If everybody can take their seats, we're ready to start. I want to welcome you to Adobe's 2016 Financial Analyst Meeting. And I'd also like to send that welcome to those on the live webcast. Our goal today over the next couple of hours is
to give you an update
on our vision and our strategy. We'll provide you lots of details and information about our momentum And our expanding market opportunities. Later today, we'll have plenty of time for Q and A with our management team. We hope that by the end of the day, you'll leave with the same excitement that we have About an hour ago, we issued a press release with updated financial targets. You can find a copy of that on adobe.com in the newsroom as well as our Investor Relations website.
We've also posted slides of our presentation on our Investor Relations website that you can access now or later. We are webcasting the meeting and an archive of the meeting will be available By tomorrow at the latest, but hopefully later today. In terms of an agenda today, Shantanu will kick things off in a few minutes and talk about Adobe's growth opportunities, our strategy, our vision. And we're excited after him to have Abe Prasnes, Our new CTO who joined us last year, he'll be presenting to you for the first time with Adobe. Following him, Brian and Brad will give you updates Digital Media and Digital Marketing.
We'll have a 15 minute break after Brian for everybody to stretch their legs, grab some refreshments and a snack. After Brad, Mark will give a financial update. And then, of course, we'll have Q and A at the end. And we'll have you
out of here by 5 p. M.
At the latest. First pitch is 5:0:8 p. M. Tonight. Before we get started, I need to review our financial disclaimer.
Some of the information we discuss today contains forward looking statements that involve risks and uncertainty, and our results could differ from our forward looking statements. And we encourage you to review our SEC filings for a complete discussion of those risks and uncertainties. With that, let's kick things off with Shantanu Narayan, our President and CEO.
Thanks, Mike,
and welcome to all of
you who are joining us here in MAX In San Diego as well as those who are joining on the webcast. For those of you who are not here in San Diego, it was really an exciting day here at MAX. We've had over 10,000 folks attending Max in person, which is our largest ever. And when I take a step back to reflect, it just underscores That Max, much like our digital marketing summit that we had earlier this year, the strong and growing community of customers Who are looking to Adobe for our innovation as well as our thought leadership. That community just keeps growing, which I think all goes well for Adobe's long term growth opportunities.
2016, by any accounts, has been a great year for Adobe. And today, you'll hear about the progress that we're making across each of our Businesses as well as our technology agenda. And as Mike alluded to, we actually provided an update, which said that Even with Q4, we're on track for the P and L targets that we announced earlier this year, which puts us in a fairly rarefied atmosphere in terms of companies that are growing at the scale At which we are with the associated profitability that we have as well. So what I'd like to do today is actually take a Step back and talk about some of the key trends that we're seeing in the industry, the impact that they're having on our customers And how Adobe continues to be uniquely positioned to win in the market that we are in. As you know, the mission that we talk about Adobe continues to be changing the world through digital experiences.
But when I think about it, the mission has never been more relevant To a broader set of customers than it is before. And it's exciting for us as we continue on this journey. And from our point of view, the 2 key goals that we're focused on He's continuing to empower people who have a story to tell to create whatever they want to do and how we can help every business transform As we think about what's happening with digital either as a tailwind or as a headwind. When I think about empowering people to create, the landscape for Creativity and design is clearly in the midst of a sea change. For those of you who are here at MAX, when we think about the creative canvas that people have to deal with, Expanding from 2 dimensional to immersive experiences like 3 d, Ultra HD, what's happening with augmented and virtual reality and extending To be able to deliver those experiences across every screen and surface from the phone to smart watches to cars to Home devices and even clothing, it's clear that this hardware innovation is driving tremendous change in terms of the experiences that have to be delivered And the screens on which that experience has to be delivered.
And when we think about what's happened with the devices that people are using To create content, the average phone camera today puts a high powered SLR in every one of our pocket. We're seeing inputs like touch and gesture and voice Open up very, very different ways and expressive ways in which people can do whatever creative content they need to do. And I think what's unique right now and what's even more different and you'll hear us talk a little bit more about that is that artificial intelligence and machine learning, I think for the first time, I've had the power to actually accelerate the creative process, which enables in my mind faster and easier creation Of the content that people need to create. I think beyond technology and the trends that are happening in technology, It's very, very clear that the demand for creativity and design capabilities is also rising dramatically. When you think about creative teams and how they are being pushed To create more content with content velocity faster than they've ever had before to keep up with the demands of the business, That's something that's extremely new.
When you think about what's going to happen in education and school projects, which are now presented as tests, That's going to dramatically change over the next years, whether it's going to be all in video and apps and multimedia. The market for all of these skills, the market for the tools Is expanding very, very significantly beyond just the traditional creative professional title. And we have talked to you over the last few years About how value expansion and market expansion in the creative business specifically or the digital media business represents a large untapped and growing opportunity. So the implications when we think about it in terms of what people are doing for Adobe is it's an area that's just ripe for deep technology innovation That builds on our decades of leadership. When you saw what we did today with new products like XD, which are going to deal with design, which I think every product manager in the world is going To learn of what's happening with new forms of 2 d merging with 3 d, our opportunity to take that creativity and put that With our next generation of creative apps in the hands of millions and millions of people, the opportunity has never been greater.
When we shift to the other end of the spectrum of what Adobe does and you think about what's happening in the enterprise, I think we can all acknowledge that it's summed up best in one word, Which is disruption. I have the privilege in my job of being able to meet with tremendous number of both business and government leaders, And it's very, very clear that the one thing on everybody's mind is disruption. Every single consumer Expectation is changing. And so these technology advances that are happening is causing every single business to rethink their digital strategy. New titles are being formed, Chief Digital Officer, person who is responsible for digital transformation.
And all this is coming from the fact Customers, every one of us in this room are demanding great experiences with every business that we interact with. And so if businesses don't reimagine how they engage with those customers, digital first in this new world, they're going to be at the risk of going extinct. So we look at it and say across every industry, if you're in retail, you have to think about how digital will enable you to compete with companies like Amazon. If you're a government agency, you're trying to compete with the private sector to recruit employees. In financial services, in travel and hospitality, Every industry, they're really thinking about how digital is going to either be an enabler or an inhibitor to the business.
And in the past, when you thought about what digital meant, digital was pretty simple. It was as straightforward as just going on the web, and then it meant maybe going on social media. We think that businesses right now have to deliver what we call on the experience business agenda, and Brad's certainly going to talk a lot more about that, Which is how do businesses deliver this consistent, continuous, compelling experience to all of their customers. And in order to do that, what we are finding in enterprises all around the world is that they have to upend the organizational silos that existed today
To focus on the customer. We like
to say at Adobe, everybody used to first focus on the ERP system or the financial system that was running the company And every other enterprise system was built around it. We think it's going to be completely flipped. People are going to start with what is the customer Software that you're using to engage with customers and then every other piece of software in the enterprise is going to have to adapt to that, So that you can deliver that right message to the right person at the right time. And so this disruption is not only happening, As we said in the creation for the individual, but it's also going to completely rethink disrupt the entire enterprise software landscape, Which clearly is a large opportunity for somebody like Adobe, who is also a clear market leader in that particular space. So we see that customers have actually invested 1,000,000,000 of dollars already in trying to apply horizontal technologies To solve this problem and they failed.
In order to actually deliver on this modern experience business, We think the implications for Adobe is we can help them with everything from making that digital experience, managing it, measuring it, monetizing it And mobilizing it. And I think it positions Adobe really well at the center of this enterprise transformation, which is customer experience centered And powered by what we have been talking about for the last few years, namely content and data. So when we think about these two things, Empowering people to create and transforming how businesses compete, the strategy that we've been embarked on is Well articulated, I think, in the slide in front of you. Our strategy is to build and deliver these great digital experiences. We're advancing the state of art for content in a way that no other software company can do at the scale at which we can do it.
We're driving digital transformation for industry after industry, enabling our customers to become experienced businesses. I think what's most important is we are powering those experiences today with intelligence using advanced machine learning and artificial intelligence That's applied to these trillions of transactions that we're already sitting upon to deliver great apps and experiences for the digital age. So let me touch on each one of these in a little bit more detail. I think all of you would acknowledge that Adobe has had a long history Of leadership and content, that's our heritage. And for those of you who are here today at MAX, you would see that we're advancing the state of the art In creativity on multiple dimensions, our vision with the Creative Cloud was actually very straightforward.
It was to completely reimagine the creative process. It was to attract a new set of customers to our platform. It was the ability to innovate at a pace That was far greater than the traditional 12 or 18 month product cycles. It was to build a more predictable revenue stream Where we could then see the stacking effect and we could continue to deliver people new services. And I think we would all acknowledge that we've been tremendously successful In delivering this continuous innovation to millions of users across desktop, across mobile and across cloud services.
We certainly believe that the best days of Creative Cloud are actually ahead of us. We're constantly looking right now for the new kinds of content That people can create and ensuring that the users who are using our products have the best tools to create this rich, Immersive experiences that need to be delivered across all devices. And at the same time, we're actually reimagining how that content is created With modern apps, cloud native apps and services, which provide everything that creators need, All the way from inspiration to being part of a community to learning all the way out to helping them monetize their creativity. In the document space as well, with PDF, Adobe has just a tremendous opportunity to capitalize on the leadership that we already have With PDF and Acrobat franchise. I think Brian is going to touch on this a little bit later, but there are approximately 90,000,000,000 PDFs That are open in one piece of Adobe software across the year.
And the opportunity for us then with PDF is to continue to enable Individuals who need to share information and businesses and governments who need to automate inefficient paper based processes To completely move into digital using Acrobat, using mobile apps, as well as integrated cloud services like Adobe Sign. And I think having led the way in establishing PDF as the de facto standard, we're continuing to innovate in the future of PDF And how we can work towards new things like cloud based digital signatures. So advancing the state of the art of content, clearly our heritage, But just tremendous opportunity ahead of us, both in the core as well as in value expansion and market expansion. I say many times though that the larger business opportunity for us right now is in the enterprise space with what we've delivered through the digital marketing platform Because digital experiences, again, are driving every business, every educational institution, every government to transform how they manage Their customer experience. We were the 1st company to recognize that while supply chain was automated, ERP was automated, HR was automated, Nobody had targeted the Chief Revenue Officer, the Chief Digital Officer, the Chief Marketing Officer, and we said we wanted to bring to bear Technology to enable them to move their businesses online.
We were the first. We now have the most comprehensive End to end solution for digital marketing, and we've been clearly leading the way, not just as a platform for Chief Marketing Officers, but now For this Experience business. And we've become mission critical. We've become mission critical. Brad's going to touch on some of the success that we're having there with additional solutions.
But every great brand in every vertical is now looking to us to enable them with their digital transformation. And the two things that I hear when I talk to customers all the time Can you help us understand how we can get more value out of the digital products that we're using? And Adobe, you've gone through this digital transformation. Can you give us a recipe or a playbook that we can use ourselves to undergo the same kind of transformation that you've had so that you can get close to your customers? But rather than just hear from me about customers, what I'd like to do is roll a video so that you can hear about how customers think about the impact that we've had on them.
Every brand, including Mastercard, has incredible equity behind it. Part of that equity is in that consistent look, voice, tone, color. The Adobe Experience Manager implementation allows us to do that at scale.
At Havas Chicago, it's critical that our teams are able to collaborate in real time. We rely on Adobe and Creative Cloud to be able to have them work seamlessly.
What's exciting about the work that we're doing with Adobe is that we're really redefining the future of television, not just for us, but across the world. And what we're seeing with Adobe Primetime is that it just Adobe
is so embedded in a community that is unthinkable that one would choose something else because it's become the standard.
Adobe understands the Academy of Art University.
The Adobe products are developing so that it can help people who wouldn't consider themselves experts on email In our previous environment, it took a huge team and we were only able to deliver about a dozen campaigns a week. Now we're delivering twice as many with just 4 people.
That constant feedback that I can get pretty much on a real time or certainly daily basis allows me to quickly see if our actions are providing the impact that we expected them to.
We adopted the Adobe Sign product to implement our paperless effort across all of state government.
The Opera House is such a magical place. How do we give that sense of proximity and involvement and inspiration throughout the world to people wherever they are? For that, we thought that Adobe was actually our perfect partner.
I think the video does a great job of Going across different industries, travel and hospitality, payments, financial services, media, such as Comcast, How the products that we are providing them are so fundamental to everything that they do. I also wanted to assure you that I personally went to both Hawaii as well as the Opera House To make sure that I got those contracts signed. But transformation at this kind of scale that we're talking about It's not just what Adobe delivers, but it also requires partners. And I think we've been incredibly successful Growing our ecosystem, whether you talk about systems integrators or agencies or independent software vendors who are now basing A lot of their business strategy and their digital disruption strategy on top of our platform. We're going to touch on this later, but We also announced a strategic partnership with Microsoft, where Microsoft looks at the flagship products that we have and is eager to ensure That not only is it available on their cloud offering, but in addition to that, their products like Power BI as well as Dynamics CRM Can actually leverage the market in cloud so that they can provide a comprehensive offering for enterprises who are interested in digital transformation.
And I think the message that I'd leave you with is through product integration, go to market collaboration as well as joint technology innovation, We are stepping up to help enterprises across every industry, embrace this digital transformation And deliver the experiences that they need to for their customers. The Adobe Cloud Platform really combines Our leadership in content and data into this integrated and open platform to help businesses. I think the name of the game right now is how do you make compelling but useful content? How do you manage and deliver these Personalized experiences across both media and screens. But I think most important, how do you measure and monetize all of this content to deliver the customer return of investment that they're expecting.
