Q4 2020 Adobe Inc Earnings Call

Good morning, and thank you for joining us.

Welcome to Adobe Q4 earnings and 2020 financial analyst meeting.

I am Jonathan boss VP of Investor Relations for Adobe.

You should have a copy of the press release, we filed this morning as well as our Investor Relations Datasheet.

We've got a great program plan for you today, which is in many ways similar to what we've done in the past and in a few is different.

This year Mark my 10th Analyst meeting at Adobe. The first was the year, we had just launched creative cloud.

And it's amazing to reflect on how that business has grown since then.

From my first nine analyst meeting I was one of the many employees helping behind the theme.

And this year I have the privilege of introducing that executive speakers as the head of Adobe's Investor Relations program a role I assumed earlier. This year just after we had made the shift to working remotely.

I've really enjoyed all of the conversations with investors and analysts about Adobe business. This year and I look forward to meeting many of you in person at some point.

That leads to the other way today's program is a little bit different than what we've done in the past. This is our first virtual analyst meeting.

I for one will really miss the opportunity to meet many of you and chat after the event, but we've also been learning this year about the power of communicating digitally.

And seeing that we're able to meet to reach a broader audience with a webcast. Then we might was an in person event.

Due to the format, we've streamlined the plan presentation today, but a long form slide deck has been posted to Adobe IR site that has all of the detailed information you're used to seeing.

Let's take a look at the agenda.

Shantanu will kick things off today by talking a bit about the quarter and fiscal year. We just completed and then moving over to Adobe vision and strategy for the future.

Our day will then talk about the company's vision from a technology land.

Scott will highlight our creative cloud strategy Anil.

Anil will go over our experience cloud strategy and Gloria will talk about our strategy related to our people as well as other adobe stakeholders.

Finally, John will provide a detailed financial summary, and share that with growth strategy and then we'll go to life today.

Before we get started as a reminder, some of the information will be providing today includes forward looking statements that are subject to risk and uncertainty.

Actual results may differ from these statements and we encourage you to review the risk factors in our SEC filings for more information.

Additionally, we'll be providing both GAAP and non-GAAP financial information.

Reconciliations between the two can be found on Adobe's Investor Relations website.

I will now pass it over to Adobe President and CEO Shantanu Bryan.

[noise]. Thank you Jonathan.

I'd also like to add my welcome.

Thank you for joining our annual financial analyst meeting.

Today's format is a little different than what we're used to.

But to make the most of this year's medium we use the time today to accomplish strategy business momentum as well as our financial performance.

We posted the complete deck similar to what we've done in prior years.

Rather than speak to every slide we lapped the management team shared day highlights in their areas.

And we've always save some time for Q any at the end of our presentations.

First and most importantly, I hope, you're all staying safe and healthy.

It's really tragic to see the recent spate of casualties.

But the progress in vaccines gives us all hope.

The worst will soon be behind us.

And clearly none of us could have predicted how everything would change overnight and the world as we know it would change so dramatically.

Digital is even more become the primary way for people to connect work non and be entertained.

This new reality has only increased the importance and relevance of our solutions and accelerated the tailwinds that benefit our business.

This combined with our business fundamentals on paralleled innovation and world class execution.

Continues to drive our girls.

Twentytwenty was another momentous year for Adobe.

And like all companies our primary focus has been to protect the health and safety of our employees.

And continue to serve our customers.

We took swift and decisive action to direct our employees to work from home suspend travel and cancel in person events.

And we focused on helping our customers make their own transition to digital overnight.

For example, we provision total <unk> million students with creative cloud so that they could create from home.

We implemented the government rapid response program to assist local governments.

With our on our heroes campaign, we galvanized our community to create artwork honoring the true heroes essential workers.

And we set the bar high for digital events with Adobe summit as well as Adobe Max in fact, Adobe Max gone to 21 million views.

We continue to harness the trillions of transactions followed by the Adobe experience cloud to provide a unique real time perspective on the economy would be Adobe digital economy index.

And we pioneered new areas such as the content authenticity initiative.

Which provides attribution functionality that create is getting attached to their work to create more transparency around how content has been posted an editor.

Our leadership extends to not only what we do but how we do it.

Now we're proud of the continued industry recognition that we received.

We continue to be a top riser on the Interbrand global best brands of the year for the fifth year in a row, what consistently named one of the best places to work.

By both for June and July store.

And in an area, that's becoming increasingly important to you as investors were a leader or whether it's in the Dow Jones sustainability index, all the Bloomberg equality index.

Whatever product company at our core.

It is our innovation engine that I'm, most proud off as we continue to fire on all cylinders.

With creative cloud, we continue to remain the clear leader in a category that's exploding.

We delivered significant product innovation that extended our applications to multiple surfaces.

We added greater collaboration capabilities to all of our leading applications.

And we continue to break ground.

In new categories, while improving engagement as well as customer satisfaction.

The document cloud continues to have huge demand in this digital environment with P.D.F. and Adobe sign all being mission critical across many businesses.

We delivered more capabilities of words as we refer to it across desktop web mobile and through a frictionless PDF services.

And with experience cloud, we continue to build out the worlds most comprehensive.

Customer experience management portfolio.

And the new capabilities in the Adobe experience platform have now been expanded to include real time customer profiles.

We delivered new services intelligence services to further the use of artificial intelligence and machine learning in organizations.

We delivered new solutions like customer journey analytics, which unifies cross channel data.

And I'm excited that we recently closed the acquisition of work from which is a leading wealth management solution for marketers.

On the financial side after crossing the $10 billion Mark in 2019, we haven't missed a beat and as you can see from our targets, we expect to exceed the $15 billion Mark in 2021.

And we're incredibly pleased to drive both top and bottom line growth, while generating cash and continuing to return to shareholders.

In fact in Twentytwenty, we achieved $12.87 billion in revenue, which represents 15% year over year growth.

In Q4, we surpassed $10 billion in digital media Air are which is a significant milestone for us as a company.

With a strong financial discipline that you've all been accustomed to we continue to generate impressive cash flows from operations and generated over $5 billion in fiscal 20.

And we continue to focus on earnings per share with the earnings per share on a non-GAAP basis of $10.10, which represents 28% year over year growth.

I truly believe that these financial accomplishments set us apart from all other software companies and the best is yet to come.

Adobe is mission is to change the world from digital experiences and it has never been more relevant as people seek new ways to communicate learn and conduct businesses virtually.

The benefits of our innovation help billions across the globe Andy.

And the EPS impact his experience across every aspect of society.

It motivates our employees to focus on having more impact.

And to invent the future.

When you think about the macro trends that we all experience every industry is experiencing a tectonic shift towards all things digital.

And I believe the day events of this year has only accelerated.

The Genie is not going to go back into the body and even regulated industries that have traditionally been slower to embrace digital has certainly picked up the pace this year.

We have industries like healthcare that are transforming whether it's through personalized medicine, tele health and new ways frankly to engage patients.

On the creative side it continues to be the Golden age of design and creativity and design continues to be a key competitive advantage because every one of their heart as a creator.

I want to express themselves across new devices with new modalities.

And creativity is so essential to how we connect how we cope and how we learn.

Education has also been re imagine.

Because digital is central to how students learn to day, whether it's through remote education as well as by unlocking new forms of creative storytelling.

And digital is also breaking long standard longstanding barriers to access to education, which is something great because it's making it more accessible.

The way, we work will never be the same again.

And it's great to see how the PC has experienced a tremendous revival as Dee computing works.

Documents are at the center of how work gets done paper to digital transformation is only accelerating and every business process is going digital because every business is now a digital business day.

Digital has become the primary way for all businesses to engage with their customers.

And it's true that customer expectations are also at an all time high because E. Commerce is exploding in fact, an annual holiday report that is powered by Adobe analytics predicts that online holiday spending will reach $189 billion, which represents 33% year over year.

Okay.

And underpinning all of this is a massive shift towards artificial intelligence and machine learning, which will only further these forces at play.

That's adobe our strategy is at the Nexus of this digital Revolution.

And through technology, we believe we are transforming work learn and play.

We are relentlessly focused on looking around the corner, how do we drive towards the next big market opportunity to solve customer pain points and anticipate day needs.

Weve pioneered and we're leading free massive growing categories creativity digital documents and customer experience management.

And we are relentless about expanding the customer segments, we serve adding more addressable market opportunity.

Because we want to empower everyone from the student to the small business owner to the largest enterprise in the world.

And I believe we win by creating path ranking technology platforms that will lead the industry for decades and today work across the entire computing paradigm from the largest clouds to the smallest devices and our belt with a service oriented architecture that also enables us to have new monetization.

Cash in models.

In fact, our three industry, leading cloud offerings are more mission critical than ever before across every geography and audience.

With creative cloud were unleashing creativity for all giving anyone everywhere the tools to express their creativity.

Document cloud, we're accelerating document productivity modernizing how people view share and engage with digital documents.

And with experience cloud Repowering digital businesses of all sizes, giving them everything that they need to design and deliver great customer experiences.

And underpinning all three clouds is the magic and power of Adobe Sensei, a significant differentiator for Adobe and an enabler to more rapid innovation.

As it relates to the creative business everywhere, we look whether it's entertainment education or the enterprise.

Content is fueling the digital economy.

And that's driving an explosion of creators tools and assets that all represent tailwinds for our business.

The reality is that creativity is for everyone from the student submitting their next school assignment to the creative professional making an AD.

Everybody has a story to tell.

And when you look at the categories, whether its web content, a mobile application creation imaging video animation screen design augmented reality, a our three D. They're all surging in this era of digital storytelling.

Creativity is essential because more than ever before this year has shown us the power of creativity in enabling people to express themselves to connect and to cope.

We believe that creativity is one of the fundamental skills in the 21st century, and as machines get faster and smarter skills that are uniquely human like creativity will become increasingly more essential.

Creativity is also now multi player.

Whatever your skill level today is creative process is becoming more it riddle and collaborative.

And all creative professionals must manage these multiple work streams across increasingly remote and dispersed teams requiring seamless cloud based enable collaboration and workflows that drive those productivity.

Social communities like be hands that we have in life tutorials are also providing new ways to learn and to be inspired.

For us Adobe creative cloud vision is to be the one stop shop from inspiration to monetization.

You will hear from Scott later, but let me expand a little bit on our strategy.

First we want to advanced every creative category and were create category leader in core creative categories, including photography design video illustration and lay out.

And we're expanding our leadership in new and emerging categories, including screen design and the most amazing media like three D. VR and they are.

And what the strategy has enabled us to do is to acquire new creators through single App offerings, and then demonstrate the benefits of the entire creative cloud offering overtime.

We're focused on building multi surface systems building.

Building solutions for every surface and system, because we want to enable anybody to create wherever and whenever inspiration strikes.

We truly believe that these devices are not just consumption devices anymore, but every device should also be a creation device.

We're focused on adding collaboration services because we can ensure that content can be seamlessly managed in the cloud and access from any device.

And what this enables us to do on the business side is to increase engagement, but also to acquire new stakeholders and expand our customer base with these new monetization opportunities.

We want to engage and inspire the community and our vibrant communities, which are a critical driver of both acquisition and engagement.

Our succeeding in fact, we've grown to over 25 million members on be hands, which represents a huge opportunity for their upsells into the broader creative cloud ecosystem.

And programs like Adobe life enable us to provide forums for creatives and to promote active use and learning.

We've always maintained that retention is the new growth and that is more relevant than ever before as weve crossed $10 billion in digital media annualized recurring revenue from our current subscribers.

At the end of the day, we are focused on democratizing creativity, enabling anyone from a student to a social media influencer from of professional photographer filmmaker and design designer to express their creativity.

And we delivered a new applications like Photoshop and illustrator on tablets consumer apps like Photoshop camera and easy to use storytelling apps like Premier Rush, and spark, which are all attracting new users and expanding our base.

But in addition to this tremendous product innovation.

We have a data driven operating model, which is enabling our ability to capture this expansive opportunity.

