Adobe Systems Incorporated

Transcription

1 Adobe Systems Incorporated April,

2 Financial Disclaimer Adobe Systems Incorporated April, 2007 Some of the information discussed today contains forward looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For a discussion of the risks and uncertainties, you should review Adobe s SEC filings, including the annual report on Form10-K for fiscal year 2006 and the quarterly reports on Form 10-Q filed by the company in In our presentation, we will discuss non-gaap financial measures. The GAAP financial measures that correspond to such non-gaap measures, as well as the reconciliation between the two, are available on our website at Adobe does not undertake an obligation to update forward-looking statements. 1 2 Market Factors Providing a Great Tailwind Web Growth PC Upgrades Video Growth Mobile Camera & Device Growth Personal Creation Adobe revolutionizes how the world engages with ideas and information 55M active websites in % online ads in M new Windows Vista and Intel Mac systems in M new camcorders in M video phones in B mobile phone users in K new blogs per day 280K new MySpace accounts per day Source: IDC, InfoTrends, O Reilly Radar, Internet Advertising Bureau 3 4 Diverse Customer Base Spans From Consumer to Enterprise Creative Solutions Business Unit Mobile and Device Solutions Business Unit Knowledge Worker Solutions Business Unit Enterprise and Developer Solutions Business Unit Print and Classic Publishing Business Unit Creative Solutions Business Unit Mobile and Device Solutions Business Unit Knowledge Worker Solutions Business Unit Enterprise and Developer Solutions Business Unit Enable our customers to produce, publish, and monetize compelling content Platform Business Unit Technology Platform Technology Platform 2007 Adobe Systems Incorporated. All Rights Reserved Adobe Systems Incorporated. All Rights Reserved. 6 1

3 Creative Market Opportunity Creative Suite Products As We Have Delivered More Value, ASPs Have Risen Creative Suite Penetration Addressable Market $ M 2.0M 2.4M Commercial & Government 1.5M 1.0M 1.6M 0.9M 1.3M 3.2M Creative Professionals Average Selling Price of Creative Professional Products All Customers 0.5M Education 0 1/2006 3/2007 Creative 38M+ Non-Professionals CS1 and CS2 Full Units* Creative Professional Units *Excludes CS1 to CS2 upgrades $0 FY03 FY04 FY05 FY06 Source: Adobe Market Research 7 Source: Adobe Market Research Market Research 8 Creative Suite Products Growth and Sustained Revenue Across Entire Life Evolution of Publishing Macromedia Acquisition Announced Creative Suite Editions and Point Products Revenue Q2 05 CS2 CS1 Q4 03 Print Web Dynamic Media Video Mobile Rich Internet Applications Launch Q1 Q2 Q3 Q4 Q5 Q6 Q7 Source: Adobe Market Research Market Research Launch Q1 Q2 Q3 Q4 Q5 Q6 Q Creative Professionals Their Work Spans Beyond Their Core Expertise Creative Suite 3 New Creative Suite Editions Targeted at Key Workflows Adobe Creative Professional Panel 100% Percent of Creative Professionals Working in More Than One Creative Workflow 50% 0% Graphic Designers Web Professionals Dynamic Media Professionals Professional Photographers Source: Adobe Market Research

4 Creative Suite 3 Cross-Product Features Mobilizing Creative Suite 3 Consistent user interface Cross-product file support Flash Dreamweaver Photoshop Illustrator Adobe Premiere Pro After Effects Design Editions Web Editions Production Premium Master Collection Latest platform support Intel-based Macs Windows Vista Performance optimization New and enhanced workflows Adobe Device Central CS3 Mobile authoring Games UI Channels WAP/HTML Video Extending Adobe Photoshop Flash Video Momentum Photoshop CS3 Faster startup time Quick Selection/Refine Edge Nondestructive filters Auto layer align and blend Photoshop CS3 Extended Measurement and analysis 3D visualization and texture editing Movie Paint to enhance video Media format used by top U.S. cable TV networks for their broadband video Number of Networks Direct video support 0 Flash WMP QT Real WMP + Real WMP + Flash WMP + QT WMP + Real + QT 15 Source: Broadband Directions LLC 16 Dynamic Media Business Model Announcing Adobe Media Player Rich Media Content Creation Server license revenue On-premise server CDN-hosted service Share of CDN revenue Recorded or live content Content protection Ubiquitous Clients Browser Mobile Adobe Media Player Next generation Internet video solution Utilizes Flash video and open standards Enables branding, content monetization (e.g. advertising), and content protection Based on Project Apollo Cross-platform Runs outside the Web browser Online and offline viewing CREATE DELIVER PLAYBACK Commercially available later in

5 Beyond Shrinkwrap Software as a service Browser-based, no download Simple user interface Extending brand to mass market reach New revenue models Creative Solutions Business Unit Mobile and Device Solutions Business Unit Knowledge Worker Solutions Business Unit Enterprise and Developer Solutions Business Unit Transform user interaction with non-pc devices into engaging experiences Technology Platform Adobe Systems Incorporated. All Rights Reserved. 20 Mobile and Device Solutions Three Business Opportunities Mobile and Device Client Opportunity Flash Enabled Device Shipments 250M Tools Client Services 200M Device Shipments 150M 100M 50M 0 Q1* Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q * Calendar Quarters Cumulative Net 21 Source: Adobe Market Research 22 Mobile and Device Client Opportunity Handset Shipments Are Growing Mobile Services Opportunity Operators Launching Flash Cast 1.2B 1.0B 0.8B Handsets 0.6B 0.4B 0.2B Historical Projected Adobe Addressable Handsets Source: Adobe Market Research

