Adobe (ADBE) 13 Dec 192019 Q4 Earnings call transcript

Good afternoon. I would like to welcome you to the Adobe Fourth Quarter Fiscal Year 2019 Earnings Conference Call. All participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be provided at that time.

As a reminder, today’s call is being recorded.

now call to to like would turn over the Mr. I Relations. Vice President Saviage, of Mike Investor Please ahead, go sir.

and us today. afternoon Good thank you for joining

me our fiscal Executive are Narayen; Joining wire also we will In of call and Adobe.com. fourth today, financial have earnings the press investor Shantanu of quarter results. Adobe’s CEO, the now, and our a Adobe’s call posted and XXXX crossed President We’ve Vice ago. copy updated President our call Murphy, discuss and and year CFO. approximately John on should remarks hour you which one an prepared slides, earnings PDFs release, and on datasheet By

find If copy can these you to you like Quick documents, of a Links. listed them under page Adobe’s would and go Investor Relations

get plans, December of differ particularly and our information risk to some emphasize materially Before we statements. that results statements and set in based revenue product from and as and such is want on call, uncertainty. involve that forth may today, our discussed Actual this we XX, of started, XXXX, forward-looking contains in forward-looking targets, those operating model the information

of uncertainties, review Forward-Looking press you Disclosure risks a the as earnings these today, release in filings. should the as issued For Statements we well discussion SEC and Adobe’s

advised is being GAAP property conference audio are Adobe’s Investor and is On prior written webcast release participants will live, XX of the Adobe. without and earnings Adobe. webcast made otherwise from our distributed non-GAAP recorded call Relations this days, may Investor and between financial website. is we for or An be is archive the on will approximately Call call archive available not in re-recorded, and reproduced audio available purposes. of permission the webcast playback The website for the or on and call, be the discuss measures. two also of being A reconciliation Relations that Adobe’s this

Shantanu. to the will call I over turn now

Thanks, Adobe significant and phenomenal $XX good year for revenue, Mike was for a XXXX milestone company. exceeded a we in as the afternoon. Fiscal billion

EPS one in record world. XX% software us makes XXXX, and revenue $XX.XX annual billion companies which the revenue most Our and growth. performance represents largest, XXXX profitable in was the FY Total diversified, in Adobe of

XXXX earnings share was year per $X.XX, share non-GAAP for $X, was earnings XX% and per GAAP delivering another and in QX non-GAAP $X.XX. earnings FY GAAP per billion, year-over-year revenue was $X.XX. $X.XX record closed quarter share of earnings quarter, with was the growth. We representing the share per

our productivity opportunity largest Document Cloud, is world’s unleash Ground-breaking power for to and students professionals creative businesses innovation in strategy our Cloud corporations. all, momentum. and multinational significantly creativity communicators is digital from document Cloud accelerating to the accelerate Our to expanding customer business to Experience Creative and universe,

Cloud Creative professional delivers all types; from empowers creators; creative next gen and edge magic voices collaborative; makes enables to demanding the the creativity cutting process across media most productive all Sensei. and more with Adobe the of

$XX expanded which in billion market Cloud by total addressable Creative invest continue We approximately new to for drivers, to has multiple XXXX. growth the

in Innovation of continuing engagement, the deepening MAX, attract This Cloud’s at generation customers, is next to growth. at growth. new Creative of customer with the fuel Creative and year heart goals opportunities Cloud, we of investing to future announced adjacent

that including leadership in multi-surface launch Illustrator systems with enhancements as live via feature Aero, on Adobe Creative Premiere the innovations our well tool as with mobile additional Illustrator introduction iPad; Adobe Creative and integrated Photoshop, Photoshop tools, Cloud build Fresco that share fully included: Windows, desktop experiences; Delivering at the designers to Pro, allows announcements value enabling complete co-editing Camera, directly work the ever Sensei-powered existing of redesign including to and moment industry’s launching to app; creative our than will MAX technology on Lightroom, of flagship with features. and XD, before to of Photoshop and with a smarter faster expanding consumer on such iPad, first of magic new and bring as creatives Key to offering subscribers category Libraries; products AR and Photoshop a through collaboration a app enable new the to our Delivering of InDesign, Cloud Adobe preview Adobe extending capture; new

responsibility role is addressing heritage trusted and in authenticity. creative to built Adobe’s a a content solutions, we on providing have play

