Hi, it's Kirk Materne with Evercore ISI. Thanks very much for joining us this afternoon. Really excited to have Jonathan Vaas from Adobe with us just to go through a little bit of a fireside chat. Then after about 25 minutes, I'll open it up to Q&A. Because we're doing this in more of a webinar format, you know, if you wanna ask a question, I think, you know, either use your raise hand function, and I'll sort of bring you in, or you could use the Q&A function as part of Zoom, which I assume everybody on this is pretty familiar with. Thanks again for joining us and Happy New Year to all of you out there. Jonathan, good to see you. You know, I think maybe we'll spend just a... Actually, I forgot to ask, but you know, two questions for you. We've asked all the participants, and you can answer this, you know, from your purview. But you know, as you go into 2022, you know, maybe what you're most excited about, frankly, from an Adobe perspective. And then, you know, I realize you know, you have a different purview versus some of our other speakers this morning, but you know, with all the macro things going on in the world, is there one that you're paying more attention to? Maybe it's inflation, maybe it's hiring. You know, I was just kinda curious. We've been asking everybody, so we'd love your input on those two questions just to kick it off. Good place to start. Well, first of all, thanks, Kirk, for having me on. Happy New Year to you. Hope everyone is doing well and safe. You know, when I look forward to 2022, the word that popped right into my mind is optimism. You know, maybe that's due to the fact that right now we're in kind of a trying month. You know, I know a lot of people who dealt with COVID over the holidays. You know, we're seeing a lot of noise in the macro environment. You know, I know a lot of folks in the investment community have had a tough couple of months. You know, I think at Adobe, when we look toward the future, ultimately we're optimistic about where things are going. You know, we've proven to be really resilient in the storm. I'm looking forward to getting past the storm. I think once we're there, you know, the future is certainly bright on a personal level and professional level in terms of the ability of digital to change the world for the better. We've seen the way that's been playing out, and I think we'll continue to see that. You know, ultimately, I feel optimistic about where things are going. If there was one thing in the macro that I'm most focused on, you know, there's so much, but I would actually say, probably, employment participation in the workforce. I think we've seen a lot of various impacts of the ways in which people have been opting out of the workforce during the pandemic, and I think, you know, that's. You mentioned jobs or hiring, you know, and certainly there's been a war on talent as fewer people have been out there looking for jobs. I think as we get back past the pandemic and more people go back to work, that's going to have positive impacts on GDP. It's gonna have positive impacts on just broad consumer spending, and certainly into enterprises. I think that's the one I'm kind of looking at the most. Okay. That's great. I guess just jumping into the business, you guys obviously closed everything up in mid-December. Could we just talk about the Digital Media side? I guess two questions for you on that. If you look at the arc of the year, you know, obviously it seemed to end up being a little bit stronger in the first half of the year and maybe and against at least our expectations, a little bit weaker at the end of the year. You know, how would you? You know, I think there is a view that, you know, things got, you know, sort of pulled forward by COVID and now it's sort of slowing down. You know, I think the business is very steady, but kinda how would you characterize where things are on sort of the Creative Cloud side? You know, because I think people are obviously worried about sort of that ARR number coming in a little bit below the street in 4Q. Yeah. Yeah. It was. You know, we did have higher aspirations in the fourth quarter. Based on what we saw early in the quarter, we were seeing some really strong trends. You know, when I look at the full year, it was a great year for Adobe. When I look at our initial targets, we came in well ahead of them. I feel like, you know, ultimately it shows, you know, a strong growth story, a strong profitability story, and that combination is pretty rare in the world. You know, I agree with your assessment that the first half of the year there was more wind in the sails maybe than the second half. The way I think about that is really it was the tailwinds of reopening that came in really strong. If we think about, there was some exuberance in the first half of 2021, after vaccines were shown to be effective, broadly rolled out. By June, we were seeing small businesses recover really nicely. I think when we look at the first half of the year, strong retention patterns from individuals, but really small businesses getting healthy and enterprises coming back and starting to spend again, was the biggest driving force behind the first half of the year for us. Mm-hmm. I think it was kind of a you know success correlating with reopening. The second half of the year, that reopening story or that reopening momentum stalled a bit as we had the Delta variant kind of slow you know come in and slow down you know the just economic activity towards the end of the summer. You know coming into the fall with Omicron and then some macroeconomic concerns, inflation. Kind of the reopening momentum we saw in the year, I think slowed down a little bit in the second half. Ultimately, and I think that goes back to why I said, you know, when I think about 2022, I definitely feel optimistic about where we're going, because I think we've shown that as we get past some of these hurdles and the macro economy improves, that's gonna correlate positively with Adobe. There's such a huge opportunity in digital with the way we're powering businesses, the way we're helping people work, you know, however and wherever they work. Of