0.6 $ 404.09 $ 373 _________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of September 3, 2021 of $666.59. Under our Performance Share Programs, participants generally have the ability to receive up to 200% of the target number of shares originally granted. Shares achieved during the nine months ended September 3, 2021 resulted from 200% achievement of target for the 2018 Performance Share Program, as certified by the Executive Compensation Committee in the first quarter of fiscal 2021. Shares awarded during the nine months ended September 3, 2021 include 0.2 million additional shares awarded for the final achievement of the 2018 Performance Share Program. The remaining awarded shares were for the 2021 Performance Share Program. The total fair value of performance shares achieved during the nine months ended September 3, 2021 was $212 million. Employee Stock Purchase Plan Employees purchased 1.0 million shares at an average price of $294.15 and 1.2 million shares at an average price of $218.37 for the nine months ended September 3, 2021 and August 28, 2020, respectively. The intrinsic value of shares purchased during the nine months ended September 3, 2021 and August 28, 2020 was $256 million and $216 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 September 3, 2021, there was $2.30 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 period of 2.34 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 and nine months ended September 3, 2021 and August 28, 2020 were as follows: Three Months Nine Months (in millions) 2021 2020 2021 2020 Cost of revenue $ 19 $ 14 $ 53 $ 46 Research and development 141 121 408 347 Sales and marketing 81 65 227 195 General and administrative 39 32 133 88 Total $ 280 $ 232 $ 821 $ 676 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 03, 2021 | |
Stockholders' Equity Note [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The components of accumulated other comprehensive income (loss) and activity, net of related taxes, were as follows: (in millions) November 27, Increase / Decrease Reclassification Adjustments September 3, Unrealized gains on available-for-sale securities $ 6 $ (4) $ — (1) $ 2 Net unrealized gains / losses on derivative instruments designated as hedging instruments (60) 5 26 (2) (29) Cumulative foreign currency translation adjustments (104) — — (104) Total accumulated other comprehensive income (loss), net of taxes $ (158) $ 1 $ 26 $ (131) _________________________________________ (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 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 nine months ended September 3, 2021 and August 28, 2020 were not material. |
Stock Repurchase Program
Stock Repurchase Program | 9 Months Ended |
Sep. 03, 2021 | |
Share Repurchase Program [Abstract] | |
SHARE REPURCHASE PROGRAM | STOCK REPURCHASE PROGRAM To facilitate our stock repurchase program, designed to return value to our stockholders and minimize dilution from stock issuances, we may repurchase shares in the open market or enter into structured repurchase agreements with third parties. In May 2018, our Board of Directors granted authority to repurchase up to $8 billion in common stock, which we fully utilized during the nine months ended September 3, 2021. In December 2020, our Board of Directors granted additional authority to repurchase up to $15 billion in common stock through the end of fiscal 2024. During the nine months ended September 3, 2021 and August 28, 2020, we entered into several structured stock repurchase agreements with large financial institutions, whereupon we provided them with prepayments totaling $2.95 billion and $2.2 billion, respectively. We enter into these agreements in order to take advantage of repurchasing shares at a guaranteed discount to the Volume Weighted Average Price (“VWAP”) of our common stock over a specified period of time. We only enter into such transactions when the discount that we receive is higher than the foregone return on our cash prepayments to the financial institutions. There were no explicit commissions or fees on these structured repurchases. Under the terms of the agreements, there is no requirement for the financial institutions to return any portion of the prepayment to us. The financial institutions agree to deliver shares to us at monthly intervals during the contract term. The parameters used to calculate the number of shares deliverable are: the total notional amount of the contract, the number of trading days in the contract, the number of trading days in the interval and the average VWAP of our stock during the interval less the agreed upon discount. During the nine months ended September 3, 2021, we repurchased approximately 5.6 million shares at an average price of $508.52 through structured repurchase agreements entered into during fiscal 2020 and the nine months ended September 3, 2021. During the nine months ended August 28, 2020 we repurchased approximately 6.5 million shares at an average price of $350.72 through structured repurchase agreements entered into during fiscal 2019 and the nine months ended August 28, 2020. For the nine months ended September 3, 2021, the prepayments were classified as treasury stock on our condensed consolidated balance sheets at the payment date, though only shares physically delivered to us by September 3, 2021 were excluded from the computation of net income per share. As of September 3, 2021, $334 million of prepayment remained under our outstanding structured stock repurchase agreement. Subsequent to September 3, 2021, as part of the December 2020 stock repurchase authority, we entered into a structured stock repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $1 billion. Upon completion of the $1 billion stock repurchase agreement, $13.1 billion remains under our December 2020 authority. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 03, 2021 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share for the three and nine months ended September 3, 2021 and August 28, 2020: Three Months Nine Months (in millions, except per share data) 2021 2020 2021 2020 Net income $ 1,212 $ 955 $ 3,589 $ 3,010 Shares used to compute basic net income per share 476.7 480.2 477.8 481.3 Dilutive potential common shares from stock plans and programs 4.0 4.7 3.7 4.5 Shares used to compute diluted net income per share 480.7 484.9 481.5 485.8 Basic net income per share $ 2.54 $ 1.99 $ 7.51 $ 6.25 Diluted net income per share $ 2.52 $ 1.97 $ 7.45 $ 6.20 Anti-dilutive potential common shares 0.1 — 0.1 0.4 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 03, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Royalties We have royalty commitments associated with the licensing of certain offerings and products. Royalty expense is generally based on a dollar amount per unit or a percentage of the underlying revenue. Indemnifications In 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 from 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 indemnification 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 covers all pertinent events and occurrences during the officer’s or director’s 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 and 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 Proceedings In connection with disputes 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 costly 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 intellectual 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 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. In addition to intellectual property disputes, we are subject to legal proceedings, claims and investigations in the ordinary course of business, including claims relating to commercial, employment and other matters. Some of these disputes and legal proceedings may include speculative claims for substantial or indeterminate amounts of damages. We consider all 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 statements. 