At other a attribution, long-term partnership New content industry with join The an shared Twitter standard we’re Times develop MAX, we for in to initiative inviting solution. companies an and to digital announced York Company create and to

grow Cloud, Document enterprises XXXX. PDF is billion space, to around that of the billions created organizations underway documents, transformation expanded of enabling viewing and is and every estimate trillions With by With year at $XX Cloud Adobe our people Document world. will and the ambitions market total approximately PDFs this for paper-to-digital addressable in we’ve the

mobile strategy can Cloud set verbs, Document in sharing, possible be actions, what and leveraging embedded to of through and web desktop call third-party applications. We Acrobat in is common frictionless applications, Our by editing, web ubiquitous this browsers, APIs to make the single-click all signing mobile and across with a format. enable we functionality rich be that including and scanning document PDF

new and Dynamics Ignite, Acrobat in directly experience, Office simplify includes Microsoft process, organize, the ecosystem PDFs modify, to Adobe and to At to a introduced between e-signature capabilities Box. collaborate we Cloud Adobe web we we new deepened announced and grow. integrations XXX, Azure. BoxWorks, Microsoft and continues Document XXX, which sign Sign on advancements At within Our Sign

Media throughout mobile Adobe Global overall grew QX for accelerated the exiting Demand interest adoption traffic across $XXX QX, strong grow. and Digital and Cloud. was ARR quarter strong ARR Document was Media Cloud and Creative revenue million, $X.XX a to billion. growth drove Digital Digital to total record revenue new Media and were after continued $X.XX Net MAX. both In offerings and we billion. web subscription

driven the new over having subscribers skills With franchise. students We next our million of Cloud Document Creative for being growth customers, to Cloud of Cloud with to development are with continues attracting migration generation. Document and spearheading of acquisition, the we’re Spark, licenses perpetual from Acrobat mobile universe new Media to XX% to Adobe subscriptions, our critical users. app an being enterprise seasonal access XX cumulative QX by customer of adoption ever-increasing creative outstanding monetization expand is Digital new the performance.

ever powering during must Cloud In Adobe Finally, and personalization, and week and content customer demand is every billion The on industry the we culminating market be Experience businesses. leader XXXX. subscriptions the management, expanding business commerce of Adobe.com. digital last journey drove data is Cloud for for demand biggest the total Friday and our Experience advertising addressable experience in business record economy, digital quarter, a ever-increasing $XX our by Black to the for insights, for

With leveraging Officer. drive We’re the critical We’ve BXB to Customer BXC (NYSEMKT:CXM) our enterprise. Digital across go-to-market with Officers and Management offerings the our relationships Chief Officers in and Experience expanding we and and Experience Chief mission are mid-market across Marketing segment. extended becoming Platform our both Adobe Chief Information footprint the to are

experiences is to Experience and Platform makes customer new technology strategy to applications. our services at Experience the purpose-built open We’re customer intelligence, real-time scale Platform reality. delivering market-leading and industry’s introduce profiles, personalized With platforms, innovative launch generational platform. a our product first CXM CXM architecture, continuous rapidly Adobe an and Adobe enhancements deliver evolving extensible

highly transformation leveraged operating customers. or we’ve playbook successful our data-driven Adobe, our for DDOM, At model, into a

We’re drive their technology, to rearchitect people helping processes enterprises and growth. business

business. own have used to perspective has as unique its and We technology transform a valuable a its that company

top by Experience to Management Customer the in named categories Intelligence the Suites, and Forrester a the recognition Digital is of QX, Platforms of ‘Completeness ‘Ability leadership Our in we Digital CRM Management Management. Adobe and both was industry Enterprise reflected achieving Marketing Wave Execute’ best in in report, leader named Forrester’s Asset received including across and Vision.’ Lead Gartner the being in leader Software scores

and Adobe this through Cloud. Monday a Adobe will Analytics watched to leverages surpass TV, that identify data showed week, and radio spending predictions sales, $XXX which Sensei trillions the Adobe’s Commerce or Holiday $X.X listened read predict this you you’ve holiday points and Shopping record of online have we Adobe’s references report, billion past trends data insights reached Adobe the in not from retail news year. to billion avoided could to flowing Cyber If online

transactions Experience Platform retail, Synopsys, quarter Bahama, Adobe in Digital included Verizon. successfully our included Key travel and closed in verticals, and manufacturing, Key telecommunications, wins Qualcomm. and and the Tommy Goldman Real-Time Coca-Cola, entertainment, Data the media Experience Interest Sachs, Platform key and business Customer including Marriott, and new McDonald’s, we and XM, financial services, hospitality. across strong is

XXXX. exceeded a result XX% subscription bookings of QX, strong growth we the during FY As

and global announce asset our and policies. pay and the opportunity and in by global across FY our to Adobe’s Our in our significant we on our greatest commitment September, are year, contributions parity performance driven inclusive promotions fairness company employees. of pride we looks in horizontal to They workforce, progressive internal XXXX parity, at the which This movement. reaffirmed we first employee became ourselves was

