Adobe Inc. (ADBE) Earnings Call Transcript & Summary

Welcome, everyone. My name is Mark Moerdler, and I cover global software at Bernstein Research. I've been covering Adobe for many years since -- prior to their cloud transition through to today, and it's been an incredible story. I'm very pleased today to have the team from Adobe here on the call and giving us a chance to be able to ask some detailed questions. We're running Pigeonhole, which allows you, if you're on the call, to be able to ask your own questions, and we're going to be looking at that and trying to ask the questions, obviously, to get the most votes. So please, put in your questions and vote. That will give us a chance to prioritize to make sure that we're asking what you feel is really important. So as I said, I'm really important to have the team -- really happy to have the team from Adobe on the call. We have Jonathan Vaas from the Investor Relations; as well as Dan Durn. Dan, I really appreciate you making yourself available to spend this time with you.

I'm going to start with some questions, one that I've been getting constantly from clients that dovetails into one of the questions on Pigeonhole. And that is, Adobe recently increased your pricing for your core solution, core creative solution and hadn't done a price increase in quite a while, while they were going through the cloud transition. So what I'd like to understand is, can you tell us how that price increase is going to impact the business, the revenue of the company? And can you also discuss the timing of that price increase? And lastly, one other point is can you give us a sense for the elasticity of demand that you're seeing in response to that price increase?

Sure. Hi, everyone, and I appreciate the opportunity to join you, Mark. So I think the first place to start is the predominant form of growth inside Adobe is about attracting new users to the platform, the technology ecosystem engaging with our products. And so that's been the case for the last 10 years. It's going to continue to be the case going forward. We've recently, as you know, introduced a product called Creative Cloud Express. And the intent of that product is to allow us to segment the user base based on their intended use cases with our technology and platform. So we've now got the product lineup that spans the entire use case. Prior to Creative Cloud Express being introduced are professional suite of products. It was doing double duty. It was serving the creative professionals. It was serving the communicators and consumers. And we're doing billions of dollars of revenue with consumers and communicators, but we're probably delivering more value to the professional community, than that lineup allowed us to address. And so we've added a lot of features and functionalities and capabilities to the products in the last handful of years since we've last raised prices. And so this introduction of Creative Cloud Express allows that segmentation so that we can look at how we optimize pricing across our lineup of products based on the value that we're delivering to customers. And so we feel really good about where we're at. But again, the predominant form of growth at the company is to get people on to the Adobe magic, get people onto the Adobe platform and ecosystem of products. In terms of impact from the pricing motion, introduced it a month ago, takes effect at the end of April. And so there'll be very little impact in Q2. And then as you know, when people come up for subscription renewals, that's when the new pricing takes effect. So there's a layering-in effect each and every quarter, over 4 or 5 quarters, to get at the full impact from a pricing standpoint. So you'll see a little bit of the impact towards the back half of the year. But you'll see it make more impact as we look into fiscal '23. And from an elasticity standpoint, again, we're adding a tremendous amount of value and features and functionality. And so users are voting with their feet, predominant form of growth is bringing people onto the platform. That's not going to change. And I think the people who use our products and understand the value, the artificial intelligence, the web native aspect of the platform, the collaboration capabilities and features that we're building in, they understand the value. And so I think this pricing motion makes sense, particularly since it's been a handful of years since we've done it, a lot of value to the products since then.

Excellent. So I'm going to follow up from another question back from the audience. We're talking specifically on creative and then we'll step up 1 level. How much runway do you believe is left in terms of the ability to sell point solutions to customers? Any sense of metrics or whatever, how to think about that, points versus suites.

Yes. So we've got a lot of headroom. And again, what's great about the product lineup as it exists today, we've got a segment of the customer base called consumers. We've got a segment of the customer base called communicators, and we've got a segment of the customer base called professionals. And as you see what's happening as a part of the creative economy, you're seeing a democratization of content creation. You're seeing an explosion of content creation. People are engaging in different ways. Individuals are engaging with social media in different ways than they were a handful of years ago. People are turning their personal brand into businesses, and they're engaging in a deeper way. And then there's a richness and a robustness of digital content that's permeating commercial and digital channels. That's great source of professional consumption of what we do. And so based on individual use cases, there is lots of headroom from an individual app perspective, and there is a lot of headroom from an integrated full suite of that perspective. And so if I look at the product market fit of our product lineup today and whether that's Creative Cloud, Document Cloud or Experience Cloud across the entire continuum of our business, I think we've got a better product market fit today than we ever have. And so I really like how we're positioned, and I think there's a lot of headroom off of where we are today.