6 Mobile Services Opportunity Annualized NTT DoCoMo i-channel Subscription Revenues NTT DoCoMo i-channel Deployments and Revenues Using Flash Cast Subscribers 10M 8M 6M 4M 10M x $5 x 12 = $600M With Flash Cast we will be able to offer our customers a desirable user experience including bold animations and new, compelling information and entertainment channels in an engaging user interface. 2M 0 Q405 Q106 Q206 Q306 Q406 Q107 John Stratton EVP and CMO, Verizon Mobile Services Opportunity Video Here, There, Everywhere Flash Lite 3 Creative Solutions Business Unit Enable our customers to communicate and collaborate across boundaries Supports Flash Video codec Available in Summer 2007 Mobile and Device Solutions Business Unit Knowledge Worker Solutions Business Unit Enterprise and Developer Solutions Business Unit Technology Platform Adobe Systems Incorporated. All Rights Reserved. 28 The Document Challenge in Business Processes Adobe Acrobat 8 Bridging paper Crossing boundaries Ensuring security Enabling collaboration Helping Knowledge Workers worldwide accelerate their work by providing the essential PDF solution for more secure and collaborative electronic document exchange

7 Adobe Acrobat 8 Value Beyond PDF Creation Acrobat Market Opportunity Vertical Segments Total potential seats 95 million Horizontal Segments Basic Basic PDF creation Office PDF creation New unit licenses 25 million Create Combine Control Collect Collaborate 31 As of December, 2006 Source: Adobe Market Research 32 New Unit Licenses Drive Acrobat Business Investing in Collaboration % of Acrobat Revenue * 100% 80% 60% 40% Upgrades New Units Collaborate Manage, organize, and extend feedback to expedite document collaboration and instantly interact through real-time web conferencing Web Conferencing Market Size $2.0B $1.5B $1.0B 20% $0.5B 0 FY 2003 FY 2004 FY 2005 FY 2006 $0 Source: Gartner Source: Adobe Market Research *Excludes OEM revenue; new maintenance revenue included in new seats and renewal maintenance revenue included in upgrade seats Acrobat Connect Solutions Rich engaging experience Easy to join meetings On-premise and hosted delivery Specific application functionality Creative Solutions Business Unit Mobile and Device Solutions Business Unit Knowledge Worker Solutions Business Unit Enterprise and Developer Solutions Business Unit Enable Enterprises and Government agencies to improve and streamline people-centric business processes Technology Platform Adobe Systems Incorporated. All Rights Reserved. 36 6

8 The Engagement Problem Adobe s Solution Improve and Streamline People-Centric Business Processes Distributors & Agencies Customers & Citizens Suppliers & Contractors Distributors & Agencies Customers & Citizens Suppliers & Contractors ENGAGEMENT PROCESSES New account opening, Broker productivity, Grant administration... Internal Processes Back Office Infrastructure ERP / ECM / CRM / BPM / Accounting CLOSING THE ENGAGEMENT GAP Faster cycle time, more transactions, increased loyalty, regulatory compliance... Internal Processes Back Office Infrastructure ERP / ECM / CRM / BPM / Accounting Targeted Enterprise Vertical Markets Many Use Case Opportunities Government Financial Services Manufacturing Life Sciences Existing Customers in Targeted Verticals Many Pilots Moving to Broad Rollout Government Financial Services Manufacturing Life Sciences Guided Self-Service edisclosure Certified Documents egrants Case Management Tax Submissions Account Opening Loan Automation Broker Productivity Correspondence Management ACORD XFI Agent Productivity Field Service Management Design Collaboration RFP/Quote Management Engineering Change Management Electronic Submissions Clinical Information Management Secure Information Exchange (SAFE) Kane County, Illinois / Circuit Court Clerk State of Illinois / Dept of Human Services Court of Cremona (Italy) Australian Dept of Community Services HSBC Ameriquest US Bank Allianz HBOS/ Intelligent Finance Gerling Insurance Group Safeco Harley-Davidson Renault Saudi Iron & Steel Industria de Turbo Propulsores (Rolls- Royce) Phonak Group Beth Israel Merck KGaA Procter & Gamble Vertically Aligned Partner Ecosystem Building Momentum with SAP Interactive Forms Government Financial Services Manufacturing Life Sciences Strong sales and marketing alignment Over 200 customers SAIC Keane Capgemini Accenture 300% royalty growth in FY06 General Dynamics Business Edge Cardinal Solutions EMC Documentum Multiple seven-figure deals Accenture Roundarch CADeSIS IBM CGI Tata Consultancy Services Cimpa

9 The Next LiveCycle Adobe s Enterprise Opportunity Cross-Platform Clients Reader Flash HTML LIVECYCLE User Interface Technologies Tooling Intelligent Documents + Rich Internet Applications Solution Components Designer Forms PDF Workbench Process Management Flex Flex Builder Output Document Output Enterprise Rights Management + Electronic Forms Digital Signatures Rich Internet Applications Human-centric BPM Barcoded Forms Connectors for ECM Rights Management RAD Scripting Reader Extensions PDF Generator Digital Signatures Foundation Common Administration, Orchestration, Security, Data Services Existing Customer Infrastructure $2.1 Billion Addressable Market 17% CAGR Source: Adobe Market Research 44 Project Apollo Empowers Web 2.0 Application Development Adobe Summary Build engaging desktop applications with standard Web technologies (e.g. HTML, AJAX, Flash, PDF, Java, video, audio) Cross-platform Run outside of the Web browser Blends the best of the Web with the best of the desktop Creates branded desktop experiences Works online and offline Market trends fueling Adobe opportunities New product launches in 2007 Diversified business serving multiple markets Investing for the future Multiple growth opportunities in 2008 and beyond Adobe Systems Incorporated. All Rights Reserved

