Adobe Inc.

Good day and welcome to the Adobe third quarter fiscal year 2020 earnings conference call. Today's call is being recorded. All participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will be provided at that time. At this time, I would like to turn the conference over to Jonathan Voss, VP of Investor Relations. Please go ahead, sir.

Good afternoon and thank you for joining us. With me on the call today are Shantanu Narayan, Adobe's President and CEO, and John Murphy, Executive Vice President and CFO. On this call, we will discuss Adobe's third quarter fiscal year 2020 financial results. By now, you should have a copy of the press release, which crossed the wire approximately one hour ago. We've also posted PDFs of our prepared remarks and financial results on Adobe's Investor Relations website. Before we get started, we want to emphasize that some of the information discussed in this call, including our financial targets and product plans, is based on information as of today, September 15th, and contains forward-looking statements that involve risk, uncertainty, and assumptions. Actual results may differ materially from those set forth in these statements. For a discussion of these risks, you should review the forward-looking statements disclosure in our press release we issued today, as well as Adobe's SEC filings. On this call, we will discuss GAAP and non-GAAP financial measures. Reconciliations between the two are available in our earnings release and on Adobe's Investor Relations website. Call participants are advised that the audio of this conference call is being webcast live 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. The call audio and the webcast may not be re-recorded or otherwise reproduced or distributed without Adobe's prior written permission. I will now turn the call over to Shantanu.

