Ladies and gentlemen, please welcome Vice President, Investor Relations, Mike Savage.
Good afternoon, welcome to Adobe's 2015 Financial Analyst Meeting. I'd also like to extend that welcome to those on the live webcast. Today, we're going to spend about the next two and a half hours going into a detailed look over the next three years. We'll look at Adobe's strategy, our growing addressable markets, and we've provided some financial targets that we'll cover in detail. We issued a press release about an hour ago, which covers those financial targets, and that can be found on adobe.com on the Investor Relations page. We've also posted a copy of today's slides from the presentations on our website for reference for everybody. Our agenda today is pretty straightforward. Following me, I'll have Shantanu come to the stage, and he'll review the growth strategy for Adobe.
We'll have presentations by Brian and Brad covering digital media and digital marketing, and Mark will wrap things up later. We'll have ample time for Q&A at the end of the meeting. In addition to the speakers I mentioned, we're pleased also today to have many members of Adobe's executive staff, as well as some of our board of directors. Before we get started, I need to provide our financial disclaimer. Some of the information we discuss today contains forward-looking statements that involve risk and uncertainty, and our results could differ materially from those forward-looking statements. We encourage you to review our SEC filings for a complete discussion of those risks and uncertainties. With that, again, thank you for joining us today, and let's start the meeting by having Shantanu, our President and CEO, come to the stage.
Thanks, Mike. I'd like to welcome also those of you who are both attending here in person, as well as those of you who are at the MAX and online. It really has been a couple of very exciting days. For those of you who were here at MAX, I think you saw a very significant amount of both product announcements, partners, as well as incredibly impressive customers that were on stage with us. From my point of view, I think the positive energy and momentum that we have with the creative community is something that we intend to build on. What I wanted to do today was just set the stage for Adobe's growth strategy, a few of the market trends that we see ahead of us, and outline how we continue to have impact with the customers that we serve.
In summary, I believe it is the most promising time that we have had at Adobe with respect to our business, when you think about the tailwinds that we have, the market trends that we see in terms of what is happening with content and data, what the customer needs are, and the technology roadmap that we have ahead of us that will enable us to drive both this incredible growth and continue to have impact on the industry. Most of you have seen me talk about this slide before, which is our mission, which remains the same, which is to change the world through digital experiences. It is really interesting to think about the kinds of digital experiences that we have, both in terms of the quality of digital experiences that we have across all of devices as well as the quantity of experiences that we have.
It is clear that digital experiences are more meaningful and a part of everybody's life than ever before because the days of one-way communication are largely over. When we think about all of the powerful digital experiences that we have in terms of how we interact with people, how we entertain, how we work, and relate to the world around us, there is a huge unmet opportunity for people to help create, manage, and measure all of these experiences. It is not just with respect to one-to-one interaction, it is also with respect to how every business is interacting with their customers or how you are collaborating or how you are participating on social media as well. So we think that the mission that we have had is more relevant and more meaningful than ever before. I would like to spend a little time touching on the three market trends that we see ahead of us.
Yesterday at the MAX keynote, we talked a little bit about the connected consumer, and all we have to do is think about all of the experiences that we have as individuals, whether it is listening to the music that you are interested in, whether it is following a TV on a device that you are interested in, whether it is ordering dinner, whether it is participating in your children's lives with respect to what they do digitally, even if they are 1,000 miles away. It is clear that all of us are both connected to devices and consuming more experiences digitally than ever before. The expectations that all consumers have is that they expect to work from anywhere they want. They expect to get access to all of the information wherever they want.
So the connected consumer is clearly more important, not just in an individual context, but also for every businesses to address in terms of how they acquire them as well as retain them than ever before. The second big trend that we see is while all of this connected consumer expectation is changing, the amount of data that is being created, that is being stored in the clouds, is absolutely exploding. The reason for all of this data that is happening is more is known about us than ever before. If you think about what people are collecting in terms of demographics or purchase history or location or browsing behavior or how we interact with all of the Internet of Things devices that we have, there is just an explosion of data.
The need really exists for somebody to understand what that data is, to be able to collect it, to make meaning of it, and more importantly, I think, for all enterprises to make that data actionable. While this flood of data is overwhelming for a lot of companies, we think trying to act on it and make it as an opportunity to help understand the impact of digital experiences is going to be a huge opportunity for many years to come. I have the opportunity to travel a lot as part of my job, and one of the things that I hear from virtually every suite around the country, and in fact the globe right now, is this notion of digital disruption.
I think every industry is grappling with the changing needs of consumers and all of this data, and how do they deal with it, because they all fear that unless they deal with it in a meaningful and personalized way, that they're all going to get disrupted. Every business is moving online. Every business is thinking about how they interact directly with consumers. The need for this next-generation web infrastructure, for the ability for people to target these consumers in a meaningful way, is more important than ever before. We think that the combination of all of these trends, the connected consumer, data explosion, and digital disruption, is going to lead to a lot of opportunities for companies, because technology is certainly going to be brought to bear to address each of these three issues.
When we take a step back and think about what Adobe's strategy is, given these three market trends, the first one continues to be: how do we help advance the state of art for content? It's clear that there's more content that's being created than ever before, whether it's websites, whether it's microsites, whether it's mobile web applications, whether it's all the video that's being delivered on the web. Certainly, advancing the state of that content is what Adobe is best known for. I think at MAX this year, we again showcased how we are doing that with mobile devices, how we're doing that with services, and how we are tying together our entire creative offering to enable these individuals to be able to create whatever content they want, wherever they want.
The second thing we think we have a unique opportunity is not just to create generic content, but how do we harness the power of data while we are helping create this content. If we can do that for every brand across all of the different customer touchpoints that they have, we think that's a unique ability that Adobe has, especially given the market share that we have with Adobe Analytics on the server side. I think most important, the conversation that we're having with every business is, as their business moves online, much like Adobe's business moved online with our own creative transformation, how can we help these companies create an online presence? How can we help them target their customers? How can we help them retain it?
How can we help them understand what's the efficacy of their brand or their marketing spend and make sure that we can provide them with a return of investment on the technology investments that they're making, because every business is moving its business online to make sure that they're not getting disrupted by a mobile app. In combination, when we think about our ability to advance the state of content, to harness the power of data, and effectively and eventually drive every industry to enable them to deal with this digital disruption, we think that that's a large and growing opportunity for Adobe. In our DNA, when I think about what Adobe is, we've always been a technology company that's built meaningful products and meaningful technology.
When we first built all of our desktop products, it wasn't just building best-of-breed applications for graphics or web or video or imaging. It was really how do we build core technology as well that enables all of these products to work in a more seamless and integrated manner than ever before, and that's how we achieve the eminence that we did with our creative products. When we take a step back, we think that the combination of what we can do with content and data represents an opportunity that's much larger than the opportunity that we had to just help create that content.
If we can help individuals, small and medium businesses, and enterprises, not just with their content, which will help them break through, but also with the data insights that they need so that they can target, measure, and optimize all of the results they need, we think that that's a long-lasting opportunity for us. It also is the unique differentiation that we have relative to other companies that are looking at technology and looking at the same market trends that I saw. Our unique differentiation is this combination of what we can do with content creation, but using the data insights to make that meaningful. When we step a little foot forward on that, what we enable people to do is make all of this content. It needs to be rich, it needs to be beautiful, it needs to be useful.
We're certainly well known for that. We can help them manage it. That was the Adobe Experience Manager acquisition that we did with the proliferation of websites. We can manage that content for seamless delivery across many devices, as well as ensuring that the consumers have access to it across all media types and screens. We can certainly measure the return of investment across all of these marketing channels. The combination of these, I think, makes us more seamless and integrated than any of the other solutions on the marketplace. When we take a step back with the move towards cloud and the move towards mobile devices, we think delivering this one integrated cloud platform, and I'll touch on how the Marketing Cloud, the Creative Cloud, and the Document Cloud fit as part of that.
