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Revenue
 9 Months Ended
Sep. 01, 2023
Revenue [Abstract]  
REVENUE REVENUE
Segment Information
Our segment results for the three months ended September 1, 2023 and September 2, 2022 were as follows:
(dollars in millions)Digital
Media		Digital
Experience		Publishing and
Advertising		Total
Three months ended September 1, 2023
Revenue$3,594 $1,229 $67 $4,890 
Cost of revenue161 397 22 580 
Gross profit$3,433 $832 $45 $4,310 
Gross profit as a percentage of revenue96 %68 %67 %88 %
Three months ended September 2, 2022
Revenue$3,232 $1,120 $81 $4,433 
Cost of revenue136 385 25 546 
Gross profit$3,096 $735 $56 $3,887 
Gross profit as a percentage of revenue96 %66 %69 %88 %
Our segment results for the nine months ended September 1, 2023 and September 2, 2022 were as follows:
(dollars in millions)Digital
Media		Digital
Experience		Publishing and
Advertising		Total
Nine months ended September 1, 2023
Revenue$10,500 $3,627 $234 $14,361 
Cost of revenue455 1,200 65 1,720 
Gross profit$10,045 $2,427 $169 $12,641 
Gross profit as a percentage of revenue96 %67 %72 %88 %
Nine months ended September 2, 2022
Revenue$9,542 $3,272 $267 $13,081 
Cost of revenue411 1,111 75 1,597 
Gross profit$9,131 $2,161 $192 $11,484 
Gross profit as a percentage of revenue96 %66 %72 %88 %
Revenue by geographic area for the three and nine months ended September 1, 2023 and September 2, 2022 were as follows:
Three MonthsNine Months
(in millions)2023202220232022
Americas
$2,943 $2,600 $8,601 $7,570 
EMEA1,229 1,143 3,615 3,436 
APAC718 690 2,145 2,075 
Total$4,890 $4,433 $14,361 $13,081 
Revenue by major offerings in our Digital Media reportable segment for the three and nine months ended September 1, 2023 and September 2, 2022 were as follows:
Three MonthsNine Months
(in millions)2023202220232022
Creative Cloud$2,909 $2,625 $8,522 $7,778 
Document Cloud685 607 1,978 1,764 
Total Digital Media revenue$3,594 $3,232 $10,500 $9,542 
Subscription revenue by segment for the three and nine months ended September 1, 2023 and September 2, 2022 were as follows:
Three MonthsNine Months
(in millions)2023202220232022
Digital Media
$3,506 $3,116 $10,225 $9,190 
Digital Experience1,096 981 3,208 2,874 
Publishing and Advertising29 31 88 92 
Total subscription revenue$4,631 $4,128 $13,521 $12,156 
Contract Balances
A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Included in trade receivables on the condensed consolidated balance sheets are unbilled receivable balances which have not yet been invoiced, and are typically related to license revenue or services which are delivered prior to invoicing. As of September 1, 2023, the balance of trade receivables, net of allowances for doubtful
accounts, was $1.85 billion, inclusive of unbilled receivables of $103 million. As of December 2, 2022, the balance of trade receivables, net of allowances for doubtful accounts, was $2.07 billion, inclusive of unbilled receivables of $93 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 $18 million and $23 million as of September 1, 2023 and December 2, 2022, respectively.
A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. We regularly review contract asset balances for impairment, considering factors such as historical experience, credit-worthiness, age of the balance, current economic conditions and a reasonable and supportable forecast of future economic conditions. Contract asset impairments were not material for the nine months ended September 1, 2023. Contract assets were $131 million and $97 million as of September 1, 2023 and December 2, 2022, respectively.
Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services, including non-cancellable and non-refundable committed funds and refundable customer deposits. Deferred revenue is recognized as revenue when transfer of control to customers has occurred. As of September 1, 2023, the balance of deferred revenue was $5.48 billion, which includes $47 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 2, 2022, the balance of deferred revenue was $5.41 billion. During the three and nine months ended September 1, 2023, approximately $983 million and $4.85 billion of revenue, respectively, was recognized that was included in the balance of deferred revenue as of December 2, 2022.
Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. As of September 1, 2023, remaining performance obligations were approximately $15.72 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 71% 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 $673 million and $629 million as of September 1, 2023 and December 2, 2022, 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 $99 million and $106 million as of September 1, 2023 and December 2, 2022, respectively.