Forbes. again “XXX Grads” and Employers Best Work New are once the on For” Companies by for to We of “Best Fortune’s proud be included to one list the of

ongoing Missing from to Center for of consecutive the to Newsweek Jones Children We receive of and work as further were “America’s Award mission honored for Responsible Dow by year. Companies” have Hope one to Index recognized to child pleased our keeping named and fourth been Exploited were safe. National We’re the Sustainability Most for the their every the

and our management. in compelling the decade position experience clear and us serve: on loyal the large these the digital customer strategy, well categories base, and our we for our customer Adobe next opportunities Adobe’s creativity, frontrunner documents, of is growth. focus vision, relentless

Our XXXX. us John? forward phenomenal best we and a days of to ahead look remain

Thanks, Shantanu.

year Experience billion, XX% resulting growth; bookings our $X.XX both Digital revenue billion, the XXXX year; billion, annual during XXXX in of of Obligation, Digital increase non-GAAP was $X.XX. of and Cloud Digital growth; XX% $X.XX and representing or revenue revenue through with Starting returning cash than the repurchase Growing covers today for strong stock revenue $X.X execution EPS an billion, growth. strategy program. in EPS Adobe our Media result $X.XX subscription QX $X.XX billion representing XX% of the Media in greater approximately revenue billion; $X.XX year-over-year of of representing billion Experience to growth; XX% the Performance Remaining billion; ARR, RPO, cash segment This Experience billion, was against by report GAAP representing is XX%; growth; results, year-over-year Generating $X.XX of billion, $X.XX Adobe which billion achieved our in flow of year-over-year earnings stockholders segment operating and expanding exiting representing achievements, FY subscription record noteworthy year to Growing including: Digital represents $X.X annual growth; XX% fiscal year-over-year $XX.XX year-over-year of with $X.XX year-over-year $X, Our Digital year results. creative XX% revenue performance Document

In which Media the net million; achieved stock billion; $XXX increasing revenue which than quarter. of represents $X.XX included: was FY XX% during QX by share RPO in ARR cash diluted more year-over-year billion; $X.XX. of $X.XX growth; growth; year-over-year which operations earnings revenue diluted billion, XX% of GAAP record was new Media Digital in Digital million, highlights repurchasing Experience billion, shares per our $X non-GAAP $X.XX $XXX represents financial flow fourth XX% share X.X of million $X.XX from represents Business and the quarter earnings and growth. Adobe XXXX, record of and revenue QX per year-over-year Digital of of

million performance acquisition, QX. Within by we with The we continued million strong quarter record and XX% ARR Digital revenue Creative Creative Creative was the grew in Digital new growth another increased QX. grew our Cloud XX% upsell as business. Digital Creative Media, this to in net Driving achieved Media Cloud well $X.XX $XXX total and Media as In adoption $XXX of of billion. retention revenue segment, addition strength services. ARR achieved our Creative of year-over-year we with the with year-over-year subscriptions,

recent initiatives in continued helped offerings; strength; users, quarter; Key of with record during the year-over-year; demand and that Stock, from seasonal growth, a strength end the interest growth all video MAX QX including an the our where enterprise app and services user last by coming increase to and drive adoption; campaigns by mobile targeted single finish campaigns Creative strength driven Improvements app revenue November included: follow-on services targeted promotions, Adobe fueled in of with adoption, drivers new the again conference year-end in upsell Adobe the grew generation year and week greater with including across continued particularly with than and strong renewals, enterprise momentum offerings. creative and XX% our imaging retention performance

We driven net conversion across QX. perpetual during including Acrobat paid achieved grew once and Adobe as app Adobe all mobile ARR growth and services adoption, performance Document Cloud again greater PDF year-over-year record growth, of demand Document we Create subscription subscriptions was customer for Cloud Document year represents to $XX Cloud $XXX the XX% and Year-end million users by: new Document accelerated services of of quarter. which OEM added Sign revenue million, QX; QX than Cloud Cloud in revenue the during segments; in Online; year-over-year which in revenue, strength The such licensing. free and Document XX%

In our XX% than of $XXX Subscription revenue greater With for year-over-year year-over-year. QX. segment, quarterly million, revenue bookings, in million, growing achieved XX% we the XX% we represents for bookings subscription the Experience quarter year. strong Digital achieved record growth growth which $XXX was QX

year-over-year Digital revenue, billion $X.XX achieved which XX% growth. represents we year, the of For Experience