In combination, this one single cloud platform is the way that we enable our customers to deal across that entire content life cycle that happens, and we have been hard at work, not just making each of the three clouds best of breed, but also in integrating them in a unique way that no other company can. That's represented on the screen by the Adobe Cloud Platform. Clearly, the three different solutions that we go to market with today. On the Creative Cloud, what you're going to hear Brian talk about is how we have completely reimagined the creative process with a combination of what we've done with constant innovation on the desktops, with a whole slew of mobile applications that we've delivered, and with a set of services that integrate all of these desktop and mobile applications.
The creative opportunity is larger for us than ever before, both in terms of the existing install base of Creative Suite users, whom we can migrate to the Creative Cloud. In addition to that, what we can do with the number of people who have not yet moved and the new creatives that are emerging the market. The creative business opportunity is best represented by a migration of the existing Creative Suite customers, by market expansion and attracting new customers to our platform, new creatives to the community, as well as value expansion services like Stock, which enable us to deliver brand-new services and increase the average revenue per user for each of these creatives. On the Document Cloud, we think there's a unique opportunity with everybody moving from paper to digital. We have this incredible franchise in PDF.
There are over 50 billion PDFs that are being viewed through Adobe products. If you think about the billion or so readers that we have, that represents a huge opportunity for us, an on-ramp to help people with their paper-to-digital process as they do digital disruption. The Marketing Cloud clearly represents the largest, most explosive opportunity for us, well north of $25 billion, that I think is the opportunity associated with helping enterprises with digital disruption and moving from a traditional business to an online business. What we are doing is working on making sure that each one of these is a growth opportunity, integrating across all of these to help people with their specific business challenges that they have. It's not just about delivering each of these three clouds in isolation.
We think a huge opportunity for us in delivering this as a platform is how do we harness the power of the entire ecosystem to make this a more sustainable and defensible cloud platform. Whether it's the community, and we talked about how we have over 5 million people on Behance who are now getting inspired and providing their portfolios on the Creative Cloud, whether it's through a marketplace, things like Stock, fonts, training, and other job searches that enable us to actually have an aftermarket, so that wherever inspiration strikes, people come to the Creative Cloud. Whether it's the partners that we've engaged with, and I think Brad's going to talk about the partners that we have, whether it's systems integrators or agencies who are our partners in enabling people to deploy our Marketing Cloud solutions.
Whether it's developers with the Creative SDK who are building brand-new products that are leveraging the history of technology that we have but are making our cloud platform even more unique. That's the strategy that we continue to think is a winning strategy for Adobe. This platform really is the foundation for not just individuals, but also for a lot of companies to build their businesses on. When I take a step back and we talk about what's happening with the market trends, what's happening with the technology that we provide, I think there's two real massive areas in which Adobe has impact, and this impact is extremely wide-ranging. The first, we are empowering people to create, whether it's images, whether it's websites, whether it's mobile applications, whether it's PDF documents, whether it's video.
We continue to touch virtually any content that's being created, and through the introduction of the Creative Cloud, we have effectively dealt with any competition that we have in that space by innovating at a faster pace. Beyond our software, we're clearly bringing value-added services to these individuals through the community, through inspiration, as well as through a marketplace to offer a more complete environment for anybody who's a content producer. While our focus primarily in this space used to be with professionals, we certainly see a large opportunity that Brian will touch on beyond the creative professionals, whether it's people at work as well as consumers, because everybody has an innate desire to want to express themselves. Large opportunity for Adobe to continue to have impact with respect to empowering people to create.
Similarly, in terms of how we will help businesses compete, when you think about all of the different industries where we're helping people, in consumer goods and services, we're helping them with their Marketing Cloud in sectors like travel and retail and apparel, build their brand, build their online commerce, and build their community. In media and entertainment with businesses, we're certainly helping people, whether you're a video publisher or whether you're a cable provider, connect to their audiences and have brand-new monetization models than they never had before. Digital government in business continues to be a large opportunity for us, helping people with end citizen-facing services like applications, taxes, reporting, and enabling all businesses and governments all around the world with this paper to digital transformation.
In education, which continues to be a large and important market for us, seeding that next generation as education institutions deal with advances in digital. While the list goes on, the real power, I think, for Adobe is that every single business segment is in the midst of their own digital transformation. We've been through ours, we've experienced it, we've actually used our own technology in making that transformation, and we continue to think that that's a large opportunity for us to have with our customers. When we summarize all of this, I think the growth story that we want to leave you all with is you will hear from both Brian and Brad how the total addressable market when we look at it in 2018 is now approximately $48 billion, a significant increase from the last time we provided our TAM for you.
We have this unique cloud platform that enables us to provide a unique technology differentiation for all of our customers. We're the only company that deals with content and data as well as has the entire content life cycle as something that we address. We believe that as a result of these large opportunities, as a result of the unique technology that we have, that we will continue to target in the FY 2015 to FY 2018 a 20% revenue CAGR. Mark's going to touch a lot about what that means also from the bottom line, but I could not be more proud of what our company has accomplished already in terms of the transformation that we've done with both the Creative Cloud, the Document Cloud, and creating a brand-new business opportunity with the Marketing Cloud.
We think that the opportunity ahead of us is significantly higher than what it was before. With that, let me turn it over to Brian to give you a lot more details about how we view the opportunity in the digital media business. Brian?
Thanks, Shantanu.
Thank you all for making the time to come out to MAX and spend some time with us, and hopefully you've had a chance to interact with a few customers and see some of the passion that they bring forward at this event, which is still the largest creativity event every year. It's been an exciting week so far. As Shantanu mentioned, I'm responsible now for the digital media business that comprises both the Creative Cloud and the Document Cloud. For those of you who don't know me that well, I spent a good percentage of my career at Adobe helping to build out the application business and the creative business in the growth stages of the early days there. I came back about two and a half years ago after spending some time outside at Yahoo and a couple of startups, much more focused on cloud services.
I think both the combination of my background on the creative business, the experience that I've had over the past two and a half years running the Acrobat and the Document Cloud business, some of the core corporate groups of corporate technology and corporate strategy, and the combined experience on the outside in cloud services. I'm really excited to kind of grab the reins of both of our big content cloud businesses and drive them forward. Without further ado, let's jump right into the story today.
The digital media business, as Shantanu touched on each one of the aspects of our core strategy, the digital media business, we're very much focused on transforming and advancing the state of the art of content and driving digital transformation, both with our creative content, but also equally importantly, with our Document Cloud business as we take steps out of the processes that lead to complex processes when it comes to paper within enterprises and organizations. That's our core focus is really on kind of the outside pillars of this slide. How we consume and interact with content has changed completely over the past five years. As we look at consumers, they expect content to be relevant, to be intelligent, to be personalized, and to really be consumable when and where they want to consume it.
To meet these rapidly changing needs, we've actually gone through quite a transformation that you've all followed, where we've really harnessed the desktop crown jewels that we built out over a couple of decades and transformed them into an ecosystem across mobile, across cloud, and across the desktop to really drive the next generation of creativity. To allow our customers and to allow consumers to create and publish for the web and for mobile consumption, to allow photography enthusiasts to interact with images wherever they are, whether that be on the web, on mobile, or on desktop, and to bridge beyond strictly image editing to actually publishing photo portfolios, publishing video content, et cetera, and to allow knowledge workers to be productive wherever they are, whether that be at their desks or away from their desks. That's the core focus that we have in the digital media business.
