- Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the Q4 and FY22 Adobe Earnings Conference Call. Today's conference is being recorded. At this time, I’d like to turn the conference over to Jonathan Vaas, Vice President of Investor Relations. Please go ahead.

Jonathan Vaas

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

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

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

rates growth that currency include constant as Our as GAAP for account XXXX. also in reported rates in an extra growth results fiscal well week adjusted constant and rates currency

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

Shantanu Narayen

earnings operating We profitability. focus non-GAAP GAAP We delivered Thanks, Jonathan. growth. $XX.XX. revenue for Adobe. with thank cash earnings achieved billion, and for XX% per and flows a joining you year-over-year record us. Good was exciting was of afternoon, share year XXXX was record $XX.XX on share eventful an representing per $XX.XX and

mission-critical digital-first of our environment macroeconomic world. our business uncertain products the and the underscores in a performance resilience strong in of role the Our

customer digital software accelerate diversified, making unleash document profitable segment, and innovative, every creativity businesses us companies and geography for power world. in Our strategy driving of one most momentum to the across is and productivity all, the

pass personalized Experience channel. large of revenue to to $X Experiences, ARR, vast Cloud, million, new In serve and year-over-year execute $X.XX Adobe development individuals universe we Digital delivery representing net creation the top- and starting all and bottom-line foundation Cloud $XXX we David. revenue to strong content best become our growth. spark, media, quarter, customer product Experience In now of first from enterprises its the on to will against QX, growing Cloud Media and across creative the first our roadmap, have every continue Creative to achieved XX% quarter and a and subscription business the achieved growth. deliver We of with it Document year-over-year. billion, business, Digital had our our ever delivering billion XX% I Digital

David Wadhwani

capabilities with making are additional Illustrator, lightweight, and progress tools. value their to AI interested Express Sensei, and users add rapid their is of Adobe millions we features lead Pro delivering as Premiere to we’re new Cloud continue task-oriented enhance across a in hello creativity Creative Thanks, Lightroom, Shantanu. leading every products for as creative pace. such XD. discipline for across type category, products offering platform, is customer media rapid digital every and everyone. the photography, segment accelerating web, and The Photoshop, animation demand our Adobe members Acrobat attracting The engine. Core at who design, Creative new categories comprehensive and video, remains Cloud with a And content of imaging, portfolio also

New sharing applications Cloud and into creation, Creative collaboration are seamless creative to and document Document integrated workflows. Cloud like directly Share review enable across Review, capabilities, and for

always showcase our posts. community and innovation, its media with Photoshop, grew quickly to include amazing members to XX% images, AI preeminent customer at assets enable and social to a growth an integration XX. that was remains magic Adobe of flagship a demand small accelerating ensures we Adobe content in Cloud million opportunity stock monetize NBC in Substance MAX. applications, of Lightroom, execution videos, of: incredible and pipeline ARR of create revenue enterprise, owners achieved Publicis, creative and wide billion, the to promotions and growth Acrobat deliver strong continued template-based Roku, October, and U.S., sales business in base Premiere across for We the product of Our customers momentum NPS professionals, Premiere Nations. our and newer quarter in and net underscoring the to ongoing of fonts, more thrilled This greater of innovation Illustrator, new holiday result strength and a The destination students, and a across wins our all with back Cloud. design to by opportunities quarter including individuals, Arts, channel; Key active our Pro QX was than growing easily year-over-year. everything record see direct to from every continued before. enterprises which of Creative performance product been be growth level. Express, $XXX Electronic from Adobe unique a visitor conference views than and for drove expansion of creative Express’ video ever than live unparalleled reseller has skill and us Creative exciting monthly collection XD Pro greater QX year-end the billion Photoshop, templates Frame.io, year-end best thousands our of and cards to of mobile Target an were and web for driven businesses; channels. sales creating and XX% significant Meta, strong of over for In users, United $X.XX our in millions our quarter-over-quarter and SMB Acrobat; Universal, from we and

brands Initiative and Content create Review such announcements The with the photographers allowing and captured; Arts, RED Fujifilm, Boss, Cloud for and our Leica more time; Frame.io Substance service XD between Share costs where when, ever were and new implement capabilities making the designers into that Delete to how and than embed Photoshop, accessible, a process, to images new Camera reducing and Camera Authenticity technology Illustrator production NVIDIA Coca-Cola it and Digital fast Restoration creative remove Our Photo partnership and integrated and into Company Adobe’s Generative that which objects, key between a immersive engaging Electronic replace collaborate cameras, and included: and of as NASCAR, Hugo and Photoshop to technology the instantly significantly early in AI AI and transform that one-click tools, photos; to promises tool neural powerful experiences; in in integration such Nikon provenance empower Fill to new easily damaged efficient first-to-market before. advances enables to demonstrations as stakeholders; a fixes filter to a

new turning for offer whether digital business, a to in to is Document innovative sales purchase deposit become it’s school Document the offering digital a personal skill documents device a form, level. synonymous have professional every documents, solutions contract. lives, Now in leader or permission a the an with bank Cloud productivity every and home, Cloud and our slip across

