Adobe Investor Presentation June, 2017
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Adobe Investor Presentation June, 2017 © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. Financial Disclaimer Some of the information discussed in this presentation 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 the risks and uncertainties, you should review Adobe’s SEC filings, including the annual report on Form 10-K for fiscal year 2016 and the quarterly reports on Form 10-Q filed by the company in 2017. In our presentation, we may discuss non- GAAP financial measures. The GAAP financial measures that correspond to such non-GAAP measures, as well as the reconciliation between the two, are available on our website at http://www.adobe.com/ADBE. Adobe does not undertake an obligation to update forward-looking statements. © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe’s Vision CHANGING THE WORLD THROUGH DIGITAL EXPERIENCES © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. 3 Adobe Strategy Advancing Driving Digital Powering State of the Art Transformation Experiences with for Content of Industries Intelligence © 2017 Adobe Systems Incorporated. All Rights Reserved. EXPERIENCES MATTER MORE THAN EVER © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Sensei Powering experiences with intelligence Massive volume of content and data assets at its core Unified artificial intelligence/machine learning framework Deep domain expertise in creative, documents and marketing © 2017 Adobe Systems Incorporated. All Rights Reserved. 6 Adobe’s Cloud Platform Creative Cloud Document Cloud Experience Cloud ADOBE.IO ADOBE SENSEI Artificial Intelligence/Machine Learning Framework and Intelligent Services CONTENT DATA © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. Key Market Trends Beyond Cloud Intelligence Open Mobility Native Everywhere Ecosystem © 2017 Adobe Systems Incorporated. All Rights Reserved. The Platform DNA for Digital Experiences Beyond Mobility: Touch is just the beginning Cloud Native: Content and Data at the core Intelligence Everywhere: AI powered by Adobe Sensei Open Ecosystem: From solutions to platform © 2017 Adobe Systems Incorporated. All Rights Reserved. Digital Media Adobe Creative Cloud Adobe Document Cloud © 2017 Adobe Systems Incorporated. All Rights Reserved. Customer Trends Fueling Digital Media Growth Content Business Mobility Explosion Automation © 2017 Adobe Systems Incorporated. All Rights Reserved. Who Are Our Customers? Creative Photo Knowledge CMOs & Students Professionals Enthusiasts Workers CIOs © 2017 Adobe Systems Incorporated. All Rights Reserved. Digital Media Business Momentum Digital Media Annualized Recurring Revenue (“ARR”) $4.5B ~$4.0B $4.0B $3.5B $3.0B $2.5B $2.0B $1.5B $1.0B $0.5B $- Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Creative Cloud Document Cloud Source: Adobe © 2017 Adobe Systems Incorporated. All Rights Reserved. Creative Cloud Desktop Mobile ADOBE SENSEI Cloud Services Assets & Collaboration Community Marketplace © 2017 Adobe Systems Incorporated. All Rights Reserved. Creative Cloud • Desktop apps, mobile apps and cloud-based services • Subscription service with monthly pricing expands market opportunity • Lower entry price point • New customer acquisition • Combats piracy • ARPU growth potential through services such as Adobe Stock • Subscribers get frequent delivery of new features and capabilities © 2017 Adobe Systems Incorporated. All Rights Reserved. Creative Cloud Product Momentum • Adobe Stock • Creative Cloud for enterprise w/ AEM integration • Creative Cloud Photography • Touch • Creative Cloud for enterprise • Creative Cloud for teams • Creative Cloud for individuals • Creative Suite 6 • CreativeSync • Sync & store • Connected desktop & mobile • Desktop subscription • Community • Connected community 2012 2013 2014 2015 © 2017 Adobe Systems Incorporated. All Rights Reserved. Creative Cloud Product Momentum Content-Aware Crop Team 3D Content VR Face-Aware Liquify in Photoshop Projects Creation capabilities in Photoshop Adobe XD Project Nimbus Adobe Spark Project Felix Character Animator 2016 Adobe Portfolio Adobe Stock CCE Typekit Lightroom for Adobe Stock One-click workflow Advancements Marketplace Mobile 2.5 Premium Collection Match Font All Mobile apps AI Capabilities in Search Adobe Stock in Photoshop now on Android and Contributor Workflows Contributor Site © 2017 Adobe Systems Incorporated. All Rights Reserved. Creative Cloud Business Momentum Key Metrics >35% ~46% ~35M New to Y/Y subscription Adobe IDs Creative Cloud* growth outside the created on mobile U.S. devices >8M ~43% Behance Creative Cloud Enterprise