course, you know, power and creativity from professionals all the way down to, you know, beginners who wanna get out there and tell their story. Yeah. You know, when you look at your guidance for this coming year and you adjust for obviously the extra week in the first quarter and then for some FX trends, I mean, it still points to a very, I think, optimistic growth number, even on the Creative Cloud side, which is obviously getting bigger and bigger. You know, what gives you confidence? Or you know, when you guys ran through the numbers and thought about the guide, what kind of gave you confidence, you know, given the back half of the year was perhaps, you know, to your point, perhaps a little bit lighter than you would've liked to see? You know, I think that's a question that keeps coming up with people is like, "All right, well, you know, they just had a suboptimal quarter," I'll call it that. You know, why should I kind of feel confident that they have their hands around the demand environment going into next year? Sure. Yeah, I think it starts with if we just look at our track record and the way we've grown the creative business over the years, you know, it's something that we've given our differentiation in our products and the fact that this market is growing so rapidly as you see in our TAM, you know, that's kind of where I think it starts with us, which gives us the confidence. Although, you know, in the quarterization during 2020 and 2021, the pandemic definitely had some impacts on the normal quarterly patterns we saw. When we zoom out and look at the fiscal year, you know, I think overall we came in, you know, with a very strong number, almost $2 billion of net new ARR. For this next year, you know, I would look at the baseline of where we've been, the fact that the category is growing. But we have some new initiatives that are going to be contributing to that net new ARR next year that we didn't have in 2021, namely, Creative Cloud Express, a product we're very excited about, which we launched in December, and we think is really going to be the right product for all of these, you know, beginners and knowledge workers and students who aren't experts in using a complex tool like Premiere or Photoshop, but they have a story to tell, and they wanna create compelling content. That's gonna be a growth driver for us. Then there's Frame.io, which is a collaboration platform in the cloud for video. Video has been a super explosive media type. You know, that's a business we're really excited about growing. You know, look at the baseline, the momentum we've had, two new growth initiatives on top of that, and that gives us a lot of confidence about our ability to go continue to add net new ARR to that creative business. When we think about sort of the growth of creative, there's obviously the new subs dimension, then there's pricing dimension. I mean, I think for a long time, you know, I think it's been one of the better things that's been going on is that the subs growth, I think, has surprised all of us for being much more robust for longer than anybody would have thought definitely 3-5 years ago. You know, is it still mainly subs driven? Is there more pricing? Maybe you can sort of, you know, when you answer that, also bring into a discussion kind of how you think about pricing for like Creative Cloud Express versus other products and how you're trying to sort of optimize, you know, for pricing in general. Sure. Yeah, I think, you know, we've said that, you know, value delivery and pricing or how we bundle the products. Mm-hmm. While that is a driver of growth over the long term, it's not a lever we've pulled a lot recently because we've just been in proliferation mode. We want the next, you know, tens of millions or hundreds of millions of communicators out there and consumers and creatives using our tools. So we've really been proliferating. I would definitely say when we look at 2021, the predominant driver of ARR growth was adding new users. Pricing comes into play. Even if we don't raise prices, off the shelf, unlike some subscription companies that really have one product, we have a bunch of different offerings, from lower priced mobile offerings to single products on the desktop and then the all apps. There's definitely a journey for our users, where over time, a cohort of customers is gonna be using more of our products, getting more and more value, using services like Stock, and that's a way, you know, we can increase ARPU over time. You know, we've done that without really moving prices. I think with Creative Cloud Express now, we have a product that's been, you know, in development for many years, bringing together so much of the science we've done that is the custom-built product for new users, for beginners, for people who are not experts, but wanna create content. Shantanu said on the earnings call, folks may have missed this, but when asked about kind of degrees of freedom with pricing, he said, "You know, when you look at some of our advanced products, like the 3D products, which is a higher price today, I think Adobe does have some other products that might be, we're delivering more value than the price today." The reason, that's because there's this halo effect where some beginners might buy Photoshop because they've heard of it, right? We wanna make sure it's at a price point where you know, that's something that's on the table. I think with Creative Cloud Express, where we really think we have the right product that's built for people as an entry point, that does give us more freedom over time to look at pricing optimization or new bundles and making sure we're getting the right value for our more advanced products. Okay. I guess I think this came up on maybe our call back with some of the other sales side, but there's no real explicit price increase baked into guidance this year. Is that fair, or is that more of just you guys aren't gonna comment on it? Just so. Sorry. I'm not trying to box you in, but I think there's been some folks being like, "All right, well, subs are coming down, so they're just raising price." I don't think that's the