The Creative Cloud and the Document Cloud are aimed at addressing the opportunities created by these trends, and I'm really proud to be at the helm to actually harness the power of the teams to actually go after these opportunities. As you know, the transition from the Creative Suite to the Creative Cloud has been a big success so far, and we've also begun transitioning the Acrobat business to a subscription model and to a recurring revenue model as well. With subscriptions and services, we're able to engage with customers and transact business much more frequently. The more affordable price point is fueling a lot of new customer growth for us. There are a few businesses, if you look across the industry, there are very few businesses that have experienced a 10x growth over three years like we have with our digital media business.
If you look at it, we were at $300 million of digital media ARR in Q1 of FY 2013, and as we exit FY 2015, we will achieve approximately $2.95 billion of digital media ARR. We kind of like this chart. It's up and to the right. There's a lot behind it, and we'll talk about that a lot more today. What I'll do today is to split my presentation into two parts. First, I'll cover the creative business, and then I'll cover the Document Cloud business. Later I'll tie it back together at the digital media level as we look at some of the synergies in the go-to markets and things that we can really bring together across this unit that we've reformed. Let's start with the creative business.
I'll cover first business momentum. Then we'll go into the underlying strategy, which is largely the same as we set forth a couple of years ago. Then our view of the market opportunity that's in front of us, I think you'll see quite an encouraging update in terms of the prospects that we see going forward with this business. Those of you who've been following us for some time now know that in our prior model with the Creative Suite, we updated our products roughly every 12-18 months, desktop perpetual software. The model worked well for us for many years, the pace of innovation became insufficient, really, to keep up with the changing needs of customers and the challenges that they were facing as they drove to deliver experiences across print and web and video and mobile.
They needed more innovation. They need it faster because really the standards and the targets that they were actually trying to hit were moving on them. The old model and the 12-18 months of innovation just didn't work well anymore. In addition to this pace of innovation, we wanted to reach new customers. We needed a model that would allow new customers to come in and to kind of ease them in at a lower price point. We wanted to combat piracy. One of the key challenges in desktop software in general is worldwide piracy, and that's not just worldwide. It's not just blame it on other geographies. We've got a fair amount of that in North America as well. We wanted to make sure that we had a mechanism that we could combat that more readily.
We wanted to move to a more predictable business model, I think you saw the charts becoming pretty darn predictable. We introduced Creative Cloud in 2012. Since then, we've already delivered over 1,000 new features. Innovation is rampant. We're cranking out more and more, I think for those of you who had the luxury of spending yesterday morning with us in the keynote, you see that we're pushing faster than ever in terms of new things that we're doing in mobile and web services, bringing it all together with Creative Sync. It's a really powerful story, I'm very proud of the rate that the teams are moving. We've expanded our offerings from Creative Cloud for individuals to teams, to enterprises, then to photography enthusiasts.
We've been taking the core product and really extending that into new segments of the market to serve them better. The results have been phenomenal, just focusing on the Creative ARR story. At the end of Q4 2015, we expect to exit with approximately $2.5 billion of Creative ARR. We all love the up and to the right charts that I'm showing you here, we're equally thrilled with the key business indicators that underlie these charts that contribute to the numbers. After I take a sip of water, I will go into those. Let's look at some of the interesting statistics that are behind the momentum you're seeing in our results today. First, in the past, we've shared that new customers of our Creative franchise were more than 20% of the total installed base.
We're seeing better results than that in terms of attracting new customers, the number is now much higher. More than 30% of Creative Cloud members are new at this point. That's a key stat that we're moving up, and that's good news. Some of this growth is coming from mobile, and we're excited to see the role that mobile is playing at the top of the funnel as we do more and more to deliver mobile apps to the market, and the act of actually signing up for Adobe IDs is occurring frequently on mobile, and that brings in new users into the top of the funnel. At Adobe Summit in March of this year, we stated that we had generated approximately 5 million new Adobe IDs from mobile apps. That number has now grown substantially to over 14 million, and it keeps going up.
These customers are coming into the franchise. They're also coming in because they want to be part of a vibrant and engaged community through Behance. With Behance, which is part of the core Creative Cloud offering, we've grown that base to 5.6 million Behance members. Another great kind of front of funnel activity for us. Let's shift our focus now down to the bottom row with the enterprise customers. Enterprise customers, we've moved to the Creative Cloud model. We began migrating our enterprise customers to term-based agreements called ETLAs. Today, over 80% of our enterprise customers are now on ETLAs. That migration happened primarily for the desktop apps, and that was the primary motivation.
We introduced in the middle of this year, asset workflows for our enterprise customers with supported federated IDs, which are kind of a requirement to deploy in the enterprise for many customers. In Q3, if you look at the ETLAs that we sold in Q3, a full 18% of those seats attached services to them. We just introduced the capability to deliver services, and now we're seeing uptake on those services. When we do this, it has a substantial impact on how the ARPU looks at a seat level in the enterprise. We're growing ARPU with those seats in the enterprise. Finally, we've stated that adoption was stronger in the U.S. than outside the U.S. in the first part of our transition to the cloud.
With CS6 now over three years old, since its removal from most of the routes to market internationally, we're starting to see increased adoption of Creative Cloud outside the U.S. In a Q3 year-over-year basis, we've grown that 40%. We're really starting to see the international business kick in there. These are some of the core indicators of the business momentum that underline that up into the right chart, and they're also driven by our core strategy. The strategy is fundamentally the same that we communicated to you before. I'll walk you through the key components of that strategy. First, the Creative Cloud is a connected creativity platform at its core that provides everything a creative professional needs to do work. The first pillar of this strategy is, of course, our industry-leading desktop applications.
These include products like Photoshop, Illustrator, InDesign, Premiere Pro, and After Effects in the video space. We keep pace and we're on pace to deliver a constant stream of innovation to our customers. Now we ship hundreds of new features in our desktop apps throughout the year, and we've been showcasing a lot of those features this week that we're just releasing. Performance is at the heart of a lot of our work, and we're proud of ourselves and the engineering teams and their ability to extract the last bits of performance out of the innovations that are brought to us in the desktop systems. We showed off, for example, this week a lot of performance in panning and zooming and core performance in Illustrator.
We're very much focused on getting the best out of the hardware and boosting the speed and the responsiveness of our applications. Productivity. To make customers more productive through product integration, through streamlining workflows, through simplifying some of the most commonly performed tasks. Things like Creative Sync at its core, but a lot of the work that we're doing in Photoshop and in the new product that we announced this week, Project Comet, to actually streamline the creation of applications and the design for applications and end-to-end workflows. These sorts of things really resonate with customers because it fundamentally just brings back more productivity. They can get their creative work done that much faster. That's a core focus for the desktop apps as well. We call it the Adobe Magic.
Our world-class research scientists continue to be at the cutting edge of their domains in imaging, in documents across the board. Our goal is to always enable customers with a lot of new magic. If you saw some of the for those of you who had a chance to sit through some of Jason's demo, the high energy guy on stage. Also Photoshop, they've seen the creative things that we're doing with photo retouching and automatic face recognition, and there's just a lot of great things that our engineers do. Content-aware fill, dehaze, automatic face tracking. All that, we make it look easy, I think, but it comes through years of research and years of experimentation and trial and error to get to the point where we can put that in a product and deliver that at scale. Finally, touch.
We're seeing a fundamental transformation of human interface when it comes to manipulating content, and touch is at the forefront. We're obviously exploiting that on the tablets and the phones, but we've also partnered quite a bit with Microsoft to optimize our applications for the touch interface with Windows 10 and with the Surface line, et cetera. We think this is fundamentally changing the way that people interact with computers for content creation and content editing. This is a big investment in the desktop apps as well. From a mobile strategy standpoint, it's really about extending the Creative Cloud desktop experience and the cloud experience to allow creatives to capture inspiration wherever they are, to be able to create and to edit wherever they are. These apps have seamless connection to the desktop through Creative Sync. We've really highlighted that.