funnel scan QX, send which document Creative year-over-year. calls right Acrobat and ability and million, sides pages as PDF ID QX the integrated serve productivity; page; for well professionals in growing card XX% SMBs, strong editing, million, common and year-over-year critical document solutions; doubled in documents; paying to include of State. $XXX net traffic and applications; dividends. ARR ever templates necessity $XXX new outstanding growth signing Mitsubishi against of searches transactions their include: growth core drivers growth on Document represents and Cigna, between e-signed and both enable In Cloud and Information and API collaborate driven was improve workers multiple web; is desktop, our reviewing, scanning of key net growth in Document strategic allows customer to Department outstanding strongest one with within the sharing, wins including scan Acrobat web, growth payments for the both new as left API QX ending Acrobat, record a XX% a including creative had highlights functionality agreement new all Sign for which to Shell and help as with for users organic nearly demonstrating ARR transactions. to capabilities seamlessly strategy significant PDF underscoring innovation strong need new by across simultaneously knowledge branded scan Raytheon, business. within the an mobile book Technology of strong in quarter capabilities U.S. execution the Deloitte, Media, integrating revenue Digital of to actions, enterprise ARR combine of Cloud the Our Cloud and BioNTech, quarter-over-quarter, capabilities, that Electric,

of future globally, people. by Department regulatory represents proceeding The and the in Competition pending millions about In and as tremendous accelerate UK. addition, for Figma is we’re is including and opportunity a Justice Overall, which the Authority to reviewed the of being the acquisition, Markets transaction of productivity the process expected. the excited creativity

engaged currently are second DOJ’s in process. We request the

We be reviewed EU. in will expect the that transaction the also

facts approval XXXX. feel it transaction to and receive the to in to close about continue to We positive transaction the underlying Anil. the I’ll expect pass now

Anil Chakravarthy

than predict global during now mission-critical to it’s every season. requires Analytics, large online engage Monday value high drive prioritize in trillions an customers. of Cyber better $XX.X improve the in positioned all-time current on Hello No accounting which to XX% climate found digital spend macroeconomic on sales will that Later with Report, this businesses Adobe efficiency, company points Cyber billion in and depends Adobe’s In Pay engagement my category maximize Holiday with Thanks, that Shopping orders for Buy remains operational Every Adobe customer shopping billion realization. long-term Thanksgiving, mobile $XXX digital on and everyone. investments, We to capitalize David. Now customer is jumping data transact now conversations, business holiday and this spending, to analyzes drove their of Week. clear and opportunity. XX% of exceed

data solutions and the streams simultaneously Experience in a leading is and growth new our businesses subscription journeys demonstrating are it engagement revenue and across our that unique through and driving across and drive audiences, We customer BXC demand, workflow, and of productivity gains. customer consulting in while existing spanning powering customers, business. is delivering commerce, helps diversified of content BXB and industry marketing it with and digital mix insights Cloud every strength businesses services

differentiated Exploited to CDP, quarter Center with billion-dollar provide scale. its $X.XX built real-time Cloud monetization. experience, Real-Time for including Document personalized revenue Experience simpler the a National representing personalized, applications, revenue. uses scale. the creation less deliver impact milliseconds, create Illinois are Creative a of using state from million year-over-year of our real-time faster, the impact on especially Experience is Cloud for based each positive are companies photos is has services $X.XX segment in executes response consumer to facilitate social Platform, in of Missing Experience Adobe They evaluations Experience recovery of customer growth residents. for their preferences the Chipotle XX access channels easier and set XX billion, product the a is day missing to and XXX strong In design to processes Photoshop ability our new highly It's unified to ideation and natively a than we process. more our ordering profile technology. Experience delivery In great of on first Subscription to witness experiences differentiated and inspiring to State Adobe of to Adobe of Platform business, per at to comprehensive and to age-progressed and customized time Our more children. most support drive offerings mobile trillion our long capabilities The at Experience providing example. used to Cloud in entire of to content to power and QX, and web content illustrating Cloud Cloud highlight achieving continued billion government, using equitable online XX% Children Adobe growth. was the and customers over Cloud and

effectively implementation services, Depot, in BlackRock, weeks professional Air and forecast Adobe Disney growth CDP, harness insights Additional demand Chipotle, applications, strong and DFS Experience continued Parks, to to audiences Platforms, in Publicis, our the Journey digital focus campaigns and part the and businesses content effectively; wins, Health, marketing native their large Wave Wells Adobe to demand for customers’ marketers for industry months Elevance Customer and Collaborative monetization; chain, inclusive role including globally; enables becoming include: on underpinning for data recognition, Sensei Optimizer rapidly of continued the it as than Adobe Analytics, for and QX resources which Quadrant which value a supply Mix Manager, demonstrating GM, of are realization; strong Journey brands Office BXB Adobe Real-Time Adobe Marketing highlights underscoring to analyst and Marketing Experience customer Group, of Platform Adobe’s power in service helping creation from to in Modeling Lines, Delta more for our and partner Fargo. ROI Marketing Automation assess the Management of strong manage offering, now Gartner new Santander pass rather leadership Adobe I’ll including receive Work Enterprise Forrester Forrester Wave Magic for the Dan. Suites. key accelerating