message you're trying to send. No, we haven't made any announcement. Okay. around, you know, any kind of pricing. Really, it's more the context of saying, "Hey, this is something we're going to look at as a strategy over time. Yeah ... because we have added a lot of value." If you look at the last time we did a broad-based price increase for Creative Cloud, it was only the one time in the decade. I think we announced it back in 2017. It was a modest price increase that was then announced ahead of time and rolled out at renewal points. So Yeah you in terms of our 2022 ARR target, you're not gonna have. Even if there was some pricing in there, it couldn't possibly be material just given the way Right We would do that. Yeah, I mean, roll out over time. Okay, that's helpful. Thank you for that. You know, I guess the other question that comes up more obviously is some of the up-and-coming vendors and sort of the lower end of the market per se. You know, when you think about, you know, Canva or Figma, you know, how should investors sort of frame that? I mean, like, to me, they seem like market expander, sort of, you know, they're helping you all expand the market. You know, I don't get the sense that these are competitors, you know, and sort of the enterprise or even the sort of group part of your business. Can you just talk about that a little bit? 'Cause obviously, you know, that's been... I think people are trying to draw conclusions that the ARR performance in the quarter has something to do competitively when I don't think the two things are necessarily related. Yeah, I think there's definitely when you look overall in the ecosystem and software, there's some things other companies are doing that validate the explosiveness of these markets that we're competing in, right? If you look at the TAM for creative, it's built up of creative professionals where we said that's going, that's growing to $25 billion by 2024. That shows you how much runway there is just in that top end of the creative professional market. In the communicators bucket, that's growing now to north of $30 billion, and that's, you know, due to a number of things, but a lot of knowledge workers, and like I said, you know, people that just aren't expert in creativity but have a story to tell, they're turning to creative tools rather than, you know, maybe they might have turned to something like PowerPoint before for office presentations. There are other companies that are expanding the market and kind of validating the enthusiasm and the spending potential for people that wanna create content is very real out there. I think until Creative Cloud Express was launched, we saw it was definitely more of a complementary situation where we would see people start out on simpler tools, and then when they're ready to, you know, do more and advance to high fidelity content creation, they would come over to Adobe. We've seen that since Microsoft Paint. We've seen that, you know, with simple content editors in social media platforms on phones, and some of these startups out there in the world. I think with Creative Cloud Express, Adobe is making more of a strategic decision now to take all of the science that we've built and go down market and really compete, not just be the place they turn to when they're ready to do more, but the place they learn and start as well. We're building bridges from, you know, the point of entry, making it extremely simple to get started, all the way through, you know, more much more complex creation, like with video and Premiere and After Effects. Yeah, that's helpful. Lastly, just on Frame, you know, it seemed like you guys got off to a really nice start with that. Obviously had some, you know, seems like good cross-sell from the Adobe reps in the fourth quarter. Yeah, how should we think about, you know, that opportunity in 2022, just in terms of the ability to, you know, cross-sell and, you know, seems to me like it's almost like something like Stock when you bought it had a nice tailwind for a couple years as you just sort of introduced it to a much broader audience. You know, how maybe should we, you know, think about dimensionalizing that opportunity over the next 12 to 18 months? Yeah. I think Stock isn't a bad reference for how we think about it. You know, that was an example of us, you know, finding a very close adjacency in creativity, something that could be deeply integrated in our apps. We've seen explosive growth from Stock since we acquired it several years ago now. I think Fotolia, which was that acquisition, was a little bit larger of a scale than Frame.io was. You know, we've mentioned, you know, Frame, more than anything, we thought of it as, you know, a product and innovation acquisition and a talent acquisition. They're earlier stage in terms of their market reach, but they've got the best product, and we have the best product, we believe, in the industry in terms of cloud collaboration for video. Had a tremendous Q4. We think with our reach, if you just look at Adobe's relationships with enterprises, our enterprise sales force and ability to plug in a product like that with our enterprise selling motion, we're extremely bullish on the opportunity to get that out there. We think. You know, we've been talking about the theme of cloud, of cloud native applications, and we've been talking about the theme of collaboration a lot over the last couple of years. Frame was just, you know, the perfect acquisition for us to accelerate that strategy. So it's definitely like I mentioned from the outset, it's something we're excited about as a growth driver for 2022. I think we're even more excited about, you know, if you zoom out and think about where that could go in five years. You know, we're five years plus beyond the Adobe Stock acquisition, and, you know, that has certainly become an important part of our ARR footprint today. Yeah. Yeah. That's great. I'm gonna toggle over to the Experience Cloud business. I'm sure, you know, if folks wanna dive back into Digital Media, just feel free to raise your hand. I'll bring you into the conversation in the next 5, 10 minutes. You know, the