I wish I had $1 for every time anyone said Creative Sync yesterday. You can work wherever you are, and it brings it all back together, your content's available in the desktop, in the cloud, on mobile. We've also made these mobile apps a lot more accessible to consumers, and I think I'd say Photoshop Fix is another great example of that, or Adobe Capture, which we announced, is another great example of that, making it very automatic to just capture real-world patterns and brush strokes, et cetera, and to be able to use that through the whole Creative Cloud ecosystem. I think that it's all very powerful, and we're making the mobile app a starting point and an entry point for less experienced users, so they can actually experience the Adobe magic out of the box on mobile.
In addition to strong desktop and mobile apps, our customers use other services as part of the creative process. Our acquisition of Fotolia in January, we announced Adobe Stock. We actually put that in the market in June, and Adobe Stock is one of the fastest-growing marketplaces with over 40 million images showcasing some of the most beautiful content in the world. Stock is deeply integrated with our Creative Cloud apps. We showcased that again yesterday in our keynote workflows. Fundamentally, we think that both the availability and the selection that we can provide in the core Stock library across images, video, and graphics, and being able to build that directly into the application so our customers don't need to leave their workflow. They don't need to interrupt their creative process to actually augment their designs with stock photography.
We think that is going to be core to unlocking this opportunity. Finally, Creative Cloud is about enabling connections for inspiration. As I mentioned earlier, we've reached 5.6 million users, members of Behance, and that continues to grow very rapidly. Deep integration with Behance enables connections for our Creative Cloud users to be inspired and to showcase their work and have it be discovered by a broader creative community. At the center of all this is Creative Sync. It's our signature technology that really ties it all together. If you think about it intelligently syncs fonts and photos and design assets wherever the creative's own assets exist, or if they want to acquire assets via Adobe Stock, that's integrated in the same Creative Sync platform. Creative Sync enables work to be started in any connected mobile app or desktop app and to be continued in the other.
It's basically our way of delivering on a seamless workflow and delivering a truly mobile workflow to our users and give them the choice and the flexibility to create where they want to create. Another example of Creative Sync, it works mobile to desktop to mobile to mobile. I mean, it works everywhere, basically. Creative Sync provides deeply integrated connections, not just across Creative Cloud, but also with the Marketing Cloud. We're helping enterprises shorten the content creation life cycle and allowing them to quickly finish campaign cycles and creating kind of a frictionless flow of assets between the creatives and the marketers. The whole concept that we've talked about this week of content velocity. This is the demand for personalization in applications and web experiences driving a proliferation of an increase in the demand of the need for content to drive those personalized experiences.
Brad will talk about that a bit more today. This is at the heart of Creative Sync is helping us deliver on that content workflow across the clouds. We introduced a lot of innovation yesterday at MAX, and I hope some of you had the chance to sit through the demonstrations. It's the world's largest creativity conference. We have over 7,000 attendees this week, and it just keeps going up every year. Our goal is to bring together the most creative minds from across the world and connect them with each other to inspire and to share ideas. Think of it as a Behance Live. We're bringing them all together in person. The announcements that we made this week include the following. First, I touched on Creative Sync a while ago. This week, we introduced mobile-to-mobile workflow.
When we started out, we made it very easy to get from desktop to the mobile device or from the mobile device to the desktop. We think it's going to be equally important as more and more content creation and content origination is happening on mobile, that we connect the application workflow across mobile. That's something that's pretty unique, and we're the first to do that in a large way to enable workflows to happen across the different mobile applications. We added hundreds of new features across the desktop app, so I called out the introduction of Comet and the end-to-end UX design experience that we've enabled there. So that's something that we were previewing yesterday, and we'll be putting that out in the market in early 2016. We introduced two new mobile applications. I talked about Photoshop Fix and Capture.
Adobe Stock, we added video, and we introduced new business plans, so letting our ETLA customers kind of attach the marketplace purchases and licensing within those agreements. In addition to that, within Stock, much deeper integration within the desktop and mobile app workflows. We also introduced on the back of Behance a new portfolio service that lets our Behance customers publish their portfolios directly to a website of their own domain so they can actually control that experience. Finally, with photography, I talked about Photoshop Fix in the mobile section. That's really a key addition to our photography ecosystem with the Creative Cloud Photography plan. We also announced a lot of new Photoshop magic across Lightroom web, desktop, and mobile. Really tying it all together at an ecosystem level. A lot of big announcements. That's kind of the core strategy, really.
We're really happy, and we think that is really the foundation for the growth that we have been driving. Naturally, we feel great about where we are today on that. We also feel pretty good about how well-aligned our strategy is with the market trends that we're seeing and what will directly influence our go-forward strategy. First of these trends, we keep seeing new creatives join the marketplace, and this gets back to that whole content velocity concept. There's just more and more demand for content. We're seeing about, we estimate, 675,000 new creative jobs that are created each year. It's freelancers, it's creatives in small and medium business, and it's in the enterprise. Next, we know that businesses going through this digital transformation are spending more on creative services. That's the other yin and yang there.
In order to deliver more personalized experiences for the customer. In 2015, this is estimated at approximately $275 billion corporate spend on content. That's a big number, and we think that's really a tailwind in our overall strategy. Mobile devices, and I've talked about this, mobile devices are no longer consumption devices only. They've emerged as new capture and creation devices. They're really putting themselves at the heart of the creative process, and you don't need to look any further than what Microsoft has done with the Surface or what Apple is doing with the iPad Pro to realize the potential of these devices as kind of full-spectrum creative devices. Every mobile phone is an image and video camera at this point, and the quality of the sensors is just amazing, and many customers now edit their images directly on the handset.
I think that fundamentally, a strategy that is not just bound to the desktop or desktop plus cloud, but really includes mobile as a core platform for creativity is going to win here. With these core trends as a backdrop, and after I take one more drink of water, we're going to get into how we see the market opportunity going forward. First, we see substantial headroom. There are three core pillars of growth starting on the left here. We see substantial headroom in our core business, and I'll jump into that. Second, a new market expansion opportunity to address a broader customer segment for photography, for consumers, and for our customers who are using our products at work or who will be using them at work. Third, a value expansion opportunity.
We've talked about this in the past, but it's basically looking at the other two segments of the core and the market expansion opportunities and how do we layer value on top via services to expand the ARPU of those opportunities. Let's start with the core and talk about the remaining headroom that we see in the core. This is a bit of a different view than we've shown you in the past. In this section, I'm going to just slow down and make sure that you guys understand this. It's how we think about this opportunity based on customer segments, which we think is a kind of more holistic way of actually looking at the opportunity going forward. If you start from the bottom, the individual segment includes Creative Cloud for individuals, Creative Cloud for students, and Creative Cloud for photography.
Next, the commercial segment represents both small and medium businesses, as well as large enterprises who use Creative Cloud for creating their content for business needs. That's Creative Cloud for Teams and Creative Cloud for Enterprise. The third segment is education, and this includes institution-wide and departmental purchases in both higher ed and K through 12. This is a very high-volume segment with lower ARPU. It's very strategic to Adobe, so we can get our tools in the hands of both students and educators, and it'll allow us to fuel future growth for our businesses as those students come out of school and are looking for jobs in the creative market. This is something that is fundamental, but we want to underline it's a lower ARPU business. It's more of a strategic play here.
