Adobe (ADBE) 23 Mar 222022 Q1 Earnings call transcript

Good day and welcome to the Q1 FY 2022 Adobe Earnings Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Jonathan Vaas. Please go ahead, sir.

you us. thank and afternoon for joining Good Dan With Adobe’s President Chairman the call Experience; of CFO. President Shantanu Narayen, today are and Digital and of Media; Chakravarthy, me Executive Anil Vice and on Digital President Durn, CEO; David Wadhwani, On recorded, will first is discuss results. being XXXX fiscal year financial which this Adobe’s call, we quarter

plans, and this on XX may forth can targets call, assumptions. risks, of information prepared and set remarks our find PDFs contains as is of The financial statements. results our You our website. financial including QX Adobe’s product results as well discussed uncertainty today, forward-looking differ Actual involve those Relations these March press on materially from statements release as that Investor in and and

you non-GAAP of call, review measures. today’s SEC discussion discussed in in risks, and release this filings. On a GAAP factors financial these press discuss the and Adobe’s will should we For

adjusted growth the Our in year GAAP in reported that results ago week constant include well quarter. rates growth for extra currency rates account an as as

growth this adjusted will now on in over Shantanu. Investor earnings and Adobe’s unless otherwise the executives are refer our release to Reconciliations turn available I website. the presentation, will Relations Adobe’s two stated. call During between to rates

Jonathan. Thanks, Good us. for joining thank you afternoon and

the and in enterprise, in made in been than I teams The tragic long-term The continue the challenging global is Adobe’s a to come proud of while global and Russia. sales services new initiatives the Adobe entertainment, of incredibly how is suffering joins pain humanitarian our democratization throughout manage the and evident stand relief Before of of taking education the more thoughts growth has horrifying personalized and of times most look, Everywhere and of more efforts. and the customers delighting emergence civilians all never whether fueling Ukrainian experiences learn am in I by for a aid results, and mandate or The before. are we together successfully to business new has QX a with Adobe Foundation to products work the change always focusing through customer company. it our than is company. grants I the to our Ukraine. Adobe ever discuss have stopping underscore content our critical heartbreaking of want had the today. culture and for community to creativity, crisis people. it is as acknowledge innocent digital prayers purpose-driven has strong have millions is and on we experiences economy. world from the anywhere immense opportunities business and the ways mission that our

businesses for all, unleash digital power to Our document creativity working. strategy productivity accelerate is and

earnings Our Creative per non-GAAP $X.XX Document is and representing was revenue. Net in strong Digital both services had basis. record adjusted on category-leading Cloud $X.XX a innovation We year-over-year QX. Media growth David? momentum GAAP engine in XX% David businesses, the Digital have about quarter. am pleased Digital million In revenue, delivering QX Experience in on an revenue, QX our exiting Cloud, million, products, revenue billion President, and achieved a and platforms Adobe achieving Digital across strong Cloud. more billion recurring to business, drove and Media and built earnings $X.XX and Media share, Cloud Experience we $XXX were achieving was share per to in new in Chakravarthy, revenue, Cloud, our Cloud I In Media Wadhwani, quarter the Anil Creative $XXX for grew Document and $X.XX. share annualized ARR, ARR Digital Media; we $X.XX or on our subscription Digital total respectively. momentum, business, and this was billion for Experience billion. President, Digital Experience, to the $XX.XX call growth our

to vision rise is rapid everyone. to For all passions, has compelling Creative for themselves and to business and is skill enabling creating catalyzing customers of All, economy fulfilling individual Everyone the on student stands The content the every the of project these digitally, services. level solopreneurs products made hello to before. professional creator school giving trends Shantanu to opportunity campaign. their out. content things from Thanks, social the important The and Cloud digital owners their their small the and and individuals, needs media monetize express our acceleration create creative that making Creativity than a next the marketing creativity ever more to more

lead We And imaging, we’re core like advancing emerging and and design, creative metaverse continue illustration. such immersive types media as for video to platforms. new the in XD categories

every every building We’re applications. and in heavily services applications collaboration and deeply for across investing integrated web, mobile we’re desktop. surface into audience our flagship are And that

Cloud deliver Creative before. are by more customers broadly Sensei, and enables to faster work AI value which Our smarter. than new and us Adobe web-based quickly solutions solutions engine, our to powered enable ever

creative members, to never of hundreds on-demand host inspiration. stronger. we nearly Behance and live and source of learning our and been serve has a a weekly continue As community result, as sessions now has XX that million

the PDFs. enhanced an organize is and $X.XX from and $XXX and web that expanding them new anyone continuously content. small new highlights which stunning features adjusted of Express and complete and business Creative our Its of easy for new Creative of XX% year-over-year of influencers result, will net enable for that everything and templates, posts to social of QX gorgeous edit, interface convert, videos of millions collection Quick capabilities billion, Cloud easy-to-use QX, bring PDF innovation with million most empower millions to As Cloud owners, on and into as it a social thousands Its in share millions to to and assets of template-driven images revenue family fonts. makes such search world’s beautiful students product combine marketing of create stock Creative onboarding and Express, Actions zero-friction create Cloud mobile users launch the include materials. basis. Creative we ARR the achieved grew

a just we’re and millions journey, into users customer high few seeing our satisfaction. While traffic, of monthly active we’re strong months

the signs video help QX, into music explosive transcriptions. of abating. the On video AI-powered shows merge that for content sequences launched In accelerate in and front, Pro no new we demand innovations Premiere video

acquired We record best in also while for Adobe ever, its any drove Frame.io, video solution had than strong quarter last Frame leading year. the more levels. sizes growth closing deals quarter to prior collaboration deal increasing late

and capabilities to team extend collaboration all will a become we video categories. our creative has creativity As sport, collaboration leadership in bring

to also marketing and bring metaverse-ready. beta already new and interest together XD Substance and We begin tremendous by XD seeing for and physical adopted are being Modeler global is NVIDIA their like e-commerce. journeys the our worlds Substance for Coca-Cola, brands and as become digital NASCAR brands