10 Investor Relations Data Sheet Last Updated: March 20, 2007 Select "Attachments" Tab to Open Excel Version of Data Sheet Description Q1`06 Q2`06 Q3`06 Q4`06 FY2006 Q1`07 FY2007 YTD Revenue ($Millions) Total Revenue , Creative Solutions , Revenue by Segment ($Millions) Knowledge Worker Solutions Enterprise and Developer Solutions Mobile and Device Solutions Other Revenue by Segment (as % of total revenue) Creative Solutions 58% 57% 55% 53% 56% 53% 53% Knowledge Worker Solutions 26% 25% 25% 26% 26% 27% 27% Enterprise and Developer Solutions 7% 7% 8% 8% 7% 8% 8% Mobile and Device Solutions 1% 1% 2% 2% 1% 2% 2% Other 8% 10% 10% 11% 10% 10% 10% Revenue by Geography ($Millions) Americas , EMEA Asia Revenue by Geography (as % of total revenue) Americas 48% 48% 52% 49% 49% 46% 46% EMEA 32% 29% 27% 32% 30% 33% 33% Asia 20% 23% 21% 19% 21% 21% 21% Enterprise KPI Number of Server Transactions > $50,000 * * Based on LiveCycle, Flex, ColdFusion, Acrobat Connect and Flash Media Server transactions greater than $50,000 (excludes maintenance, support, and professional services) Direct Costs Acquisition Related Expenses ($Millions) Research & Development Sales & Marketing General & Administrative Amortization of Purchased Intangibles Restructuring (0.5) 19.7 (1.3) (1.3) SFAS 123R Stock Compensation Expenses ($Millions) Direct Costs Research & Development Sales & Marketing General & Administrative TOTAL Shares (Millions) Headcount Diluted Shares Outstanding Worldwide Employees 5,480 5,678 5,879 6,068 6,068 6,151 6,151 DSO Ratio Days Sales Outstanding - Trade Receivables Adobe provides this information as of the modification date above and makes no commitment to update the information subsequently. For a full explanation of this data, you are encouraged to review Adobe's Form 10-K and 10-Q SEC filings.

11 Historical Investor Relations Data Sheet (Pre-Adobe/Macromedia integration) Last Updated: December 15, 2005 Description FY2000 Q1'01 Q2'01 Q3'01 Q4'01 FY2001 Q1'02 Q2'02 Q3'02 Q4'02 FY2002 Q1'03 Q2'03 Q3'03 Q4'03 FY2003 Q1`04 Q2'04 Q3'04 Q4'04 FY2004 Q1`05 Q2'05 Q3'05 Q4`05 FY2005 Total ($Millions) Revenue 1, , , , , ,966.3 Revenue By Segment ($Millions) Digital Imaging & Video Creative Professional Intelligent Documents OEM PostScript & Other Digital Imaging & Video 38% 39% 36% 36% 32% 36% 31% 41% 34% 34% 35% 32% 30% 27% 31% 30% 27% 25% 24% 27% 26% 23% 23% 20% 22% 22% Revenue By Creative Professional Segment (as % 36% 34% 30% 30% 34% 32% 33% 28% 30% 30% 30% 29% 29% 26% 30% 29% 37% 37% 37% 35% 37% 34% 37% 42% 38% 38% of total revenue) Intelligent Documents 16% 19% 26% 25% 25% 24% 28% 24% 28% 29% 27% 31% 34% 40% 33% 34% 31% 33% 34% 33% 32% 39% 36% 34% 36% 36% OEM PostScript & Other 10% 8% 8% 9% 9% 8% 8% 7% 8% 7% 8% 8% 7% 7% 6% 7% 5% 5% 5% 5% 5% 4% 4% 4% 4% 4% Revenue By Geography ($Millions) Americas EMEA Asia Revenue By Geography (as % of total revenue) Americas 52% 46% 46% 53% 48% 48% 46% 50% 55% 49% 50% 49% 49% 49% 50% 49% 43% 44% 48% 49% 46% 46% 49% 47% 49% 48% EMEA 26% 30% 23% 25% 30% 27% 28% 26% 24% 31% 27% 30% 27% 26% 31% 29% 34% 33% 31% 32% 33% 32% 29% 31% 32% 31% Asia 22% 24% 31% 22% 22% 25% 26% 24% 21% 20% 23% 21% 24% 25% 19% 22% 23% 23% 21% 19% 21% 22% 22% 22% 19% 21% Intelligent Documents Data Desktop Revenue ($Millions) Server Revenue ($Millions) Licensing as a % of Desktop Revenue Number of Server Transactions > $50,000 * Average Server Transaction Size * * Based on server transactions greater than $50,000 (excludes maintenance, support, and professional services); Average rounded to $Thousands 27.6% 30.6% % 31.8% 38.7% 40.4% % 43.1% 45.9% 47.2% % 47.2% 52.0% 57.2% Margin (as a % of total revenue) Gross Profit Margin 93.1% 93.9% 93.5% 93.1% 92.8% 93.4% 92.2% 92.1% 88.9% 91.0% 91.0% 92.5% 92.7% 93.1% 93.0% 92.8% 94.3% 93.4% 94.2% 93.2% 93.7% 94.3% 94.5% 94.4% 94.0% 94.3% Operating Expenses (as % of total revenue) Research & Development 19.0% 16.9% 17.3% 18.6% 20.7% 18.2% 22.1% 19.8% 21.0% 21.8% 21.1% 22.2% 21.6% 21.6% 20.4% 21.4% 17.7% 18.5% 19.8% 18.6% 18.7% 18.3% 18.0% 19.4% 18.5% 18.6% Sales & Marketing 31.7% 31.6% 31.8% 32.7% 35.8% 32.8% 33.3% 32.7% 32.9% 31.7% 32.7% 33.0% 33.0% 33.3% 31.7% 32.7% 30.1% 31.8% 30.5% 32.7% 31.3% 31.2% 31.2% 29.5% 28.8% 30.2% General & Administrative 9.2% 9.2% 9.0% 8.9% 10.6% 9.4% 9.6% 9.2% 9.4% 9.1% 9.3% 10.1% 9.5% 9.5% 8.8% 9.5% 7.9% 8.4% 9.1% 7.8% 8.3% 8.7% 8.5% 7.7% 9.0% 8.5% Headcount Worldwide Employees 2,947 3,066 3,161 3,233 3,043 3,043 3,054 3,510 3,557 3,319 3,319 3,377 3,440 3,486 3,515 3,515 3,518 3,646 3,749 3,848 3,848 4,016 4,207 4,286 4,285 4,285 Platform Mix Windows 63% 66% 71% 71% 73% 70% 73% 69% 72% 73% 71% 74% 73% 77% 73% 74% 71% 72% 73% 75% 73% 76% 74% 73% 76% 75% (as % of total revenue) Macintosh 37% 34% 29% 29% 27% 30% 27% 31% 28% 27% 29% 26% 27% 23% 27% 26% 29% 28% 27% 25% 27% 24% 26% 27% 24% 25% Total (Millions) * Split adjusted DSO Ratio Diluted Shares Outstanding* Days Sales Outstanding (Trade Receivables) Adobe provides this information as of the modification date above and makes no commitment to update the information subsequently. For a full explanation of this data, you are encouraged to review Adobe's Form 10-K and 10-Q SEC filings.

