This report is for Michael Tromp. Unauthorized redistribution strictly prohibited and considered a violation of our intellectual property.

September 18, 2019

Adobe 3Q19 (Aug-19Q) Results Important disclosures can be found in Appendix

STRONG REVENUE IN 3Q DRIVEN BY NEW CUSTOMER GROWTH IN CREATIVE + DOCUMENT; BOOKING DELAYS IN Q AS AEP ADOPTION BELOW EXPECTATIONS (CLEVELAND RESEARCH)

Key Points 1. 3Q revenue exceeded targets; Document Cloud accelerated, Creative and Experience constant Q/Q growth 2. Bookings underperformed in Q – (in mid-mkt) and Analytics Cloud (integration to AEP) saw delays 3. Mobile on-ramp, int’l expansion, and single apps driving new user growth for Digital Media (Creative / Document) 4. Digital Experience business driven by strong performance from AEM and + strong end market 5. AEP adoption below expectations (some pilots in market currently); company expects to meet previous FY targets 6. For 4Q , company focusing more on mid-market, driving AEP, and unifying GTM strategy with Magento / Marketo

RESULTS AND UPDATED OUTLOOK (MARKETO AND MAGENTO INCLUDED)

Aug-19Q RESULTS Revenue of $2.83B (+24% Y/Y) vs. prior Q +25% Y/Y Creative Cloud revs of $1.65B (+22% Y/Y vs. prior Q +22%) Document Cloud revs of $308m (+24% Y/Y vs. prior Q +22%) Digital Exper. revs of $821M (+34% Y/Y vs. prior Q +34% Y/Y and forecast of 34% Y/Y) Net New Digital Media ARR $386M (vs. prior Q $406M) Creative Cloud ARR of $6.87B (+21% Y/Y); Document Cloud ARR of $993M (+33% Y/Y)

GEO SUMMARY North America revenue of $1.64B +26% Y/Y (prior Q +28%) EMEA revenue of $755M +17% Y/Y (prior Q +19%) APAC revenue of $411M +28% Y/Y (prior Q +23%)

Nov-19Q OUTLOOK Digital Media revenue of $2.06B (+20% Y/Y) vs. prior Q of +22% Y/Y Digital Experience revenue of $848M (+23% Y/Y) vs. prior Q of +34%

FY19 OUTLOOK Maintained total revenue guidance of ~11.15B (+23% Y/Y) vs. FY18 +24% Y/Y Maintained Digital Media revenue guidance of +20% Y/Y (implied $7.59B) vs. FY18 of 26% Experience Cloud subscription bookings >20% Y/Y (prior guidance of 25%)

Highlights from Conference Call  Revenue in 3Q of $2.83B (+24% Y/Y) beat expectations o Creative Cloud growth driven continued momentum in mobile and new customer acquisition o Document Cloud driven by shift to subscription and conversion of free users to paid o Consistent Q/Q Digital Experience growth driven by AEM, Campaign, and Magento o Emerging markets performed favorably in 3Q (+40% Y/Y) - China called out as being strong o 92% of revenue from recurring sources in 3Q – continues to increase as % of mix  Company noted some delay in bookings in Digital Experience segment in 3Q o Subscription bookings for Marketo in mid-market below expectations . Function of GTM strategy and focusing more on enterprise o Also saw delays in Analytics Cloud bookings, which conversely impacted consulting services bookings

ARI TERJANIAN COOPER REA [email protected] [email protected] (216) 649-7275 (216) 649-7187

