As of December 1, 2023, we had state net operating loss and tax credit carryforwards of approximately $446 million and $352 million, respectively. We also had federal tax credit carryforwards of approximately $80 million. The majority of the state tax credits can be carried forward indefinitely, and the remaining net operating loss and tax credit carryforwards will expire in various years from fiscal 2024 through 2040. Certain net operating loss and tax credit carryforwards are subject to an annual limitation and/or are reduced by a valuation allowance. The net carrying amount of such assets is expected to be fully realized.


ADBE Deferred Tax Assets and Liabilities

In assessing the realizability of deferred tax assets, management determined that it is more likely than not that we will not fully realize certain available tax assets in domestic and foreign jurisdictions. Deferred tax assets are offset by a valuation allowance to the extent it is more likely than not that they are not expected to be realized. As of December 1, 2023, we continue to maintain a valuation allowance of $405 million primarily related to certain state credits. For fiscal 2023, the increase in the valuation allowance was $3 million.


As we repatriate foreign earnings for use in the United States, the distributions will generally be exempt from federal income taxes. As of December 1, 2023, the cumulative amount of foreign earnings considered permanently reinvested upon which taxes have not been provided, and the corresponding unrecognized deferred tax liability, was not material.


ADOBE INC.


ADBE Accounting for Uncertainty in Income Taxes

During fiscal 2023 and 2022, the aggregate changes in our total gross amount of unrecognized tax benefits were as follows: (in millions)####2023####2022 Beginning balance##$##321##$##289 Gross increases in unrecognized tax benefits – prior year tax positions####103####20 Gross decreases in unrecognized tax benefits – prior year tax positions####(9)####(18) Gross increases in unrecognized tax benefits – current year tax positions####108####53 Lapse of statute of limitations####(14)####(4) Tax settlements####(13)####(18) Foreign exchange gains and losses####5####(1) Ending balance##$##501##$##321


Our policy is to record interest and penalties related to uncertain tax positions within the provision for income taxes. As of December 1, 2023 and December 2, 2022, the combined amounts of accrued interest and penalties included in long-term income taxes payable related to tax positions taken on our tax returns were not material.


While we file federal, state and local income tax returns globally, our major tax jurisdictions are Ireland, California and the United States. We are subject to the examination of our income tax returns by various domestic and foreign tax authorities with 2019 being the earliest fiscal year open for examination in all of our major tax jurisdictions. 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. While we believe our tax estimates are reasonable, 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.


The timing of the resolution of income tax examinations is highly uncertain as are the amounts and timing of tax payments that are part of any audit settlement process. These events could cause large fluctuations in the balance sheet classification of our tax assets and liabilities. We believe that within the next 12 months, it is reasonably possible that either certain audits will conclude or statutes of limitations on certain income tax examination periods will expire, or both. Although the timing of resolution, settlement and closing of audits is not certain, it is reasonably possible that the underlying unrecognized tax benefits may decrease by up to $60 million over the next 12 months.


ADBE Retirement Savings Plan

The Adobe Inc. 401(k) Retirement Savings Plan, qualified under Section 401(k) of the Internal Revenue Code, is a retirement savings plan covering substantially all of our U.S. employees. Under the plan, eligible employees may contribute up to 65% of their pretax or after-tax salary, subject to the IRS annual contribution limits. In fiscal 2023, we matched 50% of the first 6% of the employee’s eligible compensation. We contributed $85 million, $76 million and $64 million in fiscal 2023, 2022 and 2021, respectively. We are under no obligation to continue matching future employee contributions and, at our discretion, may change our practices at any time.


ADBE Deferred Compensation Plan

The Adobe Inc. Deferred Compensation Plan is an unfunded, non-qualified, deferred compensation arrangement under which certain executives are able to defer a portion of their annual compensation. Participants may elect to contribute up to 75% of their base salary and 100% of other specified compensation, including commissions and bonuses. Members of the Board of Directors are also eligible to participate and are able to defer their directors’ fees and elect cash benefit distributions in the same manner as executives. Additionally, members of the Board are permitted to defer equity awards. Participants are able to elect the payment of benefits to begin on a specified date at least three years after the end of the plan year in which election is made or, with respect to equity awards, vests. For cash benefit elections, distributions are made in cash in the form of a lump sum, or


ADBE Deferred Compensation Plan

ADOBE INC.


ADBE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

five, ten, or fifteen-year annual installments. For equity award elections, distributions are made in stock in the form of a lump sum payment only.


Certain deferred compensation is invested in money market and other mutual funds and subsequently recorded as other assets on our Consolidated Balance Sheets, with corresponding unrealized holding gains and losses recorded as investment gains (losses) in our Consolidated Statements of Income. Undistributed deferred compensation is recorded as long-term liabilities on our Consolidated Balance Sheets.


As of December 1, 2023 and December 2, 2022, the invested amounts under the plan totaled $206 million and $160 million, respectively. As of December 1, 2023 and December 2, 2022, undistributed deferred compensation due to participants totaled $222 million and $178 million, respectively.


ADBE NOTE 12. STOCK-BASED COMPENSATION

Our stock-based compensation programs are long-term retention programs that are intended to attract, retain and provide incentives for employees, officers and directors, and to align stockholder and employee interests. We have the following stock-based compensation plans and programs: Restricted Stock Units and Performance Share Programs


ADBE NOTE 12. STOCK-BASED COMPENSATION

We grant restricted stock units and performance share awards to eligible employees under our 2019 Equity Incentive Plan (“2019 Plan”). Restricted stock units generally vest over four years. Certain grants have other vesting periods approved by the Executive Compensation Committee of our Board of Directors (the “ECC”).


ADBE NOTE 12. STOCK-BASED COMPENSATION

As of December 1, 2023, we had reserved 64.0 million shares of our common stock for issuance under our 2019 Plan and had 34.3 million shares available for grant.


ADBE NOTE 12. STOCK-BASED COMPENSATION

Our Performance Share Programs aim to help focus key employees on building stockholder value, provide significant award potential for achieving outstanding company performance and enhance our ability to attract and retain highly talented and competent individuals. The ECC approves the terms of each of our Performance Share Programs, including the award calculation methodology. In January 2023, the ECC approved the 2023 Performance Share Program.


ADBE NOTE 12. STOCK-BASED COMPENSATION

Shares outstanding under our 2023 and 2022 Performance Share Programs may be earned based on the achievement of (i) an objective relative total stockholder return measured over a three-year performance period, as well as (ii) revenue-based financial metrics measured over three one-year performance periods. Each type of performance goal is weighted 50% and achievement of each performance goal is determined independently of the other. Shares associated with each performance goal are not awarded until the corresponding performance targets are defined.


ADBE NOTE 12. STOCK-BASED COMPENSATION

Shares outstanding under our 2021 Performance Share Program may be earned based on the achievement of an objective relative total stockholder return measured over a three-year performance period.


ADBE NOTE 12. STOCK-BASED COMPENSATION

Performance share awards in each of our 2023, 2022 and 2021 Performance Share Programs will cliff-vest upon the later of (i) the three-year anniversary of the earliest vesting commencement date in the respective Performance Share Program, or (ii) the ECC's certification of the level of achievement of the final performance period in the respective Performance Share Program, contingent upon the participant’s continued service. Participants can earn between 0% and 200% of the target number of performance shares.


ADBE NOTE 12. STOCK-BASED COMPENSATION

As of December 1, 2023, the shares awarded under our 2023, 2022 and 2021 Performance Share Programs remained outstanding and unvested.


ADBE Employee Stock Purchase Plan

Our Employee Stock Purchase Plan (“ESPP”) allows eligible employee participants to purchase shares of our common stock at a discount through payroll deductions. The ESPP consists of twenty-four-month offering periods with four six-month purchase periods in each offering period. Employees purchase shares in each purchase period at 85% of the market value of our common stock at either the beginning of the offering period or the end of the purchase period, whichever price is lower. If the


ADBE Employee Stock Purchase Plan

ADOBE INC.


market value of our common stock at the end of a purchase period is lower than the market value at the beginning of the offering period, participants are rolled over into the subsequent offering, resulting in a reset of the offering price and the twenty-four month offering period.


The ESPP will continue until the earlier of termination by the Board of Directors or the date on which all of the shares available for issuance under the plan have been issued.


As of December 1, 2023, we had reserved 103.0 million shares of our common stock for issuance under the ESPP and approximately 9.6 million shares remain available for future issuance.


ADBE Issuance of Shares

Upon vesting of restricted stock units and performance shares or purchase of shares under the ESPP, we will issue treasury stock. If treasury stock is not available, common stock will be issued. In order to minimize the impact of on-going dilution from issuance of shares, we instituted a stock repurchase program. See Note 14 for information regarding our stock repurchase programs.