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 quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Unless otherwise specifically disclosed in this note, we have determined that no provision for liability nor 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; (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 against 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. In connection with our anti-piracy efforts, conducted both internally and through organizations such as the Business Software Alliance, from time to time we undertake litigation against alleged copyright infringers. Such lawsuits may lead to counter-claims alleging improper use of litigation or violation of other laws. We believe we have valid defenses with respect to such counter-claims; however, it is possible that our consolidated financial position, results of operations or cash flows could be negatively affected in any particular period by the resolution of one or more of these counter-claims. |
Debt
Debt | 9 Months Ended |
Sep. 03, 2021 | |
Debt Disclosure [Abstract] | |
Debt | DEBT The carrying values of our borrowings as of September 3, 2021 and November 27, 2020 were as follows: (dollars in millions) Issuance Date Due Date Effective Interest Rate 2021 2020 1.70% 2023 Notes February 2020 February 2023 1.92% $ 500 $ 500 1.90% 2025 Notes February 2020 February 2025 2.07% 500 500 3.25% 2025 Notes January 2015 February 2025 3.67% 1,000 1,000 2.15% 2027 Notes February 2020 February 2027 2.26% 850 850 2.30% 2030 Notes February 2020 February 2030 2.69% 1,300 1,300 Total debt outstanding, at par $ 4,150 $ 4,150 Unamortized discount and debt issuance costs (28) (33) Carrying value of long-term debt $ 4,122 $ 4,117 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 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 $500 million of senior notes due February 1, 2023, $500 million of senior notes due February 1, 2025, $850 million of senior notes due February 1, 2027 and $1.30 billion of senior notes due February 1, 2030. Our total proceeds of approximately $3.14 billion, net of issuance discount, 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. Interest is payable semi-annually, in arrears, on February 1 and August 1. Based on quoted prices in inactive markets, the total fair value of our outstanding senior notes was $4.36 billion as of September 3, 2021. 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 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 to grant liens on assets and to enter into sale and leaseback transactions, subject to significant allowances. Revolving Credit Agreement In October 2018, we entered into a credit agreement (“Revolving Credit Agreement”), providing for a five-year $1 billion senior unsecured revolving credit facility, which replaced our previous five-year $1 billion senior unsecured revolving credit agreement dated as of March 2, 2012 (as amended, the “Prior Revolving Credit Agreement”). In addition, we incurred issuance costs of $1 million which is amortized to interest expense over the term using the straight-line method. 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 $500 million in commitments, for a maximum aggregate commitment of $1.5 billion. At our election, loans under the Revolving Credit Agreement will bear interest at either (i) LIBOR plus a margin, based on our debt ratings, ranging from 0.585% to 1.015% or (ii) a base rate, which is defined as the highest of (a) the agent’s prime rate, (b) the federal funds effective rate plus 0.500% or (c) LIBOR plus 1.00% plus a margin, based on our debt ratings, ranging from 0.000% to 0.015%. 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 0.04% to 0.11% 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 a financial covenant, 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 and acquisition transactions, dispositions and other matters, all subject to certain exceptions. The financial covenant, based on a quarterly financial test, requires us not to exceed a maximum leverage ratio. As of September 3, 2021, we were in compliance with this covenant. 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 September 3, 2021, there were no outstanding borrowings under this Credit Agreement. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 03, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Pursuant 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 accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, 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 any 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 November 27, 2020 on file with the SEC (our “Annual Report”). |
Use of Estimates | Use of Estimates In 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 statements and accompanying notes. Actual results may differ materially from these estimates. |
Fiscal Year | Fiscal Year Our fiscal year is a 52- or 53-week year that ends on the Friday closest to November 30. Our financial results for the nine months ended September 3, 2021 benefited from an extra week in the first quarter of fiscal 2021 due to our 52/53 week financial calendar whereby fiscal 2021 is a 53-week year compared with fiscal 2020 which was a 52-week year. |
Reclassifications | Reclassifications In the fourth quarter of fiscal 2020, we moved our Advertising Cloud offerings from our Digital Experience segment into our new Publishing and Advertising segment, which combined our Advertising Cloud offerings with our previous Publishing segment. This realignment is consistent with how we manage our Digital Experience segment to better reflect the strategic shift related to Advertising Cloud and to align with our overall core value proposition of delivering on customer experience management. Further, we reclassified revenue and related cost of revenue of our Advertising Cloud offerings from subscription to services and other on our condensed consolidated statements of income. Financial information for all periods presented has been updated to reflect these reclassifications. |