Dan Durn

Anil. Thanks,

earnings and QX results. today report Our fiscal both, covers XXXX year

Adobe billion; repurchasing of of across revenue our constant Company. and XX.X Experience $X.XX initial headwinds, target which Media constant million $X.XX quarter diluted of those we diluted which was approximately in Digital X $X.XX billion, fiscal net year-over-year growth, tax cash $XX.XX from included: within million segments, billion; creative in education; demonstrating individual sales exited $X.XX Creative added workflows QX net new importance adjusted EPS the stock. $X and Fiscal across fueled of imaging growth, discipline, drove from Frame $XXX the Media customer our for Document approximately billion; the digital and $XXX enterprise, dollar, repurchasing offering, the adding million; $X.XX the revenue $XX.XX SMB rates million Document exiting applications, revenue you growth, GAAP quarter of or business throughout and for EPS Substance, Creative we including shares year added of represents stock non-GAAP to of the RPO our rates quarter. Digital of business the and In fiscal in at quarter and our As quarter billion, currency. as per operations We Cloud financial revenue impacts in our operating quarter; and Creative and achieved fourth new Media and photography All experienced revenue and billion; $X.XX an including million Adobe a we offerings; to financial $XXX billion; seasonal sequentially $XX.XX, a purchasing to Stock; represents or strengthening of Creative billion $X.XX year Cloud and strong headwinds the increased year-over-year continued in web billion model growth represents cost a Media strong shopping $XXX constant shares Apps campaigns Fourth was documents exceeded earnings Cloud promotions, which driving Digital with for product-led ‘XX billion to basis. all $XX.XX achieved or XX% growth revenue holiday a year-over-year on or XXXX ARR. adoption currency, XX% during Russia-Ukraine non-GAAP Acrobat highlights flows strength and We for $XX.XX Creative speaks businesses, well million, from Acrobat the record and demand of the represents included: growth, net this growth performance year record of community; offerings revenue web, $X.XX in significant our QX growth; growth, GAAP of demand, ARR included: Digital billion, and new the linearity searches the to our achieved finish year-over-year of in year-over-year of Team, revenue customer know, our Despite In U.S. Document the X% new ‘XX, the quarter targeted Acrobat ‘XX, ARR QX the segment, quarter and the customer segments; currency XX% flows We strong of XX% our cash RPO strength, strength in year-end per of SMB, Cloud as share and share with enterprise. ARR included: offering of of Adobe war. of through constant billion; new drivers conversion well highlights Acrobat and the or Digital billion, XX% was year $X.XX adoption; ARR and customer $XX.XX. represents drivers XX% of Sign, seasonal to fiscal newer in XX% billion. currency. was new in XX% during achieved which EPS PDF $X.XX year the by constant individual XX% fueled upsell user execution as the of billion; $X.XX. Express, year We in strong quarter. Media online weeks. record of $X.XX integrated resilient subscription of reseller strong and XX which year; by growth, the from revenue good the Driving continued earnings new Fourth was Digital traffic peak performance net of of quarter; in which achieved in currency. Media Digital of Experience yearend growth Digital customer solid from and operations over in ARR of record including of of Non-GAAP growth as channel. new of which Cloud

our portfolio of significant that newer CDP; America; Digital offerings billion represent in Workfront quarter Turning strength services, focus that Adobe revenue EMEA momentum digital transformational achieved QX, In and closing our span strategy; for XX% subscription to products. North components drive Experience Content we revenue value implementation RealTime $X.XX in which of focused Experience professional Fourth from enterprises native currency. to applications, of growth which on are drivers our growth, solutions, both year-over-year we our on chain increased included: constant momentum and in to investments. expected demand growth of our as or accelerating our billion, with our QX success with awareness XX% year-end realization of Platform of disciplined Digital segment, and investments builds content our supply on with integral including and strength, deals $X.XX and bookings of in customer time Experience and making solutions; numerous

on than in continue gross GAAP The quarter. XX.X% and tax operating rate and the performance basis. in was Adobe’s a tax came the to quarter strong We RPO XX.X% lower margins on or primarily world-class EPS foreign expected factoring have GAAP rate lower-than-projected tax effective to X% our non-GAAP was basis drove billion, QX in and FX a when earnings. due headwind. year-over-year, XX% on exiting X growing percentage-point a in $XX.XX

which expect reduce repay fiscal date, XXXX. cash entered billion year QX billion, record before from ending billion XX% $XX a the a position $X.XX of into authorization interest and due to in year-over-year. quarter the which share XXXX current up we and exiting were the remaining now Our billion, our $X.XX repurchase cash in portion hand use or billion ‘XX. have and currently $X.XX we to we was on debt In will our operations our agreement, in through QX short-term on December $X.XX investment of expense cash flows goes We intend granted

$XXX measure rates. ‘XX, sheet, and October provided and ARR between million to this at account entering We a this FX at updated currency constant measured a is of $XX.XX current now in Media fiscal decrease year ARR As Analyst that year-end and targets in for fiscal growth in we for December on Digital rate This revaluation. ARR our be during ‘XX. changes ‘XX businesses. and year which the the during the currency have a year after environment preliminary basis a resulted will against our fiscal is XXXX into fiscal macroeconomic drivers results the amount our ARR take balance various billion Financial year Meeting revalue data investor reflected reminder, year

$XX.XX. year our basis macro of long-term to there GAAP summary, ARR Experience of massive revenue we of XX.X% Digital ‘XX segment those share financial approximately Digital Digital reiterate the of for $X.XXX billion; on given XX% uncertainty, to billion; $XX.X new $XX.X is In to of momentum Media revenue business, earnings $XX.XX; ongoing $X.XXX billion; per to a subscription and revenue to targeting: net in segment basis; are tax $XX.X digital $X.XXX and per to Experience total of non-GAAP Adobe of billion share of fiscal are opportunity a $X.XXX $X.XX While in revenue on $XX.XX and $XX.X pleased rate approximately Digital to targets. earnings we billion the non-GAAP billion; billion; GAAP Media $XX.XX

do As a contemplate planned of our reminder, not these Figma. targets acquisition

and of a We growth dip QX account normal with seasonally being sequentially the expect QX, seasonality, for QX. new on to business, down light sequential strong QX year, in year a summer seasonality to finish the in throughout from QX and