ADBE Valuation of Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award.


Our restricted stock units are valued based on the fair market value of the award on the grant date. Our performance share awards which are contingent upon achievement of relative total stockholder return are valued using a Monte Carlo Simulation model. Our performance share awards which are contingent upon achievement of revenue-based financial metrics are valued based on the fair market value of the award on the grant date.


We use the Black-Scholes option pricing model to determine the fair value of ESPP purchase rights. The determination of the grant date fair value of our ESPP purchase rights is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, a risk-free interest rate and any expected dividends.


ADBE Summary of Restricted Stock Units

Restricted stock unit activity for fiscal 2023 was as follows: ##Number of Shares (in millions)####Weighted Average Grant Date Fair Value####Aggregate Fair Value (1) (in millions)##Weighted Average Remaining Contractual Life (years) Beginning outstanding balance##7.4##$##449.94###### Awarded##4.8##$##376.83###### Released##(3.9)##$##424.00###### Forfeited##(0.5)##$##436.70###### Ending outstanding balance##7.8##$##418.63##$##4,770##1.36 Expected to vest##7.0##$##419.46##$##4,276##1.29


ADBE _________________________________________

(1) The aggregate fair value is calculated using the closing stock price as of December 1, 2023 of $612.47.


The weighted average grant date fair values of restricted stock units granted during fiscal 2023, 2022 and 2021 were $376.83, $457.96 and $504.69, respectively. The total fair value of restricted stock units vested during fiscal 2023, 2022 and 2021 was $1.71 billion, $1.30 billion and $1.83 billion, respectively.


ADOBE INC.


ADBE Summary of Performance Shares

Performance share activity for fiscal 2023 was as follows: ##Number of Shares (in millions)####Weighted Average Grant Date Fair Value####Aggregate Fair Value (1) (in millions)##Weighted Average Remaining Contractual Life (years) Beginning outstanding balance##0.4##$##495.23###### Awarded##0.2##$##437.58###### Released##(0.1)##$##498.74###### Forfeited##—##$##491.86###### Ending outstanding balance##0.5##$##465.71##$##284##1.32 Expected to vest##0.4##$##466.10##$##255##1.26


Shares released during fiscal 2023 resulted from 63% achievement of target for the 2020 Performance Share Program, as certified by the ECC in the first quarter of fiscal 2023.


The weighted average grant date fair values of performance share awards granted during fiscal 2023, 2022 and 2021 were $437.58, $402.24 and $325.24, respectively. The total fair value of performance share awards vested during fiscal 2023, 2022 and 2021 was $39 million, $192 million and $212 million, respectively.


ADBE Summary of Employee Stock Purchase Plan Shares

Employees purchased 1.1 million shares at an average price of $286.31, 0.8 million shares at an average price of $333.92, and 1.0 million shares at an average price of $294.15 for fiscal 2023, 2022 and 2021, respectively. The intrinsic value of shares purchased during fiscal 2023, 2022 and 2021 was $185 million, $73 million and $256 million, respectively. The intrinsic value is calculated as the difference between the market value on the date of purchase and the purchase price of the shares.


During fiscal 2023, the rollover provision of our ESPP was triggered and resulted in incremental expense to be recognized over the new twenty-four-month offering period, which did not have a material impact on our Consolidated Statements of Income.


ADBE Compensation Costs

We recognize the estimated compensation costs of restricted stock units, net of estimated forfeitures, on a straight-line basis over the requisite service period of the entire award, which is generally the vesting period. The estimated compensation cost is based on the fair value of our common stock on the date of grant.


ADBE Compensation Costs

Compensation costs for our performance share awards which are contingent upon achievement of relative total stockholder return are recognized, net of estimated forfeitures, on a straight-line basis over the requisite performance period or service period of the entire award, whichever is longer. Compensation costs for our performance share awards which are contingent upon achievement of revenue-based financial metrics are recognized, net of estimated forfeitures, based upon the expected levels of achievement, which are assessed periodically until certification by the ECC.


ADBE Compensation Costs

We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate forfeitures and record stock-based compensation expense only for those awards that are expected to vest.


ADBE Compensation Costs

As of December 1, 2023, there was $2.87 billion of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock-based awards and purchase rights which will be recognized over a weighted average period of 2.24 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.


ADBE Compensation Costs

ADOBE INC.


Total stock-based compensation costs included in our Consolidated Statements of Income for fiscal 2023, 2022 and 2021 were as follows: (in millions)######2023####2022####2021 ##Cost of revenue##$##115##$##97##$##70 ##Research and development####874####726####549 ##Sales and marketing####495####417####307 ##General and administrative####234####200####164 ##Total (1)##$##1,718##$##1,440##$##1,090


(1)During fiscal 2023, 2022 and 2021, we recorded tax benefits related to stock-based compensation costs of $299 million, $291 million and $395 million, respectively.


ADBE NOTE 13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of accumulated other comprehensive income (loss) and activity, net of related taxes, for fiscal 2023 were as follows: (in millions)####December 2, 2022####Increase / Decrease####Reclassification Adjustments######December 1, 2023 Net unrealized gains / losses on available-for-sale securities##$##(41)##$##24##$##5##(1)##$##(12) Net unrealized gains / losses on derivative instruments designated as hedging instruments####17####(12)####(31)##(2)####(26) Cumulative foreign currency translation adjustments####(269)####22####—######(247) Total accumulated other comprehensive income (loss), net of taxes##$##(293)##$##34##$##(26)####$##(285)


(1) Reclassification adjustments for gains / losses on available-for-sale securities are classified in other income (expense), net.


(2)Reclassification adjustments for gains / losses on foreign currency hedges are classified in revenue or operating expenses, depending on the nature of the underlying transaction, and reclassification adjustments for gains / losses on Treasury lock hedges are classified in interest expense.


Taxes related to each component of other comprehensive income (loss) were immaterial for the fiscal years presented.


ADBE NOTE 14. STOCK REPURCHASE PROGRAM

To facilitate our stock repurchase program, designed to return value to our stockholders and minimize dilution from stock issuances, we may repurchase our shares in the open market or enter into structured repurchase agreements with third parties. 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.


ADBE NOTE 14. STOCK REPURCHASE PROGRAM

During fiscal 2023 and 2022, we entered into accelerated share repurchase agreements (“ASRs”) with large financial institutions whereupon we provided them with prepayments of $1.4 billion and $2.4 billion, respectively. Under the terms of our ASRs, the financial institutions agree to deliver a portion of shares to us at contract inception and the remaining shares at settlement. The total number of shares delivered and average purchase price paid per share are determined upon settlement based on the Volume Weighted Average Price (“VWAP”) over the term of the ASR, less an agreed upon discount.


ADBE NOTE 14. STOCK REPURCHASE PROGRAM

During fiscal 2023, 2022 and 2021, we also entered into structured stock repurchase agreements with large financial institutions whereupon we provided them with prepayments totaling $3 billion, $4.15 billion and $3.95 billion, respectively. Under the terms of these structured stock repurchase agreements, the financial institutions agree to deliver shares to us at monthly intervals during the respective contract terms, and the number of shares delivered each month are determined based on the total notional amount of the contracts, the number of trading days in the intervals and the VWAP during the intervals, less an agreed upon discount.


ADBE NOTE 14. STOCK REPURCHASE PROGRAM

ADOBE INC.


During fiscal 2023, we repurchased a total of 11.5 million shares, including approximately 7.5 million shares at an average price of $429.65 through structured repurchase agreements, as well as 4.0 million shares at an average price of $348.46 through the ASR entered into during fiscal 2023. During fiscal 2022, we repurchased approximately 15.7 million shares, including approximately 10.4 million shares at an average price of $375.03 through structured repurchase agreements, as well as 5.3 million shares at an average price of $451.55 through the ASR entered into during fiscal 2022. During fiscal 2021, we repurchased approximately 7.2 million shares at an average price of $536.17 through structured repurchase agreements.


For fiscal 2023, 2022 and 2021, the prepayments were classified as treasury stock on our Consolidated Balance Sheets at the payment date, though only shares physically delivered to us by December 1, 2023, December 2, 2022 and December 3, 2021 were excluded from the computation of net income per share. As of December 1, 2023, $354 million of prepayment remained under our outstanding structured stock repurchase agreement.


Subsequent to December 1, 2023, 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 billion and received an initial delivery of 2.5 million shares, which represents approximately 75% of our prepayment. Upon completion of the $2 billion accelerated share repurchase agreement, $150 million remains under our December 2020 authority.