Strong in led Magento; our include: Adobe year-over-year success solutions. solutions; cross-selling Journey momentum Manager Insights helped our and Manager segment, Customer Adoption Experience highlights Audience Adobe in in mid-market and including our in Data the Commerce growth Experience our Content of & Marketo and which growth by Real-Time & fuel and Management CDP up-selling solutions, business, QX with Platform, Key in

in currency the hedging We million. revenue XXXX; $XX.X decrease of gains From hedge million revenue net gains XXXX QX FY gains year-over-year in considering $XX.X million. decreased From a in million FY currency a had thus, FY year-over-year $X.X currency FX QX million was the in revenue by in perspective, sequential decreased net in in gains hedge a million. hedging considering QX in quarter-over-quarter $XX.X million. in versus perspective, to $XX.X to FX resulted The currency million decreased XXXX, gains FY $X revenue hedge QX by hedge XXXX $XX.X gains $XX.X versus

reduced basis EMEA. Adobe’s year-over-year We In GAAP but revenue and XX% experienced growth, a on non-GAAP QX, a reported demand, tax particularly strong rate was global FX both effective basis. in

days Our $X.XX billion XX year-ago trade QX. Remaining was days, QX, was Performance DSO in and XX the or “RPO” to to quarter. Obligation which XX last exiting billion compares quarter, compares $X.XX days exiting which

Normal seasonality was billion revenue more QX. RPO and billion. the Deferred during strong year-end $X.XX to $X in performance exiting than contributed QX increase

cost operations was position QX $X.XX and Our approximately cash $X.XX was $XXX of in QX, investment million cash a the ending billion and at short-term exiting million. In we from repurchased billion, quarter. X.X flow shares

have cash remaining $X.X repurchase we stockholders. billion billion repurchased of granted to May million our XXXX, XXXX. During shares, goes X.X fiscal XXXX, approximately in authority $X returning billion of currently through We $X.X which

basis at currency amount results our revision FY decreases data balance in This ARR billion. Media to this $X.XX and As you ARR know, is reflected ARR. Media effect our Digital a beginning we measure ARR against revalue of on have a a and changes fiscal XXXX for current $XX of year decrease and this in rates. this rate The resulted be updated measured constant during December million XXXX. in XXXX Digital investor year-end during currency FX ARR year between sheet, FY will

XXX of approximately Experience of bookings revenue year-over-year non-GAAP basis; growth count million Digital net per providing and of GAAP $XX.XX share Media fiscal targets: segment approximately Media approximately a $X.XX; of subscription earnings XX%; approximately per Digital revenue year revenue approximately growth Digital of XX% basis approximately segment approximately Experience of following XX%; revenue billion; Digital We earnings Experience year-over-year Total GAAP XX%; growth tax Digital share ARR XX%; XXXX rate of Adobe year-over-year than approximately greater growth of $X.XX on approximately are billion; share and $X.XX. the of new of year-over-year non-GAAP subscription shares;

XX% new year-over-year XX%; approximately Digital Digital Experience approximately million; $X.XX. non-GAAP approximately Digital share we non-operating segment of earnings basis; per Media million; approximately X% and million XXXX and growth ARR GAAP XX%; targeting: approximately a Media of share rate revenue $XXX Revenue a FY tax per of of of of approximately billion; segment $X.XX; QX approximately revenue approximately growth of $X.XX on are year-over-year net $XX For basis expense of share net non-GAAP XXX approximately GAAP of on count shares; earnings

sequentially to new Media dip and XXXX QX We have FY QX. seasonal Digital in finish grow QX, expect strong in a to in from ARR net QX

reminder, QX the anticipate XXXX to revenue to from first by adjustment a positive a ARR the benefitted adoption approximately by XX% in growth in total Adobe one-time of due FY the half of year-over-year We the ASC half As million XX% XXX. year. $XX grow FY followed XXXX, year-over-year approximately of second

our beyond. strong Based fiscal momentum and finished fiscal XXXX QX. summary, strong on and XXXX performance leadership in exiting bullish In we we record XXXX, remain category about with

call the Mike. turn now back over to I’ll

occur Experience Summit be annual about day during email XX information Thanks, March at found with our to in for on An the and XX. John. Vegas registration will the will can Summit, one Digital information, Las sent of including be Tuesday invitation user community, summit.adobe.com. January. the financial conference, March online investor our discounted analyst in Adobe event week to list More

calling of you of If call, to by phone #XXXXXXX. to p.m. today’s and a beginning The ending XXX-XXX-XXXX; conference listen use should XX, be XXXX. replay on can webcast IR listen the you archive at Time December XXX-XXX-XXXX. conference will be service ID available playback our X:XX X:XX Alternatively, dial a today. playback will today Time at later on Pacific p.m. a available site call phone to wish Pacific callers International

you We questions and your happy questions, we one would person. limit to now per your ask be to that Operator? take

Our from question Instructions] Brent comes first Jefferies. with you. Thank Thill [Operator