Because we have a tremendously sophisticated understanding of our customer and we're able to serve up personalized experiences and offers at every part of this digital funnel and journey.

And what this enables us to do is unlocked engagement as well as provides us with new upsell opportunities.

And when you put this all together mapping the products and services that we are targeting across these expansive segments and adjusting for factors like non genuine usage. The creative cloud total addressable market is projected to be approximately $41 billion in 2023.

[music].

$20 billion of that addressable market is coming from creative pros, which includes creative cloud apps and new services like Adobe stock.

$21 billion of the addressable market opportunities coming from the broader communicator and consumer segments, which includes products like spark and Premier rush as well as the non pro users of creative cloud as well as stock.

And our aspiration to unleash creativity will continue to be this north star that we will execute against for many years to come.

Among the key growth drivers that I'd like to highlight for this business include the ability to acquire new customers through category single applications for screen design video and three D.

Using mobile increasingly as a funnel through the creation of mobile ideas through mobile monetization services as well as upselling to the multi surface systems and new services, such as Adobe stock as well as continued global acquisition and expansion.

Turning to our second growth opportunity.

It's clear and obvious the digital documents on our mission critical empowering the modern business.

We have seen this massive acceleration as businesses all shifted to remote work overnight.

The truth is that artificial intelligence and machine learning.

The cloud and mobile.

Our old redefining the notion of productivity.

It's reshaping how we work, it's enabling greater flexibility and it's requiring more collaboration across global dispersed teams.

And artificial intelligence is only amplifying this productivity.

We're seeing a massive adoption of paper to digital processes and workflows.

And the paper based assets of the past are all now being moved digital.

And the other aspect that's happening or the cloud ecosystems are driving a new business opportunity, what we call. The EPA economy, which is revolutionizing how apps and services are both being built as well as being monetized.

What drives this is the fact that PDF continues to be the lingua franca for how things happen on the Internet.

We have over 2 billion mobile and desktop devices, they've had reader or acrobat installed.

In fact, we have 300 billion P.D. EPS there are open and document cloud applications over the last 12 months.

And so strategically as we think about the opportunity. The first is to expand what we call our sensei power acrobat worms, and it's to enable all document actions editing sharing scanning and signing.

It's to unlock the value that exists in trillions of P.D. EPS that have been created by decide free these unstructured P.D., EPS and making them truly responsive on mobile devices.

In fact, one of the innovations were particularly proud off its core liquid mode in the acrobat reader, which both deciphered and automatically reformats text images and tables for quick navigation and consumption and it's powered by Adobe Sensei.

We think nouvel mobile fuels this new business opportunity because PD of usage has absolutely exploded across mobile devices.

Making this acrobat experience more frictionless across mobile and web is truly leveraging the ubiquitous PDF format that we have and we're expanding both the free and they mobile customer base.

We're also increasingly capturing the PDF demand with acrobat web.

Because what we are doing is converting the massive demand for PDF web such as create and edit through search through our frictionless services.

With every business going digital the third aspect of the strategy is to enable the paper to digital transformation through.

Through services that we have like acrobat and Adobe sign but also to leverage what we deliver through the Adobe experience platform and the Adobe experience manager as well as Adobe experience manager for EPS.

And we want to unleash an entirely new PDF ecosystem with document services, which provides HP eyes to third party developers and they will then find new and exciting ways to use PDF and we will be able to monetize those services. So let me expand on just a few of these opportunities.

There are about 50 million searches for PDF actions every month.

And what we want to enable us to a single click best in class web experience deliver quick access to actions or the customer wants and allow them to deliver and discover a more comprehensive set of acrobat offerings.

This is similar to what we've done with the successful reader upsell motion, which is to drive engagement around PDF to enable people to complete their tasks and then upsell people from the free product to acrobat subscriptions.

The other aspect of our document cloud strategy is to deliver a unified document cloud platform. This.

This includes acrobat am forms and Adobe sign which are central to the way work is getting done today how.

And we have a tremendous go to market advantage because of the sophistication of our data driven operating model that gives us a really incredible understanding of our customers.

How to reach them how to serve them effectively and we have the ability to truly optimize everything on the follow from acquisition all the way through retention.

We're continuing to expand the.

The size and scale and reach into fast growing new verticals with significant go to market partnerships, including with Microsoft work Day service now and no price.

And we will continue to invest in the brand equity associated with P.D.S. as.

As the lingua franca of the Internet.

We're incredibly excited about the second growth pillar the document cloud strategy and the broader addressable market that it represents and we expect the addressable market to grow to $21 billion in 2023.

We're benefiting from the move to Scott subscriptions were benefiting from visitor acquisition, we're benefiting from mobile.

And the Pdm mobile opportunity itself represents approximately $11 billion of this addressable mark.

And on the document services platform, we're driving growth with electronic signatures and new embedded services, which we believe represents $10 billion in addressable opportunity.

Our third growth initiative is all about customer experience management and we continue to believe that it represents a massive opportunity with the acceleration that we all see and digital transformation.

Because the reality is that today every business as a digital business and the imperative for digital customer engagement has never been greater.

Every business has to understand their customers and deliver personalized experiences.

Because all of assets consumers, we buy experiences not just products.

The reality today is that customers are expecting this engaged personalized digital experience and we won these interactions to free easy and efficient.

They need to be well design, they need to be context aware and they need to be seamless across channels and secure and deliver that the exact micro second at which we expected.

And delivering a next generation platform to deliver and drive this experience is easier said than done because it requires businesses to completely Murray content data and artificial intelligence to deliver this compelling relevant personalized experience in real time.

And the truth is that companies must design for this brilliance, but wire for intelligence.

Adobe created the digital marketing category and we are now the leader in a much broader opportunity the customer experience management category.

Our strategy is to deliver.

Comprehensive set of applications and services group in solution areas, such as content and commerce customer journey management customer data and insights and now with the closing of our work from an acquisition work management and Anita Chakrabarti, we'll spend a little bit more time talking about our strategy.

The second aspect is to deliver this next generation technology platform.

Adobe experience platform, which provides the underlying infrastructure to make see XM or reality and is years ahead of anything that any competitor has provided.

Because it truly brings together hundreds of data points to create this unified customer profile that companies can activate to deliver the personalized experience at scale.

Our vision is also to deliver an industry, leading marketing system of record.

With the work front acquisition now being closed we have the leading wealth management product from marketers.

And why unlike most companies most of our growth is organic we do use inorganic opportunities strategically and we have an incredibly successful track record of acquiring growing and scaling these companies.

We have a long standing set of partners and an ecosystem with work front with over a thousand drawing customers.

And work front is already equipped with Npis for not just experience cloud, but also creative cloud, which represents opportunities to further leverage and deliver synergies across our businesses.

One of the key assets that we have is the ability to deliver a scale go to market cap.

Cutting across the entire C suite, given the affinity that both customer Ceos and Cmos have for Adobe.

Because all businesses are now working to re architect their systems around the customer which requires this strong partnership between the Chief marketing officer, and the Chief Information Officer.

And this enables us to scale our go to market across the entire C suite, which is driving higher value contracts as well as services.

We continue to have an exclusive partner ecosystem.

That believes in our vision and is delivering unique expertise to our joint customers.

Our total addressable market when we think about it for the Adobe experience cloud is estimated to be approximately $85 billion in 2023 and.

And that's comprised of customer data and insights, which continues to be a huge opportunity because intelligence is increasingly the life blood of every organization. So this represents an approximately $26 billion addressable opportunity.

The explosion of content and Commerce square, where the absolute leader is driving a 44 billion dollar opportunity.

And customer journey management, which includes products like campaign, and email marketing as well as be to be marketing and demand generation, which includes account based marketing and lead management is expected to be a 15 billion dollar opportunity.

As we said before these are large and growing categories, which are top of mind for every business.

To summarize we believe that we have the right strategy.

That's being applied to an exceptional opportunity that.

That is approximately $147 billion in 2023.

We have a proven capability to both create and continuously lead these categories.

Thinking bigger.

About our businesses and the customers that we serve.

From consumers and students to communicators and the creative.

Professionals and the entire C suite.

We have leading products services and platforms to unleash creativity accelerate document productivity into power digital businesses.

Our secret sauce.

Is the over 20000 talented employees that we have that her old rallied around our mission and the impact that they can have.

We have a revered Brad.

All across the globe.

We are world class financial discipline that's.

Thats driving both top and bottom line growth with an impressive margin.

This is truly an expansive opportunity and we're well positioned to capture it.

I certainly believe that Adobe is best days are ahead of us we.

We expect to cross $15 billion in revenue next year.

We have a huge addressable market index.

Industry, leading applications services and platform and an unparalleled innovation engine.

Let me just quickly turn from some growth drivers that we believe will continue to propel this momentum on the creative cloud. In addition to our leading applications across every category mobile as a funnel as well as our product monetization opportunity is huge services such as stock are becoming meaningful parts of the.

Our our growth new categories like video web services, as well as three d. or not.

On the document cloud side.

The continued adoption of web based PDF services mobile based video services and acrobat subscriptions the ability to deliver adobe sign to target, both the small and medium business as well as the larger enterprise through both seat expansion as well as through document workflows.

From the experience cloud continuing to deliver.

This next generation technology platform, delivering sensei intelligence services.

The ability to leverage our partner ecosystem and to cross and up sell in both mid market and commercial as well as to drive new logo growth and to continue to make sure that we deliver value drive customer success and maintain retention.

And now what I'd like to do is to have other partners, both our CTO as well as somebody who has recently taken on responsibility as chief product officer for document cloud to talk about our technology vision of that.

[noise]. Thank channel good morning, everyone. It's.

It's great to talk to all of you again.

So I'm going to talk about the broader opportunity and strategic imperative for Adobe.

I would like to think makes a minute to talk about our technology vision and share my excitement from the road ahead.

Being a product company at our core we have always taken a long term view of building deep technology platforms that are highly defensible and drive industry breakthroughs.

With everything going on this year, I'm, especially proud of the sheer breadth and depth of innovations our theme from delivered.

Illustrator on ipod and noodle filters in Photoshop liquid mode, and I go back to where bin document cloud.

And am cloud and Realtimes CDP inexperience CLO are just a few examples of innovations we have delivered.

And this incredible pace of innovation is only exceeded by the massive scale at which we operate today.

With trillions of Activations, so from experience cloud to hundreds of millions of mobile app downloads and more than 2 billion devices running leader and acrobat software today.

Truly have unmatched scale from cloud to the edge.

Now a key aspect of our technology strategy is to develop the consistent architectural viewpoint across all of our products.

We think of this unified architecture at three levels.

Multi service experiences for our apps.

And rich portfolio of services any pie.

And our sensei AI stack built on shared content and data platforms.

Everything we do across our three clouds is guided by this unified technology vision and gives us a significant strategic advantage.

Increasingly we are thinking we on the screen that silos to delivering new modalities and fluid multi surface experiences across desktop mobile and web.

For example in creative cloud, we are adding modern web and collaboration technologies to core imaging and video workflows in applications like Photoshop and premier evolving them into complete creative systems.

Similarly in document cloud we are taking the best in class media from times on Pcs, and bringing them to both web and mobile platforms for a consistent multi surface be they have experience.

And an experience cloud we are uniquely focused on a new kind of customer experience.

One that's a real time and hyper personalized across every single touch point.

And the service is clear we are not only building increasingly rich portfolio services, but we are focused on free crosscutting teams.

First we had a meeting collaboration deeply at the core of all of our applications.

Converting or best in class single user up like Photoshop or acrobat to multi user collaborative solutions.

And because we uniquely understandable to find sites and workflows, we can enable a much richer contextual collaboration for users as opposed to a generic financing our communication platform.

Second.

Using the shared content and data platforms, we are enabling unique cross cloud use cases.

Moving from creators to knowledge workers to marketers.

This is something that only adobe can deliver.

Lastly, we are increasingly focused on the economy opportunity by exposing over services. We are open npis to developers and I always in the ecosystem.

