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What changed in Adobe Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Adobe Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+444 added−470 removedSource: 10-K (2023-01-17) vs 10-K (2022-01-21)

Top changes in Adobe Inc.'s 2023 10-K

444 paragraphs added · 470 removed · 360 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

127 edited+32 added−27 removed105 unchanged
Biggest changeAfter Effects works together seamlessly with other Adobe apps such as Premiere Pro, Photoshop, Illustrator, Adobe XD and Adobe Audition, as well as third party software and hardware partners. 10 Table of Content s Frame.io Frame.io is our cloud-native video collaboration platform that streamlines the video production process by enabling editors and key project stakeholders to collaborate with real-time upload, review and approval, frame-accurate commenting, annotations and more.
Biggest changeFrame.io Frame.io is our cloud-native video collaboration platform that streamlines the video production process by enabling editors and key project stakeholders to collaborate with real-time upload, review and approval, frame-accurate commenting, annotations and more. Frame.io is now directly integrated into Premiere Pro and After Effects to allow video creators to request and receive streamlined frame-specific comments directly in those applications.
Capabilities include lead nurturing and management, predictive account profiling for creating account-based experiences, integrated sales application and integrations with third-party marketing apps and Adobe Experience Cloud. Marketo Engage simplifies how companies plan, orchestrate and measure engagement at each stage of the customer experience, and allows companies to better align marketing and sales to engage high priority accounts.
Capabilities include lead nurturing and management, predictive account profiling for creating account-based experiences, integrated sales application and integrations with third-party marketing apps and Adobe Experience Cloud. Adobe Marketo Engage simplifies how companies plan, orchestrate and measure engagement at each stage of the customer experience, and allows companies to better align marketing and sales to engage high priority accounts.
Narayen serves as lead independent director on the board of directors of Pfizer Inc., a multinational pharmaceutical corporation. Mr. Narayen holds a B.S. in Electronics Engineering from Osmania University in India, a M.S. in Computer Science from Bowling Green State University and an MBA from from the University of California, Berkeley.
Narayen serves as lead independent director on the board of directors of Pfizer Inc., a multinational pharmaceutical corporation. Mr. Narayen holds a B.S. in Electronics Engineering from Osmania University in India, a M.S. in Computer Science from Bowling Green State University and an MBA from the University of California, Berkeley.
With Document Cloud, users can create, review, approve, sign and track documents and store them in the cloud for easy access and sharing, across desktop and mobile devices. Document Cloud includes Adobe Acrobat DC, Adobe Sign, Adobe Scan and other apps and API services that work standalone or integrate with users’ existing productivity apps, processes and systems.
With Document Cloud, users can create, review, approve, sign and track documents and store them in the cloud for easy access and sharing, across desktop and mobile devices. Document Cloud includes Adobe Acrobat, Adobe Acrobat Sign, Adobe Scan and other apps and API services that work standalone or integrate with users’ existing productivity apps, processes and systems.
Acrobat Web We have brought many of the tools and features of Adobe Acrobat DC to the web with Acrobat web, which offers single-click tools for users to edit, comment, convert, organize and sign PDF documents directly within the web browser. Acrobat web enables quick, easy-to-access results, while introducing users to the power of our offerings.
Acrobat Web We have brought many of the tools and features of Adobe Acrobat to the web with Acrobat web, which offers single-click tools for users to edit, comment, convert, organize and sign PDF documents directly within the web browser. Acrobat web enables quick, easy-to-access results, while introducing users to the power of our offerings.
Adobe Scan powers mobile devices with scanning capabilities, transforming paper documents into full-featured PDFs. Adobe Sign also provides a green alternative to costly, paper-based solutions and offers a modern, convenient solution for customers to digitally manage their documents, automate processes and contract workflows.
Adobe Scan powers mobile devices with scanning capabilities, transforming paper documents into full-featured PDFs. Adobe Acrobat Sign also provides a green alternative to costly, paper-based solutions and offers a modern, convenient solution for customers to digitally manage their documents, automate processes and contract workflows.
Adobe Acrobat DC At the heart of Adobe Document Cloud is Adobe Acrobat DC, the industry standard for creating, converting and editing PDFs. Acrobat enables users to create secure, reliable and compact Adobe PDF documents and enables automated, collaborative workflows with a rich set of commenting, editing and sharing tools and direct integration with Adobe Sign.
Adobe Acrobat At the heart of Adobe Document Cloud is Adobe Acrobat, the industry standard for creating, converting and editing PDFs. Acrobat enables users to create secure, reliable and compact Adobe PDF documents and enables automated, collaborative workflows with a rich set of commenting, editing and sharing tools and direct integration with Adobe Acrobat Sign.
It captures paper documents as images and transforms them into full-featured and versatile PDFs via Adobe Document Cloud services for instant sharing with others. Adobe Sign Our cloud-based e-signature service, Adobe Sign, allows users to securely electronically send and sign any document from any device.
It captures paper documents as images and transforms them into full-featured and versatile PDFs via Adobe Document Cloud services for instant sharing with others. Adobe Acrobat Sign Our cloud-based e-signature service, Adobe Acrobat Sign, allows users to securely electronically send and sign any document from any device.
Our wellness reimbursement of up to $600 per year for each eligible employee, lifestyle coaching, global wellbeing speaker series and ergonomic programs help to support employees’ physical wellbeing. In addition, our financial education and financial wellness coaches offer employees tools and resources to reach their personal financial goals.
Our wellness reimbursement of up to $600 per year for each eligible employee, lifestyle coaching, global wellbeing speaker series and ergonomic programs help to support employees’ physical and emotional wellbeing. In addition, our financial education and financial wellness coaches offer employees tools and resources to reach their personal financial goals.
Lewnes joined Adobe in November 2006 and currently serves as Chief Marketing Officer and Executive Vice President, Corporate Strategy and Development. Ann has held the position of Chief Marketing Officer for over a decade and since December 2020, she also leads Adobe’s corporate strategy and strategic M&A efforts globally as Executive Vice President, Corporate Strategy and Development.
Lewnes joined Adobe in November 2006 and currently serves as Chief Marketing Officer and Executive Vice President, Corporate Strategy and Development. Ann has held the position of Chief Marketing Officer for over a decade and since December 2020, she also leads Adobe’s corporate strategy and M&A efforts globally as Executive Vice President, Corporate Strategy and Development.
With content creation, consumption and monetization happening across all surfaces and media types, we aim to deliver new ways to unleash creativity and accelerate document productivity, and we believe this is an area of significant opportunity for growth through expansion of our customer base.
With content creation, consumption, collaboration and monetization happening across all surfaces and media types, we aim to deliver new ways to unleash creativity and accelerate document productivity, and we believe this is an area of significant opportunity for growth through expansion of our customer base.
Acrobat Reader is available on mobile devices, with many of its standard features available on the go, and features “Liquid Mode” to automatically reformat PDFs for quick navigation and easier consumption on smaller screens. Acrobat is also available on the web, delivering quick results for common PDF actions with a single click.
Acrobat Reader is available on mobile devices, with many of its standard features available on the go, and features “Liquid Mode” to automatically reformat PDFs for quick navigation and easier consumption on smaller screens. Acrobat is available on the web, delivering quick results for common PDF actions with a single click.
Diversity and Inclusion Adobe For All is our vision to advance diversity and inclusion across the Company. We recognize that everyone deserves respect and equal treatment, regardless of gender, race, ethnicity, age, disability, sexual orientation, gender identity, cultural background or religious belief.
Diversity and Inclusion Adobe For All is our vision to advance diversity, equity and inclusion across the Company. We recognize that everyone deserves respect and equal treatment, regardless of gender, race, ethnicity, age, disability, sexual orientation, gender identity, cultural background or religious belief.
PRINCIPAL PRODUCTS AND SERVICES Digital Media Offerings Creative Cloud Adobe Creative Cloud is a cloud-based subscription app that enables creative professionals and enthusiasts alike to express themselves with apps and services for photography, design, video, web and more that connect across devices, platforms and geographies.
PRINCIPAL PRODUCTS AND SERVICES Digital Media Offerings Creative Cloud Adobe Creative Cloud is a cloud-based subscription app that enables creative professionals and enthusiasts alike to express themselves and collaborate with apps and services for photography, design, video, web and more that connect across devices, platforms and geographies.
The following is a brief description of our solutions for Customer Journeys. Marketo Engage Marketo Engage is a customer experience management solution optimized for B2B, cross-channel campaigns by bringing together planning, engagement and measurement capabilities into an integrated marketing platform.
The following is a brief description of our solutions for Customer Journeys. Adobe Marketo Engage Adobe Marketo Engage is a customer experience management solution optimized for B2B, cross-channel campaigns by bringing together planning, engagement and measurement capabilities into an integrated marketing platform.
We compete in a constantly evolving market and face significant direct or indirect competition from desktop software companies; device, hardware and camera manufacturers; operating system developers that integrate digital imaging and image management features with their operating systems; smartphone and tablet manufacturers that integrate imaging and video software; proprietary and open source web-authoring tools; mobile-first applications; social media platforms that provide imaging and video offerings, including editing capabilities; stock content marketplaces; and digital document creation, storage, collaboration and signing providers.
We compete in a constantly evolving market and face significant direct or indirect competition from software companies; device, hardware and camera manufacturers; operating system developers that integrate digital imaging and image management features with their operating systems; smartphone and tablet manufacturers that integrate imaging and video software; proprietary and open source web-authoring tools; mobile-first applications; web-native tools and platforms; social media platforms that provide imaging and video offerings, including editing capabilities; stock content marketplaces; and digital document creation, storage, collaboration and signing providers.
Publishing and Advertising Our Publishing and Advertising product offerings faces competition from large-scale publishing systems and XML-based publishing companies, as well as lower-end desktop publishing products. Our web conferencing product faces competition from a number of established products from other large software companies.
Publishing and Advertising Our Publishing and Advertising product offerings face competition from large-scale publishing systems and XML-based publishing companies, as well as lower-end desktop publishing products. Our web conferencing product faces competition from a number of established products from other large software companies.
Through web and mobile applications, Adobe Sign enables users to e-sign documents and forms, send them for signature, track responses in real time and obtain instant signatures with in-person signing.
Through web and mobile applications, Adobe Acrobat Sign enables users to e-sign documents and forms, send them for signature, track responses in real time and obtain instant signatures with in-person signing.
The following is a brief description of our solutions for Customer Data and Insights. Adobe Analytics Adobe Analytics helps our customers create a holistic view of their business by turning consumer interactions into actionable insights.
The following is a brief description of our solutions for Customer Data and Insights. Adobe Analytics Adobe Analytics helps our customers create a holistic view of their business by turning customer interactions into actionable insights.
We believe competitive factors in our markets include the proven performance, security, scalability, flexibility and reliability of services; the strategic relationships and integration with third-party applications; the intuitiveness and visual appeal of user interfaces; demonstrable cost-effective benefits to customers; pricing; the flexibility of services to match changing business demands; enterprise-level customer service and training; brand leadership; the usability of services; real-time data and reporting; independence from portals and search engines; the ability to deploy the services globally; and success in educating customers in how to utilize services effectively.
We believe competitive factors in our markets include the proven performance, security, scalability, flexibility and reliability of services; the strategic relationships and integration with third-party applications; the intuitiveness and visual appeal 8 Table of Contents of user interfaces; demonstrable cost-effective benefits to customers; pricing; the flexibility of services to match changing business demands; enterprise-level customer service and training; brand leadership; the usability of services; real-time data and reporting; independence from portals and search engines; the ability to deploy the services globally; and success in educating customers in how to utilize services effectively.
Adobe Acrobat Reader Adobe Acrobat Reader, our free software for reliable viewing, annotating and printing of Adobe PDF documents on a variety of desktop and mobile platforms, offers features to create, edit, export, combine, share and collaborate on PDF documents on mobile devices, including the “Liquid Mode” feature that automatically reformats PDFs for quick navigation and consumption on smaller screens.
Adobe Acrobat Reader Adobe Acrobat Reader, our free software for reliable viewing, annotating and printing of Adobe PDF documents on a variety of desktop and mobile platforms, offers features to create, edit, export, combine, share and collaborate on PDF documents on mobile devices, including the “Liquid Mode” feature that automatically reformats PDFs for quick navigation and consumption on mobile devices.
Adobe Campaign Adobe Campaign is optimized for managing B2C cross-channel marketing campaigns. Adobe Campaign enables marketers to orchestrate the entire customer journey and use rich customer data to create, coordinate and deliver dynamic, personalized experiences that are synchronized across channels, including email, mobile and offline, and determined by each consumer’s behaviors and preferences.
Adobe Campaign Adobe Campaign is optimized for managing B2C cross-channel marketing campaigns. Adobe Campaign enables marketers to orchestrate the entire customer journey and use rich customer data to create, coordinate and deliver dynamic, personalized experiences that are synchronized across channels, including email, mobile and offline, and determined by each customer’s behaviors and preferences.
We believe we are uniquely positioned to be a leader in both of these areas, where our mission to change the world through digital experiences has never been more relevant, as people seek new ways to communicate and businesses continue to invest in digital transformation.
We believe we are uniquely positioned to be a leader in both of these areas, where our mission to change the world through digital experiences has never been more relevant, as people seek new ways to create, collaborate and communicate and businesses continue to invest in digital transformation.
Future of Work Digital transformation and the COVID-19 pandemic has fundamentally changed how people work, and we are leaning into digital-first workflows, tools and resources to enable us to be productive, wherever we are. We also believe in the value of people being together—fostering trust, relationships and collaboration and innovation.
Future of Work Digital transformation and the COVID-19 pandemic have fundamentally changed how people work, and we are leaning into digital-first workflows, tools and resources to enable us to be productive, wherever we are. We also believe in the value of people being together—fostering trust, relationships and collaboration and innovation.
COMPETITION Overview Adobe participates in a highly competitive environment globally, where our competitors vary by industry segment and range from large multinational enterprises to smaller entities with a more narrowly focused product offering. Across our business, we recognize hundreds of competitors worldwide.
COMPETITION Overview Adobe participates in a highly competitive environment globally, where our competitors vary by industry segment and range from large multinational enterprises to smaller entities with more narrowly focused product offerings. Across our business, we recognize hundreds of competitors worldwide.
Belsky also serves on the advisory board of Cornell University's Entrepreneurship Program and serves on the board of trustees of the Smithsonian Cooper-Hewitt National Design Museum. Gloria Chen 57 Chief People Officer and Executive Vice President, Employee Experience Ms. Chen joined Adobe in 1997 and currently serves as Chief People Officer and Executive Vice President, Employee Experience.
Belsky also serves on the advisory board of Cornell University's Entrepreneurship Program and serves on the board of trustees of the Smithsonian Cooper-Hewitt National Design Museum. Gloria Chen 58 Chief People Officer and Executive Vice President, Employee Experience Ms. Chen joined Adobe in 1997 and currently serves as Chief People Officer and Executive Vice President, Employee Experience.
We define pay parity as ensuring that employees in the same job and location are paid fairly regardless of their gender or ethnicity. In fiscal 2021, we again achieved global gender pay parity and U.S. URM and non-URM pay parity.
We define pay parity as ensuring that employees in the same job and location are paid fairly regardless of their gender or ethnicity. In fiscal 2022, we again achieved global gender pay parity and U.S. URM and non-URM pay parity.
In other instances, we have licensed or purchased the intellectual property ownership rights of programs developed by others with license or technology transfer agreements that may obligate us to pay a flat license fee or royalties, typically based on a dollar amount per unit or a percentage of the revenue generated by those programs.
In other instances, we have licensed or purchased the intellectual property ownership rights of programs 15 Table of Contents developed by others with license or technology transfer agreements that may obligate us to pay a flat license fee or royalties, typically based on a dollar amount per unit or a percentage of the revenue generated by those programs.
Daniel Durn 55 Executive Vice President and Chief Financial Officer Mr. Durn joined Adobe in October 2021 as Executive Vice President and Chief Financial Officer. Mr. Durn most recently served as a Senior Vice President and CFO of Applied Materials from August 2017 to October 2021.
Daniel Durn 56 Executive Vice President and Chief Financial Officer Mr. Durn joined Adobe in October 2021 as Executive Vice President and Chief Financial Officer. Mr. Durn most recently served as a Senior Vice President and CFO of Applied Materials from August 2017 to October 2021.
Substance 3D Substance 3D is an ecosystem of desktop apps, including Substance 3D Stager, Substance 3D Painter, Substance 3D Sampler and Substance 3D Designer.
Substance 3D Substance 3D is an ecosystem of desktop apps, including Substance 3D Stager, Substance 3D Painter, Substance 3D Sampler, Substance 3D Designer and Substance 3D Modeler.
Our Digital Media segment is centered around Adobe Creative Cloud and Adobe Document Cloud, which include Creative Cloud Express, Photoshop, Illustrator, Lightroom, Premiere Pro, Acrobat, 3 Table of Content s Adobe Sign and many more products, offering a variety of tools for creative professionals, communicators and other consumers.
Our Digital Media segment is centered around Adobe Creative Cloud 3 Table of Contents and Adobe Document Cloud, which include Adobe Express, Photoshop, Illustrator, Lightroom, Premiere Pro, Acrobat, Adobe Acrobat Sign and many more products, offering a variety of tools for creative professionals, communicators and other consumers.
We believe in creativity for all, and Creative Cloud addresses the needs of all content creators, from creative professionals, such as artists, designers, developers, students and administrators, to knowledge workers, marketers, educators, enthusiasts and communicators and to consumers.
We believe in creativity for all, and Creative Cloud addresses the needs of all content creators, from creative professionals, such as artists, designers, developers, students and administrators, to knowledge workers, marketers, educators, enthusiasts, communicators and 4 Table of Contents consumers.
Experience Cloud is comprised of the following sets of solutions for our customers: Adobe Experience Platform; Data, Insights and Audiences; Content and Commerce; Customer Journeys; Marketing Workflow; and Digital Enrollment and Onboarding, which are each described below.
Experience Cloud is comprised of the following sets of solutions for our customers: Adobe Experience Platform; Data, Insights and Audiences; 11 Table of Contents Content and Commerce; Customer Journeys; Marketing Workflow; and Digital Enrollment and Onboarding, which are each described below.