ADBE NOTE 15. NET INCOME PER SHARE

Basic net income per share is computed using the weighted average number of common shares outstanding for the period, excluding unvested restricted stock units and performance awards. Diluted net income per share is based upon the weighted average common shares outstanding for the period plus dilutive potential common shares, including unvested restricted stock units, stock purchase rights and performance share awards using the treasury stock method. Performance share awards are included based on the number of shares that would be issued as if the end of the reporting period was the end of the performance period and the result was dilutive.


ADBE NOTE 15. NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income per share for fiscal 2023, 2022 and 2021: (in millions, except per share data)####2023####2022####2021 Net income##$##5,428##$##4,756##$##4,822 Shares used to compute basic net income per share####457.1####469.5####477.3 Dilutive potential common shares from stock plans and programs####2.0####1.4####3.7 Shares used to compute diluted net income per share####459.1####470.9####481.0 Basic net income per share##$##11.87##$##10.13##$##10.10 Diluted net income per share##$##11.82##$##10.10##$##10.02 Anti-dilutive potential common shares####2.7####4.2####0.2


ADBE NOTE 15. NET INCOME PER SHARE

ADOBE INC.


ADBE Unconditional Purchase Obligations

Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. The following table summarizes our non-cancellable unconditional purchase obligations for each of the next five years and thereafter as of December 1, 2023, primarily relating to contracts with vendors for third-party hosting and data center services: (in millions)#### Fiscal Year####Purchase Obligations 2024##$##1,202 2025####882 2026####884 2027####762 2028####789 Thereafter####411 Total##$##4,930


ADBE Unconditional Purchase Obligations

Subsequent to December 1, 2023, we executed agreements associated with certain of our long-term supplier commitments that increased our minimum purchase obligations by $2.3 billion through December 2028.


ADBE Royalties

We have royalty commitments associated with the licensing of certain offerings and products. Royalty expense is generally based on a dollar amount per unit or a percentage of the underlying revenue. Royalty expense, which was recorded in our cost of revenue on our Consolidated Statements of Income, was approximately $246 million, $228 million and $202 million in fiscal 2023, 2022 and 2021, respectively.


ADBE Indemnifications

In the ordinary course of business, we provide indemnifications of varying scope to customers and channel partners against claims of intellectual property infringement made by third parties arising from the use of our products and from time to time, we are subject to claims by our customers under these indemnification provisions. Historically, costs related to these indemnification provisions have not been significant and we are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations.


ADBE Indemnifications

To the extent permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is or was serving at our request in such capacity. The indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime. 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. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.


ADBE Legal Proceedings

We are subject to legal proceedings, claims, including claims relating to intellectual property, commercial, employment and other matters, and investigations, including government investigations, that arise in the ordinary course of our business. Some of these disputes, legal proceedings and investigations may include speculative claims for substantial or indeterminate amounts of damages. We consider all claims on a quarterly basis in accordance with GAAP and based on known facts assess whether potential losses are considered reasonably possible or probable and estimable. Based upon this assessment, we then evaluate disclosure requirements and whether to accrue for such claims in our financial statements. This determination is then reviewed and discussed with the Audit Committee of the Board of Directors.


ADBE Legal Proceedings

ADOBE INC.


We make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. As of December 1, 2023, we accrued provisions for legal liabilities that were probable and estimable, which were not material to our financial statements. Unless otherwise specifically disclosed in this note, we have determined that no disclosure is required related to any claim against us because: (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial.


All legal costs associated with litigation are expensed as incurred. Litigation is inherently unpredictable. However, we believe that we have valid defenses with respect to the legal matters pending against us. It is possible, nevertheless, that our consolidated financial position, results of operations or cash flows could be negatively affected by an unfavorable resolution of one or more of such proceedings, claims or investigations.


Since June 2022, we have been cooperating with the Federal Trade Commission (the “FTC”) staff in response to a Civil Investigative Demand seeking information regarding our disclosure and subscription cancellation practices relative to the Restore Online Shoppers’ Confidence Act. In November 2023, the FTC staff asserted that they had the authority to enter into consent negotiations to determine if a settlement regarding their investigation of these issues could be reached. We are currently engaging in discussion with the FTC. The defense or resolution of this matter could involve significant monetary costs or penalties and have a significant impact on our financial results and operations. There can be no assurance that we will be successful in negotiating a favorable settlement or in litigation. Any remedies or compliance requirements could adversely affect our ability to operate our business or have a materially adverse impact on our financial results. At this stage, we are unable to estimate a reasonably possible financial loss or range of any potential financial loss, if any, as a result of this investigation.


On October 20, 2023, a securities class action captioned Pembroke Pines Firefighters & Police Officers Pension Fund et al v. Adobe, Inc. et al, Case No. 1:23-cv-09260, was filed in the U.S. District Court for the Southern District of New York (the “Securities Action”) naming Adobe and certain of our current and former officers as defendants. The Securities Action purports to be brought on behalf of purchasers of the Company’s stock between July 23, 2021 and September 15, 2022 (the “Class Period”), and alleges that certain public statements made by Adobe during the Class Period related to competition from Figma and the adequacy of Adobe’s existing offerings to counter harms Adobe may have faced due to Figma’s growing market position were materially false and misleading. The Securities Action seeks unspecified compensatory damages, attorneys’ fees and costs, and extraordinary equitable and/or injunctive relief.


On November 16, 2023, a shareholder derivative action captioned Shah v. Narayen et al, Case No. 1:23-cv-01315, was filed in the U.S. District Court for the District of Delaware (the “Shah Action”), purportedly on behalf of Adobe. On January 3, 2024, a second shareholder derivative action captioned Gervat v. Narayen et al, Case No. 1:24-cv-00006, was filed in the U.S. District Court for the District of Delaware (the “Gervat Action,” and together with the Shah Action, the “Derivative Actions”), purportedly on behalf of Adobe. The Derivative Actions are based largely on the same alleged facts and circumstances as the Securities Action, and name certain of our current and former officers and members of our Board of Directors as defendants and Adobe as a nominal defendant. The Derivative Actions allege claims for breach of fiduciary duty, unjust enrichment, waste of corporate assets, and violations of Section 10(b) of the Securities Exchange Act of 1934 and seek recovery of unspecified damages and attorney’s fees and costs, as well as disgorgement of profits and certain payments and benefits, in the case of the Gervat Action, and improvements to Adobe’s corporate governance and internal procedures, in the case of the Shah Action, on behalf of Adobe.


We dispute the allegations of wrongdoing in the Securities Action and the Derivative Actions and intend to vigorously defend ourselves in these matters. In view of the complexity and ongoing and uncertain nature of the outstanding proceedings and inquiries, at this time we are unable to estimate a reasonably possible financial loss or range of financial loss, if any, that we may incur to resolve or settle the Securities Action and the Derivative Actions.


In connection with disputes relating to the validity or alleged infringement of third-party intellectual property rights, including patent rights, we have been, are currently and may in the future be subject to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation may be very costly and can be disruptive to our business operations by diverting the attention and energies of management and key technical personnel. Although we have successfully


ADOBE INC.


defended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and disputes. Third-party intellectual property disputes 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.


ADBE NOTE 17. DEBT

The carrying value of our borrowings as of December 1, 2023 and December 2, 2022 were as follows: (dollars in millions)##Issuance Date####Due Date##Effective Interest Rate####2023####2022 1.70% 2023 Notes##February 2020####February 2023##1.92%##$##—##$##500 1.90% 2025 Notes##February 2020####February 2025##2.07%####500####500 3.25% 2025 Notes##January 2015####February 2025##3.67%####1,000####1,000 2.15% 2027 Notes##February 2020####February 2027##2.26%####850####850 2.30% 2030 Notes##February 2020####February 2030##2.69%####1,300####1,300 ####Total debt outstanding, at par######$##3,650##$##4,150 ####Less: Current portion of debt, at par########—####(500) ####Unamortized discount and debt issuance costs########(16)####(21) ####Carrying value of long-term debt######$##3,634##$##3,629 ####Carrying value of current debt, net of unamortized discount and debt issuance costs######$##—##$##500


ADBE Senior Notes

In January 2015, we issued $1 billion of senior notes due February 1, 2025. The related discount and issuance costs are amortized to interest expense over the term of the notes using the effective interest method. Interest is payable semi-annually, in arrears, on February 1 and August 1.


ADBE Senior Notes

In February 2020, we issued $500 million of senior notes due February 1, 2023, $500 million of senior notes due February 1, 2025, $850 million of senior notes due February 1, 2027 and $1.30 billion of senior notes due February 1, 2030. Our total proceeds of approximately $3.14 billion, net of issuance discount, were used for general corporate purposes including repayment of debt instruments due in fiscal 2020. The related discount and issuance costs are amortized to interest expense over the respective terms of the notes using the effective interest method. Interest is payable semi-annually, in arrears, on February 1 and August 1.