Significant Accounting Policies | Significant Accounting Policies There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting GuidanceOn June 16, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326). The FASB subsequently issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. These updates require the measurement and recognition of expected credit losses for financial assets held at amortized cost, which include our trade receivables and contract assets. The standard also requires that we recognize credit impairment losses related to our available-for-sale debt securities through an allowance for credit losses instead of a reduction in the cost basis. On November 28, 2020, the beginning of our fiscal year 2021, we adopted the accounting requirements of the updated standard utilizing the modified retrospective method of transition. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Not Yet Effective There have been no other recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 3, 2021, as compared to the recent accounting pronouncements described in our Annual Report, that are of significance or potential significance to us. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Revenue [Abstract] | |
Disaggregation of Revenue | Segment Information Our segment results for the three months ended September 3, 2021 and August 28, 2020 were as follows: (dollars in millions) Digital Digital Publishing and Total Three months ended September 3, 2021 Revenue $ 2,865 $ 985 $ 85 $ 3,935 Cost of revenue 106 334 27 467 Gross profit $ 2,759 $ 651 $ 58 $ 3,468 Gross profit as a percentage of revenue 96 % 66 % 68 % 88 % Three months ended August 28, 2020 Revenue $ 2,337 $ 779 $ 109 $ 3,225 Cost of revenue 87 285 55 427 Gross profit $ 2,250 $ 494 $ 54 $ 2,798 Gross profit as a percentage of revenue 96 % 63 % 50 % 87 % Our segment results for the nine months ended September 3, 2021 and August 28, 2020 were as follows: (dollars in millions) Digital Digital Publishing and Total Nine months ended September 3, 2021 Revenue $ 8,511 $ 2,857 $ 307 $ 11,675 Cost of revenue 303 972 83 1,358 Gross profit $ 8,208 $ 1,885 $ 224 $ 10,317 Gross profit as a percentage of revenue 96 % 66 % 73 % 88 % Nine months ended August 28, 2020 Revenue $ 6,738 $ 2,306 $ 400 $ 9,444 Cost of revenue 258 837 199 1,294 Gross profit $ 6,480 $ 1,469 $ 201 $ 8,150 Gross profit as a percentage of revenue 96 % 64 % 50 % 86 % Revenue by geographic area for the three and nine months ended September 3, 2021 and August 28, 2020 were as follows: Three Months Nine Months (in millions) 2021 2020 2021 2020 Americas $ 2,242 $ 1,873 $ 6,651 $ 5,481 EMEA 1,061 851 3,139 2,493 APAC 632 501 1,885 1,470 Total $ 3,935 $ 3,225 $ 11,675 $ 9,444 Revenue by major offerings in our Digital Media reportable segment for the three and nine months ended September 3, 2021 and August 28, 2020 were as follows: Three Months Nine Months (in millions) 2021 2020 2021 2020 Creative Cloud $ 2,372 $ 1,962 $ 7,069 $ 5,652 Document Cloud 493 375 1,442 1,086 Total $ 2,865 $ 2,337 $ 8,511 $ 6,738 Subscription revenue by segment for the three and nine months ended September 3, 2021 and August 28, 2020 were as follows: Three Months Nine Months (in millions) 2021 2020 2021 2020 Digital Media $ 2,757 $ 2,240 $ 8,156 $ 6,433 Digital Experience 864 669 2,493 1,964 Publishing and Advertising 36 39 112 114 Total $ 3,657 $ 2,948 $ 10,761 $ 8,511 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Workfront | |
Business Acquisition | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The table below represents the preliminary purchase price allocation to total identifiable intangible assets acquired and net liabilities assumed based on their respective estimated fair values as of December 7, 2020. The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the reporting date. Fair values associated with the net tax liabilities assumed and their related impact to goodwill were pending finalization as of the reporting date. (in millions) Amount Useful Life (years) Customer contracts and relationships $ 290 10 Purchased technology 100 3 Backlog 40 2 Trademarks 30 5 Total identifiable intangible assets 460 Net liabilities assumed (36) N/A Goodwill (1) 1,100 N/A Total purchase price $ 1,524 _________________________________________ (1) Non-deductible for tax-purposes. |
Cash, Cash Equivalents and Sh_2
Cash, Cash Equivalents and Short-Term Investments (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | |
Cash Cash Equivalents and Short term Investments | Cash, cash equivalents and short-term investments consisted of the following as of September 3, 2021: (in millions) Amortized Unrealized Unrealized Estimated Current assets: Cash $ 716 $ — $ — $ 716 Cash equivalents: Corporate debt securities 16 — — 16 Money market funds 3,739 — — 3,739 Time deposits 150 — — 150 U.S. Treasury securities 2 — — 2 Total cash equivalents 3,907 — — 3,907 Total cash and cash equivalents 4,623 — — 4,623 Short-term fixed income securities: Asset-backed securities 120 — — 120 Corporate debt securities 1,396 4 — 1,400 Municipal securities 21 — — 21 Total short-term investments 1,537 4 — 1,541 Total cash, cash equivalents and short-term investments $ 6,160 $ 4 $ — $ 6,164 Cash, cash equivalents and short-term investments consisted of the following as of November 27, 2020: (in millions) Amortized Unrealized Unrealized Estimated Current assets: Cash $ 849 $ — $ — $ 849 Cash equivalents: Corporate debt securities 28 — — 28 Money market funds 3,483 — — 3,483 Time deposits 118 — — 118 Total cash equivalents 3,629 — — 3,629 Total cash and cash equivalents 4,478 — — 4,478 Short-term fixed income securities: Asset-backed securities 105 1 — 106 Corporate debt securities 1,378 8 — 1,386 Foreign government securities 3 — — 3 Municipal securities 19 — — 19 Total short-term investments 1,505 9 — 1,514 Total cash, cash equivalents and short-term investments $ 5,983 $ 9 $ — $ 5,992 |
Estimated Fair Value of Short-Term Fixed Income Securities | The following table summarizes the estimated fair value of short-term fixed income debt securities classified as short-term investments based on stated effective maturities as of September 3, 2021: (in millions) Estimated Due within one year $ 798 Due between one and two years 452 Due between two and three years 280 Due after three years 11 Total $ 1,541 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Fair Value Disclosures [Abstract] | |