And it was in that way that today we announced a big new strategic initiative for company, Adobe Sensei, Which is a new artificial intelligence and machine learning framework as well as a set of intelligence services that are domain specific In the areas that we are the leaders in, in content, in documents and in marketing to dramatically improve the ability to both design And Adobe Sensei uses artificial intelligence, machine learning as well as deep learning capabilities that we've had for years. That's how we've been able to deliver features like Vanishing Point or Content Aware Fill in our imaging products to tackle today's complex experience challenges. Things like image matching across millions of images, things like understanding the meaning and sentiment of documents and truly finally targeting And understanding what audience segments are. It is, again, as I said, one of the biggest strategic investments that we will continue to make To deepen the technology moat that we have associated with our platforms so other people cannot compete with the breadth and depth of the offerings that we have in the market At the heart of our company, we continue to be a product company. Abhay is going to touch on this a little bit more, And we continue to be incredibly excited about the breadth and depth of the offering that we can provide to our customers as well as to our partners.
I think it's fairly clear that the Creative Cloud, the Adobe Document Cloud and the Adobe Marketing Cloud Our clear leaders in their categories, and you will hear from the speakers that all of them have significant growth opportunities. For those of you, who are at MAX, I think you saw some amazing new developments in Creative Cloud. It's just a glimpse of our innovation. It's how we've been able to attract new customers to our platform at a rapid race. It's the fact We're now seeing increased adoption of the Creative Cloud internationally.
And our 3 clouds are built on this Common foundation of both content and data and powered by Adobe Sensei that we're making accessible to our partners all across the globe. Across every dimension that we have as a company, I think we're really positioned for strong growth. We've been a company that's been executing against this mission of delivering great digital experiences. I think our strategy is working. It's clear.
Our employees are motivated. And what I feel really good about is we're executing against that strategy quarter after quarter, year after year. We continue to invest in this deep technology platform, And we're investing in the future for this intelligence platform that we continue to think will drive digital experiences and distance ourselves from our competitors. We're thrilled with the amount that people are looking to us, our customers, for thought leadership as well as a trusted partner On whom they can rely on to accomplish their business objectives. And I think all of the success is leading to a larger and larger opportunity.
A year ago, We talked to you about in 2018, the TAM was about $48,000,000,000 We believe right now that we have a $64,000,000,000 TAM in 2019. So we're dramatically increasing the opportunities for us as a company to continue to grow and deliver value. And I think the momentum that we've demonstrated in fiscal 'sixteen And the targets, we've provided you, the preliminary targets for fiscal 'seventeen continue to point that Adobe is going to have a phenomenal year Both ahead in FY 'seventeen and for the foreseeable future. So with that, I'm going to ask Abe to come up and give you a little bit more insight Into our technology and our product strategy. Abhay?
Good afternoon, everyone. It's really great to be here with all of you here. As Shantanu shared, I joined Adobe a little bit over a year ago as Chief Technology Officer. And in this role, I do think I have one of the best jobs at the company. I get to actually work with amazing teams and shape the overall technology strategy for the company As well as Innovation Agenda.
But even more than that, having been an absolute diehard lifelong user of Adobe's creative products, I've had a very special personal connection with the company. So for me today to be in front of this group and share a little bit about the product strategy and direction is that much more special Given my long term connection as a user with the company's products. So as Santru started, These are truly exciting times where the technology landscape is completely transforming our personal as well as our professional lives. Combination of smartphones, cloud services and changes in the communications landscape has completely changed over the last few years How we experience and interact with digital technology. Now as transformational as that may have been, the next decade Actually, it's bound to bring even more disruptive changes in terms of how we create, how we engage and how we immerse Ourselves with these new forms of digital experiences.
For those of you who were here this morning at the MAX keynote, you saw a little bit of a glimpse of the kinds of exciting things we as users can expect on the horizon with technology. The key change as we look ahead will be we will go in this future as users from thinking about discrete devices or Digital devices and mobile devices to a true concept of experience mobility, where how we actually interact with technology We'll be completely seamless regardless of what device, what time, what place, and we will have ability to immerse ourselves Between digital and physical worlds, unlike anything before. Now as we look at that, there are Four defining characteristics as we think about company's technology and product strategy, there are 4 core pillars of strategy that we think about In every product and every technology we build. 1st, as we look ahead, we need to go way beyond today's definition of mobility. We need to go well beyond mobile first to many ways thinking about mobile only and beyond.
2nd, The world of cloud is going to go from just a simple concept of renting cheap compute and storage to cloud becoming a cloud native hub of critical experiences of the future. Intelligence is probably going to be one of the most defining And disruptive characteristics of software industry over the next decade. We firmly believe that computing is going to go from a simple automation tool To becoming a pervasive part of our lives where it helps and becomes better and better companion for our lives. Last but not the least, as this world evolves into interconnected applications and platforms, the world has to evolve Towards much more of an interconnected and open platform. And so at Adobe, we really believe that these four pillars Have to guide a fundamental investment in the future for this company.
So I recognize it's a financial community, but I was I have the liberty to go a little bit deeper into some of the technology directions, and Mark gave me a quota that at least 50% of what I say has to be understood by the room. So I'm going to try, but I'm going to walk you through a little bit of 4 pillars and what are the bets we are making in each of our cloud products. Let's start with mobility. Each of us have personally experienced over the last 10 years how transformational The smartphone has been in our lives. That said, it has been still a very, very limiting experience.
Just to give you a sense of where we are headed, just this year, there'll be over 4,000,000,000 camera sensors that will ship into these devices. Think about that. Cameras are starting to show up in devices and applications use cases that we never thought possible. Or likewise, Accuracy in speech recognition technology and voice recognition just crossed a threshold that has been a computer science problem for last 50 plus years, Where now it's close to 95% accuracy in terms of human speech recognition. So combination of voice and vision We'll define a completely new paradigm of how we interact with these devices as we look to the future.
Now for Adobe, this actually opens up a massive new opportunity in Canvas in terms of what it means to build creative products, both on the creation side As well as delivery side to embrace these new BDMs of computer vision, voice and natural forms of interaction. 2nd, as we look at the world of augmented reality and virtual reality where the technology is going, It is going to transform industry after industry from movies, music, arts, creative expression And this new forms of reality mediums that combine digital cameras, 3 d augmented reality immersive with physical worlds, It is going to open up a completely new canvas for creative expression. For some of you, you may have seen the recent Pokemon Go phenomena It's actually a very early as broad as that phenomena was, it was a very early and tiny indication of the kinds of experiences that can become social and viral in a very, very rapid time frame. So for Adobe, as you saw this morning, We are investing very heavily in these augmented reality and mixed reality techniques in reimagining what our flagship products like Photoshop or Premiere, What can they become for this new immersive reality medium?
Last but not the least, we are on the cusp of a new phenomena where the digital world and the physical world starts blending in very unusual ways, combined with location aware services And billions of Internet connected sensors and IoT devices, we are about to see a world where our personal and retail and consumer experience This blend digital and physical in ways that are simply unimaginable today. So Building on that mobility theme brings the second half of that story, which is where are we headed with the future of cloud. As you think about these new immersive experiences on mobile devices with voice and touch and cameras, you need cloud To be much more than renting cheap compute cycles and storage cycles as it is today. As Brian shared this morning in his keynote, Cloud will actually go from being a nice to have to a mission critical central hub of all our Content and sharing activities of the future. Just as an anecdote, since most of you probably don't track these kinds of numbers, well, other than financial numbers, We recently crossed 10,000,000,000 petabytes of storage in the public cloud space.
That is a massive amount of storage. And in fact, as we look at new applications like video streaming, new imaging, social collaboration, the storage and compute in the cloud It's expected to at least double or triple every year for foreseeable future. So for Adobe, this means we have to really reimagine Each of our product experiences with these cloud native services at their core were things like collaboration, sharing, assets of the future, Services like stock and deeply integrating community workflows with assets like Behance into everything we do. Going from this reimagination of services, the second part of the strategy for us is really thinking about a world Which will increasingly become multi cloud. Companies like Amazon, Google and Microsoft are investing massive amounts of money, 1,000,000,000 dollars every year into building a global public cloud infrastructure, and each of them are now trying to differentiate themselves by adding differentiated services and capabilities.
As all of you know, at Adobe, we have a long history of innovating in a multiplatform world, whether it was Photoshop And Acrobat products on the days of Windows and Mac on the desktop to more recently our innovations in the mobile platforms between Android and iOS. We are committing to continue that journey into the cloud and being one of the first companies that takes a very aggressive stance On being a multi cloud capable company, which means our services will be available uniquely yet in a completely consistent fashion Across public cloud platforms that customers demand us to deliver them on. To that end, we recently announced a partnership with Microsoft. And really part of that partnership is 2 parts of that story. 1st is making sure Adobe services are available on Windows Azure platform.
That way, customers who have already chosen that platform can continue to leverage Adobe Services in Microsoft environment. But second and equally interesting part of the strategy for us is to integrate Microsoft Dynamics CRM, Power BI and their intelligence products deeply with Adobe Marketing Cloud and Document Cloud and other services, So customers get a fully integrated environment across end to end scenarios. Now one thing that's worth noting This multi cloud strategy is not only market differentiated for Adobe, we believe we are one of the first companies to actually take a Forward looking view in delivering SaaS services in such an environment, but it actually also gives us some significant cost benefits An advantageous lift to being in this multi cloud world. Last but not the least, a key part of this strategy for us It's content and data at scale. Everything we do, as Shantanu shared, starts with a belief that if we can blend the art of content With the science of data at scale and build the next generation systems around these technologies, then we can be uniquely positioned for this digital experience era.
So to that end, we are building a next generation platform that blends content and data technology for a future Where AI and intelligence becomes even more crucial. So speaking of AI, We announced, as you saw this morning, a brand new and a strategic initiative, Adobe Sensei. This is a very forward looking and strategic bet for us And builds upon decades' worth of work we have been doing in each of our products. The key element for this strategy for us is a belief That as computing goes hyperscale with cloud and goes multi device, computers and devices have to evolve From being pure automation tools to intelligent companions that help us make better decisions, give us deep insight and deeply personalized experiences. The 3 key elements of our strategy around intelligence center around the 3 key domains that Adobe has a long standing expertise in.
With computational creativity, we are reimagining what it means to combine our creative tools With deep intelligence, deep learning technologies, so we can model and amplify human creativity in our tools. This is a very aspirational goal, and we are very, very clear that we are uniquely positioned to take the decades' worth of learning in our products And combined with state of the art around AI and machine learning. 2nd, as we reimagine future of PDF and Document Cloud, We believe these new techniques around deep learning can be applied towards future of understanding documents and syntax and semantics and sentiments of these documents. Last but not the least, with the massive amounts of data assets that we have in our marketing cloud, We believe we can combine those assets with machine learning techniques and AI techniques to build an industry first Customer intelligence system that is exceptionally targeted at next generation of personalization and engagement approaches. Now the last leg of the strategy, as you look at those 3 between mobility, cloud and intelligence, those are crucial elements.
The 4th and equally critical leg of our story is to make all those technology investments available in an open ecosystem and a platform approach. Not only will we deliver our own solutions to benefit from those investments, we believe customers and partners and ISVs Increasingly look to Adobe to step up and play a broader platform role, the same way we played a role in the days of PDF and Acrobat, where PDFs Literally have become a global standard. All days of Photoshop where the ecosystem of plug ins and extensions around Photoshop The most vibrant ecosystem in the creative space, we believe we have a similar journey to go on in this next generation of cloud services. So Shantanu talked about strategy at the beginning, And there are 3 elements that he covered for Adobe as we look at how we deliver transformational digital experiences By combining state of the art for content with intelligence combined power to our data, The 4 imperatives that I just talked about are really all designed to be in service of this strategy. Each of the pillars Add to 1 or more of these elements of our strategy.
Now even as we execute on these pillars within each of our clouds, One of the key imperatives and focus areas for us is how we integrate these clouds and deliver an integrated platform. So the Adobe Cloud Platform He's our strategic bet in the product and technology portfolio to not only innovate in each of our clouds discreetly, But to actually start connecting the dots in meaningful ways so customers can get end to end amplified value out of these products. So Shantanu showed this slide a little bit ago. I'm going to walk through a little bit detail on these two slides Around what is the Adobe Cloud Platform and how do we bring our clouds together from a customer standpoint. So at the core of this platform strategy It is the content and data platform that we are building from the get go to be infinitely scalable.
It's cloud native. But most importantly, it's built from the ground up with intelligence in mind. Equal importantly, It represents decades' worth of learning and understanding in the content space from Creative and Document Clouds and Data Space from Marketing Cloud To bring together a system unlike any other on the market today to have this unified content and data platform. Built on top of that is our newly announced intelligence framework, Adobe Sensei. And Sensei really, For us, it's all about bringing the unique depth of domain knowledge and expertise we have and starting to package that expertise Into form of intelligence services that deliver those magical experience moments inside our apps.
So unlike other companies, there's a lot of noise and echo chamber these days around AI and machine learning. We are taking a very unique view of intelligence that's hyper tailored into the domains that we operate in. And then the layer above that is adobe. Io, Which is our open platform strategy around how we expose all these amazing innovation at content and data layers as well as at Adobe Sensei Layer To 3rd party developers and ecosystem around the globe. Earlier this year, we launched Adobe.
Io as a platform initiative, And already we are seeing significant interest from SIs, ISVs, developers across the globe to partner with Adobe And extend our cloud solution into industries and use cases where we may not naturally go ourselves. So at the risk of going just a little bit deeper and geek out a little bit, I'm going to take you one more click into The sensei layer. And don't worry about it. I'm not going to walk through every single intelligence service here. But this is a big bet.
And so it warrants spending few minutes on it Just to make sure everyone in the room gets how fundamental and how forward looking this bet is for us. Sensei, at its core, is really a unified AI and machine learning framework that's common across all our clouds That combines some of the best in industry techniques around machine learning, statistical learning, deep learning, neural networks, Reinforcement Learning, etcetera. This is one where we have a long history of hiring the best and the brightest, Whether it's in our Adobe Research Labs or in product teams, and these are unbelievable, talented engineers and PhDs working with some of the best universities on the planet, building that core algorithmic layer. But more importantly is the services we have built on top of that. Just to give you a couple of examples.