Experience Cloud business, you know, I thought this was a really good year in sort of context for that business, right? I mean, I think there was some M&A in prior years, but you know, between Workfront and I think Anil's, you know, sort of focus on integrating the platform together, you know, it seemed like, I think it's one of the stronger years you guys have had in Experience Cloud in a few. You know, kind of how do you think about the year, you know, and sort of, you know, expectations for that going into next year? What are obviously tougher comps, perhaps with you know, Workfront lapping. You know, when we're heading into 2022, what sort of gets you excited on the Experience Cloud side? Yeah. I'm, you know, very pleased with the year we just finished and the momentum we have in that business. It was a year. You know, coming out of 2020, that was a year where enterprise clients really slowed down their purchasing. We knew digital first, enabling digital businesses was going to be critically important. We said a year ago, when we gave targets for 2021, we told a story that you would see gradual re-acceleration through the year of the subscription revenues. You know, and it's always a good thing when, you know, there you avoid surprises and the year plays out just like expected. Frankly, I would say once we got to the end of the year, the performance was even better than we expected just in seeing that momentum. You know, I think there's still more work to be done in that business, but everything is moving in the right direction. You know, I agree with kind of the points you referenced. Workfront, the acquisition we did just over a year ago, performed tremendously in the year. A lot of momentum and just so synergistic with you know, connecting the workflows of content creation through campaign execution and you know, powering businesses in the way they interface with their customers. Workfront had a great year. Ultimately, it was a year where our strategy of integrating all of our apps through a common data platform that brings data together in milliseconds and makes it actionable. You know, that's really playing out. We shared in Q2 of 2021 that we quote, "Blew past the $100 million book of business mark with our new data platform that had only been in market for, you know, not even 2 years at that point." We mentioned it passed a quarter of a billion in Q4. You know, although it's still a small part of the overall enterprise business, tremendous momentum there. We've said we believe in the future that that business, that data platform, is going to be critical for businesses and I think a crucial strategic piece of the business we're building. You know, we're excited with the momentum. If you saw the RPO number in Q4, really strong year-over-year RPO growth. That's primarily driven by our enterprise business, Digital Experience. Just really great bookings at the end of the year. I think strong momentum. We feel like we have the best data platform in the world that anyone's built. The only company that at scale can integrate customer profiles together in milliseconds, so you can deliver a personalized experience at the very next click at scale. You know, that's one that we're really excited about and think we have a lot of momentum exiting 2021. Yeah. What's the next sort of step forward on that? Is it just I mean, the data, the platform's been integrated now. Is it just, you know, expanding the reach from a sales perspective? I guess if Anil is here, you know, what would he kinda tell us are his, you know, real, you know, focus items for next year in terms of, you know, taking the next step with the Experience Cloud business? Yeah. I mean, with an enterprise software business, you know, part of the growth algorithm certainly is investing in sales reps and getting them up to speed and getting them fully productive. We've talked about we are in a growth company, we're gonna be hiring and investing for growth. I think, on the product side, investing in deeper integrations, both within our own ecosystem of applications and with our partners, is a really important part of how you grow the business. The biggest takeaway we really wanted to land from our December analyst event was this theme of how we grow with our customers into what I'll call transformational accounts. For years, we had just sort of broken down what our top 100 customer cohort looked like, but we gave a bunch more data points this year for the first time. We shared what the average ARR for our top 1,000 customers are. That's grown to $2.3 million in this last year. We showed the average ARR for the top 25 accounts, which is more than $20 million. I would call those the transformational accounts. We also added the total TCV, total contract value, for our top 10 accounts, more than $700 million. When you look at the very top adopters who are using our data platform, they're using all of the apps like Campaign, B2B Marketing Automation, Commerce. They're using our content platform, AEM. These are massive investments. They view Adobe as a strategic partner that is the touch point, you know, the connector between them and their customers in real time. I think for Anil, it's really the focus is looking at our customer base and working with them as partners to help them achieve their goals to grow their business by showing them how much more they can achieve by adopting our data platform and more of our applications. If you just look at within those customer cohorts and imagine how over the years, as we graduate customers up into that transformational category, the growth opportunity is immense. Then consider new logo acquisition beyond that, and you know, it's a huge opportunity. When I think about that business, and I think about your business in particular, you know, given it's a fairly wide portfolio of products, these are evolutionary relationships, not revolutionary. You know, to the extent people think that. Yeah, this was a part of the, you know, market that was pulled forward. I mean, it's almost by definition very difficult to pull forward a ton of spend on marketing and then leave it alone, meaning