Financial assets and liabilities at fair value on a recurring basis | The fair value of our financial assets and liabilities at September 3, 2021 was determined using the following inputs: (in millions) Fair Value Measurements at Reporting Date Using Quoted Prices Significant Significant Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents: Corporate debt securities $ 16 $ — $ 16 $ — Money market funds 3,739 3,739 — — Time deposits 150 150 — — U.S. Treasury securities 2 — 2 — Short-term investments: Asset-backed securities 120 — 120 — Corporate debt securities 1,400 — 1,400 — Municipal securities 21 — 21 — Prepaid expenses and other current assets: Foreign currency derivatives 48 — 48 — Other assets: Deferred compensation plan assets 152 5 147 — Total assets $ 5,648 $ 3,894 $ 1,754 $ — Liabilities: Accrued expenses: Foreign currency derivatives $ 5 $ — $ 5 $ — The fair value of our financial assets and liabilities at November 27, 2020 was determined using the following inputs: (in millions) Fair Value Measurements at Reporting Date Using Quoted Prices Significant Significant Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents: Corporate debt securities $ 28 $ — $ 28 $ — Money market funds 3,483 3,483 — — Time deposits 118 118 — — Short-term investments: Asset-backed securities 106 — 106 — Corporate debt securities 1,386 — 1,386 — Foreign government securities 3 — 3 — Municipal securities 19 — 19 — Prepaid expenses and other current assets: Foreign currency derivatives 15 — 15 — Other assets: Deferred compensation plan assets 116 7 109 — Total assets $ 5,274 $ 3,608 $ 1,666 $ — Liabilities: Accrued expenses: Foreign currency derivatives $ 4 $ — $ 4 $ — |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value of Derivative Instruments | The fair value of derivative instruments on our condensed consolidated balance sheets as of September 3, 2021 and November 27, 2020 were as follows: (in millions) 2021 2020 Fair Value Fair Value Fair Value Fair Value Derivatives designated as hedging instruments: Foreign exchange option contracts (1) $ 44 $ — $ 12 $ — Derivatives not designated as hedging instruments: Foreign exchange forward contracts (1) 4 5 3 4 Total derivatives $ 48 $ 5 $ 15 $ 4 _________________________________________ (1) 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. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other intangible assets | Other intangible assets subject to amortization as of September 3, 2021 and November 27, 2020 were as follows: (in millions) 2021 2020 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Customer contracts and relationships $ 1,233 $ (370) $ 863 $ 958 $ (289) $ 669 Purchased technology 730 (326) 404 756 (347) 409 Trademarks 372 (116) 256 384 (122) 262 Other 60 (26) 34 84 (65) 19 Other intangibles, net $ 2,395 $ (838) $ 1,557 $ 2,182 $ (823) $ 1,359 |
Amortization expense in future periods | As of September 3, 2021, we expect amortization expense in future periods to be as follows: (in millions) Other Intangibles Remainder of 2021 $ 82 2022 313 2023 282 2024 238 2025 216 Thereafter 426 Total expected amortization expense $ 1,557 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued expenses as of September 3, 2021 and November 27, 2020 consisted of the following: (in millions) 2021 2020 Accrued compensation and benefits $ 410 $ 375 Accrued bonuses 342 330 Refund liabilities 109 127 Accrued corporate marketing 98 134 Taxes payable 102 95 Accrued hosting fees 38 66 Royalties payable 40 34 Accrued interest expense 9 32 Other 302 229 Accrued expenses $ 1,450 $ 1,422 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Restricted Stock Unit Activity | Restricted stock unit activity for the nine months ended September 3, 2021 was as follows: Number of Shares (in millions) Weighted Average Aggregate Fair Value (1) (in millions) Beginning outstanding balance 7.0 $ 285.69 Awarded 3.2 $ 487.17 Released (2.9) $ 264.98 Forfeited (0.5) $ 340.20 Ending outstanding balance 6.8 $ 384.92 $ 4,544 Expected to vest 6.2 $ 381.64 $ 4,143 _________________________________________ |
Performance Share Activity | Performance share activity for the nine months ended September 3, 2021 was as follows: Number of Shares (in millions) Weighted Average Aggregate Fair Value (1) (in millions) Beginning outstanding balance 0.7 $ 333.85 Awarded 0.4 $ 325.24 Achieved (0.4) $ 218.55 Forfeited (0.1) $ 378.73 Ending outstanding balance 0.6 $ 408.58 $ 409 Expected to vest 0.6 $ 404.09 $ 373 _________________________________________ |
Stock-Based Compensation, Income Statement Location | Total stock-based compensation costs included in our condensed consolidated statements of income for the three and nine months ended September 3, 2021 and August 28, 2020 were as follows: Three Months Nine Months (in millions) 2021 2020 2021 2020 Cost of revenue $ 19 $ 14 $ 53 $ 46 Research and development 141 121 408 347 Sales and marketing 81 65 227 195 General and administrative 39 32 133 88 Total $ 280 $ 232 $ 821 $ 676 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss) and activity, net of related taxes, were as follows: (in millions) November 27, Increase / Decrease Reclassification Adjustments September 3, Unrealized gains on available-for-sale securities $ 6 $ (4) $ — (1) $ 2 Net unrealized gains / losses on derivative instruments designated as hedging instruments (60) 5 26 (2) (29) Cumulative foreign currency translation adjustments (104) — — (104) Total accumulated other comprehensive income (loss), net of taxes $ (158) $ 1 $ 26 $ (131) _________________________________________ (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 and reclassification adjustments for gains / losses on Treasury lock hedges are classified in interest expense. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | The following table sets forth the computation of basic and diluted net income per share for the three and nine months ended September 3, 2021 and August 28, 2020: Three Months Nine Months (in millions, except per share data) 2021 2020 2021 2020 Net income $ 1,212 $ 955 $ 3,589 $ 3,010 Shares used to compute basic net income per share 476.7 480.2 477.8 481.3 Dilutive potential common shares from stock plans and programs 4.0 4.7 3.7 4.5 Shares used to compute diluted net income per share 480.7 484.9 481.5 485.8 Basic net income per share $ 2.54 $ 1.99 $ 7.51 $ 6.25 Diluted net income per share $ 2.52 $ 1.97 $ 7.45 $ 6.20 Anti-dilutive potential common shares 0.1 — 0.1 0.4 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 03, 2021 | |
Debt Disclosure [Abstract] | |
Carrying value of outstanding debt | The carrying values of our borrowings as of September 3, 2021 and November 27, 2020 were as follows: (dollars in millions) Issuance Date Due Date Effective Interest Rate 2021 2020 1.70% 2023 Notes February 2020 February 2023 1.92% $ 500 $ 500 1.90% 2025 Notes February 2020 February 2025 2.07% 500 500 3.25% 2025 Notes January 2015 February 2025 3.67% 1,000 1,000 2.15% 2027 Notes February 2020 February 2027 2.26% 850 850 2.30% 2030 Notes February 2020 February 2030 2.69% 1,300 1,300 Total debt outstanding, at par $ 4,150 $ 4,150 Unamortized discount and debt issuance costs (28) (33) Carrying value of long-term debt $ 4,122 $ 4,117 |
Revenue (Details 1)
Revenue (Details 1) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | |
Segment Reporting Information | ||||
Revenue | $ 3,935 | $ 3,225 | $ 11,675 | $ 9,444 |
Cost of revenue | 467 | 427 | 1,358 | 1,294 |
Gross profit | $ 3,468 | $ 2,798 | $ 10,317 | $ 8,150 |
Gross profit as a percentage of revenue | 88.00% | 87.00% | 88.00% | 86.00% |
Digital Media | ||||
Segment Reporting Information | ||||
Revenue | $ 2,865 | $ 2,337 | $ 8,511 | $ 6,738 |
Cost of revenue | 106 | 87 | 303 | 258 |