members seats licensed in FY16 with services Source: Adobe, as of Q3 FY16; all Y/Y numbers based on FY16 Q1-Q3 comparison to FY15 * Cumulative new subscriptions, excludes Enterprise and Acrobat Single App subscriptions © 2017 Adobe Systems Incorporated. All Rights Reserved. Creative Business Momentum Revenue and ARR $4,000 $3,500 $3,000 $2,500 $2,000 Millions $1,500 $1,000 $500 $0 FY2012 FY2013 FY2014 FY2015 FY2016 Revenue ARR Source: Adobe, November 2016 © 2017 Adobe Systems Incorporated. All Rights Reserved. Creative Business Momentum Trended Revenue Mix FY2012 FY2016 Perpetual & Services & Subscription Services & OEM Support Support Perpetual Subscription & OEM Source: Adobe, November 2016 © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Document Cloud Desktop Mobile ADOBE SENSEI Cloud Services Assets & Collaboration Partners Services © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Document Cloud • Desktop apps, mobile apps and cloud services deliver streamlined workflows and compelling document experiences that accelerate business transformation • Leverages ubiquitous PDF format and ~1 billion Adobe Reader installed base on desktops and mobile devices • Using Creative Cloud playbook and cloud strategy to reinvigorate growth • Lower entry price point with subscriptions • New customer acquisition • Combats piracy • GTM synergies • Gradual transition to more recurring revenue © 2017 Adobe Systems Incorporated. All Rights Reserved. • Adobe Document Cloud Adobe Document Cloud Product Momentum • Adobe Acrobat DC • Adobe Document Cloud for enterprise • Mobile e-signature Salesforce integration • Acrobat XI with Cloud Services • Free e-signatures in Adobe Reader desktop & mobile • Workflow designer & advanced workflows • Digital signatures • Adobe Sign Across Workday Business Platform • Signature capture & sync 2012 2013 2014 2015 © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Document Cloud Product Momentum Advanced Modernized Adobe Sign On-The-Fly Enhanced Workflows Commenting Mobile Dashboard Document Correction Scan to PDF 4 Global Data Centers New “Compare Files” Recipient Groups Workflow Designer Adobe Sign Open Digital Customized Enterprise Deployment in Japan Signatures 2016 Signatures with Creative Cloud New Adobe Sign Integration with Accessibility Modernized for iOS/Android Marketing Cloud Enhancements Annotation Microsoft & Box Adobe Sign for Adobe Sign on Integrations Workday Recruiting Salesforce Lightning © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Document Cloud Business Momentum Revenue and ARR $900 $800 $700 $600 $500 Millions $400 $300 $200 $100 $0 FY2012 FY2013 FY2014 FY2015 FY2016 Revenue ARR Source: Adobe, November 2016 © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Document Cloud Business Momentum Trended Revenue Mix FY2012 FY2016 Services & Subscription Perpetual & Services & Support OEM Support Perpetual & Subscription OEM Source: Adobe, November 2016 © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Document Cloud Business Momentum Key Metrics ~13% >90% ~90B Y/Y Acrobat unit Acrobat units licensed PDFs opened per growth* as subscriptions on year in Acrobat & Adobe.com Adobe Reader >6x ~31% Y/Y growth of Adobe Y/Y Document Cloud Sign agreements created enterprise ARR growth on mobile devices Source: Adobe, as of Q3 FY16 Note: All Y/Y numbers based on FY16 Q1-Q3 comparisons to FY15 * Acrobat perpetual and subscription units licensed as Single App © 2017 Adobe Systems Incorporated. All Rights Reserved. Digital Media Opportunity MARKET VALUE CORE EXPANSION EXPANSION © 2017 Adobe Systems Incorporated. All Rights Reserved. Digital Media Total Addressable Market Across Creative Cloud and Document Cloud NEW INCREMENTAL • New creative jobs OPPORTUNITY • New student and teacher penetration • SMB and enterprise • Conversion from piracy base • Knowledge worker expansion MIGRATION OPPORTUNITY • CS3-CS6 customer installed base • Enterprise across commercial and education • Includes Acrobat perpetual installed base CORE EXISTING INSTALLED BASE • Subscriptions: CCI, CCP, CCT, STE • Subscriptions: Acrobat units licensed through Creative Cloud • Enterprise seat capacity: CC across Commercial and Education • Current Adobe Stock and Typekit ARR • Current Acrobat subscriptions, ETLAs and Adobe Sign ARR © 2017 Adobe Systems Incorporated. All Rights Reserved. Digital Media Total Addressable Market PHOTOGRAPHERS • Photo hobbyists expansion • Photoshop Lightroom and Photoshop Elements customer base conversion MARKET CONSUMERS EXPANSION • New mobile and web-based solutions targeting broad consumer base © 2017 Adobe Systems Incorporated. All Rights Reserved. Digital Media