Excellent. Following up, staying on in Creative specifically for a second, following up on your answer. Where do you see the Metaverse taking you?

So there's going to be a lot of definitions in the early days of what the Metaverse is to people. But I think there's a common element of all of those definitions that I go to. When I think of the Metaverse, I think of an immersive, rich digital experience far more immersive than currently exists on the Internet today. And when I think about that opportunity, there's going to be educational applications and business applications and consumer applications, health care applications. There's going to be a whole host of applications. But at the core of how the Metaverse is being defined, at the core of it is rich, immersive, far more immersive than we see today. And when I think about the world's largest creative community standardized on a set of technologies and products, the way our professional community is, and I think about the need case for that rich and robust immersive digital experience. Not only will we take advantage and capitalize on that trend as it plays out, but we're going to be on the critical path of making it happen. We're going to catalyze that trend because we're going to take that world's largest community, and we're going to turn it on this voracious appetite for immersive digital experiences. And I think we're just incredibly well-positioned to catalyze this trend.

Excellent. So we've had many questions about the Q2 guidance, particularly around digital media business. Investor feedback is that Q2 is a bit soft. When we look at Media ARR, you're guiding to net new ARR of $440 million versus [ $518 ] million a year ago. What's the dynamic that happened that's going on?

Yes, I think the first place to start is to understand Q2 2021, the year-ago period. And if we think about the pandemic, it started at the beginning of 2020, a lot of uncertainty in the business community, particularly small and medium-sized businesses. And what we saw is a real pullback from the market in small and medium, midsized businesses in 2020. Roll the clock forward to the beginning of 2021, and you had vaccines starting to become widely available, and it was like the great reopening. And so what we saw in Q2 of 2021 was a lot of catch-up spend for small- and medium-sized businesses that didn't make investments over the last 3, 4 quarters. So I would say the year-ago period was elevated due to that catch-up spend from small- and medium-sized businesses. And if I think about the targets we put out into the market at our FA day in December, and you think about 2021 having an extra week and a favorable tailwind from an FX standpoint, and you compare and contrast to 2022, we no longer have that extra week in our fiscal year. And FX is going to be a headwind this year given the strengthening dollar. And so when I normalize for those effects, you've got about a 17% full year growth rate target on our net new ARR for 2022, which is very consistent with where we've been on a normalized basis for the last several years. So we feel good about the fundamentals of the business and the way it's performing in the market.

So basically, the delay, the headwind occurred in 2020, there was a return to it. There's no effect that there was a pull forward from '22 into '21. We're just simply returning to the normalization at this point, we hope.

That's the way we see it. We see it as catch-up spend in 2022 -- I'm sorry, in Q2 2021 and then return to normalization towards the back half of this year once we take out the variability associated with the pandemic.

Perfect. So switching gears, highly voted on the Pigeonhole. Adobe's a success case of transformation from on-premise to subscription to SaaS, when you think about software companies. What do you think are the key success factors for such a transformation in your view?

Yes. So if I were to go back in time, first of all, it has to start with industry-leading products and technology and engine of innovation and serving your customers with really high-value capabilities that are solving their highest-value problems. It starts with the engine of innovation and the world's best set of products and capabilities. That's foundational. And then if you think about the journey we've been on, it's about understanding the digital journey our customers are taking and collecting first-party data and how they're engaging with us as a company and then having the best analytics engine in the industry so that we can turn that data into insights of what our customers want. And then we've got a content engine. We serve up content to our customers that's tailored to what they're looking for from us as a company. And there's a personalization of that experience that we've managed incredibly well. And then you think about our data-driven operating model, where we really dial in the engagement with our customers based on data, based on intent, based on usage patterns, and we've created this ecosystem of engagement with our customers that's just robust and fantastic. And it's why we get the loyalty we get from customers. It's why we have the depth of penetration of our markets. It's why our creative products are the industry standard, it's because the quality and the personalized nature of the engagement that we have with our customers is second to none in the industry, just a foundational set of capabilities for us. And the company has done a fantastic job of executing. And I look forward to the journey ahead. I think there's a lot more room to run in this regard.