Gross profit | $ 2,759 | $ 2,250 | $ 8,208 | $ 6,480 |
Gross profit as a percentage of revenue | 96.00% | 96.00% | 96.00% | 96.00% |
Digital Experience | ||||
Segment Reporting Information | ||||
Revenue | $ 985 | $ 779 | $ 2,857 | $ 2,306 |
Cost of revenue | 334 | 285 | 972 | 837 |
Gross profit | $ 651 | $ 494 | $ 1,885 | $ 1,469 |
Gross profit as a percentage of revenue | 66.00% | 63.00% | 66.00% | 64.00% |
Publishing and Advertising | ||||
Segment Reporting Information | ||||
Revenue | $ 85 | $ 109 | $ 307 | $ 400 |
Cost of revenue | 27 | 55 | 83 | 199 |
Gross profit | $ 58 | $ 54 | $ 224 | $ 201 |
Gross profit as a percentage of revenue | 68.00% | 50.00% | 73.00% | 50.00% |
Revenue (Details 2)
Revenue (Details 2) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | |
Revenue | ||||
Revenue | $ 3,935 | $ 3,225 | $ 11,675 | $ 9,444 |
Americas | ||||
Revenue | ||||
Revenue | 2,242 | 1,873 | 6,651 | 5,481 |
EMEA | ||||
Revenue | ||||
Revenue | 1,061 | 851 | 3,139 | 2,493 |
APAC | ||||
Revenue | ||||
Revenue | $ 632 | $ 501 | $ 1,885 | $ 1,470 |
Revenue (Details 3)
Revenue (Details 3) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | |
Revenue | ||||
Revenue | $ 3,935 | $ 3,225 | $ 11,675 | $ 9,444 |
Digital Media | ||||
Revenue | ||||
Creative Cloud | 2,372 | 1,962 | 7,069 | 5,652 |
Document Cloud | 493 | 375 | 1,442 | 1,086 |
Revenue | $ 2,865 | $ 2,337 | $ 8,511 | $ 6,738 |
Revenue (Details 4)
Revenue (Details 4) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | |
Disaggregation of Revenue | ||||
Subscription revenue | $ 3,657 | $ 2,948 | $ 10,761 | $ 8,511 |
Digital Media | ||||
Disaggregation of Revenue | ||||
Subscription revenue | 2,757 | 2,240 | 8,156 | 6,433 |
Digital Experience | ||||
Disaggregation of Revenue | ||||
Subscription revenue | 864 | 669 | 2,493 | 1,964 |
Publishing and Advertising | ||||
Disaggregation of Revenue | ||||
Subscription revenue | $ 36 | $ 39 | $ 112 | $ 114 |
Revenue (Details Numeric)
Revenue (Details Numeric) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 03, 2021 | Sep. 03, 2021 | Nov. 27, 2020 | ||
Trade receivables, net of allowances for doubtful accounts | $ 1,545 | $ 1,545 | $ 1,398 | [1] |
Unbilled receivables included in balance of trade receivables, net | 87 | 87 | 84 | |
Allowances for doubtful accounts | 17 | 17 | 21 | |
Contract assets | 80 | 80 | 81 | |
Deferred revenue | $ 4,390 | $ 4,390 | 3,760 | |
Non-Cancellable Committed Funds, Deferred Revenue, Percentage | 5.00% | 5.00% | ||
Revenue recognized that was included in the beginning balance of deferred revenue | $ 611 | $ 3,320 | ||
Remaining performance obligations | $ 12,630 | $ 12,630 | ||
Non-Cancellable Comitted Funds, Remaining Performance Obligation, Percentage | 5.00% | 5.00% | ||
Percent of remaining performance obligations expected to be recognized in next 12 months | 73.00% | 73.00% | ||
Capitalized contract acquisition costs | $ 610 | $ 610 | 530 | |
Refund liabilities | 109 | 109 | $ 127 | |
Refundable customer deposits | ||||
Deferred revenue | $ 30 | $ 30 | ||
[1] | The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Acquisitions (Details 1)
Acquisitions (Details 1) - USD ($) $ in Millions | Dec. 07, 2020 | Aug. 19, 2021 | |
Workfront | |||
Schedule of acquired assets and liabilities | |||
Customer contracts and relationships | $ 290 | ||
Purchased technology | 100 | ||
Backlog | 40 | ||
Trademarks | 30 | ||
Total identifiable intangible assets | 460 | ||
Net liabilities assumed | (36) | ||
Goodwill | [1] | 1,100 | |
Total purchase price | $ 1,524 | ||
Workfront | Customer contracts and relationships | |||
Schedule of acquired assets and liabilities | |||
Acquired Finite-lived Intangible Assets, Useful Life | 10 years | ||
Workfront | Purchased technology | |||
Schedule of acquired assets and liabilities | |||
Acquired Finite-lived Intangible Assets, Useful Life | 3 years | ||
Workfront | Backlog | |||
Schedule of acquired assets and liabilities | |||
Acquired Finite-lived Intangible Assets, Useful Life | 2 years | ||
Workfront | Trademarks | |||
Schedule of acquired assets and liabilities | |||
Acquired Finite-lived Intangible Assets, Useful Life | 5 years | ||
Frame.io | |||
Schedule of acquired assets and liabilities | |||
Estimated Transaction Value | $ 1,280 | ||
[1] | Non-deductible for tax-purposes. |
Cash, Cash Equivalents and Sh_3
Cash, Cash Equivalents and Short-Term Investments (Details) - USD ($) $ in Millions | Sep. 03, 2021 | Nov. 27, 2020 |
Marketable Securities [Line Items] | ||
Amortized Cost | $ 6,160 | $ 5,983 |
Unrealized Gains | 4 | 9 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 6,164 | 5,992 |
Cash and cash equivalents | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 4,623 | 4,478 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 4,623 | 4,478 |
Cash | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 716 | 849 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 716 | 849 |
Cash equivalents | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 3,907 | 3,629 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 3,907 | 3,629 |
Cash equivalents | Corporate debt securities | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 16 | 28 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 16 | 28 |
Cash equivalents | Money market funds | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 3,739 | 3,483 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 3,739 | 3,483 |
Cash equivalents | Time deposits | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 150 | 118 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 150 | 118 |
Cash equivalents | U.S. Treasury securities | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 2 | |
Unrealized Gains | 0 | |
Unrealized Losses | 0 | |
Estimated Fair Value | 2 | |
Short-term Investments | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 1,537 | 1,505 |
Unrealized Gains | 4 | 9 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 1,541 | 1,514 |
Short-term fixed income securities | Asset-backed securities | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 120 | 105 |
Unrealized Gains | 0 | 1 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 120 | 106 |
Short-term fixed income securities | Corporate debt securities | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 1,396 | 1,378 |
Unrealized Gains | 4 | 8 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 1,400 | 1,386 |
Short-term fixed income securities | Municipal securities | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 21 | 19 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 21 | 19 |
Short-term fixed income securities | Foreign government debt | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 3 | |
Unrealized Gains | 0 | |
Unrealized Losses | 0 | |
Estimated Fair Value | $ 3 |
Cash, Cash Equivalents and Sh_4
Cash, Cash Equivalents and Short-Term Investments (Details 1) $ in Millions | Sep. 03, 2021USD ($) |
Estimated fair value of short-term fixed income securities | |
Due within one year, Estimated Fair value | $ 798 |