We also recently released Adobe Experience Manager Screens, which allows customers to connect online and in-venue experiences through digital signage, and Adobe Developer App Builder, which provides a set of tools and services to developers to extend Experience Manager to customers’ existing infrastructure and apply unique parameters to make the UI look and feel unique for their organizations.
Adobe Experience Manager Screens allows customers to connect online and in-venue experiences through digital signage, and Adobe Developer App Builder, which provides a set of tools and services to developers to extend Experience Manager to customers’ existing infrastructure and apply unique parameters to make the UI look and feel unique for their organizations.
With Document Cloud, we believe we compete well based on the global use of PDF, our features and functionalities, which are critical tools for millions of business communicators, and our brand leadership. 8 Table of Content s Digital Experience Our Digital Experience business unit competes in markets that are growing rapidly and characterized by intense competition.
With Document Cloud, we believe we compete well based on the global use of PDF, our features and functionalities, which are critical tools for millions of business communicators, and our brand leadership. Digital Experience Our Digital Experience business unit competes in markets that are growing rapidly and characterized by intense competition.
MARKET OVERVIEW This overview provides an explanation of our markets and a discussion of strategic opportunities in fiscal 2022 and beyond for each of our segments.
MARKET OVERVIEW This overview provides an explanation of our markets and a discussion of strategic opportunities in fiscal 2023 and beyond for each of our segments.
Creative Cloud Express Creative Cloud Express is our web and mobile app directed towards first-time creators, communicators and creative professionals that enables easy-to-use, efficient content creation, featuring guided tools, one-click solutions for quick projects, simple drag and drop functions, collaboration tools, thousands of templates and access to more than 20,000 fonts and the entire Adobe Stock photo collection.
Adobe Express Adobe Express is our web-native platform and mobile app directed towards first-time creators and communicators that enables easy-to-use, efficient content creation, featuring guided tools, one-click solutions for quick projects, simple drag and drop functions, collaboration tools, thousands of templates and access to more than 20,000 fonts and the entire Adobe Stock photo collection.
Our local field offices include locations in Australia, Belgium, Brazil, Canada, China, Denmark, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Republic of Moldova, the Netherlands, Poland, Romania, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, the United Kingdom and the United States.
Our local field offices include locations in Armenia, Australia, Belgium, Brazil, Canada, China, Denmark, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Mexico, Republic of Moldova, the Netherlands, New Zealand, Poland, Romania, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, the United Kingdom and the United States.
Graphics professionals and professional publishers continue to require quality, reliability and efficiency in production printing, and our Adobe PostScript and Adobe PDF printing technologies provide advanced functionality to meet the sophisticated requirements of this marketplace.
Graphics professionals and professional publishers continue to require quality, reliability and efficiency in production printing, and our Adobe PostScript 7 Table of Contents and Adobe PDF printing technologies provide advanced functionality to meet the sophisticated requirements of this marketplace.
During fiscal 2021, our total attrition rate was 12%. We have not experienced work stoppages and believe our employee relations are good. Our employee listening program helps us understand employee sentiment on a wide range of topics throughout the employee lifecycle, providing insights that inform our decisions about employee programs, talent risks, management opportunities, employee networks and more.
During fiscal 2022, our total attrition rate was 11.7%. We have not experienced work stoppages and believe our employee relations are good. Our employee listening program helps us understand employee sentiment on a wide range of topics throughout the employee lifecycle, providing insights that inform our decisions about employee programs, talent risks, management opportunities, employee networks and more.
We believe that through these programmatic services and support, our joint customers benefit greatly from the combination of Adobe technology and the deep customer context that our global partners represent.
We believe that 14 Table of Contents through these programmatic services and support, our joint customers benefit greatly from the combination of Adobe technology and the deep customer context that our global partners represent.
In fiscal year 2021, 76% of our employees participated in our most recent engagement survey. We encourage you to visit our website for more detailed information regarding our Human Capital programs and initiatives. Nothing on our website shall be deemed incorporated by reference into this Annual Report on Form 10-K.
In fiscal 2022, 79% of our employees participated in our most recent engagement survey. We encourage you to visit our website for more detailed information regarding our Human Capital programs and initiatives. Nothing on our website shall be deemed incorporated by reference into this Annual Report on Form 10-K.
Our collaboration tools and services help us to further expand our universe of business customers beyond creative professionals to other stakeholders who use our products for review and approval purposes, copywriting or leveraging templates for social media marketing. We utilize channel partners to target mid-size creative customers with our Creative Cloud for teams offering.
Our collaboration tools and services help us to further expand our universe of customers beyond creative professionals to other stakeholders who use our products for review and approval, copywriting, social media marketing or other social content. We utilize channel partners to target mid-size creative customers with our Creative Cloud for teams offering.
Driven by AI and machine learning, Adobe Analytics collects, organizes and structures vast streams of data from virtually any channel to deliver real-time insights that are easy for users to process, analyze and share to quickly identify problems and opportunities and to drive conversion and relevant consumer experiences.
Driven by AI and machine learning, Adobe Analytics collects, organizes and structures vast streams of data from virtually any channel, including streaming web data, to deliver real-time insights that are easy for users to process, analyze and share to quickly identify problems and opportunities and to drive conversion and relevant customer experiences.
With Adobe Target, our customers have the tools they need to create omnichannel personalized experiences and create A/B and multivariate tests, done at scale through AI-powered automation so they can quickly discover 13 Table of Content s the best customer experience and deliver that experience across all touchpoints.
With Adobe Target, our customers have the tools they need to create omnichannel personalized experiences and create A/B and multivariate tests, done at scale through AI-powered automation so they can quickly discover the best customer experience and deliver that experience across all touchpoints.
The information posted to our website is not incorporated into this Annual Report on Form 10-K. OFFERINGS For almost 40 years, Adobe’s innovations have transformed how individuals, teams, businesses and governments engage and interact across all types of media.
The information posted to our website is not incorporated into this Annual Report on Form 10-K. OFFERINGS For four decades, Adobe’s innovations have transformed how individuals, teams, businesses and governments engage and interact across all types of media.
The information posted to our website is not incorporated into this Annual Report on Form 10-K. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Adobe’s executive officers as of January 21, 2022 are as follows: Name Age Positions Shantanu Narayen 58 Chairman and Chief Executive Officer Mr. Narayen currently serves as our Chairman of the Board and Chief Executive Officer.
The information posted to our website is not incorporated into this Annual Report on Form 10-K. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Adobe’s executive officers as of January 17, 2023 are as follows: Name Age Positions Shantanu Narayen 59 Chairman and Chief Executive Officer Mr. Narayen currently serves as our Chairman of the Board and Chief Executive Officer.
We aim to achieve this by using data-driven customer engagement, driving product-led growth through innovation to make our creative applications more accessible and easier to learn and meeting customer needs holistically to increase the value of our products.
We aim to achieve this by using data-driven customer engagement, driving product-led growth to make our creative applications more frictionless and accessible, and meeting customer needs holistically to increase the value of our products.
To better serve our current users and potential users, we offer free and premium levels for certain applications, such as Creative Cloud Express, and targeted packages and suites, such as our Photography Plan and Substance 3D Collection. We use our data-driven operating model to optimize conversion of our users of free apps and trials to paid subscribers.
To better serve our current users and potential users, we offer free and premium levels for certain applications, such as Adobe Express, and targeted packages and suites, such as our Photography Plan and Substance 3D Collection. We use our data-driven operating model and product-led growth strategy to optimize conversion of our users of free apps and trials to paid subscribers.
We believe we have significant opportunities to grow by expanding content-first, task-based creativity, advancing every creative category across desktop, web and mobile, expanding 3D and immersive content creation, enabling seamless collaboration across all stakeholders and inspiring and empowering the creative community through sharing and monetization.
We believe we have significant opportunities to grow by advancing every creative category across devices and the web, expanding content-first, task-based creativity with Adobe Express and 3D and immersive content creation with Substance 3D, enabling seamless collaboration across all stakeholders and inspiring and empowering the creative community through sharing and monetization.
Substance 3D Modeler, which is currently only available in beta form, interprets spatial input from the physical world, allowing the user to sculpt a model as if in a real workshop, using natural, fluid gestures of the artistic flow, and switch between VR and desktop, at every project stage.
Substance 3D Modeler, which is available on desktop and Meta Quest VR headsets, interprets spatial input from the physical world, allowing the user to sculpt a model as if in a real workshop, using natural, fluid gestures of the artistic flow, and switch between VR and desktop, at every project stage.
Prior to that, Dan was a Vice President of Mergers and Acquisitions in the technology practice at Goldman Sachs & Company. Mr. Durn received his MBA in Finance from Columbia Business School and graduated from the U.S. Naval Academy with a B.S. in Control Systems Engineering.
Prior to that, Dan was a Vice President of Mergers and Acquisitions in the technology practice at Goldman Sachs & Company. Mr. Durn received his MBA in Finance from Columbia Business School and graduated from the U.S. Naval Academy with a B.S. in Control Systems Engineering. He served in the Navy for six years, reaching the rank of lieutenant.
Chen holds a BS in electrical engineering from the University of Washington, an M.S. in electrical and computer engineering from Carnegie Mellon University and an MBA from Harvard Business School. 19 Table of Content s Name Age Positions Ann Lewnes 60 Chief Marketing Officer and Executive Vice President, Corporate Strategy and Development Ms.
Chen holds a BS in electrical engineering from the University of Washington, an M.S. in electrical and computer engineering from Carnegie Mellon University and an MBA from Harvard Business School. Ann Lewnes 61 Chief Marketing Officer and Executive Vice President, Corporate Strategy and Development Ms.
We also offer a range of other creative tools and services, including hobbyist products, such as Photoshop Elements and Premiere Elements; libraries of creative assets, such as Adobe Stock and Adobe Fonts; mobile-first apps, such as Photoshop Camera; and Creative Cloud Libraries, a central place for users to store their assets.
We also offer a range of other creative tools and services, including libraries of creative assets, such as Adobe Stock and Adobe Fonts; mobile-first apps, such as Lightroom Mobile; and Creative Cloud Libraries, a central place for users to store their assets.
We believe that by growing the awareness of electronic signatures in the broader contract delivery and signing market, utilizing Adobe Sensei to enhance customer experiences through machine learning and AI and continuing to add new capabilities to our Acrobat, Adobe Scan and Adobe Sign offerings, we can help our customers continue to migrate away from paper-based processes and adopt our solutions to modernize and digitize document experiences, growing our revenue with this business in the process.
We believe that by using Adobe Sensei to enhance customer experiences through machine learning and AI and continuing to add new capabilities to our Acrobat, Adobe Scan and Adobe Acrobat Sign offerings, we can help our customers continue to migrate away from paper-based processes and adopt our solutions to modernize and digitize document experiences, growing our revenue with this business in the process.
As part of our strategy, we use a data-driven operating model and our Digital Experience solutions offered through Adobe 5 Table of Content s Experience Cloud to drive and optimize customer awareness, engagement and licensing of our creative products and services at every stop of the customer journey through our website and across other channels.
We use a data-driven operating model and our Adobe Experience Cloud solutions to drive and optimize customer awareness, engagement and licensing of our creative products and services at every stop of the customer journey through our website and across other channels.
Adobe XD is available as a free or premium version. Adobe Stock Adobe Stock provides designers and businesses with access to millions of high-quality, curated, royalty-free photos, vectors, illustrations, videos, templates, audio and 3D assets, for all of their creative projects.
Adobe Stock Adobe Stock provides designers and businesses with access to millions of high-quality, curated, royalty-free photos, vectors, illustrations, videos, templates, audio and 3D assets, for all of their creative projects.
Rao was with Microsoft Corporation for 11 years, serving in a variety of roles including Associate General Counsel of Intellectual Property and Licensing. From 1997 until March 2001, he served as a patent attorney at Fenwick & West. He holds a B.S. in Electrical Engineering from Villanova University and a JD from George Washington University.
Rao was with Microsoft Corporation for 11 years, serving in a variety of roles including Associate General Counsel of Intellectual Property and Licensing. From 1997 until March 2001, he served as a patent attorney at Fenwick & West.
This open architecture offers scalability with a wide variety of supporting products and services, empowers users to quickly develop innovative applications to interact with consumers and enables a broad industry ecosystem. To drive growth of Adobe Experience Cloud, we are focused on delivering the best customer experience management solutions for B2E, enterprise and mid-market through our applications, services and platform.
This open architecture offers scalability with a wide variety of supporting products and services, empowers users to quickly develop innovative applications to interact with customers and enables a broad industry ecosystem. To drive growth of Adobe Experience Cloud, we are focused on delivering the best customer experience management solutions across B2B and B2C buyers, and both enterprise and mid-market segments.
Digital Media Opportunity In today’s digital world, design and creativity have never been more relevant, providing a significant market opportunity for Adobe in digital media. Everyone has a story to tell—from creative professionals, to communicators, to consumers, to first-time creators—and they need the tools, services and capabilities at their fingertips to tell those stories on an ever-increasing number of canvasses.
Digital Media Opportunity In today’s digital world, content is fueling the global economy and design and creativity have never been more relevant, providing a significant market opportunity for Adobe in digital media. Everyone has a story to tell, and they need the tools, services and capabilities at their fingertips to tell those stories on an ever-increasing number of canvasses.
AVAILABLE INFORMATION Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our Investor Relations website at www.adobe.com/adbe as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We also provide forums for managers and employees to have regular conversations about their career and contributions throughout the year. 17 Table of Contents AVAILABLE INFORMATION Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our Investor Relations website at www.adobe.com/adbe as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Trillions of PDF documents are created every year, which reflects the growing role PDF plays across practically every segment of the economy, and there are hundreds of millions of users that engage with PDF files on a daily basis, in industries such as legal, financial services and publishing, as well as a broader array of communicators and Acrobat Reader users, who can also use the expanded capabilities provided by our Acrobat applications and the document services platform found in Document Cloud.
There are hundreds of millions of users that engage with PDF files on a daily basis, in industries such as legal, financial services and publishing, as well as a broader array of communicators and Acrobat Reader users, who can also use the expanded capabilities provided by our Acrobat applications and the document services platform found in Document Cloud.
Business customers increasingly have the same expectations, which drives business-to-business (“B2B”) companies to deliver business-to-consumer (“B2C”) experiences with a “business-to-everyone” (“B2E”) strategy. Delivering the best, personalized experience to a consumer at a given moment requires the right combination of data, insights and content across multiple channels in real time and at scale.
Business customers increasingly have the same expectations, driving business-to-business (“B2B”) companies to deliver equally engaging and seamless experiences as business-to-consumer (“B2C”) companies and enterprise brands to adopt “business-to-everyone” (“B2E”) mindsets. Delivering the best, personalized experience to a consumer at a given moment requires the right combination of data, insights and content across multiple channels in real time and at scale.
New features include integration with Adobe Real-Time Customer Data Platform, same page segment qualification and enhanced AI-powered capabilities. Journey Optimizer Journey Optimizer helps brands drive engagement by providing tools to manage inbound customer engagement with outbound omnichannel campaigns, offering personalized content based on real-time profiles, data-driven insights, cloud-native scalability and API extensibility, within a single application.
Adobe Journey Optimizer Adobe Journey Optimizer helps brands drive engagement by providing tools to manage inbound customer engagement with outbound omnichannel campaigns, offering personalized content based on real-time profiles, data-driven insights, cloud-native scalability and API extensibility, within a single application.
We are continually investing in our global workforce to further drive diversity and inclusion, provide fair and market-competitive pay and benefits to support our employees’ wellbeing, and foster their growth and development. As of December 3, 2021, we employed 25,988 people, of which approximately 52% were in the United States and 48% were in our international locations.
We are continually investing in our global workforce to further drive diversity and inclusion, provide fair and market-competitive pay and benefits to support our employees’ wellbeing, and foster their growth and development. As of December 2, 2022, we employed 29,239 people, of which 51% were in the United States and 49% were in our international locations.
Dana Rao 52 Executive Vice President, General Counsel and Corporate Secretary Mr. Rao currently serves as our Executive Vice President, General Counsel and Corporate Secretary.
Dana Rao 53 Executive Vice President, General Counsel & Chief Trust Officer and Corporate Secretary Mr. Rao currently serves as our Executive Vice President, General Counsel & Chief Trust Officer and Corporate Secretary.
Adobe Experience Manager Assets offers cloud-native digital asset management to create, manage, deliver and optimize personalized experiences at scale. Adobe Experience Manager Forms provides a cloud-native and scalable solution for personalized end-to-end digital customer onboarding and enrollment, enabling users to create, manage, publish and approve forms and documents.
Adobe Experience Manager Forms provides a cloud-native and scalable solution for personalized end-to-end digital customer onboarding and enrollment, enabling users to create, manage, publish and approve forms and documents.
HUMAN CAPITAL Our values—genuine, innovative, involved and exceptional—are built on the foundation that our people and the way we treat one another promote creativity, innovation and performance, which spur the Company’s success.
HUMAN CAPITAL Our culture is built on the foundation that our people and the way we treat one another promote creativity, innovation and performance, which spur the Company’s success.
In our Creative Cloud business, we continue to employ a pricing strategy, as appropriate, to move our customers to better-value offerings as well as attract past customers and potential users to try out our products and ultimately subscribe.
We also continue to employ a pricing strategy, as appropriate, to migrate our customers to higher-value offerings as well as attract past customers and potential users to try out our products and ultimately subscribe.
Adobe Fresco is our illustration app, available as a free or premium version and on iPhone, iPad, Microsoft Surface tablet and Wacom MobileStudio devices, that 9 Table of Content s brings together the world’s largest collection of vector and raster brushes and Live Brushes, powered by Adobe Sensei, to deliver a natural painting and drawing experience.
Adobe Fresco is our illustration app, available as a free or premium version and on iPhone, iPad, Windows devices and Wacom MobileStudio devices, that brings together the world’s largest collection of vector and raster brushes and Live Brushes, powered by Adobe Sensei, to deliver a natural painting and drawing experience. 9 Table of Contents Adobe InDesign Adobe InDesign is an industry-leading design and layout app for print and digital media.
Adobe Document Cloud Adobe Document Cloud is a cloud-based subscription offering that enables complete, reliable and automated digital document and signature workflows across desktop, mobile, web and third-party enterprise applications to drive business productivity for individuals, teams, small businesses and enterprises.