We're going to address these segments with different offerings and different ARPUs, and that's natural. We want to make sure that we are aligning the offering with the segment. Together, these segments represent $8.3 billion of TAM in 2018. This is about the core business. That was a segment-based view. Let me break that down for you in a more familiar view of units, and this is more consistent with the way we've talked about the business in the past. First, it includes our current Creative Cloud base. Our current base is estimated at 8.6 million units at the end of Q3 2015, and that's up from the 500K that we shared with you at MAX in 2013.
This 8.6 includes the 5.3 million subscriptions that we shared with you at the end of Q3 of this year, plus an estimate of seats for the enterprise. As you know, we have not been giving you a seat adoption for Creative Cloud for the enterprise. The reason for this is many of our contracts are capacity based, and so it's pretty difficult for us to accurately report the seat count in those deals. For the purpose of discussing the go-forward opportunity, we are estimating that there are 3.3 million seats in the enterprise, which includes education institutions, which as I have just said a few times, are very large volume and a much lower ARPU. Together, the 5.3 million subs and the 3.3 million estimated number of enterprise seats gives us the 8.6 million current Creative Cloud base.
The second piece that we're layering on top of that is the remaining CS installed base. At the end of Q3 of this year, we have 8.3 million remaining users on CS. I'll explain that, but all in, when you consider the remaining CS install base plus the current Creative Cloud base, we've grown the 13.3 million of total users of creative tools, and this is the number that we shared with you at MAX in 2013. That was 13.3 million. We've grown that to 16.9 million at the end of Q3 2015. That may come as a little surprise to you that the remaining CS install base is that much higher than what you expected, and so I'm going to slow down a bit and explain that to you.
We get to 8.3 million CS customers after removing those who were in the 12.8 million install base that we shared in MAX 2013, who since migrated to Creative Cloud. In addition, we added new customers who bought CS6 over the past two years since we announced and started shipping Creative Cloud. We had new customers who were still buying CS6 through that period that we've added back into the equation here. Finally, as I mentioned earlier in the presentation, we're getting a lot of new customers to the core business as well that we're factoring in. As we look to the future opportunity for new customers in 2018, we estimate this at 11.7 million.
Some of the growth is because of the content explosion that is happening in the industry that I talked about, new creatives coming into the market across SMB and the enterprise, and also fueling the addition of freelance contributors to the market. This segment also includes the opportunity to penetrate education institutions, students, and teachers, which for the fourth time, I will say, has a large volume and lower ARPU. Finally, Creative Cloud presents our best opportunity to combat piracy. We are anecdotally already seeing benefits from the low entry price point and the Creative Cloud services model, the integration of desktop and cloud services and mobile, think of the complete ecosystem that we have developed. We think that will allow us to make much further progress over the coming years on piracy. It is a much better model than perpetual desktop software to combat piracy.
Over the next three years, we estimate the new opportunity in core to grow to 11.7 million, bringing the full opportunity to 29 million users. As I said earlier, those 29 million users are targeted with an array of product offers at an array of price points. When we put that all together, we estimate our core TAM in 2018 as $8.3 billion of opportunity. That is the core. Let us talk about market expansion. We are aggressively focused on leveraging our strong brand and our amazing product technology to address adjacent customer segments beyond our core creative market. The market expansion opportunity includes a focus on both the photography market and the potential to take Creative Cloud capabilities to a much bigger consumer and at-work market. This is the 100X and the 10X user potential that we have talked to you about in the past.
Our first market expansion offering was introduced in the spring of 2014, you all know about it. It is the Creative Cloud for Photography plan. This has enabled us to address a large adjacent market of photography enthusiasts and hobbyists. As we have discussed, it has been very successful. We have added hundreds of thousands of new users to the Creative Cloud. In our Q3 call, we mentioned that over the past year, we have started to see an opportunity to migrate our legacy customers who are using Photoshop Elements and Photoshop Lightroom to Creative Cloud via the $9.99 per month photography plan. To help you gauge the remaining size of just converting some of the legacy users on Elements and Lightroom, we estimate the combined Lightroom and Elements install base opportunity at five million users.
These are the ones that we measure and we think will have a propensity to move over to a subscription over time. This install base, plus reaching new customers for photography, represents a $1.6 billion incremental market opportunity for Creative Cloud in 2018. Beyond photography, our goal with Creative Cloud is to be a one-stop shop for creative expression. In the future, we intend to target a significantly broader audience with lower priced offerings for consumers in the at-work space and for digital marketers who need lighter weight tools for creative content. These solutions could include mobile and web offerings or mobile-only offerings and will likely lead to subscription plans at a substantially lower ARPU. Market expansion is an exciting area we are testing with the consumers. We are testing now and in the future represents another incremental $1.3 billion market opportunity for Creative Cloud in 2018.
Finally, let's talk about value expansion. We've talked about the two core bases there. Let's talk about value expansion and the market opportunity for the addition of Adobe Creative Cloud services that we can monetize across both the core base and the market expansion user base. We think this is significant. At the top of the list of services, of course, is stock content. This was a large focus in our keynote yesterday, where we showcased the integration of Adobe Stock into the Adobe Creative Cloud across desktop and mobile apps. We estimate our market opportunity with Adobe Stock at $4.1 billion. The size of the opportunity has grown from the $3 billion that we shared in June. This is due to the addition of incremental content like video and editorial and premium content. Beyond stock content, we see other creative services as the logical next steps.
This includes the opportunity around how businesses hire creative talent for custom project-based work, so creating a marketplace for that. It also includes things like training and plug-ins and fonts and a lot more. It's basically the edge creative services that are still important components of creativity, and we think we have an opportunity to create a marketplace for those services. Creative services overall adds up to an incremental $2.1 billion to our total Adobe Creative Cloud market opportunity. That, combined with stock, takes the total opportunity for value expansion to $6.2 billion by 2018. To net it out, the opportunity is big. It's bigger than what we've discussed in the past. We all think that's a good thing. By 2018, we see substantial headroom across our core business, plus the added potential with market expansion and value expansion.
It adds up to $17.4 billion of total creative opportunity in 2018. Wrapping up the creative section. In summary, we have very strong momentum over the past several years. We have a very large growth opportunity ahead that consists of the remaining migration of the CS base, which has expanded, the targeting new customers and adjacent markets, and expanding value across both these markets. With a total creative TAM of more than $17 billion in 2018, we think the story is just getting started. Now let's turn to the Adobe Document Cloud. I'll cover market trends and problems that the Adobe Document Cloud helps our customers address. I'm going to take this one maybe a little slower up front because we haven't talked about this business in a while, so I want to make sure that you guys understand what it comprises.
Then I'll give you a deeper kind of view of the strategy going forward and the business momentum around the business. Then I'll conclude with an updated view of the market opportunity that lies ahead in this business as well. Adobe Document Cloud is another growth driver for Adobe, fueled by our leadership in digital documents. We believe it will complement and extend the value that we can bring customers on a global scale. Adobe created the category of digital documents with Adobe Acrobat and PDF over 20 years ago at this point. Our Acrobat Reader franchise, built on this value proposition and enabled by the PDF file format, helps to drive roughly $800 million of revenue every year. Another key pillar of our business.
Regulated industries such as government, legal, insurance, aerospace, financial services, any market where the fidelity and the integrity and the security of a document matters, they've standardized on PDF and Adobe Acrobat as the core solution for their success. While we've talked a lot about the Adobe Creative Cloud and Adobe Marketing Cloud over the past couple of years, we've also been investing in the Adobe Acrobat franchise and in the Adobe Document Cloud to drive future opportunity and growth for Adobe. I'd like to walk through what I mean by this and keep your attention here for a moment because it's a different story than one we've talked about. There are three relevant market forces that drive the Adobe Document Cloud opportunity. First, even though we're all becoming increasingly digital, there's still plenty of paper in the world.