In the creative space, this morning, you saw a couple of really intuitive and amazing examples where a user can simply ask, Find me all the pictures that have this look and feel of a mountain with a sunset and this color scheme and sensory powered content intelligence service We'll go mine through in real time millions and millions of images on Adobe Stock as well as your personal content repositories And through deep learning, find exactly the images you are looking for. Or if you look at the face aware editing and liquify features that we have in Photoshop, This represents literally decades' worth of or millions of man hours' worth of work in deeply understanding facial features, How to automatically recognize eyes versus nose, ethnographic differences, male versus female, children versus adults, And the system constantly gets tuned to knowing precisely how to do face detection and face editing. So it's a great example Of the kind of intellectual property that somebody can't just wake up and say we are going to do creative products or AI in this space. This is very, very hard to do. In the document space, we are continuing to push the limits building on the PDF and Acrobat franchise and the example services in Sensei Our seemingly simple services where I can ask a question, find me all the documents that have content like the one I'm reading Or find me all the documents that have positive sentiment in it.
And this is way beyond anything on the planet today. It's not a file name search. It's not a search based on just who wrote the document, but deeply understanding the meaning and the semantics of the document. Within the marketing space, we have always done amazing work in driving AI and machine learning with our analytics product. We are continuing to push the limits here, and Brad is going to talk a lot more about this in a few minutes, is next generation of attribution or personalization and how we take that forward.
So you
could probably tell my energy and excitement around Sensei, and I'm sure Mike is giving me the hook here on time. But this is actually a very, very foundational bet, and you will continue to see us expand into new categories, new scenarios On the basis of this platform bid for us. So let me recap quickly for you what I just covered. There are 4 core pillars that we are betting very, very aggressively looking around the corners, looking into the future, and these four pillars We'll permeate and show through all our product strategies we go beyond. 1st is going beyond mobility.
We were there when cloud and mobile transition With Creative Cloud and Marketing Cloud and Document Cloud, we will be there as the world moves beyond today's definition of mobility into new forms of ARVR, Voice and Natural Interactions. 2nd, we will be one of the few companies on the planet that runs cloud native services At a scale unlike anything before. And so with creative cloud services, document services and marketing, we will continue to reimagine workflows With cloud services and collaboration at their core. With Sensei, we are going to deeply permeate intelligence in everything we do going forward. And last but not the least, we will commit to opening these things up as a platform play, which we are already well on the journey to open the innovations we do Well beyond our own products.
So as I wrap this, maybe I'll go back to where I started at the beginning of the talk. When I joined Adobe last year, I was personally very excited when I looked at the landscape of the market, other software companies. There are very few companies that sit at the inflection point in the intersection of some of the biggest industry shifts that are happening. On one side, Changing consumer behavior and changing expectation of consumer experiences. And on the other side, Business transformation that companies around the globe have to go around to adapt to that changing consumer.
As excited as I was when I joined the company, Having spent a year here talking to customers, really understanding the strength of the business and really a deep, deep belief in innovation and product, I am now even more energized around the possibilities that the company has for the next decade. Thank you. I'm going to invite Brian up on stage.
Good afternoon, everyone. I think, Abe, overachieved, I think You understood at least 62% of what he said, and I rate myself at a full 78%. So Great job, Bobby. That was very clear. It's great to be here at MAX and to kind of share the event with you.
Obviously, for those of you who had a chance to Joined us in the morning. So, frankly, one of the most exciting weeks in the company is we roll out we connect with our creative community and get to roll out The vision for where we're taking the products and the business and just think it's great for you to be involved in that as well because you get a deeper view Of not just what we're doing, but the connection that we make with customers and the depth of those relationships. I've been managing the combined Creative Cloud and Document Cloud business For just about a year now, when I stood on stage in front of you last year, I've been at it for a couple of weeks and I've gained a little bit more expertise in the domain. I think that what I've learned for the time and what I hope to convey to all of you today is not just the momentum and the success that we've had over the past year because I think it's been Obviously, very large, but more importantly, to help you understand the large and growing opportunity that we all fundamentally believe are in front of us.
And I think these opportunities Ours large and larger than we've ever believed, and I think we have some very concrete plans to continue to build against them. So it's something that I'm I'm very excited to share today with you. The move to Creative Cloud has exceeded our expectations. And I think we had high expectations, and we've Overachieved on that, and that's been on the backs of a team that's been working hard for the past 5 years to really drive not just the fundamental This transformation will drive the transformation of the product model and to really begin to layer in large investments to The likes that Abe characterized to build for the future of a connected cloud, of a Cloud centric and a cloud native model that really transforms creativity to the next level. It's very exciting to be a part of that.
Think if you bring it back closer to home in the near term, both the migration of the CS install base and new customer adoption has gone faster than we had imagined. So doing a good job of moving customers over. There's still a lot more to go, and we'll talk about that today. But I think equally, if not more importantly, is we're doing a great job of We're bringing new customers into the fold, customers who have not been in the installed base initially, and we'll spend a bit more time characterizing that for you today.
I think
part of that has been more affordable price points. Part of it's been the innovation model that we'd actually embarked on with Creative Cloud. Part of it's been our ability to actually tune aims to be much more pointed at segments of opportunity that we hadn't addressed before and things like Creative Cloud Photography, addressing a large number Everything from professional photographers all the way to photo enthusiasts and consumers has been played a key role And bringing new customers into the fold. But you saw today, for those of you who had a chance to sit through the demonstrations today, you saw the power Of Adobe Spark and how much that resonated with the audience for really putting creativity and putting the ability to tell a story And to communicate into a much broader set of hands there. So I think that it's there's a combination of core strength in the model, But also a model that really has given us a new platform to grow a new business with new customers.
And we built another amazing platform with Adobe Acrobat. We have tens of millions of Acrobat users out there, and they're starting to follow suit, follow the playbook that we established with Creative Cloud, and we'll spend some more time on that today. But it's also just the overall franchise that we've built over decades. You have to keep in mind that PDFs are ubiquitous. That was something that came out of a couple of very smart minds at Adobe decades ago.
In fact, Acrobat was a product called Carousel when I joined the company in 1992. And it's just been great to see the impact that John Warnock and a team of engineers and some Some fairly bright business people as well had on actually building that franchise up and going. And now we're processing tens of billions of PDFs through our products. And throughout the industry, this story tells itself over and over again. There are massive industry trends, stepping back from both Document Cloud and Creative Cloud that are really the tailwinds that we're going to sail into capture here.
And at the same time, these trends are Posing new problems to customers and they're grappling with how do I solve those in new ways. And I think that Adobe across all of our clouds, Including Marketing Cloud. We're in a very unique position to combine the strength that we have with content and assets And the ability to personalize and deliver richly personalized experiences and monetize those experiences in a unique way. On the content side, even if you just look at The explosion of content from mobile to 3 d and VR, we are in a very unique position. We are in the capper seat when it comes to being the company that people come And so while we all tend to think about the recent results and the next quarter's goals, and I know that that's something that Shantanu talks to me about daily, That's impressive.
I think it's important to step back and kind of amplify the larger picture. I think, Abhi, it's great to follow Abhi because he did a great job of painting a much broader landscape that we're playing on, a much broader And just to see to reflect on how big these opportunities really can be if we continue to execute, which we will. So let's get started on kind of some of the core themes here. I think these are this is really a refresh of some of the themes that Avi said, advancing state of the art and content. That obviously plays very well To the businesses I manage, driving digital transformations, this is something that we're all very focused on, particularly on Brad's side of the business.
But we're Fundamentally focused on what does this mean from a content and an experience standpoint and how do we actually retool not just our asset producing tools, How do we retool the whole ecosystem to actually deliver against those content experiences? Driving wholesale change and digital transformation of industries, this is as much about What we do with content, but also thinking about the document differently, thinking about the role that the document plays in driving business And how do we actually complete the journey that we've been on for a couple of decades of going from paper to digital and accelerating the business process with those documents. Creative Cloud and Document Cloud businesses, they have a lot in common in terms of we share the same market trends that impact both of the businesses. There, we share a lot of common customers, and we share common go to market synergies. And so the more having spent the past year on the business And managing them as a unit.
I think that I think about these businesses very comprehensively and synergistically. And you'll see that reflected in how we think about the framework for the TAM and our product strategies. These businesses belong together, and we think about them holistically. So first, we'll touch on customer trends that are creating a tailwind here. Obviously, we've gone very deep between the morning and And Abe's talked this afternoon, so I won't dwell here, but maybe add a little more perspective from a customer standpoint.
Mobility, This is really every one of us has a phone. What we're seeing that is really relevant to the digital media business is we not only are engaging with these phones As consumers of content, but these phones are we our tools are being used to deliver against the experiences that are hosted by these phones, the experiences in your pockets. And they're starting to be used at scale to actually build these experiences. So with things like the iPad Pro and the Surface Pro and much more capable touch devices, We're seeing the world of mobility become a world of creators. And so when we think about how do we serve them holistically, How do we deliver on what Abe calls experience mobility?
This factors in a very primary sense into our strategy. We're also seeing a dramatic increase in both the volume and the diversity of content. We are the one stop shop for content production. There is nowhere else to go In terms of producing professional content at scale than Adobe, and we think this is a trend that as people as Customers really focus on delivering against these rich, immersive personalized experiences, whether it's photos, video, 3 d, animations, virtual reality content, Apps for business, we're in a very strong position here. And we talked a bit about business automation, and this is just it's both the transformation of business through Through the app experiences, through the web experiences, but also the transformation of both internal and customer facing processes that have been on paper before.
And so we're very focused on Really, these customer trends as we think through our product strategies. Let's talk about who these customers are. So we talk a lot about customers. Obviously, the core of our strength He's a creative professional. This is the customer that we've served for decades here.
But we also serve enterprise leaders from marketing and IT We were really behind driving this new form of customer engagement and the digital transformation of experiences. We serve students as individuals. We serve education institutions, Government agencies and increasingly consumers. We serve everyone from photo enthusiasts who are using products like Elements and Lightroom To whole new creatives who want to find new ways to tell their stories and express themselves who are consumers at heart. So we serve a very broad spectrum of customers.
This week at MAX, we're hosting over 10,000 of them. I think the growing tally was 10,700 or something like that And 50, and 50 is Dave. We have 50 more to update on our doorstep. And they all come together. And I've talked to in the moments that I've had outside of conferences, I've Several who are from all walks of life.
I've talked to consumers who are using Spark to just raise funds for a school project. And so They're coming out, and it isn't just a professional conference. We're seeing people from across all walks of the customer base. And as we engage these customers, we see clear momentum, not just in the applications and the cloud services, but also in the value added services We're bringing together with Adobe Stock and Cloud Libraries Creative Cloud Libraries and Adobe Sign. So we're seeing these customers Willingly engage and deepen the relationship with Adobe as they're looking for deeper and deeper and more integrated solutions from us.
Talk about the framework for today. I'd like to share first some highlights of our strong business momentum. Then we'll go into An updated view of the TAM through 2019. So the last time we got together, we actually covered TAM through 2018. We're going to update that and give you a 2019 view.
We're going to give you that across digital media. And then we'll wrap up with a brief overview of our strategy and how are we going to direct our energies to unlock this opportunity. Before I do that, I'm going to take one sip of water. So let's start with business momentum. So things are going well.
As demonstrated in this chart, the move to subscriptions with Creative Cloud has been a huge success. I'm trying to practice a little bit of understatement to compensate for Jason on stage this morning. We're making great progress with Creative Cloud, and we're actually making very good progress transitioning Acrobat to a recurring revenue model as well. We'll talk more about that. As you know, when we shared we exited Q3 2016 with $3,700,000,000 of Android Digital Media ARR.
We still anticipate the yellow bar there. The growth we've seen so far has been driven largely by migration of both the Creative Suite and the Acrobat installed base In addition to new customer penetration, we'll double click on each one of these. Just looking at some of the product momentum, I think that We've continued to deliver great innovation across the years. This is you see the stream of innovations that we've focused on through 2015 with Creative Cloud. From the day that we declared a new strategy to today, thousands of new features have been delivered across all of the customer segments that we characterize.
2016, in particular, was another year of great innovation. I think you saw a lot of that on stage this morning, starting with Adobe XD in March. We delivered 8 feature rich updates, 1 each month based on a lot of the feedback from a very engaged customer community, and the product is getting great response so far. In June, we updated Creative Cloud with a major update, dozens of new features across desktop and mobile and Adobe Stock and started Kind of the journey that we're on integrating Adobe Stock to more deeply into the Creative Cloud and also, release Spark in first half of the year to address the broader consumer opportunity that we shared with you this morning, integrating web and mobile services in one unified service to create and share stories in minutes. It's actually resonating a lot with not just the consumer segment, but as you saw this morning with the response, the design segment, there's a lot of people who are actually picking it up.
At today's keynote, just to refresh for those who weren't here, we focused on some core themes around Cloud native workflows, some of these are very familiar. We talked about Sensei and machine and deep learning and AI. Collaboration was a core theme across Multiple products that we demonstrated and mobility, obviously, and the ability to actually have experienced mobility across different surfaces, Including the new studio device that was on stage from Microsoft where we showed XD Windows, which will be released in beta by the end of the year. And really, the themes of advancing the new future of design and creativity with the new apps, the refreshes to the core desktop and mobile apps. We've completed the offering now on Android, so we have complete parity between iOS and Android and then some deeper enhancements to our position with the marketplace on both stock As with Creative Cloud, with Document Cloud, we delivered continuous This product innovation to help our customers transform their interactions around Dialogflow.