Thanks, Jonathan. Good afternoon. I hope all of you are safe and taking good care. The ongoing pandemic continues to result in a challenging environment everywhere around the world. People are seeking new ways to communicate, learn, and conduct business virtually. Content creation and consumption are exploding in a world where connecting visually has become even more essential. Students are adapting to learning remotely instead of in a classroom. Entire industries from media and entertainment to pharma, retail, automotive, and financial services have had to pivot overnight to digital operations to engage with customers and ensure business continuity. Electronic workflows and signatures are the only way to efficiently complete business transactions. The world has changed in a way that none of us could have foreseen. This reality has created new tailwinds for Adobe. Our mission to change the world through digital experiences has never been more critical. Our strategy of unleashing creativity for all Accelerating document productivity, empowering digital businesses is more relevant than ever and driving our strong performance across every geography and audience. Adobe had an outstanding third quarter. We saw strength across Creative Cloud, Document Cloud, and Experience Cloud. We achieved $3.23 billion in revenue in Q3, representing 14% year-over-year growth. Gap earnings per share for the quarter was $1.97, representing 22% year-over-year growth. And non-gap earnings per share was $2.57, representing 25% year-over-year growth. In our digital media business, we drove strong revenue growth in both Creative Cloud and Document Cloud in Q3, achieving $2.34 billion in revenue, representing 19% year-over-year growth. Net new digital media annualized recurring revenue, or ARR, was 458 million, and total digital media ARR exiting Q3 grew to 9.63 billion. We believe that everyone has a story to tell, and our goal is to give all creators, from students to social media influencers, business communicators, and creative professionals, the ability to create and amplify their stories. Creation and consumption across phones, tablets and desktops is exploding. Web content, mobile application creation, imaging, video, animation, screen design, AR and 3D are all surging in this new era of digital storytelling and business transformation. Enabling the capture, authoring and collaboration across each of these categories and inspiring our global communities, Creative Cloud is driving this massive content revolution. Q3 Creative Cloud performance was outstanding, with net new Creative Cloud ARR of 360 million and revenue of 1.96 billion. Driving our Q3 Creative Cloud performance was record traffic to Adobe.com, our acquisition engine, using proprietary models for attribution and optimization. Strength in our creative cloud, single app and complete offerings across all geographies. Growth in our creative mobile apps, delivering discrete revenue as well as a funnel to our multi-surface creative cloud offerings. Improvement in retention, driven by increased engagement and product usage among individuals, teams, and enterprises. Outstanding performance in the imaging and video categories with Photoshop, Lightroom, and Premiere Pro, and strong performance in the education segment across students, educators, and institutions. Adobe MAX, the world's largest creativity conference, will be hosted virtually in October. In addition to showcasing exciting new Creative Cloud products and services, Our programming includes 56 hours of around-the-world content and features incredible creators like actor Keanu Reeves, photographer Annie Leibovitz, and award-winning filmmaker Ava DuVernay. We expect a record turnout and are thrilled to already have over 200,000 registrations. With Adobe Document Cloud, we've reinvented how people create, edit, share, and sign digital documents with Acrobat and PDF. While digital documents have always helped small, mid-sized, and large businesses realize productivity and efficiency gains, they have now become central to businesses operating remotely. Supported with a rich set of APIs, Adobe Document Cloud enables seamless workflows and collaboration across devices Q3 document cloud performance was exceptional with net new document cloud ARR of 98 million and record revenue of 375 million. Q3 highlights included strong growth in gross new ARR coming from the Adobe reader funnel, significant gains in Acrobat web monthly average use, Acrobat mobile installs up 33% year to date Significant momentum with Adobe Sign, including our announcement to pursue FedRAMP moderate status. Key customer wins, including Citi, PwC, Pepsi, HSBC, Merkle, and JFower. And the release of the Adobe Document Cloud Resource Hub for Education, a one-stop destination, outlining how Document Cloud can assist with remote learning. The shelter in place requirements instituted across the globe created a heightened sense of urgency among all companies to accelerate their digital transformation. Overnight, small, midsize and large B2C and B2B companies shifted every aspect of their customer relationships from acquisition all the way through renewals to digital. As a company that's been through its own digital transformation, we have a deep understanding of what it takes to be a digital business, and that experience makes us the ideal partner to help other companies do the same. Over the past decade, we have put the right technology, processes, and people in place to precisely and persistently measure and manage performance every day at scale across each of our businesses. We developed across-company, real-time, data-driven operating models that leverages all of our Experience Cloud technology. The CXM Playbook, which relies on continuous product, platform, and process innovation, has fundamentally changed the way we run our company, and today we are helping our customers build their own CXM Playbooks. The industry's most comprehensive offering, Adobe Experience Cloud, features industry-leading applications and services built on the Adobe Experience platform, Leveraging Adobe Sensei, our AI and machine learning framework. Digital experience revenue was 838 million in Q3. Subscription revenue, excluding advertising cloud, grew 14% year over year. Q3 highlights include increased adoption of Adobe Experience Platform and the launch of new capabilities that allow marketers to accelerate data collection across channels, to enable faster, personalized experiences based on real-time insights. General availability of data governance capabilities in the real-time customer data platform. Early traction with our customer journey analytics service, which provides customers a complete view of the customer journey, online and offline. Acceleration in the deployment of our Adobe Experience Manager cloud service. significant quarter-over-quarter growth for commerce offerings, working with our advertising cloud customers to wind down our transaction-based offerings. Key customer wins included Eli Lilly, Truist, Nike, Lowe's, Shell, Lloyd's, and the U.S. Department of Commerce. A partnership with IBM and Red Hat to enable experienced cloud deployment in hybrid cloud environments that further strengthens real-time data security, for enterprises and regulated industries, and recognition as a leader in six Gartner Magic Quadrant and Forrester Wave reports. In the Gartner Magic Quadrant for CRM lead management, Adobe was the leader, achieving the best scores across ability to execute and completeness of vision. Adobe's record results would not be possible without the ongoing contributions and unwavering dedication of our employees around the world. They have demonstrated incredible resilience by quickly pivoting to a remote work environment without missing a beat. I am proud and grateful. Great companies are defined by how they manage through difficult times. Our strong corporate culture, focus on innovation, exceptional customers and partners, and always doing right by our communities drives us and our success. We're excited about the tremendous opportunity ahead of us and look forward to continuing our strong momentum in 2020 and beyond. John?