$X.XX well I non-GAAP year, Document year per on In to across for sustained Cloud $X.XX. carry billion; $X.XX fiscal earnings of QX next Digital Digital strong, Digital billion; of billion to expect Shantanu, revenue to Digital Adobe’s ARR $X.XXX to For per targeting: earnings approximately this and profitability Cloud. back $X.XX of of Adobe of billion million; Experience total GAAP are $X.XX of and we XX.X% of Media of segment $X.XXX revenue basis and fiscal basis; FYXX $X.XX billion to on Cloud, as ‘XX tax Creative to $X.XX us to year a XX% $X.XX; into billion executing performance summary, billion; revenue $X.XXX $XXX $X.XX GAAP Experience you. approximately rate share and beyond. to ‘XX net continue top-line position non-GAAP world-class our to a share new and strategies on Media subscription revenue Experience growth finished billion; segment Adobe

Shantanu Narayen

Thanks, Dan.

and our remain and company perfect our and communities on enduring our our it As are shareholders reflect that core, celebrates XXth asset us was past simple to is our its on Adobe founded greatest future. a anniversary, success. our principles is to employees Innovation central at the time customers, but are with today.

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Operator

[Operator you. go go Mark Moerdler ahead Instructions] our We'll Thank Bernstein and Research. ahead. Please first with take question from

Mark Moerdler

the Are impact more on assure by customers some Adobe the Can the to Express with impact switch express do how free congratulations on and any ability to convert way. Cloud? on guidance, very And to that seeing users? much. adoption to us, Express? paid And trying you quarter Creative color you you Thank your give users David, paid to you creative and

David Wadhwani

Express the year of just excited about sort state Express. finished in Yes. first market. of We're its very

millions users. We active monthly of have

on Premier the is other really primary over best-breed products XX%. have, our like that's that market, is quarter-over-quarter our of of from visitors, fonts year over first our content backs releases XXX of Acrobat. the of to NPS And Express out. which XX,XXX addition unique had mentioned, I hundreds that We've millions that highest growth we've focus the templates. stock sequentially been we the added Adobe in XX% constant offering, U.S., the As we strong and features Photoshop that terrific the And has quality in saw and very in growth of quarter-over-quarter

So, about excited very that. we're

conversion users. And itself do terms adoption your to free But CC well, customer so, we to also very strong those in our of seeing the users Express of terms of question, business Express both are and continues within of base. in existing

flagship and see have Express of that to quickly. buying power speed and users we the power that course, fact to just something precision And lot represent, precision the they them So, looking the of ability they times for and done ease. users in that applications that also a gives our is are and to are but the people, get those there those core entitled have and the

And users are bringing funnel. bringing is ever driving well. in audiences, so able as reached that we're we're drive in, of We're the giving retention in than search We're is And users coming, haven't of more top we those which intent-based things. customers, incredible also in finding users had by for which business as us conversion. driving to increases utilization CC we've overall

playing So, expected. migration the funnel out and healthy very and that of that base as is

Operator

question from America. of and our Brad Bank on move Sills to with next ahead go We'll

Brad Sills

in Express. where Creative ask about you upgrade on funnel that with provide seeing business. wanted of you here the I Is some Obviously, can see motion a even to we of for there there any Thank could customers? Are there upsell another conversion -- installed the question success full suite color Cloud see path as you. other products, some you're potentially that growing? it's top of is those that certain base

David Wadhwani

Yes.

As tier up it's Creative and into whether bringing the the Express pay the migrating whether eventually Cloud right when them making into at free at tier core or it's primary is the or applications. Adobe whether talked paid people about it's tier a just Express, flagship we now focus we launched successful,

and Our to has continues and primary repeat be focus utilization. been right usage now usage, around

the that focus, coming are still our in data working. while -- while suggesting and are we a seeing focus though, that's We are lot really primary our primary has seeing, -- not upgrade interesting are of early we that

we're many but Creative to Express, ed increase in increase in we've in applications. Cloud of starting see example, where flagship the terms higher Adobe starting for to the of Express, usage and is deploy power should well. see Adobe not know this just For part demand institutions also started they precision people we're of start again, as leverage productivity. that creativity to everyone we want creativity, believe and new and that from And and we naturally be more benefit is But to as creative

they hand. well in do go that hand So

Operator

move next We'll ahead. question Auty go SVB our to on MoffettNathanson. from with Sterling Please

Sterling Auty

what preparation is you the do or acquisition, operationally before from can if And that I'm structure are an anything close? those development now So, either expense there Figma curious, you're side making? moves so, in for that

Shantanu Narayen

maybe can the nice I the core as, in companies mean, to as interest announced, since you Yes, business. combined as as it's do excitement first, that can see from the I was Sterling, see speak can the associated what deal results, our we both that. to well with

so, we're focus bodies it. on looking excited at the it. overall Certainly, strategically. associated about And thinking are can as with regulatory We

a made. cost We customers. as companies. great of technology, from are feedback lot good about separate two independent prioritizations relates we feel these our are our really And well structure own to it But we've getting all the as as

we And feel advantage immediately like we're when of it so, uniquely it. take positioned closes to

Operator

ahead. with Bank. Please question on to go from Zelnick move our Deutsche We'll Brad next

Brad Zelnick

strong My congrats the a to well as finish on year.

especially trending, an macro is question, it's commentary Thanks. to the expected. good moving your then? hear the give evolution forward Following you time just given us Figma their as up the to on the announced, the how was since on business update deal is Sterling's at close Can environment relative of process

Shantanu Narayen

Brad, know, a they're as private you company.

their liberty about opportunity execute at to to themselves. by have they on not to continue certainly talk we're And it. so, And