We all see it and we all suffer through it, whether it's a school permission form that you need to fill out and print out and sign or a loan application, chances are that a large part of your daily life still, you're interacting with paper, both at the organization level and at home. We think we can continue to bring great value by digitizing these paper workflows. This is a core part of the digital transformation story. Over the past two years, as I've engaged with enterprise customers, this is a key pillar of what they're trying to accomplish through digital transformation. As the world becomes more mobile-centric, people want to access and get work done with their critical documents no matter where they are, no matter what device they're using.
The ability to actually flow content, we've talked about that in the creative segment, equally important if not more important here, where you're getting work done, you're reviewing documents, you're signing documents, et cetera. This creates a need for documents to flow seamlessly and transparently to the right device, at the right time with the right experience, which gets me to the third trend. Experience matters. I mean, the integrity, the experience of the document, the experience that you have in the app, experience matters. To be able to do that in an elegant way, in a seamless way, in a connected way, really makes a difference for our customers. With digital transformation, every business wants to engage their customers by providing an experience that is relevant and positive. It's not just about the personalization of websites or mobile apps.
There's room to improve document experiences as paper processes remain inefficient. Combined, these three trends create a rich opportunity for Adobe in the document space, and it's why we reinvented the business earlier when we launched in April with the Adobe Document Cloud. I could show you hundreds of specific use cases at the organization level that describe the needs of our customers relating to the market trends that I've discussed. On this slide, you see just a few. Signatures, collaboration and sharing, HR onboarding, procurement agility. These are the pain points that our customers are solving with the Adobe Document Cloud. Each of these examples has one thing in common. The need to automate a paper-based process to drive more efficiency and to improve productivity and to reduce cost along the way.
Going one step deeper, I'm going to actually spend about five minutes on each one of the nodes on this slide. Just kidding. Okay. Going one step deeper, here's an example that demonstrates the pain our customers face. This is a typical paper-based process. You get an NDA contract signed within an organization. What starts off as a 24-step process, 12 of which are manual steps, becomes significantly simplified with the Adobe Document Cloud. Down to six total steps, no manual processes, all digital. This is the type of value proposition that we can deliver to our customers, so dramatically simplifying and digitizing workflows with documents. What is Document Cloud?
It's a set of solutions which help customers transform their interactions with documents into impactful, highly efficient digital experiences that deliver streamlined workflows and compelling document experiences that result in a better customer experience, that improve productivity, and that ultimately drive business results. Since we last spoke to you about this business, it has evolved to a more powerful value proposition that's about desktop apps, mobile apps, services, and partner integration. You've heard the story on the creative side. We're playing it out here on the document side. The Document Cloud includes the world's best PDF software. We've reimagined Acrobat with Acrobat DC, Document Cloud, and added a new Acrobat mobile app for iOS, for Android, and for the Windows Phone.
We've also created new mobile capabilities like Mobile Link, which gives users access to their documents anywhere they're working, whether it's on laptop or on the mobile phone, and lets you pick up where you left off with the review and viewing of the document. Fill & Sign lets you capture, fill, sign, and send any form electronically, so it really takes the paper out of the forms process from the phone, from the tablet, from the desktop. Adobe PDF Services enable users to create, export, to combine, to insert, to delete PDF pages from any location using Acrobat Reader or a web browser. One of the nice things about this business is we have 1 billion PDF readers in the market, Adobe Reader, Acrobat Reader, and we're exposing these services directly through our broad reader footprint to introduce a wide range of services, kind of entry-level services to users.
This is a growing part of our business, and not just for the services themselves, but also as a funnel, as kind of the front of the funnel as we sell more desktop Acrobat as well, or Acrobat subscriptions. The third core capability of Document Cloud is the advanced eSign services, which enable organizations to digitize their document workflows. We'll talk more about that. Customers using eSign will never have to print out, never have to sign, never have to fax back another document. Finally, we leverage a strong partner ecosystem, including companies such as Workday, Ariba, SAP, Apttus, that use Document Cloud APIs to build deep integrations with third-party solutions and deliver integrated solutions to their customers. Let's talk briefly about the strategy. At the core of our strategy is the opportunity to modernize document experiences across desktop, mobile, and web.
Similar to Creative Cloud, this opportunity addresses both the individual as well as enterprise needs, specifically around individual productivity and enterprise document automation. What do I mean by that? Individual productivity is about helping workers be more productive with tools and services like Acrobat Mobile, eSign, and PDF Services. On the enterprise side, enterprise automation is about streamlining document processes for organization. We've talked about that in the graph. Through Acrobat DC Enterprise Services, customers get all the capabilities of Acrobat and eSign with advanced workflows with customizations and integrations that tie to their systems of record. In this way, their document workflows are accelerated, but they're still adhering to their corporate policies and procedures as part of that workflow. We're growing on the individual side, we're actually growing and migrating our Acrobat base to subscriptions.
We've been doing that all along, not quite at the pace that we are on the creative side, but we'll talk about that. We started this shift with individual purchasers. As a result, you'll see in a moment, revenue has remained relatively flat while growing ARR substantially. We're also reaching new users who might not have the need for the full Acrobat, and I talked about that with our PDF Services built into the Reader. We're doing that with services like export, create, combine directly through the Reader. As I mentioned, we also upsell those users directly to Acrobat full subscriptions.
For enterprises, the opportunity is to leverage our franchise to quickly automate time-consuming paper-based processes through the Document Cloud, and we're addressing the opportunity through Acrobat DC Services by scaling the eSign offering and building on core PDF capabilities like review and commenting, like document protection, and our strong position in forms. Finally, we are leveraging the common digital media sales team and partners across both to maximize the scale of this business. As a business, the Document Cloud has incredible reach and brand and great products and has also been a large revenue and profit driver for Adobe. We pioneered the PDF ecosystem, which is thriving more than ever. We opened 50 billion PDFs so far in 2015 within just the Adobe products. We have an installed base of about 1 billion Readers, and we're downloading 300,000 Acrobat mobile apps every day.
We've processed over 150 million eSign agreements to date with our eSign functionality in Adobe products. As I mentioned before, Acrobat has been a very profitable and has generated business and has generated stable revenue. You see underlying this, we are steadily transitioning this business to recurring revenue, which is reflected in the growing ARR line underneath. Prior to the launch of Document Cloud in March this year, ARR growth was driven by a combination of ETLAs in enterprise and individual subscriptions. We had a very positive response at the launch, which is further accelerating the transition to a recurring business model for us. Looking at our recent business results, we have reached an inflection point in Q3 of FY 2015, where our recurring revenue exceeded 50% and continues to grow. In parallel, we're increasingly selling through Enterprise Direct and adobe.com, which accounts for over 50% of our revenue.
The Enterprise Direct channel is now primarily ETLAs. That gives you a little bit more color about how we're going about the business. Subscriptions have been consistently popular on adobe.com, with the launch of Document Cloud, more than 75% of people who bought Acrobat DC on adobe.com chose the subscription path as opposed to the perpetual software path. Finally, the free reader, which has a billion installations, is a very effective upsell vehicle, as I've said. Go into a little more detail on that.
Basically, just so you understand, customer comes into Reader and they want to do something that is a function that's not available, we expose that functionality, we monetize that offering via a much smaller price subscription service, then we also use that as an opportunity based on the behavioral data that we get in the interaction to offer for some of those customers, to take them directly to Acrobat full subscriptions. That's driving about 30% of the Acrobat subscriptions that we are selling right now. Here's a view of some of the enterprise customers across all industries and government where Document Cloud is accelerating business success. UnitedHealthcare is a great example. They like to tell the story about Document Cloud, that Document Cloud has reduced the paper they use in a year, that if it were stacked, would be as tall as the Empire State Building.