You will see us aggressively focused on this new wetter.

Last but not the least I've talked to all of you about Adobe Sensei, our generational bet on AI.

Since he is already having a profound impact with our teams delivering hundreds of sensei board features across our three clouds.

We started sensei with AI freighters delivered within existing apps.

But by leveraging our unique understanding of our users workflows and usage patterns. We have built a special licensing platform. One that is focused on creativity documents and customer experience domains.

With this platform in place we are now positioned to push the limits with a completely new kinds of the iPhone stops.

Liquid mode in document cloud is one great example of this.

This was a multiyear journey and the required us to solve some unique and heart problems.

Using the latest techniques in AI and machine learning and computer vision.

We train centseight to deeply understand the trillions of mediums that exists in the world.

And then using that intelligence, we are able to generate structure, although unstuck certainly is that across the world.

Initially we are using this to create a delightful experience on mobile devices.

But the possibilities ahead are truly exciting.

With document installations breakthroughs in areas like semantic understanding our documents summarisation.

And like liquid mode in dark cloud. We're also working on unique sensei suddenly says look relative intelligence and experience in diligence.

Since they they key R&D priority with long term strategic advantage.

One that living has been truly differentiated capabilities and delight customers with sensei forward Adobe Magic.

As our customers rely on Adobe for ever more mission critical needs. We are laser focused on engineering excellence.

And getting the basics right every single day.

We are one of the force SaaS companies that has built a multi cloud foundation, enabling us to deliver across various public private and hybrid cloud environments.

And doing so with higher levels of operational excellence as well as cost efficacy.

Also with Adobe common can force framework, we are able to meet.

Enterprise expectations for security compliance and privacy requirements as well as global regulatory landscape.

Lastly, we continue to play a part leadership role in the industry with various standard than other efforts like our content authenticity initiative and open day initiative.

In closing.

The Fortunately I had follow me is truly exciting.

From future on creativity to re imagining documents.

Two important are you completely de why are the customer experience.

We have a world class engineering team with a deep culture of innovation and investment in foundational technology platforms that enable us to deliver with speed and scale.

I've never been more confident about Adobe technology agenda, and I'm Super excited about our ability to go invent the future.

Now, let me hand over to Scott Belsky, Chief product officer for creative cloud to talk about creative cloud strategy over to Scott.

[noise], saying saw there so well I've outlined in more details of our creative cloud strategy and is that I'm excited to share a quick summary, right now big picture, we're seeing tremendous growth momentum and creative cloud.

Because creativity has never been more important than it is now resolved. This at our most recent Max conference, which has become a premier global creativity conference non blew away all previous records with over 21 million views worldwide why its creativity. So critical right now well for starters, everyone wants to send out at work at school.

Cool on social and even in their family projects and creatively creative expression is how they do it within the enterprise companies more and more recognize the creativity is this competitive advantage and employees want to stand out whether it is with their presentations highly visualize data will become more active stakeholders in their own profit.

Good marketing experiences.

In the workplace or the future creativity is how people will thrive and frankly keep their jobs as AI takes over more and more of these productivity focus roles.

Ill address all of these shifts are callable the role of creativity and create a tremendous opportunity for creative cloud enter responsibility for us to evolve our offerings to meet the needs of new creators. So let's take a look at the five pillars of our strategy for creative cloud from.

First we are innovating to advance every creative category, our professional customers want to push the boundaries of their fields and achieved more in less time, one way. We are enabling this is through Adobe sensei, which I already talked about artificial intelligence anger in Photoshop for instance, we recently launched neuro filter.

There's a new platform powered by sensei that allows customers to make sweeping changes with just a scroll. The slider. These neuro filters are truly magical you can turn night in today and literally turn a frown into a smile and neuro filters are just one example of our sensei powered breakthroughs at Max we launched dozens of.

New sensei features across our creative categories, and we're helping customers explore new mediums like three day and immersive with tools, such as substitutes dimension and arrow depends.

Dependent because force many teams to turn a threed tools as they can render image or video rather than have an in person shoot one. Great example, is Ben and Jerry's, who levered, our free and immersive products to execute a critical campaign about getting ice cream delivered during the pandemic. They found what many companies are finding that threed rendered images.

Sales are indistinguishable from traditional photos and they're far more efficient and actually less expensive to produce so we expect a surging interest and not be able to continue especially as new mediums like augmented reality go mainstream these innovations are value for creative professionals and help ensure the creative cloud remains large.

Michael choice for modern team struggling with content velocity, our way of talking about the you know insatiable need from work formats and work platforms and just more content more personalize every day and we're committed to extending their creativity in new directions.

The next pillar of our strategy for creative cloud is the continued transformation of our category leading products to become cloud based multi surface systems creativity is no longer confined to the desktop and we made a lot of progress in extending our flagship products across more services over the last year, we brought photos.

GAAP and illustrator the ipod and we launched Adobe fresco the industry's most powerful drawing and painting out on windows and Apple tablets last year and brought into the phone this year customers tell us that the portability of our products unlocks huge advantages.

Designers for scenarios Japanese theme parks for instance use illustrated on the Ipi the sketch out new features or they're actually inside the park. It really works and see how the design, we actually sit in in person in place. So here's what we've learned from this evolution from parts and service from Multisystem Multisystem platform expansion, we know that cash.

Customers, who use our products across multiple devices have higher satisfaction and better retention and we know that offering a more modern interface on mobile devices is inviting from new customers and isn't a standard way to bring new customers into the creative cloud from the mobile App stores.

So we're continuing to extend our applications on the new surfaces, including the web which will engage an even broader set of customers and unlock another level of possibility for creative cloud.

Another major part of our strategy is the development and seamless integration of powerful services that enable collaboration no doubt we entered a new era of creativity that is deeply deeply collaborative the next generation of our customers grew up in the age of Google Docs, They expect everything to be collaborative by default.

And we have enabled us through our investments in creative cloud services over the last few years, we launched creative cloud libraries, which helps teams share cradle ingredients from funds from colors to doctors and images, we rolled out cloud documents, which allows customers to easily share their work with collaborators and stakeholders, our services like stock and flow.

Non integrated at the point of need within our products. We're ensuring that teams are all of the condor they need to start a project without ever leaving creative cloud free.

Finally, we're making it much easier for stakeholders to review and share comments directly in our desktop products. All of these collaborative features make creative cloud the single source of truth for creative assets, ensuring greater lifetime value. These services also unlock new business opportunities and expand our footprint.

Bryan gauging stakeholders beyond the traditional creative team whether it be for review purposes, Copywriting are leveraging template for social media marketing.

Another area of focus is engagement and community inspiration, we're bringing many kinds of new customers and to creative cloud. These days, but to keep them. We have to ensure that they are engaged and they're learning new skills and that they're continuously inspire to try new tools and techniques, we're improving engagement.

Re imagining the new user journey from.

Providing a more personalized experience for every customer is infused with community and educational content and we become very very data driven as we optimize these flows were providing many more ways for people to learn new skills traffic to Adobe lives are rich offering of livestream I'd, hence members using our products into.

Torrijos has doubled this year and we have doubled our content in response and the engagement with these live streams is truly remarkable over the last year. The average watch time is more than an hour and 20 minutes.

We have also enabled live streaming and our iPad apps, but any customer can easily go live from within the product and share the U.R.L. on social networks, others can click the link and learn by looking over the shoulder of an experience creator and download the app to give it a try as well.

And we personalized learning experiences within our products and then moving personalize the battery, we each customer exactly where they are.

And because of the greatest and because of the great inspiration of course comes from seeing what others are creating we're doing more to convene a global community of Creatives, we built a new community set of features and products like lightroom and be hence our global creative community near and Dear to my heart as growth of 25 million members with over 1 million people visiting the site every single day.

All of these efforts not only grow the top of the funnel, but also make it more likely that these new customers will be successful inspired and engaged.

Finally, let's talk about an advertising creativity with certain mentioned in the beginning we want to empower the world to create with a new generation of web and mobile products that are freemium and easy to use and that leverage Adobes core technology.

Anyone searches the web editor photo or make a flyer, we will present easy to use web apps that help from complete their project and encourage them to go further to take it to the next level, our mobile photo shop Express Premier Rush in Adobe Spark empower every day consumers to create content.

As it stands out on social media in the year ahead, we're bringing these products closer together to enable customers to work across them and to extend their work to the web and we're doing this in a way only adobe can we're bringing powerful time saving features many powered by sensei to these mobile and web apps we're off.

Also prioritizing interoperability with the rest of creative cloud so that more casual creators can work together with creative professionals and so that they can take their work to the next level and apps like Photoshop illustrator when they're ready to do so from.

I'm excited to share more on these are price investments in the euro had so to sum it up our view of our market is expanding to 41 billion in town in 2023, because the importance of creativity is growth das and the number of creators worldwide is exploding our work over the next few years will ensure that.

Creative cloud stays at the cutting edge of creativity, and new mediums that it supports the growth of collaborative creativity and net at welcomes new generations of creators with a new generation of tools and with the learning inspiration and community that will keep people engaged and successful.

Thank you and now I will turn it over to my colleague and Neil who oversees the digital experience business to talk about experienced club Neil.

[noise] also responsible for our worldwide field organization.

I want to give you some context and color on the experience cloud strategy that Shantanu outlay, you should have the full presentation that we have provided.

In the first half from 2020, when covert hit we saw businesses focus on that employee safety and wellbeing and ensuring business continuity.

We pivoted and work with our customers to navigate the new normal.

In the second half, we saw businesses doubling down on customer experience management in response to hide from customer expectations.

Customers are visiting force now and from every business, they expect engaging and personalized experiences and this has put more pressure than ever on businesses to accelerate their digital engagement.

It is also accentuated how hard it is for businesses together, what a great experience to their customers across all touch points.

In the current environment, there has been no small feat.

Businesses need to account for the external factors like privacy regulations, and data sovereignty and master internal challenges like fragmented customer data and manual inefficient processes.

So it's become clear that companies need in next generation technology platform for customer experience management.

This has created a massive 85 billion dollar market opportunity for C. XM and Adobe is uniquely positioned to address this.

Our mission is more relevant than ever and our strategy of powering digital businesses is resonating with branch across industries and around the world.

So we saw that in spades in 2020, 93% of our top line growth customers have three or more experience cloud solutions and our average day all in all with them has grown to $8 million nearly three times what it was in 2015.

Let me highlight one of those customers top customers horizon.

Over the last five years, Verizon has standardized on the Adobe foresee XM across their consumer business and media groups.

The Adobe experience platform provides real time responses in 250 milliseconds of cloud scale across billions of profiles, but.

Ryzen is leveraging ATP to deliver personalized communications optimize customer journeys increased conversions and create customer loyalty.

As a result, our a. all at all from the rise of has grown 700% over the last five years.

This is a great example of the growth trends, we see across our customer base.

Turning to our strategy for experience cloud.

It's based on Adobe his own successful transformation journey.

We've taken the principals and insights from our day to day, one operating model and created a customized simple playbook that any customer can use to power their digital business with next generation customer experience management.

We have five pillars in our strategy as.

Shantanu outlay.

First it's a comprehensive set of applications and services for customer data and insights content and commerce and customer journey management.

Now these apps and services are delivered on an integrated Adobe experience platform.

A P. The nexgen platform to deliver real time personalization at scale with nearly 17 trillion segment devaluations per day.

Leveraging first party data cloud.

Cloud scale power better be sensei, and extended by an open ecosystem of partners and developers.

Now we do the hard work of delivering the best of both worlds to our customers comprehensive apps and services integrated onto a common cloud scale platform.

I've been in the world of data for a long time now and it's clear to me that HCP is years ahead of our competitors in capabilities and production deployments.

Third we are excited about our recent acquisition of work from.

Well, great feedback from customers and partners.

We're laying a strong foundation for a marketing system of record that'll enable our customers to have greater efficiency and agility in executing their campaigns.

Moving to optimize their campaigns with real time insight.