Brad Zelnick

Okay. Thank Understood. Shantanu. you,

Operator

Murphy on JPMorgan. from Please next to Mark ahead. go move with our We'll question

Mark Murphy

my much. And congrats. Thank I'll you very add

monetizable? in which excitement that So impressive enthusiasm, most amount created Shantanu, you innovations MAX down has the also energy I'm of And the which intertwine I'm the Share might Review AI audience could wondering capability, conference. think to wondering the capability else or of you And at be coming whether was the for generative -- be unveiled the might or it that the you anything and quite forefront. really

Shantanu Narayen

which that of worry were firstly, more showed, at all applications it's, I David the was of children that Mark, most. which applications. and continue cool do love are because accessible, always there, what you the just it's for core innovative looking delivered. me Well, thanks think, also being thematically, We is core more know, about questions I my stuff to, clear just that productive, the the fun. new you more sure like I make let Scott to But and speak

that outstanding I an has so innovative that think capabilities. team that's of And thematically, making deliver continue the we done one sure to job area,

and mentioned You Illustrator. Intertwine

talk Express, I through it's we trial when more think second we to participating get that the get it's in collaborative David the whether questions Express, into whether people on our referred it's the whether about the we more which thing, two is, through the into the franchise, he products, franchise. thematically, how answered process. also do through people

adds only to that available think the I market Adobe. for

we I do. so, work collaboration the And think continuing we're in doing what is democratize can to really that

excited I'm So, about pretty that.

for of and AI the also tracking I'm potential think exactly can terms text. that what's the you've GPT be respect able -- sure whether Mark, content chat that really and through happened, you your it the ability to do is. to when fonts to with your you individual see been the that a get I the done or whether way that the sneaks talked what was done in about, you were it being text,

how you space, So, creative a been has I entire anybody who has think do idea always to creative life. that get idea, that our vision

billions use I it. millions the people think moving And hundreds from so, who of to of can

perhaps And delivering And off. has an in on also people with excited of Express. first more about be that getting see that. is platform. you'll we're functionality You're terms way, of profound acquisition of I think But the in our more impact us certainly quite Frame aggressive think that starting augmented right, all I about

I Substance. think spoke to and David Dan

really drivers. we multiple growth the So, feel about good

David Wadhwani

examples a are brought three of to example because examples adjust bit an little interesting intertwine is the that. The existing you can in really flagship I application. innovation If ongoing our

driving use So of applications once onboarding you loop -- amazed us. people keep engaged that the know, start to anyone Adobe is opportunity into document future Photoshop document, those document and to as turn while of been products, a and be be that a or to to Illustrator user it as a the that represents drive Review repeat other fresh or release, Adobe for people continues stakeholder we've people an using keeps growth And it's great gets by Share also it differentiated. any try document shared usage happens an for a early, to initial and whether to the Photoshop it. whether that that Express. whether Photoshop a happens keep into an document or Because, everything still

saw So, I opportunity. us to just wanted those sure that well. growth And loops and are important to really interesting people as make

Operator

Securities. ahead. from will Vleeschhouwer The Please go next Griffin Jay with question come

Jay Vleeschhouwer

does as has namely how I'm that what Shantanu, ask a historically? also about thinking the product-led specifically is And you about that I've term XX from for the cross-sell I'd today been meant a in more at mean And used wondering relatedly, now what fact, the growth. upsell three-letter might are Adobe MAX. that company differently have acronym use product-led growth MAX, new it at for and you about years XXXX. growth you opportunity well, spoke than a that question product-led you. often And And known to you arguably like

Shantanu Narayen

thanks close Jay, really has through extremely our Yes. recognizing innovation with customers. an for relationship come that

engage think I in use we with customers, was desktop the era, as making was all to the we in able sure that that. So, engage about product-led growth we the with as the what really community, were that past,

also Photoshop example. we the both think we actually in are release we millions I the given it had think we use the those the Lightroom, even that frankly, before up people Cloud, in the desktop What was of in Cloud. came the with first when Creative great did example fact team Document Cloud just great a evangelists era a was doing product, as product, and getting pioneered perhaps what on we the that work Lightroom. having product, And following to in great a is Experience best already the the and I all with

growth and offerings I as we've got we so, to how when just level Cloud, bit. really on searches clearly of community and people introduced satisfy quite whole well our we product. it's velocity about a prioritizing in for mind really David were customers think web-based this said, with think as right engage we the product-led to and them, the to in, Document ability what's take the product-led what When escalated integrating frankly, doing related with David new top engagement as, I now, both growth, them, see when think, this to And of for in to started our immediately came a we engagement marketing Acrobat, that's

now, product as the manager when manager, are marketing well get see on them page. right and manager And and the you engineering of you the into so product product sessions the as all same

We have data.

