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Revenue | 12 Months Ended
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Nov. 27, 2020
Revenues [Abstract] |
Revenue | REVENUE Segment Information We report segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments. Our Chief Executive Officer, the chief operating decision maker, reviews revenue and gross margin information for each of our reportable segments, but does not review operating expenses on a segment by segment basis. In addition, with the exception of goodwill, we do not identify or allocate our assets by the reportable segments. Following the move of our Advertising Cloud offerings from our Digital Experience segment into the Publishing segment, our business is organized into three reportable segments: Digital Media, Digital Experience, and Publishing and Advertising. These segments provide our senior management with a comprehensive financial view of our key businesses. Our segments are aligned around our two strategic growth opportunities as described in the “Business Overview” within Part I, Item 1, placing our Publishing and Advertising business in a third segment that contains some of our legacy products and solutions. We categorize our products into the following reportable segments: •Digital Media—Our Digital Media segment provides tools and solutions that enable individuals, teams and enterprises to create, publish, promote and monetize their digital content anywhere. Our customers include content creators, experience designers, app developers, enthusiasts, students, social media users and creative professionals, as well as marketing departments and agencies, companies and publishers. Our customers also include knowledge workers who create, collaborate on and distribute documents and creative content. •Digital Experience—Our Digital Experience segment provides products, services and solutions for creating, managing, executing, measuring, monetizing and optimizing customer experiences from analytics to commerce. Our customers include marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers, marketing executives, information management and technology executives, product development executives, and sales and support executives. •Publishing and Advertising—Our Publishing and Advertising segment addresses market opportunities ranging from the diverse authoring and publishing needs of technical and business publishing to our legacy type and OEM printing businesses. It also includes our platforms for Advertising Cloud, web conferencing, document and forms, and Primetime. Financial results for fiscal 2020 and 2019 are presented below in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs - Contracts with Customers (Subtopic 340-40), which was adopted under the modified retrospective method at the beginning of fiscal 2019. Fiscal 2018 revenue has not been restated. Our segment revenue and results for fiscal 2020, 2019 and 2018, updated for segment reclassifications discussed above, were as follows:
(dollars in millions) | Digital Media |  | Digital Experience |  | Publishing and Advertising |  | Total
Fiscal 2020 |  |  |  |  |  |  |
Revenue | $ | 9,233 |  |  | $ | 3,125 |  |  | $ | 510 |  |  | $ | 12,868 |
Cost of revenue | 352 |  |  | 1,126 |  |  | 244 |  |  | 1,722 |
Gross profit | $ | 8,881 |  |  | $ | 1,999 |  |  | $ | 266 |  |  | $ | 11,146 |
Gross profit as a percentage of revenue | 96 | % |  | 64 | % |  | 52 | % |  | 87 | %
Fiscal 2019 |  |  |  |  |  |  |
Revenue | $ | 7,707 |  |  | $ | 2,795 |  |  | $ | 669 |  |  | $ | 11,171 |
Cost of revenue | 290 |  |  | 1,056 |  |  | 327 |  |  | 1,673 |
Gross profit | $ | 7,417 |  |  | $ | 1,739 |  |  | $ | 342 |  |  | $ | 9,498 |
Gross profit as a percentage of revenue | 96 | % |  | 62 | % |  | 51 | % |  | 85 | %
Fiscal 2018 |  |  |  |  |  |  |
Revenue | $ | 6,325 |  |  | $ | 2,073 |  |  | $ | 632 |  |  | $ | 9,030 |
Cost of revenue | 249 |  |  | 679 |  |  | 267 |  |  | 1,195 |
Gross profit | $ | 6,076 |  |  | $ | 1,394 |  |  | $ | 365 |  |  | $ | 7,835 |
Gross profit as a percentage of revenue | 96 | % |  | 67 | % |  | 58 | % |  | 87 | %
Revenue by geographic area for fiscal 2020, 2019 and 2018 were as follows:
(in millions) |  | 2020 |  | 2019 |  | 2018
Americas: |  |  |  |  |  |
United States |  | $ | 6,746 |  |  | $ | 5,904 |  |  | $ | 4,633 |
Other |  | 708 |  |  | 602 |  |  | 484 |
Total Americas |  | 7,454 |  |  | 6,506 |  |  | 5,117 |
EMEA: |  |  |  |  |  |
United Kingdom |  | 880 |  |  | 794 |  |  | 653 |
Other |  | 2,520 |  |  | 2,181 |  |  | 1,897 |
Total EMEA |  | 3,400 |  |  | 2,975 |  |  | 2,550 |
APAC: |  |  |  |  |  |
Japan |  | 893 |  |  | 751 |  |  | 609 |
Other |  | 1,121 |  |  | 939 |  |  | 754 |