ARR, in your could continued Digital was Shantanu, continued on afternoon. better-than-expected guide, take Media the dive I QX strength driving you what's this good in if wondering outperformance Hi, side? a the including deeper

tried continued. we And growth as even actually meeting, meeting, of analyst were in as have to in quarter. financial targets updated remember, the at think strength a I FA And this the you that we we result we clearly mean, of outline business. at trend that drivers I the seeing Brent. the that to, all Happy that

So, come things a to mind. that couple of

acquisition to be New across just continues strong customer geographies. all

we our I think strength. introductions was doing. the a product were across Strength that offerings both clearly in new Acrobat

quarter. also of strong quarter, one a tremendous we've clearly point When DDOM. to campaigns I that, run a we our saw at end into success. personalized for talked season very million highlight And reason to online well. lot was that the The the have hard the We Brent. to about it's tapping $XXX you the continued a just seasonal enterprise think I'll a continues thing, really targeted business again, stock do campaigns, also was another

Thank you.

with will next Weiss be Keith And Morgan Stanley.

Thank Excellent. And really operating the wanted I question. margins. you, for quarter. guys about taking ask nice John a to question

bounce When You push sort nice margins two, guys And see of about to from that's – EPS more coming we tend continued that QX. one. acquisition, the XXXX, operating QX, Number guide really historically. from to leverage? seems FY absent continue continue to we FY you the see see XXXX to that that M&A should saw accounting into higher? impacts in will Is we operating back the not that a during there margin And QX impact imply number out, down to for QX. margins think

what to be operating margins of lead the So, versus QX levels? sort QX would lower

that year-over-year. our we Thanks, margins FY Keith. Well, about FY XXXX do Yes, guide sure. full expand think XXXX, shows when year

dramatized the kind seasonal QX expenses related operating downward, that we quarter, to as margin so, larger others the course, to margins had from we'd each did past of about XXXX. in XX% FY expenses year. more show obviously year, second in than margins the like we kind that expect of some QX the second would we but have of hit half first last continue that acquisitions this that taking There's And in half, think of different greater half,

question ISI. from with our will next Materne Kirk And Evercore come

Materne. for Hi. It's taking for Diana Kirk on Chang my question. Thanks

is maybe from can now year, XXXX secondly, this platform running of in Shantanu, in that the Cloud almost are business, First different like the the varies for could you seeing like year. outperform business to Experience is think in like maybe factors discuss thinking further Cloud the geographies. you or been And ahead bigger next say demand like And point that just it when like what some you've U.S.? share the Experience a about potentially of fair you. products the when Thank how about terms

questions there. Well, multiple

So, let parse all try that. of me and

product experience our it's say, would in machine been really innovative I the and the cloud, looking and the that using of new Experience AI First, moving at delivering Experience innovation, services that we're year intelligent for a good Cloud, terms delivering learning. manager to the Cloud services

a innovation alignment during I When only our what's look call I good Magento, amount about it, And the step feel across really having second business go-to-market, expense terms core the that's helped associated thing happened unified the helped feel the but happening. and it's of about I the take the back of at really good Marketo is DX has operating in business. that and more just also and with results, aligned a which not year,

a just to engage for customers And a we just It's U.S. to phenomenon. really global The so, differentiated phenomenon. not people need continue digitally is offering. a have with

And feels good. so really that

ability a unified And had strong we profile. I Experience marketplace. adoption has verticals. the to a Adobe as product mean, mentioned the that Platform scale company overall, QX differentiated the at such various this We're create exists among and that unique we in so, only It's the very

overall, feel really So business. I good that on

week first continue XXXX. tremendous January. Opportunity we be and drive We update on a mid-market do in business related and is made I good front. We creating good. the segment. what's continues saw scale We well. that that progress of Marketo. segment. it, it in an people delivering innovation. it across opportunities how just the We And be that of There's to aligned We able ask mid-market-focused a also lot will feels news you in to to we hiring share rebound me, hopefully will to Magento not just know, as geographies with have great, continue about But to the the typically, talked business. to

appreciate it. I you. Thank

UBS. with Lowe Jennifer to on moving And

Great. you. Thank

the the this but half John. think XX% growth comment versus in back six just I the in into before months statement revenue XX% XX% the make that you're question pretty growth. first drill to actually I in made that a of bold for with would you to that's wanted year a the be is half,

purely convert and that booking starts the about the see shape Experience that revenue, thoughtful part Thanks. is to Or seeing the should bit? as function of at to business a that strength are pick So, a you play that think Digital of expectation we that other the you're of there factors we be in up of the year?