. Analytics Cloud being integrated in to AEP; less than expected AEP adoption causing some delays This report is for Michael Tromp. Unauthorized redistribution strictly prohibited and considered a violation of our intellectual property. o Also impacted revenue associated with AEP; below expectations o Highlighted that macro had no impact on booking delays – more about sales execution  Creative Cloud driven by upsells, new customer acquisition, and mobile o Mobile has been a health on-ramp for subscriptions o Success in enterprise offerings including new logos and seat expansions o strong on mobile – 130% Y/Y monthly active user growth o New Adobe IDs from mobile apps grew 40% Y/Y o Strong single-app performance from Pro and o Adobe Stock rev grew 30% Y/Y vs. prior Q of 25% Y/Y – seeing good traction internationally o Adobe Fresco new product announced in 3Q – will be available on Apple iPads in the fall o China seeing really good growth for Creative Cloud Teams  Document Cloud accelerated Q/Q from continued shift to subscription, mobile momentum, and o Record for net new ARR in 3Q ($72m) driven by subscription bringing total Document ARR to $993m o Enterprise adoption continues to be strong . Key 3Q wins – Deutsche Bank, Saudi Aramco, Dell, and U.S. Department of Veteran Affairs o Customers expecting to be able to handle paper-based business processes over mobile . More than 2.5 billion were opened on Adobe Reader mobile in 3Q . Adobe scan had 35m installs in 3Q (+30% Y/Y) – top downloaded scanning app on iOS and Android o Adobe Sign continues to gain traction growing +25% Y/Y and also introduced Adobe Sign for SMB in 3Q o New cloud offering that allows for instant access to PDF creation and compression on any browser  Digital Experience solution seen as market leader in CX – penetrating the entire C-suite o Key wins in 3Q included Delta Airlines, T-Mobile, Capital One, and Best Western o AEM performed favorably in 3Q – Assets and AEM Forms called out . Highlighted moving AEM to full SaaS, headless commerce, and DAM as focus areas for AEM o Magento adoption strong (bookings +40% Y/Y) with noted success of bringing Magento up market o Completed integration of Marketo and Campaign for full marketing orchestration stack for B2B and B2C o See the CX market as having a TAM of more than $70B by 2021  AEP is an exciting opportunity but company may have been aggressive with initial expectations for adoption o Company highlighted customers excited about AEP and already some initial pilot deployments in market o Admitted actual adoption not happening as quickly as originally expected o New Analytics Cloud upgrade available through AEP – customer adoption has been good, but shift to AEP is causing some of those booking delays o AEP more focused on enterprise than mid-market  Marketo strong in enterprise, under-performed in mid-market o Adobe unified sales organization for mid-market with Magento and Marketo o Shifting focus for Marketo to really focus on mid-market where the big opportunity is o Mid-market traction can help margin expansion – less direct sales notion, more demand gen through website  Digital Media ARR should continue to be driven by growth of new users o International markets, single-apps, and mobile on-ramps are driving users to the platform o Strategically using promotions to capture new customers o Leveraging DDOM model to drive new user growth and convert them to paid users o Education continues to be a vertical focus – expanded Adobe ambassador network to over 100 U.S. colleges  AEP is a CDP; a real-time platform to engage and have unified view of cusomter across all channels o Addressing things such as you buy a product from a website and then get ads for weeks for that same product o Or when you call customer support and they do not know what you’ve done in store or online o With a CDP - all of this data and different engagements would be tracked in real-time in one profile that can be seen by anybody on the platform o Groundbreaking technology – CDP, AEM combined with Analytics embedded into Audience Manager

Adobe 3Q19 Results Recap 2

Q&A Notes from Conference Call

This report is for Michael Tromp. Unauthorized redistribution strictly prohibited and considered a violation of our intellectual property.  Can you help us understand what it is it going to take DX back up to growth where you are expecting? o Clarify – wasn’t any impact from macro o Interest from enterprises across all geos and verticals remains strong o Guidance accelerating sub bookings Y/Y thinking about apples over apples comparison o AEM, Campaign, and Magento had strong growth o Magento received well by customers – have done a good job of taking Magento into the enterprise o New generation of enterprise software that is going to emerge – interact with customers across different channels . Have to deliver first mile of experience which is content and commerce . Segment audiences in real-time, customer journey management and orchestration o Built the AEP from scratch to deliver DDOM o Customers really excited about it o First software that integrates needs of CMO, CIO, and CRO o Excited about installations and interest o Maybe tad aggressive in terms of what we were expecting for adoption o As we think about targets and this business o Saw some delays in bookings but has not changed our excitement about business o Talked about Marketo specifically – maybe our natural inclination was to focus on enterprise – that is going well o Mid-market is big opportunity o Much like we drove growth in Magento business – our focus will now be both on Magento and Marketo o Aligning sales organization in the field o AEP – future of analytics services, campaign services o Investments have been factored into our 4Q targets o Expanding EBIT margin as expected  Digital Media strong Q – subscription growth in emerging markets – provide a little more detail on international? o Digital Media ARR across CC and DC continue to see strength o First is mobile . Mobile has been on on-ramp –especially international . Lightroom adoption has been great . Some people who come in only for mobile and buy it on app store . People come in through mobile and then want more and adopt desktop offerings o Doc Cloud shift to subscriptions international o Adobe Stock – primarily a U.S. product before . But as have more international content available – services revenue is increasing o New customers, mobile momentum o DDOM – gives us insights into what is effective in those markets . How do we price, engage customers, o China good growth as it relates to Teams offering in CC  DX business – 4Q guide implies a couple points below FY guide – why is it taking so long to get someone other than you to be in the leader role here? o We are going off subscription business – much larger base in 2019 than 2018 o In mid-market – create demand generation focus o We have had enterprise focus o Wish I had earlier done combined mid-market Magento / Marketo offering o AEP – nobody has delivered something like this – it is so innovative . Customer interest is high . Ongoing on-ramp . Maybe we were a tad aggressive on optimism . Confident that we will continue to grow that business that we had o Organization o Innovation roadmap is strongest as it has ever been . AI, new intelligent services, AEP, content + commerce o Pleased that I aligned the organization first so it is ready for someone when they come in  Is it possible to give us a sense of how much this DX issue is product-related integration or is it organizational?