ADBE Senior Notes

During the first quarter of fiscal 2023, the $500 million of senior notes due February 1, 2023 became due and were repaid.


ADBE Senior Notes

Our senior notes rank equally with our other unsecured and unsubordinated indebtedness. We may redeem the notes at any time, subject to a make-whole premium. In addition, upon the occurrence of certain change of control triggering events, we may be required to repurchase the notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The notes do not contain financial covenants but include covenants that limit our ability to grant liens on assets and to enter into sale and leaseback transactions, subject to significant allowances.


ADBE Term Loan Credit Agreement

In January 2023, we entered into a delayed draw term loan credit agreement (the “Term Loan Credit Agreement”), providing for a senior unsecured term loan (the “Term Loan”) of up to $3.5 billion for the purpose of partially funding the purchase price for our intended acquisition of Figma and the related fees and expenses incurred in connection with the acquisition. The Term Loan was available for funding in a single drawing upon the closing of the Figma acquisition at any time


ADBE Term Loan Credit Agreement

ADOBE INC.


prior to March 15, 2024. The Term Loan would mature two years following the initial funding date and required no scheduled principal amortization payments prior to maturity. The Term Loan could be prepaid and terminated at our election at any time without premium or penalty. At our election, the Term Loan would bear interest at either (i) term Secured Overnight Financing Rate (“SOFR”), plus a margin, (ii) adjusted daily SOFR, plus a margin, or (iii) base rate, plus a margin. Base rate is defined as the highest of (a) the federal funds rate plus 0.50%, (b) the agent’s prime rate, or (c) term SOFR plus 1.00%. The margin for term SOFR and adjusted daily SOFR loans was based on our debt ratings, and ranges from 0.750% to 1.250%. The margin for base rate loans was based on our debt ratings, and ranged from 0.000% to 0.250%. In addition, commitment fees determined according to our debt ratings were payable quarterly in an amount ranging from 0.040% to 0.100% per annum until the funding of the Term Loan.


The Term Loan Credit Agreement contained customary representations, warranties, affirmative and negative covenants, events of default and indemnification provisions in favor of the lenders similar to those contained in the Revolving Credit Agreement. As of December 1, 2023, there were no outstanding borrowings under the Term Loan.


Subsequent to December 1, 2023, we entered into a mutual termination agreement with Figma to terminate the previously announced merger agreement. Consequently, the Term Loan Credit Agreement was terminated. See Note 3 of our Notes to Consolidated Financial Statements for further information regarding the Figma transaction.


ADBE Revolving Credit Agreement

In June 2022, we entered into a credit agreement (“Revolving Credit Agreement”), providing for a five-year $1.5 billion senior unsecured revolving credit facility, which replaced our previous five-year $1 billion senior unsecured revolving credit agreement entered into in October 2018 (the “Prior Revolving Credit Agreement”). The Revolving Credit Agreement provides for loans to Adobe and certain of its subsidiaries that may be designated from time to time as additional borrowers. Pursuant to the terms of the Revolving Credit Agreement, we may, subject to the agreement of lenders to provide additional commitments, obtain up to an additional $500 million in commitments, for a maximum aggregate commitment of $2 billion. At our election, loans under the Revolving Credit Agreement will bear interest at either (i) term SOFR, plus a margin, (ii) adjusted daily SOFR, plus a margin, (iii) alternative currency rate, plus a margin, or (iv) base rate, which is defined as the highest of (a) the federal funds rate plus 0.50%, (b) the agent’s prime rate, or (c) term SOFR plus 1.00%. The margin for term SOFR, adjusted daily SOFR and alternative currency rate loans is based on our debt ratings, and ranges from 0.460% to 0.900%. In addition, facility fees determined according to our debt ratings are payable on the aggregate commitments, regardless of usage, quarterly in an amount ranging from 0.040% to 0.100% per annum. We are permitted to permanently reduce the aggregate commitment under the Revolving Credit Agreement at any time. Subject to certain conditions stated in the Revolving Credit Agreement, Adobe and any of its subsidiaries designated as additional borrowers may borrow, prepay and re-borrow amounts at any time during the term of the Revolving Credit Agreement.


ADBE Revolving Credit Agreement

The Revolving Credit Agreement contains customary representations, warranties, affirmative and negative covenants, including events of default and indemnification provisions in favor of the lenders. The negative covenants include restrictions regarding the incurrence of liens and indebtedness, certain merger transactions, dispositions and other matters, all subject to certain exceptions.


ADBE Revolving Credit Agreement

The facility will terminate and all amounts owing thereunder will be due and payable on the maturity date unless (a) the commitments are terminated earlier upon the occurrence of certain events, including an event of default, or (b) the maturity date is further extended upon our request, subject to the agreement of the lenders.


ADBE Revolving Credit Agreement

As of December 1, 2023, there were no outstanding borrowings under this Revolving Credit Agreement.


ADBE Commercial Paper Program

In September 2023, we established a commercial paper program under which we may issue unsecured commercial paper up to a total of $3 billion outstanding at any time, with maturities of up to 397 days from the date of issue. The net proceeds from the issuance of commercial paper are expected to be used for general corporate purposes, which may include working capital, capital expenditures, acquisitions, stock repurchases, refinancing indebtedness or any other general corporate purposes. As of December 1, 2023, there were no outstanding borrowings under the commercial paper program.


ADBE Commercial Paper Program

ADOBE INC.


ADBE NOTE 18. LEASES

We lease certain facilities and data centers under non-cancellable operating lease arrangements that expire at various dates through 2032. We also have one land lease that expires in 2091. Our lease agreements do not contain any material residual value guarantees, material variable payment provisions or material restrictive covenants.


ADBE NOTE 18. LEASES

Operating lease expense was $117 million, $121 million and $119 million for fiscal 2023, 2022 and 2021, respectively. We recognized operating lease expense in cost of revenue and operating expenses in our Consolidated Statements of Income. Our operating lease expense includes variable lease costs and is net of sublease income, both of which are not material.


ADBE NOTE 18. LEASES

Supplemental cash flow information for fiscal 2023, 2022 and 2021 related to operating leases was as follows: (in millions)######2023####2022####2021 ##Cash paid for amounts included in the measurement of operating lease liabilities##$##97##$##107##$##116 ##Right-of-use assets obtained in exchange for operating lease liabilities##$##32##$##59##$##60


ADBE NOTE 18. LEASES

The weighted-average remaining lease term and weighted-average discount rate for our operating lease liabilities as of December 1, 2023 were 6 years and 2.50%, respectively.


ADBE NOTE 18. LEASES

As of December 1, 2023, the maturities of lease liabilities under operating leases were as follows: (in millions)###### ##Fiscal Year####Operating Leases (1) ##2024##$##83 ##2025####80 ##2026####74 ##2027####74 ##2028####62 ##Thereafter####111 ##Total lease liabilities##$##484 ##Less: Imputed interest####38 ##Present value of lease liabilities##$##446


(1) Legally binding minimum lease payments for leases signed but not yet commenced as of December 1, 2023 were not material.


ADOBE INC.


ADBE NOTE 19. NON-OPERATING INCOME (EXPENSE)

Non-operating income (expense) for fiscal 2023, 2022 and 2021 included the following: (in millions)####2023####2022####2021 Interest expense##$##(113)##$##(112)##$##(113) Investment gains (losses), net:############ Realized investment gains##$##6##$##11##$##9 Realized investment losses####—####(1)####— Unrealized investment gains (losses), net####10####(29)####7 Investment gains (losses), net##$##16##$##(19)##$##16 Other income (expense), net:############ Interest income##$##269##$##61##$##17 Foreign exchange gains (losses)####(17)####(21)####(17) Realized losses on fixed income investments####(7)####—####— Other####1####1####— Other income (expense), net##$##246##$##41##$##— Non-operating income (expense), net##$##149##$##(90)##$##(97)


ADBE To the Stockholders and Board of Directors

Adobe Inc.:


Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting


We have audited the accompanying consolidated balance sheets of Adobe Inc. and subsidiaries (the Company) as of December 1, 2023 and December 2, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three fiscal year period ended December 1, 2023, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 1, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 1, 2023 and December 2, 2022, and the results of its operations and its cash flows for each of the fiscal years in the three fiscal year period ended December 1, 2023, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 1, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.


ADBE Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


ADBE Basis for Opinions

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.


ADBE Basis for Opinions

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


ADBE Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


ADBE Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.