New streamlined workflows create a better customer experience, Improves productivity and ultimately drives business results. And this is a theme that we've been driving for the past 2 years of Document Cloud and well before that. Launched the Document Cloud last year, and we set out to reinvent Acrobat Desktop and the mobile experiences. I think we've done a great job of bringing those experiences together with a completely modern User interface and sharing and synchronizing content in the cloud across the devices, but also with a keen focus on helping our customers move from paper to digital And get business done based on digital with our investments in electronic signature, digital signature and Adobe Sign. In 2016, similar to Creative Cloud, a strong year of product innovation, quarterly updates on both mobile and desktop products, Integration with Marketing Cloud to go after opportunities in the government sector and in the financial services sectors and integration with a number of key partners, including Microsoft and Box and the addition of 4 global data centers to expand our international footprint and grow the opportunity internationally.
A lot of strong momentum in 2016 as well. Momentum and innovation leads to awards. We keep winning them, and We don't expect that to change anytime soon. Let's talk about the opportunity ahead of now. And this is where I'm going to really Drill in a bit to how do we think about the opportunity across digital media in aggregate and then give you some of the Breadcrumbs historical about how we sized it last year so that you can you see how things have changed there.
You may recall that Creative Cloud opportunity framework consists of 3 pillars: So core market expansion and value expansion. This year, we're applying the same framework to the Document Cloud. And as I mentioned, having run these businesses for the past year, I see a lot of synergies and a lot of unity across our product innovation agenda, across the customers and across The go to market. So we're kind of bringing these together and really thinking about the TAM in aggregate as well. In fact, if you think about Document Cloud, we've done A great job of leveraging the Creative Cloud, Adobe.com conversion engine to drive Acrobat subs through the Creative Cloud experience, and we're realizing Similar synergies on the enterprise go to market.
Given this, going forward, we're going to be sharing the overall digital media TAM, and we'll call it Kind of unique differences and how they layer together today. So I'm going to jump in. I'm going to start defining the core opportunity for Creative Cloud, and then we'll layer on Document Cloud. So as a reminder, Creative Cloud, the CC Core TAM includes 3 components: the existing installed base, There remains CS migration opportunity and then the new incremental opportunity on top of that. And one thing I want to call out, as we monetize the opportunity For market expansion and value expansion, so we have core market expansion and value expansion, as we monetize market and value expansion, that Flows back into the core.
And so when you think about the installed base, that gets kind of replenished or increased by the Monetization of market and value expansion. That will become clear as we go through here. And also so all the associated seats in the ARR of the installed base Component of that core TAM. So starting with the existing installed base, I'm going to walk through this and kind of walk it up here. CC subscription across all offerings, the Acrobat single app subscriptions that are sold through the Creative Cloud experience on adobe.com.
And then we also layer in an estimate of the seat capacity for Creative Cloud in the enterprise segment. And as you remember from last year, that was really a capacity Base model, and we come forward with our best estimate for what that is. And then we take the current Adobe Stock and Adobe Typekit ARR And we add that to the installed base as well to give us the installed base. And next, we add on top of The migration opportunity. So we're pleased that we see steady migration from the CS base to CC.
We still have approximately 7,000,000 seats Left to migrate. So across individuals, SMB, enterprise and education, another 7,000,000 seats, north of 7,000,000 that we still have left to migrate. And then finally, there's a large incremental opportunity on top of that. That's the new creatives entering the workforce. That's students and teachers.
That's new seats in the SMB segment and the enterprise and then that's the opportunity for that we have for converting pirates. And so these are All of the opportunities that are incremental to both the installed base and the migration opportunity from the CS base. And now let's layer in the Document Cloud opportunity to complete the total core TAM using the same sort of methodology that we did with Creative So starting with the existing installed base, we are reflecting Acrobat subscriptions and ETLAs and Adobe Sign and the installed base. And then we add the Acrobat Perpetual installed base to the migration opportunity. And then finally, like Creative Cloud, there's also an incremental opportunity With new knowledge workers entering the workforce and the conversion opportunity from piracy that adds out to complete the core.
Turning to market expansion. Market expansion addresses a broader customer segment. So we think about that as a combination of the photography opportunity, And that's represented by the elements in the Lightroom's installed base and the ability to expand in those bases as well as new photography enthusiasts And incremental penetration of the into photography. And so that's from a photography standpoint. We add to that a large base of consumers Who wants to create with impact.
And this is the base that we're targeting with products like Spark, tailored offering to go after that base of consumers. And then finally, value expansion. And value expansion includes add on services that we offer to both the core and the market expansion Opportunities. And this includes things like Adobe Stock and Adobe Typekit. There's also additional creative services that we think will present an opportunity like training And other forms of content.
And then on the Document Cloud side, the Adobe Sign opportunity goes into value expansion. So with these definitions as a backdrop, the aggregate digital media TAM for 2019 is $24,000,000,000 So this is up about $3,000,000,000 from last year over the 2018 TAM that we estimated last year, and it reflects both the addition of 1 year of growth in the TAM as well as ARPU expansion from customers who are moving up to higher ARPU offerings. And so we're seeing the model work that customers will come in at a certain level, And they'll see more value in Creative Cloud and Document Cloud, and they'll move up to higher ARPU offerings over time. Breaking this down to get this kind of play it back In a similar fashion to last year, the Creative Cloud TAM in 2019 discretely is $19,500,000,000 So the Creative Cloud TAM has expanded by 2,100,000,000 As we've added moved from 'eighteen to 'nineteen. And we want to dwell for a moment on what's the momentum actually has created this opportunity and expansion.
We see a lot of momentum in the business and tailwinds across the board. So as I mentioned earlier, In addition to migrating existing CS customers, we've dramatically expanded the number of new customers. So over 35% of Our new customers are coming in new, and this is up from 30% last year. So as a percentage of the total Customers acquired or transacted in the year, we've bumped up by 5% there. These customers are Creative pros are in the workforce.
They're photo enthusiasts. They're consumers. They're educational institutions that are coming on, so across virtually all the segments here. Look, outside the U. S, we're seeing healthy growth in our international business with year to date subscription growth 46%, so really strong on the international front as well.
Adobe ID is created on mobile. We're really looking to mobile as kind of one of the front of the funnel activities as people change their competing patterns, and we need to acquire customers on mobile. So we've grown substantially and added We've added up to 35,000,000 Adobe IDs created on mobile through our mobile apps. So this represents a pipeline for kind of the Market expansion offerings of the Lightroom family, photography products and Adobe Spark. So that's a good sign, not just for the present, but I think more importantly the future health of the business as we move forward.
The Behance community has grown substantially. So now we're over 8,000,000 units, And this represents an important Creative Cloud service that will help us drive customer engagement. So Behance is kind of a community platform, a social platform for sharing, for discovering content, And the more that we can actually build that in and bring that closer into Creative Cloud and integrate that as a core service, the stickier that will make the overall Creative Cloud and service. And finally, our paid base is stepping up to higher value plans and services I mentioned. And a reflection of that is that 43% of the enterprise seats year to date Have been sold with services.
And so when we're renewing or transacting new enterprise deals, the service attached level is actually quite high at this point. And the nice thing about that is the adoption of services. It just doesn't mean larger deal size, but it actually means that the stickiness of the added services that we can bring So that relationship will create higher retention and higher engagement in the products that we offer. On the Document Cloud side, we estimate Document Cloud TAM is about 4.5 $1,000,000,000 in 2019, that's $600,000,000 more than 2018 that we shared last year, and it breaks down $1,300,000,000 between core and $3,200,000,000 between the value expansion. Again, this is a large opportunity as we continue to see solid growth and market adoption of Acrobat DC and Document Cloud.
As you see here, the Acrobat business is showing strong performance with total units growing 13% year over year. And similar to what we experienced with the Creative Cloud Business transition, over 90% of Acrobat units on adobe.com are licensed as subscriptions. And so people who come to us on adobe.com are preferring To engage with us on subscription and are very satisfied with that offering and the services that we provide them. I mentioned before, Shantanu mentioned in his talk, the number of PDX is exploding. We're now processing 90,000,000,000 PDX per year through the Acrobat client.
So that's important, Not just to show the vitality of the Acrobat and Document Cloud ecosystem, but also when we start to talk about things like The sensei platform and what we can do with content and data, that level of content velocity through our pipes puts us in a very unique position To build businesses and services on top of that. It's also clear that our customers are continuing to automate their mobile document processes. We've seen a 6 fold increase And the number of Adobe Sign processes that have been initiated from mobile. So that's a strong indication of opportunity there. And then great performance in the enterprise.
We've seen strong growth in enterprise ETLAs across Acrobat and Sine with growth of 31% year over year. So very solid business momentum here as well. I'm going to turn to strategy now. And the opportunity to summarize, the opportunity against both businesses is very substantial, Strong remaining installed base, large growing number of new customers that we're bringing into the fold and An indication from our customers that they want to engage with us and both move up the chain for higher priced offerings but also attach services to those offerings. And so A great platform to actually build more and more services, combined with our technology platform to do so, this will present a rich opportunity going forward.
So let's talk about Creative Cloud strategy briefly, and I spent a full morning on this one, but we'll do a little bit more and then touch on the Document Cloud. Creative Cloud, the core strategy is to give users everything they need to do the best creative work. And since the inception of Creative Cloud, we've had an aggressive innovation agenda to drive against that. Today, I was thrilled to debut some of the new innovations. And just a really quick recap for the 3 of you who weren't in the audience this morning.
Apps and services to address new content types, user experience, 3 d, VR. You're going to see a lot more in Snykhs tomorrow as well where we're actually giving you an indication of Where we're taking some of these asset classes in the future. Augmenting Adobe Stock with the Reuters deal, you'll see more deals to come from this premium stock We continue to fill out the catalog, but also bring much more premium content that is really going to drive deeper engagement with customers to our stock catalog. I think you also saw just a really an indication of the depth of integration that we're actually bringing to Adobe Stock and being able to Use visual search and find images automatically within Photoshop, etcetera. So we're still at the early days of actually what we can do from a product integration standpoint We really differentiate that offering very deeply.
Typekit marketplace, no design is done that isn't built on the backs of typography. That's a long standing history in the company from the days of the early fontfolios and ATM, etcetera. And that's something that I think playing Borrowing from the playbook of the stock marketplace, we're in a unique position to bring some of these premium boundaries together and actually create a transactional model That we both we and our customers will benefit from with the Typekit marketplace. I'm excited about that one as well. We talked about the Adobe Sensei capabilities The machine learning capabilities that are at the center of that adding even more value to customers.
You saw some of that today. You're going to see a lot more tomorrow, and you'll see a lot more over the coming couple of years as we build that out as a rich platform. Creative Cloud, just a real Quick primer. It's since the beginning, it has included all of our desktop applications like Photoshop, InDesign, Premiere Pro, etcetera. We've completed the offering on mobile, as I mentioned, and filled out and now have complete parity across all of our mobile applications that are integrated together With the desktop applications via Creative Sync, talked a bit about marketplace and Reuters And then community.
So this is the that's where people go to get inspired to be discovered and now with the addition of Adobe Portfolio to build personalized websites Really showcase their experiences and their content. At the core of Creative Cloud are assets created by the user and those that they get from the marketplace. So this where it all comes together. And our goal is to continue to put those assets at their fingertips. And I think you saw great evidence of that this morning so they can get their work done Wherever they are, whether it be cloud, web, mobile, desktop.
We announced Sensei today. This is exciting. And just to Touch on that. We've been building machine learning and deep learning into our applications for years. There are Obviously, there are decades of science and experience against that that are built into products like Photoshop and Document Cloud, etcetera.
I think What has been the part of the opportunity that excites me is to unify that at cloud platform level so that we can actually Play that off against the content and data at scale. And I think that this will be a very key accelerant, not just within the business, but in terms of how we can partner With this, in terms of the things that we're excited about within the business, immediately content intelligence, where we can use the deep learning to auto tag and search images To segment images, to categorize documents, to compare documents, there's just a lot of deep benefit that we'll get out of providing these services as Today, we showcased some of those services in Adobe XD, Project Felix and Lightroom. So we're off into the races already. And I think that the sensei powered services, as we invest more deeply in there, they will Enable deeper real time collaboration, deeper flexibility in terms of nondestructive editing, auto lighting, Automatic horizon detection, etcetera. So there's a full range of things that we're going to be able to exploit at the heart of Sensei.
The Document Cloud reflects a similar strategy, a similar framework with stronger emphasis on partners here given that documents Play a pervasive role in not just in our ecosystem, but in others. So Acrobat Reader, desktop and mobile, Really at the heart of driving secure document processes and transactions and service the jumping off point for many business document processes. Adobe Sign and future enterprise services enable organizations to achieve end to end digital document processes, creating a platform for document automation. And finally, we're expanding a lot of our efforts in our partner ecosystem with companies like Microsoft, Workday, Ariba, Fox, Dropbox. So Engaging deeply both with ISVs who are providing systems of record where documents play a core part of the process, Where the need to sign documents electronically and digitally is critical, but also making sure that we are extending our offerings into some of the other content In the future, we'll accelerate this innovation with Sensace Intelligent Services at the heart, and we've talked already about many of the Things will be more document focused in terms of where we focus our energy.
Semantic structure analysis that lets you analyze documents as they're scanned and Automatically recognized paragraphs and tables, etcetera, and that I've spoken with about document similarity. So in conclusion, to wrap it up, Digital media, we have a massive $24,000,000,000 opportunity by 2019. Our future growth will be fueled by all the key industry trends that we talked about Earlier, content explosion, experienced mobility and business automation. We continue to be very bullish about the future growth here. We have new customers joining the Joining the franchise daily.
We have a strong adoption of our consumer offerings for both the photography and storytelling. We're driving new seats in schools as institutions focus much more on digital literacy and expand the presence of our creative offerings beyond the core Design and Creative segments. Our large remaining CS and Acrobat perpetual installed base We'll present substantial opportunity for migration, and we'll continue to deliver innovation to help move the customers over the hump on that migration. In addition, we're doing a lot to build out the Acrobat and Document Cloud platform, and that presents another very large migration opportunity And active engagement opportunity around the billions and billions of PDFs that our users are creating and managing. We're delivering more value to our paid customers with services like Adobe Stock and Adobe Sign that will drive further engagement and retention.
