Adobe Inc.

Good afternoon, ladies and gentlemen. I'd like to welcome you to Adobe Fourth Quarter Fiscal Year 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. I would like to now turn the call over to Mike Savage, Vice President of Investor Relations. Please go ahead, sir.

Good afternoon, and thank you for joining us today. Joining me on the call are Adobe's President and CEO, Shantanu Narayan. and John Murphy, Executive Vice President and CFO. In our call today, we will discuss Adobe's fourth quarter and fiscal year 2018 financial results. By now, you should have a copy of our earnings press release, which crossed the wire approximately one hour ago. We've also posted PDFs of our earnings call prepared remarks and slides and an updated investor data sheet on Adobe.com. If you'd like a copy of these documents, you can go to Adobe's Investor Relations page and find them listed under Quick Links. Before we get started, we want to emphasize that some of the information discussed in this call, particularly our revenue and operating model targets and our forward-looking product plans, is based on information as of today, December 13, 2018, and contains forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the four looking statements disclosure in the earnings press release we issued today, as well as Adobe's SEC filings. During this call, we will discuss GAAP and non-GAAP financial measures. A reconciliation between the two is available in our earnings release and in our updated investor data sheet on Adobe's Investor Relations website. Call participants are advised that the audio of this conference call is being webcast live in Adobe Connect. and is also being recorded for playback purposes. An archive of the webcast will be made available on Adobe's Investor Relations website for approximately 45 days and is the property of Adobe. The call audio and the webcast archive may not be re-recorded or otherwise reproduced or distributed without prior written permission from Adobe. I will now turn the call over to Shantanu.