ADBE Performance obligations in cloud-enabled software subscriptions

As discussed in Note 1 to the consolidated financial statements, cloud-enabled services are highly integrated and interrelated with on-premise or on-device software licenses in the Company’s Creative Cloud and Document Cloud subscription offerings. Because of this, the cloud-based services and the on-premise/on-device software licenses are not considered distinct from each other and the applicable subscription is accounted for as a single performance obligation.


We identified the assessment of performance obligations in these cloud-enabled software subscription offerings as a critical audit matter. A high degree of subjective auditor judgment was required to assess the nature of the Company’s Creative Cloud and Document Cloud offerings, their intended benefit to customers as an integrated offering, and the level of integration that exists between the cloud-enabled services and the on-premise/on-device licenses.


The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of an internal control related to the assessment of distinct performance obligations. We read the Creative Cloud and Document Cloud subscription offering agreements to understand the contractual terms and conditions. We participated in product demonstrations and performed interviews with the Company’s product and engineering department to both understand and observe specific functionalities of the integrated offering and evaluate the nature of the promise made to the Company’s Creative Cloud and Document Cloud customers. We evaluated the features and functionalities of the Creative Cloud and Document Cloud subscription that can be accessed only when using the on-premise/on-device software while connected to the Adobe cloud to assess that customers receive the intended benefit from each solution only as an integrated offering.


ADBE /s/ KPMG LLP

We have served as the Company’s auditor since 1983.


ADBE January 16, 2024

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


ADBE January 16, 2024

None.


ADBE Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of December 1, 2023. Based on their evaluation as of December 1, 2023, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective at the reasonable assurance level to ensure that the information required to be disclosed by us in this Annual Report on Form 10-K was (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.


ADBE Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Adobe have been detected.


ADBE Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Our management assessed the effectiveness of our internal control over financial reporting as of December 1, 2023. In making this assessment, our management used the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our management has concluded that, as of December 1, 2023, our internal control over financial reporting is effective based on these criteria.


KPMG LLP, the independent registered public accounting firm that audited our financial statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting, which is included herein.


ADBE Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 1, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


ADBE OTHER INFORMATION

None.


ADBE DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.


ADBE DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item 10 of Form 10-K that is found in our 2024 Proxy Statement to be filed with the SEC in connection with the solicitation of proxies for the Company’s 2024 Annual Meeting of Stockholders (“2024 Proxy Statement”) is incorporated herein by reference to our 2024 Proxy Statement. The 2024 Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year to which this report relates. For information with respect to our executive officers, see the section titled “Executive Officers” in Part I, Item 1 of this report.


ADBE EXECUTIVE COMPENSATION

The information required by this Item 11 of Form 10-K is incorporated herein by reference to our 2024 Proxy Statement.


ADBE EXECUTIVE COMPENSATION

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


ADBE EXECUTIVE COMPENSATION

The information required by this Item 12 of Form 10-K is incorporated herein by reference to our 2024 Proxy Statement.


ADBE CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 13 of Form 10-K is incorporated herein by reference to our 2024 Proxy Statement.


ADBE PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item 14 of Form 10-K is incorporated herein by reference to our 2024 Proxy Statement.


ADBE EXHIBITS, FINANCIAL STATEMENT SCHEDULES

1. Financial Statements. See Index to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. ######Incorporated by Reference###### Exhibit Number##Exhibit Description##Form##Filing Date##Exhibit Number##SEC File No.##Filed Herewith 2.1##Agreement and Plan of Merger, dated as of September 15, 2022, by and among Adobe Inc., Figma, Inc., Saratoga Merger Sub I, Inc., Saratoga Merger Sub II, LLC and Fortis Advisors LLC##8-K##9/15/22##2.1##000-15175## 3.1##Restated Certificate of Incorporation of Adobe##8-K##4/26/11##3.3##000-15175## 3.2##Certificate of Amendment to Restated Certificate of Adobe##8-K##10/9/18##3.1##000-15175## 3.3##Amended and Restated Bylaws##8-K##1/18/22##3.1##000-15175## 4.1##Specimen Common Stock Certificate##10-K##1/25/19##4.1##000-15175## 4.2##Form of Indenture dated as of January 25, 2010 by and between Adobe and Wells Fargo Bank, National Association, as trustee##S-3##2/26/16##4.1##333-209764## 4.3##Forms of Global Note for Adobe Inc.’s 1.700% Notes due 2023, 1.900% Notes due 2025, 2.150% Notes due 2027, and 2.300% Notes due 2030, together with an Officer’s Certificate setting forth the terms of the Notes##8-K##2/3/20##4.1##000-15175## 4.4##Form of Global Note for Adobe’s 3.250% Notes due 2025, together with Form of Officer’s Certificate setting forth the terms of the Note##8-K##1/26/15##4.1##000-15175## 4.5##Description of Adobe’s Common Stock##########X 10.1##2020 Employee Stock Purchase Plan, as amended*##10-K##1/15/21##10.1##000-15175## 10.2A##2003 Equity Incentive Plan, as amended*##8-K##4/13/18##10.2##000-15175## 10.2B##Form of RSU Grant Notice and Award Agreement pursuant to 2003 Equity Incentive Plan*##8-K##1/26/18##10.6##000-15175## 10.2C##Form of Restricted Stock Unit Grant Notice and Award Agreement pursuant to 2003 Equity Incentive Plan*##8-K##1/28/19##10.5##000-15175## 10.3A##2019 Equity Incentive Plan, as amended*##8-K##4/24/23##10.1##000-15175## 10.3B##2021 Performance Share Program pursuant to the 2019 Equity Incentive Plan*##8-K##1/27/21##10.2##000-15175## 10.3C##Form of 2021 Performance Share Award Grant Notice and Award Agreement pursuant to 2021 Performance Share Program and 2019 Equity Incentive Plan*##8-K##1/27/21##10.3##000-15175## 10.3D##2022 Performance Share Program pursuant to the 2019 Equity Incentive Plan*##8-K##1/27/22##10.2##000-15175## 10.3E##2022 Performance Share Program pursuant to 2019 Equity Incentive Plan, as amended and restated*##8-K##1/26/23##10.4##000-15175## ######Incorporated by Reference###### Exhibit Number##Exhibit Description##Form##Filing Date##Exhibit Number##SEC File No.##Filed Herewith 10.3F##Form of 2022 Performance Share Award Grant Notice and Award Agreement pursuant to 2022 Performance Share Program and 2019 Equity Incentive Plan*##8-K##1/27/22##10.3##000-15175## 10.3G##Form of Restricted Stock Unit Grant Notice and Award Agreement pursuant to 2019 Equity Incentive Plan (for awards granted prior to January 15, 2021)*##10-Q##6/26/19##10.35B##000-15175## 10.3H##2023 Performance Share Program pursuant to 2019 Equity Incentive Plan*##8-K##1/26/23##10.2##000-15175## 10.3I##Form of 2023 Performance Share Award Grant Notice and Award Agreement pursuant to 2023 Performance Share Program and 2019 Equity Incentive Plan*##8-K##1/26/23##10.3##000-15175## 10.3J##Form of Restricted Stock Unit Grant Notice and Award Agreement pursuant to 2019 Equity Incentive Plan (for awards granted on or after January 15, 2021)*##10-K##1/15/21##10.3E##000-15175## 10.3K##Form of Non-Employee Director Grant Restricted Stock Unit Grant Notice and Award Agreement pursuant to 2019 Equity Incentive Plan*##10-Q##3/29/23##10.7##000-15175## 10.3L##Form of Restricted Stock Unit Grant Notice and Award Agreement pursuant to 2019 Equity Incentive Plan (for awards granted on or after January 24, 2023)*##10-Q##3/29/23##10.6##000-15175## 10.4##Retention Agreement between Adobe and Shantanu Narayen, effective December 5, 2014*##8-K##12/11/14##10.2##000-15175## 10.5##Form of Indemnity Agreement*##########X 10.6A##Adobe Deferred Compensation Plan, as Amended and Restated*##10-K##1/20/15##10.19##000-15175## 10.6B##Amendment No. One to Adobe Deferred Compensation Plan*##10-K##1/21/20##10.6B##000-15175## 10.7##Credit Agreement, dated as of June 30, 2022, among the Company, certain subsidiaries of the Company party thereto, Bank of America, N.A. as Administrative Agent and the other lenders party thereto##8-K##7/1/22##10.1##000-15175## 10.8##Adobe Inc. 2023 Executive Severance Plan in the Event of a Change of Control*##8-K##12/13/23##10.1##000-15175## 10.9##2023 Executive Annual Incentive Plan*##8-K##1/26/23##10.5##000-15175## 10.10##2023 and 2024 Non-Employee Director Compensation Policy*##10-K##1/17/23##10.11##000-15175## 10.11##Voting and Support Agreement, dated as of September 15, 2022, by and among Adobe Inc. and the Key Stockholders party thereto##8-K##9/15/22##10.1##000-15175## 10.12##Term Loan Credit Agreement, dated as of January 19, 2023, among the Company, Bank of America, N.A., as administrative agent, and the other lenders party thereto.##8-K##1/19/23##10.1##000-15175## ######Incorporated by Reference###### Exhibit Number##Exhibit Description##Form##Filing Date##Exhibit Number##SEC File No.##Filed Herewith 10.13##Form of Commercial Paper Dealer Agreement between the Company, as issuer, and the applicable Dealer party thereto.##8-K##9/14/23##10.1##000-15175## 10.14##Termination Agreement, dated as of December 17, 2023, by and among Adobe Inc., Saratoga Merger Sub I, Inc., Saratoga Merger Sub II, LLC and Figma, Inc.##8-K##12/18/23##10.1##000-15175## 21##Subsidiaries of the Registrant##########X 23.1##Consent of Independent Registered Public Accounting Firm, KPMG LLP##########X 24.1##Power of Attorney (set forth on the signature page to this Annual Report on Form 10-K)##########X 31.1##Certification of Chief Executive Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934##########X 31.2##Certification of Chief Financial Officer, as required by Rule 13a-14(a) of the Securities Exchange Act of 1934##########X 32.1##Certification of Chief Executive Officer, as required by Rule 13a-14(b) of the Securities Exchange Act of 1934†##########X 32.2##Certification of Chief Financial Officer, as required by Rule 13a-14(b) of the Securities Exchange Act of 1934†##########X 97##Adobe Inc. Incentive Compensation Recovery Policy##########X 101.INS##Inline XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.##########X 101.SCH##Inline XBRL Taxonomy Extension Schema##########X 101.CAL##Inline XBRL Taxonomy Extension Calculation##########X 101.LAB##Inline XBRL Taxonomy Extension Labels##########X 101.PRE##Inline XBRL Taxonomy Extension Presentation##########X 101.DEF##Inline XBRL Taxonomy Extension Definition##########X 104##Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)##########


