Adobe Inc. (NASDAQ:ADBE) Q4 2019 Earnings Conference Call - Final Transcript
Dec 12, 2019 • 05:00 pm ET
Thank you. [Operator Instructions] Our first question comes from Brent Thill with Jefferies.
Hi, good afternoon. Shantanu, I was wondering if you could take a deeper dive in the continued strength in Digital Media ARR, including the better-than-expected Q1 guide, what's driving this continued outperformance on your side?
Happy to, Brent. I mean, I think at the financial analyst meeting, we tried to outline all of the growth drivers that we have in that business. And as you remember, even at the FA meeting, we actually updated targets as a result of this trend that we were seeing in the quarter. And clearly that strength continued. So a couple of things that come to mind. New customer acquisition just continues to be strong across all geographies. I think the new product introductions that we were doing. Strength in Acrobat across both our offerings was clearly a strength.
We saw a very strong seasonal enterprise at the end of the quarter. The stock business just continues to do well. When you have a $539 million quarter, it's hard to point to one thing, Brent. And I think that, again, we've talked a lot about our DDOM. I'll also highlight the campaigns that we run really targeted personalized campaigns, tapping into it was clearly a tremendous online season was also another reason for the continued success.
And next will be Keith Weiss with Morgan Stanley.
Excellent. Thank you guys for taking the question. And really nice quarter. I wanted to ask John a question about operating margins. You guys continue to see a really nice bounce back from the M&A impacts that you saw in -- during FY '19 into Q4. When we think about FY '20, should we continue to see that continued operating margin leverage. Is there more sort of accounting impact that's coming out, that will push margins higher, number one.
And number two, for Q1, the EPS guide seems to imply operating margins down from Q4 to Q1. And absent the acquisition, we tend not to see that historically. So what would lead sort of Q1 operating margins to be lower versus the Q4 levels?
Yeah, sure. Thanks, Keith. Well, when we think about FY '20, our full year guide shows that FY '20 margins do expand year-over-year. And so as we think about kind of the first half, second half, we'd expect that margins would continue to show greater than 40% each quarter, but have a larger margins in the second half like we did this past year. There's some seasonal expenses that obviously hit Q1 differrent from others in last year, of course, we had more expenses related to the acquisitions that kind of dramatized that downward, taking the operating margin in Q1 of FY '19.
And our next question will come from Kirk Materne with Evercore ISI.
Hi. It's Diana Chang on for Kirk Materne. Thanks for taking my question. First Shantanu, maybe now that you've been running the Experience Cloud for almost a