I do MAX Yes. [our I we wanted think QX we any mean, we're what when provide because try didn't payday]. to to guidance on at

that the achieved revenue second convert the into the first And so, XXXX into half. in year the you expect, half in do we full about obviously, and what we FY to revenue we've convert you color year how wanted XXXX think modeling And bookings to with in was is. to obviously total begin obviously But to the provide with guide, the growth do year. bookings obviously, of to could full

out seeing to we're that is really when converts. reflect that of momentum QX the So, trying coming on we're what

we And good the to rush we people Maybe a Jennifer, think products strength trying guidance, think services was little the you as mean, is, our little that. little is bit of you more see about just as a get also. Experience in QX really add the on FA give There bit were color, a annual the a add business were season, holiday give really preparing to are the Digital billing said, typically just of QX to you to cloud and I happens do a trying get we John color. to what professional you I when with to QX advertising associated what of of in ready to few meeting, at bit a what bunch for transition,

was strength licensing. Acrobat there had board, related additional the it perpetual and across strength as to some but OEM

in models, Media think is just you I And year. a of how your well as we of what trying you were color look for little to to as at the as both as Digital would, the it as related bit so, rest EPS, provide do well ARR revenue

our was that So, goal.

thank Great, you.

next with Sterling question from Auty come And our Morgan. JP

a Yes, has what thinking remind the Photoshop device specifically thanks. us monetization a that for been be iPad do is XXXX now And some MAX, of XXXX. How about the talked can Illustrator that? through fiscal out guys. mover to apps, you Illustrator Shantanu, can of how you something at needle there either mobile like fiscal you or for monetize on And Hi much while. for iPad. model

Yes, ways monetize are multiple we Sterling, there our mobile. in which

is when have I mean, first devices. images like multi-system product maybe example. it's for taken, The approach that they using we've across a Lightroom, multiple clear people this to images, want manage their

we see but system a approach could so, And changes of take dramatically, you quite that pricing, in the what retention terms towards it engagement and associated with it.

that's provided, first quite terms value of in So, significant.

well. we thing is, actually have offerings mobile-only The as second

offering, have we on it's do Photoshop could whether iPad. a with Express, our it's mobile-only you whether so, Photoshop And what

are nice think we of the stream the one becoming us so, for also growing. created. price and have multiple And And I mobile-only mobile-only where offering. And across price being to revenue really a that we've that's ID’s devices, in for past, we alluded have number and the one – for offering,

trying And done third Reader thing model. say do have the to good also would a they're That's is, on PDF. is respect I you with where usage, have monetization side things become significant we've and where fairly to people what really one-time the a job Acrobat

of think And for enables just different as price all So, these be there different positioning shop customers, models monetization customers. attracting our new one-stop I the very segments. multiple points, that's very it relevant to are valid and

long we growth now there. to the be bullish about term, continue So, and excited

Thank you.

with Vleeschhouwer Jay from comes question next our And Securities. Griffin

driver been sources particularly XXXX, was various Thank introduced you that, retention. new given new growth PDF fiscal to and latest over the theme on at internally you. an picking DX to investments perhaps is years? And you've you the a frictionless the up just MAX would growth as that I integrations of the we when frictionless be additional related rank you people is possible in phrase, among drive many wondering the on words, been Good to additional evening. that a growth. Shantanu, it an scheme that multiple how MAX, in retention other And it's In picking the driver services, making year and might about up think content-as-a-service, talked growth. from could call of the over

terms of strategic the terms has and the as larger, getting right the and from really as of methods upsell right think out to relates I in to products, retain it. being to work to incredible sure both continue that value larger that, to the way an just that's they book for the attract of and it amazed way them. you'd well productive Jay, even perspective important retention been to continue done be platform. in get of sure Yes, being for what's as The the And value to business retention it able upsell those really offer, to making is that a make and understanding of team both customers new company they're what's as how relates both the be ensuring objectives gets as that payment

with with people of continue is I a are growth believe is So, technology. it our focus, we user within it that enterprise to associated named an deployment, really for and very area what doing the retention area adopt big of easy to making

in are number the well as the again, enterprise. that, both as users is increasing of which in a ARPU, way we the So

so, real significant focus good some And results. with

get a frictionless, immediately search, see customers, for when that they want example, think search that you do gratification. fulfilled they if create and they be and the want to clearly for a instant PDF, On to do I

doing as can and at that enable we, it are something, how And or do a for two point, that clicks, the one is frictionless it's people well so, behind when ensure the as, them reason monetization to within opportunity thesis us.