12 bc Adobe Systems Incorporated Historical Desktop Product Release Roadmap Last Updated: March 20, 2007 Product Q1`06 Q2`06 Q3`06 Q4`06 Q1`07 Acrobat 8.0 Acrobat 3D 7.0 After Effects 7.0 Audition 2.0 Authorware Captivate 2.0 Connect (formerly Breeze) 6.0 Contribute 4.0 Creative Suite 2.3 Director Dreamweaver Encore 2.0 Fireworks Flash FrameMaker FreeHand GoLive Illustrator InDesign Lightroom 1.0 PageMaker Photoshop Photoshop Elements 5.0 Premiere Elements 3.0 Premiere Pro 2.0 Production Studio 1.0 Soundbooth Studio Adobe provides this information as of the modification date above and makes no commitment to update the information subsequently. For a full explanation of this data, you are encouraged to review Adobe's Form 10-K and 10-Q SEC filings. All of the above products were launched in the United States.

13 bc Adobe Systems Incorporated Historical Desktop Product Release Roadmap (Pre Adobe/Macromedia integration) Last Updated: December 15, 2005 Product Q1'00 Q2'00 Q3'00 Q4'00 Q1'01 Q2'01 Q3'01 Q4'01 Q1'02 Q2'02 Q3'02 Q4'02 Q1'03 Q2'03 Q3'03 Q4'03 Q1`04 Q2`04 Q3`04 Q4`04 Q1`05 Q2`05 Q3`05 Q4`05 Acrobat After Effects Audition Creative Suite Encore DVD FrameMaker GoLive CS CS2 Illustrator CS CS2 InDesign CS CS2 PageMaker 7.0 Photoshop CS CS2 Photoshop Album Photoshop Elements Premiere Premiere Elements Premiere Pro Adobe provides this information as of the modification date above and makes no commitment to update the information subsequently. For a full explanation of this data, you are encouraged to review Adobe's Form 10-K and 10-Q SEC filings. All of the above products were launched in the United States.

14 bc Adobe Systems Incorporated Income Statement Reconciliation of Non-GAAP to GAAP $Millions Except EPS Reflects May :1 Stock Split March 20, 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY05 FY05 FY05 FY05 FY06 FY06 FY06 FY06 FY07 Non-GAAP Revenue Operating Expenses Operating Profit % of Revenue 36.1% 36.7% 37.7% 37.6% 38.5% 38.3% 34.4% 37.5% 34.3% Interest & Other Income Income Before Taxes Taxes Net Income Adjusted Diluted Shares (Millions) Adjusted EPS Reconciliation to GAAP Non-GAAP Income Before Taxes SFAS 123R Stock-based Compensation Restructuring and Other Charges (0.5) (1.3) Acquisition and technologyrelated Costs Amortization of Macromedia Deferred Compensation Investment (Gain) Loss (5.0) 1.3 (2.7) 5.1 (65.0) (5.6) GAAP Income Before Taxes Taxes GAAP Net Income Adjusted Diluted Shares (Millions) Adjusted EPS GAAP Revenue Operating Expenses Operating Profit % of Revenue 36.1% 36.7% 37.7% 37.6% 19.8% 23.3% 18.3% 23.9% 22.5% Investment Gains (Loss) (1.5) (2.7) (2.0) 5.0 (1.3) 2.7 (5.1) Interest & Other Income Income Before Taxes Taxes Net Income Adjusted Diluted Shares (Millions) Adjusted EPS The above results are supplied to provide meaningful supplemental information regarding Adobe s core operating results because such information excludes amounts that are not necessarily related to its core operating results. Adobe uses this non-gaap financial information in assessing the performance of the Company s ongoing operations, and for planning and forecasting in future periods. This non-gaap information should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

15 FY2007 Business Segment Classifications Last Updated: December 14, 2006 Additions/Changes in Bold Products Creative Solutions Knowledge Worker Solutions Enterprise and Developer Solutions Mobile and Device Solutions Other After Effects Audition Creative Suite Design Bundle Dreamweaver Encore DVD Fireworks Flash Flash Media Server Flash Video Streaming Service GoLive Illustrator InDesign Acrobat Acrobat Connect (formerly Breeze) Acrobat Capture Acrobat Distiller Server Acrobat Elements Server Adobe Reader Extensions Server Barcoded Forms ColdFusion Document Security Server Document Server FlashCast Flash Lite Authorware Captivate Contribute Director FrameMaker Freehand Photoshop Photoshop Album Photoshop Elements Photoshop Lightroom Premiere Elements Premiere Pro Production Studio Soundbooth Studio Video Bundle Video Collection Web Bundle Create PDF Online Flex Flex Builder Form Server Output Server PDF Library Policy Server Workflow Server Flash Player SDK Jrun PageMaker PDF Print Engine PostScript Reader, Flash Player & Shockwave Player Type Adobe provides this information as of the modification date above and makes no commitment to update the information subsequently. For a full explanation of this data, you are encouraged to review Adobe's Form 10-K and 10-Q SEC filings.