For part of our strategy there been a trusted partner to CMO growth since we created the digital marketing category and our adjusted partners to see iOS as well I.

Oh in mid 2020, we combined our worldwide field operations and digital experience into a single organization that I lead and that has enabled us to scale. Our go to market to address the needs of enterprises from mid market customers to the largest brands in the world.

Finally, we work really closely with our global ecosystem of over 2800, S. size and technology partners to drive business value and sustained growth.

So in closing I'm incredibly excited about the opportunities ahead of US experience cloud is a growth business and we will combine our go to market and product organization to be well positioned to fire on all cylinders.

When you look at our products our platform, our innovation power, but it'll be sensei, a customer relationships or Brad and the investments we are making.

Adobe is the clear leader in customer experience management and we're in the best position to help businesses deliver personalized engaging digital experiences to all of their customers.

Thank you and I'll, let me bring up our Chief people Officer Maria Chen.

[noise], thanks to now and Hello, everyone.

A year ago as Chief strategy Officer, I spoke to you about Adobe is growth story, our total addressable market and the tremendous opportunities across our business.

As you've heard today, our strategy is more expensive than ever and I'm confident in our ability to succeed because of our proven track record of channel transformation.

One thing I've seen firsthand multiple times in my 20 plus years at the company.

And I believe our secret sauce has been a combination of a winning strategy great people and an exceptional purpose driven culture.

Mike did it from corporate strategy to employee strategy earlier this year with a natural move.

People are our greatest assets and as Chief people officer, I'm excited to be carrying the torch for our values our history of progressive people standard benefits in programs and our commitment to the growth and development of over 22000 employees around the world now, including Brooklyn, who joined US earlier this week.

Increasingly companies are viewed by employees customers and stakeholders as an extension of their identity values in community.

In 2020, our core values were on full display seen genuine exceptional innovative and involved.

As we responded to cool that we put the health and safety of our people first.

We increased communication will that work from home benefits encourage scheduling flexibility.

We took care of our community.

Lighting customers with flexibility and students with free creative cloud licenses.

And our employees really stepped up this year with 70% engaging in volunteerism online.

Our employees have responded with gratitude and pride in our approach and are more engaged in productive than ever.

As a people centric company, we always focused on fostering an inclusive culture, what we call Adobe from because we believe that when employees can either authentic south they do their best work and when we have diverse teams were more innovative and reflective of the customers we serve.

From place to fuel supply day in and outside of work, we invest in learning and development programs community networks and family friendly benefits.

We are a leader in pay parody accounts gender and ethnicity anyway.

We examine opportunity parity for fairness in promotion and horizontal movement.

We're building current and future talent pipeline investing in young artists in underserved communities University partnerships and mid career re skilling and apprenticeship.

This year's event made it clear.

Well, we've made progress there's more that we can do.

As a company we're about action not worried.

Together with our Black simply network, we've launched the taking action initiatives focused on community advocacy and growth.

And during our global Adobe for all week, we outlined aspirational goals to increase representation.

Across our recruiting and development programs, our campaign celebrating winning in black creators and our efforts to ensure that our products are inclusive we are driving change align to our core values.

Another topic Thats been top of mind for everyone is the future of work after the pandemic. So let's talk briefly about that.

This year, we learned that there's so much that we're able to do effectively while we bring them home.

Steve lunch he products produced global customer events and Onboarded hundreds of interest in employees around the world.

Digital transformation is here and will continue to reimagine customer and employee experience as a company.

At the same time, we continue to believe that in real life experiences are critical to nurturing culture interest learning and development and innovation.

Each team will need to strike the right balance for them, but in general we won't be giving most employees the flexibility to work from home part of the time and making this the default as opposed to the exception.

As for fully remote workers. This is something we already have today, especially among sales and consulting staff.

Broadly expanding remote where it is a significant decision that is not just about individual preference, but also has implications for collaboration cohesion and culture.

We have more to learn here and so we'll be starting like updating our criteria for remote work in the coming Mike and integrating thoughtfully as we always do.

This is clearly a journey when that we expect will continue to evolve.

As I reflect on the year, it's been a privilege for me to contribute to Adobe in his new capacity.

I am pleased to achieve this record year see their dedication camaraderie and resilience.

2020 has shown that the power of the Adobe is values in action and I'm confident that Adobe is best days are ahead of us.

And now I'd like to turn it over to our CFO John Murphy.

[noise] Thanks Gloria.

This wasn't sure. This morning, it's clear there are tremendous opportunities for Adobe.

Now I'd like to give you a view of our business momentum and how we drive our growth going forward.

Today's presentation will cover both Q4 and fiscal year 2020 results.

Before we jump into the numbers in Q4, we made a change to our segment reported to align with the way we manage our digital experience business in light of the advertising cloud shift we made earlier this year.

We created a new segment called publishing advertising, combining advertising club with existing publishing segment.

As a result of this change our digital experience subscription book of business now aligned exactly to the components that make up our digital experience subscription revenue and it's great to have those aligned as that's where we're strategically driving segment growth.

Most important change is reflected in the numbers, we will show for Q4, and a flow 20, and Weve revised our financial information from appointing to present day to maintain comparability.

Now, let's turn to our Q4 performance.

[noise] Adobe achieved record revenue of 3.42 billion, which represents 14% year over year growth.

GAAP diluted earnings per share in Q4 was $4 and 64 sales and non-GAAP diluted earnings per share was $2.81.

Business and financial highlights from Q4 include digital media revenue of 2.5 billion, which represents 20% year over year growth.

Record net new digital media ARR of 548 million.

Digital experience revenue of 819 million, which represents 10% year over year growth.

Digital experience subscription revenue grew 14% year over year.

We had record cash flow from operations of 1.78 billion and we exited with remaining performance obligation or RPM growth of 11.34 billion.

And we repurchased 1.6 million shares of our stock during the quarter.

Overall this is a really strong performance in Q4.

Now for some Q4 financial highlights and growth drivers for each of our strategic businesses.

In Q4, Adobe achieved 2.08 billion in creative revenue, representing 20% year over year growth.

And added 425 million of net new creative they are.

We exited the year with $8.72 billion and creative ARR, which was also 20% growth year over year.

Created a our growth drivers include acquisition of new users across all geographies and segments single App and Cc complete subscriptions and strong performance in the imaging video and star categories.

Adobe document cloud achieved $411 million in Q4 revenue growing 21% year over year.

We added a record 123 million of document cloud ARR in the quarter and document cloud EHR, our eggs and leader was 1.46 billion growing 35% year over year.

Document cloud ARR growth drivers include strong demand for acrobat subscriptions as well as demand coming through the reader funnel and on mobile and the significant momentum inside.

In Q4, we also benefited from greater than expected perpetual revenue in our document cloud offerings.

Digital experiences from southern revenue of 819 million in Q4, representing 10% year over year growth and subscription revenue of 696 million, representing 14% year over year growth.

The growth I was her experience cloud in Q4 included it accelerating adoption of Adobe experience plus platform an AP services.

Non sense and Thomas momentum, particularly with our HCM cloud service offering.

And continued recovery in the mid market segment as well as success signing up deals of greater than $1 million in annual deal value.

For the full 2020 fiscal year Adobe achieved record revenue of 12.87 billion, which represents 15% year over year growth GAAP.

GAAP EPS for the year was $10.83 and non-GAAP EPS was $10.10.

Contributing to our strong execution enough why 20 was digital media segment revenue of 9.23 billion, representing 20% year over year growth.

Creative revenue of 7.74 billion, representing 19% year over year growth Adobe.

Adobe document cloud revenue of 1.5 billion, representing 22% year over year growth.

Moving here with $10.18 billion of digital media. They are an annual increase of 1.85 billion.

Digital experience segment revenue of 3.13 billion falling to segment reporting change representing 12% year over year growth.

Digital experience subscription revenue of 2.66 billion represents 17% year over year growth.

We generated 5.73 billion in operating cash flows during the year and we grew our PEO by 1.52 billion and returned 3 billion in cash flow stockholders to our stock repurchase program.

Next let me provide more information around our strategic cloud businesses.

Well begin with our digital media segment, starting with creative cloud.

We've highlighted a number of areas, where we drove tremendous momentum and the creative business. We continue attracting new customers with approximately 75% of our subscribers and fiscal 2020, the newswire creative cloud franchise.

Over 45 million students have access to the sport nearly doubling since last year, showing how we're developing creative skills from the next generation.

Mobile continues to be an important follow for us with over $300 million mobilize these creative cumulatively and over 80% year over year growth in mobile units as mobile monetization has become an important driver of area for our growth.

Premiere Pro Adobe stock service growth and new media types or important customer acquisition vehicle for us.

Turning to revenue and air are we've seen another record year with our creative cloud.

The creative cloud.

[noise] simple the creative cloud users, an incredibly healthy business and scale with sustained revenue growth over the last several years, we continue to see significant user acquisition across creative professionals communicators.

And consumers and revenue growth from services, such as Adobe stock continues to be strong.

He creative growth drivers exiting fiscal play 20 include new user growth fueled by organic traffic with remains elevated as well as targeted campaigns and promotions.

Demand for single assets, particularly our video and photography offerings strong attention engagements, which held a pre coated levels exiting the year.

Expansion into emerging markets.

The gradual recovery in the SMB segment, driving demand for a team offering including from the reseller channel and instill utilities with educational institutions.

This is such a great slide because it shows the mix of our creative revenue and EPS, why 2017, and free 2020 today over 97% of our creative revenue and subscription based revenue, while the business sales girl, 85%.

Much of our success here comes from a deep understanding of our customers, which continues to drive high retention for us as Scott has already shared its growth is also driven by our vast innovation engine across products and services as we expand into new markets.

When you look at the big at the make up of there are a.

The majority of the revenue continues to come from all absent descriptions across individual seen an enterprise.

While growing portion comes from single App subscriptions, consistent with our strategy of expanding our market opportunity as we attract new users in the consumer and communicate or categories.

With most comprehensive set of creative offerings against every design category and service, we're using single out from mobile as a proven on ramp from new subscribers. While we continue to grow our all EPS business across all segments and as an upsell opportunity for single out a mobile users.

The strength of creative cloud is derived from our diversified and resilient business with offerings tailored for everyone from individuals to small businesses education and enterprises.

We also have a deep understanding of how our customers one engaged with us and you can see here the slight mix shift towards individual offerings to Adobe Dot com, while we continue to grow our team an easier way offerings.

Let's now move on to document cloud.

This business is thriving and has continued significantly to control contributed significantly to the company's success. This year with over 70% of our channel units now being subscriptions and over 75% of subscribers in fiscal 2020 be news to the acrobat franchise.

With the creative business, our mobile strategy is driving Adobe I'd creation at the top of the funnel.

While mobile monetization is contributing to our growth.

Our focus on acquiring new customers, coupled with our shift from perpetual base to subscriptions is working the.

The document cloud strategy on accelerating die from productivity going from paper to digital is really resonating in the remote work environment.

He's already signed business has seen a growth influx from this year as our consultants Watson played before the pandemic head and when do you expect this trend to continue as a flight 21, if I play from one.

As Lora, Sharon, we envision businesses with people working in flexible ways things went out to fall back to the way were.

Tomorrow Sharpens phrase the June will not go back in the bottle.

There's just some explosive opportunity for new user growth as we continue to capitalize on work from home or flexible work.

We have multiple growth initiatives, including web based PDF sign as a service and the Apiay economy. The U.S this business more legs.

Turning to revenue and they are.

Document cloud is another adobe business that is powered past the billion dollar Mark approaching 1.5 billion in both revenue and they are our adjusted tremendous opportunity ahead for us the key document cloud growth drivers exiting fiscal 2020 include news or acquisition of acrobat subscriptions across all customer segments.

Monetization of our leader install base on mobile demand for our subscription offerings across all geos and enterprise adoption, including strength in Adobe sign.

Tomorrow, we also offer acrobat and PDF services through Cc individually all of subscriptions, which was another driver of growth in this business.