Adobe Portfolio allows users to quickly and simply build a fully-customizable and hosted website that seamlessly syncs with Behance. Adobe Document Cloud Adobe Document Cloud is a cloud-based subscription offering that enables complete, reliable and automated digital document and signature workflows across desktop, mobile, web and third-party enterprise applications to drive business productivity for individuals, teams, small businesses and enterprises.
Our customers continually seek to integrate across Adobe’s products and cloud solutions and engage our professional services teams for their expertise in leading customers’ digital strategies, multi-solution integrations and in running customer platforms.
Our customers continually seek to integrate across Adobe’s products and cloud solutions and engage our professional services teams for their expertise in leading customers’ digital strategies, multi-solution integrations and in running customer platforms. Using our methodology, our professional services teams are able to accelerate customers’ time to value and maximize customers’ return on their investment in Adobe solutions.
We continue to believe that addressing the challenges of customer experience management is 6 Table of Content s a large and growing opportunity and we are in position to help businesses and enterprises invest in solutions that aid their goals to transform how they engage with their customers and constituents digitally.
We continue to believe that addressing the challenges of customer experience management is a large and growing opportunity and we are in position to help businesses and enterprises invest in solutions that aid their goals to transform how they engage with their customers and constituents digitally. 6 Table of Contents Strategy Our goal is to be a leading provider of cloud-based solutions for delivering digital experiences and enabling digital transformation.
To assist partners in building their respective digital practices, Adobe Global Services provides a comprehensive set of deliverables through Adobe’s Solution Partner Program. The breadth of services described in the program provides system integrators, agencies and regional partners the tools required to develop core capabilities for positioning and building with Adobe technology, as well as implementing and running customer platforms.
The breadth of services described in the program provides system integrators, agencies and regional partners the tools required to develop core capabilities for positioning and building with Adobe technology, as well as implementing and running customer platforms.
In a creator economy that is continually expanding, creators are looking for tools to help them easily make and share unique and beautiful content without complexity. At the same time, creativity is becoming increasingly collaborative, more critical to every company’s success and more complex.
In a creator economy that is continually expanding, creators are looking for tools to help them easily make and share unique and beautiful content with speed and ease. At the same time, creativity is increasingly a team sport that is redefining productivity, making collaboration even more critical to every company’s success.
Wadhwani previously worked at Adobe as Senior Vice President and General Manager of Adobe’s Digital Media business, having joined Adobe in 2005 through the Company’s acquisition of Macromedia, Inc., where he had been Vice President of Developer Products. Mr. Wadhwani holds a bachelor’s degree in computer science from Brown University and serves on the Brown computer science department advisory board.
Before that, Mr. Wadhwani previously worked at Adobe as Senior Vice President and General Manager of Adobe’s Digital Media business, having joined Adobe in 2005 through the Company’s acquisition of Macromedia, Inc., where he had been Vice President of Developer Products. Mr.
We believe Adobe is in a strong position to capitalize on these trends with innovation that will accelerate the creative process to empower individuals to create wherever inspiration strikes and enable more effective collaboration between creators and stakeholders.
We believe Adobe is in a strong position to address these trends with innovation that will democratize creativity, empowering individuals to create wherever inspiration strikes and enabling more effective collaboration between creators and stakeholders.
In fiscal 2021, we collaborated with industry peers to advance diversity across multiple dimensions including through our participation in the CEO Action for Diversity & Inclusion, The Valuable 500, the Ascend 5-Point Action Agenda and ParityPledge. We invest in analysis and transparency to demonstrate our commitment to fair compensation.
We collaborate with industry peers to advance diversity across multiple dimensions, including through our participation in the CEO Action on Diversity & Inclusion, The Valuable 500, the Ascend 5-Point Action Agenda and ParityPledge.
As of December 3, 2021, women represented 33.8% of our global employees, and underrepresented minorities (“URMs”, defined as those who identify as Black/African American, Hispanic/Latinx, Native American, Pacific Islander and/or two or more races) represented 10.9% of our U.S. employees.
As of December 2, 2022, women represented 34.6% of our global employees, and underrepresented minorities (“URMs,” defined as those who identify as Black/African American, Hispanic/Latinx, Native American, Pacific Islander and/or two or more races) represented 11.7% of our U.S. employees.
We utilize a direct sales force to market and license our Experience Cloud solutions, as well as an extensive ecosystem of partners, including marketing agencies, SIs and ISVs that help license and deploy our solutions to their customers. Strategic partnerships, such as the ones we have formed with Microsoft, IBM, Fluent Commerce and Dentsu, continue to increase our market reach.
We utilize a direct sales force to market and license our Experience Cloud solutions, as well as an extensive ecosystem of partners, including marketing agencies, SIs and ISVs that help license and deploy our solutions to their customers. We also maintain several strategic partnerships with other technology companies that allow us to increase our market reach.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a global business that generates approximately 43% of our total revenue from sales to customers outside of the Americas, we are subject to a number of risks, including: • foreign currency fluctuations and controls; • international and regional economic, political and labor conditions, including any instability or security concerns abroad, including uncertainty caused by the United Kingdom’s exit from the European Union (Brexit) on January 31, 2020, including the effects of the Trade and Cooperation Agreement between the European Union, the European Atomic Energy Community and the United Kingdom signed on December 30, 2020, as well as uncertainty caused by the evolving relations between the United States and China; • tax laws (including U.S. taxes on foreign subsidiaries); • increased financial accounting and reporting burdens and complexities; • changes in, or impositions of, legislative or regulatory requirements; • changes in laws governing the free flow of data across international borders; • failure of laws to protect our intellectual property rights adequately; 27 Table of Content s • inadequate local infrastructure and difficulties in managing and staffing international operations; • delays resulting from difficulty in obtaining export licenses for certain technology, tariffs, quotas and other trade barriers; • the imposition of governmental economic sanctions on countries in which we do business or where we plan to expand our business; • costs and delays associated with developing products in multiple languages; • operating in locations with a higher incidence of corruption and fraudulent business practices; and • other factors beyond our control, such as terrorism, war, natural disasters, climate change and pandemics, including fluctuations in the severity and duration of the COVID-19 pandemic and resulting restrictions on business activity which may vary significantly by region.
Biggest changeAs a global business that generates approximately 42% of our total revenue from sales to customers outside of the Americas, we are subject to a number of risks, including: • inflation and actions taken by central banks to counter inflation; • foreign currency fluctuations and controls; • international and regional economic, political and labor conditions, including any instability or security concerns abroad, such as uncertainty caused by economic sanctions, trade disputes, armed conflicts and wars; • tax laws (including U.S. taxes on foreign subsidiaries); • increased financial accounting and reporting burdens and complexities; • changes in, or impositions of, legislative or regulatory requirements; • changes in laws governing the free flow of data across international borders; • failure of laws to protect our intellectual property rights adequately; • inadequate local infrastructure and difficulties in managing and staffing international operations; • delays resulting from difficulty in obtaining export licenses for certain technology, tariffs, quotas and other trade barriers; • the imposition of governmental economic sanctions on countries in which we do business or where we plan to expand our business; • costs and delays associated with developing products in multiple languages; • operating in locations with a higher incidence of corruption and fraudulent business practices; and • other factors beyond our control, such as terrorism, war, natural disasters, climate change and pandemics, including the COVID-19 pandemic and resulting restrictions on business activity, which may vary significantly by region.
Much of our business relies on hardware and services that are hosted, managed and controlled directly by Adobe or third-party service providers, including our online store at adobe.com, Creative Cloud, Document Cloud and Experience Cloud solutions.
Much of our business relies on hardware and services that are hosted, managed and controlled directly by Adobe or third-party service providers, including our online store at adobe.com and our Creative Cloud, Document Cloud and Experience Cloud solutions.
Failure to manage our sales, partner and distribution channels effectively could result in a loss of revenue and harm to our business. We contract with a number of software distributors and other strategic partners, none of which are individually responsible for a material amount of our total net revenue for any recent period.
Failure to manage our sales, partner and distribution channels effectively could result in a loss of revenue and harm our business. We contract with a number of software distributors and other strategic partners, none of which are individually responsible for a material amount of our total net revenue in any recent period.
Some of those foreign countries may not have as robust or comprehensive of intellectual property protection laws and schemes as those offered in the United States In some foreign countries, the mechanisms to enforce intellectual property rights may be inadequate to protect our technology, which could harm our business.
Some of those foreign countries may not have as robust or comprehensive of intellectual property protection laws and schemes as those offered in the United States, and the mechanisms to enforce intellectual property rights may be inadequate to protect our technology, which could harm our business.
While we have invested in readiness to comply with applicable requirements, the dynamic nature of these laws, regulations and codes, as well as their interpretation by regulators and courts, may affect our ability (and our enterprise customers’ ability) to reach current and prospective customers, to respond to both enterprise and individual customer requests under the laws (such as individual rights of access, correction and deletion of their personal information) and to implement our business models effectively.
While we have invested in readiness to comply with applicable requirements, the dynamic and evolving nature of these laws, regulations and codes, as well as their interpretation by regulators and courts, may affect our ability (and our enterprise customers’ ability) to reach current and prospective customers, to respond to both enterprise and individual customer requests under the laws (such as individual rights of access, correction and deletion of their personal information) and to implement our business models effectively.
The markets for our products and services are characterized by intense competition, new industry standards, evolving distribution models, limited barriers to entry, disruptive technology developments, short product life cycles, customer price sensitivity, global market conditions and frequent product introductions (including alternatives with limited functionality available at lower costs or free of charge).
The markets for our products and services are characterized by intense competition, new industry standards, evolving distribution models, limited barriers to entry, new technology developments, short product life cycles, customer price sensitivity, global market conditions and frequent product introductions (including alternatives with limited functionality available at lower costs or free of charge).
Transferring personal information across international borders is complex and subject to legal and regulatory requirements as well as active litigation and enforcement in a number of jurisdictions around the world, each of which could have an adverse impact to our ability to process and transfer personal data as part of our business operations.
Transferring personal information across international borders is complex and subject to legal and regulatory requirements as well as active litigation and enforcement in a number of jurisdictions around the world, each of which could have an adverse impact on our ability to process and transfer personal data as part of our business operations.
A change in these principles, how the principles are interpreted, or the adoption of new accounting standards can have a significant effect on our reported results, and could even retroactively affect previously reported transactions, and may require that we make significant changes to our systems, processes and controls.
A change in these principles, how the principles are interpreted, or the adoption of new accounting standards can have a significant effect on our reported results, could retroactively affect previously reported transactions and may require that we make significant changes to our systems, processes and controls.
We have issued $4.15 billion of notes in debt offerings and may incur other debt in the future, which may adversely affect our financial condition and future financial results. We have $4.15 billion in senior unsecured notes and a $1 billion senior unsecured revolving credit agreement, which is currently undrawn.
We have issued $4.15 billion of notes in debt offerings and may incur other debt in the future, which may adversely affect our financial condition and future financial results. We have $4.15 billion in senior unsecured notes and a $1.5 billion senior unsecured revolving credit agreement, which is currently undrawn.
The success of some of our product and service offerings, such as Adobe Stock, depends on our ability to continue to attract new customers and contributors to these online marketplaces for creative content, as well as our ability to continue to retain existing customers and contributors.
The success of some of our product and service offerings, such as Adobe Stock, depends on our ability to continue to retain existing and attract new customers and contributors to these online marketplaces for creative content.
It is also possible that hardware or software failures or errors in our systems (or those of our third-party service providers) could result in data loss or corruption, cause the information that we collect or maintain to be incomplete or contain inaccuracies that our customers regard as significant, or cause us to fail to meet committed service levels or comply with regulatory notification requirements.
It is also possible that hardware or software failures or errors in our systems (or those of our third-party service providers) could result in data loss or corruption, cause the information that we collect or maintain to be incomplete or contain inaccuracies that our customers regard as significant, or cause us to fail to meet committed service levels or comply with applicable notification requirements.
We apply for patents in the United States and internationally to protect our newly created technology and if we are unable to obtain patent protection for the technology described in our pending patent, or if the patent is not obtained timely, this could result in revenue loss, adverse effects on operations and harm to our business.
We apply for patents in the United States and internationally to protect our newly created technology and if we are unable to obtain patent protection for the technology described in our pending patent, or if the patent is not obtained timely, this could result in revenue loss, or have other adverse effects on operations and harm our business.
Third-party intellectual property disputes, including those initiated by patent assertion entities, 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.
Third-party intellectual property disputes, including those initiated by patent assertion entities, could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from offering certain products or services, subject us to injunctions restricting our sales, 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.
This may result in litigation and liability or fines, our compliance with costly and time-intensive notice requirements, governmental inquiry or oversight or a loss of customer confidence, any of which could harm our business or damage our brand and reputation, thereby requiring time and resources to mitigate these impacts.
This may result in litigation and liability or fines, costly and time-intensive notice requirements, governmental inquiry or oversight or a loss of customer confidence, any of which could harm our business or damage our brand and reputation, thereby requiring time and resources to mitigate these impacts.
Our ability to acquire other businesses or technologies, make strategic investments or integrate acquired businesses effectively may also be impaired by the effects of the COVID-19 pandemic, government actions in light of the pandemic, trade tensions and increased global scrutiny of foreign investments.
Our ability to acquire other businesses or technologies, make strategic investments or integrate acquired businesses effectively may also be impaired by the effects of the COVID-19 pandemic, including government actions in light of the pandemic, trade tensions, restrictions and increased global scrutiny of foreign investments.
If our business relationship with a third-party provider of hosting or content delivery services is negatively affected, or if one of our content delivery suppliers were to terminate its agreement with us without adequate notice, we might not be able to deliver the corresponding hosted offerings to our customers, which could subject us to reputational harm, costly and time-intensive notification requirements, and cause us to lose customers and future business.
If our business relationship with a third-party provider of hosting or content delivery services is negatively affected, or if one of our content delivery suppliers were to terminate its agreement with us without adequate notice, we might not be able to deliver the corresponding hosted offerings to our customers, which could disrupt our business operations and those of our customers, subject us to reputational harm, costly and time-intensive notification requirements, and cause us to lose customers and future business.
As a result, most of the subscription revenue we report in each quarter is the result of subscription agreements entered into during previous quarters. Any reduction in new or renewed subscriptions in a quarter may not be reflected in our revenue results until a later quarter. Declines in new or renewed subscriptions may decrease our revenue in future quarters.
As a result, most of the subscription revenue we report in each quarter is the result of subscription agreements entered into during previous quarters. Any reduction in new or renewed subscriptions in a quarter may not be reflected in our revenue results until a later quarter and may decrease our revenue in future quarters.
If we supply inaccurate information or experience interruptions in our systems, our reputation could be harmed, we could lose customers, and we could be found liable for damages or incur other losses. Security vulnerabilities in our products and systems, or in our supply chain, could lead to reduced revenue or to liability claims.
If we supply materially inaccurate information or experience significant interruptions in our systems, our reputation could be harmed, we could lose customers and we could be found liable for damages or incur other losses. Security vulnerabilities in our products and systems, or in our supply chain, could lead to reduced revenue or to liability claims.
Certain unauthorized parties have in the past managed, and may again in the future manage, to gain access to and misuse some of our systems and software, or that of our third-party service providers, in order to access the authentication, payment and personal information of our end users’ and employees.
Certain unauthorized parties have in the past managed, and may again in the future manage, to gain access to and misuse some of our systems and software, or that of our third-party service providers, in order to access the authentication, payment and personal information of our end users and employees.
Depending on the results of our review, we could be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets were determined, negatively impacting our results of operations.
Depending on the results of our review, we could be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets was determined, negatively impacting our results of operations.
These risks will likely increase as we expand our hosted offerings, integrate our products and services and store and process more data, including personal information. These issues affect our products and services in particular because cyber-attackers tend to focus their efforts on popular offerings with a large user base, and we expect them to continue to do so.
These risks will likely increase as we expand our hosted offerings, integrate our products and services and store and process more data. These issues affect our products and services in particular because cyber-attackers tend to focus their efforts on popular offerings with a large user base, and we expect them to continue to do so.
We cannot provide assurance that our employees, 29 Table of Content s contractors, agents and business partners will not take actions in violation of our internal policies or U.S. laws. Compliance with these laws and regulations may involve significant costs or require changes in our business practices that result in reduced revenue and profitability.
We cannot provide assurance that our employees, contractors, agents and business partners will not take actions in violation of our internal policies or U.S. laws. Compliance with these laws and regulations may involve significant costs or require changes in our business practices that result in reduced revenue and profitability.
In addition, such perceived or actual unauthorized loss or disclosure of the information we collect, process or store, or breach of our security could damage our reputation, result in the loss of customers and harm our business.
Further, such perceived or actual unauthorized loss or disclosure of the information we collect, process or store, or breach of our security could damage our reputation, result in the loss of customers and harm our business.
Nonetheless, if any single agreement with one of our distributors were terminated, any prolonged delay in securing a replacement distributor could have a negative impact on our results of operations.
Nonetheless, if an agreement with one of our distributors were terminated, any prolonged delay in securing a replacement distributor could have a negative impact on our results of operations.
A number of factors may affect the market price for our common stock, such as: • shortfalls in, or changes in expectations about, our revenue, margins, earnings, Annualized Recurring Revenue (“ARR”), sales of our Digital Experience offerings, or other key performance metrics; • changes in estimates or recommendations by securities analysts; • whether our results meet analysts’ expectations; • compression or expansion of multiples used by investors and analysts to value high technology SaaS companies; • the announcement of new products or services, product enhancements, service introductions, strategic alliances or significant agreements by us or our competitors; • the loss of large customers or our inability to increase sales to existing customers, retain customers or attract new customers; • recruitment or departure of key personnel; • variations in our or our competitors’ results of operations, changes in the competitive landscape generally and developments in our industry; • general socio-economic, political or market conditions; • macroeconomic conditions and the economic impact of the COVID-19 pandemic; and • unusual events such as significant acquisitions by us or our competitors, divestitures, litigation, regulatory actions and other factors, including factors unrelated to our operating performance.