Cloud Disney, Kohl’s to for demand globally the segments: Education Creative ING SMBs, Mexico continue FAA, strong IBM, all we Finally, individuals, and Department. enterprises the see New Bank, wins and Public offerings teams across key at with

with in the On significance all the document PDFs web, capabilities, continue Cloud, Cloud desktop for by of become workflows net have mobile. Commerce XX% enabling represents strong $XXX with year-over-year including and Document build to accelerating include $XXX Document the integrations across AI Workfront. and signing growth driven ML. digital mark, APIs scanning In through businesses e-signature by growth. and achieved experiences more Sign editing, work million Cloud customized and side, be record converting, crossed ARR to new sharing, enabling hybrid how in billion digital Acrobat we’re unifying QX accessible our Adobe getting of gain which QX, of Document productivity Document Adobe and frictionless becomes is and new Sign, in developers standard. run the empowering $X smarter document are Ending their continued as documents will highlights we foundation for functionality and million. ARR and businesses. through And revenue to new Cloud Adobe investment our

see actions and editing, On of document such volume PDFs. for a searches continue to web, the as high converting sharing we

year-over-year. ARR efforts Medallia, paid lastly, mobile, Document with do enterprise Web’s is over our wins business Cloud business to saw working. in This subscribers mobile convert Mercedes-Benz, As a of with well to Raytheon, the And nearly to opened grew mobile we including billions Europe, and Acrobat doubled Ricoh mobile, QX. On combined usage, to Acrobat our PDFs on users result, has XX% key year-over-year. continues UnitedHealth. Acrobat Shimizu contribution

the and Document on number of have to both professionals of responded And Cloud needs of by including new We and Creative millions we’re our significant non-pros, Cloud users, array Creative to web with of applications mobile. attracting a Acrobat Express flagship and features a Cloud. broad across adding

it pricing personalize ability to but QX. of now later to I breadth Anil. customers increasing further starting across us not offerings Our also reach to our expand will pass our in enable new offerings only

everyone. Thanks, David. Hello,

customer a economy help companies At years, exception. year, Over deliver we of $X applications across Cloud Adobe the how we and Adobe digitally. visits set experienced in Digital essential, be core the journey. rather make to U.S. a Adobe are aspects Economy Platform last engaging experiences is shopping and track now and customers companies To personal of the trillion play. the is work, its Experience of AI-driven milliseconds. now that with Customers this the succeed, are the Telehealth and powerful is and in with to sales experiences businesses X global Online transacting is surpass on integrated according the the of e-commerce digital have millions personalized to Index. services must as profiles. to digital can economy norm exploded the digital profound customer billions than shift Experience all has learn in comprehensive

across the audiences customer monetization Our commerce, content marketing insights Adobe and Cloud workflow. and applications to retention, Experience from acquisition funnel, customer to and entire journeys, data span

made digital including Adobe we and experiences our customers Summit demand deliver transformation. ML Experience world’s and Cloud brands, over executives from world’s over Real Experience and Boots technology the using now Cloud has framework power to digital entire to for services Walgreens most content their new some Cloud, innovative experience We date, and dramatic customers. Experience exciting We the hosted event XX AI significant week, had using We Adobe Last XX% launched for views global the largest and from have Prada, the Alliance. of industry-leading Madrid AI-driven our to the for Nike, million with attendees. of the transformation underscoring conference. experience BMW, Summit, heard interest enabled personalizing interesting Sensei,

Cloud flexibility drive outstanding In Experience to And logos business. the was need that for $XXX that partner provide growth revenue DICK’S our by IBM, a Subscription Goods, Manager the in with and to speed workflow for real-time general customers personalized year-over-year strong cross-cloud delivery; ecosystem, to on with an include adjusted Experience to availability APIs deliver QX, customer and driving representing revenue. is consent customers an we base achieved significant e-commerce realization integrations emphasizing FedEx, growth million continuing focus the XX% at Sporting CrowdStrike, for existing as content innovations, Adobe as on capabilities Real-Time and Cloud product value chain; with including simplify Real-Time CDP integrations, Land including Chase, on the Panera, McDonald’s CDP next of create with developers meet to $X.XX partnership transformation. data management; to Adobe OneTrust for Healthcare customized JPMorgan billion world Adobe digital Real critical used between Adobe Cloud realize key to new we’re positioned Walmart management Company; expanding care across continue demand creation user the the The assets brands new customer unified health for Commerce; basis. Telekom, a The need and powers Workfront, QX and our We adding UnitedHealth. of of help of including content Adobe for a the Adobe has uniquely Rover, collaboration highlights caused to Adobe while a Jaguar and experiences; Weather pandemic in growing wins, and the the PayPal around new customers. Experience such content of slate Creative is well Verizon; phase large Madrid, scale. Deutsche Target. and performance end-to-end the Enterprise of Experience content and experiences as new with a exciting Manager, unified ServiceNow quarter, including Henkel, top in ever-increasing integration supply

success. product are Cloud Experience vibrant base partner and global ecosystem our innovation, continued Our customer driving

industry executing motion continue are We and strong across entire go-to-market recognition. receive our to

CDPs Platforms, focused Digital quarter, for Dan, MarketScape was the for Experience a you. including in This Front X over the Forrester named experience analyst for Quadrant Asset customer to management Adobe leader Gartner’s Office industry Magic Wave on IDC reports for inaugural segments, Digital Management. core and

and business, business highlighting in challenging I the finish QX Today, and will Adobe’s results we across velocity. ramp QX. cases, strong up Across and, ability attracting fiscal summarizing geopolitical our are growth reach deals, to in growing a new company’s Adobe’s targets performance transformational signing financial Thanks, execute I’ll book XXXX, drivers macroeconomic in businesses start environment. of for our by with some and businesses, Anil. seeing our escape emerging customers, recurring demonstrate