And then finally, we're really excited about the rich innovation agenda that we have for this business. I think you saw a lot of that this morning. It's a pretty easy presentation to lead when you have products and people like that behind you on stage. I really invite you to mingle with a lot of the customers and the partners in the Community Pavilion and to really share their enthusiasm and excitement about the direction of the digital media business at Adobe. Thank you very much.
Mike, we'll give it to you.
Thanks, Brian. So we are going to take a 15 minute break. We'll start at 3:35 again. Notice I said break and not Q and A session.
Ladies and gentlemen, please welcome back Mike Savage.
All right. Welcome back. We're ready to kick off the second half of the day. Let's bring to the stage Brad Rancher.
Good
afternoon, everyone. I'm excited to be here. So Hopefully, I've got your caffeine fixed. You're ready to roll through this next section. Excited to talk a little bit about The Marketing Cloud business, where we are, some of the things that I think you're seeing even here at MAX that are impacting The business and where we're going and I think the velocity at which we could achieve some of the strategic objectives.
So let's get started. If you in the Q and A, I expect that you'll probably ask the question, what is it that's driving the momentum of the digital marketing business? What differentiates us? It's here on the slide. Why do we win?
Because we're taking content, you're taking the digital transformation theme that every enterprise in the world is feeling, And then you're combining that with data and intelligence. This is where the core IP of the business is and it's why we're differentiated in the market and really it's why we win. And you've seen it several times today. And I just want to really drive that home. This is the unique differentiation for us In the enterprise, when we talk to big brands all over the world.
And I'm going to spend some time on that, really as I go through the momentum in the business, The opportunity that we have and then rolling out the product strategy that we're executing to inside of the business. So what an amazing experience this morning's keynote was. The screens, the production value, how it makes you feel. You listen to the speakers and you walk away, I don't care what you do, you walk away inspired to be more creative, to think differently about what it is that you're doing. And we at Adobe have long said, experience is what matters.
I don't think that quite does it even justice anymore Because it really, I think experiences are becoming mandatory. And what do I mean by that? If you scroll through your own Instagram feed or your Facebook feed, Where your friends and family are posting about what they are doing. That's what they do. They post about what they are doing.
They are not posting about products That they buy or things, it's about experiences. Any Jimmy Kimmel or Fallon fans out there? Look at what's happened even late night TV. You have celebrity guests that used to sit down and have a conversation about Their movie or their book or whatever they're hawking at the time. And that now is transitioned to what?
You've got car karaoke with James Corden happening. You've got celebrities playing Pictionary with Jimmy Fallon, going shopping with Ellen DeGeneres, Even politics, a few decades ago, we had hard hitting political interviews with Walter Cronkite. What do we have today? We have the President of the United States slow jamming the news. Oh, yeah.
This is experience and it's why it's really why everything we're doing in this business is so important To CEOs and Board Directors everywhere across the world. So This is what's really propelling the growth in the business. I did want to show some of the statistics. What are the metrics that I see in the business that get me excited about what's Today and in the future. First, you look at the size of the deals that we're executing.
We're doing more big deals and the Big deals are including more and more of the Marketing Cloud. So 57% increase in ASV contracts over $500,000 And just as a reminder, ASV stands for annual subscription value. It's the most precious part of everything that we book and that we drive in the market. You look at the solution adoption, 85% growth in multi solution ASV contracts. This tells you that More and more of the customers who are buying the marketing cloud are saying, you know what, it's not just about analytics or experience manager.
It's about bringing all of these together and to accomplish a broader business objective. The size of the data asset, the data platform, 71,000,000,000 transactions, over half of those are now mobile. So the entire our entire business is transitioning to mobile As our lives become more mobile and as you start to interact with brands through your mobile devices, that clearly impacts our business as well. And the growth of that business has been very exciting. Let me just show on the next page, there's been a transition of How people think about us as a platform and less like an applications company and that's happened really in the last 2 years.
Look at the metrics In terms of just one segment of the population, our top 100 accounts, 2 years ago, about 2 thirds of them had More than 3 of our solutions. You remember in the Marketing Cloud, there's 8 solutions. And you think about how we grow, we sell new customers, We sell existing customers more of the solution that they're using and we sell existing customers other solutions. Those are really the 3 big growth levers that we have in the business, cross sell, up sell and new business. So here you have An opportunity for us that we went from 2 thirds of the top 100 accounts that are using really the cloud, 3 plus to 90% today.
People have bought into the vision and are deploying and implementing the full cloud. And you see what's happened to the ARR as a result. Now, I look at this and say, there still is a tremendous opportunity. If I've got 8 solutions to sell into this space, we're certainly not Sold out in any of these opportunities, I think it just shows how much the market is really grasping the vision. It's not about any individual solution.
It's about the orchestration of this all coming together in the Adobe Cloud. So it's not just is this not me on stage telling you that we're leading in this category and doing it. We continue to have a very strong validated by 3rd party analysts, Forrester, Gartner, IDC, whatever the research firm that you'll find, you'll see that We're continually called out as the innovator, with strong vision and execution across the different characteristics that make a marketing cloud. So we're very proud of this and this clarity of vision I think is what sets us apart in the industry. So let's briefly get into the opportunity.
As I for those of you that came to Summit 6 months ago, just by show of hands, who was at Summit? Okay. So you I want to update you on several things that we announced at Summit And roll through that together. But the big thing that I think we articulated this year that's exciting that I think is changing how people view our is really around this massive tectonic shift that's happening in the enterprise. And it's disrupting Companies in terms of how they build their products, how they sell their products, how they organize their team.
And I don't care if you're a retailer, a financial services company, A government institution, an educational institution, you are being disrupted by this great digital transformation that is upon us. So the question is, what do CEOs do? What do the boards think about when they're doing that? And what's the fact pattern that perhaps we could help them latch on to understand How they drive this impact and change. So I believe that this wave of enterprise disruption is the 3rd big wave that we have seen in enterprise technology in the last 50 years.
And all of you, you've seen this with the companies that you follow and as you look at the industry. The first big wave was around ERP. This was, hey, enterprises, let's connect our supply chains, our inventory systems, so we can drive greater automation and get rid of all these paper based processes that slow us down. And that happened. Several multi $1,000,000,000 companies were founded and built on the backs of this disruption.
Next came the front office wave. And this is CRM as customer selling conversations used to be tracked on rolodexes. That was state of the art. That and the telephone, that was the best way to communicate with your customers. Again, several $1,000,000,000 companies created it in this category.
But it brings us to where the state of competition that is happening in the enterprise is today. It's not about how great your ERP system is or your CRM system. It's about how you engage with your customers. Can you be consistent and compelling at every touch point in a digital world? And that's what brings us to the experience business wave.
And I believe that the back office wave and the front office wave, the size of those are going to pale In comparison to the size of this experience business opportunity because of how broad and wide the disruption is happening around this. So, and we shared, we've built 4 key criteria that consumers are going to use to judge The success of businesses in doing that. But the foundational item here is that every this is now the state of competition. This is how your Brands will be measured no matter what type of business that you're in. So companies have asked me, Brad, how will I know if I'm being Successful in becoming an experienced business in doing this.
So this is a construct that we have built and we've articulated to help CEOs and Boards Understand, what is it that I need to drive? And this is five characteristics of an experienced business. So what does that mean? It means that an experienced business is going to be able to understand the context of who I am and what I'm doing. So My context is going to be different when I'm on my desktop device and on my mobile device.
You need to understand that and be able to interact with me in a way that makes sense. 2nd, an experienced business anticipates what experience I'm going to want and delivers a compelling experience. You want to talk Adobe Sensei and what we announced today, This stretches across all five of these characteristics because you can't deliver real time experiences without having that type of automation built into the core. Anticipation, again, Adobe Sensei at work. We have today over 50 characteristics and capabilities inside the Marketing Cloud that are powered by Adobe Sensei and it sits here in the anticipation and the orchestration of these experiences.
And lastly, it raises the bar Because this is something I believe. We all talk about Moore's Law in the computing space that the computing power is going to double every 18 months. I think there's also a lot of experience that is emerging. And that is that my expectations as a consumer, Of you as a brand, it's going to double every 18 months. So what does that mean?
It means that today's Yes! Experience that I have a great digital experience, That's only going to be okay 18 months from now. If you're not constantly making it better and moving that forward, you're going to fall behind your competition. That's how brands are feeling today, and this is how they're going to be measured. So this brings me to what are we doing and what are we building So brands can take advantage of this experience business opportunity.
So this is the Adobe Marketing Cloud, 8 best in class solutions, Leveraging core services that let them communicate and integrate together, built on top of the Adobe Cloud Platform With content and data being at the center and at the core. So you think about we're defining the language. This is something that's important. We're defining the language at Adobe of what an experienced business looks like. Because right now, that's the thing that Many brands and companies don't even haven't even really thought about that this is one of the biggest challenges.
You have multiple different data systems. You have multiple different customer systems. How do you get to the point where you can define that in a common way so you can deliver a consistent experience? It's a semantic data model We're building and we're putting at the core of the Adobe Cloud Platform. We're also, as Abe talked about, Using open APIs because we understand that not every piece of technology that an experienced business is going to need is going to be provided just by Adobe.
We need to open up and leverage what is happening, the innovation that's happening in the broader ecosystem so they can take advantage of the content workflows that we have And that semantic data model so that they can build really exciting innovation on top. So I've talked a little bit about Adobe Sensei. This is where it sits within the Adobe Marketing Cloud. And we made some announcements at Summit 6 months ago that we were built on the data science framework at the time. We have moved this forward.
This is now built on Adobe Sensei. So, talk about the Adobe device co op. So that's in beta. We're live with several customers. And for those of you that didn't weren't at Summit and saw that announcement, This is where we are changing the paradigm of what's happening in marketing from going to marketing to devices, essentially cookies, to marketing to people and individuals, A very disruptive innovation we announced 6 months ago.
We're in beta with many large several large brands, and we'll have an update at Summit in terms of where that sits. That's built on Adobe Sensei. Anomaly detection is built on Adobe Sensei. This is the fastest growing feature. We've adoption of anomaly detection faster than anything that we've ever released in the platform.
And this is and why this is so compelling is Analysts and people who are dealing with big data, they look at that and it takes them weeks to go through and get even a single insight. Anomaly detection uses machine learning, Adobe Sensei, to go through and say, you know what, analysts who's looking at click behavior across mobile and desktop, You should pay attention to this. The machines do the work, the analyst gets the credit, and everybody is happy because the business can move faster, Okay. Today, we announced 6 new capabilities that are built on Adobe Sensei inside the Marketing Cloud. So you're going to see more rapid innovation that happens within the platform With this new intelligent framework.
So from a core theme standpoint, I do I'm going to change a little bit about how we talk about the business, not from a product perspective, but more from a theme. What are the core themes that our products are addressing? And you'll see that this is actually how the TAM is rolling up now as well. So key themes, personalization, content, content velocity, words you've heard several times today, data and analytics and advertising. So let's jump into this.
So first, personalization. And I want to do this through the context of customer conversation. How are customers getting value out of personalization, content and data and analytics? So let's take first Travelocity. Travelocity encourages customers to wander wisely is their brand message.
And they provide every day 13,000,000 hotel deals On their website, 40,000 flight quotes. This is the scale at which they're working. The challenge they had when they came to us is They said, hey, Adobe, I don't have a common way to actually measure my customers. So if someone comes to me on a mobile device and on the website, I actually don't know that they're the same person. I can't give them a consistent experience.
So using the Marketing Cloud, they were able to triple the number of campaigns that they were running for their site And do that with 4 people. Their open rates were 40 percentage points higher And 17 points higher on click through rates. What does this mean? It means ROI. And the thing that I want to deliver to you today It's everything we do in the Marketing Cloud is focused on driving ROI for our customers, revenue, cost savings.
It's very, very important to us and I like to say our core value proposition is we make our customers money. We help them drive their business. And if we're doing that and we align to those business objectives, we know that we'll be successful. So Heathrow, does anyone think about an airport when they think about customer experience? I know you all spend a lot of time in airports.
It's not the first thing that comes to your mind, right? When it's like, hey, that's a really great customer experience, the security line, parking. Well, Heathrow actually wants to change this. They want to be the number one airport in the world. How are they doing that?
They're going digital transformation first. Before I go to Heathrow, I can understand what's the Heathrow will send me an alert with traffic patterns on the way to the airport. I can book a reserved parking spot in Heathrow. I can even book a personal shopping appointment at Harrods before I fly out. And heaven knows I need that.
But for us, using Heathrow, leveraging the marketing cloud is really about a big campaign, a transformation of a brand. That's how you use personalization to do that. But it's not always about the big bang campaigns. It can be about micro changes. Take Lenovo.
Lenovo changed one metric in their purchase funnel and drove 26% increase in global sales For a particular product line, it can be big campaigns and it can be micro segmentation driving hyper personalization, both sides, ROI using the Adobe Marketing Cloud. So other things within personalization, We're working with Comcast, NBC Sports, ML Band, Turner on what is the next generation of television start to look like, addressable TV. If you stream the Olympics, this past summer, that was using the Adobe Marketing Cloud with our primetime service to do that. With ML BAM, They're starting to power all sorts of OTT experiences that are driving that are leveraging the marketing cloud to drive personalized content. So let's talk content next.
Nedbank, South African bank, they wanted to do one thing. They were having massive fall off when they would go from a marketing message to actually account enrollment. And so they used our content framework to increase the completion rates of forms from 33% to over 80%. That's ROI. It's just revenue straight to the bank.