A number of factors may affect the market price for our common stock, such as: • shortfalls in, or changes in expectations about, our revenue, margins, earnings, Annualized Recurring Revenue (“ARR”), sales of our Digital Experience offerings or other key performance metrics; • changes in estimates or recommendations by securities analysts; • whether our results meet analysts’ expectations; • compression or expansion of multiples used by investors and analysts to value high technology SaaS companies; • the announcement of new products or services, product enhancements, service introductions, strategic alliances or significant agreements by us or our competitors; • the loss of large customers or our inability to increase sales to existing customers, retain customers or attract new customers; • recruitment or departure of key personnel; • variations in our or our competitors’ results of operations, changes in the competitive landscape generally and developments in our industry; • general socio-economic, political or market conditions; • macroeconomic conditions and the economic impact of the COVID-19 pandemic, inflation and rising interest rates and global conflicts, including the Russia-Ukraine war; and • unusual events such as significant acquisitions by us or our competitors, divestitures, litigation, regulatory actions and other factors, including factors unrelated to our operating performance.
In the current global tax policy environment, any changes in laws, regulations and interpretations related to these assertions could adversely affect our effective tax rates, cause us to respond by making changes to our business structure, or result in other costs to us which could adversely affect our operations and financial results.
In the current global tax policy environment, any changes in laws, regulations and interpretations could adversely affect our effective tax rates, cause us to respond by making changes to our business structure, or result in other costs to us which could adversely affect our operations and financial results.
While we offer our products on a variety of hardware platforms, if we cannot continue adapting our products to tablet and mobile devices, or if our competitors can adapt their products more quickly than us, our business could be harmed.
While we offer our products on a variety of platforms, if we cannot continue adapting our products to tablet and mobile devices or the web, or if our competitors can adapt their products more quickly than us, our business could be harmed.
Such a strain on our infrastructure capacity could subject us to regulatory and customer notification requirements, violations of service level agreement commitments, financial liabilities, result in customer dissatisfaction, or harm our business.
Such a strain on our infrastructure 23 Table of Contents capacity could subject us to regulatory and customer notification requirements, violations of service level agreement commitments or financial liabilities and result in customer dissatisfaction or harm our business.
Should financial market conditions worsen in the future, including from impacts of the COVID-19 pandemic, investments in some financial instruments may pose risks arising from market liquidity and credit concerns. In addition, any deterioration of the capital markets could cause our other income and expense to vary from expectations.
Should financial market conditions worsen in the future, including from impacts of the COVID-19 pandemic or the Russia-Ukraine war, investments in some financial instruments may pose risks arising from market liquidity and credit concerns. In addition, any deterioration of the capital markets could cause our other income and expense to vary from expectations.
In addition, some of our businesses rely on third-party hosted services, and we do not control the operation of third-party data center facilities serving our customers from around the world, which increases our vulnerability.
In 31 Table of Contents addition, some of our businesses rely on third-party hosted services, and we do not control the operation of third-party data center facilities serving our customers from around the world, which increases our vulnerability.
Deterioration in economic conditions in any of the countries in which we do business could also cause slower or impaired collections on accounts receivable, which may adversely impact our liquidity and financial condition. 34 Table of Content s A disruption in financial markets could impair our banking partners, on which we rely for operating cash management and derivative programs.
Deterioration in economic conditions in 32 Table of Contents any of the countries in which we do business could also cause slower or impaired collections on accounts receivable, which may adversely impact our liquidity and financial condition. A disruption in financial markets could impair our banking partners, on which we rely for operating cash management and derivative programs.
We also sell some of our products and services through our direct sales force. Risks associated with this sales channel include more extended sales and collection cycles associated with direct sales efforts, challenges related to hiring, retaining and motivating our direct sales force, and substantial amounts of ongoing training for sales representatives.
We also sell some of our products and services through our direct sales force. Risks associated with this sales channel include more extended sales and collection cycles, challenges related to hiring, retaining and motivating our direct sales force, 26 Table of Contents and substantial amounts of ongoing training for sales representatives.
Volatility in the market price of a company’s securities for a period of time may increase the company’s susceptibility to securities class action litigation. Oftentimes, this type of litigation is expensive and diverts management’s attention and resources which may adversely affect our business. 35 Table of Content s ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Volatility in the market price of a company’s securities for a period of time may increase the company’s susceptibility to securities class action litigation. Oftentimes, this type of litigation is expensive and diverts management’s attention and resources which may adversely affect our business. 33 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our intellectual property portfolio is a valuable asset. Infringement or misappropriation of our patents, trademarks, trade secrets, copyrights and other intellectual property rights could result in lost revenues and ultimately reduce their value. Preventing unauthorized use or infringement of our intellectual property rights is inherently difficult.
Infringement or misappropriation of our patents, trademarks, trade secrets, copyrights and other intellectual property rights could result in lost revenues and ultimately reduce their value. Preventing unauthorized use or infringement of our intellectual property rights is inherently difficult.
If we do not make the appropriate level of investment in our technology systems or if our systems become out-of-date or obsolete and we are not able to deliver the quality of data security our customers require or that meet our independent security control certification requirements, our business could be adversely affected.
If we do not make the appropriate level of investment in our technology systems and we are not able to deliver the quality of data security and privacy our customers require or that meet our independent security control certification requirements, our business could be adversely affected.
Unauthorized access to or loss or disclosure of data stored by Adobe or our service providers may occur through physical break-ins, breaches of a secure network by an unauthorized 24 Table of Content s party, software vulnerabilities or coding errors, employee theft or misuse or other misconduct.
Unauthorized access to or loss or disclosure of data stored by Adobe or our service providers may occur through physical break-ins, breaches of a secure network by an unauthorized party, software vulnerabilities or coding errors, employee mistakes, theft or misuse or other misconduct.
The failure of third parties to provide acceptable products and services or to update their technology, including during the COVID-19 pandemic, may result in a disruption to our business operations and those of our customers, which may reduce our revenues and profits, cause us to lose customers and damage our reputation.
The failure of third parties to provide acceptable products and services or to update their technology may result in a disruption to our business operations and those of our customers, which may reduce our revenues and profits, cause us to lose customers and damage our reputation.
These risks include: • inability to achieve the financial and strategic goals for the acquired and combined businesses; • difficulty in, and the cost of, effectively integrating the operations, technologies, products or services, and personnel of the acquired business; • entry into markets in which we have minimal prior experience and where competitors in such markets have stronger market positions; • disruption of our ongoing business and distraction of our management and other employees from other opportunities and challenges; • inability to retain personnel of the acquired business; • inability to retain key customers, distributors, vendors and other business partners of the acquired business; • inability to take advantage of anticipated tax benefits; • incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; • elevated delinquency or bad debt write-offs related to receivables of the acquired business we assume; • additional costs of bringing acquired companies into compliance with laws and regulations applicable to a multinational corporation; • difficulty in maintaining controls, procedures and policies during the transition and integration; • impairment of our relationships with employees, customers, partners, distributors or third-party providers of our technologies, products or services; • failure of our due diligence processes to identify significant problems, liabilities or other challenges of an acquired company or technology; • exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an acquisition, such as claims from terminated employees, customers, former stockholders or other third parties; • incurring significant exit charges if products or services acquired in business combinations are unsuccessful; • inability to conclude that our internal controls over financial reporting are effective; • inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions; • the failure of strategic investments to perform as expected or to meet financial projections; • delay in customer and distributor purchasing decisions due to uncertainty about the direction of our product and service offerings; • increased accounts receivables collection times and working capital requirements associated with acquired business models; and • incompatibility of business cultures. 23 Table of Content s Mergers and acquisitions of technology companies are inherently risky.
These risks include: • inability to achieve the financial and strategic goals for the acquired and combined businesses; • difficulty in, and the cost of, effectively integrating the operations, technologies, products or services, and personnel of the acquired business; • potential identified or unknown security vulnerabilities in acquired products that expose us to additional security risks or delay our ability to integrate the product into our offerings; • entry into markets in which we have minimal prior experience and where competitors in such markets have stronger market positions; • disruption of our ongoing business and distraction of our management and other employees from other opportunities and challenges; • inability to retain personnel of the acquired business; • inability to retain key customers, distributors, vendors and other business partners of the acquired business; • inability to take advantage of anticipated tax benefits; • incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; • elevated delinquency or bad debt write-offs related to receivables of the acquired business we assume; • additional costs of bringing acquired companies into compliance with laws and regulations applicable to a multinational corporation; • difficulty in maintaining controls, procedures and policies during the transition and integration; • impairment of our relationships with employees, customers, partners, distributors or third-party providers of our technologies, products or services; • failure of our due diligence processes to identify significant problems, liabilities or other challenges of an acquired company or technology; • exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an acquisition, such as claims from terminated employees, customers, former stockholders or other third parties; • incurring significant exit charges if products or services acquired in business combinations are unsuccessful; • inability to conclude that our internal controls over financial reporting are effective; • inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay prevent or impose conditions on such acquisitions; • the failure of strategic investments to perform as expected or to meet financial projections; • delay in customer and distributor purchasing decisions due to uncertainty about the direction of our product and service offerings; 21 Table of Contents • additional stock-based compensation issued or assumed in connection with an acquisition, including the impact on stockholder dilution and our results of operations; • increased accounts receivables collection times and working capital requirements associated with acquired business models; and • incompatibility of business cultures.
We may also find, on occasion, that we cannot deliver data and reports to our customers in near real time because of a number of factors, including significant spikes in customer activity on their websites or failures of our network or software (or that of a third-party service provider).
We may also find, on occasion, that we cannot deliver data and reports to our customers in near real time due to factors such as significant spikes in customer activity on their websites or failures of our network or software (or that of a third-party service provider).
These actual and potential breaches of our security measures and the accidental loss, inadvertent disclosure or unauthorized dissemination of proprietary information or sensitive, personal or confidential data about us, our employees, our customers or their end users, including the potential loss or disclosure of such information or data as a result of hacking, fraud, trickery or other forms of deception, could expose us, our employees, our customers or the individuals affected to a risk of loss or misuse of this information.
These actual and potential breaches of our security measures and the accidental loss, inadvertent disclosure or unauthorized dissemination of proprietary information or sensitive, personal or confidential data about us, our employees, our customers or their end users, including the potential loss or disclosure of such information or data could expose us, our employees, our customers or other individuals affected to a risk of loss or misuse of this information.
Moreover, recent hires may not become as productive as we would like, as in most cases it takes a significant period of time before they achieve full productivity. Our business could be seriously harmed if our expansion efforts do not generate a corresponding significant increase in revenue and we are unable to achieve the efficiencies we anticipate.
Moreover, recent hires may not be as productive as we would like, as in most cases it takes significant time for them to achieve full productivity. Our business could be seriously harmed if our expansion efforts of our direct sales do not generate a corresponding significant increase in revenue and we are unable to achieve the efficiencies we anticipate.
Our future effective tax rates are likely to be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned, the geographic mix of earnings, our repatriation policy or the valuation of our deferred tax assets and liabilities, by changes in or our interpretation of tax rules and regulations in the jurisdictions in which we do business, or by unexpected negative changes in business and market conditions that could reduce certain tax benefits.
Our future effective tax rates are likely to be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned, changes in jurisdictions in which our profits are determined to be earned and taxed, changes in the valuation of our deferred tax assets and liabilities, changes in or interpretation of tax rules and regulations in the jurisdictions in which we do business, or unexpected negative changes in business and market conditions that could reduce certain tax benefits.
Consumers can control the use of these technologies through their browsers, operating systems, device settings or “ad-blocking” software or applications. Increased use of such methods, software or applications could harm our business. We may not realize the anticipated benefits of past or future investments or acquisitions, and integration of acquisitions may disrupt our business and management.
Increased use of methods to control the use of these technologies through customers’ browsers, operating systems, device settings or “ad-blocking” software or applications may harm our business. We may not realize the anticipated benefits of past or future investments or acquisitions, and integration of acquisitions may disrupt our business and management.
Our investment portfolio may become impaired by deterioration of the financial markets. Our cash equivalent and short-term investment portfolio as of December 3, 2021 consisted of asset-backed securities, corporate debt securities, money market funds, municipal securities, time deposits and U.S. Treasury securities.
Our investment portfolio may become impaired by deterioration of the financial markets. Our cash equivalent and short-term investment portfolio as of December 2, 2022 consisted of asset-backed securities, corporate debt securities, foreign government securities, money market funds, municipal securities, time deposits, U.S. agency securities and U.S. Treasury securities.
In addition, computer viruses, worms, ransomware or other malware may harm our systems, causing us to lose data, and the transmission of computer viruses or other malware could expose us to litigation or regulatory investigation, and costly and time-intensive notification requirements.
In addition, the loss of data resulting from computer viruses, worms, ransomware or other malware may harm our systems could expose us to litigation or regulatory investigation, and costly and time-intensive notification requirements.
In addition, cyber-attackers (which may include individuals or groups, as well as sophisticated groups such as nation-state and state-sponsored attackers, which can deploy significant resources to plan and carry out exploits) also develop and deploy viruses, worms, credential stuffing attack tools and other malicious software programs, some of which may be specifically 25 Table of Content s designed to attack our products, services, information systems or networks.
In addition, cyber-attackers (which may include individuals or groups, as well as sophisticated groups with significant resources, such as nation-state and state-sponsored attackers) also develop and deploy viruses, worms, credential stuffing attack tools and other malicious software programs, some of which may be specifically designed to attack our products, services, information systems or networks.
We offer our products and services in foreign countries and we may seek intellectual property protection from those foreign legal systems.
We offer our products and services in foreign countries 28 Table of Contents and we may seek intellectual property protection from those foreign legal systems.
We also distribute some products and services through our OEM channel, and if our OEMs decide not to bundle our applications on their devices, our results could suffer. In addition, the financial health of our distributors and partners and our continuing relationships with them are important to our success.
If our OEMs through which we distribute products and services decide not to bundle our applications on their devices, our results could suffer. Further, the financial health of our distributors and partners and our continuing relationships with them are important to our success.
The complexity in these sales cycles is due to several factors, including: • the need for our sales representatives to educate customers about the use and benefit of large-scale deployments of our products and services, including technical capabilities, security features, potential cost savings and return on investment; • the desire of organizations to undertake significant evaluation processes to determine their technology requirements prior to making information technology expenditures; 26 Table of Content s • the need for our representatives to spend a significant amount of time assisting potential customers in their testing and evaluation of our products and services; • intensifying competition within the industry; • the negotiation of large, complex, enterprise-wide contracts; • the need for our customers to obtain requisition approvals from various decision makers within their organizations due to the complexity of our solutions touching multiple departments within customers’ organizations; and • customer budget constraints, economic conditions and unplanned administrative delays.
The complexity in these sales cycles is due to several factors, including: • the need for our sales representatives to educate customers about the use and benefit of large-scale deployments of our products and services; • the desire of organizations to undertake significant evaluation processes to determine their technology requirements prior to making information technology expenditures and the need for our representatives to spend a significant amount of time assisting with such evaluations; • intensifying competition within the industry; • the negotiation of large, complex, enterprise-wide contracts; • the need for our customers to obtain requisition approvals from various decision makers within their organizations due to the complexity of our solutions touching multiple departments; and • customer budget constraints, economic conditions and unplanned administrative delays.
We increasingly utilize the distribution platforms of third parties like Apple’s App Store and Google’s Play Store for the distribution of certain of our product offerings.
We increasingly utilize third-party distribution platforms, such as Apple’s App Store and Google’s Play Store, for the distribution of certain of our product offerings.
Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our services, our ability to continue enhancing features and functionality, the reliability (including uptime) of our subscription offerings, the prices of offerings and those offered by our competitors, the actual or perceived information security of our systems and services, decreases in the size of our customer base, reductions in our customers’ spending levels or declines in customer activity as a result of economic downturns or uncertainty in financial markets, including as a result of the COVID-19 pandemic, which has affected and may continue to affect certain sectors of the economy disproportionately.
Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our services, our ability to continue enhancing features and functionality, the reliability (including uptime) of our subscription offerings, the prices of offerings and competitors’ offerings, the actual or perceived information security of our systems and services, decreases in the size of our customer base, reductions in our customers’ spending levels or declines in customer activity as a result of general economic conditions or uncertainty in financial markets, including as a result of a global health crisis and geopolitical conflict, which has affected and may continue to affect certain sectors of the economy disproportionately.
To accurately assess and take potential proactive action as appropriate, Adobe is aligned with the guidelines of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures recommendations and the Sustainability Accounting Standards Board environmental metrics.
To inform our disclosures and take potential action as appropriate, Adobe is aligned with the guidelines of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures recommendations and the Sustainability Accounting Standards Board and the Global Reporting Initiative environmental metrics.
Several other countries, including Australia, New Zealand, Brazil, and Japan, have also established specific legal requirements for cross-border transfers of personal information. Other countries, such as India, are considering requirements for data localization (i.e., where personal data must remain in the country).
Several other countries, including China, Australia, New Zealand, Brazil, Hong Kong and Japan, have also established specific legal requirements for cross-border transfers of personal information and for data localization (i.e., where personal data must remain stored in the country).
For example, European data transfers outside the European Economic Area are highly regulated and litigated. The mechanisms that we and many other companies rely upon for European data transfers (e.g., Privacy Shield and Model Clauses) are the subject of judicial decisions by the Court of Justice of the European Union resulting in the invalidation of Privacy Shield.
For example, European data transfers outside the European Economic Area are highly regulated and litigated. The mechanisms that we and many other companies rely upon for European data transfers (e.g., Standard Contractual Clauses) are the subject of regulatory interpretation and judicial decisions by the Court of Justice of the European Union.
Our customers have no obligation to renew their subscriptions for our services after the expiration of their initial subscription period, and customers may not renew their subscriptions at the same or higher level of service, for the same number of seats or for the same duration of time, if at all.
Since our customers have no obligation to renew their subscriptions for our services after the expiration of their initial subscription period, which typically ranges from 1 to 36 months, our customers may not renew their subscriptions at the same or a higher level of service, for the same number of seats or for the same duration of time, if at all.
These countries, governmental bodies and intergovernmental economic organizations such as the Organization for Economic Cooperation and Development, have or could make unprecedented assertions about how taxation is determined in their jurisdictions that are contrary to the way in which we have interpreted and historically applied the rules and regulations described above in such jurisdictions.
These countries, governmental bodies and intergovernmental economic organizations such as the Organization for Economic Cooperation and Development, have or could make unprecedented assertions about how taxation is determined and, in some cases, have proposed or enacted new laws that are contrary to the way in which rules and regulations have historically been interpreted and applied.