Excellent. Lots of investors were looking for more clarity about your comments for 2H strength. Can you give us any more details on what you believe is going to drive the strength into the second half of the year?

Yes. So as I think about the fundamentals of the business, we talked about some variability due to COVID and put that aside, and we think about more normalized growth rates towards the back half of the year, the things I'd point to. Creative Cloud Express is now in the market. We've got millions of monthly active users on that platform. And increasingly, that will turn into a source of revenue and net new ARR performance and growth for us. Our frame business is doing really, really well. We see momentum around our 3D and immersive technologies, our substance product line. We've now got Photoshop and Lightroom and beta versions on the Internet on the web. And so that part is looking good. And then you think about Acrobat Web, the growth rates around that. And then on the DX side of the house. We're out in the market now with our first-party customer data platform. That's driving insights real time for our customers. So you see a breadth of strength, fundamentals of the business that look good as we progress into the back part of the year. And then you layer on top of that the modest pricing action we took, which will complement the underlying performance of the business. And we feel good as we look into the back part of this -- back part of the year.

Asking the question I think I get the most from, from clients, and that was how should we think about your annual targets in light of the commentary made during the last call on the effect of Ukraine and Russia?

Yes. So I think we all heard what we said on the call. We didn't update the targets. We updated the tax rate, but we didn't update the targets. And we just talked about the fundamentals of the business being good, and we like the growth as we look into the back part of the year. And then again, we've got the modest pricing action that we took. So fundamentals of the business are strong. We like the growth as we progress throughout the year. If there's a need to update the targets, we will. But we don't see that need right now, absent just sharing with people what we see on the tax rate side.

Perfect. I think that's very helpful to people. Hopefully, it will make them feel more comfortable. How should we -- question from the audience. How should we expect acquisitions to proceed under your leadership? Do you feel there are important constraints, regulatory or otherwise, that should be involved? How does your prior experience affect or impact your style in thinking about acquisitions? And are they big acquisitions? Are they little is your approach there?

Yes. So rather than classify them by size, I would say that we're going to make smart acquisitions at this company. What I mean by that is, is grow -- and so I'm going to be oriented towards growth. The opportunity set in front of us is large, it's enormous. So the engine of innovation is second to none at this company. This company is unbelievably innovative, delivers an incredible amount of value, executes well and adds a tremendous amount of value to our customers. So when you take that engine of innovation and you expose it to large growing market opportunities, the highest value form of growth is organic growth. We are oriented towards organic growth. So by definition, when you think about M&A and layering in M&A, inorganic growth to complement that, the bar for those transactions is going to be high because the organic growth opportunities are so attractive. But where we see an opportunity to accelerate our strategy, further our leadership position, accelerate time to market and do it in a value-accretive way for shareholders, we'll burn calories to acquire those assets. Frame is a perfect example of that. Frame is a great business that's performing incredibly well, but it's also got a collaboration engine and technology that we can use to accelerate the proliferation of collaborative capabilities across our entire product set. We've got a great road map. This will just accelerate the development of that road map and making those collaboration capabilities more pervasive across the product set. That's a great example of a transaction that's going to add a lot of value over time. Based on the transactions I've done in the past, the other thing that I'm going to be spending time on is when we choose an opportunity to go execute against, the value is not created when you negotiate the transaction. The value is not created when you announce the transaction. the value is created when it's well integrated into the platform and the Adobe family. And so the back-end Christmas from an execution standpoint is where the value creation engine associated with M&A is delivered. And I'm going to be hyper-focused on getting that right and getting it right and as quickly of a time frame as possible. Time to value is going to be an important focus from us.