We the digitization work. digital how a Adobe’s and customers to are underpinning witnessing everything offer products of and they future, live access

Media the and per highlights achieved Our earnings segment, Digital In of approximately of our revenue year-over-year from billion Digital exited quarter. $X.XX data-driven year-over-year Media of on net of XX% to million; year-over-year of operating Creative model QX $X.XX per innovation factoring of revenue financial of model, content the on $X.XX flows or and RPO Adobe’s stock or Adobe with period. achieved QX X% on In a demand week quarter; $X.XX; share We which share million of grew the after the shares growth $XXX during basis GAAP new Business data-driven adjusted in new billion; QX, an non-GAAP revenue the new year-over-year added $X.XX Media growth product continues with we drive net Digital the X% out Creative an for million Global and Experience growth year-ago billion; Adobe’s $XX.XX in operations operating products, adjusted in earnings And billion; a Media adjusted strength digital in represents record $X.XX of marketing ARR. cash diluted our XX% of We revenue X% basis. $X.XX continuing Media explode. ARR achieved on our investment $XXX included and which additional X.X repurchasing the basis. diluted of billion ARR Digital and net XX% Digital to growth. basis. ARR We exiting or Digital are in quarter $XX.XX represents quarter. revenue billion, an our of billion, of

Premiere and Teams on QX First our the small quarter Creative and large licensing engagement for retention such as in drivers which growth well sustained across collaboration as medium growth was as segments; Photoshop, well our growth in flagship across Creative enterprise as individual included business; Cloud organizations, of driving strong and demand as customer and and creative Adobe capabilities, for offering, strength subscription new our including applications SMB highest businesses, new immersive Illustrator and individual applications. Stock record; Frame.io XD adoption of

and well initiatives adoption the newer also Photoshop pleased are Express, in of the as Acrobat, such see by Creative as our we We Substance as some Illustrator Cloud on Web.

to and active have cloud-native millions users are strong our monthly We driving growth usage already offerings. of attracted

Cloud to billion digital-first Cloud an which ending year-over-year. of $X fastest-growing the and surpassing people strategy is a document demonstrating Cloud to represents Adobe added revenue the We year-over-year our world. reflecting XX% work or and ARR, XX% essential Document achieved in on growth We accelerating these and adjusted Document drivers $XXX million in how are be that Acrobat in to at $XXX PDF growing way basis. growth. Document XX% of of our expect net productivity business, of ARR continues new future businesses be quarter, ARR revenue million, working

our offering momentum Acrobat and subscriptions, on SMB segment, quarter our new Web strongest reseller for Sign customer within both Acrobat; momentum new for growth for ARR with and PDF on transactions year-over-year. Adobe on record; XX% continued the drivers approximately adobe.com First demand QX solutions Acrobat strong demand onboarding through for and through of channel; Cloud growth Document included licensing Sign Acrobat frictionless in our strong customers mobile; of year-over-year with Teams renewal in growing the with

see or represents Turning year-over-year representing XX% basis. continue QX, is $XXX or When as customers. we subscription of at an to year-over-year at quarterly enterprise billion, was growth delivering which million, XX% achieved XX% adjusted Experience personalization revenue Digital our revenue an resonating XX% our segment, basis. we to on on sequential adjusted with the acceleration Digital growth, $X.XX growth revenue scale of Experience look we strategy in

ramping Experience investments and drivers across customer momentum facilities experience; QX our Digital will as drive customer Commerce, but levels value in Analytics In with Workfront in data acquisition R&D and associated Journey quarter we basis. of revenue with and remained our business; across logo in basis in-person offerings. Adobe’s solutions; expected, a long-term platform travel compensation. initiatives Customer to traction sizes a customers resume GAAP and partners. we’ve QX solutions; effective increasing QX, retention made new included tax growth at in increase product we’re with higher QX, continued strong was new & and stock-based benefits facilities upselling we customer and to First result innovation, including that headcount greater tax our cloud-native and than a to and due Travel customers The as primarily sales less-than-expected larger investments came rate rate tax growth, Content deal meetings capacity. in utilization in XX% lower XX.X% realization on in on non-GAAP

XX to $XX.XX which days DSO bookings. from enterprise to benefiting XX% QX, was in the quarter quarter. compares exiting by trade XX days RPO days, billion grew and Our XX last year-ago year-over-year

early billion. to cost ASR billion. be QX a X.X our be shares XXXX which operations $X.X the was an $XX to during will was to delivery in billion $XX.X incremental of QX. in previously under occur a billion. These share weighted have average under QX $X.X share entered the shares the Our authorization on short-term of aggregate was shares during part settlement The accelerated from of final purchase the we $X.XX repurchases goes of number repurchased repurchase currently of the in price Included settlement at partial in granted into XXXX. repurchase with of final program, were stock shares term this scheduled of of and common announced the based ending exiting and an volume at and QX cash and billion discount $X.XX of through approximately We to Adobe billion cash remaining December agreement cost the our that million investment QX flows are position to repurchased in

I get in to devastating this the discuss Earlier the to sales our targets, announced impact and QX Adobe Before all want Russia cessation of month, new we in Belarus. situation Ukraine. of the

In addition, we’ve the represents in which million, these existing $XX ARR reduce by Media all for our countries. made Digital ARR decision to balance business two

extend during by reduced a Ukraine business this total an expected an Digital we While impact automatically Experience provide Media This revenue Digital of The million, services, we minimis. and reduction million XXXX. million $XX additional de in of to in will toward $XX for represents is Ukraine ARR continue and our fiscal ARR which subscriptions entire results impact business. period $XX