There are even see the phenomenal growth were driven on subscriptions.

While the nonrecurring perpetual revenue accounts for a small portion of our revenue. It's in line with our strategy. This represents a continuing opportunity to transition that installed base over to subscriptions.

And you can see that the total business has nearly doubled in the last three years and we are working as near from tourism more of the business to recurring revenue sources.

Unlike creative cloud for document cloud, we continue to offer perpetual as a vehicle have people come to the franchise.

We have the flexibility of our offerings given the breadth of our customer base, which a switch primarily to subscription.

Looking at digital media as a whole, including both creative and document cloud era our.

You have a view that any CFO would love to see.

And showing the stacking effect of recurring subscription revenue up into the right ending the year with over 10 billion of annualized recurring revenue.

When you think of the revenue base, when we lost creative cloud less than a decade ago, It's amazing to see how we have expanded the market opportunity while transitioning nearly all of the revenue from perpetual to recurring there.

This shows you the power and durability of our subscription model.

Numbers like those don't happen without an extremely sophisticated system, our data driven operating model, which is purpose built to acquire more customers across geographies and to engage and drive higher retention.

You done as we call it as a weapon for fighting and understanding the personalized offerings for our customers vs.

Gross part about it is that we use our own software Adobe experience platforms to drive this.

Which brings me to the digital experience segment.

Let's take a deeper look at the Adobe digital experience business.

First of all we're very excited to close the work for an acquisition earlier this week and we welcome to work from teams who doby.

When it comes to M&A at Adobe, we looked at the technology and the people Adobe has a great track record and history of acquiring companies driving synergies and accelerating growth.

With work front were focused on our ability to accelerate growth through the marketing use case as.

As Anil shared what's particularly exciting for us is that we have the opportunity to create an industry, leading marketing system of record.

We're confident that our shareholders and customers will get maximum value and this is a huge opportunity to accelerate subscription revenue growth for years to GAAP.

Work work work from represents a sizeable addressable market for digital experience. The targets, we are providing for a flow 21, and Q1 are inclusive of work from.

And we're looking forward to hitting the ground running integrating the business and our digital experience I went and expanding our opportunity what customer experience manager.

Digital experiences a category, we created a little over a decade ago Burger from content creation, all where the marketing execution measurement optimization and modernization.

This year, we achieved 3.13 billion and segment revenue, but more importantly, we have seen digital transformation and customer experience management resonating with our enterprise customers.

More than ever before for enterprises to succeed and provide the sort of personalized real time experiences our customers expect the required technology partner that can help them transform their businesses. The way, we reinvented our own digital media business with our day to day or an operating model and focus on customer experience management.

In my conversations with my peers across the C suite, it's clear no matter their industry. They recognize the value in the digital transformation investments.

And you can see the momentum here when you look at the makeup of our top 100 customers.

Sales were in 2020, approximately 93% of those customers are using three or more of our solutions and the average error has more than doubled over the last five years.

We've talked a lot about our focus on growing subscription SaaS revenue in this business and you can see here our focus on driving subscription revenue has driven segment growth over a multiyear period.

The growth in our digital experience business has been driven across subscription offerings with particular strength in enterprise adoption of content and commerce offerings, including a cloud service.

Although the Experis platform is gaining tremendous traction with a number of Russell referenceable customers, such as rising creating momentum.

And we're also seeing continued recovery in the market following the macroeconomic challenges we saw there early in the pandemic.

Hi.

Looking at the business by revenue type. So 2018, we've held the services and other categories relatively flat as we suddenly word as we are focused on growing the recurring subscription SaaS revenue, which has grown at a 29% CAGR since 2018.

In order to accomplish this we continued our strategy of leveraging the partner ecosystem that Anil talked about earlier line at least those partners to implement our solutions and provide services to.

To help our enterprise customers realize the value we are delivering.

His view of the revenue mix by category across our three strategic growth pillars of customer journey, now Israel content, and commerce and data and insights.

These are all mark and winning solutions that are fundamentals with customer experience management, which we built on a common data and content platform.

The growth from these businesses is driven by customer demands to help maintain a digital presence and transact online.

Deliver personalized experiences to their customers and unifying to activate their data.

Well, the 85 billion dollar market opportunity, we're investing to drive long term growth in these categories and our comprehensive set of solutions and innovations in platform puts us years ahead of the competition and solving these challenges for the enterprise.

Now lets focus a little more on the income statement and cash flow and our capital allocation strategy.

There's one other slides mostly from the loved the sales revenue growth and margin expansion, both GAAP and non-GAAP basis, with non-GAAP operating margin well over 40% for the year and terminals where margin expansion has been the sustainable revenue growth that we're working on for decades yeah.

Operating leverage our subscription model and our strategic decision to exit the transactional advertising club business as well as actions taken in response to the total pandemic related cost sales associated with travel and reduce facilities operations.

When we got to where it was one of our targets or provide some color on how we should think about those savings in those categories, specifically going forward.

Sales and see the bells of ARPU, which grew 15% year over year exiting fiscal twenties wine list.

This represents contracted business that is committed to flow into revenue in the future. They hear revenue sources are extremely predictable.

Components of our PEO or deferred revenue, although backlog and as we noted earlier this year, we've seen a mix shift from deferred revenue to handle backlog in fiscal 2020 as more of our digital media business has come through Adobe Dot com, where subscriptions are billed monthly rather than invoiced annually advance, meaning they don't have deferred revenue the way a lot of our channel enterprise business what.

As a result of strengthen acquisition Adobe Dot Com continues to drive the mixture from deferred revenue to adult backlog.

Moving to cash flow in fiscal 2020, we saw an acceleration of our operating cash flow growth achieving a record 5.73 billion from a year.

In terms of uses of cash we continue to prioritize investment in growing the business, both organically as well as through inorganic.

Opportunities like the acquisition of work fronts.

And as always we focus on returning capital to shareholders through our stock repurchase program.

[noise] exiting a flight 20, we had approximately 6 billion of cash and short term investments as well as an unused billion dollars credit facility.

This is a healthy liquidity position with an investment grade credit rating and plenty of debt capacity and as I mentioned, we have a long track record of making sure we return excess cash to our shareholders through structured repurchases.

On that point, you can see how we've continued increasing our investment in stock repurchases, reducing the share count overtime today, we're announcing a new 15 billion repurchase authority. In addition to the amount remaining under our current authority, which will run through the end of fiscal 2024, demonstrating our commitment to accelerate the return of capital total.

Doctors.

Now I'd like to cover how you should think about financial strategy, and our addressable markets, which underpin our preliminary targets for from 21.

Let's first strategy I'm going to touch on a few things on the slide Adobe has a unique financial profile that means of Skus that we've discussed the draws a strategy.

We invest for top line growth and our operational discipline drives margin expansion and earnings growth over the long term.

With a diversified portfolio of leading products and services. We are investing to drive continued top line growth and expand into new categories with a massive market opportunity that's in front of us.

Or accelerate our growth.

Are you going to be investments that we've made in new businesses, such as Adobe stock sign at our mobile applications, which from contributor over 500 million of the air our growth since 2017.

Would they did driven dynamic planning capabilities, we exercise discipline spend management principles, we focus on margin expansion and long term earnings growth, we focused on integrating acquisitions quickly tons for the same organic operating discipline is embedded in newly acquired businesses.

And strict management of our balance sheet prudent use of debt financing cash has driven exceptional operating cash flow growth for many years affording adobe the opportunity to continue to invest in our existing businesses.

Cash for promising and organic growth opportunities and return capital to shareholders.

As you heard earlier in todays presentations, we have updated our addressable markets and you can see that we are excited to capture the opportunity ahead from the extensive list of growth drivers and product innovations across creative cloud document cloud and experience club.

With creative cloud, we're driving continued growth from broader customer segments by reaching the all creative professionals to communicators and consumers.

And Mike raising inspiring our creative community to drive customer lifetime value.

With document cloud, we see growth inflection for acquire to monetize a new customers across desktop mobile and web and.

And finally, we continue to leverage and build upon our data driven operating model to manage the business in real time.

All this lease was 62 billion addressable market for digital media and 2020 foot.

Likewise with the most comprehensive set of solutions for customer experience management applications and services and the additional work from our addressable market for digital experiences growth.

We expect to drive multi year growth of the data and insights category with our scaled next generation customer data platform.

The second change from in Q4 to reflect the way, we manage our business and our strategic focus.

The digital experience organizations optimize to drive subscription and SaaS revenue growth well gaining share of an 85 billion addressable market for digital experience.

Before getting into our fiscal 2021 targets I want to walk through some of the assumptions we've built in.

We expect to see continued gradual macroeconomic improvements during the year and as such we are modeling continued recovery for the small and medium businesses. Instead of 421, which was a segment that was hit particularly hard early in the pandemic and then showed signs of improvement during Q3 and Q4.

We anticipate an increase in our effective tax rate due to additional taxes on our foreign operations for the changes we made to our international training structure that from a 20.

Our high 20 tax rate included onetime benefits tourette recognized deferred tax assets, resulting from these changes.

These deductible assets will be amortized over a multiyear period lowering our cash tax rate over that time.

Targets include initial estimates associated with our acquisition of work fronts. These estimates involve numerous assumptions given the purchase Kelly process has not been completed.

The purchase accounting is expected to result in an increase to amortization of intangible assets and a significant deferred revenue haircut, resulting in an expected contribution of about $25 million to Q1 revenue.

And as you know we know her air on a constant currency basis during the fiscal year, and we value air or at year end for current currency rates FX.

FX changes between December of 2019 of this year have resulted in a 77 no increase in digital media there are.

The effect of this revision is reflected in our updated investor Datasheet assets. They are our results. This year will be measured against this amount during from 21.

The cost savings associated with the current remote work environment will continue into the first half a day for 21.

In terms of Opex growth, we will be investing in top line growth opportunities and our hiring is expected to return to an ordinary pace, particularly for R&D and sales and marketing roles and we expect teeny and facilities expenses to ramp from the second half as things open back up.

Lastly for 21 is a 53 week fiscal year for us with the additional week falling in Q1 as we noted in the press release, we estimate the extra week will benefit you on with approximately 240 million in additional revenue over 13 week quarter as well as an additional 25 million and net new digital media ARR.

So what further do.

Without further Ado I say here are the targets, we are providing for fiscal year 2021. So.

Total Adobe revenue of approximately 15.15 billion.

Digital media segment year over year revenue growth of approximately 19% net new digital media ARR of approximately $1.75 billion.

Digital experience segment year over year revenue growth of approximately 19%.

Digital experience subscription revenue year over year growth of approximately 22%.

Attach rate of approximately 19% on a GAAP basis, and 17 or have percentage on a non-GAAP basis.

Sure Council, approximately 480 million shares GAAP earnings per share of approximately $8.57 and non-GAAP earnings per share of approximately $11.20.

For Q1 of our flight 21, we are targeting revenue of approximately 3.75 billion.

With digital media segment year over year revenue growth of approximately 26% net.

Net new digital media ARR of approximately 410 million.

There's always from segment year over year revenue growth of approximately 19%.

Digital experience year over year subscription revenue growth of approximately 22%.

That's very low approximately 15.5% on a GAAP basis, and seven seems to have percentage on a non-GAAP basis.

Sure Council, approximately 484 million shares GAAP earnings per share of approximately $2 or 19 cents and non-GAAP earnings per share of approximately $2.78.

In terms of seasonality.

2020 was not the typical year, given the pending Mike, resulting a particularly strong Q3 with everybody that Muslim home as we spoke about last quarter.

Assuming things over back with the summer of 2021, and we would expect digital media net new air are definitely 21 to grow sequentially from Q1 to Q2 dip seasonally in Q3 as we have experienced in the past.

And had a strong finish to Q4 as we typically do.

And in terms of the EPS growth, we expect strong growth in Q1, the fall by more modest growth in quarters, two three and four as we lap the total related savings from roughly 20, as well as resulting from a higher effective tax rates in fiscal 2001.