16 bc Press/Analyst Contacts Investor Relations Contact: Mike Saviage Adobe Systems Incorporated Public Relations Contact: Holly Campbell Adobe Systems Incorporated FOR IMMEDIATE RELEASE Adobe Systems Reports First Quarter Results Company Readies for Biggest Product Launch in its History SAN JOSE, Calif. March 20, 2007 Adobe Systems Incorporated (Nasdaq:ADBE) today reported financial results for its first quarter ended March 2, In the first quarter of fiscal 2007, Adobe achieved revenue of $649.4 million, compared to $655.5 million reported for the first quarter of fiscal 2006 and $682.2 million reported in the fourth quarter of fiscal Adobe s first quarter revenue target range was $640 to $670 million. Q1 was a solid quarter for Adobe, as we came in at the high end of our earnings target range and were within our targeted range for revenue, said Bruce Chizen, chief executive officer of Adobe. As Adobe prepares for the biggest product launch in our history, we are excited about our opportunities and bullish about our prospects for another year of strong performance. GAAP Results Adobe s GAAP diluted earnings per share for the first quarter of fiscal 2007 were $0.24, based on million weighted average shares. This compares with GAAP diluted earnings per share of $0.17 reported in the first quarter of fiscal 2006, based on million weighted average shares, and GAAP diluted earnings per share of $0.30 reported in the fourth quarter of fiscal 2006, based on million weighted average shares. Adobe s first quarter of fiscal 2007 GAAP earnings per share target range was $0.17 to $0.20. GAAP operating income was $146.3 million in the first quarter of fiscal 2007, compared to $130.0 million in the first quarter of fiscal 2006 and $163.4 million in the fourth quarter of fiscal As a percent of revenue, GAAP operating income in the first quarter of fiscal 2007 was 22.5 percent, compared to 19.8 percent in the first quarter of fiscal 2006 and 23.9 percent in the fourth quarter of fiscal GAAP net income was $143.9 million for the first quarter of fiscal 2007, compared to $105.1 million reported in the first quarter of fiscal 2006, and $183.2 million in the fourth quarter of fiscal 2006.

17 Page 2 of 10 Adobe Systems Reports First Quarter Results Non-GAAP Results Non-GAAP diluted earnings per share for the first quarter of fiscal 2007 were $0.30. This compares with non-gaap diluted earnings per share of $0.32 reported in the first quarter of fiscal 2006, and non-gaap diluted earnings per share of $0.33 reported in the fourth quarter of fiscal Adobe s first quarter non-gaap earnings per share target range was $0.28 to $0.30. Adobe s non-gaap operating income was $222.5 million in the first quarter of fiscal 2007, compared to $252.4 million in the first quarter of fiscal 2006 and $255.8 million in the fourth quarter of fiscal As a percent of revenue, non-gaap operating income in the first quarter of fiscal 2007 was 34.3 percent, compared to 38.5 percent in the first quarter of fiscal 2006 and 37.5 percent in the fourth quarter of fiscal Non-GAAP net income was $182.3 million for the first quarter of fiscal 2007, compared to $197.5 million in the first quarter of fiscal 2006, and $198.3 million in the fourth quarter of fiscal A reconciliation between GAAP and non-gaap results is provided at the end of this press release. Adobe Provides Second Quarter Financial Targets and Reaffirms Fiscal Year 2007 Financial Targets For the second quarter of fiscal 2007, Adobe announced it is targeting revenue of $700 million to $740 million. The Company also is targeting a GAAP operating margin of approximately 23 to 25 percent in the second quarter. On a non-gaap basis, the Company is targeting a second quarter operating margin of approximately 36 to 37 percent. In addition, Adobe is targeting its share count to be between 605 million and 607 million shares in the second quarter of fiscal The Company also is targeting other income in its second quarter to be approximately $23 million to $24 million, with a GAAP tax rate of approximately 24 to 26 percent and a non-gaap tax rate of approximately 25 to 27 percent. These targets lead to a second quarter GAAP earnings per share target range of approximately $0.23 to $0.26. On a non-gaap basis, the Company is targeting earnings per share of approximately $0.34 to $0.36. For fiscal year 2007, Adobe announced it is reaffirming its annual revenue growth target of approximately 15 percent. The Company also reaffirmed it is targeting a GAAP operating margin of approximately 25 to 27 percent, and a non- GAAP operating margin of approximately 37 to 38 percent. A reconciliation between GAAP and non-gaap targets is provided at the end of this press release. Forward Looking Statements Disclosure This press release contains forward looking statements, including those related to revenue, operating margin, other income, tax rate, share count and earnings per share, which involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: delays in development or shipment of Adobe s new products or major new versions of existing products, introduction

18 Page 3 of 10 Adobe Systems Reports First Quarter Results of new products by existing and new competitors, failure to successfully manage transitions to new business models and markets, adverse changes in general economic or political conditions in any of the major countries in which Adobe does business, difficulty in predicting revenue from new businesses, failure to anticipate and develop new products in response to changes in demand for application software, computers, printers, or other non PC-devices, costs related to intellectual property acquisitions, disputes and litigation, inability to protect Adobe s intellectual property from unauthorized copying, use, disclosure or malicious attack, failure to realize the anticipated benefits of past or future acquisitions and difficulty in integrating such acquisitions, changes to Adobe s distribution channel, disruption of Adobe s business due to catastrophic events, interruptions or terminations in Adobe s relationships with turnkey assemblers, risks associated with international operations, fluctuations in foreign currency exchange rates, changes in, or interpretations of, accounting principles, impairment of Adobe s goodwill or intangible assets, unanticipated changes in, or interpretations of, Adobe s effective tax rates, Adobe s inability to attract and retain key personnel, and market risks associated with Adobe s equity investments. For further discussion of these and other risks and uncertainties, individuals should refer to Adobe s SEC filings. The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe s Quarterly Report on Form 10-Q for the first quarter ended March 2, 2007, which the company expects to file in April, Adobe does not undertake an obligation to update forward looking statements. About Adobe Systems Incorporated Adobe revolutionizes how the world engages with ideas and information anytime, anywhere, and through any medium. For more information, visit ### 2007 Adobe Systems Incorporated. All rights reserved. Adobe, Macromedia, and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners.

