Adobe Inc. (NASDAQ:ADBE) Q1 2018 Earnings Conference Call - Final Transcript

Mar 15, 2018 • 05:00 pm ET


Adobe Inc. (NASDAQ:ADBE) Q1 2018 Earnings Conference Call - Final Transcript


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Shantanu Narayen

has become the go-to company for helping customers develop and deliver transformative digital experiences.

In our Digital Media business, we achieved strong growth in both Creative revenue and Document Cloud revenue for Q1, achieving net new annualized recurring revenue, or ARR growth of $336 million. We exited Q1 with Creative ARR of $5.07 billion, marking the first time Creative ARR has surpassed $5 billion. Across our individual, team and enterprise offerings, we continue to acquire new subscribers through Creative Cloud single app and all app offerings. We focus on retention by driving customer engagement through products, services and community.

In addition to strength in our major geographies, emerging markets such as Korea, China and Southeast Asia are beginning to contribute to subscriber growth. Creative Cloud remains the gold standard for creativity and design. We deliver ongoing value to our subscribers through major feature enhancements in our existing flagship applications across desktop and mobile devices.

In addition, we are attracting a broader set of consumers and creative professionals through innovative new applications like Adobe Character Animator, Spark, Lightroom CC, Dimension and XD. Adobe XD is an innovative new app for designing experiences across multiple screens. In addition to graphic, mobile and website designers, product managers are adopting this all-in-one solution that combines design, prototyping and collaboration capabilities.

We recently delivered workflow enhancements, tighter integration with Photoshop and deeper support for new modalities such as pen and touch. Major companies including Wipro have standardized on XD as their core design product. Video continues to be an explosive category, and our editing and production products including Adobe Premiere Pro and After Effects, continue to gain momentum among large production houses as well as independent film makers.

More than half of the films at the recent Sundance Film Festival were edited with Premiere Pro, as were the majority of virtual reality projects. Adobe Spark makes it easy for everyday communicators to transform their ideas into beautiful visual stories that make an impact with graphics, videos and web pages. Starting next month, Adobe Spark Premium will be accessible to every student globally, and we're already beginning to see strong adoption across school districts in areas like Anaheim in California, Roanoke in Virginia, Burnsville in Minnesota and Deer Park in Texas.

In addition to the world's best desktop and mobile tools, we continue to focus on community and services to provide inspiration and accelerate the creative process. Adobe Stock now has a library of more than 80 million images, videos and creative assets.

Last month we announced a partnership with the Pantone Color Institute to curate a collection of Adobe Stock Premium images inspired by the top colors in fashion, as well as a gallery of Adobe Stock images that captures the essence of Pantone's always highly-anticipated Color of the Year. It's Pantone, 18-3838 Ultra Violet, for those of you who are curious. Adobe Stock achieved record revenue in the quarter, with greater than 20% year-over-year growth.

Adobe Document Cloud is the world's leading digital document