If we do not complete an announced acquisition transaction or integrate an acquired business successfully and in a timely manner, we may not realize the benefits of the acquisition to the extent anticipated, and in certain circumstances an acquisition could harm our financial position.
Mergers and acquisitions of technology companies are inherently risky. If we do not complete an announced acquisition transaction, including the pending acquisition of Figma, Inc., or integrate an acquired business successfully and in a timely manner, we may not realize the benefits of the acquisition to the extent anticipated, and in certain circumstances an acquisition could harm our financial position.
If we fail to appropriately respond to objectionable content created using our products or services or shared on our platforms, our users may lose confidence in our brands and our business and financial results may be adversely affected.
If we fail to appropriately respond to objectionable content created using our products or services or shared on our platforms, our users may lose confidence in our brands and our business and financial results may be adversely affected. In addition, government regulation designed to address DeepFakes could adversely impact our product offerings.
We have been, are currently and may in the future be subject to claims, negotiations and complex, protracted litigation relating to disputes regarding the validity or alleged infringement of third-party intellectual property rights, including patent rights.
We may incur substantial costs defending against third parties alleging that we infringe their proprietary rights. We have been, are currently and may in the future be subject to claims, negotiations and complex, protracted litigation relating to disputes regarding the validity or alleged infringement of third-party intellectual property rights, including patent rights.
The invalidation of Privacy Shield and the open questions related to the validity of Model Clauses have resulted in some changes in the obligations required to provide our services in the European Union and could expose us to potential sanctions and fines for non-compliance.
The open judicial questions and regulatory interpretations related to the validity of transfers using Standard Contractual Clauses have resulted in some changes in the obligations required to provide our services in the European Union and could expose us to potential sanctions and fines for non-compliance.
As of December 3, 2021, we had no material impairment charges associated with our short-term investment portfolio, and although we believe our current investment portfolio has little risk of material impairment, we cannot predict future market conditions, market liquidity or credit availability, and can provide no assurance that our investment portfolio will remain materially unimpaired. 33 Table of Content s General Risk Factors Catastrophic events may disrupt our business.
As of December 2, 2022, we had no material impairment charges associated with our short-term investment portfolio, and although we believe our current investment portfolio has little risk of material impairment, we cannot predict future market conditions, market liquidity or credit availability, and we can provide no assurance that our investment portfolio will remain materially unimpaired.
Revenue, margin or earnings shortfalls or the volatility of the market generally may cause the market price of our stock to decline. In the past, the market price for our common stock experienced significant fluctuations and it may do so in the future.
Any of these events would likely harm our business, financial condition and results of operations. Revenue, margin or earnings shortfalls or the volatility of the market generally may cause the market price of our stock to decline. In the past, the market price for our common stock experienced significant fluctuations and it may do so in the future.
We are closely monitoring other developments related to the remaining valid transfer mechanisms available for transferring personal data outside the European Union (including the recent issuance of updated Model Clauses) and other countries that have similar trans-border data flow requirements and adjusting our practices accordingly.
We are closely monitoring for developments related to valid transfer mechanisms available for transferring personal data outside the European Economic Area (including the Trans-Atlantic Data Privacy Framework) and other countries that have similar trans-border data flow requirements and adjusting our practices accordingly.
The cost of these steps could reduce our operating margins, and we may be unable to implement these measures quickly enough to prevent cyber-attackers from gaining unauthorized access into our systems and products.
The cost of undertaking these efforts could reduce our operating margins, and we may be unable to implement these measures quickly enough to prevent unauthorized access into our systems and products in all circumstances.
A catastrophic event that results in the destruction or disruption of any of our data centers or our critical business or information technology systems could severely affect our ability to conduct normal business operations and, as a result, our future operating results could be adversely affected, and the adverse effects of any such catastrophic event would be exacerbated if experienced at the same time as another unexpected and adverse event, such as the COVID-19 pandemic.
A catastrophic event that results in the destruction or disruption of any of our data centers or our critical business or information technology systems could severely affect our ability to conduct normal business operations and, as a result, our future operating results could be adversely affected.
Non-compliance could also result in fines, damages, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.
Non-compliance could also result in fines, damages, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business and damage to our reputation. 27 Table of Contents In addition, approximately 49% of our employees are located outside the United States.
Our operations have also been negatively affected by a range of external factors related to the pandemic that are not within our control, and COVID-19 cases (including the emergence and spread of more transmissible variants) continue to surge in certain parts of the world, including the United States.
Our operations have also been and may in the future be negatively affected by a range of external factors related to the pandemic that are not within our control, including the emergence and spread of more transmissible variants.
For additional information regarding new standard s that may have signifi cant impact to our consolidated financial statements , see the section titled “Recent Accounting Pronouncements Not Yet Effective ” i n Note 1 of our Notes to Consolidated Financial Statements .
For additional information regarding new standards that may have significant impact to our consolidated financial statements, see the section titled “Recent Accounting Pronouncements Not Yet Effective” in Note 1 of our Notes to Consolidated Financial Statements.
Releases of new devices or operating systems may make it more difficult for our products to perform or may require significant cost to adapt our solutions to such devices or operating systems. These potential costs and delays could harm our business. Introduction of new technology could harm our business and results of operations.
In addition, releases of new devices or operating systems may make it more difficult for our products to perform or may require significant cost to adapt our solutions. The potential costs and delays incurred as a result could harm our business.
Our brands may be negatively affected by the use of our products or services to create or disseminate newsworthy content that is deemed to be misleading, deceptive, or intended to manipulate public opinion (e.g.
Our brands may be negatively affected by the use of our products or services to create or disseminate newsworthy content that is deemed to be misleading, deceptive or intended to manipulate public opinion (e.g., “DeepFakes”), by the use of our products or services for illicit, objectionable or illegal ends, or by our failure to respond appropriately and expeditiously to such uses of our products and services.
Despite our preventative efforts, actual or perceived security vulnerabilities in our products and systems may harm our reputation or lead to claims against us (and have in the past led to such claims), and could lead some customers to stop using certain products or services, to reduce or delay future purchases of products or services, or to use competing products or services.
Despite our preventative efforts, there is no assurance that our security measures will provide 24 Table of Contents full effective protection from such events, and actual or perceived security vulnerabilities in our products and systems may harm our reputation or lead to claims against us (and have in the past led to such claims) and could lead some customers to stop using certain products or services or to reduce or delay future purchases.
As our business has grown, we have become increasingly subject to the risks arising from adverse changes in economic and political conditions, both domestically and globally, including trends toward protectionism and nationalism, and other events beyond our control, such as the COVID-19 pandemic.
As our business has grown, we have become increasingly subject to the risks arising from adverse changes in economic and political conditions, both domestically and globally, including trends toward protectionism and nationalism, other unfavorable changes in economic conditions, such as inflation, rising interest rates or a recession, and other events beyond our control, such as economic sanctions, natural disasters, pandemics, including the COVID-19 pandemic, epidemics, political instability, armed conflicts and wars, including the Russia-Ukraine war.
In addition, in the United States and other countries where we conduct business and in jurisdictions in which we are subject to tax, including those covered by governing bodies that enact tax laws applicable to us, such as the European Commission of the European Union, we are subject to potential changes in relevant tax, accounting and other laws, regulations and interpretations, including changes to tax laws applicable to corporate multinationals such as Adobe.
In addition, the United States and other countries and jurisdictions in which we conduct business, including those covered by governing bodies that enact tax laws applicable to us, such as the European Commission of the European Union, 29 Table of Contents could make changes to relevant tax, accounting or other laws and interpretations thereof that have a material impact to us.
For additional information regarding our competition and the risks arising out of the competitive environment in which we operate, see the section titled “Competition” in Part I, Item 1 of this report.
For additional information regarding our competition and the risks arising out of the competitive environment in which we operate, see the section titled “Competition” contained in Part I, Item 1 of this report. Introduction of new technology could harm our business and results of operations. The expectations and needs of technology consumers are constantly evolving.
Uncertainty about current and future economic conditions and other adverse changes in general political conditions in any of the major countries in which we do business could adversely affect our operating results.
Regulatory developments, changing market dynamics and stakeholder expectations regarding climate change may impact our business, financial condition and results of operations. Uncertainty about current and future economic conditions and other adverse changes in general political conditions in any of the major countries in which we do business could adversely affect our operating results.
If we encounter problems with our third-party customer service and technical support providers, our reputation may be harmed, our ability to sell our offerings could be adversely affected, and we could lose customers and associated revenue. If we are unable to recruit and retain key personnel, our business may be harmed.
Our customers may react negatively to providing information to, and receiving support from, third-party organizations, especially if these third-party organizations are based overseas. If we encounter problems with our third-party customer service and technical support providers, our reputation may be harmed, our ability to sell our offerings could be adversely affected, and we could lose customers and associated revenue.
Additionally, in connection with our sales efforts to enterprise customers, a number of factors could affect our revenue, including longer-than-expected sales and implementation cycles, potential deferral of revenue and alternative licensing arrangements.
Additionally, in connection with our sales efforts to enterprise customers, a number of factors could affect our revenue, including longer-than-expected sales and implementation cycles, potential deferral of revenue and alternative licensing arrangements. If any of our assumptions about revenue from our subscription-based offerings prove incorrect, our actual results may vary materially from those anticipated.
Some of our enterprise offerings have extended and complex sales cycles, which can make our sales cycles unpredictable. Sales cycles for some of our enterprise offerings, including our Adobe Experience Cloud and Adobe Experience Platform solutions and Enterprise Term License Agreements (“ETLAs”) in our Digital Media business, are multi-phased and complex.
Sales cycles for some of our enterprise offerings, including our Adobe Experience Cloud and Adobe Experience Platform solutions and Enterprise Term License Agreements (“ETLAs”) in our Digital Media business, are multi-phased and complex, which also makes it difficult to predict when a given sales cycle will close.
From time to time we have identified, and in the future we may identify other, vulnerabilities in some of our applications and services and those of our third-party service providers.
From time to time we have identified, and in the future we may identify other, vulnerabilities in some of our applications and services and those of our third-party service providers. In some cases, such vulnerabilities may not be immediately detected, which may make it difficult to recover critical services and lead to damaged assets.
We may be unable to scale our infrastructure effectively or as quickly as our competitors in these markets, and our revenue may not increase to offset these expected increases in costs and operating expenses, causing our results to suffer.
We may continue to expand our international operations and international sales and marketing activities, which would require significant management attention and resources. We may be unable to scale our infrastructure effectively or as quickly as our competitors in these markets, and our revenue may not increase sufficiently to offset these expected increases in costs, causing our results to suffer.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditionally, we have ongoing building construction in San Jose, California and Bangalore, India which are currently targeted for completion in fiscal 2022 and 2023, respectively. During fiscal 2021, our employees across all geographic regions continued to work from home due to the COVID-19 pandemic.
Biggest changeConstruction of a new building at our corporate headquarters in San Jose, California is substantially complete and was opened for occupancy in January 2023. We have ongoing building construction in Bangalore, India which is currently targeted for completion in fiscal 2023. During fiscal 2022, we fully re-opened our offices and evolved to a hybrid work model.
ITEM 2. PROPERTIES Our corporate headquarters is located in San Jose, California where we occupy approximately 1.1 million square feet of office space. We own a substantial portion of our San Jose, California properties which we use for research, product development, sales, marketing and administrative purposes.
ITEM 2. PROPERTIES Our corporate headquarters is located in San Jose, California where we occupy approximately 1.1 million square feet of office space as of December 2, 2022. We own a substantial portion of our San Jose, California properties which we use for research, product development, sales, marketing and administrative purposes.
The largest properties we occupy outside of the United States are the Bangalore, India and Noida, India offices which are approximately 0.4 million and 0.5 million square feet, respectively. We own and lease these properties in India. As of December 3, 2021, we have not terminated any significant lease arrangements.
The largest properties we occupy outside of the United States are our Bangalore, India and Noida, India offices which are approximately 0.4 million and 0.5 million square feet, respectively. We own and lease these properties in India.
See Note 18 of o ur N otes to Consolidated Financial Statements for further information regarding our lease obligations.
We believe our existing facilities, both owned and leased, are in good operating condition and suitable for the conduct of our business. See Note 18 of our Notes to Consolidated Financial Statements for further information regarding our lease obligations.
Removed
Starting in June 2021, we began a phased reopening of all of our U.S. offices and certain of our international offices in areas with sustained low infection rates, and invited fully vaccinated employees located near those reopened offices to return to the office on a voluntary basis.
Removed
While all our U.S. offices, including our headquarters in San Jose, California, are now open, our reopened offices are operating at reduced capacity with heightened health and safety protocols in place. As conditions continue to fluctuate around the world, our focus remains on promoting employee health and safety as we carefully evaluate reopening plans and timelines.
Removed
We carefully assess, and reassess, conditions on a case-by-case basis to determine when employees can safely return to our offices. We believe our facilities continue to be suitable for the conduct of our business should we decide to fully reopen our facilities in the next twelve months.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Repurchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Approximate Dollar Value that May Yet be Purchased Under the Plans (1) (in millions, except average price per share) Beginning repurchase authority $ 14,434 September 4 — October 1, 2021 Shares repurchased 0.5 $ 656.47 0.5 $ (334) October 2 — October 29, 2021 Shares repurchased 0.6 $ 596.55 0.6 $ (333) (2) October 30 — December 3, 2021 Shares repurchased 0.5 $ 657.07 0.5 $ (333) (2) Total 1.6 1.6 $ 13,434 _________________________________________ (1) In December 2020, the Board of Directors granted authority to repurchase up to $15 billion in our common stock through the end of fiscal 2024.
Biggest changePeriod Total Number of Shares Repurchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Approximate Dollar Value that May Yet be Purchased Under the Plans (1) (in millions, except average price per share) Beginning repurchase authority $ 8,700 September 3 — September 30, 2022 Shares repurchased 1.1 $ 371.04 1.1 $ (400) October 1 — October 28, 2022 Shares repurchased 2.1 $ 285.40 2.1 $ (584) (2) October 29 — December 2, 2022 Shares repurchased 1.8 $ 317.04 1.8 $ (583) (2) Total 5.0 5.0 $ 7,133 _________________________________________ (1) In December 2020, the Board of Directors granted authority to repurchase up to $15 billion in our common stock through the end of fiscal 2024.
Issuer Purchases of Equity Securities Below is a summary of stock repurchases for the three months ended December 3, 2021. See Note 14 of our Notes to Consolidated Financial Statements for information regarding our stock repurchase programs.
Issuer Purchases of Equity Securities Below is a summary of stock repurchases for the three months ended December 2, 2022. See Note 14 of our Notes to Consolidated Financial Statements for information regarding our stock repurchase programs.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol “ADBE.” Stockholders According to the records of our transfer agent, there were 940 holders of record of our common stock on January 14, 2022.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol “ADBE.” Stockholders According to the records of our transfer agent, there were 928 holders of record of our common stock on January 6, 2023.
(2) In September 2021, we entered into a structured stock repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $1 billion. As of December 3, 2021, approximately $334 million of the prepayment remained under this agreement.
(2) In September 2022, we entered into a structured stock repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $1.75 billion. As of December 2, 2022, approximately $583 million of the prepayment remained under this agreement.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGeneral and administrative expenses increased due to the following: Components of % Change 2021-2020 Incentive compensation, cash and stock-based 9 % Base compensation and related benefits associated with headcount 4 Bad debt expense (4) Software licenses 2 Various individually insignificant items 1 Total change 12 % Amortization of Intangibles Amortization expense increased during fiscal 2021 as compared to fiscal 2020 primarily due to amortization expense associated with intangible assets purchased through our acquisition of Workfront.
Biggest changeGeneral and administrative expenses increased due to the following: Components of % Change 2022-2021 Professional and consulting fees 4 % Incentive compensation, cash and stock-based 4 Base compensation and related benefits 3 Charitable contributions 2 Charges related to cancellation of corporate events, net of recoveries (2) Various individually insignificant items 1 Total change 12 % Professional and consulting fees increased from fiscal 2022 as compared to fiscal 2021 primarily due to incurred transaction costs associated with our planned acquisition of Figma. 44 Table of Contents Non-Operating Income (Expense), Net (dollars in millions) 2022 2021 2020 % Change 2022-2021 Interest expense $ (112) $ (113) $ (116) (1) % Percentage of total revenue (1) % (1) % (1) % Investment gains (losses), net (19) 16 13 ** Percentage of total revenue * * * Other income (expense), net 41 — 42 ** Percentage of total revenue * * * Total non-operating income (expense), net $ (90) $ (97) $ (61) (7) % _________________________________________ (*) Percentage is less than 1%.
Our solutions help customers manage, deliver and optimize content delivery, through Adobe Experience Manager and to enable shopping experiences that scale from mid-market to enterprise businesses, with Adobe Commerce. • Customer journeys.
Our solutions help customers manage, deliver and optimize content delivery through Adobe Experience Manager, and enable shopping experiences that scale from mid-market to enterprise businesses with Adobe Commerce. • Customer journeys.
Cloud-based features that are integral to our Creative Cloud and Document Cloud offerings and that work together with the on-premise/on-device software include, but are not limited to: Creative Cloud Libraries, which enable customers to access their work, settings, preferences and other assets seamlessly across desktop and mobile devices and collaborate across teams in real time; shared reviews which enable simultaneous editing and commenting of PDFs across desktop, mobile and web; automatic cloud rendering of a design which enables it to be worked on in multiple mediums; and Sensei, Adobe’s cloud-hosted artificial intelligence and machine learning framework, which enables features such as automated photo-editing, photograph content-awareness, natural language processing, optical character recognition and automated document tagging.
Cloud-based features that are integral to our Creative Cloud and Document Cloud offerings and that work together with the on-premise/on-device software include, but are not limited to: Creative Cloud Libraries, which enable customers to access their work, settings, preferences and other assets seamlessly across desktop and mobile devices and collaborate across teams in real time; shared reviews which enable simultaneous editing and commenting of digital assets across desktop, mobile and web; automatic cloud rendering of a design which enables it to be worked on in multiple mediums; and Sensei, Adobe’s cloud-hosted artificial intelligence and machine learning framework, which enables features such as automated photo-editing, photograph content-awareness, natural language processing, optical character recognition and automated document tagging.