it's, you know, it's something that requires care and feeding and ramping of the technology over time versus sort of something you can ramp up and then ramp down. You know, am I wrong on that? Just because I think these are technologies that take you know, you're investing over a 3- to 5-year cycle, not over a 6-month cycle. Yeah, I don't wanna put words in your mouth. I like the way you said, you know, evolutionary rather than revolutionary. I think that's right. Again, think about the problems we're helping enterprises solve. The problem of, you know, once they have traffic on their website, providing a personalized experience that improves conversion, right? I haven't met the enterprise that says, "We just wanna get conversion to, you know, 2%, and then we're good," right? I mean, they're constantly looking to grow their business and drive efficiencies, gain more customers, drive more purchasing, and grow over time. When we're selling them products that are really partnering with them to help them grow their business faster, and we can show the value that they're gaining, and every business that I think Anil talks to says, "Personalization at scale is absolutely required for us. We have to personalize experiences if we're gonna win and we're gonna grow." It doesn't feel discretionary from their point of view. It feels absolutely essential to be a part of what's helping them grow their business. I, you know, don't see a story of pulling forward. Frankly, when I look at the CDP market, when I look at the, you know, the data platform market, there's so many enterprises out there that just haven't even matured yet to making those sorts of investments. I think we're still on a very front of wave of, you know, the, this adoption curve that we're gonna see play out over the next several years. That's helpful. I have one more, then I do see one question if you wanna be pulled in the conversation. You can either use the Q&A function on Zoom or just raise your hand. You know, I've talked to, you know, Shantanu and Anil about this for a number of years. You know, to your point on being early days in the CDP world, you know, are you starting to see customers start to make platform decisions now versus point product decisions? Is that sort of shift from point products to platforms or suites, if you will, you know, starting to happen in a bigger way? You know, I think it's been, you know, again, sort of evolutionary on that front, but it feels like you have the technology platform now that maybe allows that evolution to happen at a bit of a faster pace over the next couple years. You know, I think, you know, it's something that would be good to talk to Anil about too. I think we're still. I don't wanna say we're going from zero to sixty with a brand-new account, where they're just- Yeah. You know, say we're going in and saying, "You know, buy five solutions in the whole platform, let's go." I think we tend to solve a problem that a business really is looking to solve, and that's how you land, and that's how you gain credibility. That oftentimes, that's how do we manage the content in real time? Or how do we better understand where we're losing customers on our web properties? You know, where is it working? Where is it not? You know, sometimes it might just be we had a homegrown commerce solution. It's not scaling to our current needs. We need a modern commerce solution that works for B2B and B2C. It can be any of a wide variety of problems. Once we get into an account and prove our credibility and solve that problem, then it's really about speeding up the adoption of moving from, you know, the initial entry point towards them really adopting the platform. Those transformational accounts, I would refer to those as the companies that are really adopting Adobe as a front office platform. I think today it's still early days, and you do see a lot of point solutions and front offices that businesses are having to integrate themselves. Anil, a theme he talks about a lot is, over time, businesses are going to tire of having to be system integrators. They're gonna want a software partner like Adobe who's built technology that integrates all those systems. Our data platform is not closed to Adobe applications. It's open and can integrate data from whatever sources, internal databases, other vendors they use. Really, we want that to be our job of integrating those systems for them, and that's how we win kind of in a platform adoption world. Okay. That's great. Thank you. I got a couple others, but let me. There was a question I wanna get to. You know, so I'll just read it. So for the creative business, given the DDOM model, you should have pretty good real-time visibility on business trends. If the Black Friday/Cyber Monday situation happened earlier in the quarter, what are some of the levers you can pull on the marketing side of the equation? Yeah. The, you know, DDOM, we talk about that a lot. Yeah. It's something that has made Adobe world-class with our ability to adapt to behaviors that we're seeing almost in real time to find. One way that David Wadhwani has described it really elegantly is it's an ability to do a number of experiments in real time and see the data and understand which ones work and then sort of go all in on those ones. I think David described when he left Adobe back in 2014, we were maybe running 10 experiments a week, and now we're able to run hundreds of experiments a day. It might be how we're thinking about different search terms that we're investing in or different cohorts of customers that we're targeting online with different variable marketing spend. You know, I think ultimately, what we saw, it was not just Cyber Monday and Black Friday, but it was those weeks where traditionally we've had real spikes in net new ARR that have driven really strong Q4s. You know, I describe DDOM as an ability to figure out where the fishing is good and then keep casting there. Mm-hmm. I think there is something to the question where if some of those trends happened earlier in the quarter, you know, maybe we would have been able to. We certainly would have been aware of them and