Total APAC |  | 2,014 |  |  | 1,690 |  |  | 1,363 |
Revenue |  | $ | 12,868 |  |  | $ | 11,171 |  |  | $ | 9,030 |
Revenue by major offerings in our Digital Media reportable segment for fiscal 2020, 2019 and 2018 were as follows:
(in millions) |  | 2020 |  | 2019 |  | 2018
Creative Cloud |  | $ | 7,736 |  |  | $ | 6,482 |  |  | $ | 5,343 |
Document Cloud |  | 1,497 |  |  | 1,225 |  |  | 982 |
Total |  | $ | 9,233 |  |  | $ | 7,707 |  |  | $ | 6,325 |
Further, we reclassified revenue of our Advertising Cloud offerings from subscription to services and other on our Consolidated Statements of Income. Subscription revenue by segment for fiscal 2020, 2019 and 2018, updated for the reclassifications discussed above, were as follows:
(in millions) |  | 2020 |  | 2019 |  | 2018
Digital Media |  | $ | 8,813 |  |  | $ | 7,208 |  |  | $ | 5,858 |
Digital Experience |  | 2,660 |  |  | 2,280 |  |  | 1,600 |
Publishing and Advertising |  | 153 |  |  | 146 |  |  | 146 |
Total |  | $ | 11,626 |  |  | $ | 9,634 |  |  | $ | 7,604 |
Contract Balances Trade Receivables A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Timing of revenue recognition may differ from the timing of invoicing to customers. Certain performance obligations may require payment before delivery of the license or service to the customer. Included in trade receivables on the Consolidated Balance Sheets are unbilled receivable balances which have not yet been invoiced, and are typically related to license revenue or services which are delivered prior to invoicing. As of November 27, 2020, the balance of trade receivables, net of allowances for doubtful accounts, was $1.40 billion, inclusive of unbilled receivables of $84 million. As of November 29, 2019, the balance of trade receivables, net of allowance for doubtful accounts, was $1.53 billion, inclusive of unbilled receivables of $149 million. Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectible trade receivables. The allowance is based on both specific and general reserves. We regularly review our trade receivables allowance by considering factors such as historical experience, credit-worthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to pay and we specifically reserve for those deemed uncollectible. During fiscal 2020, 2019 and 2018, our allowance for doubtful accounts activities were as follows:
(in millions) |  | 2020 |  | 2019 |  | 2018
Beginning balance |  | $ | 10 |  |  | $ | 15 |  |  | $ | 9 |
Increase due to acquisition |  | — |  |  | — |  |  | 6 |
Charged to operating expenses |  | 31 |  |  | 5 |  |  | 6 |
Deductions(1) |  | (20) |  |  | (10) |  |  | (6) |
Ending balance |  | $ | 21 |  |  | $ | 10 |  |  | $ | 15 |
________________________________________ (1) Deductions related to the allowance for doubtful accounts represent amounts written off against the allowance, less recoveries. Contract Assets A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets are typically related to subscription and hosted service contracts where the transaction price allocated to the satisfied performance obligations exceeds the value of billings to date. Contract assets are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the Consolidated Balance Sheets. We regularly review contract asset balances for impairment, considering factors such as historical experience, credit-worthiness, age of the balance and other economic or business factors. Contract asset impairments were not material in fiscal 2020. Contract assets were $81 million and $64 million as of November 27, 2020 and November 29, 2019, respectively. Deferred Revenue and Remaining Performance Obligations Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services, including non-cancellable and non-refundable committed funds and refundable customer deposits. Deferred revenue is recognized as revenue when transfer of control to customers has occurred. Customers are typically invoiced for these agreements in regular installments and revenue is recognized ratably over the contractual subscription period. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, size and new business linearity within the quarter. Deferred revenue does not represent the total contract value of annual or multi-year non-cancellable subscription agreements. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, such as invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and not to receive financing from our customers. Any potential financing fees are considered insignificant in the context of our contracts. As of November 27, 2020, the balance of deferred revenue was $3.76 billion, which includes $64 million of refundable customer deposits. Refundable customer deposits represent arrangements in which the customer has a unilateral cancellation right for which we are obligated to refund amounts paid related to products or services not yet delivered or provided at the time of cancellation on a prorated basis. Arrangements with some of our enterprise customers with non-cancellable and non-refundable committed funds provide options to either renew monthly on-premise term-based licenses or use some or all funds to purchase other Adobe products or services. Non-cancellable and non-refundable committed funds related to these agreements comprised approximately 6% of the total deferred revenue. As of November 29, 2019, the balance of deferred revenue was $3.50 billion. Significant movements in the deferred revenue balance during the period consisted of increases due to payments received prior to transfer of control of the underlying performance obligations to the customer, which were offset by decreases due to revenue recognized in the period. During the year ended November 27, 2020, approximately $3.22 billion of revenue was recognized that was included in the balance of deferred revenue as of November 29, 2019. Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price allocated to the remaining performance obligation is influenced by several factors, including the timing of renewals and average contract term. We applied practical expedients to exclude amounts related to performance obligations that are billed and recognized as they are delivered, optional purchases that do not represent material rights, sales- and usage-based royalties not yet consumed and any estimated amounts of variable consideration that are subject to constraint. Remaining performance obligations were approximately $11.34 billion as of November 27, 2020. Non-cancellable and non-refundable committed funds related to some of our enterprise customer agreements referred to in the paragraph above comprised approximately 6% of the total remaining performance obligations. Approximately 73% of the remaining performance obligations, excluding the aforementioned enterprise customer agreements, are expected to be recognized over the next 12 months with the remainder recognized thereafter. Contract Acquisition Costs We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs meet the requirements to be capitalized. The costs capitalized are primarily sales commissions paid to our sales force personnel. Capitalized costs may also include portions of fringe benefits and payroll taxes associated with compensation for incremental costs to acquire customer contracts and incentive payments to partners. Capitalized costs to obtain a contract are amortized over the expected period of benefit, which we have determined, based on analysis, to be 5 years. Amortization of capitalized costs are included in sales and marketing expense in our Consolidated Statements of Income. During fiscal 2020 and 2019, we amortized $186 million and $171 million of capitalized contract acquisition costs into sales and marketing expense, respectively. We did not incur any impairment losses in fiscal 2020 and 2019. Capitalized contract acquisition costs was $530 million and $474 million as of November 27, 2020 and November 29, 2019, of which $352 million and $315 million was long-term and included in other assets in the Consolidated Balance Sheets, respectively. The remaining balance of the capitalized costs to obtain contracts was current and included in prepaid expenses and other current assets. Revenue Reserve During fiscal 2020, 2019 and 2018, our revenue reserve activities were as follows:
(in millions) |  | 2020 |  | 2019 |  | 2018
Beginning balance |  | $ | 7 |  |  | $ | 25 |  |  | $ | 22 |
Impacts of adoption of the new revenue standard |  | — |  |  | (15) |  |  | — |
Amount charged to revenue |  | 24 |  |  | 19 |  |  | 65 |
Actual returns |  | (21) |  |  | (22) |  |  | (62) |
Ending balance |  | $ | 10 |  |  | $ | 7 |  |  | $ | 25 |
Refund Liabilities As part of our revenue reserves, we record refund liabilities for amounts that may be subject to future refunds, which include sales returns reserves and customer rebates and credits. Refund liabilities are included in accrued expenses on the Consolidated Balance Sheets. Refund liabilities were $127 million and $126 million as of November 27, 2020 and November 29, 2019, respectively. Significant Customers For fiscal 2020, 2019 and 2018 there were no customers that represented at least 10% of net revenue. As of fiscal year end 2020 and 2019, no single customer was responsible for over 10% of our trade receivables.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 + Details
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