Services and Other Our services and other revenue is comprised primarily of fees related to consulting, training, maintenance and support for certain on-premise licenses that are recognized at a point in time and our advertising offerings. We typically sell our consulting contracts on a time-and-materials and fixed-fee basis.
Services and Other Our services and other revenue is comprised primarily of fees related to consulting, training, maintenance and support for certain on-premise licenses that are recognized at a point in time and our advertising offerings. We typically sell our consulting contracts on a time-and-materials or fixed-fee basis.
These strategies include increasing the value Creative Cloud users receive, such as offering new desktop and mobile applications, as well as targeted promotions and offers that attract past customers and potential users to experience and ultimately subscribe to Creative Cloud.
These strategies include increasing the value Creative Cloud users receive, such as offering new desktop, web and mobile applications, as well as targeted promotions and offers that attract past customers and potential users to experience and ultimately subscribe to Creative Cloud.
Within each geographic region, the fluctuations in revenue by reportable segment were attributable to the factors noted in the segment information above. Included in the overall change in revenue for fiscal 2021 as compared to fiscal 2020 were impacts associated with foreign currency which were mitigated in part by our foreign currency hedging program. During fiscal 2021, the U.S.
Within each geographic region, the fluctuations in revenue by reportable segment were attributable to the factors noted in the segment information above. Included in the overall change in revenue for fiscal 2022 as compared to fiscal 2021 were impacts associated with foreign currency which were mitigated in part by our foreign currency hedging program. During fiscal 2022, the U.S.
ACQUISITIONS In the fourth quarter of fiscal 2021, we completed the acquisition of Frame.io, a privately held company that provides a cloud-based video collaboration platform, for approximately $1.18 billion and we began integrating Frame.io into our Digital Media reportable segment.
ACQUISITIONS In the fourth quarter of fiscal 2021, we completed the acquisition of Frame.io, a privately held company that provides a cloud-based video collaboration platform, for approximately $1.24 billion and we began integrating Frame.io into our Digital Media reportable segment.
Digital Media In our Digital Media segment, we are a market leader with Creative Cloud, our subscription-based offering which provides desktop tools, mobile apps and cloud-based services for designing, creating and publishing rich and immersive content.
Digital Media In our Digital Media segment, we are a market leader with Creative Cloud, our subscription-based offering which provides desktop tools, mobile apps and cloud-based services for designing, creating and publishing rich content and immersive 3D experiences.
Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to: • future expected cash flows from software license sales, subscriptions, support agreements, consulting contracts and acquired developed technologies and patents; • expected costs to develop acquired technologies and patents internally into commercially viable products; 38 Table of Content s • historical and expected customer attrition rates and anticipated growth in revenue from acquired customers; • the acquired company’s trade name and trademarks as well as assumptions about the period of time the acquired trade name and trademarks will continue to be used in the combined company’s product portfolio; • the expected use of the acquired assets; and • discount rates.
Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to: • future expected cash flows from software license sales, subscriptions, support agreements, consulting contracts and acquired developed technologies and patents; • expected costs to develop acquired technologies and patents internally into commercially viable products; 36 Table of Contents • historical and expected customer attrition rates and anticipated growth in revenue from acquired customers; • the acquired company’s trade name and trademarks as well as assumptions about the period of time the acquired trade name and trademarks will continue to be used in the combined company’s product portfolio; • the expected use of the acquired assets; and • discount rates.
See the section titled “Stock Repurchase Program” below. Liquidity and Capital Resources Considerations Our existing cash, cash equivalents and investment balances may fluctuate during fiscal 2022 due to changes in our planned cash outlay.
See the section titled “Stock Repurchase Program” below. Liquidity and Capital Resources Considerations Our existing cash, cash equivalents and investment balances may fluctuate during fiscal 2023 due to changes in our planned cash outlay.
Subsequent to December 3, 2021, as part of the December 2020 stock repurchase authority, we entered into an accelerated share repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $2.4 billion and received an initial delivery of 3.2 million shares, which represents approximately 75% of our prepayment.
Subsequent to December 2, 2022, as part of the December 2020 stock repurchase authority, we entered into an accelerated share repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $1.4 billion and received an initial delivery of 3.2 million shares, which represents approximately 75% of our prepayment.
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.
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. 49 Table of Contents
In the current global tax policy environment, any changes in laws, regulations and interpretations related to these assertions could adversely affect our effective tax rates, cause us to respond by making changes to our business structure, or result in other costs to us which could adversely affect our operations and financial results.
In the current global tax policy environment, any changes in laws, regulations and interpretations could adversely affect our effective tax rates, cause us to respond by making changes to our business structure, or result in other costs to us which could adversely affect our operations and financial results.
By combining the creativity of our Digital Media business 41 Table of Content s with the science of our Digital Experience business, we help our customers to more efficiently and effectively make, manage, measure and monetize their content across every channel with an end-to-end workflow and feedback loop.
By combining the creativity of our Digital Media business with the science of our Digital Experience business, we help our customers to more efficiently and effectively make, manage, measure and monetize their content across every channel with an end-to-end workflow and feedback loop.
Creative Cloud delivers value with deep, cross-product integration, frequent product updates and feature enhancements, cloud-enabled services including storage and syncing of files across users’ machines, machine learning and artificial intelligence, access to marketplace, social and community-based features with our Adobe Stock and Behance services, app creation capabilities, tools which assist with enterprise deployments and team collaboration, and affordable pricing for cost-sensitive customers.
Creative Cloud delivers value with deep, cross-product integration, frequent product updates and feature enhancements, cloud-enabled services including storage and 37 Table of Contents syncing of files across users’ devices, machine learning and artificial intelligence, access to marketplace, social and community-based features with our Adobe Stock and Behance services, app creation capabilities, tools which assist with enterprise deployments and team collaboration, and affordable pricing for cost-sensitive customers.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, the effects of the pandemic and other risks detailed in the section titled “Risk Factors” in Part I, Item 1A of this report.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, risks detailed in the section titled “Risk Factors” in Part I, Item 1A of this report.
Other uses of cash include business acquisitions, purchases of property and equipment and payments for taxes related to net share settlement of equity awards. Cash Flows from Operating Activities For fiscal 2021, net cash provided by operating activities of $7.23 billion was primarily comprised of net income adjusted for the net effect of non-cash items.
Other uses of cash include business acquisitions, purchases of property and equipment and payments for taxes related to net share settlement of equity awards. Cash Flows from Operating Activities For fiscal 2022, net cash provided by operating activities of $7.84 billion was primarily comprised of net income adjusted for the net effect of non-cash items.
We have made significant investments to broaden the scale and size of all of these routes to market, and our recent financial results reflect the success of these investments. Digital Experience revenue was $3.87 billion in fiscal 2021, up from $3.13 billion in fiscal 2020 which represents 24% year-over-year growth.
We have made significant investments to broaden the scale and size of all of these routes to market, and our recent financial results reflect the success of these investments. Digital Experience revenue was $4.42 billion in fiscal 2022, up from $3.87 billion in fiscal 2021 which represents 14% year-over-year growth.
Our financial results for fiscal 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 and 2019 which were 52-week years.
Revenue Revenue for fiscal 2021 benefited from an extra week in the first quarter of fiscal 2021 due to our 52/53 week financial calendar whereby fiscal 2021 was a 53-week year compared with fiscal 2022 and 2020 which were 52-week years.
As of December 3, 2021, the carrying value of our senior notes was $4.12 billion and our maximum commitment for interest payments was $514 million for the remaining duration of our outstanding senior notes. Interest is payable semi-annually, in arrears on February 1 and August 1. Our senior notes do not contain any financial covenants.
As of December 2, 2022, the carrying value of our senior notes was $4.13 billion and our maximum commitment for interest payments was $416 million for the remaining duration of our outstanding senior notes. Interest is payable semi-annually, in arrears on February 1 and August 1. Our senior notes do not contain any financial covenants.
Discussion regarding our financial condition and results of operations for fiscal 2020 as compared to fiscal 2019 is included in Item 7 of our Annual Report on Form 10-K for the fiscal year ended November 27, 2020, filed with the SEC on January 15, 2021.
Discussion regarding our financial condition and results of operations for fiscal 2021 as compared to fiscal 2020 is included in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 3, 2021, filed with the SEC on January 21, 2022.
See section titled "Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" in Part I, Item 5 of this report for stock repurchases during the quarter ended December 3, 2021 and Note 14 of our Notes to Consolidated Financial S tatements for fu rther details regarding our stock repurchase program .
See section titled “ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ” in Part I I , Item 5 of this report for stock repurchases during the quarter ended December 2, 2022 and Note 14 of our Notes to Consolidated Financial Statements for further details regarding our stock repurchase program.
Subscription revenue by reportable segment for fiscal 2021, 2020 and 2019 is as follows: (dollars in millions) 2021 2020 2019 % Change 2021-2020 Digital Media $ 11,048 $ 8,813 $ 7,208 25 % Digital Experience 3,379 2,660 2,280 27 % Publishing and Advertising 146 153 146 (5) % Total subscription revenue $ 14,573 $ 11,626 $ 9,634 25 % Product Our product revenue is comprised primarily of fees related to licenses for on-premise software purchased on a perpetual basis, for a fixed period of time or based on usage for certain of our OEM and royalty agreements.
Subscription revenue by reportable segment for fiscal 2022, 2021 and 2020 is as follows: (dollars in millions) 2022 2021 2020 % Change 2022-2021 Digital Media $ 12,385 $ 11,048 $ 8,813 12 % Digital Experience 3,880 3,379 2,660 15 % Publishing and Advertising 123 146 153 (16) % Total subscription revenue $ 16,388 $ 14,573 $ 11,626 12 % Product Our product revenue is comprised primarily of fees related to licenses for on-premise software purchased on a perpetual basis, for a fixed period of time or based on usage for certain of our OEM and royalty agreements.
The increases were primarily due to subscription revenue growth associated with our Creative Cloud and Document Cloud offerings. • Digital Experience revenue of $3.87 billion increased by $742 million, or 24%, during fiscal 2021, from $3.13 billion in fiscal 2020.
The increases were primarily due to subscription revenue growth associated with our Creative Cloud and Document Cloud offerings. • Digital Experience revenue of $4.42 billion increased by $555 million, or 14%, during fiscal 2022, from $3.87 billion in fiscal 2021.
Cash Flows from Financing Activities For fiscal 2021, net cash used for financing activities of $4.30 billion was primarily due to payments for our common stock repurchases and taxes paid related to the net share settlement of equity awards, which were offset by proceeds from re-issuance of common stock mainly for our employee stock purchase plan.
Cash Flows from Financing Activities For fiscal 2022, net cash used for financing activities of $6.83 billion was primarily due to payments for our common stock repurchases and taxes paid related to the net share settlement of equity awards, offset in part by proceeds from re-issuance of treasury stock mainly for our employee stock purchase plan.
The combined amounts of accrued interest and penalties related to tax positions taken on our tax returns were approximately $22 million and $26 million for fiscal 2021 and 2020, respectively. These amounts were included in long-term income taxes payable in their respective years.
As of December 2, 2022 and December 3, 2021, the combined amounts of accrued interest and penalties related to tax positions taken on our tax returns were approximately $17 million and $22 million, respectively. These amounts were included in long-term income taxes payable in their respective years.
Revaluing our ending ARR for fiscal 2021 using currency rates at the beginning of fiscal 2022, our Digital Media ARR at the end of fiscal 2021 would be $12.15 billion or approximately $86 million lower than the ARR reported above. Our success in driving growth in ARR has positively affected our revenue growth.
Revaluing our ending ARR for fiscal 2022 using currency rates at the beginning of fiscal 2023, our Digital Media ARR at the end of fiscal 2022 would be $13.26 billion or approximately $712 million lower than the ARR reported above. 38 Table of Contents Our success in driving growth in ARR has positively affected our revenue growth.
We cannot provide assurance that the final determination of any of these examinations will not have an adverse effect on our operating results and financial position. 49 Table of Content s LIQUIDITY AND CAPITAL RESOURCES Cash Flows This data should be read in conjunction with our Consolidated Statements of Cash Flows.
We believe our tax estimates to be reasonable; however, we cannot provide assurance that the final determination of any of these examinations will not have an adverse effect on our financial position and results of operations. 46 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Cash Flows This data should be read in conjunction with our Consolidated Statements of Cash Flows.
These countries, other governmental bodies and intergovernmental economic organizations such as the Organization for Economic Cooperation and Development, have or could make unprecedented assertions about how taxation is determined in their jurisdictions that are contrary to the way in which we have interpreted and historically applied the rules and regulations described above in such jurisdictions.
These countries, governmental bodies and intergovernmental economic organizations such as the Organization for Economic Cooperation and Development, have or could make unprecedented assertions about how taxation is determined and, in some cases, have proposed or enacted new laws that are contrary to the way in which rules and regulations have historically been interpreted and applied.
We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations.
Moreover, we are subject to the examination of our income tax returns by domestic and foreign tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations.
In the first quarter of fiscal 2021, we completed the acquisition of Workfront, a privately held company that provides a workflow platform, for approximately $1.52 billion in cash consideration and we began integrating Workfront into our Digital Experience reportable segment.
In the first quarter of fiscal 2021, we completed the acquisition of Workfront, a privately held company that provides a workflow platform, for approximately $1.52 billion in cash consideration and we began integrating Workfront into our Digital Experience reportable segment. See Note 3 of our Notes to Consolidated Financial Statements for further information regarding these acquisitions.
Revenue (dollars in millions) 2021 2020 2019 % Change 2021-2020 Subscription $ 14,573 $ 11,626 $ 9,634 25 % Percentage of total revenue 92 % 90 % 86 % Product 555 507 648 9 % Percentage of total revenue 4 % 4 % 6 % Services and other 657 735 889 (11) % Percentage of total revenue 4 % 6 % 8 % Total revenue $ 15,785 $ 12,868 $ 11,171 23 % Subscription Our subscription revenue is comprised primarily of fees we charge for our subscription and hosted service offerings, and related support, including Creative Cloud and certain of our Adobe Experience Cloud and Document Cloud services.
(dollars in millions) 2022 2021 2020 % Change 2022-2021 Subscription $ 16,388 $ 14,573 $ 11,626 12 % Percentage of total revenue 93 % 92 % 90 % Product 532 555 507 (4) % Percentage of total revenue 3 % 4 % 4 % Services and other 686 657 735 4 % Percentage of total revenue 4 % 4 % 6 % Total revenue $ 17,606 $ 15,785 $ 12,868 12 % Subscription Our subscription revenue is comprised primarily of fees we charge for our subscription and hosted service offerings, and related support, including Creative Cloud and certain of our Adobe Experience Cloud and Document Cloud services.
As of (in millions) December 3, 2021 November 27, 2020 Cash and cash equivalents $ 3,844 $ 4,478 Short-term investments $ 1,954 $ 1,514 Working capital $ 1,737 $ 2,634 Stockholders’ equity $ 14,797 $ 13,264 A summary of our cash flows for fiscal 2021, 2020 and 2019 is as follows: (in millions) 2021 2020 2019 Net cash provided by operating activities $ 7,230 $ 5,727 $ 4,422 Net cash used for investing activities (3,537) (414) (456) Net cash used for financing activities (4,301) (3,488) (2,946) Effect of foreign currency exchange rates on cash and cash equivalents (26) 3 (13) Net increase (decrease) in cash and cash equivalents $ (634) $ 1,828 $ 1,007 Our primary source of cash is receipts from revenue.
As of (in millions) December 2, 2022 December 3, 2021 Cash and cash equivalents $ 4,236 $ 3,844 Short-term investments $ 1,860 $ 1,954 Working capital $ 868 $ 1,737 Stockholders’ equity $ 14,051 $ 14,797 A summary of our cash flows for fiscal 2022, 2021 and 2020 is as follows: (in millions) 2022 2021 2020 Net cash provided by operating activities $ 7,838 $ 7,230 $ 5,727 Net cash used for investing activities (570) (3,537) (414) Net cash used for financing activities (6,825) (4,301) (3,488) Effect of foreign currency exchange rates on cash and cash equivalents (51) (26) 3 Net change in cash and cash equivalents $ 392 $ (634) $ 1,828 Our primary source of cash is receipts from revenue.
If the total unrecognized tax benefits at December 3, 2021, November 27, 2020 and November 29, 2019 were recognized, $199 million, $136 million and $116 million would decrease the respective effective tax rates.
If the total unrecognized tax benefits as of December 2, 2022, December 3, 2021 and November 27, 2020 were recognized, $203 million, $199 million and $136 million would decrease the respective effective tax rates.
Our primary uses of cash are our stock repurchase program as described below, payroll-related expenses, general operating expenses including marketing, travel and office rent, and cost of revenue. Other sources of cash include proceeds from participation in the employee stock purchase plan.
Our primary uses of cash are our stock repurchase program as described below and general business expenses including payroll, marketing and third-party hosting services. Other sources of cash include proceeds from participation in the employee stock purchase plan.
Dollar primarily weakened against EMEA currencies and the Australian Dollar as compared to fiscal 2020, which increased revenue in U.S. Dollar equivalents by $276 million. During fiscal 2021, the foreign currency impacts to revenue were offset in part by net hedging losses from our cash flow hedging program of $18 million.
Dollar primarily strengthened against EMEA and APAC foreign currencies as compared to fiscal 2021, which decreased revenue in U.S. Dollar equivalents by approximately $486 million. During fiscal 2022, the foreign currency impacts to revenue were offset in part by net hedging gains from our cash flow hedging program of $176 million.
Our maintenance and support offerings, which entitle customers, partners and developers to receive desktop product upgrades and enhancements or technical support, depending on the offering, are generally recognized ratably over the term of the arrangement.
Our maintenance and support offerings, which entitle customers, partners and developers to receive desktop product upgrades and enhancements or technical support, depending on the offering, are generally recognized ratably over the term of the arrangement. Transaction-based advertising revenue is recognized on a usage basis as we satisfy the performance obligations to our customers.
In addition, in the United States and other countries where we conduct business and in jurisdictions in which we are subject to tax, including those covered by governing bodies that enact tax laws applicable to us, such as the European Commission of the European Union, we are subject to potential changes in relevant tax, accounting and other laws, regulations and interpretations, including changes to tax laws applicable to corporate multinationals such as Adobe.