That's a visual representation of what you can save with the Document Cloud. A lot of paper in one year. The reach we have, our array of customers, the challenges they continue to face with digital transformation create a large opportunity for Document Cloud. As I mentioned, there are two parts of our business, Acrobat products used for individual productivity and enterprise services used for business automation. The $1.2 billion TAM reflects a healthy growth in the market opportunity for the Acrobat side of the business for individual productivity. While 50% of our business is recurring, we still have a large portion of our base that still use our perpetual software, leaving us quite a bit of headroom for growth in that part of the business.
The $2.7 billion TAM for enterprise services reflects the strong growth of the e-sign category, now one of the fastest-growing segments of software, our exciting roadmap, which will allow us to participate in adjacent segments to that. Together, we have a nearly $4 billion opportunity with Document Cloud overall by 2018. To summarize on the Document Cloud side of the business, we see great momentum in the business. Our legacy digital documents and our install base with Acrobat Reader and PDF give us a very strong product foundation. Together, our move to the cloud and our success growing Acrobat DC subscriptions are reinvigorating long-term growth for this business. We have incredible opportunity to scale enterprise services.
As we migrate more revenue to recurring, it should build to the point where we see in the out years beyond FY 2018, mid-single-digit revenue growth with substantially higher ARR growth as well. We'll see the sphere stay fairly constant over the next three years as we move over to subscriptions, and then we see the opportunity to actually accelerate growth into the mid-single digits as we move beyond 2018. That growth will come as we target a TAM of almost $4 billion by 2018. Putting the two clouds together, the combined opportunity for digital media is $21 billion of TAM by 2018. Our go-to-market efforts for both clouds are aligned, to deliver a world-class experience for all of our customers and to give us a strong advantage.
We are leveraging key areas of synergy, including common routes to market and the opportunity to build a unified partner program and applying the Creative Cloud playbook to the Document Cloud side of the business to drive the transition to recurring revenue. Let me talk a little bit more about routes to market before I hand over to Brad. Both Creative Cloud and Document Cloud are moving increasingly more to direct sales channels of, as I've mentioned, via adobe.com and Enterprise Direct. More people are coming to adobe.com than ever, and we're using the Adobe Marketing Cloud to deliver in-product experiences, data-driven experiences that drive stronger conversion and stronger retention. Thank you, Brad. In the enterprise, we are continuing to pursue ETLAs and shifting to value-added business solutions such as integrated marketing services, publishing services, business workflows, and workforce productivity.
We're also building a large partner ecosystem, as you'll see on the next slide. Across all routes to market, we've built our muscle around data-driven marketing and customer engagement, and this is changing how we're doing business and making it more efficient. Our partnership strategy spans proliferation, customer acquisition, and solution integration partners. Our partners include global consumer brands, ISVs, agencies, OEMs, productivity partners, and SDK partners. Very broad range of partners across the digital media business. To wrap up, I am very excited about the growth opportunity we have ahead of us for digital media. We'll capitalize on a strong product position, market trends, as well as our brand and reach through connected mobile and integrated services to help customers advance the state of the art for content and to drive digital transformation and documents.
The total opportunity for digital media is approximately $21 billion, as I've said, by 2018, with a three-year revenue growth target of over 20% on a CAGR basis. A critical enabler of this opportunity is how Creative Cloud and Document Cloud are leveraging Marketing Cloud to deliver delightful and relevant experiences to our existing and new customers. That's both to acquire and to retain those customers and to engage them. I'd like to now hand off to Brad to talk more about the Marketing Cloud part of the business. Thank you.
Thanks, Brian. All right. Hey, good afternoon, everyone. Let's do something together. Let's just stand up and stretch it out for a minute. Everyone stand up, introduce yourself to someone at the table, shake their hand, give them a hug. There's caffeine over here. The next topic, I just really want you guys to just process. Caffeine over there, grab that, stretch it out. I'm going to stretch out the hammy. I needed to stretch out. All right, let's go ahead and we'll get into the next section. I'm glad everyone got caffeine. It's important at this time in the afternoon. I am here to take you briefly at Adobe MAX away from your regularly scheduled programming for a commercial break, and we're going to talk about digital marketing for a few minutes.
In the week of creativity, we're going to get into once you create all that fantastic content, what do enterprises, how do they use that? What are they going to use that content for? That's where digital marketing comes in. Let's jump into that. We started with the strategy. I love this slide because it brings onto one piece of paper why is it that Adobe's having success in digital marketing, and why are we winning in this category, and what's going to propel us to success? It starts with content. All the content that you need, we've shown all these workflows this week about going from desktop to mobile to desktop, all these great workflows, and all the creative glue that we're putting in with Adobe CreativeSync and other tools to get all the content to come to life.
What do you do with that? Where do you put that content? Where do you put those assets, and then how do they get used? That's where the Adobe Marketing Cloud comes in, and anyone, anywhere in the world who creates content already uses Adobe, and increasingly, enterprises across the world are using us to manage that content and then to run marketing campaigns, customer-facing programs using the Adobe Marketing Cloud. This is a competitive differentiator. I know in the Q&A, we're going to get asked about competition. No one can touch us on content, and I don't think anyone's going to be able to touch us on content for a long, long time. Second, on data. It's not just about talking about data and big data. It really is about insights. Getting from insights. No company in the world, it's not a big data arms race.
You don't win in enterprise big data just because your database is bigger than the next person's. It's not a competition in whose is bigger. It really comes down to how do you get the insights in that data more quickly, and how are you driving that to action? It's insights and action, and that's our unique perspective and differentiation as it relates to data. Digital transformation. There are three parts of digital transformation. I talk to lots of companies all over the world. It starts with, "Hey, we're running an experiment.
We don't know what digital means to us, we're going to start with a little group over here, maybe in the basement or in a different building, and we're going to see how they do and what they come up with." That inevitably leads to much more of an efficiency, to where we're going to stop selling offline, we're going to start selling online, and that's going to drop our cost of sales. We're going to be able to drive more and faster, and we're going to be able to scale our business. That's where most companies in the world really are. They're in the efficiency part of the digital transformation. What's next? You go from efficiency to evolution, to where it pervades the organization. You start to wrap your entire organizational structure around digital.
We do see, Matt Thompson's here, he talks to more customers than anyone, and he'll tell you that there are customers that are changing their entire internal process and organizational chart around Adobe's Marketing Cloud, to use that better in their organization. This strategy is really coming to life every day out in the field and with our customers. My remarks are going to be in three sections. I'm going to give you some statistics and updates on just the momentum that we have in the business to give you a sense of how we look at it and scorecards, really, about how we're doing. Then just an update on strategy. It's been six months since we were together at the Adobe Summit and talk to you a little bit about where we are, then just sum up on opportunity.
Digital transformation, I talked about this, and about creativity being at the center of everything that we do. If there was a panel of customers up here on stage and you said, "Articulate for me what your strategy is," what are the words that you're going to hear? You're going to hear different variations of personalization. I want to give my customers a unique experience when they walk into my store, when they come to my website. It's all variations of that. I don't know, how many people, Mike, do we have in the room here? Mike, tell me. 100? 100, okay.
It's easy for us to talk personalization, but even here in the room, if I'm a creative director of a marketing department and I want to personalize an email campaign to everyone in this room, I have to tell my creative team to create 100 different versions of a marketing asset and then put that into the Marketing Cloud to go do that. That simply from a cost standpoint, does not scale. What's happening around this digital transformation is you want to create several versions of this marketing asset, but then componentize that, modularize that, so I can combine that in different iterations to create personalized experiences for 100 people and do that at massive scale. Because you think about these big properties, even adobe.com, with all the customers we have coming to our site, we can't create individual content for everyone.