19 Page 4 of 10 Adobe Systems Reports First Quarter Results Condensed Consolidated Statements of Income (In thousands, except per share data; unaudited) Three Months Ended March 2, 2007 March 3, 2006 Revenue: Products $ 620,298 $ 636,826 Services and support 29,109 18,652 Total revenue 649, ,478 Total cost of revenue: Products 53,815 62,849 Services and support 18,448 14,897 Total cost of revenue 72,263 77,746 Gross profit 577, ,732 Operating expenses: Research and development 137, ,543 Sales and marketing 214, ,816 General and administrative 62,583 60,297 Restructuring and other charges (1,308) 18,984 Amortization of purchased intangibles 17,725 17,112 Total operating expenses 430, ,752 Operating income 146, ,980 Non-operating income, net: Investment gain (loss) 5,601 (1,265) Interest and other income 22,464 15,542 Total non-operating income 28,065 14,277 Income before income taxes 174, ,257 Income tax provision 30,551 39,185 Net income $ 143,851 $ 105,072 Basic net income per share $ 0.24 $ 0.18 Shares used in computing basic net income per share 587, ,451 Diluted net income per share $ 0.24 $ 0.17 Shares used computing diluted net income per share 604, ,839

20 Page 5 of 10 Adobe Systems Reports First Quarter Results Condensed Consolidated Balance Sheets (In thousands, except per share data; unaudited) ASSETS March 2, December 1, Current assets: Cash and cash equivalents $ 526,030 $ 772,500 Short-term investments 1,756,370 1,508,379 Trade receivables, net 304, ,815 Other receivables 63,511 51,851 Deferred income taxes 164, ,613 Prepaid expenses and other current assets 42,077 39,311 Total current assets 2,857,000 2,884,469 Property and equipment, net 258, ,197 Goodwill 2,134,058 2,149,494 Purchased and other intangibles, net 464, ,405 Investment in lease receivable 126, ,800 Other assets 63,089 68,183 Total assets $ 5,904,184 $ 5,962,548 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Trade and other payables $ 46,867 $ 55,031 Accrued expenses 270, ,550 Accrued restructuring 8,066 10,088 Income taxes payable 190, ,368 Deferred revenue 139, ,310 Total current liabilities 655, ,347 Other long-term liabilities Deferred revenue 30,847 32,644 Deferred income taxes 78,368 70,715 Accrued restructuring 19,120 21,984 Other long-term liabilities 12,250 7,982 Total liabilities 796, ,672 Stockholders equity: Common stock, $ par value Additional paid-in-capital 2,429,251 2,451,610 Retained earnings 3,461,637 3,317,785 Accumulated other comprehensive income 7,103 6,344 Treasury stock at cost, net of re-issuances (789,977) (623,924) Total stockholders equity 5,108,075 5,151,876 Total liabilities and stockholders equity $ 5,904,184 $ 5,962,548

21 Page 6 of 10 Adobe Systems Reports First Quarter Results Condensed Consolidated Statements of Cash Flows (In thousands; unaudited) March 2, 2007 March 3, 2006 Cash flows from operating activities: Net income $ 143,851 $ 105,072 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization, and accretion 68,488 78,350 Stock-based compensation expense, net of tax 46,285 51,079 Changes in deferred revenue 7,585 12,263 Changes in other operating assets and liabilities 10,144 (70,497) Non-cash restructuring charges 18,984 Net investment (gains) losses (5,835) 1,310 Net cash provided by operating activities 270, ,561 Cash flows from investing activities: Purchases of short term investments, net of sales and maturities (249,540) (194,112) Purchases of capital and long term investments, net of sales (57,215) (16,856) Acquisitions, net of cash (3,094) 478,787 Net cash (used for) provided by investing activities (309,849) 267,819 Cash flows from financing activities: Purchases of treasury stock, net of reissuances (207,435) (270,104) Excess tax benefits from stock-based compensation 1,556 18,823 Proceeds from issuance of common stock 306 Net cash used for financing activities (205,879) (250,975) Effect of exchange rate changes on cash (1,260) 963 Net increase (decrease) in cash and cash equivalents (246,470) 214,368 Cash and cash equivalents at beginning of period 772, ,818 Cash and cash equivalents at end of period $ 526,030 $ 635,186

22 Page 7 of 10 Adobe Systems Reports First Quarter Results Non-GAAP Results (In thousands, except per share data) The following table shows Adobe s non-gaap results reconciled to GAAP results included in this release. March 2, 2007 March 3, 2006 December 1, 2006 GAAP operating income $ 146,337 $ 129,980 $ 163,372 SFAS 123R stock-based compensation 24,935 23,031 30,006 Amortization of Macromedia deferred compensation 6,917 23,451 9,505 Restructuring and other charges (1,308) 18,984 (518) Amortization of purchased intangibles and incomplete technology 45,644 56,955 53,484 Non-GAAP operating income $ 222,525 $ 252,401 $ 255,849 GAAP net income $ 143,851 $ 105,072 $ 183,244 SFAS 123R stock-based compensation, net of tax 18,234 18,220 17,133 Amortization of Macromedia deferred compensation, net of tax 5,058 17,283 5,427 Restructuring and other charges, net of tax (1,766) 13,991 (296) Amortization of purchased intangibles and incomplete technology, net of tax 32,908 41,976 30,539 R&D tax benefit, net of tax (12,330) Investment (gain) loss, net of tax (3,638) 932 (37,672) Non-GAAP net income $ 182,317 $ 197,474 $ 198,375 Diluted net income per share: GAAP net income $ 0.24 $ 0.17 $ 0.30 SFAS 123R stock-based compensation, net of tax Amortization of Macromedia deferred compensation, net of tax Restructuring and other charges, net of tax (0.00) Amortization of purchased intangibles and incomplete technology, net of tax R&D tax benefit, net of tax (0.02) Investment (gain) loss, net of tax (0.01) 0.00 (0.06) Non-GAAP net income $ 0.30 $ 0.32 $ 0.33 Shares used computing diluted net income per share 604, , ,175