QX, of and approximately Digital currency; a approximately non-GAAP approximately earnings revenue XX% in basis approximately approximately of revenue and subscription GAAP XX% per non-GAAP approximately $X.XX currency; XX% or Media year-over-year or segment Digital billion; ARR share a in tax GAAP in Media growth $XXX share of constant growth growth segment constant earnings rate Adobe XX% of XX% new XX.X% on net approximately per Experience we million; XX% year-over-year of targeting $X.XX; revenue currency; For revenue basis; Digital or year-over-year Experience total $X.XX. of of are constant Digital approximately on of XX%

from fiscal our the XX.X% a non-GAAP for a GAAP targeted rate on lower-than-expected now basis stock-based be XX.X% tax XXXX of and on is basis. a result compensation, As deductions to effective

performance like year, Web, Express. the we and As half Cloud emerging we sequential QX expect Acrobat we strong of businesses the EPS Frame.io, towards half continued across In strength and Creative quarterly revenue Cloud ARR and look Digital growth expect Cloud, QX. Document Media, in of Creative including Substance back and second

structure we addition, new offering QX. starts contributions and late sequentially in ARR which In a in QX and increase expect pricing from to QX

continued show We momentum traditional a the in QX expect Digital second half Experience strong finish. with bookings to

in and We demand opportunity. sales invest will immense given marketing continue to market awareness innovation, product capacity, our generation

to expect I’m that expenses. its face and we I’m travel in profitability. world-class QX increase the In today, emerge confident another stronger. world through that our quarter facilities circumstances with As show companies pleased delivered unprecedented growth and Adobe reopens, Adobe resilience and we sustained all record will to summary, continues

performance. for Shantanu, We are you. on back another track year strong financial to of

time Adobe. is This Dan. Thanks, a at transformative

We’re winning our audiences from to platforms customers engaging millions launching collaboration for exceptional our applications the a increasing enterprises, solutions. new category and flagship and applied applications globally, largest bringing capabilities to has new of with individuals hundreds Adobe new of to across surfaces while opportunity. an strategy

economy Creative focus with Few business customers We’re models Document to technology Adobe $XXX unwavering innovation on deliver dedication successful Cloud, I’d a and market innovation, leader partners. and companies Thank of and Experience their have ever-growing in the categories customer XX,XXX base transformation future combined total which and employees can Cloud, digital Cloud digital the and billion. for of delivering thank addressable like new a of and consistently experiences. you. inventing broad our continued across a

Operator? will take We now questions.

take with Thank Brent you. Instructions] ahead. We from Jefferies. Please question go first will Thill [Operator our

any more pricing beyond you’ve and anything historically? the shed structure what Ukraine, could new seen you you’re if seeing else Curious in than is Shantanu, different economy you. color that’s the on means. afternoon. broader Good there And that Thank

in Ukraine. in relates situation, impact the what weeks we around continue saw terms continue first strength. So of I quarter, terms last you growth it some to to in the pleased the I of happened what see terrible world. the Europe, Brent, of in we few specifically it QX. as think think But Certainly, related the as situation were have strong actually We the seen see we with to macroeconomic to

overall in I since you’ve also major you have we pricing seen it the then and we’ve then the that the was and on number we’ve our whether we think done offerings had done David one, as I’ll in done first the for XXXX. comprehensive mobile, on Express. was last add have that some And know, what the Cloud Creative XD different web, we’ve we’ve around offerings, introduced, what initiatives that what of color,

I what it of And to add want has say I also done. David can think a get want very would comprehensive maybe provided. to for bit time more. continue to to the little was is hundreds I the millions innovation platform, look, attract we think value but So that tremendous take which a directionally, that we you we’ve David, to

happy Yes, to.

you across Shantanu Since base. of us millions early and to introduce subscribers. is made it new of We’ve in expect onboarding go heard provide mentioned, through doing. with also takes we the customer The significant remarks. as been looking existing So the where prices build-out for the years, their We’ve But for across more minimal for and value and about CCX the time offerings. added usage introduced the in is the broadly was Obviously, our that QX But let seeing renewal attract last experience CCX services. a on for millions across And and to QX. fairly mobile opportunity prepared also catalyst of We’ve last last and or out customers and new of will mobile new their we right right existing the web Acrobat doubled – takes and we’re right-size impact this, They has where to pricing across heard in adjustments update time the to Acrobat us new core stock in And now we year been it web really lot the and a and And offerings. change. us fonts. assets and engagement us think, we’ve cycles and value these right it success market this pricing they at pricing across web down growing talk few to adjustment highest offerings we’re our added because globally, X, added impact in QX has collaboration. the extended roll to have and you these we’ve mobile. XXXX. talk with then, applications. thousands We’ve multiple be that and

Thank you.

Thank you.

take our with will from Zukin We Wolfe next Alex Research. question

guys. Hi,

maybe QX. year about the the different activity as bit $XXX if of up development, helpful? out the to as a the through back guide inclusive guys. the inflationary environment, half you many changes pipeline think any – think is And think the pipeline just the more of So – with seasonality? is long NRR impact to think the look question more respect at adjustment? you you for – little you Adobe a Brent the how Russia-Ukraine the Is investors of of a think way, been the million, around business cycles, ask recessionary, give taking ask of has you to Just where – about we a of context in about are prior year? around think I – a for about to some be how the how taken shaping how that you and Are – the about just and you for it of that color would us should the can maybe Thank you, it think financial of just mechanics question, shape then year there is a understanding better time

questions were Sure, that. Alex. There in multiple

is a put of there customer of is everything in what to importance excitement, terms that terms of document as your a a to as whether point, the rhythm cadence, that’s of maybe by what’s impacted picture, we first, it’s the at and I think is happening doing, perspective on will the spotlight digital maybe clearly, the more whether happened external we’re or happening agree war But continue look the in whether – productivity. relates big me to the the customer our with, events seasonal And about been which actually the adoption, it it’s tailwind. let or what’s pandemic question the no recently you was So business that pandemic Ukraine. and be content tailwind when engagement, in it’s

would to Dan And happens that certainly, a so QX. momentum in we that But even to as see QX, would strong I we we of think QX you half think and strength had seasonally, in terms referred what about see. continue second start. the

So from up right, the have terms of seasonal with our secular the to actually trends perspective, some it. in associated don’t we and of but changed, might see any cadence impact the

what think it. the the happens Digital your second reduce to Since of and business, Belarus made the Ukraine. and Media Russia question decision book on I we is to related ARR, specifically

so ARR And what which for those another the QX I of just existing is of exiting book number what the data is think three countries. out you’ll business and see our sheet then takes on all

see in the it revenue QX, it again, because you You see, what in to grand as business. able and QX impact small would revenue been to relates of the collect. that scheme the the But is on have things, we it’s QX certainly as can means fairly

our impacted I strong business So we overall, countries. it’s by think and the is optimistic. in as business $XXX yes, specifically, you But feel said, targets, million ARR those

show many and is message initiatives new that to to, talked David they the starting Dan that growth the I traction. really ways, think really in both are

that. the in And certainly and see we of half to strength beyond the so year second expect

it. you, Got Thank guys.