Perfect. Switching gears to the digital experience side of the business. The first is, how do you see the opportunity in digital experience? And what are the changes in availability of data from, whether it's the changes Apple are making or Google is making with cookies. How do you think that's going to impact both the market and your specific opportunity?

Yes. So the opportunity in our Experience Cloud, I think, is tremendous. And what I mean by that is this, I think we're in the early innings of digitization of the global economy. Every single industry vertical within the global economy and every company exposed to those industry verticals is going to go through a digital transformation in the next decade or 2. Some will happen faster than others, but every single sector of the global economy is going to go through a digital transformation. And so when you think about companies and you think about a digital presence that complements their physical infrastructure, our Digital Experience business, our Experience Cloud business is the interface. It's the digital interface between a company and its customers. And so the market opportunity over the next decade or 2 in this market is going to be -- it's going to be enormous. And I think we're incredibly well positioned to capitalize on it. And what I mean by that is, if you think about the journey Adobe has been on, and we talked about transformation to a subscription and SaaS model, and the digital underpinning of that journey, the data, the analytics, the insight serving up content, the personalization of those experiences, we've been at this now for a decade serving Adobe's business. And we've got a great set of capabilities that are now being [ productized ] and packaged to sell to other companies so they can replicate a similar journey. And the parallel I would draw to the business is if you think about Amazon and their cloud capabilities, that was originally developed to serve their business. And then they realized that they were best-in-class and an industry leader and then started [ productizing ] that for others and have created a very nice business. I think we're in a similar stage with respect to our Experience Cloud business. Again, we've been at it -- Adobe was customer 0. We've been at it for a decade. We've got a customer data platform that can do hundreds of millions of transactions, capture them real time, the behaviors of customers, the real-time nature of that data platform. Then the world's best analytics engine to turn that data into insights and then the content delivery platform, world's best content delivery platform, to push content to users to serve up content so that, that digital journey is very personalized in nature but does it at a massive scale and globally across a company's footprint. The set of capabilities we're bringing to market are unmatched. And when you think about the world going from a cookies-based insight to first-party data, again, we spent the last decade honing these capabilities in this engine, and we've got a tremendous amount of leadership in this. And I'm really excited about the opportunity ahead as the world goes to a more fundamental understanding first-party data version of engaging with customers. Again, we've just got this incredible capability, and I'm excited about the growth prospects.

I appreciate. Another question from the audience dovetails on that. What levers do you have to expand Digital Experience margins? What's a realistic margin 3 to 5 years from now? And how does that impact Adobe's overall margins?

So I think as we go forward from here, what I would say is I expect to see a larger proportion of revenue delivered from the Experience Cloud business than we have today. So the growth prospects, the tailwinds around the business, the product market fit and the positioning we have is great. The setup is really good. What I would say is when we go back in time around our digital media business and the margin structure we see there, the engine of innovation and delivery of value to customers, we've earned the right to be the market leader. And we've got a margin structure that reflects that leadership position, tremendous amount of value being delivered to customers and a great business for us at Adobe. I would say, over time, as we own the right to be the industry leader based on a differentiated set of capabilities on the Digital Experience side, I think we'll have a margin structure that reflects that market leadership position. And so again, I'm pretty excited about the ability to grow that business, both from a top line standpoint but also a margin profile as that industry leadership position gets solidified over time.

Beautiful. Can you give us an update on retention metrics across the segment? How did -- where are you compared to the pre-COVID days? And the -- is the expectation for elevated churn as you roll out the price increase? Or is that a wrong way of thinking about it? And what's the historic precedent?

Yes. So the great thing about the business and where we sit today, again, focused on delivering value and capability and functionality to customers. It gives you a platform to have that conversation with customers about what the right thing to do from a value-pricing and optimization standpoint is. If I think about the retention engagement that reflects the value being delivered to customers, the observation I would make is those retention and engagement statistics are higher today than they were pre-COVID. And so we feel really good about the way in which we're engaging customers and adding features and functionality. What I'd also say, and I go back to the data-driven operating model, the underlying data and insights we have on the business and the way that sensitizes the judgments that we make around, not only how we engage with customers, but the commercial, the commercial terms around those engagements, we feel good about the modeling and the insights that we've got. And that from a retention and engagement standpoint, I would not expect, based on everything we see and everything we know and the feedback that we're getting, I would not expect that to be influenced in a material way by the actions we just took. So we think it's a modest set of actions, and we're still delivering a tremendous amount of value to customers to support those actions we're taking.