Anil the products do and instrumented to the testing we and both ability We our and in use that own here's where your have AB products things products does.

growth And tests a given so, to And the But at any we market in to really feature has interactions from as that we're particular pioneer. have quality customer learn saying, about products deliver for right now time, is well. product-led the and been three probably really using David sooner. better

we bit, Digital a And So, what Experience then Anil, David, like to maybe are for well. little that add? in on if you'd as doing

David Wadhwani

that have. an that in add inflection even of that Yes, only your introduction with take web would an which is it, product-led that interesting we point, development to of was more summary. and of applications that complete all the give The drive a growth pretty thing our are opportunity point to use product doing, always us what Shantanu, we've cycles think the there's terms we been I I is

optimizing, have that's sharing have we area that now have we a the we and with loops for growth Adobe Review as Web, Express, we we the have Acrobat have teams. focus of Web, Share been for with that an huge have And example. So, and Illustrator we Web, you that Photoshop focus combine new we can start

Anil Chakravarthy

technology add, I just have to online their for best own wanted are our who what starting customer, to do said, it. to who's they mortgage using and of and using They application, one several technology, to product-led example, as our customers. use is to that Shantanu, able they enterprise our they're what fix works to analytics growth do complete deploy completely it online, analytics applications Yes. and and want our to see you banking customers their able a need of track to successfully,

starting as own to our Adobe we're to inside PLG doing both technology being it. said, drive well So, customers like used see as you our as exactly,

Shantanu Narayen

targets for back, of the beginning had And a team $X.X look had feel I maybe we momentum. provided taking when about I good Jay, to I of some with second that Media to billion. your to do about. year know is And ARR I the at say, people get step have annual I question our Digital we and crushed really the QX our which the think where And think questions even guide, that, at

know people us on we've them have to happening customers And whether in pricing I a allow with or Acrobat people shows been on past. for the then incredible is then either lot the promotional whether pricing, to them converting to driving the then first then ramp, and data on individual result always the just questions had Reader apps, acquiring some us you're we engage on-ramp good apps product job really and in mobile very used use is platform an people it's they get whether educational And what engage a because the license and customers. of so, pricing. we a that Adobe even convert a platform. We've and the a do in, a Adobe that's Individual of our product. graduate on that who attracting it's of for as good first, to come we And success people and Acrobat. device, has as with desktop when then cross-sell, very, to upsell, referring PDF to web promotional or and Experience functionality

our by personalizing numerous derive knowledge there every to offer we're value creative think are we've that the that as which they monetize able from to after I So, demonstrated well it. or ways that in worker

Operator

& Cowen on ahead. We'll to Derrick move Company. go Wood Please with

Derrick Wood

on I mean much dynamics growth in Congrats uptick number. surprising. stronger you QX give the dynamic on typically strongest Cloud between Document growth the customer net seasonal new Document in I Creative quarter. you to second new the and and -- a grow The little color was sequentially a a had, quarter? QX. Document ARR a the at about Cloud ask strong percentage of I in between net Cloud ever. Creative think, But wanted looking ARR sequential saw more this Cloud, didn't just what's Cloud little Can Creative composition

David Wadhwani

Sure. to do Yes, that. I'm happy

how new of focus all, as So has businesses across out, to customer how first of a closed in continues ads. we And mentioned, strength lot and FYXX saw around new these acquisition, with we're be customer businesses. the very the pleased primary yes, gone quarter Shantanu our core

also we have diversity in terms that to drivers leverage a lot have and We the drive of we the of business. have the

design. mentioned, great we we photo, saw creative imaging, As across all video, strength of segments our

been directly are of We conversion. a can the new terms with focused top that productive Photoshop, into lot for of as in campaigns products campaign and funnel in that's new lot Everyone and well also a bringing creative a has customers targeting of grew audiences driving called terms -- of in new very

like really On really has campaign of business that contributed specifically around targeted in ever point, than new capabilities Frame where the It strength Creative, before. we're and from the Substance that now, been all Acrobat. Got have lot a this quarter core of seeing the including businesses your new signatures the SMB and we've focused show strength on we to things drive more that a lot terms Acrobat’s new And -- seeing help them a also We're running of for customers businesses in at Acrobat them business. in

in is doing macro. business. of business represented that the an growth of saw you too, that from complicated saw The business some if year, to creative portion perspective one And look important -- it's at the that XX% also the -- -- we we is ARR is really also the that despite remember of proud the overall, at for well. So this Acrobat we're is Acrobat dynamic very

So, a this point. the Acrobat probably bit understated growth number is in

Operator

Fargo Michael Please to next Securities. question go move Wells Turrin ahead. our from on We'll with

Michael Turrin

in one backdrop. the We for some just side. year on around price there next current digital fielded questions the Maybe guidance

You're holding on in quarter. XX% the for constant targets, currency grew well at

in closed there Thank you targets how can that forward. the going just confidence in much all, the visibility you year So, comment it's you more around and at those provides you. incremental particularly EMEA targets given have talk how

Anil Chakravarthy

question. the for Thanks

different digital business. with tough pleased of Experience Digital the really the at with we a of at mean we growth of which the for all is performance the year are macro a just beginning I year, as reminder, the quick had the in XX% year, We DX achieved what guided issues.

if our So first a portfolio. product position we're we're -- with strong I really really take all, step a in back, of

Experience invest we off We with a the Adobe of investments the the adoption that are are at made we the are is platform leader clear And X hearing really real in customer to in priorities And really ago. seeing. the platform eager with starting paying and market years we at all seeing we with business is that they're are and book that that customers around conversations are enables a that's what personalization digital. the enabling in scale. them that to our meet mission-critical we what And from time them our

this go through product under time, this we are And what companies believe a a we going of large come So, is significantly is that as to single opportunity. lot scrutiny.

it's for us to years see So, to also next approval, want their for scrutinized getting that for the XX while we -- up digital definitely market see a customers and we like deals going higher the in investment. going invest to XX, really levels to last investments, leader

with we are. pleased So where

Shantanu Narayen

of first Anil, top to for has of what Maybe customers. is you been a realization the mind said. of mean add a lot I just that value I'll these couple things

cost. space And frankly, business is you top with in this and the of part, is implement as and funnel very that Adobe's so, people well it's if what help customer I we look think as clear as about both the And at the want help with think offerings I the unique we it. well, productivity to services particular engagement that

the an that both actually frankly, that think equation as on help And well so, which it you find side as, doesn't we Sign what as, I both are are of of them enterprise, with fronts. doing them matter as Cloud Adobe Experience

associated the to pleased visibility. interest imperative. good think, and to sure also, we overarching in and team digital I And execution people an making the pipeline and complement we're his that, the reflect so on continues I have Anil just against that be have deals with want transformational