possibly able to invest more where we were seeing traction and adapt. But, you know, ultimately, though, Adobe is a massive company that's going to correlate with some of these macro trends. What we saw towards the end of the year, I think, were themes that every company was seeing, you know, in terms of what was happening, especially with consumer spending. Mm-hmm. We're not going to overspend on marketing if there's not appropriate return on that investment that's gonna benefit our shareholders as well. You know, it's DDOM is immensely effective. It's not magic, but you know, ultimately, we feel like, again, when we look at the quarter and the momentum with Frame.io, you know, it was the biggest ARR we ever put up in a quarter, and we're pleased with the finish. You know, wanna ask one just about, you know, the Experience Cloud TAM versus, you know, kind of where you all are. There's obviously a huge amount of runway there. You know, historically, you guys have done a lot of M&A in that broader area with, you know, Workfront being the most recent. You know, sort of what's the criteria now for that? Or maybe a better way of asking this is, has the criteria changed at all now that you have a more integrated platform where, you know, the things you look at have to be a little bit easier to plug and play, meaning I assume Anil's not dying to go do, you know, some huge bolt-ons. Maybe just given the size of the market, there is a you know time value equation that plays into that. I don't know. I'm just kind of curious, now that Anil's been there almost two years, you know, has the thought process around M&A and Experience Cloud changed at all for you or is it still yeah kind of the same lens that you've been using historically? You know, I don't know if I would say it changed. I would say Adobe always, with our Experience Cloud business, and frankly any business, has a very high awareness of what we would call technical debt. When you bring in an acquisition, there's a debt to pay off in terms of integrating the technology. We wanna have the best, highest functioning products in the world, that work for our customers. We don't just wanna be a holding company cobbling together different things we can sell to enterprises that don't integrate. You know, I think we've been aware of that in the past, and you know, that continues to be an important part of our thought process. You know, the data platform that we've built, one thing, we think that differentiates it and makes it best in the world is it's a technology solution to bringing in data sources from disparate systems and integrating them to be actionable in real time. The platform itself can actually be a competitive advantage that enables us to integrate technology. We, in fact, do. We partner so broadly through broad partner programs where people can come in and connect through APIs with Adobe's digital experience products. There, there's a lot of partnering that already happens out there. I think it's something we feel that integrating is a differentiator when people think about us compared to some other enterprise software companies in the world. It is absolutely an important part of our thought process. We don't just wanna, yeah, you called them bolt-ons, just bring in a bunch of different, you know, cats and dogs. For us, it really is about strategy first. You know, it's what our fundamental beliefs are around the problems enterprises are looking to solve, and they're looking for Adobe to help them solve, and where are we gonna be as a market in 5 years or 10 years. I think, you know, one thing we believe about digital experience or customer experience management software. There's always going to be a world where technologies have to partner and integrate together. There's not gonna be one company that owns every single set of technologies because it's such a complex world. We wanna make sure we own the things that really need to be deeply integrated, you know, under Adobe, but absolutely partnering is such a critical part of our strategy. You know, we have partnerships with ServiceNow, Microsoft, Qualtrics, Medallia, all kinds of companies in that ecosystem, and that's gonna be an important part of our strategy, you know, for the foreseeable future. Okay. Couple other questions. You know, I guess the CDP sales and implementation cycle longer than other marketing solutions? I guess the question is just sort of around, you know, time to value for CDP, for your customers. I think it's something that is shortening as we go. As you know, I refer to it as earlier innings. I think you know, something that's really critical when you have a new technology is finding the right early adopter customer. A year ago, we announced Verizon as one of those early adopter customers for us. We've announced Nike as one of them, a lot of other big companies. Though you know, the companies that make those initial investments on something new, there's gonna be a longer consideration cycle for them. I think now as we've proven the value proposition, we have a functioning product that's leading and truly differentiated, not just a marketing pitch. We see sales cycles shortening because people don't wanna be late adopters, right? I think, you know, it is complex enterprise-grade software that, you know, these are not multiple week sales cycles. They're, you know, possibly multiple quarter sales cycles. But I do think they're shortening, and that's. As we gain momentum, you know, we have the ability to move faster. We see customers that are motivated to be adopting and getting those solutions implemented so they can reap the benefits. How about just, you know, the changes on IDFA or iOS privacy? You know, has that helped? I think you all from a sort of a, you know, CDP perspective, meaning, you know, every big company is having to sort of deal with that. You know, is that a tailwind for you all at all? Is it a headwind? You know, I think you can probably view it both ways. It might slow down things, but, you know, people are gonna have to address it at some point, Tom. It's a tailwind. I would say one of the biggest reasons it's a tailwind is because