Perfect. How should we think about customer retention churn over time over the last number of years and through this transition?

Yes. So if we were to go back in time and take a look, so 5 years ago, we announced a pricing action. And I would say that the engagement on the platform is better today than it was back then prior to taking that action. And so again, if you engage in the right way and you're constantly adding innovation and value and features and functionality, and customers are engaging in a way based on their individual use cases where they see the value in the product, it drives leadership. It drives engagement. And I think people -- I mean we're probably one of the only companies on the planet that has taken one pricing action in the last decade. I think that speaks volumes to who we are as a company. The predominant mechanism of growth that the company is bringing new users to the platform, nothing is going to change on that front. We're going to continue to grow this company by bringing people into the ecosystem and exposing them to the magic that defines who Adobe is.

Beautiful. So here's a question from the audience. Do you see opportunities to strengthen disclosures relating to revenue growth, including TAM calculations, creative revenue segment data? What are your thoughts in that respect?

Yes. So you see what we've put out -- at our most recent FA Day, you can see some incremental disclosure and insights around the business. We constantly look at what those right metrics are and how we're communicating from an investor standpoint to give people a fundamental underlying, understanding and perspective on the business. I wouldn't expect to see any dramatic change today, but we're always looking for ways to optimize based on what we put out in the market to give investors better insights to underlying performance and trends of the business. We're always looking for opportunities to optimize that.

Perfect. Another question in here. How much revenue is Creative Cloud Express generating? How is that business doing? And how is it doing, you think, compared to smaller entrants in that market?

Yes. So here's the great thing, we've been out in the market for a few months and we've got millions of monthly active users on the platform. And when you democratize access to the technology ecosystem that Adobe has and the features and the functionality, and you make it very accessible to a segment of the market, it's going to add hundreds of millions of users to the top end of the funnel over time. And now we've got a segmentation of the way in which we can engage those customers based on their specific use cases, where they're going to take a journey with us through their lifetime. There are going to be some that operate in the free spectrum of the freemium model. There's going to be some that migrate towards a monthly paid version. And then there's going to be a nice number of them that ultimately move up to some of the more professional creative capabilities. So we like that lineup. What we can do right now is drive viral adoption of these capabilities. And once we get them involved in the Adobe ecosystem, Think about things like our stock capabilities where we make certain things available to people in much larger portion of those assets available as they move through those customer journeys. When you think about the artificial intelligence capabilities that we've built into our professional applications and revealing some of those capabilities to our customers, there's a richness of that ecosystem that gets created based on making these features available. And then if you think about the world's largest professional community, and you think about the professional community contributing stock content to a platform called Creative Cloud Express, again, there's a richness and a robustness in the market that very few people will be able to compete with. And so we feel great about the positioning. We're not advertising yet, the current revenue contribution. But what we have said, as we look into the back part of the year, those millions of monthly active users will start to be a performant from an ARR standpoint, will start to contribute to growth. But the most important thing we can do is engage in a viral way to create adoption and access to our great platform and do it in a very accessible way. So we're focused on engagement with that cross-section of the customer base, and it will turn into financial performance over time.

Beautiful. Following up on that one, is management concerned that the Creative Cloud Express will cannibalize the full-priced or the other versions of the product?

I don't think so. And the reason I go there is, again, we've got a lot of data on the customers and the way they engage with the product set and the things that they find valuable. And I actually think that there's -- again, as I think about the number of creators of content out there, it's absolutely exploding with the advent of the creator economy. And when you think about individuals and the way they engage with social media and the way they develop personal brands and then monetize that brand, on and on to the creative professionals, there's a continuum of use cases that we now have a product market fit that spans that continuum. I actually think this brings more people onto the platform. And I think it deepens the engagement with our technology ecosystem. And I think it adds features and functionality to complement that creative suite, the professional suite of products we have, that's going to make it even more valuable to the people who have landed there and have been developing rich content for years. You get an idea, you do a mockup. It gives you a platform to share it very easily with your professional colleagues, and it just deepens the engagement enrichment. And again, the underlying data we have in terms of how customers engage, we've been very strategic in bringing this product to market, developing the right features and making sure current customers are -- the value is enhanced and it gives us an on-ramp for hundreds of millions of new customers. We feel very good about where we're at.