To wrap up Adobe saw a record performance enough why 20, something we're all proud about the business momentum is strong as we look towards our 421.

We continue to me Mark and we are delivering growth and expanding margins at scale in fact record profit and cash flow.

We have a largest spending market opportunity as we've shared in and we're driving category creation expansion innovations and growing customer universe targeting over 15 billion in revenue over the next 12 months and we are just wanted operating with a proven track record for driving long term topline and bottom line growth.

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[noise] what degree video I, certainly can't imagine thank productive without Adobe sign an adobe acrobat.

Thanks, John we're now going to move to live today with all six of our executive speakers for those of you who wish to ask a question. Please go ahead and queue up now with our conference call. Operator, if you haven't done so already and when you ask a question. Please remember to mute your web cast to avoid any feedback and due to the format. There may be a few seconds of latency. So.

Please keep an any interjection to a minimum with that operator, we'll take the first question.

Thank you I didn't ask the question of test time T signature site crashing standard one on your telephone keypad.

We can now take our first question bench Chen of Jefferies. Please go ahead.

Yeah.

Good morning, Thank you for all the great overview today Shantanu there've been some investor questions just on the current quarter around digital media and the percentage of upside relative to plan was a little lower than some had thought that many are asking is there anything to consider buying the digital media business for the quarter and then.

Maybe more importantly, looking into next year additional strength it seems like you're seeing some great momentum maybe in New York you talk about what is driving that increased comments momentum.

In that business. Thank you.

Sure I'm happy to answer both questions and give you some color first as it related to digital media I mean, we had record Oh Q4 performance and digital media 548 million in net new way, our AR, which is just phenomenal performance.

I would say both Q3 and Q4 are very strong and certainly I think when you look at the back half of the year as it relates to digital media. It was incredible performance and when you look at our Q1 targets as well as when you look at the targets for the entire fiscal 2021 are as.

As you know these are the highest our targets that we have given at the beginning of the younger and so the growth drivers that we see in digital media. Just continue unabated you know everything from acquiring customers Upselling them. I think we tried therefore to give you real color between the individual apps and the full lapse.

And you know our data driven operating model allows us to be pretty sophisticated and so I you know relative even to our targets for Q4 as far as we're concerned it was a beat.

It showed the momentum that we had in the business. So digital media. They are nothing we continue to believe in the expansion.

Of the total addressable market and really pleased with our performance as it relates to your digital experience as well I mean, I think the momentum.

There what happened was clearly in Q2 and Q3 as all companies were dealing with the pandemic.

You know what was top of mind was custom continuum.

Continuous de and safety of the employees.

As soon as that pivoted everybody was talking about digital is the only way out of the pandemic and so they started to look at who are the clear leaders in customer experience management and the combinations really accelerated for US now was the momentum the Adobe experience platform being a clear leader, which is why as you look at you know our expectation.

Runs for 2021, and what we believe will continue to be accelerating beyond that you know, we're pleased and net net I you know, we're really excited about our 2021 targets.

We'll take the next question operator.

Our next question comes from Brad Zelnick of Great change keeps go ahead.

Excellent. Thank you so much and Jonathan no disrespect to Mike, but I think your 10th year, you've delivered a great event. So thank you for that and it's it's clear that the best is yet to come from Adobe I have one question for shopping day, one another for John for Shantanu.

Chuck I'm struggling a bit to reconcile the optimism as expressed by the growth rates and what our no doubt very large very exciting markets in which you participate in many cases lead but your growth expectations. In current run rates would suggest you expect to gain share across the board. So just curious if you think that's a fair observation and what I might be missing entered.

John John I wanted to ask about slide 112 of the deck, which you presented about creative cloud how should we think about conversion of single App to all apps and what are some levers here to highlight the value of the entire creative cloud suite, you and maybe just related to that whats the non genuine usage opportunity. That's left thank you so much guys.

Yeah, and I'll start off with that and like you said, we appreciate that the leadership or that you know Jonathan.

Jonathan has showed in helping us pull together what is hopefully the only virtual event that we do and we can get back to you know more normalcy next year I think as it relates to the opportunities that we have in the market and how were thinking about it. We're certainly you know the market leaders and in each one of the category.

They were talking about first why we don't think it's a zero sum game, we're actually continuing to be the leader in each one of those categories. So.

I don't know specifically, how you're looking at it and I'm feeling like we're not but we are actually gaining market share and we become you know the true end to end lead or whether it's on the creative side as it relates to entire category of applications certainly I think in in digital experience, you're going to see a consolidation off you know.

They're all of these solutions are done the experience platform, what we said around customer data and insights. So now we're excited about our prospects and in each one of them. Yeah. We continue to believe that we will be number one and we continue to gain market share. So thats really the way that we look at it in terms of the expansion opportunity ahead of us.

And in terms of.

Creative cloud and conversion of single apps to all EPS you know, it's as we said we've got so many opportunities to attract different customers and different types of customers from platform and we are definitely growing you know our communicator say when I look at that and the consumer segment.

But as we've seen particularly in the during the pendency, Mike and the work from home the need to create and residual solutions do that is really touching so many different segments of customers. So the value there for us obviously seen on the growth of their our overall is fantastic and gives us an opportunity to continue to monetize assets so that based on customers over.

Or time, you know, we don't we haven't sized the non genuine environment in a very long time, it was probably a sizable opportunity, but the chip away at that when we have you know.

Very good entry price point for a single EPS for customers that may be using non generation products and so as they see the innovations that are available with our cloud based solutions and our mobile solutions.

Certainly the way that attracts people that may be made out of even realize reason on general product. It's actually use the most up to date innovative products that we have so it's it's really an important aspect for us Brad in terms of addressing all of the different segments that we can address and attract more and more people to the franchise.

Thanks, very much guys and a happy and safe holiday Sheila thank.

Thank you.

I will now take our next question from Mac No net fund she makes church. Please go ahead.

Thank you very much for taking my questions and congratulations on the quarter.

Adobe has been very thoughtful and measured in modeling your Tam in the past and as you've written the channel has been a really good leading indicator of future growth I think most would find a large year over year Tam expansion, specifically for creative cloud is it surprising can you give us some more color on what what are you modeling in that's driving such a big channel.

Expansion.

Why you feel so confident what's changed any color would be appreciated.

Sure Mark as you know and you've followed us for a while we take our addressable market very seriously and unlike some companies would just throw the kitchen sink and what they believe is day addressable market and so let me touch a little bit on when you look at digital media and the Tam.

You know some of the growth of actors out with mobile Firstly mobile has become we talked about the 300 million ideas that weve already created and mobile has become a pretty impressive funnel in terms of both attracting new customers to the platform the ways in which we are monetizing the mobile only services, but how that also so.

There's an on ramp and this was one that honestly, we had a real offerings in the mobile space and the ability to have these multi surface.

We also have storage options in terms of you know some of our products across multiple surfaces. So that's clearly one of the drivers are they're just continuing to grow I think as the nature of our products target. The communicators. In addition to the creative frozen the consumers all of these applications as well you know we feel like that's a.

Another part of the addressable opportunity certainly what weve seen what stock the business is doing really well and this notion of a content first altering paradigm, where people start to alter the content using a piece of content. We think that that also drives a you know further acceleration in that vertical.

No business the amount of stakeholders are you have seen us deliver more and more collaboration services and the collaboration services allow us to also monetize that on the documents side and on the creative side, what we've targeted with respect to the web. We that's why I gave you some insight as to the magnitude.

How much people are doing a PDF searches on the web and what kind of an industry. That's become that same south sort of task based approach is certainly true in creative that's a brand new opportunity and the confidence that we have in being able to convert all of that traffic and all of that acquisition funnel into monetization models.

You know gives us a lot of confidence and so when you look at the services, whether its stock assign what's happening with respect to document workflows and I think as we said during the prepared presentation. The fact is this digital inflection point, it's only going to increase in terms of the number of people who use it and that's why we also touched on Reg.

Related industries, which in the past may have been a little bit more slow are out you know less enthusiastic about digital there's no opportunity left for them. So all of that really adds up to why the time continues to build for us.

Thank you very much and again, congratulations and stay safe.

Thank you.

We can now take our next question from Alex Zukin of RBC. Please go ahead.

Hey, guys. Thanks for taking the question and congrats on the quarter and Brad presentation [noise] shutdown I wanted to ask you kind of similar to the previous question.

How should we think about the headwinds and tailwinds in that business as we come out of the pandemic where are you most enthusiastic about the growth.

Doctors in both digital media and experience from Jon I think obviously industrial flow pleasantly surprised at some of the modest modern margin leverage your show in for next year, given the onetime Ci savings from this year, coupled with the you know what you.

The move acquisition, so I guess, how should we think about the impact on margins. The durable efficiency is all around go to market force coated and the trade off between operating leverage from growth.

From my perspective, Alex I mean, there are definitely it's the Tailwinds. That's the story of the company and its across all three businesses I think on the creative side. This notion of more content creation and more content consumption across all of the media types is sold.

Driving you know more usage of our particular products global expansion, we didn't talk about that as well, but global just continues to be as Digitization, you know becomes a phenomenon a tailwind in our business I think the documents signed is probably going to see the biggest tailwinds as it relates to what happens.

Part of the reason I'm, making sure that we had Gloria touch on how we thought about you know remark log and what was happening as we think about you know our own business and how we think about remote work. So I see significant tailwinds in the document business.

Both as it relates to the usage of electronic documents as well as the automation of business workflows and that drives digital experience and a digital experience I mean, which one of US is now going to go back.

And standing in line for a driver's license so for a permit to do anything else and so I think you're just going to see more and more are if anything the pandemic and the health crisis has raised the urgency and I think John alluded to this which is every CFO and every C level executives that I talked to what Steve.

Top of mind right now is digital transformation, so they're all saying, okay vaccines are underway once the vaccine scum, we're not going back to business as usual and you know whether you're on travel or hospitality or whether you're in some of the other industries that have unfortunately been impacted a little bit more digital engagement is the only way around it so net net.

I I really do look at our businesses and feel like the headwinds associated with the business I mean day.

We continue to be dependent on the macroeconomic environment, which.

Which is actually continued to be fairly robust and so now we're we're excited about our prospects and I think the solutions that we deliver become frankly more important rather than less important.

Yes.

The margin question, Alex I think when we when we think from.

How we target growth.

Growth. That's we were a growth company and so we want to continue to invest in growth and we've been able to demonstrate overtime that as we drive growth were able to expand margins over time, you think about our original targets for for 20, we still have expanding margin coming out of I guess, a fynineteen them. All we're really pleased to deliver this level of operating margin in Q4 GAAP.

Moving to slide 2021 to have operating margins down from our Q4 high but still expanding over a fly 20. So we were definitely committed to that.

The reason for that is that we'll be lapping much of the cost related savings and we expect to.

Realize some of those savings in the first half, but there's a gradual phase ran three happens later in the latter half the year, we expect to be able to invest because that's non drive growth and we want to continue to strike the right balance between investing for growth and benefiting from those continue percentage savings not to mention we will be impacted by the deferred revenue haircut from the work for an acquisition, but even even so.

Good day, expanding our margin in a flow 21 over roughly 20.

Perfect. Thank you guys and congrats again on another great job Steve situation.

We can now take our next question from Jennifer Lowe of you can teach go ahead.

Great. Thank you.

From me Yeah, first maybe asking a question the one that Brad earlier, but looking at the composition of air our banks for actually price is single App.

Even though the discussion around single App as an onramp than any cash landing point for communicating with consumers and you seem to be seeing a lot of momentum there why hasn't single app grown as a percentage of that mix and as you continue to lean into that sales motion could it be more 50 50 over time or is the expectation that income communication consumer they'll ultimately.

The fall and it just stayed balanced or I guess any color. There and then secondly free time, you know Alex mentioned that he had redemption and what kind of lead assets, but I'm. Just curious if we could get a little bit more color, but we got to Q4 Q1 revenue impact, but is there any more color to add around either Mike in impacting Q why not whats baked in.