And think flyer, have want well so, you to you where search that as do easily. in as a able be be document very the I both space we space, fulfill continue that'll done in to to Google Spark, a and to the with and creative we want as create

frictionless. on I So, I expansion important think it's and for opportunity think us

to continue cases, in of be an area So, we're both will doing it well focus. and

you is API all just on aware APIs ecosystem way it, extend that through is our side, as making know well. didn't the that I another even this the of you reach as ask to sure available but partner stuff are

Thanks, Shantanu.

with Our Kash Instructions] from of comes Bank question America. [Operator Rangan next

That's the team at expectations bit I starting question. a wonderful in We curve and this of of Or holidays fiscal Are we with we its started execution gift. Thanks is to Adobe. a the a year the QX. improve? in bookings bottom happy had had execution Shantanu, for XX% Experience, and Hi, you'd reset targeted earlier Digital for back playing up Experience. Digital little fiscal a quarters, through re-examine that for point target to outcome that in you're had growth once to again. a position with couple conservative and more for get we you Congratulations be And just it. respect bit revenue the the a then XXXX? to

in say, QX. for Thanks, were with to Kash, mean, pleased holidays would and saw business happy as I momentum you the we well. really I we the that

with the we’ve the of for billion to as team north pleased continues earlier, delivery. identified opportunity, $XX said addressable opportunity has the just with also the I'm And area the of product us. to really of able amount innovation I of focus all in As new been XXXX, do that be

one continue business. I'm targets that to but John opportunity we will so, the constraint not And not different particular that from you we're just giving in gave, execute.

Wonderful. Congrats.

you. Thank

Credit Zelnick to And moving Suisse. on with Brad

take Tsung slightly quarter. This for is Brad everyone. on route. Hi, Congrats in solid Zelnick. question different another Yao a I want on Chu to

see iPad Photoshop stuff offerings like some mobile like Instagram realm, acquisition, to a Camera, you're apps mobile different how or philosophy is primarily and Can with fundamentally a next-generation you approach retention you differentiating whether different very As on it's on even the different Photoshop competition, going or more growth what speak how the VSCO, user it's landscape. new you lot more in into a into you Adobe and native case a run use very mobile-centric for screen? for

for I the that have we of detail precision provide whether see millions IDs, What when paint, amount different that colors, that the on we we have of millions the oil you of market no Acrobat in we has, have on think users, done I spaces, like for teams whether we water of have product with that on It's those like what world's from and space. about technology Express, I'd the PDF I Adobe we space. it's of have. think it's the to with that actually Fresco, encourage I on mean, a tens best in you product done about there's nothing in mobile Photoshop have hundreds the fact that many respect we've of that and mobile. done the brand the we mean, you think what And which mean, try with to in ways technologies you depth desktop. out

our And that very convert about to that see as arena the out tremendous to so, but we to able funnel the focus and to innovating, it, we doing as are to we the be data-driven just we mobile in I continue traffic given we what model pointing brand, keep adobe.com, on given feel of good operating have well. have

you. Great. Thank

Walter And our comes question Citi. with from next Pritchard

look Shantanu, just I'm you perpetual strong we that base That inning? characterization if you to third cloud from are of installed Acrobat inning? wondering, around you adopting with and a the is. Fifth sort compare transition Where piece, at been Thanks. the base. we? like the business installed us Any inning? Thanks. subscription can it's where give seems pretty in driver. Seventh the Are

new platform. as well. to We're the to well. do continues the Walter, really well. services, new mobile doing attracting to continues Sign customers do the business business funnel just The PDF a is really

licensing offering As you well. that a know, we have to and we've to those continue business offering, perpetual do that an OEM feathered continue so

editing the Internet early. to team done it's The on back space, lingua opportunity. is PDF incredible just the that the happen inefficient I and processes whole the for that mean, reality And massive things is sharing particular automating has and has of how job franca collaboration, an and documents the of in innovating paper-based brand, and a become I really the earlier mean, PDF question. going

don't As we have still cricket where to are fan, it a relates it's that very three as innings we space. in early but in cricket,

next come our with Tom Stifel. question And Roderick from will

you a the resources afternoon Experience spend quarter I couple Marketo? been Marketo mid-market on and to just and you're a to How the last you exclusively It the how great a you my think you of mix just of wanted specifically you how go already, thanks bounced good fourth mid-market questions. the discussion quarter, about ask and back more kind time market. had about that Cloud the there's on mid-market questions more that deploy for opportunity and taking there I a back little pipeline. some nicely. was know Can seeing about Shantanu, as Hi, you high-end and going for focused enterprise want business? like talk through bit but of back And for of between perhaps having side that sounds

So, you would in Thank and love hear go to you. to do did what going what forward you to market. want