Same thing at BNP Paribas to where their Head of Products and Services really Took a step back and said, across mobile and web, we were able to drive ROI because we had a common content framework. And this is really where the magic of The Marketing Cloud, the Creative Cloud and the Dot Cloud comes together. And I'll tell you, it was probably 2, 3 years ago, maybe even more, 4 or 5 years ago, when we were out talking about this content velocity message, you're going to create content in the Creative Cloud, You're going to manage those assets and then you're going to use those with the Marketing Cloud to drive personalization. We were 4 years ago, 5 years ago, when we would Deliver that message, we kind of got blank stares from customers on the other side. Now the market has completely flipped.
Customers want to do more. They see the value of content velocity, whether that's Hyatt, who's using the Marketing Cloud and Creative Cloud Transform their digital presence in their stores, Under Armour, in automotive, whether it's Knight, whether it's GM, Ford, Nissan, Are all using this integration to drive huge value and increase in content velocity in their business. Really exciting to see this come together. And the Marketing Cloud and Document Cloud, look at what Royal Bank of Scotland has done to drive impact for their business to really Go soup to nuts from the website to creating a checking account and doing the signage directly in one workflow. So there's no paper based workflow in the entire enrollment process anymore.
And the impact of their business has been significant. That's why we win. That's the core differentiation is we can do things from a document So from a data and analytics standpoint, this is one that's important, NetApp. NetApp basically had siloed analytics. They didn't have one common view of their customer across.
They were able to by deploying the marketing cloud and getting one common view, increase Their click through rates and their conversion rates by 170%. One quick note on, I get asked a lot From the analyst community on the data management platform space. This is one that's gotten a lot of press recently. This was a market that we entered 5 years ago. 5 years ago, we made an acquisition of a company called Demdex.
What have we been doing for the last 5 years? Well, we're now the leader in the space, And we've been integrating that deeply into the Adobe Cloud Platform. So the DMP isn't something that sits out on the side. It's at the core. Because what's happening in marketing and advertising, you need to have your audience identified in the DMP and then be able to activate that in all different places.
And that's why I think you're seeing so much activity around the DMP here at Adobe. It's probably one of the fastest growing segments for us across the board. And why the biggest companies in the world, the 5 largest MVPDs, whether it's Comcast, AT and T, Dish, Charter, Cox, Are all partners of ours looking into this market to see how do I start to activate my data better. And that's what's happening within the data and analytics segment Of the Marketing Cloud and again, it's another differentiated market because we saw what was happening in the importance of data and activating that data 5 years ago. On advertising, same story.
The story in advertising now in digital is really taking your core audiences and activating those and not having a So take Nordstrom. Nordstrom basically using our tools has driven massive, massive Increases in search display and social ROI. And Bijan Corp, Out of the Netherlands, drove a doubling of their ROI within a number of weeks from using our advertising products Tied to the DMP, tied to our analytics. And the reason I don't want to belabor each one of these ROI metrics, but I really wanted this to drive home. This is about customer stories.
This is about customers' digital transformation and this is about impacting their business in a positive way. That's what Makes us successful and that's how we measure our own success. Last one, T Mobile. T Mobile uses us across all four of these themes. And we know them as the uncarrier and they, by leveraging the Marketing Cloud, are now have the number one wireless customer care support.
Their average order value on their site is up by 56%. Think about this in a marketplace such as theirs And click through rates for phones is up 16%. So just big ROI from platforming on the Adobe Marketing Cloud. Great. So again, back to the ecosystem.
This is where, Adobe. Io comes in and you want to know the impact that that's starting to have for customers. Just look at the brands that we're leveraging in the ecosystem, whether it's our 16 Global Alliance partners, Global Premier partners, business and community partners all over the world, And also, hundreds of technology partners, ISVs, data companies that are tying into this entire data pipeline and content pipeline To create compelling experiences. The fun thing is that I love to see what are the technologies That are getting traction in our ecosystem. We see all of that data.
What's happening from a click stream, a click map, What's happening in email? What's happening in attribution? We see all of that, but given the ecosystem that's happening around. It also provides us an interesting business development opportunity to go and partner more deeply with brands that are seeing success in and around the marketing and advertising Ecosystem, which brings us to the Microsoft relationship. And this has come up several times today, but I did just want to Spend a minute to clarify what's happening here.
I think this is it really is the message behind this is there was an opportunity for Microsoft to A major hole in its product portfolio, as they think about their CRM business Dynamics 365 And what do you need to, what needs to sit there to really drive this digital transformation across to do these customer interactions? They looked at it and said, what's the leading product in the marketplace, the Adobe Marketing Cloud? For us to be able to have a preferred cloud partner With Azure, with having a global enterprise ready infrastructure was a compelling fit for us and for our customers. And if you think about what this co sell and co marketing relationship is going to be, it's going to enable us to have much more breadth of capabilities and a suite of services together that help us really engage customers in this digital transformation conversation. Also, I think you think about Adobe Sensei and what's happening in machine learning and AI, it's a rich set for now Adobe and Microsoft to collaborate together To do that, you look at Power BI with that data and analytics business that we have to drive visualizations and more insights is another area that we're Working on with them.
So you think the content, AEM, the campaign with personalization are all areas that I think you'll see us go to market jointly with Microsoft. So it's one that we're excited about. I think the reaction from the customer base, although we're still early in those selling conversations and in the engagement, I think it's one that both Adobe and Microsoft continue to be excited about and headed into 2017. So briefly and in conclusion, I did just want to highlight the change in the TAM. Shantanu mentioned this earlier.
We gave a $27,000,000,000 TAM for 2018 last year. We're now projecting a $40,000,000,000 TAM in 2019. And the TAM is broken up across these four the 4 categories that I talked through, personalization, roughly $10,000,000,000 TAM Content, 11.7 percent. Data and analytics, that core data infrastructure, a little over 11% and 7.3% for advertising. So these are the fundamental themes that are propelling the business and I think that the opportunity for us to continue to drive Growth inside of this TAM is significant and one that we're excited about.
So we've got significant momentum in the business today. The market opportunity, we are far from being market constrained. We're a leader in the category. We continue to set the stage for the most complete and integrated offering in the marketplace. And that's where we sit today and why I think we continue to be very excited going into the future.
So that's my section. I think next we're going to come up and bring it home with our CFO, Mark Garrett. Mark,
your turn.
Thanks, Brad. So I am the only thing between you and the Cubs winning their 1st World Series title in 1000 years, I think.
Okay. So I'll wrap it
up by giving you my perspective on our business momentum, which you've heard a lot about today. I'll talk about our capital structure. I'll summarize some key points from today's presentations, and then I'll talk through the 2017 targets, and then we'll Take a break to do some Q and A. So first, as you've heard through the day, as you heard at Max, It's pretty clear that we're at the heart of some major market trends. As every company is going through digital transformation, We become more and more and more mission critical to our customers.
They just cannot do their jobs without our help. Our strategy and our opportunities are expanding as we've been executing, and that's evidenced in the growing TAM that you just saw. And all of this has and will continue to drive strong growth for Adobe. So first, we are reaffirming our Q4 2016 P and L targets. I'm going to talk about revenue and operating margin next, and I'll show you both GAAP and non GAAP And how operating margin is really returning nicely to the model since we've gone through the transition.
So first, a view of revenue and GAAP Operating margin, you can see that GAAP margins have come back nicely as revenue has accelerated, as we've gone through the transition. And then obviously, non GAAP follows suit with that as well. So we're on track this year To have yet another record year from a revenue point of view and from an earnings point of view in FY 'sixteen. And of course, Like I said, operating margin just gets better and better as we keep driving more revenue. So let me shift gears to a quick view of each of the businesses and some of the key operating metrics in each of the businesses.
So first, Creative. And you can see here a chart that you are all familiar with creative ARR and revenue. We have well over $3,000,000,000 in creative ARR. And if you go back to the perpetual model, I said this on the Q4 earnings call or Q yes, I think it was Q earlier this year earnings call. I haven't done Q4 yet.
The perpetual model in creative was $2,000,000,000 at its peak And we've now, in essence, grown that $2,000,000,000 business to $3,000,000,000 By shifting to Creative Cloud, really a remarkable transformation. From an ARR perspective, as you know, at the end of each year, we revalue ARR for the then current FX rate. So we hold ARR in constant currency throughout the year. The last couple of years, we've had a downward adjustment to ARR. We are expecting that we would likely see an increase to ARR at the end of this Due to FX rates, so that's great.
And we continue to believe, and we've said this for years years now, that ARR is the best measure of the health of the business. It encompasses everything you want to know about the creative business. And you can now start to look to ARR as a good predictor for future revenue in this business because you can see cloud much more gradually, and you can see that revenue has been relatively constant since 2012, While we've grown ARR significantly. So we've done a really good job here of keeping revenue at a constant level While we've driven subscribers, while we've driven ETLAs, while we've driven Adobe Sign and really increased ARR, and we expect that this business is going From a Marketing Cloud perspective, as Shantanu and Brad elaborated, we are the leader in this very, very high growth market. This business is approximately 1 point $6,000,000,000 in revenue now, and it's growing at approximately 20% a year from a revenue perspective.
And I'll do a little bit of a double click on that 20% for you guys because I know there's a lot of questions about that. We continue to add new logos in the space. As Brad pointed out, we're driving larger deals. More and more customers are buying multiple solutions from our cloud offering. So this business continues to drive really good growth for the company.
I want to take a minute to go through each business, and this is a new view of each of the businesses So this is a little bit more insight into our revenue for you that we've never shared before. First, you can see this compares 2012 to 2016, And we've broken out the revenue in each of the years in different categories. In 2012, First off, Creative, as I said, has transitioned from perpetual to subscription by growing the overall business from $2,300,000,000 to $3,000,000,000 So the pies are not obviously scaled to revenue, but huge growth in this business from a revenue perspective, 1st and foremost. Secondly, if you look back at 2012, Creative was greater than 90% nonrecurring revenue, 90% nonrecurring revenue. If you look at 2016, we're now greater than 90% recurring revenue, really a remarkable That sliver of blue on the 2016 pie there is perpetual and OEM revenue It's left in the business.
It's approximately $150,000,000 It's made up of hobbyists, of Lightroom and monetization of our website. So that slice probably is flat to declining over time as people move from products like Habius over to CCPP, Creative Cloud Photography plan, but over time, you're just going to see that it's going to be more and more subscription. And as Brian said, this business continues to grow from base migration, from new users and from services. Same slide for Document Cloud. Document Cloud has also transformed from upfront perpetual to more of a subscription and services business.
As I said, the revenues remained relatively stable. So actually, both of these pies are roughly $800,000,000 in reported revenue. And what you see in 2012 is, again, this business was greater than 90% nonrecurring revenue, very similar to the Creative business. And now in 'sixteen, what you see is greater than 50% recurring. So again, we are slowly but surely moving Acrobat The document business over to more and more recurring revenue that will continue.
And just like the creative business, the Growth here comes from moving the base. So there's a lot of perpetual people left to move over in the base. We're reimagining the role that PDF plays in a mobile centric world, and we're leveraging Acrobat services such as Adobe Sign. So the growth comes in similar flavors to what you see in the Creative business. This is the one that shows total digital media.
So this really just brings the two pieces together for the full segment. Clearly, a large move to subscription and still some perpetual to migrate in Acrobat, which is the main part of that blue on the right hand side. So the one that you'll find maybe a little bit more interesting is the Marketing Cloud. So the 2 pies here, The business has doubled. So back in 2012, this was an $800,000,000 business.
As I said, this year, we expect It will be approximately $1,600,000,000 so doubling of this business. Subscription and services Is the majority of Marketing Cloud revenue. Services includes 2 things, professional services and maintenance. Professional services is a really important factor in driving the long term success of our customers. We need professional services To help our customers get up and running and to help drive that ROI that Brad was talking about.
Professional services is going to continue to grow in this business. There's no doubt. We're going to have to Our customers, a lot of that is done by external partners as well, but we will continue to grow out professional services. But professional services is going to grow probably slower than you're going to see on the booking side. So you're going to see slower growth in professional services revenue And you see on the bookings side.
Maintenance is from the old perpetual business that we used to have, an AEM particularly. It's about $115,000,000 just the maintenance stream that you see in that services line. And it's relatively flat To declining now moving forward. So that will continue to shrink a bit from a maintenance perspective. So services in total and perpetual and OEM is one of the reasons that you see probably the primary reason that you See revenue still growing slower than the booking pace that we've talked about.
So that's a little bit more insight that we wanted to share with you. We're going to see strong growth in this business. The market tailwinds are clearly in our favor. And as Brad just said we've got the most comprehensive solution in the market out there. From a recurring revenue perspective, I've been showing this for years now, but it's probably my favorite slide.
As revenue continues to grow, We're driving more and more recurring revenue. We'll clearly end this year at over 83% recurring revenue. It's creating clearly a much more predictable business for us from a P and L perspective. It's driven by all the things you heard about today. It's driven by Creative Cloud Individual Team and Enterprise and Adobe Stock.
It's driven by Document Services, ETLAs, subscriptions and Adobe Sign. And it's clearly driven by digital marketing SaaS based offerings. Deferred revenue and unbilled backlog, basically the way I think about it is it's business that's been contracted that has not yet been recognized to revenue. We continue to build large growing balances in deferred revenue and unbilled backlog. At the end of last year, we had roughly $4,300,000,000 in deferred and unbilled, and we fully expect at the end of that both deferred and unbilled together will grow substantially at year end, again, making us much more predictable From a P and L perspective.
One of the benefits of moving to this recurring model is clearly manifesting itself in our cash flow. Probably my second favorite slide. Strong very strong growth in operating cash flow since 2013, and you really see that Accelerating in 2016. So we're going to have significant cash flow this year and moving forward, clearly providing us with financial strength and flexibility. From a capital structure perspective, frankly, not a lot of change here from what I've been telling you for past couple of years, we're very well capitalized.
We have significant debt capacity available should we need it. We have a very strong liquidity position. We've had a conservative approach to our debt with $1,900,000,000 in debt and a debt to adjusted EBITDA ratio Of less than $2,000,000 All our domestic excess U. S. Cash has gone towards share repurchase.