Due between one and two years, Estimated Fair value | 452 |
Due between two and three years, Estimated Fair value | 280 |
Due after three years, Estimated Fair Value | 11 |
Estimated fair value of short-term investments, Total | $ 1,541 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Sep. 03, 2021 | Nov. 27, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Deferred Compensation Plan Assets | $ 152 | $ 116 |
Assets, Fair Value Disclosure | 5,648 | 5,274 |
Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 120 | 106 |
Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 16 | 28 |
Short-term Investments, Fair Value Disclosure | 1,400 | 1,386 |
Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 3,739 | 3,483 |
Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 150 | 118 |
Foreign government debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 3 | |
Municipal securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 21 | 19 |
Foreign currency derivatives | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Foreign Currency Contracts, Asset, Fair Value Disclosure | 48 | 15 |
Foreign Currency Contracts, Liability, Fair Value Disclosure | 5 | 4 |
U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 2 | |
Fair Value, Inputs, Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Deferred Compensation Plan Assets | 5 | 7 |
Assets, Fair Value Disclosure | 3,894 | 3,608 |
Fair Value, Inputs, Level 1 | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 1 | Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Short-term Investments, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 1 | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 3,739 | 3,483 |
Fair Value, Inputs, Level 1 | Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 150 | 118 |
Fair Value, Inputs, Level 1 | Foreign government debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 0 | |
Fair Value, Inputs, Level 1 | Municipal securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 1 | Foreign currency derivatives | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Foreign Currency Contracts, Asset, Fair Value Disclosure | 0 | 0 |
Foreign Currency Contracts, Liability, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 1 | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | |
Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Deferred Compensation Plan Assets | 147 | 109 |
Assets, Fair Value Disclosure | 1,754 | 1,666 |
Fair Value, Inputs, Level 2 | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 120 | 106 |
Fair Value, Inputs, Level 2 | Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 16 | 28 |
Short-term Investments, Fair Value Disclosure | 1,400 | 1,386 |
Fair Value, Inputs, Level 2 | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 2 | Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 2 | Foreign government debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 3 | |
Fair Value, Inputs, Level 2 | Municipal securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 21 | 19 |
Fair Value, Inputs, Level 2 | Foreign currency derivatives | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Foreign Currency Contracts, Asset, Fair Value Disclosure | 48 | 15 |
Foreign Currency Contracts, Liability, Fair Value Disclosure | 5 | 4 |
Fair Value, Inputs, Level 2 | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 2 | |
Fair Value, Inputs, Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Deferred Compensation Plan Assets | 0 | 0 |
Assets, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 | Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Short-term Investments, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 | Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 | Foreign government debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 0 | |
Fair Value, Inputs, Level 3 | Municipal securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Short-term Investments, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 | Foreign currency derivatives | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Foreign Currency Contracts, Asset, Fair Value Disclosure | 0 | 0 |
Foreign Currency Contracts, Liability, Fair Value Disclosure | 0 | $ 0 |
Fair Value, Inputs, Level 3 | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | $ 0 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details Numeric) $ in Millions | Sep. 03, 2021USD ($) |
Outstanding Notes | Fair Value, Nonrecurring | Fair Value, Inputs, Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Outstanding Debt, Fair Value Disclosure | $ 4,360 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details Numeric) - Cash Flow Hedging - USD ($) $ in Millions | Sep. 03, 2021 | Sep. 03, 2021 | Jun. 07, 2019 |
Foreign Exchange Contract | |||
Derivatives and Hedging | |||
Maximum Remaining Maturity of Foreign Currency Derivatives | 12 months | ||
Designated as Hedging Instrument | Treasury Lock | |||
Derivatives and Hedging | |||
Derivative, Notional Amount | $ 1,000 | ||
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ (4) | ||
Designated as Hedging Instrument | Foreign Exchange Option Contracts | |||
Derivatives and Hedging | |||
Maximum Length of Time, Foreign Currency Cash Flow Hedge | 18 months | ||
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months | $ (5) | $ (5) |
Derivative Financial Instrume_4
Derivative Financial Instruments (Details 1) - USD ($) $ in Millions | Sep. 03, 2021 | Nov. 27, 2020 | |
Derivative, Fair Value, Net | |||
Fair value asset derivatives | $ 48 | $ 15 | |
Fair value liability derivatives | 5 | 4 | |
Designated as Hedging Instrument | Foreign Exchange Option Contracts | |||
Derivative, Fair Value, Net | |||
Fair value asset derivatives | [1] | 44 | 12 |
Fair value liability derivatives | [1] | 0 | 0 |
Derivatives not designated as hedging instruments | Foreign currency derivatives | |||
Derivative, Fair Value, Net | |||
Fair value asset derivatives | [1] | 4 | 3 |
Fair value liability derivatives | [1] | $ 5 | $ 4 |
[1] | 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. |
Derivative Financial Instrume_5
Derivative Financial Instruments (Details 2) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | |
Designated as Hedging Instrument | Cash Flow Hedging | Foreign Exchange Option Contracts | Revenue | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | $ (5) | $ (1) | $ (26) | $ 11 |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles (Details) - USD ($) $ in Millions | Sep. 03, 2021 | Nov. 27, 2020 | |
Finite-Lived Intangible Assets | |||
Cost | $ 2,395 | $ 2,182 | |
Accumulated Amortization | (838) | (823) | |
Net | 1,557 | 1,359 | [1] |
Customer contracts and relationships | |||
Finite-Lived Intangible Assets | |||
Cost | 1,233 | 958 | |
Accumulated Amortization | (370) | (289) | |
Net | 863 | 669 | |
Purchased technology | |||
Finite-Lived Intangible Assets | |||
Cost | 730 | 756 | |
Accumulated Amortization | (326) | (347) | |
Net | 404 | 409 | |
Trademarks | |||
Finite-Lived Intangible Assets | |||
Cost | 372 | 384 | |