Thank you.

question Saket from take Barclays. next We from Kalia our will

the for you. the Okay, differentiates product competition thanks deep, going do plan continue do to maybe feel without Express how you taking question you for of you there? some guess my great. lead? too is, how launch product question specifically see investing your to out the maybe on that Cloud for from David, I the here. And Hey, recently, Creative in Great

the thanks Yes, for question.

been the call, for talked as built CCX. to a for relates And on it the of clearly relates as creator talking base. in significant going communicator minute, very millions past up-level everyone about have and we’ve both we’ve about as We’re and mobile the years, We’ve hundreds that a Creative economy. for the our registrations, excited which But launch and it segment about to to the non-pros our business. is a reminder just apps beyond Pro of of desktop

the predominantly and communicators across freemium Creative lot the model. a consumers. represents provider tools starting of of the few all It’s business mobile. creative learning The with Cloud In by we’re fact, segments: of our world the largest believe our over we pros, model. measured introduction of a and that web business last when years, revenue Express though in It’s

success So it’s seeing minutes, not hours. customers, for users are and friction onboarding zero in

that, unprecedented we to In Cloud to we addition Creative Express. that bring library an have

stock We images have XXX million and videos.

be We library content-first important end fonts, and the font of largest content continue tool, creatives the terms are in confident carefully this to have that together expand you mix world. you’re of differentiator ability you’re also sure feel going what people power And the fundamental to what the creation their world the this of a create very about mixing is our very, creating And in that by to available, some we XX,XXX really of crafted to and have good best of and what class. course, of make Adobe. templates been producing. if is because and and we have online thousands just output library But a day, is the at you’re designed

lastly, about really our make Creative pipeline of of If to our into our started innovation to can bring decades you segments Quick and where across leadership good across Acrobat quick you Creative operating years has been the opening into around Express, invaluable we’re do, model what been Cloud course, be Actions, Actions, will Creative Actions many We we hint Photoshop his that going their Cloud for about to we’re directly look and with at the of feel of Express ContentCal that a users. over this announced company we we’ve Cloud talked have foundation data-driven of Quick publishing called of all starting Dan the are from last Premiere here. Express. work ways scheduling then, actions a doing looking Quick gives rich the And And we the we’ve for way in acquired that accelerate. then content

of onboarding have we’re what the users is seen little traffic. bit to. alluded And and through finding we’re Adobe result new We’ve with would that interacted great not we So intent-based a typically search. their

We’re of monthly into just few the launch. active seeing months millions a users

over NPS in point XX at the an have product. this We

the is high our strong take of to usage a what also well. drive very retention and the really and forget and already CC that. to super franchise. the the CC And So And very, our look new opportunity innovation, Adobe-only of been But your continue as is to long don’t we’re I’ll we’re here users engagement last and start users you excited if within is millions where base of thing the bullish core there about on our of opportunity question, that into curve maybe say are. pipeline at here has we retention drive to drive engagement

Very guys. helpful. Thanks,

Thank you.

JPMorgan. Sterling our We from question next take with will Auty

Yes. Thanks. Hi, guys.

Just clarification. maybe for

update annual there the With changes, the guidance. to is no

I side to you’ll impact but that pricing the the don’t, understand to the versus the negative the investors Thanks. from want on positive guide how structure. annual ARR and impact for typically Ukraine the get Russia uplift You think from changes

Sterling, of was in we’ve way color-wise, the come. about I have navigating it’s issues think a that great strong mean, Yes. the feel still QX. external really And early but I it I been all year, the

because As with impact the we of know growth more as happening to of to ARR that more still as relates you have. EPS what’s some out or was tax on it on provide it year by things, Russia, saying revenue growth prepared we we for the is while we out, whether not drivers. we’re targets, And unpredictable a to But that this call, considerably optimistic are all well will as we we we share the important really for number rate it it’s felt the you the situation. as what significant I updating the annual navigating throughout the of pointed share are net drivers

that things feel we the about. and control, excellent however, QX, strong we Our

Understood. you. Thank

you. Thank

question our Jay take from will Securities. with next We Griffin Vleeschhouwer

meeting X could effect, the Thank always, analyst David XX growth. was you Shantanu, back the wondering the if over and elaborate last used been you. term you months product-led you company And or Good the years ago, evening. that product-led growth. when about in you’ve think more, I referring arguably, to because on