In addition, the United States and other countries and jurisdictions in which we conduct business, including those covered by governing bodies that enact tax laws applicable to us, such as the European Commission of the European Union, could make changes to relevant tax, accounting or other laws and interpretations thereof that have a material impact to us.
Cost of Revenue (dollars in millions) 2021 2020 2019 % Change 2021-2020 Subscription $ 1,374 $ 1,108 $ 926 24 % Percentage of total revenue 9 % 9 % 8 % Product 41 36 40 14 % Percentage of total revenue * * * Services and other 450 578 707 (22) % Percentage of total revenue 3 % 4 % 6 % Total cost of revenue $ 1,865 $ 1,722 $ 1,673 8 % _________________________________________ (*) Percentage is less than 1% Subscription Cost of subscription revenue consists of third-party hosting services and data center costs, including expenses related to operating our network infrastructure.
Cost of Revenue (dollars in millions) 2022 2021 2020 % Change 2022-2021 Subscription $ 1,646 $ 1,374 $ 1,108 20 % Percentage of total revenue 9 % 9 % 9 % Product 35 41 36 (15) % Percentage of total revenue * * * Services and other 484 450 578 8 % Percentage of total revenue 3 % 3 % 4 % Total cost of revenue $ 2,165 $ 1,865 $ 1,722 16 % _________________________________________ (*) Percentage is less than 1% 42 Table of Contents Subscription Cost of subscription revenue consists of third-party hosting services and data center costs, including expenses related to operating our network infrastructure.
Transaction-based advertising revenue is recognized on a usage basis as we satisfy the performance obligations to our customers. 43 Table of Content s Segments In fiscal 2021, we categorized our products into the following reportable segments: • Digital Media —Our Digital Media segment provides products, services and solutions that enable individuals, teams and enterprises to create, publish and promote their content anywhere and accelerate their productivity by modernizing how they view, share, engage with and collaborate on documents and creative content.
Segments In fiscal 2022, we categorized our products into the following reportable segments: • Digital Media —Our Digital Media segment provides products, services and solutions that enable individuals, teams and enterprises to create, publish and promote their content anywhere and accelerate their productivity by modernizing how they view, share, engage with and collaborate on documents and creative content.
In May 2018, our Board of Directors granted authority to repurchase up to $8 billion in our common stock, which we fully utilized during fiscal 2021. In December 2020, our Board of Directors granted additional authority to repurchase up to $15 billion in our common stock through the end of fiscal 2024.
In December 2020, our Board of Directors granted authority to repurchase up to $15 billion in our common stock through the end of fiscal 2024.
Cost of subscription revenue increased due to the following: Components of % Change 2021-2020 Hosting services and data center costs 12 % Base compensation and related benefits associated with headcount 5 Incentive compensation, cash and stock-based 4 Royalty costs 3 Total change 24 % 45 Table of Content s Product Cost of product revenue is primarily comprised of third-party royalties, amortization of certain intangible assets, localization costs and the costs associated with the manufacturing of our products.
Cost of subscription revenue increased due to the following: Components of % Change 2022-2021 Hosting services and data center costs 9 % Amortization of intangibles 4 Base compensation and related benefits 3 Incentive compensation, cash and stock-based 1 Royalty costs 2 Various individually insignificant items 1 Total change 20 % Product Cost of product revenue is primarily comprised of third-party royalties, localization costs and the costs associated with the manufacturing of our products.
We are also a market leader with our Document Cloud offerings built around our Adobe Acrobat family of products, including Adobe Acrobat Reader DC, and a set of integrated mobile apps and cloud-based document services, including Adobe Scan and Adobe Sign. Acrobat provides reliable creation and exchange of electronic documents, regardless of platform or application source type.
We are also a market leader with our Document Cloud offerings built around our Adobe Acrobat family of products, with a set of integrated mobile apps and cloud-based document services which enable users to create, review, approve, sign and track documents regardless of platform or application source type.
Adobe Acrobat DC is offered both through subscription and perpetual licenses. As part of our Creative Cloud and Document Cloud strategies, we utilize a data-driven operating model (“DDOM”) and our Adobe Experience Cloud solutions to raise awareness of our products, drive new customer acquisition, engagement and retention, and optimize customer journeys.
As part of our Creative Cloud and Document Cloud strategies, we utilize a data-driven operating model (“DDOM”) and our Adobe Experience Cloud solutions to raise awareness of our products, drive new customer acquisition, engagement and retention, and optimize customer journeys, and it continues to contribute strong growth in the business.
See N ote 16 of ou r Notes to Consolidated Financial Statements for additional information re garding our pur chase obligations. We lease certain facilities and data centers under non-cancellable operating lease arrangements that expire at various dates through 2031. As of December 3, 2021, the value of our obligations under operating leases was $604 million.
We lease certain facilities and data centers under non-cancellable operating lease arrangements that expire at various dates through 2032. As of December 2, 2022, the value of our obligations under operating leases was $548 million. See Note 18 of our Notes to Consolidated Financial Statements for additional information regarding our lease obligations.
Segment Information (dollars in millions) 2021 2020 2019 % Change 2021-2020 Digital Media $ 11,520 $ 9,233 $ 7,707 25 % Percentage of total revenue 73 % 72 % 69 % Digital Experience 3,867 3,125 2,795 24 % Percentage of total revenue 24 % 24 % 25 % Publishing and Advertising 398 510 669 (22) % Percentage of total revenue 3 % 4 % 6 % Total revenue $ 15,785 $ 12,868 $ 11,171 23 % Digital Media Revenue by major offerings in our Digital Media reportable segment for fiscal 2021, 2020 and 2019 were as follows: (dollars in millions) 2021 2020 2019 % Change 2021-2020 Creative Cloud $ 9,546 $ 7,736 $ 6,482 23 % Document Cloud 1,974 1,497 1,225 32 % Total Digital Media revenue $ 11,520 $ 9,233 $ 7,707 25 % Revenue from Digital Media increased $2.29 billion during fiscal 2021 as compared to fiscal 2020, driven by increases in revenue associated with our Creative and Document Cloud subscription offerings due to continued demand amid an increasingly digital environment and expanding subscription base.
Segment Information (dollars in millions) 2022 2021 2020 % Change 2022-2021 Digital Media $ 12,842 $ 11,520 $ 9,233 11 % Percentage of total revenue 73 % 73 % 72 % Digital Experience 4,422 3,867 3,125 14 % Percentage of total revenue 25 % 24 % 24 % Publishing and Advertising 342 398 510 (14) % Percentage of total revenue 2 % 3 % 4 % Total revenue $ 17,606 $ 15,785 $ 12,868 12 % 41 Table of Contents Digital Media Revenue by major offerings in our Digital Media reportable segment for fiscal 2022, 2021 and 2020 were as follows: (dollars in millions) 2022 2021 2020 % Change 2022-2021 Creative Cloud $ 10,459 $ 9,546 $ 7,736 10 % Document Cloud 2,383 1,974 1,497 21 % Total Digital Media revenue $ 12,842 $ 11,520 $ 9,233 11 % Revenue from Digital Media increased $1.32 billion during fiscal 2022 as compared to fiscal 2021, driven by increases in revenue associated with our Creative and Document Cloud subscription offerings due to continued demand amid an increasingly digital environment and strong customer acquisition and engagement, partially offset by the impact of foreign currency exchange rate fluctuations.
The total valuation allowance was $335 million as of December 3, 2021, primarily attributable to certain state credits and foreign intangible assets. We are a United States-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions.
The total valuation allowance was $402 million as of December 2, 2022, primarily related to certain state credits. 45 Table of Contents We are a United States-based multinational company subject to tax in multiple domestic and foreign tax jurisdictions.
Document Cloud revenue of $1.97 billion increased by $477 million, or 32%, during fiscal 2021, from $1.50 billion in fiscal 2020.
Document Cloud revenue of $2.38 billion increased by $409 million, or 21%, during fiscal 2022, from $1.97 billion in fiscal 2021.
In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Management must make assumptions, judgments and estimates to determine our current provision for income taxes and also our deferred tax assets and liabilities.
In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Significant judgment is required in determining our current provision for income taxes and deferred tax assets or liabilities.
The current U.S. tax law subjects the earnings of certain foreign subsidiaries to U.S. tax and generally allows an exemption from taxation for distributions from foreign subsidiaries. In the current global tax policy environment, the U.S.
The current U.S. tax law subjects the earnings of certain foreign subsidiaries to U.S. tax and generally allows an exemption from taxation for distributions from foreign subsidiaries. In the current global tax policy environment, the domestic and foreign governing bodies continue to consider, and in some cases introduce, changes in regulations applicable to corporate multinationals such as Adobe.
Digital Experience Revenue from Digital Experience increased $742 million during fiscal 2021, as compared to fiscal 2020 primarily due to subscription revenue growth across our offerings including from our Workfront acquisition. 44 Table of Content s Geographical Information (dollars in millions) 2021 2020 2019 % Change 2021-2020 Americas $ 8,996 $ 7,454 $ 6,506 21 % Percentage of total revenue 57 % 58 % 58 % EMEA 4,252 3,400 2,975 25 % Percentage of total revenue 27 % 26 % 27 % APAC 2,537 2,014 1,690 26 % Percentage of total revenue 16 % 16 % 15 % Total revenue $ 15,785 $ 12,868 $ 11,171 23 % Overall revenue during fiscal 2021 increased in all geographic regions as compared to fiscal 2020 primarily due to increases in Digital Media revenue and, to a lesser extent, increases in Digital Experience revenue.
Geographical Information (dollars in millions) 2022 2021 2020 % Change 2022-2021 Americas $ 10,251 $ 8,996 $ 7,454 14 % Percentage of total revenue 58 % 57 % 58 % EMEA 4,593 4,252 3,400 8 % Percentage of total revenue 26 % 27 % 26 % APAC 2,762 2,537 2,014 9 % Percentage of total revenue 16 % 16 % 16 % Total revenue $ 17,606 $ 15,785 $ 12,868 12 % Overall revenue during fiscal 2022 increased in all geographic regions as compared to fiscal 2021 primarily due to increases in Digital Media revenue and, to a lesser extent, increases in Digital Experience revenue.
Based on our current business plan and revenue prospects, we believe that our existing cash, cash equivalents and investment balances, our anticipated cash flows from operations and our available credit facility will be sufficient to meet our working capital, operating resource expenditure and capital expenditure requirements for the next twelve months. 50 Table of Content s Our cash equivalent and short-term investment portfolio as of December 3, 2021 consisted of asset-backed securities, corporate debt securities, money market funds, municipal securities, time deposits and U.S.
Based on our current business plan and revenue prospects, we believe that our existing cash, cash equivalents and investment balances, our anticipated cash flows from operations and our available credit facility will be sufficient to meet our working capital, operating resource expenditure and capital expenditure requirements for the next twelve months.
Driving this increase was the increase in subscription revenue across our offerings which grew to $3.38 billion in fiscal 2021 from $2.66 billion in fiscal 2020, representing 27% year-over-year growth. Also contributing to the increase in Digital Experience subscription revenue was revenue associated with Workfront’s workflow platform offerings.
Driving this increase was the increase in subscription revenue across our offerings which grew to $3.88 billion in fiscal 2022 from $3.38 billion in fiscal 2021, representing 15% year-over-year growth.
We expect Creative Cloud will drive sustained long-term revenue growth through a continued expansion of our customer base by attracting new users with new features and products, continuing to acquire users with our low cost of entry and delivery of additional features and value to Creative Cloud, and delivering new features and technologies to existing customers with our latest releases.
We expect Creative Cloud will drive sustained long-term revenue growth through a continued expansion of our customer base by attracting new users with new features and products like Adobe Express that make creative tools accessible to first-time creators and communicators, and delivering new features and technologies to existing customers with our latest releases such as share for review.
The change in our Digital Media ARR was primarily due to new user adoption of our Creative Cloud and Document Cloud offerings. • Creative revenue of $9.55 billion increased by $1.81 billion, or 23%, during fiscal 2021, from $7.74 billion in fiscal 2020.
The change in our Digital Media ARR was primarily due to new user adoption of our Creative Cloud and Document Cloud offerings, partially offset by an $87 million ARR reduction taken in March 2022 in response to the Russia-Ukraine war. • Creative revenue of $10.46 billion increased by $913 million, or 10%, during fiscal 2022, from $9.55 billion in fiscal 2021.
Our assumptions, judgments and estimates relative to the current provision for income taxes take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities.
We record a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not. Our assumptions, judgments and estimates relative to the current provision for income taxes take into account our interpretation and application of current tax laws and possible outcomes of current and future examinations conducted by domestic and foreign tax authorities.
The transfers did not result in taxable gains; however, our Irish subsidiary recognized deferred tax assets for the book and tax basis difference of the transferred IP rights. As a result of these transactions, we recorded deferred tax assets, net of valuation allowance, and related tax benefits totaling $1.35 billion, based on the fair value of the IP rights transferred.
As a result of these transactions, we recorded deferred tax assets, net of valuation allowance, and related tax benefits totaling $1.35 billion, based on the fair value of the IP rights transferred. The tax-deductible amortization related to the transferred IP rights is recognized over the period of economic benefit.
Sales and marketing expenses also include the costs of programs aimed at increasing revenue, such as advertising, trade shows and events, public relations and other market development programs. 46 Table of Content s Sales and marketing expenses increased due to the following: Components of % Change 2021-2020 Marketing spend related to campaigns, events and overall marketing efforts 10 % Incentive compensation, cash and stock-based 5 Base compensation and related benefits associated with headcount 3 Transaction fees 2 Total change 20 % General and Administrative General and administrative expenses consist primarily of compensation and contracted costs, travel expenses and related facilities costs for our finance, facilities, human resources, legal, information services and executive personnel.
Sales and marketing expenses increased due to the following: Components of % Change 2022-2021 Marketing spend related to campaigns, events and overall marketing efforts 5 % Base compensation and related benefits 4 Incentive compensation, cash and stock-based 3 Various individually insignificant items 3 Total change 15 % General and Administrative General and administrative expenses consist primarily of compensation and contracted costs, travel expenses and related facilities costs for our finance, facilities, human resources, legal, information services and executive personnel.
Other income (expense), decreased during fiscal 2021 primarily due to decreases in interest income driven by lower average interest rates and increases in foreign exchange losses.
Other income (expense), net also includes realized gains and losses on fixed income investments and foreign exchange gains and losses. Other income (expense), increased during fiscal 2022 primarily due to increases in interest income driven by higher average interest rates.
Our reported ARR results in the 40 Table of Content s current fiscal year are based on currency rates set at the beginning of the year and held constant throughout the year.
We adjust our reported ARR on an annual basis to reflect any exchange rate changes. Our reported ARR results in the current fiscal year are based on currency rates set at the beginning of the year and held constant throughout the year for measurement purposes.
However, while our revenue and earnings are relatively predictable as a result of our subscription-based business model, the duration of the pandemic and the broader implications of the macro-economic recovery on our business remain uncertain.
While our revenue and earnings are relatively predictable as a result of our subscription-based business model, the broader implications of these macroeconomic events on our business, results of operations and overall financial position, particularly in the long term, remain uncertain.
We primarily recognize subscription revenue ratably over the term of agreements with our customers, beginning with commencement of service. Subscription revenue related to certain offerings, where fees are based on a number of transactions and invoicing is aligned to the pattern of performance, customer benefit and consumption, are recognized on a usage basis.
Subscription revenue related to certain offerings, where fees are based on a number of transactions and invoicing is aligned to the pattern of performance, customer benefit and consumption, are recognized on a usage basis. 40 Table of Contents We have the following reportable segments: Digital Media, Digital Experience, and Publishing and Advertising.
Digital Experience We are a market leader in the fast-growing category addressed by our Digital Experience segment. The Adobe Experience Cloud applications, services and platform are designed to manage customer journeys, enable shoppable experiences and deliver intelligence for businesses of any size in any industry.
The Adobe Experience Cloud applications, services and platform are designed to manage customer journeys, enable personalized experiences at scale and deliver intelligence for businesses of any size in any industry. Our differentiation and competitive advantage are strengthened by our ability to use the Adobe Experience Platform to integrate our comprehensive set of solutions.
Because of the shift towards Creative Cloud subscriptions and Enterprise Term License Agreements (“ETLAs”), revenue from perpetual licensing of our Creative products has been immaterial to our business. In October 2021, we acquired Frame.io, a privately held company that provides a cloud-based video collaboration platform, and we began integrating Frame.io into our Digital Media segment.
Because of the shift towards Creative Cloud subscriptions and Enterprise Term License Agreements (“ETLAs”), revenue from perpetual licensing of our Creative products has been immaterial to our business.
Operating Expenses (dollars in millions) 2021 2020 2019 % Change 2021-2020 Research and development $ 2,540 $ 2,188 $ 1,930 16 % Percentage of total revenue 16 % 17 % 17 % Sales and marketing 4,321 3,591 3,244 20 % Percentage of total revenue 27 % 28 % 29 % General and administrative 1,085 968 881 12 % Percentage of total revenue 7 % 8 % 8 % Amortization of intangibles 172 162 175 6 % Percentage of total revenue 1 % 1 % 2 % Total operating expenses $ 8,118 $ 6,909 $ 6,230 17 % Research and Development Research and development expenses consist primarily of compensation and contracted costs associated with software development, third-party hosting services and data center costs, related facilities costs and expenses associated with computer equipment and software used in development activities.
Operating Expenses (dollars in millions) 2022 2021 2020 % Change 2022-2021 Research and development $ 2,987 $ 2,540 $ 2,188 18 % Percentage of total revenue 17 % 16 % 17 % Sales and marketing 4,968 4,321 3,591 15 % Percentage of total revenue 28 % 27 % 28 % General and administrative 1,219 1,085 968 12 % Percentage of total revenue 7 % 7 % 8 % Amortization of intangibles 169 172 162 (2) % Percentage of total revenue 1 % 1 % 1 % Total operating expenses $ 9,343 $ 8,118 $ 6,909 15 % Research and Development Research and development expenses consist primarily of compensation and contracted costs associated with software development, third-party hosting services and data center costs, related facilities costs and expenses associated with computer equipment and software used in development activities. 43 Table of Contents Research and development expenses increased due to the following: Components of % Change 2022-2021 Incentive compensation, cash and stock-based 7 % Base compensation and related benefits 7 Professional and consulting fees 2 Various individually insignificant items 2 Total change 18 % We believe that investments in research and development, including the recruiting and hiring of software developers, are critical to remain competitive in the marketplace and are directly related to continued timely development of new and enhanced offerings and solutions.