Accumulated Amortization | (116) | (122) | |
Net | 256 | 262 | |
Other | |||
Finite-Lived Intangible Assets | |||
Cost | 60 | 84 | |
Accumulated Amortization | (26) | (65) | |
Net | $ 34 | $ 19 | |
[1] | The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Goodwill and Other Intangible_3
Goodwill and Other Intangibles (Details 1) - Other intangibles $ in Millions | Sep. 03, 2021USD ($) |
Amortization Expense in Future Periods | |
Remainder of 2021 | $ 82 |
2022 | 313 |
2023 | 282 |
2024 | 238 |
2025 | 216 |
Thereafter | 426 |
Total expected amortization expense | $ 1,557 |
Goodwill and Other Intangible_4
Goodwill and Other Intangibles (Details Numeric) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | Nov. 27, 2020 | [1] | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||
Goodwill | $ 11,838 | $ 11,838 | $ 10,742 | |||
Finite-Lived Intangible Assets | ||||||
Amortization of other intangible assets | 83 | $ 92 | 262 | $ 281 | ||
Amortization included in cost of sales | $ 40 | $ 51 | $ 130 | $ 158 | ||
[1] | The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Millions | Sep. 03, 2021 | Nov. 27, 2020 | |
Accrued Expense | |||
Accrued compensation and benefits | $ 410 | $ 375 | |
Accrued bonuses | 342 | 330 | |
Refund liabilities | 109 | 127 | |
Accrued corporate marketing | 98 | 134 | |
Taxes payable | 102 | 95 | |
Accrued hosting fees | 38 | 66 | |
Royalties payable | 40 | 34 | |
Accrued interest expense | 9 | 32 | |
Other | 302 | 229 | |
Accrued expenses | $ 1,450 | $ 1,422 | [1] |
[1] | The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details 1) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended | |
Sep. 03, 2021USD ($)$ / sharesshares | ||
Other | ||
Share Price | $ 666.59 | |
Restricted Stock Units | ||
Share Activity | ||
Beginning outstanding balance, Shares | shares | 7 | |
Awarded, Shares | shares | 3.2 | |
Released, Shares | shares | (2.9) | |
Forfeited, Shares | shares | (0.5) | |
Ending outstanding balance, Shares | shares | 6.8 | |
Expected to vest, Shares | shares | 6.2 | |
Weighted Average Grant Date Fair Value | ||
Beginning outstanding balance, Weighted average grant date fair value | $ 285.69 | |
Awarded, Weighted average grant date fair value | 487.17 | |
Released, Weighted average grant date fair value | 264.98 | |
Forfeited, Weighted average grant date fair value | 340.20 | |
Ending outstanding balance, Weighted average grant date fair value | 384.92 | |
Expected to vest, Weighted average grant date fair value | $ 381.64 | |
Aggregate Fair Value | ||
Ending outstanding balance, Aggregate fair value | $ | $ 4,544 | [1] |
Expected to vest, Aggregate fair value | $ | 4,143 | [1] |
Other | ||
Total fair value of restricted stock units vested | $ | $ 1,450 | |
[1] | The aggregate fair value is calculated using the closing stock price as of September 3, 2021 of $666.59. |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 2) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended | |
Sep. 03, 2021USD ($)$ / sharesshares | ||
Other | ||
Share Price | $ / shares | $ 666.59 | |
Performance Shares | ||
Share Activity | ||
Beginning outstanding balance, Shares | shares | 0.7 | |
Awarded, Shares | shares | 0.4 | |
Achieved, Shares | shares | (0.4) | |
Forfeited, Shares | shares | (0.1) | |
Ending outstanding balance, Shares | shares | 0.6 | |
Expected to vest, Shares | shares | 0.6 | |
Weighted Average Grant Date Fair Value | ||
Beginning outstanding balance, Weighted average grant date fair value | $ / shares | $ 333.85 | |
Awarded, Weighted average grant date fair value | $ / shares | 325.24 | |
Achieved, Weighted average grant date fair value | $ / shares | 218.55 | |
Forfeited, Weighted average grant date fair value | $ / shares | 378.73 | |
Ending outstanding balance, Weighted average grant date fair value | $ / shares | 408.58 | |
Expected to vest, Weighted average grant date fair value | $ / shares | $ 404.09 | |
Aggregate Fair Value | ||
Ending outstanding balance, Aggregate fair value | $ | $ 409 | [1] |
Expected to vest, Aggregate fair value | $ | $ 373 | [1] |
Other | ||
Maximum Target Percentage Allowed Under Program | 200.00% | |
Total fair value of performance shares achieved | $ | $ 212 | |
Performance Shares | Program 2018 | ||
Other | ||
Actual Percentage Achieved | 200.00% | |
Additional shares awarded upon achievement | shares | 0.2 | |
[1] | The aggregate fair value is calculated using the closing stock price as of September 3, 2021 of $666.59 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details 3) - Employee Stock Purchase Plan - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended | |
Sep. 03, 2021 | Aug. 28, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Shares Purchased, ESPP | 1 | 1.2 |
Average purchase price of shares, ESPP | $ 294.15 | $ 218.37 |
Total intrinsic value of shares purchased, ESPP | $ 256 | $ 216 |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details 4) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | |
Total stock-based compensation costs | ||||
Stock-based compensation costs | $ 280 | $ 232 | $ 821 | $ 676 |
Cost of Revenue | ||||
Total stock-based compensation costs | ||||
Stock-based compensation costs | 19 | 14 | 53 | 46 |
Research and Development | ||||
Total stock-based compensation costs | ||||
Stock-based compensation costs | 141 | 121 | 408 | 347 |
Sales and Marketing | ||||
Total stock-based compensation costs | ||||
Stock-based compensation costs | 81 | 65 | 227 | 195 |
General and Administrative | ||||
Total stock-based compensation costs | ||||
Stock-based compensation costs | $ 39 | $ 32 | $ 133 | $ 88 |
Stock-Based Compensation (Det_5
Stock-Based Compensation (Details Numeric) $ in Millions | Sep. 03, 2021USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award | |
Unrecognized compensation cost, non-vested awards | $ 2,300 |
Period for recognition, unrecognized compensation cost | 2 years 4 months 2 days |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details 1) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | |||
Gross unrealized gains, available-for-sale securities | ||||||
Beginning balance, unrealized gains on available-for-sale securities | $ 6 | |||||
Gross unrealized gains on available for sale securities, increase or decrease | (4) | |||||
Gross unrealized gains on available for sale securities, reclassification adjustments | [1] | 0 | ||||
Ending balance, unrealized gains on available-for-sale securities | $ 2 | 2 | ||||
Net unrealized gains / losses on available-for-sale securities | ||||||
Net unrealized gains / losses on available-for-sale securities, increase or decrease | (1) | $ 1 | (4) | $ 8 | ||
Reclassification adjustment for recognized gains / losses on available-for-sale securities | 0 | 0 | 0 | (1) | ||
Net unrealized gains on derivatives designated as hedging instruments | ||||||
Beginning balance, net unrealized gains / losses on derivative instruments designated as hedging instruments | (60) | |||||
Net unrealized gains / losses on derivative instruments designated as hedging instruments, increase or decrease | 12 | (33) | 5 | (31) | ||