XXX of differently So that executables about could relative for various the concept you talk now about in normal thinking employees record compensate a for versus had you recs. about those thinking You are QX headcount year? Dan, organic over filling How about how you’re growth you are terms your quarter, number you attrition or you finished done growth how the to thinking open onboarded expense a for then your that? divisions, either have with that for the would growth otherwise you in ‘XX during fiscal to increase of in anyway? And

millions that done what I as entrance relates delivering what sort your think that really the you the are certainly have when on it. document And that search how information have innovation to do constantly teams And the continue of approach Creative liberating fingertips marketing, absolutely I financial have the hundreds to to of billions constant dwarf top. just millions data-driven Document to company, people When people cadence the these so traffic is that how what of to iterate product that to we comparison it’s terms of pioneered. And what it’s and truly we’re it. our to that the said whether to of Jay, are accomplish rapidly what customer I that traffic want see to digital done is as business, think to to intent-based aware excitement we’ve about think people at sentiment. product-led doing doubling users, actions, say ensuring what model think of needle-moving want using we the sort important the or we’ve statistics, some understanding where David But the would of of and the way add Cloud they as a of example product-led doubling focus come Cloud, you Creative subscriptions, new Saket they on into web with actually the truly is, improve software, on what well, transformative we’re can as and growth when can a customers referred – in web as Cloud I customer being teams Express in delight of bubble of Yes. it of using all operating of something them. interest David things and just the move what’s to that and the means we’ve the I all I feel mobile their done product in has And And about on in really you drive we the to do. growth product-led good the side. with far David with it’s those what

serve continue add on have retain to is and to NPS customers, I So able David bit more. and a think we the how I’ll little the recruit But impact significant. being

Yes.

of I most think covered Shantanu it.

to of add. Just couple things a

As of you actually offering. internally correctly that Chuck Acrobat distributing the created Reader point with joke then John growth there people and out, we product-led from sort to upselling and free the

drive to And sense of and and idea throughout users. history, then and so we’ve, to had utilization convert engagement drive and this our that how you usage

seeing a and what we inflection on activity mobile. lets web, lot are seamless And better where mentioned, we engagement think as that Shantanu now is seeing have a we’re an are engagement where, onboarding. more we’re more lot I right more – point on exciting activity and us and

and audiences So DDOM better hours. drive we before we is around can that to because frankly minutes, in reach not we to what use able to and intent-based everything that onboarding we’ve success the actions reach then experience, the learned do weren’t search beyond

Maybe one before comments. thing Dan last

to I retention seeing look engagement been to we’re all of to prior XX-day the think on the teams those, that we’re have and product on pandemic. And improve, We I doing in rates all as color even think retentions. cohort those at a better David that at And We rates. in look both result of ever little of more, we to improvement during they you three getting of Dan help than renewal. activity at are the the about talked and churn bit and quarter. that, terms reseller give a Jay, look

us that’s, innovation example gives our think going our again, and what I of So confidence another offerings forward. in

market opportunity $XXX immense have economic to we an look come and a to question, digital front digital. in increasingly of your in we us, in performing than greater means about XXXX that billion we is going the we going as and When just Jay, second larger everything business forward. then, talked data well. where significantly world driving than That talk And growth forward about content

is long-term growth our not opportunity-constrained. So at opportunity Adobe

about the and think built our at strong innovation product company. positions, they of we when engine back are the so a leadership very And on

going are we towards to So, growth. orient

it sales investments is a going a we in. participate way, are what in to do continue time done in and the very leadership do along We the R&D grow businesses as we our we profitable and But that invest we are we muscle opportunities in materialize that with continue in the make they and have markets over are to way. to to always the so the scale going disciplined marrying way,

track history And so you the can on expect terms see the long in continue profitable company’s run. strong would our of record and to over that I growth,

Thank you.

you. Thank

next our question take Stanley. Morgan with from will Weiss We Keith

– think margin – bit commentary do did little the you the net one. guide? about. of already business, price Thank it in accrue changes, pushed the gets were FY ‘XX, about quarter. the like number that’s given three, savings new that the out, increases, I not weakness? it earlier see you, that Can I clarifications in or full taking are into Shantanu, persist of the more for giving like comments the guys you ask end was where that just hoping guidance, I on at was little did perhaps had seeing temperamental? was QX, couple that year Number in And dig question. of some So, know you a in the of guys Europe kind to actually on a bit two, the that we you a did billion call, the weakness year? you billion of addition be number year, but you back And $X.X changes contemplate ARR these the original when $X.X guidance in so for or the later then three in clarification was is or the throughout the already the clarifications. full that So ramp-up price guys like about gave of my in so the guys operating we price QX, outperformance kind going sort just when that’s to is made

Sure.

which we is, entering the Keith, meeting, actually at I last and – FA talk talked question answer the we will year if first as you think pricing, and So, are maybe were that were also about then a got to as going to what at the alluded we constantly we what we on relates and I to fact it. it do of questions we looking the couple it,

was working And entire finished that so were while the recently effort. actually we it something on, we just pretty

it that have finalized, as didn’t well. pricing structure we timed thought the offerings it was we actually look the So, always but with to new at

the materiality more we exhaustively. the of looking be definite the that will through so that, amount to knew And we But directionally, process. were know and we as go going pricing at we

a felt impact see think I Belarus Russia weeks, in the the bit for you just across region. and Ukraine, little the terms war of not clarification last that what couple when of of and broke is the out traffic of that we saw, in

was I continued strength and the saw alluding right we all through really that that’s the quarter. in strength, to. U.S. And So,

unsurprisingly, we a not impact. little so And saw

European to that’s all Keith? third I So, situation. did the And you it question, as was a related have to referring

one Yes, the was third operating margins. on

Yes.

margin. operating question Your on third

three it break me periods. let time up So, into

QX about talk Let’s briefly.

about then talk and beyond. Let’s ‘XX FY

think Omicron that about So, was quarter. around we as QX, clearly, a context

standpoint we step scale of to to in growth positions, So, and businesses, a robust a the continuing uplift invest our of a those back, things about sales-oriented. our structure being as and our R&D you we leadership as investments take from product lot and travel, profile and contemplated, talked the a originally like saw facilities investments in When weren’t bit of margin little QX.