ADBE ___________________________

* Management contract or compensatory plan or arrangement.


ADBE ___________________________

† The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Adobe Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.


ADBE FORM 10-K SUMMARY

None.


ADBE SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ##ADOBE INC.## By:####/s/ DANIEL DURN ####Daniel Durn ####Chief Financial Officer and ####Executive Vice President, Finance, ####Technology Services and Operations ####(Principal Financial Officer)


ADBE POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Shantanu Narayen and Daniel Durn, and each or any one of them, his or her lawful attorneys-in-fact and agents, for such person in any and all capacities, to sign any and all amendments to this report and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact and agent, or substitute or substitutes, may do or cause to be done by virtue hereof.


ADBE POWER OF ATTORNEY

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature##Title##Date /s/ SHANTANU NARAYEN####January 16, 2024 Shantanu Narayen##Chair of the Board of Directors and  Chief Executive Officer (Principal Executive Officer)## /s/ DANIEL DURN####January 16, 2024 Daniel Durn##Chief Financial Officer and  Executive Vice President, Finance,  Technology Services and Operations (Principal Financial Officer)## /s/ MARK GARFIELD####January 16, 2024 Mark Garfield##Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)## /s/ FRANK CALDERONI####January 16, 2024 Frank Calderoni##Director## /s/ CRISTIANO AMON####January 16, 2024 Cristiano Amon##Director## Signature##Title##Date /s/ AMY BANSE####January 16, 2024 Amy Banse##Director## /s/ BRETT BIGGS####January 16, 2024 Brett Biggs##Director## /s/ MELANIE BOULDEN####January 16, 2024 Melanie Boulden##Director## /s/ LAURA DESMOND####January 16, 2024 Laura Desmond##Director## /s/ SPENCER NEUMANN####January 16, 2024 Spencer Neumann##Director## /s/ KATHLEEN OBERG####January 16, 2024 Kathleen Oberg##Director## /s/ DHEERAJ PANDEY####January 16, 2024 Dheeraj Pandey##Director## /s/ DAVID RICKS####January 16, 2024 David Ricks##Director## /s/ DAN ROSENSWEIG####January 16, 2024 Dan Rosensweig##Director##


ADBE SUMMARY OF TRADEMARKS

The following trademarks of Adobe Inc. or its subsidiaries, which may be registered in the United States and/or other countries, are referenced in this Form 10-K: Acrobat Acrobat Reader Acrobat Sign Adobe Adobe Audition Adobe Campaign Adobe Commerce Adobe Experience Cloud Adobe Express Adobe Firefly Adobe Fonts Adobe Fresco Adobe Premiere Adobe Scan Adobe Sensei Adobe Stock Adobe Target After Effects Behance Camera to Cloud Creative Cloud Document Cloud Frame.io Illustrator InCopy InDesign Journey Optimizer Lightroom Marketo Engage Photoshop PostScript Premiere Pro Reader Sensei Substance 3D Substance 3D Designer Substance 3D Modeler Substance 3D Painter Substance 3D Sampler Substance 3D Stager Workfront


CPNG The Company

We have created and continue to build a next generation experience for retail. By investing for the long term with a fanatical culture of customer centricity, we believe we are delivering a superior customer experience at a lower cost as we continue to redefine retail standards worldwide. Our efforts have centered on building an end-to-end integrated system of technology and infrastructure, and most importantly, an innovation-focused culture driven to raise our customers’ expectations and lead them to wonder “How did I ever live without Coupang?”


CPNG Our Customer Experience

We are committed to delivering a “wow” experience to all of our customers every day. This commitment drives every aspect of our operations and pushes us to redefine the standards of the retail experience. We reimagined the retail customer experience with our Rocket Delivery service in Korea: •Dawn and Same-Day Delivery. Orders are delivered within hours via Dawn Delivery (ordered as late as midnight, arrive before 7am) or Same-Day Delivery (ordered in the morning, arrive same-day). •Next-Day Delivery. Customers are eligible for free, one-day delivery nationwide 365 days a year. •Frictionless Returns. Our customers simply tap a button on the app and leave the item outside their door for pickup. Refunds are initiated the moment the item is picked up at the door.


CPNG Our Customer Experience

In addition to Rocket Delivery available across Korea, our Rocket WOW membership program allows members to enjoy unlimited free shipping with no minimum spend, free unlimited returns for 30 days, delivery of groceries via Rocket Fresh, discounts on restaurant orders via Coupang Eats, and content streaming on Coupang Play. We believe the success of these offerings demonstrates the power of our network to extend offerings to our loyal customers.


CPNG Our Customer Experience

In January 2024 we acquired the business and assets of Farfetch, a leading global marketplace for the luxury fashion industry which connects customers with some of the world’s best boutiques and brands.


CPNG Our Merchant Experience

Small and medium-sized enterprises (SMEs) on Coupang form an essential part of our business, and we strive to be a growth driver for these companies through our win-win model. Over 75% of Coupang merchants are SMEs, which can leverage our nationwide fulfillment and logistics infrastructure to connect with millions of customers. We’ve supported these SMEs, helping them in everything from marketing and logistics to customer service. We also continue to develop new ways for SMEs to unlock growth through Coupang, such as Coupang Private Label Brands, through which we work mostly with SMEs to develop and market high-quality products for customers marketed under our private label brand, at affordable prices. We also launched Rocket Overseas to customers in Taiwan, empowering SME partners to unlock even more growth through sales to customers outside of Korea, at no additional effort or cost on their part.


CPNG Our Merchant Experience

We offer merchants of all sizes the opportunity to sell on Coupang and provide effective solutions to improve their customer experiences and enhance demand generation. Our fulfillment & logistics by Coupang (“FLC”) offering empowers merchants by offering them our fulfillment, logistics, delivery, and customer service network services.


CPNG Advertising

We also have offerings for our suppliers and merchants to advertise on our websites and mobile applications.


CPNG Our Competition

We compete with: (1) offline, online, and omnichannel retailers, suppliers, distributors, manufacturers, and producers of the products we offer and sell to consumers and businesses; (2) web search engines, comparison shopping websites, social networks, web portals, and other online and app-based means of discovering, using, or acquiring goods and services, either directly or in collaboration with other retailers; (3) companies that provide retail merchant services; (4) companies that sell grocery products online and offline; (5) on-demand food delivery services; (6) companies that provide fulfillment and logistics services for themselves or for third parties; (7) companies that provide online advertising products and services; (8) on-demand streaming entertainment services; and (9) financial services companies, including credit card issuers and payment platforms. Coupang, Inc.##2023 Form 10-K##4


CPNG Seasonality

Our overall operating results may fluctuate from quarter to quarter as a result of a variety of factors, including seasonal factors, economic cycles that influence consumer spend, and our ability to attract and retain new customers.