Beautiful. I think that's very helpful. What levers do you have to expand digital experience margins? How should we think about margins long term?

Yes. So a couple of things. So there's scale benefits that will certainly improve that business from a margin structure standpoint. It's profitable today. We're an industry leader. But as we solve the industry's highest value problems, working with the Nikes and the Verizons of the world and on and on, the complexity of the problems that need to be solved serving those customers are creating a depth and a richness to the product portfolio that's going to serve other customers that come on to the platform extremely well. And it's going to create differentiation in the market that's going to be very hard for others to overcome. And so we feel good about the path that we're on and the leadership capabilities, the robustness of the product set. And we're going to be able to leverage those investments with future customers that come down the pipeline for us. And so as that business gains scale, as we invest in the products and get even deeper feature sets and differentiation in the market and as we drive leadership over time, I fully expect the margin profile of that business to reflect that journey. We're in the very early days now. The most important thing we can do is continue to invest in the product set, the feature, solving customer problems, the sales and marketing organizations to get that business ready to scale. But as we come up that curve, the product curve, the scale curve, the leadership curve, I expect the margin profile to reflect that journey.

Beautiful. Switching gears to the Document Cloud. How do you see the competitive dynamics in the market? Where is Adobe's sweet spot? And what really is the differentiation that does it? The secret sauce.

Yes. So what I like about the Document Cloud Business, if you think about the pandemic and you think about the spotlight that's been shine on the importance of digital documents and digital workflows, to underpin conducting business in a remote and hybrid work environment, I think there's a renewed appreciation in the market of the importance, key enablement that this technology plays in productivity at companies. So the backdrop of the market, those trends have been accelerated in the last couple of years, and so we feel good about that. And if I were to put myself in the shoes of customers, I think what they need, they're not looking for features where you can replace a [ wedding ] signature, they're looking for digital document solutions and digital workflow solutions. So they're looking for solutions to enable their enterprise. And they don't want to be the ones that solve all of those individual problems. They want to buy solutions that become key enablements to future growth so that they can get back to doing what they're, in business, doing. And so I think the macro backdrop against this business is better today than it's ever been. I think our product market fit is better today than it's ever been. We've got a solution capability that we're delivering to our customers. That puts us in a very good position about where the market is going, not where it's been. And if you look at the growth rates of our business and the performance in this environment, I think it reflects everything that I'm describing right now.

Perfect. Number of questions came in that are highly related, touching on the people trying to understand the mix within creative between the enterprise and the creator consumer, whether it's within the business or whether it's within the TAM, any color would be appreciated.

Yes. So I'm really trying to -- I'm having a hard time putting my finger on exactly what people are looking for. You can see some splits that we put out in our FA day, and I don't have the deck in front of me, so I can't go back and forth through all of the individual aspects. There's a split in there from a revenue standpoint, all apps versus single apps, that's a proxy for individual users and creative pros. And Jonathan, I'm just going to look to you for a little bit of help on sort of what's out there from a data standpoint that can unpack and give some insights based on those charts in the FA deck.

Sure. Sure. Happy to jump in. And those are -- those 2 pie charts that Dan is referring to from the analyst meeting deck from December are absolutely the 2 sources we would start. So Dan just referenced the one that shows Creative ARR by subscribers to all apps versus single apps. And what we've said is that's the closest proxy we could point you to towards the professional user base. Those are from individuals, small businesses and large enterprises, using all apps as a close proxy for the professional use case versus communicators and consumers on the single app side. And if you look at that chart, it looks like it's about a 2/3, 1/3, maybe 60-40 sort of a split there. There's another chart that then shows the different offerings, and that's ETLA or enterprise team, which is targeted towards teams and small businesses and individual. Individual is just over about half of the creative ARR. That's coming in through predominantly adobe.com as well as other digital channels like mobile. Team SMB, that's about 1/3, and then ETLA enterprise as the rest. So that gives you some insight on the diversified customer base that we have as well as the relative importance of those different segments.