23 Page 8 of 10 Adobe Systems Reports First Quarter Results The following table shows the Company s reconciliation of non-gaap to GAAP operating expense for the quarters ended March 2, 2007, March 3, 2006, and December 1, March 2, 2007 March 3, 2006 December 1, 2006 GAAP operating expenses $ 430,807 $ 447,752 $ 439,178 SFAS 123R stock-based compensation (24,488) (22,528) (29,255) Amortization of Macromedia deferred compensation (6,194) (20,902) (8,372) Restructuring and other charges 1,308 (18,984) 518 Amortization of purchased intangibles and incomplete technology (17,725) (22,912) (18,762) Non-GAAP operating expenses $ 383,708 $ 362,426 $ 383,307 The following table shows the Company s reconciliation of non-gaap to GAAP operating margin for the quarter ended March 2, 2007, March 3, 2006, and December 1, March 2, 2007 March 3, 2006 December 1, 2006 GAAP operating margin 22.5% 19.8% 23.9% SFAS 123R stock-based compensation Amortization of Macromedia deferred compensation Restructuring and other charges (0.2) 2.9 (0.1) Amortization of purchased intangibles and incomplete technology Non-GAAP operating margin 34.3% 38.5% 37.5% The following table shows the Company s reconciliation of non-gaap to GAAP effective tax rate for the quarter ended March 2, March 2, 2007 GAAP effective income tax rate 17.5% SFAS 123R stock-based compensation 0.4 Amortization of Macromedia deferred compensation 0.1 Investment gain (0.1) R&D tax benefit for carryover of 2006 tax benefit 7.1 Amortization of purchased intangibles and incomplete technology 0.6 Non-GAAP effective income tax rate 25.6%

24 Page 9 of 10 Adobe Systems Reports First Quarter Results Second Quarter and Fiscal Year 2007 Non-GAAP Financial Targets The following tables show Adobe s non-gaap financial targets reconciled to GAAP financial targets included in this release. Second Quarter Fiscal 2007 Low High GAAP operating margin 23 % 25% Amortization of purchased technology 4 4 Amortization of purchased intangibles 2 2 SFAS 123R stock-based compensation 6 5 Amortization of Macromedia deferred compensation 1 1 Non-GAAP operating margin 36 % 37% Diluted net income per share: GAAP net income per share $ 0.23 $ 0.26 Amortization of purchased technology Amortization of purchased intangibles SFAS 123R stock-based compensation, net of tax Amortization of Macromedia deferred compensation, net of tax Non-GAAP net income per share $ 0.34 $ 0.36 Shares used in computing diluted net income per share GAAP effective income tax rate 24.0 % 26.0% SFAS 123R stock-based compensation Amortization of Macromedia deferred compensation Investment gain (0.1) (0.1) Amortization of purchased intangibles and incomplete technology Non-GAAP effective income tax rate 25.0 % 27.0%

25 Page 10 of 10 Adobe Systems Reports First Quarter Results The following table shows Adobe s non-gaap operating margin targets reconciled to GAAP operating margin targets included in this release for fiscal year Low High GAAP operating margin 25% 27% Amortization of purchased technology 4 4 Amortization of purchased intangibles and Macromedia deferred compensation 3 3 SFAS 123R stock-based compensation 5 4 Non-GAAP operating margin 37% 38% Adobe continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, Adobe uses non-gaap financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. Adobe s management does not itself, nor does it suggest that investors should, consider such non-gaap financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adobe presents such non-gaap financial measures in reporting its financial results to provide investors with an additional tool to evaluate Adobe s operating results in a manner that focuses on what Adobe believes to be its ongoing business operations. Adobe s management believes it is useful for itself and investors to review, as applicable, both GAAP information that includes the stock compensation impact of SFAS 123R, restructuring and other charges, amortization of purchased intangibles and incomplete technology, amortization of Macromedia deferred compensation, investment gains and losses, tax differences related to the timing and deductibility of the Macromedia acquisition and related charges and SFAS 123R stock-based compensation, the net tax impact of the R&D tax benefit, and the non-gaap measures that exclude such information in order to assess the performance of Adobe s business and for planning and forecasting in subsequent periods. Whenever Adobe uses such a non-gaap financial measure, it provides a reconciliation of the non-gaap financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-gaap financial measures to their most directly comparable GAAP financial measure as detailed above. For the first quarter of fiscal year 2007 and for fiscal year 2006, Adobe s GAAP financial information and targets include the stock compensation impact of SFAS 123R, restructuring and other charges, amortization of purchased intangibles and incomplete technology, amortization of Macromedia deferred compensation, tax differences related to the timing and deductibility of the Macromedia acquisition and related charges and SFAS 123R stock-based compensation and the net tax impact of the R&D tax benefit. Also, in accordance with GAAP, Adobe incurs investment gains and losses from its venture program. These charges are otherwise unrelated to Adobe s ongoing business operations and are excluded from its non-gaap financial information and targets.