Marketo and Great, way in serves Tom. always product leads $X a having reason business the the why also business. taking customer think across well. mid-market just I for we customer think across the said, the are a tongue-in-cheek is have well, the I revenue the I And company management it at across what commerce, every billion with to starts but them all believe business making opportunity we content doing enterprise that self-serve serves And mid-market easy-to-use not an

are base to get a of want you you early. so, that who growing huge sure make And customers

for And business. of importance so, the that's the reason the

team over the very mid-market generation few through a perspective. the think has good of is last demand created different the such it's touch a and generation job. has then marketing lot A it done actually quarters, activities demand – actually I

more in demand back by And And few that, we've process generation investing seen having a do. it's us quarters, bounce the last efficient actually well. so, to that bit more for in a little

always the The really space. have we both Magento with business the that's that with experience good, given think of just product have been for sure leadership, And depth invest best and helps that right manager an and particular that given in helped really have also, with Having market. what product base. also end-to-end offering that a solution, we of making what inspecting we in the has and I appropriately all

So, we're it. excited about

you. Thank Congratulations. Outstanding.

you. Thank

Our next question with JMP from Pat comes Walravens Securities.

Thank so about you for Hi. are maybe much is data customer what focus and feedback? you Mark for question. Could a next And This your talk my platform, some what's customer year? little for bit Pat. taking

the Could I'm just not please? sure I repeat you heard the question, question.

platform, and customer could little from CDP, what Yes. wondering I'm just are customer data you if a talk bit some feedback there? about

really we to our the scalable remarks, the people part of profile. allows unified fact prepared have Adobe mean, platform Experience that is as this the Platform talked I only Yes, about that

to audience have people known have users. makes combination the As we had deal users and are of do, differentiate And thinking how to of both they real-time and what what they solution about unknown our think the I CDP unique. manager with with aspects we it

every to creating way which profile. what's business business has the this Every its so, think think they And has in core about are segmentation. to about unified

clear a And so, leader. space. our that That's excited offering about in we're

Great. Thank you so much.

our Rutherford And next Stephens. question comes from James with

the you. Congrats thank quarter. on Hi,

DX the core Adobe to some ambitions bring follow-up just curious and success solutions the to realignment it as the Magento, having to Thank into you're see. like others and with nice of what size sounds mid-market the other your and or to make packaging a And to it changes earlier, was AEM, what in Manager Campaign, down are really Tom's debt a of Audience require Marketo as big question particular mid-market product that's great might in you. that Just well. of like on I market? terms

I'll Adobe bit detail, the which touch little Experience Manager. is of a on in one, maybe

year, over innovated. the have, really last We

enables We have an cloud-based do that's that to it. completely offering you offering a

so competition. It's management. content ahead headless the do can of far You

that So, SaaS-based make services, all that that the self-help. the believe do into making glimpse cloud and we I hopefully think these it's fact you opportunity think a an gives we move I to as

shows particular, quickly, the think, their I who've paradigm the larger number it and get content up customers want another that in kind the they they want to AEM management sites, have creating as get publishing are and running cloud-based. of to quickly, and running use but same That's really space, reason, people we the up they In that use new for product been of to The able innovation. micro these but sites. that's

for about just value really it's from mid-market, I sooner as later. implementation, technology AEM itself, well cloud-based products the example, seeing translates it our value. same Adobe And significant we Take that our not move than as enterprises rather said into earlier, adds actually

we'll one Justin, question, more take please.

come Ken that from Guggenheim will question And Securities. Wong with

if look the a could Great. can a would RPO squeezing that discuss drove uptick what you QX of was for you much, you, great? maybe might little insight question year, in next seasonality really you little is This don't give strong. but Thanks me Maybe into that RPO John. be know that? extent color for guys the guys. I shed in like to on then what And us

of forward. along Yes, the an sure. going before, to essentially, indicator of FY The revenue start go deferred and forward, it's following performance And it's look health compare as get you'll we RPO, as with XXXX, that the at year-over-year growth. – in when of and also business unbilled the we

we suggest typically Now, with of across has expect seasonality have normal That RPO so along each unique you quarters the at revenue. what look growing we about the well, that. indicator seen nothing there's to it would of an in terms as as of that

to execution, delivering flow, continue cash but agenda that strategy great us; same at growth businesses on unleashing represented continue last billion as the And It's GTM we we and given increasing the value categories this our a and the on be XXXX. what's to that focused product alignment to innovation, also powering time, drive leader approximately that and as at digital us well of MAX, how in exciting was was as the opportunities that had a on three be it those the ahead to our in document Day creativity, accelerating continue shared productivity of question, we at large as we as we company, Analyst have can to TAM nice and shareholders. well so $XXX

And with Clearly, look product, alignment, with pleased the and about clouds three course that of over across on we cash next XXXX our profitability should as to strong QX. that I'm performance really progress GTM, you the year with organizational we and another forward flow. year. made record in be FY excited progress fiscal sharing as all well

I you all joining wanted wish to today. happy Thank us for holidays. you

And Thanks, everyone. our call. this concludes

you Have Thank We does wonderful a you. thank conference. participation. your That for day. conclude do today’s