Excellent. I appreciate the color. Changing gears again a little bit. With all of the concern today with the economies, et cetera, how do you think Adobe's revenue and margins would fare if we get hit by a recession? What's different now than the last recession, which has been a long time ago?

Yes. Jonathan can talk about the last one since, obviously, I wasn't here. What I'd say is I'd just go to the fundamental underlying components of the business. And when we do see strength across the business, and then I think about the value and the use cases and the explosion of content creation and the importance of digital documents to how companies are operating in this environment, and the importance of companies building out digital channels, and the importance of being the digital interface between companies and their customers, I like how we're positioned against that opportunity in a mission-critical way. Will there be something on the margin that gets impacted from a recession? I'm sure we're not going to be completely immune to it, but the mission-critical nature of what we do and the depth of engagement and the value that's added, I really like the predictability and the resilience of this business against those trends. I like being where I'm at against that opportunity.

I'll jump in and give a very quick contrast to where Adobe is positioned today versus the recession we saw in 2008, 2009. That was a few years before our transition to a subscription business model. And in fact, our experience in that recession informed that decision. If you think about our business model back then, we were selling upgrades to a professional user base on an 18-month cycle essentially. And what we found in a recession is it's -- I like to use an analogy to a skilled labor like a plumber or an electrician. In a recessionary environment, they need their tools, but they might opt to skip upgrading to a new shiny set of wrenches versus using the same ones they've been using. But again, imagine then a subscription business model where that skilled laborer cannot access his or her tools, that's the last thing they're going to do. And so for the users of Adobe's products that use them for their livelihood, either their day job or even a side hustle, the fact that we're on a subscription business model really makes our business so much more resilient and durable in that sort of environment. And we saw that in early 2020. And so I think we're much better positioned today. Certainly, at our scale as a global enterprise, we are going to correlate in some ways to what happens in the macro environment, but much more resilient and better set up for that scenario today.

Perfect. I apologize for the background noise right now. But what do you think -- what should -- what would you like to tell investors that you don't think has been communicated well enough about the Adobe business and the opportunity that should hopefully help them get a better clarity to the business and the future of the company?

Yes. I would say I think the long-term growth prospects are probably not fully appreciated, more broadly speaking. If I look on the creative side and I look at the creative professionals, and I look at what's happening with today's Internet technology and the more immersive 3D-type technologies that are just starting to get introduced. And then extrapolate that to a much more immersive, rich digital experience, the only way to deliver that content is to create -- take that largest community of creative professionals, turn it on the problem, and we are absolutely on the critical path of enabling that. Under appreciating probably the extent with which content creation is being democratized through the creator economy and having the right product market fit against that opportunity. I look forward for the next 5, 10 years, and I get really excited about what I see. The importance of Document Cloud and digital documents, digital workflows to conducting business and what is going to happen on the enterprise side. Then when you think about enterprises and you think about [ this continuum ], real-time data, the best analytics engine to turn that data into Insights, best content delivery engine to serve up personalized content to engage customers in that very personalized way, to do it at a global scale, when you see the engine to serve that content start to blend with the content creation itself, there's nobody better positioned against this opportunity in the next decade or 2 than Adobe. When those worlds start to blend, where the content creation is married with the data, insights and content delivery, the depth and width of those moats are only going to increase. And I don't think people can -- I don't think there's a company out there that can touch the position that we have in the market. So I get really excited as I see the evolution of these businesses and the opportunity that we're focused on.

Excellent. I think we're up on time. Unfortunately, that could easily hold the conversation for another hour or 2. Dan, it's been incredible spending time with you over the last couple of days. Jonathan, thank you, and the team for making this all possible. I think it's been very helpful. If you have any additional questions, please reach out to myself and my team. We're obviously to the Adobe IR, and everyone, stay safe and healthy, and I look forward to speaking to everyone soon. Thank you.

Take care.

Thanks.