Document Cloud ARR exiting fiscal 2021 was $1.93 billion, up from $1.47 billion at the end of fiscal 2020. Total Digital Media ARR grew to $12.24 billion at the end of fiscal 2021, up from $10.26 billion at the end of fiscal 2020.
Total Digital Media ARR grew to $13.97 billion at the end of fiscal 2022, up from $12.15 billion at the end of fiscal 2021.
As a result, we observed strong growth in Digital Media revenue during fiscal 2021. Annualized Recurring Revenue (“ARR”) is currently the key performance metric our management uses to assess the health and trajectory of our overall Digital Media segment.
Annualized Recurring Revenue (“ARR”) is currently the key performance metric our management uses to assess the health and trajectory of our overall Digital Media segment. ARR should be viewed independently of revenue, deferred revenue and remaining performance obligations as ARR is a performance metric and is not intended to be combined with any of these items.
The increase was primarily due to subscription revenue growth across our offerings, including from our Workfront acquisition. • Remaining performance obligations of $13.99 billion as of December 3, 2021 increased by $2.65 billion, or 23%, from $11.34 billion as of November 27, 2020, primarily due to new contracts and renewals for our Digital Media and Digital Experience offerings, as well as impacts from our Workfront acquisition. • Cost of revenue of $1.87 billion increased by $143 million, or 8%, during fiscal 2021, from $1.72 billion in fiscal 2020 primarily due to increases in hosting services and data center costs, partially offset by decreases in Advertising Cloud media costs. • Operating expenses of $8.12 billion increased by $1.21 billion, or 17%, during fiscal 2021, from $6.91 billion in fiscal 2020 primarily due to increases in base and incentive compensation and related benefits costs, as well as increased marketing spend. 42 Table of Content s • Net income of $4.82 billion decreased by $438 million, or 8%, during fiscal 2021 from $5.26 billion in fiscal 2020 primarily due to the change in provision for income taxes, which was largely driven by the non-recurring benefit from income taxes recognized in fiscal 2020 associated with our intra-entity transfers of certain intellectual property rights.
The increase was primarily due to subscription revenue growth across our offerings. • Remaining performance obligations of $15.19 billion as of December 2, 2022 increased by $1.20 billion, or 9%, from $13.99 billion as of December 3, 2021, primarily due to new contracts and renewals for our Digital Media and Digital Experience offerings, partially offset by the impact of foreign currency exchange rate fluctuations. • Cost of revenue of $2.17 billion increased by $300 million, or 16%, during fiscal 2022, from $1.87 billion in fiscal 2021 primarily due to increases in hosting services and data center costs, as well as increases in base and incentive compensation and related benefits costs. • Operating expenses of $9.34 billion increased by $1.23 billion, or 15%, during fiscal 2022, from $8.12 billion in fiscal 2021 primarily due to increases in base and incentive compensation and related benefits costs, as well as increased marketing spend. • Cash flows from operations of $7.84 billion during fiscal 2022 increased by $608 million, or 8%, from $7.23 billion in fiscal 2021 primarily due to higher net income after adjustment for non-cash items.
(**) Percentage is not meaningful. Interest Expense Interest expense represents interest associated with our debt instruments.
(**) Percentage is not meaningful. Interest Expense Interest expense represents interest associated with our debt instruments. Interest on our senior notes is payable semi-annually, in arrears, on February 1 and August 1.
Treasury securities. We use professional investment management firms to manage a large portion of our invested cash. We expect to continue our investing activities, including short-term and long-term investments, purchases of computer systems for research and development, sales and marketing, product support and administrative staff, and facilities expansion.
We expect to continue our investing activities, including short-term and long-term investments, purchases of computer systems for research and development, sales and marketing, product support and administrative staff, and facilities expansion. Furthermore, cash reserves may be used to repurchase stock under our stock repurchase program and to strategically acquire companies, products or technologies that are complementary to our business.
We have established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities. In addition, we are subject to the examination of our income tax returns by the U.S. Internal Revenue Service and other domestic and foreign tax authorities.
We have established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and associated reserves.
See Note 17 of our Notes to Consolidated Financial Statements for further details regarding our debt instruments. Investment Gains (Losses), Net Investment gains (losses), net consists principally of unrealized holding gains and losses associated with our deferred compensation plan assets, and gains and losses associated with our direct and indirect investments in privately held companies.
Investment Gains (Losses), Net Investment gains (losses), net consists principally of unrealized holding gains and losses associated with our deferred compensation plan assets, and gains and losses associated with our direct and indirect investments in privately held companies. Other Income (Expense), Net Other income (expense), net consists primarily of interest earned on cash, cash equivalents and short-term fixed income investments.
See Note 1 8 of our Notes to Consolidated Financial Statements for additional information regarding ou r lease obligations. Our transition tax liability related to historical undistributed foreign earnings, which was accrued as a result of the U.S. Tax Act, was approximately $349 million as of December 3, 2021 and is payable in installments through fiscal 2026.
Other Our transition tax liability related to historical undistributed foreign earnings, which was accrued as a result of the U.S. Tax Act, was approximately $313 million as of December 2, 2022 and is payable in installments through fiscal 2026. As we repatriate foreign earnings for use in the United States, the distributions will generally be exempt from federal income taxes.
Our effective tax rate for fiscal 2021 was lower than the U.S. federal statutory tax rate of 21% primarily due to tax benefits related to stock-based compensation. During fiscal 2020, we completed intra-entity transfers of certain IP rights to our Irish subsidiary in order to better align the ownership of these rights with how our business operates.
During fiscal 2020, we completed intra-entity transfers of certain IP rights to our Irish subsidiary in order to better align the ownership of these rights with how our business operates. The transfers did not result in taxable gains; however, our Irish subsidiary recognized deferred tax assets for the book and tax basis difference of the transferred IP rights.
See Note 10 of our Notes to Consolidated Financial Statements for further informatio n regarding o ur provision for (benefit from) income taxes. 48 Table of Content s Accounting for Uncertainty in Income Taxes The gross liabilities for unrecognized tax benefits excluding interest and penalties were $289 million, $201 million and $173 million for fiscal 2021, 2020 and 2019, respectively.
Accounting for Uncertainty in Income Taxes The gross liabilities for unrecognized tax benefits excluding interest and penalties were $321 million, $289 million and $201 million for fiscal 2022, 2021 and 2020, respectively.
Total Digital Media segment revenue grew to $11.52 billion in fiscal 2021, up from $9.23 billion in fiscal 2020 and representing 25% year-over-year growth. These increases were driven by strong net new user growth, including those resulting from the current work-from-home environment reflecting expanded digital engagement.
Total Digital Media segment revenue grew to $12.84 billion in fiscal 2022, up from $11.52 billion in fiscal 2021 and representing 11% year-over-year growth driven by strong net new user growth. Digital Experience We are a market leader in the fast-growing category addressed by our Digital Experience segment.
Provision for (Benefit from) Income Taxes (dollars in millions) 2021 2020 2019 % Change 2021-2020 Provision for (benefit from) income taxes $ 883 $ (1,084) $ 254 ** Percentage of total revenue 6 % (8) % 2 % Effective tax rate 15 % (26) % 8 % _________________________________________ (**) Percentage is not meaningful.
Provision for (Benefit from) Income Taxes (dollars in millions) 2022 2021 2020 % Change 2022-2021 Provision for (benefit from) income taxes $ 1,252 $ 883 $ (1,084) 42 % Percentage of total revenue 7 % 6 % (8) % Effective tax rate 21 % 15 % (26) % Our effective tax rate increased by approximately six percentage points during fiscal 2022 as compared to fiscal 2021, primarily due to lower tax benefits related to stock-based compensation in fiscal 2022.
In making such a determination, we considered all available positive and negative evidence, including our past operating results, forecasted earnings, future taxable income and prudent and feasible tax planning strategies. On the basis of this evaluation, we continue to maintain a valuation allowance to reduce our deferred tax assets to the amount realizable.
We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized based on evaluation of all available positive and negative evidence. On the basis of this evaluation, we continue to maintain a valuation allowance to reduce our deferred tax assets to the amount realizable.
The 51 Table of Content s remaining balance will be settled during our third quarter of fiscal 2022. Upon completion of the $2.4 billion accelerated share repurchase agreement, $10.7 billion remains under our December 2020 authority.
Upon completion of the $1.4 billion accelerated share repurchase agreement, $5.15 billion remains under our December 2020 authority.
Creative revenue in fiscal 2021 was $9.55 billion, up from $7.74 billion in fiscal 2020 and representing 23% year-over-year growth. Document Cloud revenue in fiscal 2021 was $1.97 billion, up from $1.50 billion in fiscal 2020 and representing 32% year-over-year growth which reflected an increase in demand driven by new user acquisition for our Document Cloud subscription offerings.
Creative revenue in fiscal 2022 was $10.46 billion, up from $9.55 billion in fiscal 2021 and representing 10% year-over-year growth. Document Cloud revenue in fiscal 2022 was $2.38 billion, up from $1.97 billion in fiscal 2021 and representing 21% year-over-year growth.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe also have long-term investment exposures consisting of the capitalization and retained earnings in our non-U.S. Dollar functional currency foreign subsidiaries. As of December 3, 2021 and November 27, 2020, this long-term investment exposure totaled an absolute notional equivalent of $749 million and $598 million, respectively, with the year-over-year increase primarily driven by earnings growth.
Biggest changeDollar functional currency foreign subsidiaries. As of December 2, 2022 and December 3, 2021, this long-term investment exposure totaled an absolute notional equivalent of $770 million and $749 million, respectively. At this time, we do not hedge these long-term investment exposures.
We may use foreign exchange option contracts or forward contracts to hedge a portion of our forecasted foreign currency denominated revenue. Additionally, we hedge our net recognized foreign currency monetary assets and liabilities with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates.
We may use foreign exchange option contracts or forward contracts to hedge a portion of our forecasted foreign currency denominated revenue and expenses. Additionally, we hedge our net recognized foreign currency monetary assets and liabilities with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates.
In addition, we enter into collateral security agreements that provide for collateral to be received or posted when the net fair value of these contracts fluctuates from contractually established thresholds. A sensitivity analysis was performed on all of our foreign exchange derivatives as of December 3, 2021.
In addition, we enter into collateral security agreements that provide for collateral to be received or posted when the net fair value of these contracts fluctuates from contractually established thresholds. A sensitivity analysis was performed on all of our foreign exchange derivatives as of December 2, 2022.
Senior Notes As of December 3, 2021, we had $4.15 billion of senior notes outstanding which bear interest at fixed rates, and therefore do not subject us to financial statement risk associated with changes in interest rates.
Senior Notes As of December 2, 2022, we had $4.15 billion of senior notes outstanding which bear interest at fixed rates, and therefore do not subject us to financial statement risk associated with changes in interest rates.
At December 3, 2021, the outstanding balance sheet hedging derivatives had maturities of 180 days or less. See Note 6 of our Notes to Consolidated Financial Statements for information regarding our derivative financial instruments. Interest Rate Risk Short-Term Investments and Fixed Income Securities At December 3, 2021, we had debt securities classified as short-term investments of $1.95 billion.
At December 2, 2022, the outstanding balance sheet hedging derivatives had maturities of 180 days or less. See Note 6 of our Notes to Consolidated Financial Statements for information regarding our derivative financial instruments. Interest Rate Risk Short-Term Investments and Fixed Income Securities At December 2, 2022, we had debt securities classified as short-term investments of $1.86 billion.
A 150 basis point increase in interest rates would lead to a $27 million decrease in the market value of our short-term investments. Conversely, a 150 basis point decrease in interest rates would lead to a $14 million increase in the market value of our short-term investments.
A 150 basis point increase in interest rates would lead to a $20 million decrease in the market value of our short-term investments. Conversely, a 150 basis point decrease in interest rates would lead to a $20 million increase in the market value of our short-term investments.
As of December 3, 2021, all contracts were set to expire at various dates through June 2022. The bank counterparties in these contracts could expose us to credit-related losses that would be largely mitigated with master netting arrangements with the same counterparty by permitting net settlement transactions.
As of December 2, 2022, all contracts were set to expire at various dates through November 2023. The bank counterparties in these contracts could expose us to credit-related losses that would be largely mitigated with master netting arrangements with the same counterparty by permitting net settlement transactions.
Changes in interest rates could adversely affect the market value of these investments. A sensitivity analysis was performed on our investment portfolio as of December 3, 2021, based on an estimate of the hypothetical changes in market value of the portfolio that would result from an immediate parallel shift in the yield curve.
Changes in interest rates could adversely affect the market value of these investments. A sensitivity analysis was performed on our short-term investment portfolio as of December 2, 2022, based on an estimate of the hypothetical changes in market value of the portfolio that would result from an immediate parallel shift in the yield curve.
Dollar and a corresponding decrease in the value of the hedged foreign currency asset would lead to an increase in the fair value of our financial hedging instruments by $172 million. Conversely, a 10% decrease in the value of the U.S. Dollar would result in a decrease in the fair value of these financial instruments by $76 million.
Dollar and a corresponding decrease in the value of the hedged foreign currency asset would lead to an increase in the fair value of our financial hedging instruments by $75 million. A 10% decrease in the value of the U.S. Dollar would lead to an increase in the fair value of these financial instruments by $17 million.
When the forecasted transaction affects earnings, we reclassify the related gain or loss on the cash flow hedge to revenue. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, we reclassify the gain or loss on the related cash flow hedge from accumulated other comprehensive income (loss) to revenue.
In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, we reclassify the gain or loss on the related cash flow hedge from accumulated other comprehensive income (loss) to revenue or operating expenses, as applicable.
For the fiscal year ended December 3, 2021, there were no net gains or losses recognized in revenue relating to hedges of forecasted transactions that did not occur.
For the fiscal year ended December 2, 2022, there were no net gains or losses recognized in revenue or operating expenses relating to hedges of forecasted transactions that did not occur.
As of December 3, 2021, the total carrying amount of our senior notes was $4.12 billion and the related fair value based on observable market prices in less active markets was $4.29 billion. See Note 17 of our Notes to Consolidated Financial Statements for information regarding our senior notes. 53 Table of Content s
As of December 2, 2022, the total carrying amount of our senior notes was $4.13 billion and the related fair value based on observable market prices in less active markets was $3.88 billion. See Note 17 of our Notes to Consolidated Financial Statements for information regarding our senior notes. 51 Table of Contents
Our significant foreign currency revenue exposures for fiscal 2021, 2020 and 2019 were as follows : (in millions) 2021 2020 2019 Euro € 2,209 € 1,887 € 1,603 Japanese Yen ¥ 104,829 ¥ 88,640 ¥ 73,158 British Pounds £ 669 £ 562 £ 503 Australian Dollars $ 768 $ 645 $ 538 As of December 3, 2021, the total notional amounts of all outstanding foreign exchange contracts, including options and forwards, were $3.03 billion, which included the notional equivalent of $1.47 billion in Euros, $480 million in British Pounds, $448 million in Japanese Yen, $338 million in Australian Dollars and $299 million in other foreign currencies.
Our significant foreign currency revenue exposures for fiscal 2022, 2021 and 2020 were as follows: (in millions) 2022 2021 2020 Euro € 2,487 € 2,209 € 1,887 Japanese Yen ¥ 118,456 ¥ 104,829 ¥ 88,640 British Pounds £ 737 £ 669 £ 562 Australian Dollars $ 876 $ 768 $ 645 As of December 2, 2022, the total notional amounts of all outstanding foreign exchange contracts, including options and forwards, were $3.25 billion, which included the notional equivalent of $1.32 billion in Euros, $602 million in Indian Rupees, $480 million in British Pounds, $394 million in Japanese Yen, $338 million in Australian Dollars and $112 million in other foreign currencies.
As a general rule, we do not use foreign exchange contracts to hedge local currency denominated operating expenses in countries where a natural hedge exists. For example, in many countries, revenue in the local currencies substantially offsets the 52 Table of Content s local currency denominated operating expenses.
As a general rule, we do not use foreign exchange contracts to hedge local currency denominated operating expenses in countries where a natural hedge exists. For example, in many countries, revenue in the local currencies substantially offsets the local currency denominated operating expenses. We also have long-term investment exposures consisting of the capitalization and retained earnings in our non-U.S.
We enter into these foreign exchange contracts to hedge forecasted revenue in the normal course of business and accordingly, they are not speculative in nature. We record changes in fair value of these cash flow hedges of foreign currency denominated revenue in accumulated other comprehensive income (loss) in our Consolidated Balance Sheets, until the forecasted transaction occurs.
We record changes in fair value of these cash flow hedges of foreign currency denominated revenue and expenses in accumulated other comprehensive income (loss) in our Consolidated Balance Sheets, until the forecasted transaction occurs.
We regularly review our hedging program and assess the need to utilize financial instruments to hedge currency exposures on an ongoing basis. Cash Flow Hedges of Forecasted Foreign Currency Revenue We may use foreign exchange purchased options or forward contracts to hedge foreign currency revenue denominated in Euros, British Pounds, Japanese Yen and Australian Dollars.
Cash Flow Hedges of Forecasted Foreign Currency Revenue and Expenses We may use foreign exchange purchased options or forward contracts to hedge foreign currency revenue denominated in Euros, British Pounds, Japanese Yen and Australian Dollars, or foreign currency expenses in Indian Rupees.
At this time, we do not hedge these long-term investment exposures. We do not use foreign exchange contracts for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of changes in foreign exchange rates.
We do not use foreign exchange contracts for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of changes in foreign exchange rates. We regularly review our hedging program and assess the need to utilize financial instruments to hedge currency exposures on an ongoing basis.
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We enter into these foreign exchange contracts to hedge forecasted revenue and expenses in the normal course of business and accordingly, they are not speculative in nature.
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When the forecasted transaction affects earnings, we reclassify the related gain or loss on the cash flow hedge to revenue or 50 Table of Contents operating expenses, as applicable.

Other ADBE 10-K year-over-year comparisons