XML 20 R9.htm IDEA: XBRL DOCUMENT v3.22.2
Revenue
 6 Months Ended
Jun. 03, 2022
Revenue [Abstract]  
Revenue REVENUE
Segment Information
Our segment results for the three months ended June 3, 2022 and June 4, 2021 were as follows:
(dollars in millions)Digital
Media		Digital
Experience		Publishing and
Advertising		Total
Three months ended June 3, 2022
Revenue$3,200 $1,095 $91 $4,386 
Cost of revenue141 374 24 539 
Gross profit$3,059 $721 $67 $3,847 
Gross profit as a percentage of revenue96 %66 %74 %88 %
Three months ended June 4, 2021
Revenue$2,787 $938 $110 $3,835 
Cost of revenue99 319 26 444 
Gross profit$2,688 $619 $84 $3,391 
Gross profit as a percentage of revenue96 %66 %76 %88 %
Our segment results for the six months ended June 3, 2022 and June 4, 2021 were as follows:
(dollars in millions)Digital
Media		Digital
Experience		Publishing and
Advertising		Total
Six months ended June 3, 2022
Revenue$6,310 $2,152 $186 $8,648 
Cost of revenue275 726 50 1,051 
Gross profit$6,035 $1,426 $136 $7,597 
Gross profit as a percentage of revenue96 %66 %73 %88 %
Six months ended June 4, 2021
Revenue$5,646 $1,872 $222 $7,740 
Cost of revenue197 638 56 891 
Gross profit$5,449 $1,234 $166 $6,849 
Gross profit as a percentage of revenue97 %66 %75 %88 %
Revenue by geographic area for the three and six months ended June 3, 2022 and June 4, 2021 were as follows:
Three MonthsSix Months
(in millions)2022202120222021
Americas $2,524 $2,185 $4,970 $4,409 
EMEA1,157 1,026 2,293 2,078 
APAC705 624 1,385 1,253 
Total$4,386 $3,835 $8,648 $7,740 
Revenue by major offerings in our Digital Media reportable segment for the three and six months ended June 3, 2022 and June 4, 2021 were as follows:
Three MonthsSix Months
(in millions)2022202120222021
Creative Cloud$2,605 $2,318 $5,153 $4,697 
Document Cloud595 469 1,157 949 
Total Digital Media revenue$3,200 $2,787 $6,310 $5,646 
Subscription revenue by segment for the three and six months ended June 3, 2022 and June 4, 2021 were as follows:
Three MonthsSix Months
(in millions)2022202120222021
Digital Media $3,079 $2,668 $6,074 $5,399 
Digital Experience961 817 1,893 1,629 
Publishing and Advertising30 35 61 76 
Total subscription revenue$4,070 $3,520 $8,028 $7,104 
Contract Balances
A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Included in trade receivables on the condensed consolidated balance sheets are unbilled receivable balances which have not yet been invoiced, and are typically related to license revenue or services which are delivered prior to invoicing. As of June 3, 2022, the balance of trade receivables, net of allowances for doubtful accounts, was $1.59 billion, inclusive of unbilled receivables of $95 million. As of December 3, 2021, the balance of trade receivables, net of allowances for doubtful accounts, was $1.88 billion, inclusive of unbilled receivables of $82 million.
We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectible trade receivables and is based on both specific and general reserves. We maintain general reserves on a collective basis by considering factors such as historical experience, credit-worthiness, the age of the trade receivable balances, current economic conditions and a reasonable and supportable forecast of future economic conditions. The allowance for doubtful accounts was $19 million and $16 million as of June 3, 2022 and December 3, 2021, respectively.
A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. We regularly review contract asset balances for impairment, considering factors such as historical experience, credit-worthiness, age of the balance, current economic conditions and a reasonable and supportable forecast of future economic conditions. Contract asset impairments were not material for the six months ended June 3, 2022. Contract assets were $75 million and $85 million as of June 3, 2022 and December 3, 2021, respectively.
Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services, including non-cancellable and non-refundable committed funds and refundable customer deposits. Deferred revenue is recognized as revenue when transfer of control to customers has occurred. As of June 3, 2022, the balance of deferred revenue was $4.88 billion, which includes $44 million of refundable customer deposits. Arrangements with some of our enterprise customers with non-cancellable and non-refundable committed funds provide options to either renew monthly on-premise term-based licenses or use some or all funds to purchase other Adobe products or services. Non-cancellable and non-refundable committed funds related to these agreements comprised approximately 5% of the total deferred revenue.
As of December 3, 2021, the balance of deferred revenue was $4.88 billion. During the three and six months ended June 3, 2022, approximately $1.35 billion and $3.50 billion of revenue, respectively, was recognized that was included in the balance of deferred revenue as of December 3, 2021.
Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. As of June 3, 2022, remaining performance obligations were approximately $13.82 billion. Non-cancellable and non-refundable funds related to some of our enterprise customer agreements referred to in the paragraph above comprised approximately 5% of the total remaining performance obligations. Approximately 74% of the remaining performance obligations, excluding the aforementioned enterprise customer agreements, are expected to be recognized over the next 12 months with the remainder recognized thereafter.
Incremental costs of obtaining a contract with a customer are capitalized if we expect the benefit of those costs to be longer than one year and primarily relate to sales commissions paid to our sales force personnel. Capitalized contract acquisition costs are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. Capitalized contract acquisition costs were $638 million and $611 million as of June 3, 2022 and December 3, 2021, respectively.
We record refund liabilities for amounts that may be subject to future refunds, which include sales returns reserves and customer rebates and credits. Refund liabilities are included in accrued expenses on the condensed consolidated balance sheets. Refund liabilities were $97 million and $128 million as of June 3, 2022 and December 3, 2021, respectively.