Adobe Inc. (NASDAQ:ADBE) Q2 2019 Earnings Conference Call - Final Transcript

Jun 18, 2019 • 05:00 pm ET

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Adobe Inc. (NASDAQ:ADBE) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Shantanu Narayen

us to serve millions of customers around the globe. We are creating large, addressable markets in the creativity, document and customer experience management categories. Our opportunity has never been greater.

In our Digital Media business, we drove strong revenue growth in both Creative Cloud and Document Cloud in Q2. Net new Digital Media annualized recurring revenue, or ARR, was $406 million, and total Digital Media ARR exiting Q2 grew to $7.47 billion. Q2 Creative revenue was $1.59 billion, which represents 22% year-over-year growth. Mobile is a tailwind in our Digital Media business and we're driving significant increases in mobile traffic and member sign-ups for our offerings.

This is the golden age of creativity and our vision for Creative Cloud is to be the creativity platform for all. Whether you're a student, an experience designer, a YouTuber, or a marketer, storytelling is central to the way you communicate and connect.

A key part of our Creative Cloud growth strategy is appealing to new segments of users. Adobe Spark, our offering for easily turning ideas into compelling stories, graphics and webpages, is rapidly gaining popularity among creators from the classroom to the boardroom. Spark traffic on web and mobile has more than doubled year-over-year. In Q2, we expanded Spark's global footprint with support for five new languages: Brazilian-Portuguese, French, German, Italian and Spanish.

We've expanded our vision of platforms to include social media channels like Facebook, Instagram and YouTube. Premiere Rush is rapidly becoming the solution of choice for YouTubers and social video creators. Premiere Rush is now available on Android in addition to iOS, Mac and Windows.

Experience design is one of the most explosive creative categories and we continue to innovate in this space with Adobe XD, our design system for UX and UI. We released a major update to Adobe XD in May, enabling teams to create and share designs to enhance both productivity and collaboration.

In Q2, we drove strong subscription growth across our flagship photography and digital video offerings. At NAB in Las Vegas, we unveiled new innovations across Premiere Pro, Audition, Character Animator, and After Effects. One exciting announcement was the availability of the Content-Aware Fill feature in After Effects, powered by Adobe Sensei, which magically enables editors to seamlessly remove unwanted objects from video, saving hours of tedious manual work. It won five awards at the show, including the NAB Show Product of the Year Award.

We continue to expand Creative Cloud with value-added services. Adobe Stock, our fast-growing service for stock images, videos, and millions of additional creative assets, grew greater than 25% year-over-year.

We're proud of the role our solutions play in inspiring the global creative community and shaping popular culture. This quarter, we launched a creative campaign with 17-year-old music sensation Billie Eilish, which inspired significant participation among our important student segment.

With Adobe Document Cloud, we're reinventing how people scan, edit, collaborate, sign and share documents in the cloud and mobile era. Document Cloud revenue in Q2 was a record $296