people are constantly asking the question, what do these changes mean? It's an opportunity for us to get out there and tell our story around how brands need to learn to use first-party data to provide personalized experiences. One thing that Anil has clarified in a number of investor events we've done is within the industry, the changes that happen with IDFA, the changes that are happening with third-party cookies and browsers, these are things that have been expected and known for many years, you know, our engineering teams had been solving for. I think, you know, the press was kind of a little bit late to the scene, and suddenly, wow, a piano just fell out of the sky. Suddenly these technology changes are happening, you know, in the interest of consumer privacy protections. Within enterprise software, you know, we've been envisioning a cookie-less world for quite a while. Those things on the horizon were part of the reason we made initial investments in building a data platform to solve for them. They're not things that happened to us. They're part of why we had the strategy that we had. Now that we're amidst those changes happening and being on the horizon, it's an opportunity. you know, people wanna interview Anil and hear him talk about how to use first-party data. What does it mean third-party cookies are going to be going away? How are those gonna change the way businesses think about marketing technologies? Yeah. There's a lot of, you know, smaller martech companies out there. Are we at the point yet where you've seen customers go out, try a solution that maybe has less ability in terms of scale or purview, frankly, in terms of, you know, the amount of integrations they can pull in, and then they come back to you? Meaning, is it still so early that, you know, frankly, a lot of people might try out a lot of technologies in this area before consolidating back to a bigger solution? If that's, you know, that's generally the way the world's gone. You know, I think sometimes people think these are mutually exclusive trends at the beginning of a longer trend. I was just kind of curious how you know- At our scale, you know, with you know, a book of business around $4 billion, we're. You see it all. I mean, certainly that's something that we've seen. I think it's. That's probably a little bit on the periphery 'cause you know, Adobe is at the top of the market in terms of the functionality we bring. I think it's probably a more common story that we go to a customer offering a set of capabilities, and they'll buy, you know, a few of them from us and might go to another smaller vendor for some of those capabilities at a lower price point with lower functionality, and then later come back to us. When they've seen what they were able to do with our technology and realize, "This isn't worth the headache. We should just standardize on Adobe." I think more, 'cause enterprise software that, you know, customer experience management software, this is very sticky. The switching costs are high. I think more likely that they initially don't buy something from us and then eventually do versus buy from us, leave to go to a smaller vendor, and come back. Yeah. Last one for you, off the Zoom. Yeah, I think it's basically around, you know, the fact you obviously have guidance already out for DX for next year. You know, what would be the drivers, you know, if you have a blowout year, you continue the acceleration from 2021, you know, what would you say the drivers of that would have to be? Meaning, is it just, I mean, it might be a lot of things we've already talked about in terms of just customers going deeper with you, more new lands. I mean, it's a P versus V model in software. If there's anything that maybe stands out to you know, international expansion. You know, I guess how would you answer that in terms of what would need to happen to have, you know, acceleration continue from here? I mean, ultimately, you know, it might sound like a non-answer, but I believe this. I think if we're talking about a blowout year in 2022- Yep primarily that's going to come from our existing cohort of customers as they're making deeper investments with us. Those are things that are gonna happen faster than. As I mentioned earlier, when you think about new logo acquisition and how we grow with those cohorts of customers over time, I think that the new logos that we land in 2022 are gonna benefit the growth in 2023. They're gonna benefit the growth in 2025. Ultimately, you know, another thing I would say is a subscription SaaS business like this is extremely predictable 'cause the revenue really flows from the balance sheet. You saw the RPO number. You'll see that, you know, what was unbilled turned into deferred. The revenue growth is extremely predictable for a business like this. It's more You know, when we think about a blowout year, it's more our ability to evangelize, to add new bookings for our platform and, you know, across our solutions that are going to help us continue to accelerate that revenue growth in the out years. Before I let you go, I'd be remiss not to ask about Document Cloud because it's done really well, so I think it deserves a little bit of a shout-out. Yeah, I guess the question on that is you know, or I guess maybe the question is, you know, what should we be looking out for in Document Cloud next year? I think obviously, you know, there's always questions around sort of the Sign part of that. Yeah. There, there's obviously a lot more goes into that. You know, what should we be thinking about on that front? Obviously, the transition continues onto the cloud side, for that business. Anything you'd call out on Document Cloud as we go into 2022? Yeah. I would say, certainly we had a tremendous year with a lot of momentum, our fastest growing business. This is a very profitable business that's been around for a long time as well. I would say when I think about that business going forward, you know, sometimes we get asked about constituent parts, like what is Sign standalone, for example. If you look at our messaging and look at the way we're more and more we're talking about Sign, not