We have $500,000,000 left on the $2,000,000,000 authorization that goes through 2017, and we're on track to do more than $1,000,000,000 in Okay. This is exciting stuff. FASB 606, actually, it is very important, as you know. We are going through FAS 606, the revenue recognition update that is out. We're evaluating the impacts across our products.
We believe we have very strong Arguments to continue to recognize revenue ratably. I will say that revenue recognition in some enterprise agreements It's going to be dependent on contract specific terms, particularly where under the private cloud, the hybrid cloud, the public cloud, some customers Choose to not use services. But for the most part, we believe revenue recognition will continue to be ratable. And we have 3 years to help figure this out, whether that's changes to product, changes to offering, changes contract because it's not effective for us until fiscal 2019. So let me do a quick summary on each of the businesses.
In terms of digital media, again, as Brian said, a TAM now of $24,000,000,000 That's being driven from an expansion perspective by the market trends that we've talked about as well as our cloud based Strategy and again, 3 major pillars of growth here, migration of the base. And as Brian said, there's still 7,000,000 people In that base that we can migrate over to Creative Cloud, we've got new customer expansion opportunities with students, with hobbyists and others. And we continue to drive services like Adobe Sign and Adobe Stock that will drive higher ARPU in the people that we are selling to already. And you've seen from Max this morning, you've seen from Brian this afternoon, our continued innovation is really what's going to keep propelling this business moving forward.
And last
but not least, the P and L leverage in this model, particularly for digital media, is more and more evident as you look at our targets For FY 'seventeen. In digital marketing, dollars 40,000,000,000 TAM, explosive growth category. We're the leader with our platform. We have the most complete, most integrated offering out there. We're driving, as I said, multi solution engagements.
We're driving bigger deals. This helps the overall health of the business, and this is a business that we're going to continue to invest in. So when you all ask where that OpEx is going To drive the kind of growth that we're driving in this business, it requires investment, and we will continue to invest in this business. And of course, that's all factored into the guidance that we've provided. So speaking of the guidance, here are the preliminary targets for 2017.
These are preliminary targets like we did last year. We will update these after Q4 results. In 2017, we expect revenue growth of roughly 20% Or roughly $7,000,000,000 That is very consistent with what we've been saying for quite a while now from a guidance perspective. Keep in mind that with a over 83% recurring revenue model, there's not going to be a lot of fluctuation in that. It's the beauty of this recurring model.
It makes us very predictable. So roughly $7,000,000,000 but 20% for a company our size, 20% year over year growth. In digital media and ARR, They grow 20% 25%, respectively. So the Digital Media segment revenue grows 20% and ARR grows 25%. So still very strong growth in ARR.
And like we've said, that is the true measure of the health of the business. Marketing Cloud ASV bookings, so annual subscription value bookings grow 30% And revenue grows 20% due to the revenue mix considerations I shared with you on those pie charts. Earnings is clearly showing leverage in the model as we look forward, dollars 3.75 in earnings, While we continue to invest for growth in the business, and we expect to meet or exceed All the 3 year targets that we laid out for FY 'fifteen to FY 'eighteen. So strong performance in 'seventeen from our perspective And meet or exceed all of the targets for 2015 to 2018 that we laid out. So the way I think about the story from my perspective is we have had a very strong, very compelling strategy for some time now.
We're the leader in a fast growing category. And as we execute, the size of what we're targeting is growing. And that's represented in the increasing TAM that we showed you this afternoon. We're the clear leader in all of our markets with market tailwinds helping us. The 3 clouds you've seen from Abe's presentation are built on a deep technology foundation of content and data Now powered by Adobe Sensei, we've had very consistent from my perspective and very strong execution for at least the past 5 years now.
And with all of that, I would challenge you to find another company at scale, $6,000,000,000 in revenue, growing 20% a year from a revenue perspective and growing 30% a year from an earnings perspective And generating strong cash flow. I mean, that's just an incredible combination from my perspective for a company at $6,000,000,000 So with that, we're going to pause for Q and A. So give us just a couple of minutes, and I'll turn it over to Mike to get us ready for Q and A.
So we're going to set up some stools for Q and A. We'll have plenty of time to get to your questions. Of course, as I always ask, please try to limit one Question per person. No multi, multi, multi parks. We'll be here to answer your questions.
And then at the end, we can also mingle and go into it a bit more.
I just want to acknowledge, Mike, that they are both some board members as well as members of the entire management team that are here. Specifically, we do have Board members, including our Co Founder and Chairman, Chad Keshe, at the back of the room. Anne and Matt are also here in case there are any questions associated with either what's happening on the field operations side as it relates to it, As it relates to our go to market and as our CMO conducts this event and anything as she looks at the landscape of the marketing also ends here as well.
First question, we have mics going around as well. So, wait for when to find you. And of course, Jay,
you're up.
One question is what you said, Mike? What's that? You said one question? Yes.
Not sure what that
means. Okay.
So the question has to do with the selling and packaging Of everything we talk about today, in my view, there's been a latent question anyway as to the possible segmentation of Creative Cloud as you once have done before under the old model and now more broadly with everything we've talked about today in terms of domain specific Capabilities of addressing new kinds of services across your clouds. Talk about the selling approach. I know that Matt has been increasing his capacity, but talk about any domain specific sales approaches that you may have to implement across the cloud or within the cloud. Brad has spoken of 50 use cases within Marketing Cloud. That's a form of complexity in selling and packaging.
Just address that whole
if you could.
Let me start and then Brad, feel free to add, which is at one level, Jay, it's very true that we have such a diversity of what we sell. But I would say at the macro level, it's becoming a little bit of a barbell, which is we do a tremendous amount of business online Through adobe.com, which is becoming a bigger and bigger part of our business, and we do a bigger and bigger part of our business at the enterprise level With a traditional direct sales force. So first, as we look at our business, this is certainly what we do with inside sales targeting small and medium business. But our goal is anybody who wants to transact business with us directly through adobe.com, we want to be able to do more and more of that. And so The traditional individual business has gone there, the small and medium enterprise business as well with the ability to do things like purchase orders and Enterprise renewals and administration of enterprise accounts online.
Adobe.com represents a larger and larger chunk of our business. We like it for multiple reasons. We like it because it's the cheapest way in which we transact business with our customers. We like it because we understand exactly what our customers Are doing on adobe.com. And we like it because it just allows us to get Closer to the customers on every aspect of it from renewal.
So I wanted to clarify that. I think on the enterprise side, we are certainly Doing a couple of things. The first is selling the entire one Adobe value proposition is becoming an increasing way in which we go to market. And The traditional enterprise sales force is organized over verticals for the most part. So you have media and entertainment, you have You have financial services, and other verticals such as travel and hospitality.
Retail is a large market for us. And within that, you're trying to sell the entire complement of the Adobe solutions through the enterprise term license agreements. Mike Dillon is here, At GC, we've signed one particular agreement with all of them. And so the good news right now is that if a business Has transacted business with Adobe on the Creative Cloud. They can buy both Marketing Cloud as well as Document Cloud through that.
In the enterprise space for Marketing Cloud, we're certainly moving a lot more towards what are the use cases and how are we selling. And What customers are expecting from us that both Brad and I talked about is they really literally, we have a parade of CEOs, CFOs, CMOs within the company, and they want to know what they can do to take digital transformation And completely execute against that agenda. And we are growing on that maturity curve. We certainly have a High end value selling based approach, which is the most successful right now. Those are the top of our accounts where we're organized by vertical.
We go in with a Specific vertical use case, it may be new account enrollment, it may be something in retail associated with that, and that's becoming a larger and larger chunk of our business, and we do that through value selling rather than just through the solution use cases. So big picture, 2 barbells On the enterprise side, organized more and more through verticals. Partners represent a big chunk of how we both go to market. And then I'll have Brad Maybe add more to that on the enterprise side.
Well, I think that and you covered it. I don't have much more to add. I would just say The complexity that we're seeing in the ecosystem, it has increased, because what we find is Companies are coming and saying, Adobe, I want to send you more of my data. I want us to have you tie into more of my broader enterprise CRM, my commerce systems, my financial systems to bring that 360 degree view of the customer together So I can do that personalization across all the different channels. So I think what we have to do is really take the out of the conversation and bring back simplicity.
So you mentioned the 50 use cases, you're right. We have 50 key kind of use cases across All the businesses, but really for the retail vertical sales team that Shantanu mentioned, they have 3 or 4 or 5 That we're going by vertical. So the 50 is across all verticals, all the different routes to market. So an individual rep who wouldn't be able to sell all 50 is really like Going to market with 3. And the big reason we do that is I call them the I want to statements.
As much as I love our brands and our products, Customers don't care what the product is. They have a business problem they want to solve. And so the I want to statements are important And that's what those use cases really represent.
Next question.
Sorry, where are you going, Michael?
Walter Pritchard, Citi. So we saw the CAGRs, Consistent CAGR as you talked about for growth through 2018. I think probably the question I get the most from people is if you look at your growth rate in digital media 5 years ago, 6 years ago, call it mid single digits, I mean, a lot of lumpiness with the cycles. And you're obviously leading for 20% growth through 'eighteen. You're driving a lot of that growth through new customers.
So I think we could probably look at that growth and say it's higher than it was back in the day when it was a Business that maybe wasn't attracting the new customers, but can you help us understand as we get either sort of a normalized growth rate on that digital media business or after we get outside of this Period where there's an accelerated conversion of the base, how should we think about the digital media growth rate? And I guess I'm thinking more on the pure creative side, less the Doc McCloud, which may be on a longer burn.
Walter, we're still, as I think Brian mentioned, so early in the cycle. When you look at 35% new users are still new to the platform, 7,000,000 people have not yet migrated. And you look at the number of creators who are coming into the market, I think if you look at what the census would say, I think there are probably 700,000, 800,000 new people coming in Every year who are creatives, we get a huge majority of that when you look at what's happening in education. So as we look the couple of years, we still feel that the new user acquisition is actually going to continue to fuel it. And so first and foremost, I should explain that.
The second thing is, I think the ARR is also demonstrating the value of when people move off a promotional pricing And they move off onto the full pricing, that ARR increase and that ARR increase is also then getting reflected in TAM increase because that increases the TAM associated with what we can provide for the core customers. So that continues to represent significant headroom as well, Which is, remember, we're getting all of these customers as we upsell them. In the enterprise space, for example, when we first did all of the ETLAs, all of the ETLAs were 3 year ETLAs that sort of mimic what they were buying on Creative Suite products. Now what they're doing is they're actually moving to the complete Create a cloud offering. And in addition to that, as we said, I think in 2016, about 43% of those who have Renewed, they are also getting the entire services.
So the ARPU expansion associated with selling them stock, selling them sign, Continuing to move them into higher value products, continuing to grow customers and migration. If I look at all 5 of those, We're still looking at it and saying, there's significant growth ahead of us. We're only giving 3 year CAGRs right now, as you point out, But lots of opportunity. And then when you add all these new media types that are going to cause even more market expansion, I mean, a product like XD, We're extremely excited because anybody who's designing a product right now for the web is going to need XD. When you think about Spark, when you think about mobile offerings, 35,000,000 mobile IDs that we've been creating.
So we look at it and say there's still so much opportunity Associated with that, we're not thinking to what sort of post growth opportunity looks like right Now that should be music to your ears in terms of how we're thinking about it.
The other one is piracy. And piracy. We have a yes. Still have a huge opportunity just to combat piracy.
And to be fair, a certain amount of the new user acquisition may be people who've used our products in the past and have pirated. We do have More differential pricing, I think you're going to see between now and the end of the year some more announcements of having this available in more markets as it relates Attracting more and more of that customer. So we've been telling you for a few years, we're so focused on developed markets because there's so much opportunity. At some point, though, we're still selling CS in markets like China, and that's all upside in terms of selling them CC.
Over here.
Steve? Hi. Steve Ashley, Robert Baird. I was going to ask about the Document Cloud business. You replatform that business.
Did that give you an opportunity to also change your go to market to be more digital on that side? And if it did, You have a little expanded reach lower than you have in the past. Are you able to tap? And are you seeing new customers in that business as well?
I'll start and then Brian feel free to add, which is Steve, good question. I mean, the first thing, even on Acrobat, we have an Acrobat service that's a $0.99 onetime usage The reason we don't provide the number of subscribers on the document business is we have everything from people one time, they have a PowerPoint, they have a Word document, they want to convert to PDF or vice versa. I mean, the millions of people who are using that kind of a subscription, so There's no question that adobe.com has provided us with a tremendous go to market to enable anybody who is a one time user Of the service in order to be able to make them a customer. Reader, the amount of people who have Reader and the distribution that we have for Reader, If you only have Reader and if you do, I encourage you to buy Acrobat. But if you're still holding out and you only have Adobe Reader, The amount of conversion that we have of people who have reader and are using one time services, that's what we used to call Acrobat in the cloud, document cloud services, That ability for us to also get them either to a one time usage or a monthly subscription or an annual subscription Would never have happened before this online business opportunity.
I do want to again remind everybody that the SES that we're seeing, I think we pointed out 13% growth units in Acrobat. All of that's not reflected when you look at our financials in the document business. A lot of that is reflected in the creative business. And this, we are only talking about the single app, not about the CC Complete offering. So PDF as a standard and Acrobat, and I'm not even got into sign and other, and maybe you can speak to the enterprise part, Brian.
But see, that's the way we look at it. We have this Billions of footprint of people out there with mobile devices, with the reader out there, and we are doing a better and better job of monetizing it, including Monetizing the website that Mark talked about when he showed the sliver of the pie that was still perpetual and OEM, Some of it is monetizing, as you know, our run times.