And a the targets those FA We in in in that will year. that operating do ago for framework that. few – Day implied set margin is continue to we the months an

business, will as the it the of as the year. into the margin And increasingly we that leadership layer company about way. And our And profitable digital. and talked to see to throughout that you in operating over with unfold ability think the you opportunities so grow see will and strong, this capture that disciplined our term, I significant scale benefits as rest and time of do goes a world we facing the we continue the position longer then

Excellent. guys. so Thanks much,

you. Thank

our next question Radke from Citi. Tyler take with will We

taking Thanks Yes. much for my question. very

going and sharing pricing of the changes be pricing context back how you thinking the the changes at Thank as you Just will creative changes. I entry-level versus increase of specifics the just curious you end the how to those And just products? competitive go evaluating forward. lot high particularly, about am you. sure we landscape? more philosophically, Obviously, in the are are price a But pricing kind

apps I we is way to think at what’s a you multiple area what look we with in the or all repeat of or philosophically, the any in not we entire And the said the response. new apps. are competitive to we shape All I that we is form driven are significant user we think do the is And in mean looking increased of any which at has to way, I done at directionally, This haven’t years. to are businesses I called have. So, a comprehensive will I earlier, people, the just whether we add where – have added by whether it, platform. continue the value saying CC have directionally, are look you Apps that that value that

interest. web, the offerings the mobile, as platform that. with to categorical terms continue we attract This good we by – in to are we that we the expand And across raised to looking at offerings, let all the to of have, in continue about again So, way. people want the a is me that as billions across be of make pricing browsers, just sure we across David said, of the new

that or the at look you we apps prices us continues with whether we collaboration as the you all that value added. teams whether a new to So, well are for have motivator added to businesses be to to are on have in the

color. So hopefully, that gives you

as want up you we some to this would why call, is you because didn’t gets me least rolled this otherwise, and say, also say an to at really and But give because back earnings you least up of at heads allude about for customers. Let some customers had out, us, it. all delighting we said we

As impact. David said, an pretty really. QX this a It’s doesn’t have small in impact

with So, then rationale associated and how what business we forward. share out roll it. move we will we impact will first, that’s thinking is. of But at that this And with going the customers we was you the way with look the and more the certainly

that side, And strong of digital sneak the an Great. drove experience quarter factors about call I for here growth just think could and one-time that just adjusted QX I if out pretty the And to a of and basis. kind there? on first any XX% obviously, next above in the deceleration the there guide implied, was the follow-up you. Thank in anything on as the part guess we outperformance? year,

question. for Thanks the

obviously pandemic spotlight The adjusted huge, a The it urgency. we the with pleased in and momentum over the is opportunity seen on growth XX% are in put with We experience billion business have digital TAM. the subscription on an basis. terms of $XXX market of

We interest are C-level. of and seeing it demand, Board the customer at level customer continue grow in terms the at to

and Platform that. are we and We like CDP have Experience strong Customer in with that Analytics market built with a Journey we the the native what apps position Adobe with really built have

well So, showcase as event overall, we last we had chance feel innovation. about And to excellent really forward. the as product Summit just a pipeline conference our week, building excited path the

continue So, we year expect through the to our this terms momentum. of in

you. Thank

you. Thank

Keith question with our Bachman from We next will BMO. take

clarifications. in there? I I So contribution when this that Russia inorganic – comment a what But competition on subscribers was to ARR the confused Weiss, significant are Thank end where clarification. on you. could growth. have instance wanted new am business to you ceasing follow I Belarus you Just actually then on about the bit to to is And so Dan, want creative might side, try ask in write-off, to past, with that Hi. you was the payments you think third one. or am the said Frame.io, contribute manifests? from of quarter understand speak. that continue ARR? just new that still and business. lead was in more going perhaps are The And you. that to existing most you the in to for incremental Thank from clarify comment going Keith in little Russia given ARR of a I of get couple Secondly, all contributor market, contribution to spirit just what was lower the the it true? the actually Shantanu, the to a and to – going

the single apps, – third I subscribers as the one is which will driven growth, first if does, Keith, the you by driving first, is answer is being look unit Dan to new the which at it. and growth

of from there, because be to payments is impact that’s all book trend, is So and Russia, part part million the which to, way but get for the one it. about it, $XX business, will the what you Russia we about rest ARR, which terms of I when getting is to Belarus, definitely that how And to of the Dan are with how is there in think have is single that of really going about payments. have year. continuing sanctions no unit, we that drive is you factored answer which the maybe the to business, is think have we the book of also not think of of we alluded that

new unable what realize So, to payments. in for – sales, addition SaaS-based payment new have you that service addition a to as is exists stopping you in service, collect to seizing to a are

the And impact particular well in that as reflected so have geographies. we

it. great. it’s now, are not business. on team of part that The Yes. a exists about average collaboration And piece, we now in number it the a talked Keith, business, we that part the it’s coming last is this And explicitly. business to lot breaking has Frame, business, breaking talked The be deal the of great technology momentum But We doing there. going It’s the out of won’t size, of really about just be well. out. deals, the around back the to momentum we your that

you. Thank Okay.

you. Thank

with take our question Rangan will Goldman We Kash next Sachs. from

much. for on quite The Congrats very look quarter. numbers you the good QX. Thank

sign the of Shantanu, at second macro seasonality, am ARR, optimization. your maturity or more a the right? seasonal transition I find then factors or generally second DM factors. shifting you But pricing the half, market half, when generally I when have you for you So, in look just have relatively product easier And a curious, that’s comps do

the out, first quarter, relative all the against macroeconomic it fiscal in But you of do you net we you positives the concerns? about the of negatives into versus so business do positives, against how Thank we – feel the feel the three net to year? second back months if granted net all half rest the So, how much. going today about of these that the have

we beat more in all strong a feel about Thanks, at our mean at Kash. perhaps – QX. you most to I forward because the net out, a and world. that in is than have, situations what clearly first of unpredictable exist business QX, positive it just We moving targets take I I look definitely if had ever step look back the

alluding the about really you impacted. Cloud we Experience perhaps both good seasonal the came and of – last feel and David businesses” to, feel when back think in and allude there of – online. that Creative a medium certainly, initiatives sort that’s catch-up QX. Cloud that are and you cadence the “small as the in was thing business, was come new And some about Cloud in year, did rhythm QX about spoke on the of So, of Kash, and that to. good to Document We Anil really fact I the that

relates as and in. is targets for DME to QX getting more what it well just And optimistic as so revenue are in of half. that we the second in similar factor is growth to gave both actually and you we QX ARR, have talk the QX about because But to as we terms for didn’t only the guidance QX QX. about The reason specific

opposed color in on So, targets QX to trying and you what to we that give happens and for have QX. given we you anything don’t are take as as QX

the to helps, was fewer announcements Kash. really that exciting, transformation the And side, amount the have on been digital It done, done we since questions experience to have on on the feels continues C-suite I So there. side, talked I in of person that and hopefully, really focus new I Every that am DX great. customer there DX excited. Summit want on what mean we management. the back I to have am road again.