26 Adobe Creative Suite 3: What s in each edition? C R E A T I V E L I C E N S E Take as much as you want For web, design, and video C R E A T I V E L I C E N S E Adobe Creative Suite 3 Editions Design Premium Design Standard Web Premium Web Standard Production Premium Adobe InDesign CS3 Adobe Photoshop CS3 Extended Adobe Photoshop CS3 Adobe Illustrator CS3 Adobe Acrobat 8 Professional Adobe Flash CS3 Professional Adobe Dreamweaver CS3 Adobe Contribute CS3 Adobe Fireworks CS3 Adobe After Effects CS3 Professional Adobe Premiere Pro CS3 Take as much as you want with Adobe Soundbooth CS3 Adobe Creative Suite 3 for web, design, and video Adobe Encore CS3 Additional Tools and Services in Adobe Creative Suite 3 Adobe Bridge CS3 Adobe Version Cue CS3 Adobe Device Central CS3 Adobe Dynamic Link Adobe OnLocation Adobe Ultra CS3 Adobe Stock Photos Adobe Acrobat Connect Adobe Ultra and OnLocation require Microsoft Windows. However, OnLocation is also included with the Macintosh version of Adobe Premiere Pro, Creative Suite 3 Production Premium, and Creative Suite 3 Master Collection. Mac users can run OnLocation using Boot Camp and Windows (purchased separately), or a separate Windows-based computer. Master Collection Adobe Systems Incorporated 345 Park Avenue San Jose, CA USA Adobe, the Adobe logo, Acrobat, Acrobat Connect, Adobe Premiere, After Effects, Contribute, Creative Suite, Dreamweaver, Encore, Flash, Illustrator, InDesign, Macromedia, Photoshop, Soundbooth, and Ultra are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. Macintosh is a trademark of Apple, Inc., registered in the United States and other countries. Intel is a trademark of Intel Corporation or its subsidiaries in the United States and other countries. Microsoft and Windows are registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. All other trademarks are the property of their respective owners. Adobe Stock Photos and Adobe Acrobat Connect may not be available in all countries Adobe Systems Incorporated. All rights reserved. 03/15/07 version.

27 ADOBE CREATIVE SUITE 3 PRICING OVERVIEW IN U.S. DOLLARS This document summarizes the retail and upgrade pricing for each edition of Adobe Creative Suite 3, plus all of the individual CS3 products. All prices are estimated street prices in U.S. dollars and do not include applicable taxes or shipping costs. For exact prices, please visit the Adobe Store online (store.adobe.com) or contact an Adobe Authorized Reseller. At the request of customers, Adobe is introducing more upgrade paths to Adobe Creative Suite 3. Please note the following about these paths: Customers are eligible to upgrade to an edition of Adobe Creative Suite 3 or to a standalone CS3 product from up to three versions back of a qualifying product. For example, a customer who owns Adobe Photoshop 7.0, CS, or CS2 software may upgrade to most editions of Adobe Creative Suite 3; or, as another example, a customer who owns Adobe InDesign 2.0, CS, or CS2 may upgrade to InDesign CS3. Customers who own any previous version of Adobe Premiere or Adobe Premiere Pro may upgrade to Adobe Premiere Pro CS3 or Adobe Creative Suite 3 Production Premium. Customers who purchase a CS3 version of a standalone product are eligible to upgrade later to an edition of Adobe Creative Suite 3. For example, a customer with Adobe Illustrator CS3 can move to Creative Suite 3 Design Premium for the upgrade price. Information about pricing in Euros and Yen, educational pricing, and volume licensing is available separately. C R E A T I V E Take as much as For web, design, Adobe Creative Products Estimated U.S. street price Upgrade from these products Adobe Creative Suite 3 Design Premium $1799 Adobe Creative Suite 2.x Premium Adobe Creative Suite 2.x Standard Adobe Creative Suite 1.x Premium Adobe Creative Suite 1.x Standard Macromedia Studio 8 Macromedia Studio MX 2004 Macromedia Studio MX Adobe Creative Suite 3 Design Standard $1199 Adobe Creative Suite 2.x Premium Adobe Creative Suite 2.x Standard Adobe Creative Suite 1.x Premium Adobe Creative Suite 1.x Standard Adobe Creative Suite 3 Web Premium $1599 Macromedia Studio 8 Macromedia Studio MX 2004 Macromedia Studio MX Adobe Creative Suite 2.x Premium Adobe Creative Suite 2.x Standard Adobe Creative Suite 1.x Premium Adobe Creative Suite 1.x Standard for this estimated U.S. street price Upgrade from these products $599 Adobe InDesign 2.0, CS, CS2, or CS3 Adobe Photoshop 7.0, CS, CS2, CS3 or CS3 Extended Adobe Illustrator 10, CS, CS2, or CS3 Flash MX, MX 2004, MX Professional 2004, Basic 8, Professional 8, or CS3 Professional Dreamweaver MX, MX 2004, 8, or CS3 $399 Adobe InDesign 2.0, CS, CS2, or CS3 Adobe Photoshop 7.0, CS, CS2, or CS3 Adobe Illustrator 10, CS, CS2, or CS3 $499 Adobe Photoshop 7.0, CS, CS2, CS3 or CS3 Extended Adobe Illustrator 10, CS, CS2, or CS3 Flash MX, MX 2004, MX Professional 2004, Basic 8, Professional 8, or CS3 Professional Dreamweaver MX, MX 2004, 8, or CS3 for this estimated U.S. street price $1599 $899 $1399 C R E A T I V E L Take as much as you Adobe Creative Suit Customers who purchased Adobe Creative 2.3 Premium can upgrade to the following editions of Adobe Creative Suite 3 at these estimated street prices (calculated by subtracting the upgrade price for Creative Suite 2.3 from the upgrade price for the edition of Adobe Creative Suite 3): Creative 3 Design Premium for U.S.$440 Creative Suite 3 Design Standard for U.S. $240 Creative Suite 3 Web Premium for U.S. $340 Creative Suite 3 Master Collection for U.S. $1840 (see next page for details) Customers may obtain these upgrade prices directly from Adobe Customer Service, except for volume license customers who should contact their Adobe License Center or Authorized Reseller.