Sure. This is the benefit of having a CEO who's been focused on your business for 20 years, Sean, it's just given a condensed version of my presentation. Really, the only thing I have to add there is if you look at some of the services on top of Acrobat, we have the opportunity to take more and more of those direct as well. So we do a fair amount of transactional business on the signed business on adobe.com. And then for the enterprise component of the Document Cloud business, there's both the ETLA component that pairs with Creative Cloud at the enterprise level And more of a line of business departmental cell for e signature services that really becomes an opportunity for us to land in kind of a transactional business to line of business and then
Maybe the last thing I would add is that the way we are selling digital media, much like we are organized, Matt sells a common enterprise term license agreement across both Acrobat as well as the Creative Cloud. And that's something that most customers are We're very happy to transact business with us across all of the desktop offerings. Kurt?
Thanks. Kirk Maturant, Pepper, ISI. I want to ask a question about sort of AI and Sensei and the monetization Of AI going forward, is AI something that is going to be table stakes in terms of maintaining your share in a market or taking share? Meaning,
Can you go it might
be best expressed in the enterprise world, but when you have these intelligent solutions around smarter targeting or smarter marketing, Is that something you can monetize on top of what you're selling today? Or is that going to be something that if you're not offering those type of services and leveraging AI, I'm just trying to get a sense on it clearly keeps you ahead of the field, but at the same time, can you also see an uplift in terms of value expansion? Thanks.
I think it's both. Brad, maybe you can talk again about the DataCo op and then all of us will add as well as some of the other services.
And so in the enterprise, I think, Kirk, you're correctly calling out, okay, is this going to be something it's like, okay, I'm paying for Adobe Experience Manager, am I buying Sensei on top? The thought right now is Sensei is already in the solutions. We've been doing it for some time. Like I talked about, we have 50 capabilities that are already baked into the Marketing Cloud leveraging this AI. So today, it's going to be an ingredient inside of the solutions.
What I think the way I would think about that is it's going to help us do have greater deal velocity. It will help drive ASPs up and it will help us drive win rates higher. So it wouldn't be a separate monetization. It's going to help us do better in what we're doing. And that's, I think, where you're going to see the growth.
A couple of other things maybe just
to add to that, Brad.
I mean, things like attribution, which is a big issue on everybody's You know, Radar, that's clearly a new business that's going to get powered by Adobe Sensei. When we also think about what we are doing with the SDKs And having the creative SDKs that are available through Adobe IO used by third parties, when they use our technology, we will certainly be monetizing that as well because I think Abe talked about in the press conference earlier, we have how many IO calls? More than $500,000,000 now.
Okay. Dollars
500,000,000 I want to know what the external number is first. That's why I always so that's another way in which people are using our technology as ingredient technology. That's certainly an opportunity to monetize, no different from what we did with our dashboard of the run times. Think of it as a new way to do it. And I think We always eat our own dog food, sip our own champagne, whatever you prefer.
Sensei, we're also actually going to use to understand Exactly who's using our products, where's the value that they're getting out of our products and how do we monetize that internally for ourselves. So that's something that's Often not appreciated as much. Brian is the number one customer of Brad in terms of Using our technology to build a creative business, and there's no money exchanging hands. There's no transfer price.
No transfer price in there.
And Jonathan, I should mention, so Kirk, I think I answered in the context of what we're doing today
and I
didn't even answer the data co op piece. Like the data co op would be an example Of a new service that we build on top of that would be incremental. So I just wanted to make that clear because I do think we see a long innovation roadmap for new services that we can build. And then how we actually monetize 3rd party services leveraging that is a question for the future.
I think on the if you think about it from the media side, it's both, As we move more and more of our product offering to a cloud native offering, it's going to be at the heart of what we can Due to differentiate and be competitive and to come up with new solutions in digital media, and it will allow us to activate new services that we might not have envisioned before, Might be a service that just requires too many humans to curate content. Now we can actually throw machine learning and Deep learning that, that problem to come up with new services that are really will monetize richly. It could be that preparing documents for mobile delivery and for accessibility become much more automated With the intelligence that we can throw at that. So I think it's going to be both. It will be it will make our offerings much more competitive at the heart and the combination of content and data at scale, we're in a very unique position there, but we will be activating new lines of services as well.
Next question over here, Mark.
Thank you. Mark Mertler, Bernstein Research. So as you're expanding or growing internationally, not necessarily Moving into new markets, how important is for Adobe to have cloud data centers throughout the world located in Individual regions or even countries, what's driving that? How should we think about it? And from an economic point of view, what, if any, impact do we think it will have
It is a more important issue that customers are certainly asking us about. I mean, I think A year ago or 2 years ago, everybody, when they were getting software from Adobe, the big question was security and understanding Our security common framework, I think the topic of the day to day is how are you supporting EU guidelines for data and what happens with Data or what are you doing? I think Brian touched on how we've added 4 data centers for sign in different countries and geographies. So The short answer is that a big strategic reason for our multi cloud efforts is also to ensure that we have the flexibility As enterprises either choose to mandate which cloud service they want the operational to be in Or to leverage the cloud service that's actually got the geographic distribution that we need to serve customers that were well served in both of those particular cases. So we look at it and say it's going to become one of those absolute must haves.
I think we're ahead of the curve, as Abhay talked about, Than most other companies in doing it. Microsoft and AWS and Google are all extremely Interested in having the Adobe offering as one of their flagship offerings. And honestly, I think if you look at it from a P and L, and I'll let Abe, who is responsible for that and Mark add, it's all factored into our targets in terms of how we think about getting these data centers out there.
Yes. The only thing I would add, in addition to kind of the global consideration, some of the country specific, geo specific guidelines on what customers are increasingly asking, There is also an expectation as the kinds of use cases we solve for customers become more mission critical, especially in the enterprise space. Us relying on a single cloud provider, even when they are mostly up all the time, it's not good enough. And so we are now starting to push the limits Of working across cloud where we want to make sure these are truly mission critical services. So not just from a data Privacy, but also just share availability and reliability standpoint.
So a question from you. Ross?
Thanks. Ross MacMillan, RBC. I actually have 2, and the first is somewhat multi part, so I apologize. But so the first one on Creative. So you put up the 7,000,000 CS based customers that are left.
And I think last year, you said CS3 to CS6 was 8.3. So on the one hand, that's great because there's still a lot left. But on the other hand, it's relatively Slow burn. I'm just curious as to how you're thinking about encouraging those customers to convert?
Well, they're across the spectrum, Ross. I mean, when we look at our subscription achievements for the year, We continue to be really very pleased with the number of both subscribers who are moving as well as new customers. So First, big picture, I do want to clarify that when you look at the success that we've had, remember, we had CS6 in many markets still quite late in the cycle. So While you're thinking about it maybe from the lens of the U. S.
Where 2012 or 2013, as Mark keeps showing that, There were some markets well, till last year, we were actually selling CS6. So that's one thing that I would remember as you talk about The number who have still not migrated. International, I think we've said in the past that international was a little bit of a Slower burn. Again, we showed how international is growing 46% year over year, so we're seeing good success. And in the enterprise, That's the other place where, I mean, you can go to enterprises right now, and you still have older versions of CS that exist.
So I would say That represents when we see new people coming to the community, when we see individual users, their Desire, their intention to move over is much faster, which is what it is for all software. So Continue to be pleased. We're excited. Promotional considerations will always be a way to do that given how we see how successful we are with Retention once people come onto the platform. That's why you've seen we periodically run promotions, and we'll run those promotions to get people onto the platform Because we think they derive value from being on the new product, and we get the value associated of having them as customers.
Great. And that's helpful. Thank you. And one for Brad. So Brad, you updated the ARR from the 1200 customers, and I think that Now equates to about $440,000,000 which by my math is about 40% of the subscription revenue in the digital marketing cloud.
I'm just curious actually about the other 60%, if that's roughly the right math. What does that other 60% look like there's 100 customers in the top in the 40%, is there a long tail of other customers? Is it still quite concentrated? I'd love sort of any Thoughts and color on that? Thanks.
Yes. So, did you want to
No, please.
Okay. So we obviously We haven't talked about what that base looks like. So without commenting on your math specifically, let me just talk about The non top 100 customers and what that looks like. What you'll see there is certainly our business, we over the past 4 or 5 years, I would We have done exceptionally well penetrating the largest enterprises, I'd say midsize enterprise up. The one thing that I don't think we've talked as much about and it really comes back from the heritage even 5, 6, 7, 8, 9 years ago, The mid market piece, mid market customers, whether you describe that as customers with less than $1,000,000,000 in revenue or employee size, Continues to be a very, very nice growth market for us, specifically in the data and analytics segment, That and the personalization segment of the business.
So it's long tail ish, but I would say, as you look at us versus maybe the digital media side of Adobe's business where it's a very, very long tail, It's not nearly as long of a tail there. I would say it's more on the SMB. It's more of the M, and up to the large enterprise is the way to think about that.
Keith?
Thank you for taking the question and hosting. Question for Brad on Marketing Cloud. So I went to the Marketing Summit, got really excited about digital experience and all the great growth that was coming out there. I went back
to my media analyst and he said, how
is this happening? The marketing budgets that we're seeing are only growing both single digits. Traditional media is actually getting back some share. Digital media is not going the way it was before. Where are all these marketing dollars coming from that are going towards the digital media solutions?
I was going to ask you That's the same question. Where do these budgets come from? Like, what's sustaining this 30% growth in bookings for marketing stuff?
Yes, I would say the way I would address that one is I think what your analyst is talking about is just strictly the Advertising dollars and the advertising budgets that are being spent against media. So either television media and digital media and that's 100 of 1,000,000,000 of That are spent in media, basically by geo across the world. I mean, it's a huge number. Now The balance, it depends on who you talk to. Anne, on those dollars spends and Anne, what are we now, 70%?
75% digital.
75% of our spend there is on digital versus traditional. And so you're going to see a different mix there. That's only one of the budget dollars that we're capturing to drive the business. As you stretch back across the rest of the business, Those are that's traditional technology budgets that are driving that, transformation budgets that may have been Spent on ERP implementations or those type of things in the past, enterprises are moving more of those traditional technology spend budgets To the highest priority item.
So, Selim. Mick, can
I add 2 things
to that? If you look at both SIs and digital agencies And ask them which of their practices is exploding, they will all tell you their digital transformation practice is exploding. The McKinsey's of the world, the BCGs of the world, the Baines of the world, plus all of these Accenture. So the two things that I would add is when you think about marketing budgets, There's an advertising budget. There's a marketing tech budget, which may be controlled in many organizations by an IT, and there's actually a digital transformation budget.
The digital transformation budget
dwarfs all
of those budgets in many places. And there isn't one company that we're talking to If you can demonstrate what that digital transformation does for your company, that there's actually a limit to that budget that exists. And that's what
we are tapping. That's why the ROI
is so critical.
So we're looking at marketing spend across like the Fortune 500. That's growing low single digits. So what you're saying is the share of that going towards technology of these Digital Experience Technologies is growing as a percentage of the overall marketing spend.
Yes. And I would say that the budget dollars you're looking at is only one slice of the That are actually available. So even just looking at the media spend, you're missing the IT budget and that digital transformation budget in your number.
It's the
way I would look at that.
We're coming up on time. Why don't we take one more over here?
Derek Wood at Cowen. You guys Showed a slide that I think 43% of your enterprise customers have core services attached.
I think that's a year to date number.
And I assume that stock and sign are the 2 main core services. Could you give us some color on what the attach rates look on the broader base? And as you look at how adoption has been trending on the enterprise side, how do you see those vectors on stock And on content play out over the next few years, do you see a hockey stick adoption rate out of the broader base or something more gradual? It would be great to get color on that.
Yes. So if I could characterize the attach rate, that's speaking specifically to Creative Cloud Services and the services in that context are more the CC libraries and some of the other services that are embedded into Creative Cloud. The opportunity for stock and sign is in addition to that, but the service needs to be activated for us to actually tap into that opportunity, say, to be able to go in and sell stock To an enterprise account, they need those services activated. So I think there's still a lot of headroom in terms of the opportunity to attach stock in the enterprise. And frankly, we're in the early days of getting going
There are a couple of joint offerings also, Derek, that are being sold, which is you're selling the AEM assets As enterprise attach as well in terms of services, so asset management within the enterprise, there isn't a company that doesn't want us to help them with Dealing with all of their campaign assets or all of the asset management. So when we talk about services, the attached Asset management is also a big part of what we are seeing. Certainly, I think hopefully you saw in all of our demos today The emphasis that we are placing on stock as well across each of our applications. So as we renew these services, That's when we go in and typically sell them the additional value associated with all of these services. Because when you're on a 3 year ETLA, The focus is let's continue to get the value out of that and then sell these additional services.
So I think Shantanu wanted to have some closing comments before he does that. I want to thank the Adobe staff and the production crew for the meeting today and thank all of you for joining us. And Shantanu, you had some closing comments.
Yes. I just, again, like to thank you for coming here today. I mean MAX was certainly, from our point of view, Extremely successful event and just you got a glimpse of the innovation agenda that we're engaged on and the Mission as a company. Hopefully, today, as you heard presentations from everybody, you get a sense of the excitement that we feel associated with the mission that we are on, why it's a large growing opportunity for us as a company to focus on, The key things that we have to continue to execute on in order to continue to see the benefits that we've had as a company, building a platform In digital marketing and continuing to expand how We are thought leaders in that particular segment continuing to develop deep technology moats that for the Multiple decades. And on the creative side, any piece of creative content that's out there, we want it to be created through A piece of Adobe software, and I think what Mark and I would both say is that leads to the predictable revenue stream and a business model that we think is A pretty successful and a unique business model.
So thank you for coming. Do attend Snyk's so you get a flavor of what's Around the corner as well and tomorrow's session because I think tomorrow's session really that Anne organizes is all about what the community does with our software. And I think you'll understand The relationship we have with them. So thank you for coming, and I think we'll be here to take some informal Q and A as well. Yes.
Thank you. Thank you.