as something separate from Acrobat, but as something deeply integrated within Acrobat. We're trying to advance Sign through the integration, sell the entire integrated document platform, and get people using Signature inside of Acrobat. For us, I think more and more of that business is about integrating it and selling the whole offering. Really, I think there's more opportunity ahead in terms of end-to-end workflows and the way people work. Again, people are now working together, not in the office, but across all kinds of different distances and not wanting to be emailing, you know, Microsoft Word documents back and forth. Just working in a cloud environment to collaborate using PDF technology all the way through signatures and authenticating those and storing it in the cloud. You know, it's a massive opportunity ahead. Explosive TAM. We get asked all the time about competition in the Sign world, but I think the way we see the future is Sign is just one critical component of what you need to do in a document workflow. It's not a separate and apart sort of a business. We're really looking at it all integrated together. Have you guys changed up the go-to-market at all with that? I mean, historically, or at least this is my perception, has been, you know, Acrobat's been sort of owned by the IT department. Whereas, look, I think there's been a lot of business users that have been making decisions on at least the Sign part of the equation. You know, you know, has that evolved? I mean, I think, you know, I think we've talked before that, you know, there's always sort of that opportunity, like, you know, Sign's been out there. Do you feel like you're sort of targeting people more in the line of business area, more specifically at this point in time? Is it just because you're integrating with Acrobat, it's a little bit easier to go talk to the guy that's already got the Acrobat ELA or owns the relationship on that front? Yeah. I mean, you're hitting on something, and it's absolutely a change we made. We've talked about sort of these digital transformation. We're talking to businesses about how they digitally transform. You know, we have a PDF solution that we sell to IT departments. I mean, that might look like the world three years ago. Yeah. One thing that Anil changed in 2020, this is he had been at Adobe six months maybe at the time, was making sure our entire enterprise sales force was enabled to think about PDF as part of digital transformation, and think of signatures as part of digital transformation. When we're talking to companies about their workflows and how the business operates and how they interface with customers, thinking about PDF, thinking about workflows in that way. That's something that really accelerated the business over the last two years, is being able to add our Document Cloud solutions into any deal where our sales reps see an opportunity. Okay. Actually, I lied. Okay, one more just 'cause we didn't talk about it. You know, margins and sort of just the philosophy around that at this point in time, I realize this year is a little bit weird just 'cause there's some catch-up costs coming in and things like that from, you know, travel and expense and sort of expenses coming back onto the income statement. You know, I guess just philosophically, I mean, you guys already have such high operating margins, it's sort of, you know, you're sort of punished by the fact that you're already so profitable to a certain degree. Yeah, how should people think about that? Maybe not on a, you know, on a multi-year view. I mean, you guys have been very consistent about, you know, driving top-line growth and very strong bottom-line growth. You know, I assume that philosophy hasn't changed at all. It's just maybe, you know, this next year is a little bit weird just because the comps are different in terms of, you know, areas of spend that just have to come back at some point in time. Yeah. I don't know, how would you characterize, yeah, the thought process on that? Sure. Yeah. You hear a lot in software about the Rule of 40, but you don't hear about the Rule of 60 that often with, you know, what Adobe adheres to with our non-GAAP operating margin. I would say the philosophy hasn't changed at all. Again, as you mentioned, the margin artificially was a little bit high because of some of these pandemic savings that you'll see as we're now getting back to business travel and facilities use. That does bring the margin down a little bit. If you look at the implied margin. We don't target a margin, but the margin implied by our targets. Actually the biggest factor that would bring it down from our 2021 performance is FX. Just the revenue lost to changes in the strengthening US dollar is actually the biggest factor. After that, you know, the rest is maybe half Frame.io acquisition, and then the other half some of those expense categories. Okay you know, where we were saving in the pandemic coming back. You know, ultimately, I think even the margin implied by our targets is extraordinarily high. Once we're fully out of the pandemic and kind of normalize, there's our revenue sources are so overwhelmingly recurring that there's a lot of natural margin expansion motion in our business. An enterprise software business wants to expand the margin over time as we grow with these cohorts of customers. We've, you know, said for the last couple of years we've been focused on both growth and profitability of our digital experience business. There's a lot more runway ahead there. You know, I just as we scale, you know, and get bigger as a company, you'll see leverage in line items like G&A, you know, which could go lower as a percentage of revenue. I think long term, there's absolutely a margin expansion opportunity with Adobe, but it is, there is gonna be a little bit of a normalization. when we do acquisitions from time to time, you'll see an investment cycle where it might go down and come back up. Okay. Great. Well, Jonathan, thank you for your time today. Really appreciate it. Thanks, everybody, for joining us. Happy New Year to everybody. Have a good afternoon. Thanks, Kirk. Take care.