Thanks, Mike, and good afternoon. Fiscal 2018 was an outstanding year for Adobe, and I'm thrilled with what we've accomplished. Our vision to empower people to create and transform how businesses compete has never been more relevant, and we welcomed millions of new customers to Adobe. From students to creative professionals to government agencies and the world's most successful brands, customers everywhere are turning to Adobe to tell their story, drive their digital businesses, and changed the world. This year, we delivered significant innovation across Creative Cloud, Document Cloud, and Experience Cloud. We made strategic acquisitions which have expanded our offerings in addressable markets, and we forged key partnerships that bring us increased scale. These actions have resulted in record revenue and impressive growth across all our businesses. As we enter 2019, Adobe is well positioned to build on this momentum, delight our customers, and continue to deliver impressive long-term top and bottom line growth. Total Adobe revenue was $9.03 billion in FY18, which represents 24% annual growth. Gap earnings per share in FY18 was $5.20, and non-gap earnings per share was $6.76. Total digital media annualized recurring revenue, or ARR, exiting the year, grew to 6.83 billion. FY18 creative revenue was 5.34 billion, which represents 28% year-over-year growth. We achieved annual revenue of 982 million for Document Cloud. And in our digital experience business, experience cloud revenue for the full year was 2.44 billion, representing 20% year-over-year growth. We close the year with another record quarter, delivering Q4 revenue of $2.46 billion, representing 23% year-over-year growth. Gap earnings per share for the quarter was $1.37, and non-gap earnings per share was $1.83. These results include the acquisition of Marketo and the associated financial impacts that come with a large transaction. Excluding Marketo, we met or exceeded all of our Q4 and annual targets. Adobe believes everyone has a story to tell. Tens of millions of people around the world tell their story with Creative Cloud, whether it's in a high school magazine, a mobile app, a documentary at Sundance, or an enterprise website. We achieve record creative revenue of $1.45 billion in Q4, with 26% year-over-year growth. In Q4, our creative business was fueled by strong performance across all segments, particularly among consumers. Black Friday and Cyber Monday were two of the largest single selling days in company history. We focused on expanding the value of Creative Cloud for existing customers while extending its capabilities to meet the needs of broad new segments of users. In October, we held our annual Max Creativity Conference. Max has become a movement with reach and impact well beyond the physical event. This year, hundreds of thousands of creative customers tuned in online to watch Max, and millions more continue to view Max content. Product announcements at Max included major updates to our flagship creative tools, including Photoshop, Lightroom, Illustrator, InDesign, and Premiere Pro. The introduction of Premiere Rush, the first all-in-one, easy-to-use video editing app for social media creators, simplifying video creation and sharing on leading platforms such as YouTube and Instagram. Online video is one of the fastest-growing creative segments, and Rush is a cornerstone of our strategy to unlock this opportunity for millions of new customers. Exciting new innovations powered by Adobe Sensei Inside of Adobe XD include new technology for prototyping experiences and applications for voice-enabled devices, such as Amazon Echo. And new apps, including Photoshop on the iPad, which will bring the power and precision of Photoshop to a touch device. And Project Gemini, a new drawing and painting application that brings unprecedented watercolor and oil painting capabilities to the digital canvas. In our Document Cloud business, we're revolutionizing how people scan, edit, collaborate, sign, and share Adobe PDFs, whether they're consumers, small businesses, or large enterprises. Document Cloud revenue in Q4 was 259 million, and we grew Document Cloud ARR to more than 800 million. We continue to accelerate our pace of innovation with Document Cloud, investing to modernize the PDF experience on every device and surface, and building on the document intelligence available from the billions of PDFs in market to power AI-driven experiences. We recently shipped an all-new Acrobat DC with connected mobile apps like Adobe Scan and Acrobat Reader Mobile to create, share, and collaborate with PDFs across smartphones and tablets. Adobe Sign, our e-signature solution, continues to gain momentum across businesses through new integrations and partnerships including Dropbox, Microsoft Dynamics, and ServiceNow. Digital transformation continues to be the mandate for CEOs across the globe. To compete and win today, both B2C and B2B businesses must provide a world-class end-to-end customer experience across every touchpoint. With Experience Cloud, Adobe is reimagining customer experience management, and delivering the industry's only end-to-end solution for marketing, advertising, analytics, and commerce, purpose-built for the modern enterprise. In our digital experience business, we achieved experience cloud revenue of $690 million for the quarter, which represents 25% year-over-year growth. Key Experience Cloud customer wins in the quarter include Unilever, The Home Depot, Telegraph Media Group, GEICO, Heathrow Airport, and the U.S. Department of Veterans Affairs. Delivering exceptional customer experiences demands deep customer insights and a platform built for action. We continue to invest in building the industry's first open platform for customer experience management, the Adobe Experience Platform. The Adobe Experience Platform will deliver a true, unified view of the customer for both CMOs and CIOs. In partnership with Microsoft and SAP, the recently announced Open Data Initiative is aimed at eliminating the data silos that exist across enterprises. It will enable enterprises to harness and take action on massive volumes of customer data to deliver personalized, real-time customer experiences. We're excited to have early support for ODI from leading brands, including Coca-Cola and Walmart. Adobe's retail reports, powered by Adobe Analytics data, have become the industry bellwether for holiday shopping forecasts and other digital media, commerce, and cultural trends. Adobe analyzed over 1 trillion visits and 55 million product SKUs across U.S. retail sites this holiday season. Data showed that online sales reached $7.9 billion on Cyber Monday, making it the largest online shopping day of all time in the U.S. In October, we completed our acquisition of Marketo, the leader in B2B marketing engagement, and we're off to a great start. Marketo strengthens our offering to customers, combining Experience Cloud's analytics, personalization, commerce, and content capabilities with Marketo's B2B marketing engagement platform, helping customers automate and orchestrate mission-critical marketing campaigns and activities from lead management and customer engagement to account-based marketing and revenue attribution. The addition of Marketo, along with our recently integrated commerce capabilities via our acquisition of Magento, widens Adobe's lead in customer experience management across both B2B and B2C in all industries. We're well positioned to continue capitalizing on this growing opportunity that we estimate to have a total addressable market of more than $71 billion by 2021. Adding Marketo to our digital experience business immediately accelerates overall revenue growth for Adobe, and other financial benefits will ramp during FY19 as the accounting impact from the transaction dissipates. Adobe is the clear leader in the markets we serve, creativity, digital documents, and customer experience management. Our solutions have become indispensable to millions of customers, whether they're in the design department or the IT department, the classroom or the boardroom. At Adobe, it is our 20,000 global employees that form the heart and soul of our business. In October, we achieved global gender pay parity, a critical milestone in Adobe's commitment to providing employees with a workplace that is diverse and inclusive. Last week, we were named one of Fortune's top 100 best workplaces for diversity. Adobe was once again ranked on the Dow Jones Sustainability Index a key barometer tracking sustainability-driven companies. In 2018, we made significant investments across our product portfolio, entered new markets, and made strategic acquisitions, which we believe will fuel continued top and bottom line performance. We expect 2019 to be another year of strong product innovation and financial results. John?