The flow your guide for what price.

Thanks.

Sure So Jennifer I'll take the one on the single lap and as you know you have to look at both the unit to view as well as the air our view and the units view continues to grow but remember that also is an area where as we ramp them to the platform. It's the single apps or that's the way in which we acquire them, but we're doing a better and.

Net a job of being able to convert them into a you know the full lap. So I think what you have to just recognizes that the single out pricing on ARPU is a little bit lower and so that same a pie chart that we showed that the revenue local D.R.R. look associated with it and when you look at the units look clearly it will show a different picture and done.

As of the higher proportion of whats happening through a single apps and so that's a model that you know all the way back to creative suite, we know how to do that attract new customers to the platform and drive that end. So that's the answer to your question around single apps and you know the full lap model and it's actually working for us.

And Jennifer in terms of work from Yep No work for an acquisition. It's just close we don't have the full purchase accounting completed yet we.

We are expecting significant deferred revenue haircut is fairly typical with these acquisitions and you know as a result will be a slight dilution, but as you can see from the our full year targets were still targeting significant margin expansion over a flight to quality and that just kind of shows the leverage in our operating model our ability to continue to invest.

For growth and still expand our margins and our earnings.

Thank you.

You bet.

We can now take our next question from JP shallow Chris each carrier teach teach go ahead.

Yes. Thank you good morning, Shantanu you noted the closing this week or the work fluent acquisition.

It also happens to be this week, the 15th anniversary of the Macromedia acquisition, and it's pretty evident with the long term value of that acquisition has been from just the impact on the company and the question. Therefore for Adobe today is do you think that day.

The the long term lasting value of day foundational technologies that you have or investing in each day.

The D.S. couldn't have a 10 year or more law student value affordability or do you think that perhaps be a half life showed or say of a foundational a critical technologies might be shorter and if so what are the implications there for core R&D spend.

Moving and the like and then secondly, a recurring theme from the company. This year tickets and shown that has been application and intelligent services in our head referred to there looking ahead over the next from two years, what do you think the contribution from those discrete new services.

Mike could be aside from the incumbents have signed them stock was asking really more about the the new ones that you have been Mike and all those sort of this is something that you might begin to disclose.

More more specifically over time as they become material.

So Jay let me take both the December is not only as you point out the anniversary of the Macromedia acquisition. A you know in 2005 I can even have the privilege of going back and say December was also when we did an acquisition for go live in 19.

98 that was one of my first acquisitions and that sort of embarked us on the web journey as well, which has clearly proven to be also one of those seminal moments, but most seriously I think when we look at what we've done with book from a we've always had and understood the technology component of what.

It means to deliver these services, but the amount of spend the amount of ability to drive efficiency as it relates to the internal work flows and processes associated with it because you know its not just from about the campaign itself. It's about the creation of the campaign and we've talked about this expression content.

Velocity for a while and so when people want the ability to create these campaigns and personalize it and get this out and global its not just about the technology platform, but it's also you know very much about the work management associated with it which is why we're excited about work from and what it does for US I think as a company they buy.

Perhaps you know focused or defocus handful, you know spend a little bit more time on the broader opportunity and we just think focusing on content and focusing on creation. While I think most people are correctly pointing to what we can do as it relates to what happens on the marketing side. The fact is that we also have you know.

A significant number of customers, who use work front in conjunction with the creative cloud and now you've written about you know our desire to continue to integrate the creative cloud as well as the experience cloud would that entire content creation management monetization measurement opportunity that we have and I.

Think this can be a significant accelerant to that as well. So you know you have seminal products, whether it was macromedia when it was day software when we talked about content that actually created you know these are significant opportunities for us in terms of platforms and now tying that together the glue, which is why when you look at one of the slides in the day.

Bakken how another describes where work front is it's really the blue that actually ties together all of our marketing application. So I think to your point, we feel like that could be a really significant enabler of increasing more people into the entire marketing campaign work flow and in addition to that really.

Providing a you know more integration capabilities across each of our solutions I think to your second point associated with services. You know what is phenomenal about both our creative business in our document business is actually the breadth of our offerings. I think this is related to some other questions. I mean, we have mobile offerings.

From services offerings, we have single lapse offerings, we have a full offerings, we have a freemium offerings and you know I think as the business scales I understand you know need from investors to say how can you give us color. That's part of the reason why you know John was giving a little bit more color on how material.

The combination of mobile than stock and sign up given so I know, we will continue to figure out how we can provide more insight, but I think it's to answer the question of the incredible momentum that we're seeing around both the creative cloud and document cloud what's underlying it and you know there's very very significant amount of debt associated.

But that entire business, you know, which is what's fueling our business and I've been reminded that it's also close to the eighth anniversary of when Scott can be hands joined us in 22 hours. So Scott. It's good to have you on board as well, but thanks for the question Jay.

Thank you Andrew.

Well now take our next question from customer churn of Evercore ISI. Please go ahead.

Hi, Thanks, very much and thanks for all the information today and happy holidays to shopping what's likely to just double click a little bit all day experience cloud business just in terms of the three pillars their customer data content and customer journey amps or is there one area in particular are moving to that you're.

Particularly excited about as we head into calendar 2001, I realize there's big opportunities for all of them, but just kind of curious to hear your thoughts on that those kind of pillars, and where you see each of those position from next year and then John just on the work on acquisition or else you gave us the 25 million net revenue for the first quarter I assume it's fair to say I assume its.

There that that would ramp from there given that the purchase write down I know you probably don't want get a full year non <unk> revenue.

I assume that should scale from from that starting point throughout the rest of the year. Thanks. Thanks all.

Yes, Kirk I mean, whenever I get cost questions. I guess you didn't ask me. The question that I can never answer which is one which is one of my favorite products. Because you know as a products in the portfolio. You know, we can't I I don't distinguish between them they need the ones that I would highlight is the momentum that we've seen around the adobe is.

Billions manager cloud version that has been really phenomenal and so we've seen some really good success. As we moved everybody is again, you know thinking about content, how they improve day agility and so I think the content and commerce, which represents a large opportunity and the fact that we've integrated how you can create a content.

Right, and then have and enable commerce for it or whether it's a and b to C or b to B, we're seeing just a dramatic a tremendous demand for it because every company that didn't have the ability to transact business online. You know was seeing you know a fair amount of headwinds in the pandemic, so content and commerce I will continue to believe is one of the underpin.

Earnings of our business and you know continue to be a driver associated with it and the second one that I'm talking about is where experienced platform a big part of it is reported within the data and insights and what we are seeing associated with now all of this data coming back and a unified profile. So I think that is really.

One of the areas that we've also seen significant momentum in Q3 and in Q4 people want to know how they can create that profile how they can deliver it. So you know if they want to out of the tree Adobe say all three of them are growth opportunities I'd, probably prioritize it like that car.

And thanks, Scott, Yes, absolutely you're you're correct. The 25 million does we are targeting for work fronts in the first quarter of course.

Depending on what the purchase accounting plays out do you have kind of modeled out from your are too big for us whatsoever on the deferred revenue haircut. So we are expecting between a 140 million and 150 million, but again, you know really dependent upon when when finalized.

Purchase accounting later this quarter.

But it will ramp thank you all.

And big picture on that car coming certainly our expectations for the work front acquisition net of all the accounting things that John alluded to that there would be accretive to the growth profile of the company in terms of where the opportunity is and what we expect to do with that business. So I you know I I just want to make sure we separate how.

Internally, we are looking at the growth and what we are driving towards is our plan relative to what will be reported as John mentioned on the accounting side.

And we can now take our next question to keep that you're not BMO. Please go ahead.

Hi, Thank you Oh gosh Shantanu objective to you one is a consistent question from me is your.

Document cloud continues to put up a very strong numbers in terms of day, along and you're guiding the growth of the document cloud Tam opportunity again between 2022, and 2023 at 60% growth, which is far higher than.

Oh, the AE, our gold sold its loved it see what you think the conclusion should be to the kind of long weighted they all growth call. It mid thirtys.

I am pretty significant growth the Tam does that suggest that the growth rate can actually accelerate.

And then I'll just ask my second question control much total disclosure surrounding.

The creative called including users on the volume very helpful. That's your strength.

Where would you.

Rank order so to speak the growth potential being driven by the consumers communicators or crate approach as we think about our model over the next couple of years function much.

Sure Keith So a you know I think there are two questions. One day I think the first one as it relates to our where we are you know ensuring that our documents our products are being adopted remember the document products get adopted both as part of a you.

The document cloud and what I reported in the document cloud ARR, but also a acrobat as a huge part of what we reported within the creative cloud and what's happening within the creative cloud. So you know the growth that we're seeing and documents is reflected in both from because in many ways. What we see is that the adoption of PDF as a.

Collaborative or medium as well as for work flow in the creative segment is also a extremely large so you know I think of it as a really fueling do large growth opportunities, but certainly I think the acceleration that we've seen in that business and the continued focus and investment that we're going to make in that business.

Gives us a lot of confidence of being able to continuously grow the document business from our from our perspective, I think as you look at which customers segments. Much like Jennifer's question as it related to a are are the numbers associated with it versus the our our you know could have potentially a different answer.

And certainly I think on the consumer side, what we are seeing with the mobile I'd creation.

What we are seeing an imaging, maybe which appeals primarily you know as a new category to the consumers. The communicators is a large space. It's always been a big part of the Halo and so the numbers are probably in terms of new customer acquisition largest in consumers then and communicator then in creative gross but.

The opportunity to drive VR AR continues to be across all three because of the different price points as well as you know in many cases the way we up sell into those particular customer segments. So that's the way we look at it I you know again I I have a you know a dumbass enough, where I know people want a simple and Mike.

Multiplied by end in order to be able to do it but I think what actually makes us so differentiated in such a sustainable business is really the fact that we have these breadth and depth of offerings in the D. Dom that we've talked to you about where we know how to personalize each offering and it's also different by geography, maybe that's one of the things that I should mention.

And it's different for example in education.

Cash and had a phenomenal year and that's eating that next generation of creative professionals, but in many cases, whether its a K through 12 license or license, where an entire educational institution. The RR may be small so hopefully that gives you a little bit of color as to how we think about each of those segments, but the nice thing is now.

We have a product portfolio that cuts across all of them.

Yeah, Let me think.

We can now take our next question from Ken Wong issue from time, securing each keystroke, perhaps.

Great. Thanks for taking my question guys. Just one from me up I wanted to just touch on the slide you guys put up there with the and George that's where the average from.

The top 100 customers went from 3 million [laughter] 8 million, which is very impressive just wondering what kind of head room. Do you think you have with that top 100 or more doctors are force CDP and then also how far down the customer list could you, possibly maybe see a similar through my Linda 8 million type uplift from.

From from from your customer base.

I think one of the impressive things or can that mill is done is really focus on what he calls the transformational accounts, which is you know a in many ways. I think has he has taken on responsibility for the entire product as well as on the go to market I think an analysis sure.

Why do we were getting significant traction with a number of customers that we had it's really just focused on transformational accounts and creating a good go to market has demonstrated that there's no EPS of headroom associated with this with our customers are I think the Verizon example, it was a good example to articulate anshu.

So how you know each of our products and the second part of that honestly is the fact that we're also far better at demonstrating what the ROI is and again on the lighting touched on the ROI associated with the experience cloud. So as you take the ROI as well as you take the focus that we have on day.

These transformational accounts you add the ability to do work front. We just continue to think that there's massive opportunity you know that's the beachhead, but that doesn't mean in any way shape or form that there's a limited set of transformational accounts rather it's the recipe to continue to deliver value become strategic to these customers and drive.

Good day, our AR and as it relates to you know the breadth and depth of that customer base again going back to the question that I think was Austin around expedience cloud and what's driving it the EMM cloud service is not just a service that can apply to large enterprises will maybe wanted to create a you know new.