CPNG Human Capital

Our global team of employees is the driving force in creating a one-of-a-kind experience for millions of customers. In the same way our employees aim to go above and beyond for our customers, we aim to go above and beyond for them. As one of the largest private sector employers in South Korea, we directly employ approximately 78,000 employees as of December 31, 2023. We believe our direct employment model, along with competitive wages, training and safety programs, and a broad range of comprehensive benefits, empowers our diverse set of employees to deliver the “wow” experiences for our customers we strive to create every day.


CPNG Human Capital

Most of our employees are frontline workers in our fulfillment and logistics operations, and we make their health, safety, and wellness a top priority. We've made significant investments in health and safety initiatives that helped strengthen our leading safety record, which is one of the best in the Korean logistics industry and globally1. These investments include Coupang Care, the first paid health promotion program of its kind at scale for logistics workers in Korea. We believe the well-being of our employees is directly tied to the success of our business, and most importantly, our impact on our customers.


CPNG Intellectual Property

We rely on a combination of patents, trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements, employee non-disclosure and invention assignment agreements, and other legal and contractual rights to establish and protect our proprietary rights.


CPNG Intellectual Property

We have trademark rights in our name and other brand indicia and have trademark registrations for select marks in Korea, the United States, Taiwan and other jurisdictions around the world. We also have registered domain names for websites that we use in our business, such as www.aboutcoupang.com and similar variations.


CPNG Intellectual Property

We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including technical and administrative security controls and contractual protections with employees, contractors, customers, and partners. It is our practice to enter into confidentiality and invention assignment agreements (or similar agreements) with our employees, consultants, and contractors involved in the development of intellectual property on our behalf. We also enter into confidentiality agreements with other third parties in order to limit access to, and disclosure and use of, our confidential information and proprietary information. We further control the use of our proprietary technology and intellectual property through provisions in our terms of service.


CPNG Intellectual Property

Our design logos, “Coupang,” and our other registered or common law trademarks, service marks, or trade names appearing in this Form 10-K are our property or our affiliates’ property. Other trade names, trademarks, and service marks used in this Form 10-K are the property of their respective owners.


CPNG Government Regulation

Government regulation impacts key aspects of our business. In particular, we are subject to a number of national, state/region, and local laws, standards and regulations in Korea, the U.S., Taiwan, China, and other jurisdictions where we operate. These laws and regulations involve matters that are often central to our business, including our interactions with customers, suppliers, and merchants. They may regulate fair trade, competition, labor and employment, privacy, data protection, intellectual property, consumer protection, import and export regulations, and other subjects. These regulations are often complex and subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application in practice may change or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal, state, and local administrative agencies.


CPNG Government Regulation

For additional information, see the risk factors herein in Part I—Item 1A.“Risk Factors” under the sub-caption “Risks Related to Laws, Regulation and Intellectual Property” in this Form 10-K.


CPNG Company Website, Social Media, and Availability of SEC Filings

Our corporate website address is http://www.aboutcoupang.com and our investor relations website is www.ir.aboutcoupang.com. Information on our website is not incorporated by reference herein and is not a part of this Form 10-K. We promptly make available on our investor relations website, free of charge, the reports that we file or furnish with the Securities and Exchange Commission (the “SEC”), corporate governance information (including our Code of Business Conduct and Ethics) and select press releases. We


1 Measured using work-related and accident-related fatalities. Coupang, Inc.##2023 Form 10-K##5


file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and amendments to reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding Coupang and other issuers that file electronically with the SEC.


We may announce material business and financial information using our investor relations website, our filings with the SEC, webcasts, press releases, conference calls and social media. We use these mediums, including our corporate and investor relations websites, to communicate with investors and the general public about our company, our products, and other issues. It is possible that the information that we make available on our websites may be deemed to be material information. We therefore encourage investors and others interested in our Company to review the information that we make available on our websites.


Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. Coupang, Inc.##2023 Form 10-K##6


CPNG Risk Factors

Investing in our Class A common stock involves a high degree of risk. You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this Annual Report on Form 10-K, including the sections titled “Special Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this Form 10-K, before making an investment decision. The risks and uncertainties described below may not be the only ones we face. Our business, financial condition, results of operations, and prospects could also be affected by additional factors that apply to all companies operating globally. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us, or that we currently believe to be immaterial, or that apply to all companies operating globally could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the price of our Class A common stock which would cause you to lose all or part of your investment.


CPNG Summary Risk Factors

Our business faces significant risks and uncertainties. Farfetch’s business was subject to many of the same risks we have historically faced, and the acquisition of Farfetch will increase our exposure to these risks. The risk factors described below are only a summary of the principal risk factors associated with investing in our Class A common stock. These risks are more fully described in this “Risk Factors” section, including the following: •our results of operations may fluctuate significantly, which makes our future results of operations difficult to predict and could cause our results of operations to fall below expectations; •we may be unable to effectively manage the continued growth of our workforce and operations, including the development and management of new business initiatives; •our business is rapidly evolving, and we plan to continue to forgo short-term financial performance for long-term growth, which makes it difficult to evaluate our future prospects and predict our future results of operations, including our revenue growth rate; •we have a history of net losses, and we may not be able to generate sufficient revenues to achieve or maintain profitability in future periods; •if we were to lose the services of members of our senior management team, we may not be able to effectively execute on our business strategy; •we face intense competition and could lose market share to our competitors if we do not innovate or compete effectively; •ongoing or future pandemics may continue to adversely affect our business, operations, and the geographies and communities in which we, our customers, suppliers, merchants, and advertisers operate; •because some of our operations are subject to Korean law, there are circumstances in which certain of our Korean affiliates’ executive officers may be held either directly or vicariously criminally liable for the actions of our Korean affiliates or our Korean affiliates’ executives and employees; •some of our operations are subject to certain detailed and complex fair trade, labor, employment, and workplace safety laws and regulations, which continue to evolve and have and will continue to affect our operations and financial performance, could subject us to costs and penalties, and may affect our reputation; •harm to our Coupang brand or our associated brands and marks (our “brand”) or reputation may occur if manufacturers and distributors from whom we buy products (“suppliers”) or the parties that sell their products on our marketplace (“merchants”) use unethical or illegal business practices, such as the sale of counterfeit or fraudulent products, or if our protocols with respect to such sales are perceived or found to be inadequate, which may also subject us to possible sanctions or penalties; •The acquisition of Farfetch creates incremental risk to our business, financial condition and results of operations; •any significant interruptions or delays in service on our apps or websites, or any undetected errors or design faults, could result in limited capacity, reduced demand, processing delays, and loss of customers, suppliers, or merchants; •any failure to protect our apps, websites, networks, and systems against security breaches or otherwise protect our confidential information could damage our reputation and brand and may subject us to possible sanctions or penalties; •any failure to comply with privacy laws or regulations, or to fulfill privacy-related customer expectations in the jurisdictions where we operate, could damage our reputation and brand and business and may subject us to possible sanctions or penalties; Coupang, Inc.##2023 Form 10-K##7 •we rely on Coupang Pay to conduct a substantial amount of the payment processing. If Coupang Pay’s services were limited, restricted, curtailed, or degraded in any way, or become unavailable to us or our customers for any reason, our business may be adversely affected; •our expansion into new geographies and offerings and substantial increase in the number of our offerings may expose us to new and increased challenges and risks; •international relations, including escalations in tensions between North and South Korea, and other global conflicts could adversely affect the Korean or global economies and demand for our products and services; and •the dual class structure of our common stock has the effect of concentrating voting control with Mr. Bom Kim. This voting control may limit your ability to influence the outcome of important transactions and to influence corporate governance matters.


CPNG Risks Related to Our Limited Operating History and Growth

We had a history of net losses prior to our most recent fiscal year, we may incur losses in the future, and we cannot ascertain whether we will maintain profitability in future periods, which would materially and adversely affect our business, financial condition, results of operations, and prospects.