And but not our to differentiated immune we're I macroeconomic, going be execution. so, and solution like to our the

Operator

question And go ahead. comes Jefferies. Brent next Please with Thill from our

Brent Thill

can X are Shantanu, worse go-to-market talk about tougher you go you're reshaping next of is guide, just you any months steps through or your the X for environment same. Thanks. Dan, And in. headwind, that stays potentially what ensure or as rethinking how economic implying the and in we the you into coming you to your can a cut to terms take can gets

Dan Durn

Yes.

the standpoint, So, the guide talking from a during day. lot we that Against of business. time see FA we're in backdrop, can a momentum about the spent environment of you

a the set we're markets, in, we're year. XXXX. really in You we're end change it's and the product for environment that we're view positioned can a see that into gives that There's the you There's the and way the the the carrying execution against momentum really see It's segments, of opportunities. to no next in that resilience that we environment the we reflected see targets in, the the market. What it's it in I in like us company. of business diversification about models,

So, to a in made. criticality mission but resilience stay environment, our what that of who about adding there's and our to that are And could a a and on we're good we then see customers. diversification focused against to comment feel macro Shantanu the complicated continue sell we'll value we customers, executing a way the to and we you

impacting can us top see line. You the company's

can unique serve us customers, pretty see position. You impacting in with which their that and us puts they productivity the a

Shantanu Narayen

as I'll two in to ways. Brent, relates question, second it your maybe And unpack that

undersold with within really of think how did in what top effective even be I and the helped prioritization your alignment really terms the really bring imperatives, that when was you're pandemic critical First that when should is for for first the started we're don't company what been think has prioritizing I that's us. clarity exercise we execution. pleased about really And on focused and

I through As what it companies in digital electronically. terms Index the to mean, the to to or three continuing X continues Adobe people we area they engage think we with you I of with relates the about to to next that routes X our Digital an know market, are customers talk about strength. transact be seeing want and -- months of

community the just digital And side, the on the SI for business and the they so, just attribution and the value as that for is from where a will they continue the we have David on vigilant them, well, we platforms VAR to Experience, the we're that's we offerings they engage the are issue on attracting And get effective ecosystem, on we spoke continuing retention, that remain make how customers with which focus sure whether that's making what enable to partner the to of some customers. just sure campaigns. them. Clearly, with whether of to key The Digital have. exist. acquiring continue understand to we new doing for that. small just or on to And medium continuing

small medium what a was through I did a really and that's rebound bad situation. which went after part. year, the think Clearly, a business see last they

think And execution that. to of first our continuing month in on as Europe to start quarter. December, focus fiscal highlights of our at So in Europe. have I on I we on that continue think the against companies. we February to was exists for sales direct part, quarter, as you look that Brent, in end flush of the the it's despite remain we to Japan our the year, will fact what us budget pipeline, to it's on whatever And their one vigilant happens in the actually as of to then, take focus advantage come

Adobe think well. has Experience I done platform

And can into the sure visibility I so, continue execute, we we cautious remain macroeconomic, to think making have but Brent. about that clearly we

Operator

BMO. next ahead. question Bachman our on Please We'll go with go move from Keith ahead and to

Keith Bachman

as And ARR you Figma really new resolved background -- to creative noise. new we on assuming I things in therefore more going that that back improvement even period Thank liked before focused Analyst the much quarter, call advance out. drivers if like would some Hi. but expectations. are in apologize net ARR, net ARR Express would the very longer have issues if over think key and Shantanu to you the or in think that Adobe could. entry help of or what Many and Adobe in you, much. to some wanted If before flattening And the very focused have you're else that has it's ARR, what the do -- as believe of the things been there Is key I and total compelling cause macro you the perhaps creative Figma anything look for be been than you despite if are I we we And what was growth an a want? assume I in some improve that to relative you has at The AR growth thanks. can time was, that you direct really past this is particularly though of good, quarter slowed I one little growth? the get a didn't side? in point. the that what net on think new as out David, didn't Day as

David Wadhwani

Shantanu to add in happy I'm anything. jump and Yes. can

Day, and high focus look which a retention strategy areas. is about what the drivers new at are clear, at level, So and is users our you very talked we've if at Analyst core

we've being very of or added comes they users that year career of tend is important mentioned, it new subscribers ever Many our intentional things. are And subscribers, tend those professionals. in -- intentional activities to earlier sort of and When in are nonprofessionals, Shantanu doing. we we're than be be two history. to those we a right, very in terms to new really added more commercial this new As focused

going is products is happy coming from because and at to making and and main are very we time plan to The apps, strongly app that us that is and thing, persistent is leveraging them all something need. and very single and we take about our an app as into available the successful. opportunities them something getting to drive app that ready be on Express, they Adobe them the so, single though, that the And to Express example, to believe and from to have or in upsell initial them very we're single

with operational been also very And retention focus, so that we've been -- we've about those maniacally of bases.

have not the think you retention the broaden I people users, in other questions, users net, typical you are as what's to happening bring asked rates. that Adobe