Web sites as it relates to campaigns. The fact that it's you know easily provision and easily on ramp actually makes it a very appropriate solution for what we refer to as commercial low mid market of small and medium business customers and integrating things like analytics into it and commerce into it with you know the MAGEC.

Total service enables us to really say, we could be a one stop shop for getting a web presence as well as from transacting commerce on the web. So you know clearly the aspirations are to enable people to have a quick and one stop on ramp.

Great. Thanks, so much on net.

Well, Mike now take our next question from Walter Pritchard of Shaky teach college.

Hi, Thanks, I had two questions one for John and one for a by John on the one of the slides you talked about 75% of the individual subscribers muted creative cloud franchisee fiscal 20 can you clarify the you know the other 25 are they are they coming from mobile apps that were the prior year, whereas the other 25 coming from I think the disclosure to pass a little bit.

And I'm just trying to frame that non has a follow up.

Yeah, and they're coming from a couple of the places certainly you know it.

Mobile as we talked about before is it is a huge our land force and we've been having so many new Adobe ideas created on mobile. We also perpetual is the other part of that as well so double as far the force across both of those in Q4.

Got it great and then from a lie if he's still on just around you talked about more <unk> opening up more a T.I.s and sign one of your competitors. There seems quite strong leveraging that could you talk about where you expect to see sort of the tangible revenue and package as you embark on non effort and prototype some of that from.

Without that you're out you're building around a you know a P.I. day success for products.

Sure. So I think at a macro level I mean, and we shared a little bit because the reduction in the document cloud started yet eichler across all our businesses, but especially in document cloud PDF has always been a very vibrant ecosystem Blair as you know for us where it's connected into a lot of wild swings in solutions across industries.

Where it goes liner business application and so what we are starting to now do is opening up the eyes and working with three kinds of players. There are large I asked me like Microsoft word lease service now we are we are connecting our application that EPA is directly into that ecosystem that application that have kind of joint attach motion. There. But then we are also opening it up.

The broader developer ecosystem and as you know he went on our Dx enterprise business, we have products like Magento and ecosystems of large developers, who connect or black from whether its ATM magento and we are opening up already be either non signature speedier to that kind of long steel or whatever so I would say large diaries like Microsoft.

There is now one day that we have announced partnerships around integrating and then a broad long day in their local reach play where they are embracing our aviation services for more inline into their applications and taking it to market.

The last thing I'll say and I've got to be shared on flow says AI. The other piece of the B. I started these also opening of our intelligence services or loans and say platform and exposing those also beyond our application for developers an ice machines, which are very unique and differentiated so that's the other component of that.

Thank you.

Yeah, we can now take our next question from Garrett with Cowen and company. Please go ahead.

Great. Thanks, just two.

Two questions from me shopping there may be a chart on a kind of a.

Doubling down on the communicators market I'm, just curious about some of the more popular persona are out there and maybe how cold. It it's been a catalyst and what you guys are doing to kinda lean into that market more.

And then from John Amit on the digital experience side seems like there's a lot of margin leverage to be driven out of that business restructuring on the AD cloud side is one step.

Sounds like maybe more revenue leverage out of a piece another but can you just talking about some of the things you guys are doing to drive better leverage on both the gross and operating margin, yes, we look over the next year or two.

Yeah, let me start as it relates to the communicators, what I think most people don't maybe fully appreciate is what is happening on the web with respect to wanting to do certain creative tasks and being able to fulfill those tasks with you know what we are doing or.

Around search engine and everything associated with the actions that people want to do they want to remove the background for a picture they Wanna bullshit for social media and just the communicators that we refer to are also you know what Mike perhaps referred to in the past as knowledge workers because we just fundamentally believe that every piece of.

Printed material or presented material you know benefits from this more interactive graphics rich and so you know what we are seeing is the ability for people to say I want a single click ability to finish my task and then once they finish that gas exposed me to all of the other you know riches that exist in Adobe creative products.

So I think that's a big driver of what the Communicator has we certainly see that would spark we see that across lightroom as people want to you know share their images, but we also see it in our category leading applications video is the other place where the usage of video in virtually every piece of communication is rapidly exone is rapidly.

Accelerating so hopefully that gives you a couple of examples of where the communicator organic demand is coming from.

And derik in relation to the digital experience yeah, we I mean looking at the time, we have such great opportunity and as you've seen yeah. We expect acceleration and then with work force even further acceleration from their work fronts had you know.

Some of that or before we actually acquire them a little bit, but we know that the demand is there from that solution and that coupled with our capabilities. We know we can actually accelerate.

That back so there's definitely revenue leverage and the digital experience business and as we said the way we realigned the digital slayings business by moving.

As you.

Out of that segment, because we're operating in a different way we wanted to make sure that.

We're operating the digital experience business the way a healthy SaaS companies, we should view and we have aspirations from first on margins. There you think about how this EPS companies growing and their margins. The other rule affording. So were definitely excited about that no thing. We're doing is we're going to continue to invest as we said in hiring and not only in R&D, but also in sales capacity.

Because.

That's the way, we're not opportunity constrained, we just definitely need to take advantage of the ability to capture all this opportunity, particularly now the way that we've aligned the solutions within digital experience from the resonating with our customers and then of course with work from we can accelerate or even more.

Thank you happy holidays.

Thank you operator.

Operator lets take two more questions and then we'll do a brief wrap up thank you.

We can now take our next question from Sterling Auty JP Morgan. Please go ahead.

Yeah. Thanks, Hi, guys shutting down how would you characterize in the digital marketing advertising Adobe experience area with all the products ranging from the original Omniture all the way through to Mark at all in all the home grown solutions as well where are you in the evolution of keeping that entire stack actually flow.

The integrated Kubernetes enabled cloud delivered platform are you complete is there still stays is left to deliver and how might that envestnet can patch gross margins moving forward.

Well the Sterling.

When we did have the kind of innovation opportunity ahead of US Let me first start off by saying we've made tremendous progress. So the delivery of the Adobe experience platform was a momentous milestone sterling not just because we delivered all this new functionality, but we started to happen whether it's a adobe campaign function.

I'll, let D. You know integrated into the experience platform to be able to do a customer journey or whether it was the adobe analytics or what you referred to as the omni channel functionality and being able to get inside of all of that data and so the progress that we've made in being able to drive all of these solutions into a common platform.

From its never done to some degree you know I I don't remember that people would ask me how much innovation do you have on the creative products and here. We are you know a decades later and the list of what we can do with these products dwarfs, what we ever had 20 years ago. So it's I think about the experience platform.

And I think about what every enterprise has to do to rewire. It I think we're in a fantastic position.

Given the engineering efforts over the last few years to have this integrated platform that nobody else has it runs on cloud I think you know you've seen with the progress and success that we've had around Microsoft and what we've done with Microsoft on Azure It.

Certainly cloud aware the announcement that we made with I.B.M.

With the ability for all of these two also running a hybrid cloud where people whether its for regulatory reasons or other reasons want to run it on their private cloud network, we've made progress and there's clearly interest on companies like VM, there and I B M to partner with us on that so I'm really confident about.

The architectural thing, but the way we look at it is you're constantly architecting for new architectures, you're constantly doing work in AI and ml in providing more and more insights some of the ways in which we've actually added tremendous value is in the reporting and the analysis and the insight that each one of these is.

Been doing but the breadth and depth of our offerings I think there's still significant headroom or what we can do because the way you have to think about it is.

If we believe that would de Dong day, one of the most from mature companies in terms of having a digital funnel and how we operate that's driven our success you know were pioneers not just in delivering technology, but in how we've moved it and that movement for every company now rethinking their business process rethinking their computer.

Good day count were at such an early stage that we're going to have to keep innovating around that space and so you know we we think of it right now as an overall growth opportunity. We have made as you saw the strategic decisions around how we think about margin in that particular business and so we will continue to see margins expand in that business.

But I think what you should be most excited about as an investor is the fact that we're investing in this immense opportunity and extending our lead and so I think that's the way we think about it you know you look at the overall margins of the company again, and I think John alluded to this despite.

Despite investing invoke from despite investing in sales capacity. Despite you know, saying that we will accelerate growth. We're showing you margin expansion for the entire company. So you know we know how to do this which is drive topline growth and bottom line growth at an impressive margin. So that's how I piece I think about it.

We'll take the next question, let me elaborate Hancock final question.

Final question from teach fights Mark.

From Stanley Pease go ahead.

Perfect Great. Good afternoon, everybody and that this actually Stan zlotsky sitting in for Oh for key two questions from our end.

If you look at the creative cloud and the progression of that though the Pie chart that you guys put up there from 27 to 2020. We show you can see that there's a fairly pronounced shift and they are from a from key to larger individual and maybe just.

Following up on the question that Jennifer I'm asked earlier.

As we move into 2021 and beyond.

How should we think about the progression of the shift.

Moving forward you will we see more can continue this push out from individual or are we starting to reach a more normalized equilibrium within those two categories and then a very quick follow up.

Well I think what you should see and what you will expect us first and foremost the pie expanding and you know as it relates to the total addressable market. The main thing that you have to think about as this is market expansion, we're growing the value associated with our customers I think its steady state at some point in the prior busy.

Yes, which maybe a predictor it was closer to 50 50, but you know the thing that again I will reemphasize is that a lot of that as we drive into individual and then convert into the entire offering and so that's it and so big picture I would focus more on the growth of the pie or the exact.

You know mix between those two we look at both of them and feel like they're growing really well and I'm happy to answer your second question as well Stan.

That makes a lot of sense, Thank you and just stuff.

Digging into the they're slightly rejiggering of Youre reporting segments by an increase in the New York publishing and advertising segment. What are you seeing behind the scenes in your business and how should we think about this net the print and publishing segment average is a very small part of the overall.

All our revenue component, but why why create this such as dedicated segment and pull out the advertising from experience cloud. Thank you.

Well, what we were trying to do is give you more insight and color into how we were running the different businesses and I think that's a key part of it I think the print business, which was a lot of you know the Genesis of the company. It's a business that continues to do well, but it wasn't a growth category as much as a high profitability category we.

Talked about in the advertising cloud getting out of a lot of the transaction based revenue that we were seeing and.

[laughter].

Investors should take is it.

Pure play what is being reported as part of the digital expedient segment that there's a clear alignment between what you see on bookings and what you see on revenue a as you have seen the consulting services has been proactively driven down as a percentage of the revenue as we have a thriving ecosystem I think the advertising cloud will.

Not to be a growth opportunity for us there are some strategic partners, who liked the fact that we can continue to deliver it but I would take that as a signal Oh, we're really focused on the large growth opportunities, where we have a differentiated solution and it's purely subscription based revenue because that's an alignment with how we think about the largest GAAP.

Opportunities and so we are focused as a company on making sure that we do it I'm actually really pleased with how we transition odd that and how we communicated to customers and so you know this focus on the software as a service component of all of our businesses. We believe that that drives topline growth, we believe that that drives margin.

And we believe that that's consistent with where we want to be as a company and given that was the last question I want to again first and foremost you know thank you all for joining us today and what was this virtual far Matt you know I really hope you share the passion that we feel for the mission the tremendous.

Market opportunity ahead of us the depth that we have in our technology platforms and really the significant customer value that we're delivering and providing a we really believe that the global brand the customer base that we have the ubiquity of our software and the dedicated employees provides a real competitive.

Wantage that frankly is the envy of the industry from my perspective, 2020 was an amazing year, we expect the momentum to continue in 2021 and beyond and I certainly believe that our best years are ahead of us as a number of you said, let me also a you know wish you all.

A healthy safe holiday season, and we really look forward to continuing to share the momentum and the story that we have in the new year. So thank you for joining us and with that I'll hand, it back over to Jonathan.

Thanks, John from there and thanks again to everyone on the phone non the webcast for joining US today as something you mentioned earlier I also hope that will have an opportunity next fall to do that than person again, but we're really pleased that you've joined us for the virtual event. They say about their happy holidays to everyone. We look forward to thing you at the Q1 call in March and I.

Sure I will be speaking from many of you very soon this concludes the event.

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