Prior to 2023, we have had a history of net losses, including $(0.1) billion and $(1.5) billion for 2022 and 2021 respectively, as well as an accumulated deficit of $(4.4) billion as of December 31, 2023. Even though we have experienced recent profitability and expect to remain profitable, we cannot ascertain whether we will be able to maintain or further increase our profitability in future periods. Our costs and expenses are expected to increase in future periods, which could materially and adversely affect our future results of operations. In particular, we intend to continue to spend significant amounts to increase our customer base, increase the number and variety of merchandise and services we offer, expand our marketing channels, expand into new geographies, broaden our operations, develop additional fulfillment centers, hire additional and retain existing employees and managers, and develop our technology and fulfillment infrastructure. These increased costs may materially and adversely affect our operating expenses. Some of our initiatives to generate revenue are new and unproven, and any failure of these initiatives could materially and adversely affect our business, financial condition, results of operations, and prospects.


In addition, we expect to invest in longer-term initiatives, which will likely impact our shorter-term results of operations. We may find that these efforts are more expensive than we currently anticipate and/or encounter technological and other development delays. We will also face increased compliance costs associated with growth and the expansion of our customer base. Our efforts to grow our business may cost more than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses or to achieve and, if achieved, maintain profitability in future periods.


We may incur significant losses in the future for a number of reasons, including the other risks described in this “Risk Factors” section, and unforeseen expenses, difficulties, complications or delays, and other unknown events. If we are unable to achieve and, if achieved, sustain profitability in future periods, the value of our business and the price per share of our Class A common stock could decline.


Our limited operating history and evolving business make it difficult to evaluate our future prospects, including future revenue growth rate, as well as the risks and challenges we may encounter.


Our limited operating history and evolving business make it difficult to evaluate and assess our future prospects, as well as the risks and challenges that we may encounter. Although we launched our first website in 2010 and our first mobile application in 2011, our business and the markets in which we compete have rapidly evolved over time. As a result, our ability to accurately forecast our future results of operations is limited and subject to a number of risks and uncertainties, including our ability to plan for and model future growth and to expand our business in existing markets and enter new markets. As such, you should not rely on our business and financial performance in any prior quarterly or annual period as an indication of our future business or financial performance. Many factors may contribute to a decline in our growth rate, including, but not limited to, market saturation, increased competition, slowing demand, global macroeconomic and geopolitical conditions, the difficulty of capitalizing on growth opportunities, and the maturation of our business. If our growth rate declines, investors’ perceptions of our business could be materially and adversely affected and the price per share of our Class A common stock could decline.


You should consider our business and prospects in light of the risks and uncertainties we may encounter. These risks and uncertainties include but are not limited to our ability to effectively and in a timely manner: •attract, on a cost-effective basis, new customers who purchase merchandise and services from us at similar or higher rates and amounts as compared to existing customers; •retain our existing customers and motivate their continued purchases from our apps and websites at rates and amounts consistent with or higher than their historical purchases; •encourage customers to expand the categories of merchandise and services they purchase from us; Coupang, Inc.##2023 Form 10-K##8 •retain and expand our network of suppliers and merchants; •manage and expand our fulfillment and logistics infrastructure and related operations; •fulfill and deliver customer orders on time and in accordance with customer expectations, which may change over time; •increase awareness of our brand and protect our reputation; •respond to changes in the way customers access and use the Internet and mobile devices; •react to challenges from existing and new competitors; •expand our business in new and existing geographies; •avoid interruptions or disruptions in our business; •further develop our scalable, high-performance technology and fulfillment infrastructure that can efficiently and reliably handle increased usage, as well as the deployment of new features and the sale of new merchandise and services; and •hire, integrate, motivate and retain qualified personnel.


If we fail to address the risks and uncertainties that we face, including those associated with the challenges listed above and those described elsewhere in this “Risk Factors” section, our business, financial condition, and results of operations would be adversely affected.


In addition, because we have limited historical financial data and our business continues to evolve and expand, any predictions about our future revenue, expenses, and results of operations may not be as accurate as they would be if we had a longer operating history or operated a business that is not rapidly evolving and growing. We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories and evolving businesses that operate in highly regulated and competitive industries or have fixed expenses. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, and our business, financial condition, results of operations, and prospects would be materially and adversely affected. Any failure to accurately predict revenue or to control our expenses could adversely affect our results of operations in any given quarter, or a series of quarters, which could cause the price per share of our Class A common stock to decline.


We may experience significant fluctuations in our results of operations.


Our revenue and results of operations may fluctuate for a variety of reasons, many of which are beyond our control. These reasons include those described elsewhere in this “Risk Factors” section as well as the following: •our ability to attract new and retain existing customers, increase sales to existing customers, and satisfy our customers’ demands; •our ability to offer merchandise and services on favorable terms, manage inventory, and fulfill orders in a timely manner; •the introduction or activities of competitive stores, apps, websites, merchandise, or services; •the success of our growth and expansion efforts, including investments into new initiatives and expansion into new geographies; •variations in our level of merchandise and supplier returns; •the extent to which we offer fast and free delivery through Rocket Delivery, continue to offer a compelling value proposition to our customers, and provide additional benefits to our customers; •factors affecting our reputation or brand image or awareness; •the extent to which we finance our current operations and future growth, and the terms of any such financing; •the timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; •the outcomes of any legal proceedings and claims or regulatory investigations, which may include significant monetary damages, injunctive relief, personal liability (including criminal liability), sanctions, fines, suspensions or revocations of related permits and licenses, and penalties; •the extent to which we invest in technology and content, fulfillment, and other expense categories; •increases in our temporary or long-term costs such as labor and energy sources, packing supplies, and other goods not for resale; •changes in existing, or development of new, laws, regulations, or other regulatory practices and enforcement in the countries where we operate; Coupang, Inc.##2023 Form 10-K##9 •the extent to which our services are affected by cybersecurity and data security incidents, including but not limited to spyware, viruses, phishing, and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; and •disruptions from natural or man-made disasters, extreme weather conditions (including as a result of climate change) and other catastrophic events, global health epidemics and pandemics, geopolitical events and security issues (including terrorist attacks and armed hostilities), labor or trade disputes, macroeconomic conditions, and other similar events.


Fluctuations in our revenues and results of operations may result in a failure to meet the expectations of analysts or investors, which could cause the price per share of our Class A common stock to decline. In addition, our revenue growth may not be sustainable and our growth rates may decrease. Our revenue and results of operations depend in part on the continued growth of demand for the products and services offered by us or our merchants, and on general economic and business conditions worldwide. A softening of demand, whether caused by changes in customer preferences or a weakening of the Korean or global economies, may materially and adversely affect our revenue or growth rate, which could also materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the price per share of our Class A common stock.


CPNG Risks Related to Our Business and Our Industry

If we fail to timely identify or effectively respond to changing customer preferences and spending patterns, fail to expand the products being purchased by customers, or fail or are unable to obtain or offer appropriate categories of products, our relationship with our customers and the demand for our products and services could be materially and adversely affected, and the demand for our products and services could decrease, which could in turn materially and adversely affect our business, financial condition, results of operations, and prospects.


Our future business and financial performance depends on continued demand for the types of goods and services that we and our merchants offer. The popularity of certain products, including apparel, beauty, food, and consumer electronics, may vary over time due to perceived availability, subjective value, seasonality, and/or general societal trends. A decline in the demand for certain products we sell could materially and adversely affect our revenue. In addition, a temporary or sudden surge in demand for certain products may temporarily inflate the volume of those products listed on or purchased through our apps and websites, placing a significant strain on our infrastructure and throughput capacity. These trends may also cause significant fluctuations in our results of operations from period to period. A failure to timely identify or effectively respond to changing consumer preferences and spending patterns, an inability to keep adequate inventory of the type of products being purchased by customers, failure to grow and retain the members of our Rocket WOW membership program, or a failure or inability to obtain or offer appropriate categories of products could negatively affect our relationship with customers and the demand for our products and services.


Our ability to identify and develop and effectively manage sourcing relationships with qualified, economically stable suppliers and merchants, who satisfy our requirements, and to acquire sufficient amounts of products in a timely and cost-efficient manner is critical to our business. Significant changes to, or a failure to develop and maintain, sourcing relationships with a broad and deep supplier base could materially and adversely affect our business, financial condition, and results of operations.


Further, we also offer our customers private-label products on our apps and websites. Selling private-label products subjects us to additional and/or heightened risks, including but not limited to, risks of: potential product liability and mandatory or voluntary product recalls; potential liability arising from our commercial relationships with the manufacturers of our private-label products; potential liability for incidents, including, but not limited to, the injuries of our subcontractors’ employees at manufacturing sites that we do not control; failure to successfully protect our intellectual property rights and the rights of applicable third parties; harm to our reputation and brand image; and other risks generally encountered by entities that source, market, and sell private-label products.


If we are unable to successfully implement some or all of our major strategic initiatives in a timely manner, our ability to maintain and improve our market position may be materially and adversely affected.