Net unrealized gains / losses on derivative instruments designated as hedging instruments, reclassification adjustments | 5 | 2 | 26 | [2] | (3) | |
Ending balance, net unrealized gains / losses on derivative instruments designated as hedging instruments | (29) | (29) | ||||
Cumulative foreign currency translation adjustments | ||||||
Beginning balance, cumulative foreign currency translation adjustments | (104) | |||||
Cumulative foreign currency translation adjustment, increase or decrease | (26) | $ 72 | 0 | $ 62 | ||
Cumulative foreign currency translation adjustment, reclassification adjustments | 0 | |||||
Ending balance, cumulative foreign currency translation adjustments | (104) | (104) | ||||
Accumulated other comprehensive income totals | ||||||
Beginning balance, total accumulated other comprehensive income, net of taxes | [3] | (158) | ||||
Accumulated other comprehensive income, increase or decrease | 1 | |||||
Accumulated other comprehensive income, reclassification adjustments | 26 | |||||
Ending balance, total accumulated other comprehensive income, net of taxes | $ (131) | $ (131) | ||||
[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 and reclassification adjustments for gains / losses on Treasury lock hedges are classified in interest expense. | |||||
[3] | The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details Numeric) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 9 Months Ended | |||
Sep. 29, 2021 | Sep. 03, 2021 | Aug. 28, 2020 | Dec. 10, 2020 | May 21, 2018 | |
Payments for Repurchase of Common Stock | $ 2,950 | $ 2,200 | |||
Repurchase of common stock, Shares, Acquired | 5.6 | 6.5 | |||
Treasury Stock Acquired, Average Cost Per Share | $ 508.52 | $ 350.72 | |||
Up Front Payments Treasury Stock Remaining Balance | $ 334 | ||||
Stock Repurchase Authority 2018 | |||||
Stock Repurchase Program, Authorized Amount | $ 8,000 | ||||
Stock Repurchase Authority 2020 | |||||
Stock Repurchase Program, Authorized Amount | $ 15,000 | ||||
Subsequent Event | |||||
Payments for Repurchase of Common Stock | $ 1,000 | ||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 13,100 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 03, 2021 | Aug. 28, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 1,212 | $ 955 | $ 3,589 | $ 3,010 |
Shares used to compute basic net income per share | 476.7 | 480.2 | 477.8 | 481.3 |
Dilutive potential common shares from stock plans and programs | 4 | 4.7 | 3.7 | 4.5 |
Shares used to compute diluted net income per share | 480.7 | 484.9 | 481.5 | 485.8 |
Basic net income per share | $ 2.54 | $ 1.99 | $ 7.51 | $ 6.25 |
Diluted net income per share | $ 2.52 | $ 1.97 | $ 7.45 | $ 6.20 |
Anti-dilutive potential common shares | 0.1 | 0 | 0.1 | 0.4 |
Debt (Details)
Debt (Details) - USD ($) $ in Millions | Sep. 03, 2021 | Nov. 27, 2020 | Feb. 03, 2020 | Jan. 21, 2015 | |
Debt Instrument | |||||
Long-term Debt, Gross | $ 4,150 | $ 4,150 | |||
Debt instrument, unamortized discount and issuance costs, noncurrent | (28) | (33) | |||
Long-term Debt | 4,122 | 4,117 | [1] | ||
Notes 2023 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | $ 500 | 500 | $ 500 | ||
Debt Instrument, Interest Rate, Effective Percentage | 1.92% | ||||
Notes 1.90% 2025 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | $ 500 | 500 | 500 | ||
Debt Instrument, Interest Rate, Effective Percentage | 2.07% | ||||
Notes 3.25% 2025 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | $ 1,000 | 1,000 | $ 1,000 | ||
Debt Instrument, Interest Rate, Effective Percentage | 3.67% | ||||
Notes 2027 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | $ 850 | 850 | 850 | ||
Debt Instrument, Interest Rate, Effective Percentage | 2.26% | ||||
Notes 2030 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | $ 1,300 | $ 1,300 | $ 1,300 | ||
Debt Instrument, Interest Rate, Effective Percentage | 2.69% | ||||
[1] | The condensed consolidated balance sheet as of November 27, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Debt (Details Numeric 1)
Debt (Details Numeric 1) - USD ($) $ in Millions | Feb. 03, 2020 | Sep. 03, 2021 | Aug. 28, 2020 | Nov. 27, 2020 | Jan. 21, 2015 |
Debt Instrument | |||||
Proceeds from issuance of debt | $ 0 | $ 3,144 | |||
Outstanding Notes | |||||
Debt Instrument | |||||
Repurchase notes at price of their principal amount plus accrued and unpaid interest | 101.00% | ||||
Fair Value, Inputs, Level 2 | Fair Value, Nonrecurring | Outstanding Notes | |||||
Debt Instrument | |||||
Outstanding Debt, Fair Value Disclosure | $ 4,360 | ||||
Notes 2023 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | $ 500 | $ 500 | $ 500 | ||
Debt Instrument, Interest Rate, Effective Percentage | 1.92% | ||||
Notes 1.90% 2025 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | 500 | $ 500 | 500 | ||
Debt Instrument, Interest Rate, Effective Percentage | 2.07% | ||||
Notes 3.25% 2025 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | $ 1,000 | 1,000 | $ 1,000 | ||
Debt Instrument, Interest Rate, Effective Percentage | 3.67% | ||||
Notes 2027 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | 850 | $ 850 | 850 | ||
Debt Instrument, Interest Rate, Effective Percentage | 2.26% | ||||
Notes 2030 | |||||
Debt Instrument | |||||
Debt Instrument, Face Amount | 1,300 | $ 1,300 | $ 1,300 | ||
Debt Instrument, Interest Rate, Effective Percentage | 2.69% | ||||
Notes 2023, 1.90% 2025, 2027, and 2030 | |||||
Debt Instrument | |||||
Proceeds from issuance of debt | $ 3,140 |
Debt (Details Numeric 2)
Debt (Details Numeric 2) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 03, 2021 | Oct. 17, 2018 | Mar. 02, 2012 | |
Revolving Credit Facility | |||
Debt Instrument | |||
Long-term Line of Credit | $ 0 | ||
Revolving Credit Facility | |||
Debt Instrument | |||
Revolving Credit Agreement, Borrowing Capacity | $ 1,000 | $ 1,000 | |
Unamortized Debt Issuance Expense | 1 | ||
Option To Request Additional Commitments On Credit Facility | 500 | ||
Revolving Credit Agreement, Maximum Borrowing Capacity | $ 1,500 | ||
Revolving Credit Facility | Minimum | |||
Debt Instrument | |||
Commitment Fee Percentage | 0.04% | ||
Revolving Credit Facility | Maximum | |||
Debt Instrument | |||
Commitment Fee Percentage | 0.11% | ||
Scenarioi | Revolving Credit Facility | Minimum | |||
Debt Instrument | |||
Margin Added to LIBOR to Determine Interest Rate | 0.585% | ||
Scenarioi | Revolving Credit Facility | Maximum | |||
Debt Instrument | |||
Margin Added to LIBOR to Determine Interest Rate | 1.015% | ||
Scenarioii | Revolving Credit Facility | |||
Debt Instrument | |||
Percentage Added to Effective Funds Rate in Determining Interest Rate | 0.50% | ||
Percentage Added to LIBOR in Determining Interest Rate | 1.00% | ||
Scenarioii | Revolving Credit Facility | Minimum | |||
Debt Instrument | |||
Margin Added to LIBOR to Determine Interest Rate | 0.00% | ||
Scenarioii | Revolving Credit Facility | Maximum | |||
Debt Instrument | |||
Margin Added to LIBOR to Determine Interest Rate | 0.015% |