I up new we're think audiences. starting example. -- these usage we and products improve. and And retention also fact, is seeing better to was we strong now we're to shared seeing than of continues as tick stay bring And that we're very as it in in continue retention an pre-pandemic

bring to new users. continue in we So,

example them mentioned of organic move Shantanu a retain up and We continue great education. new opportunities users to we them. and to upgrade see those

lot expected, see using them more a those to as see graduate we activities a lot opportunity, them new them. we down and in they to in, continue to when to upgrade our pricing. are it. education pricing. opportunity it We then, come retaining three years two And the products full bringing playing of lot with or commercial out the to comes years people have getting And later But all users a and

Shantanu Narayen

happening key actually just mean, step a imaging you going think XD things two in businesses I And we're are a to about, if video the that driver, Keith. to immersive that, think really growth add to when and take talking the maybe and about that But newer you photography. tailwinds. to be I environment be back, continues macroeconomic that

fact the golden like the is all of to content There express design. Everybody is first being it is are age consumed. which The would themselves. this of on more that screens

content, I being So, a think for that's created. consumer the lot demand think, I more is content certainly insatiable driving of

And being think the the delivered? have larger is are are we created? with to digitally get you a chain. about take even companies, much to chain driver calling How I creative that's business handle for all it be it David the I exciting content being believe to they supply is everything do well. think that is I Anil as being that the we localize so, then trying going asset of it? What's a management, with the what engage Where when have supply and and content? of content, talked think our content as One we created? applications, I efficacy And areas customers that growth they we how this that Where our fact that is continue entire of deliver content

underestimate insatiable the I with is demand happening enterprises engage but that content. to also recognize that what's people to wouldn't I the way So, consumer as underestimate personalize wouldn't

Jonathan Vaas

the at more we're and top make then question, wrap up. hour. one operator, time of we'll for We'll Thanks. Hey the

Operator

bet. take from You last with our and Alex ahead question go We'll go ahead. Zukin Please Wolf Research.

Alex Zukin

I'll the a the sounding pretty you're kind pressures macro background to guess lot any we've the environment, the apologize for any noise. seeing the it's like about believe in moment. other demand of initiatives side of I continuing at I resistant growth ask equation. heard I

on to that the exhibiting. few been have over that at maybe the quarter As story, seem you last quarters, does our margin expectations. side, the margin exceed and past discipline margin like levers continued the least the It you've has discipline that about think you that

bit about through have see we cash scenario where in either, conversion in at the flow again. year, opportunity think of think And or you look to the Thanks lean in the little the parts that from a A, how should also, of a cash the back? next through about as perspective. business you you pull B, we as that Can maybe go business So, if the you levers slow. should walk

Dan Durn

Yes.

FA lot for were help a reflect the company, really If and a So flow drives that more what XX at operating talked And customers, at industry-leading the become is drive But way Company I our of driving from we is environment, to products deliver Rule back of we and their disciplined path the well. very the of cash performing on business. which for step XX inside effective we’re FYXX, an on and a standpoint, growth. out, performance you in rule them point margin rightfully it's day. we've take it driving and really, year. a our done innovation about do complicated doing always revenue we're growth, But operating critical to macro while

So, our we operate. feel to really good ability about

long-term as successful, do forward going so going customers continue to into to what continue to and that going prioritize year, constantly to to prioritized continue way. we're always going do drive lead. We're continue we investments, ruthlessly the our a next to things look done, in which we've portfolio, very our make We're the our it review And value customers is but disciplined to for I where innovate. make are we'll to

operating So, how cash about that we're with executing carrying company. the cash changed feel good really on front. XXXX. tone all inside starts and drive the to From we'll it we're on environment discipline that's the momentum into Nothing's in value and We excess business basis that a the cash in with shareholders. driving and a flow the quarterly to standpoint, create that flow continue deploy the

Shantanu Narayen

Cloud. are a step done for and combining We've and three and good customer and important Cloud products going that also Creative to Document is had drive creativity why back innovative out continuing our job Adobe more in at and and be look the rare was humbling Digital productivity. things that last and we me had by on saying start as question, celebrate to let inspiring given XXth anniversary, Alex, off that the it's about And has able think both the us. me, impact a we and say communication of that demonstrating it's And to of world new we've with level ahead done the what that to ARR able this both, believe do. years what really stand XXXX, design Media at I are deliver across take our just to been creativity we I be to best If acquisition the there

we operations remain excited to to as why about had first clearly performance of just dollars that the reflects beyond. all to focused. we in that the millions that team the up it a Experience question it that asked, the and software the in of the back apps, helps created seen sure success the continue a that quarter subscription that innovative And $X I revenues, of organic side, other line I both making go-forward, And fact And think think I said things DX billion you platform end associated amazing about to in relates are you why the we're related this both the profitability, and for map, focused just companies of with And enterprises. ago/ space, just Alex, year that, we're are category. and and hundreds FX as the year, finance we've non-GAAP we're despite the we fact we specifically come unlike our unique that by that the to is line on it that the all Adobe look the bottom top we've think mean, when EPS this. about exceeded On it impacted excited a who and of creation had its at ruthlessly and that enterprise impact talked of is that the say, really going XXXX that of road I we

good it so, And I a year. think was

of our execution remain and all season. I happy work to the heroes wishing and for We your and focused. you the they again in do. really you, this holidays will continue thank joyous a Adobe interest all employees every thank for want And of are that to you who of one unsung holiday

Jonathan Vaas

concludes This the everyone. Thanks, call.

Operator

call. participation. With for that, you that today's your Thank does conclude

disconnect. now may You

Adobe (ADBE) 16 Dec 222022 Q4 Earnings call transcript