in and back facilities. of have People digital top We meet, mind. employees and want the to is engagement office

book business, billion we web on of as well businesses, So, are that the across $XXX whether business. a our to functionality, movement sign we trying in do. didn’t was big as Acrobat, a about all ARR of unifying three for the of the it’s $X which good really talk our document quarter, adoption with million new

So, I think all those positive. of are

EPS, feel the think core But considerations of revenue again, that, just some But business, for part the can maybe factor it happened. the have doesn’t our business. and good. other one I you functional I touch Dan just impact on impact really that of to is the the certainly,

Yes.

So the of did the talking business. a Shantanu good job fundamentals about

point would to The other of piece them. two transient And the effects. are I

we Ukraine, the like to do, around that’s in thing profile to And conservative be prudent in war the the this. the situations situation. de-risked for So,

the in So, QX million through that’s a the reduction well $XX reduction as what revenue QX. as million $XX from in you ARR standpoint, see

I of a to and going P&L, look I FA And were $X.XX to rate. company of about going clearly a that’s QX. about that standpoint, this share roll current through P&L, throughout activity, share a were at the take year to we talked through $X.XX to advantage And point environment. Day. that I quarter then flow a about That’s the be We overcome in where the a per tax From share repurchase that’s that’s were each year, able headwind the benefit about at revenue a FA change the through create we $X.XX If we if at year. QX. non-GAAP versus for were when the that quarter QX X.X I took share versus a XX.X% So, Day. where the balance tax the it quarter an per

QX, And again, the that that headwind all out like continue headwind share said got set, so each on in that when overcome were we deliver I a above growth. orient and about have to expectations $X.XX net going we of we an able towards and QX And basis, per in to quarter. in are had to go-forward you we

time do see. you we a but invest We quarter go-forward to on it will overcome there in know to it we it going if are and at a lead, to take what and a let opportunities way basis, disciplined a is

know one and very clear a you the talk final Dan. Experience that just bold Creative subscription. want I And fall Cloud to Shantanu, to the follow-up, you, I Document you Cloud of transition have Thank Cloud, made XXXX, remember the about but –

your years? it at as inflection that for Express you Creative fact, be how me. in target have what subscribers a X a going the to as of outlined it big then, What So, if is similar it the seemed quite that’s you you for going measure the Thank look company you you back into would in few much. subscribers And to or were You, in aspirations are of next point so you your visionary million look prognostication like be? business ‘XX, would which fiscal Cloud – right? through,

addressable Kash, meeting, will of will paying us be as business I use they be we some we the users at of offerings the that what a advantage billions about is. the have. our take feel perhaps on the we market as like of overall will spectrum opportunity subscription people then freemium who get But who And others really well FA product. talked can of to

part the certainly, have used people adoption Cloud X.X have But kind – We a with that Express. tell starting Document are Cloud story in Creative other hope who Creative products. see and Express, Reader that of aspiration to Cloud my who our where some to right, my a the you has billion of person single think every terms of I is and uses

We are great to Kash. a off start there,

we said, the on as platform. have the I think David differentiation,

great sure are now every that we have world-class of we also And that capture single intent. technology making deliver we piece need at search-based to a experience. We compelling

I would be to growth just area So, users disappointed we what want do our anticipate to if of to doesn’t Creative, with want continue to new be that people but huge a platform. in terms

little a the of past are hour. top we the Operator,

in We up. wrap more will you. question Thank squeeze then and one

Thank you.

our from Wells with Turrin question take will Fargo next Michael We Securities.

afternoon. there. on. Hi Appreciate you Good squeezing me

to actually normalized been you We product normalization can to think expense QX efforts And add and flat way just return QX were margin think we year. some operating margins the that some else any takes as around have year, you and of of that if between to expecting? puts and Anything a the more expense last normal expecting through Thank relative mentioned have help a profile. the can this profile expense offset return uplift pricing are price you. you ahead to through results?

sure. Yes,

Russia the implicit into that influence the from the I were as of landed travel environment. I guide be standpoint I Omicron operating There some out from because the to talked fully and were buckets. look an facilities going effects if and not investing is QX of a and and to at we to situation. So, we guide look several in margin transient break where forward the to that QX, it is in about And

in. are weighted. say QX. to bridge the expenses And from from each increased full is the a future one buckets layer QX quarter back four to going for would merit Those you buckets a growth. And impact. that start to see We do of standpoint are hiring of will we to reopening then to instead roughly month We four I impact invest start equally get those

rate that’s so And the year. into normalized look you the QX to as run half think gets what and more we of back a I

And that to, last the was you wanted joining for I again, us question, thank since today. all

of our a delight Cloud. innovative a gives the to I contributing Summit Document I start will believe, I that taking I confidence our successful more growth normalcy, customers digital are that, another think both of the to continue. in had Cloud, on is continue roadmap new to us future ability the well our We that associated spotlight, at three strong and as And the Adobe. we stock think that fiscal businesses will initiatives go pleased think the And Creative the customers. The and of with really indicator than only We our all performance. lot across the more just organized, year and with just Adobe for exists to on deliver Experience to all Cloud back get interest and we think And we solutions.

So, thank look go year. today, you Thank for and sharing the we us we more forward as joining you. to through

the everyone. Thanks, call. This concludes

conclude does your today’s you. Thank participation. thank That you for We conference. all

disconnect. You may now