Adobe 3Q19 Results Recap 3

o 4Q expect substantial increase Q/Q for sub bookings based on pipeline o New Analytics upgrade though AEP – customer adoption has been good – doesn’t have to do with a product issue This report is for Michael Tromp. Unauthorized redistribution strictly prohibited and considered a violation of our intellectual property. . It is a new notion so partners were waiting . Not a customer demand issue  Integration work and sales expansion – delivered a good margin – should we continue to see EBIT margin move up? o Guidance for 4Q EBIT margin – it is clear we are also focusing on margin o Said at beginning of year would see margins in 40% range and it is there o Continued focus on top-line growth o Mid-market notions are more marketing and generated by demand through website and less through direct sales so that would be more of benefit to margin  AEM – how are you thinking about ongoing momentum and any investments or re-architecture you are doing as focal point of DX? o Both Magneto and Marketo – we have self-service capabilities as well as ecosystem of partners . Magento – open source community helping bringing us leads and also with implementations . Magento already integrated with AEM o AEM – content continues to be differentiator o When we acquired Day Software 10 years ago it was a perpetual business o We have exciting plans to full SaaSify AEM o Headless content management – area of investment for us o AEM Assets – a lot of excitement for this o AEM Forms – another way people are using o Really excited for us – there isn’t a digital event that happens that isn’t run in some way on Adobe technology o AEM had a strong Q o Continues to be the the way people are re-platforming their web o Move to SaaS, Asset management, move to headless are three areas of focus with AEM  Is anything from DX standpoint from competition or is it all just on your GTM strategy? o Maybe some point solutions that do similar technologies o Vast majority of DX we are undisputed leader – AEP, intelligent services o Really isn’t anybody else offering similar capabilities o Document side – people can embed PDFs o $100B TAM  When we think about Expenses, how should we think about OpEx growth going forward? o M&A – nothing major on our radar o In 3Q – were able to contribute to lower OpEx in 3Q than what was modeled o EBIT margin expansion again in 4Q based on targets o Idea is to always focus on growing EPS as fast if not faster than rev  As you think about next year, can you talk about puts and takes to how ARR may look next year? o ARR – will talk more about at analyst day o Drivers we have . International, new products, mobile on ramp, single-app all bringing new users to platform . Then converting new users to paid users o Think can continue to grow ARR in the future and beyond  Where greater magnitude of bookings headwind came from? Was it more Marketo mid-market side or more Analytics side? o As Analytics is moving to AEM with real-time CDP – would say this had bigger impact o Then Marketo  With Operating Cash Flow in Q – it was below targets – anything issue there? o Some one-time events o Took advantage of some favorable vendor pricing to do some pre-payments o Also some tax payment timing o Ex-these would have been above $1B  What % of Marketo business is targeted towards mid-market? o Demand generation machine – easier to fix o Marketo already applicable to both mid-market and enterprise o Our natural inclination was to focus on enterprise o Now trying to align to more mid-market o Well-penetrated across both mid-market and enterprise Adobe 3Q19 Results Recap 4

 Mid-market appears to be delaying purchasing – what else do you need to see in integrated product by which customer base can move forward with purchases? What are you expecting next year? This report is for Michael Tromp. Unauthorized redistribution strictly prohibited and considered a violation of our intellectual property. o Bookings – we would expect overall subscription bookings for all DX cloud to be greater than 20% o The integrated platform – more for enterprise o Mid-market – more specific to Marketo o No issues with adoption by enterprise . Maybe a little aggressive in how quickly we thought enterprise customers would adopt AEP  What are things customers can do with AEP than they could not do before? o Real-time platform that activates customer interactions across multiple channels o Customer is first just a record in a database – that is inadequate in terms of levels of engagement that can be reached o Think about you go to a website, you buy a product, and then get an ad for that same product for weeks o Then insult to injury – it says there is now a discount for the product o So we are addressing things like this to make sure it doesn’t happen o Or with customer support – they should know exactly what you have done in a store or online to help you o Other thing is what is known and unknown and movement towards that with browsers o CDP = Ability to have one single unified view of customer across multiple channels o Understand how you acquire them, engage with them  Pricing as a driver? How promotional pricing and some of price increases are driving business? o Pricing is certain a lever o Not one as something as a ARR annual driver o Price America last year in NA and this year internationally – have seen price increases well accepted and people staying on one platform o Not one of core levers but certainly something we can use  Advertising – back in August Google shut out Adobe DSP from their ad exchange? Did this have any impact? o No impact o It was one day in one part in Europe as a result of customer used it inappropriately - then back up and running o Advertising is important to Experience offering o We have good offering because it cuts across channels – TV, search, display, and video o We are strongest in helping people with new media types such as video and TV o Adobe creating large market opportunities across all three clouds

Adobe 3Q19 Results Recap 5

This report is for Michael Tromp. Unauthorized redistribution strictly prohibited and considered a violation of our intellectual property.

APPENDIX

Disclosures: We, Ari Terjanian and Cooper Rea, certify that the views expressed in the research report(s) accurately reflect our personal views about the subject security(s). Further we certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in the research report(s). The analysts responsible for the preparation of this report have no ownership stake in this company. Cleveland Research Company provides no investment banking services of any type on this or any company. Proprietary research and Information contained herein which forms the basis for findings or opinions expressed by Cleveland Research Company may be used by Cleveland Research for other purposes in the course of compensated consulting and other services rendered to third parties. The information transmitted is intended only for the person or entity to which it is addressed. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from any . Member FINRA/SIPC

Adobe 3Q19 Results Recap 6