What we have to do is to be able to personalize at scale, that's really the transformation that enterprises are dealing with. This transformation message, it's gone beyond just talk, it is really a board-level conversation now at enterprises. It doesn't matter if you're selling stuff online or if you're providing services. Media companies, retailers, financial services companies, governments are talking digital transformation. They talk about it in digital government, but how do I provide services to my constituencies and do it in a scalable way? Education institutions are talking about digital transformation using their own words. No matter the vertical, no matter the industry, digital transformation is on the brain. It is what people are doing to drive their strategy. For us, it's really the trend that's propelling our growth forward. With that, let's talk a little bit about the business.
Approximately $1.4 billion in revenue this year. Bookings growth of over 30%. If you double-click on some of these, what's happening within the business? Big deals. We are selling higher in organizations. The deal sizes are going up. We're selling more solutions in every deal. Over a 50% increase in customers with over 500K in ARR. Solution adoption. We've got 38% of the contracts include today, of over $1 million, include multiple solutions. I get asked. Just to recap, our growth opportunity is to sell the Marketing Cloud to new customers who aren't using any solutions, then we upsell. We sell more of each solution to customers who are using it, then we cross-sell solutions into, if you're using Adobe Analytics, we want to come and sell you Adobe Experience Manager or Adobe Campaign.
This cross-sell metric of multiple solutions is an important metric for us. On the data platform side, the explosion of data, we certainly are seeing 41 trillion transactions flowing into the platform. You want to talk big data, you want to talk behavioral attributes, you want to understand what the graph of what's happening on the Internet? Well, Adobe can tell you that. The interesting thing in that transaction is our business is becoming a mobile business, right under our noses, really. 45% of that analytics traffic is now coming from mobile devices. It's not a surprise with how we're all using our phones and our tablets and other mobile devices, but the scale and the pace at which it's changed is dramatic. Another metric, if you go back a few years and you contrast 2012, where were we in the business, to 2015. I love this slide.
In fact, I think Matt Thompson actually, he has this under his pillow when he sleeps at night. Grown the business from $800 million in revenue to $1.4 billion, really nice growth. The scale of the transactions from 10 trillion to 41 trillion. This shows the depth at which our customers are using the data platform. We talked about mobile growth. You see that with 600% growth over that time period. We've also transformed how we package and sell our products. In 2012, we had 22 products that made up the digital marketing suite. We've really repackaged those into the buying centers and the way that our customers want to buy from us. Those are the eight solutions that are in the Marketing Cloud today. Really great progress over a few years. It's been a fantastic ride.
I even go back to even before that, at the time that Abhay acquired Omniture, and we started this journey. It's just an amazing journey to go through. The market, and we're going to talk about the market. The market is even better today than it was in 2012, than it was in 2009 and 2010. It continues to get better and I've been in a lot of different spaces, and there's not many that five years in, 10 years in, the market's actually better than you thought it was going to be. That's exactly where we are in this category. Other, double-click into customers. I thought this would be interesting for all of you to look at.
Last year, when we gave these metrics to you, we had two-thirds of our top 100 customers who were using more than three of the eight solutions, or at the time it was six solutions, three of the six solutions in the Marketing Cloud, for just under $3 million in average ARR for each customer. You can see the success that we've had in 12 short months to go in and sell more solutions into that installed base, and the growth in ARR. This is an opportunity, and it's an opportunity not only here in the top 100, but top 500, top 1,000, all 5,000, across all the base. This is, I thought, an interesting lens into some of the customer dynamics. This is one of my favorite slides. This is a scorecard that we look at in terms of how are we doing in industries?
How are we doing across the marketplace? What's our scorecard? If you look across here, of the world's largest media companies, 10 of the top 10 use the Marketing Cloud. Financial services, 10 of the top 10. Auto manufacturers, 10 of the top 10. Wealth management firms, 10 of the top 10. Across the board, the Marketing Cloud is doing very well across industry, cross-platform. It is a horizontal industry opportunity. For us, this is a fantastic way to measure ourselves and measure our success. All right. Let's advance one slide. Here on the customers, a couple of customers that I will call out just to talk a little bit about their digital transformation. Royal Bank of Scotland. Royal Bank of Scotland at our digital marketing summit in London brought over 50 of their team. Why did they bring 50 of their team?
What happens typically is you've got a siloed marketing and customer organization where you've got a team who buys search to bring people to the site, then you've got the website team, then you've got the loan application team, then you've got the email team, but they happen to not buy, and they move on. What RBS has done is they've created 50 journey managers. They've mapped their 50 most common ways that they convert people into customers, and they have a person who's responsible for that end-to-end journey. The tools that these 50 people use to do this, is the Marketing Cloud. They went from running one or two tests on their site to drive conversions every six months.
Now they're running hundreds of tests a month, using the Adobe Marketing Cloud to do that. Royal Bank of Scotland has driven big business impact using the Adobe Marketing Cloud. Next in the media vertical, HBO. HBO is obviously a media company that is at the forefront of this cord-cutting wave. As all of us, and many of you maybe have cut the cord and dropped your satellite or your cable subscription, and now media brands are looking to go direct to consumers. HBO is at the forefront of this, and they're using Adobe Primetime and Adobe Analytics to deliver that content on HBO Go and HBO Now. Whether you're watching "Game of Thrones" or whatever your content of choice is, you're using Adobe software to do that. It's a significant growth opportunity, and one that we're in conversations with many media companies about.
How do you create direct relationships with consumers so that you can continue to propel your brand forward in this cord-cutting age? Okay? HBO. One last one I'll mention, just on the auto side, Nissan. Nissan is using the Adobe Marketing Cloud to transform that creative process, to use the Adobe Creative Cloud to create their content, design their cars, and then use the asset management ultimately through all the way through the experience delivery, not only on their site, but in their stores, meaning in the dealer networks. All the way through, they've really embraced this digital transformation message, and have bet the entire project on the Adobe Marketing Cloud. We're really proud of this slide. We think we have the best customers in the world, and I think we continue to add more and more great brands to this list every year. Partners.
Our partner ecosystem, as you saw at Adobe Summit, if you were there, it continues to grow. The biggest SIs, Accenture, Deloitte, Sapient, Epsilon, big SIs, big agencies, Publicis, WPP, are building entire practices around the Adobe Marketing Cloud. Our deal sizes when we work with partners are bigger than if we're going direct. We like to work with partners. We have over 3,000 partners in the program today, and that's continuing to grow, and we're starting to see innovation from our partners as they, Shantanu talked about the Adobe platform, partners coming and starting to build applications and drive innovation on top of the platform, which is an exciting ecosystem play for us to continue to drive. Okay, third-party validation.
You may have seen this before, it's an exciting chart for us because as you think about the Adobe Marketing Cloud and this experience layer that's going across all of enterprises, we're called out by third parties as leaders today by both Gartner and Forrester. In the last 12 months, these reports have come out. This is important to us, it's also important to us in each of our product categories, we're also best in class. If you lined up all the basically the waves and the reports from each of the categories we play in, whether that's Adobe Analytics, in Adobe Experience Manager, in targeting, or SEM, we are best in class in each of the categories. We're really playing that both sides of the market, where we're leading at the platform level and we're also leading at the product level.
The interesting thing about these charts is, just one piece of color, Forrester actually went out and talked to customers. We were the only vendor that was participating in a chart that could give a customer who was using more than one of our products. Lots of folks on the page are talking about clouds, and they've got lots of products. For the most part, people are still just using one of the products with everyone with the exception of Adobe. We're very proud of that. Okay. Addressable market. $27 billion market opportunity for the Marketing Cloud. You see by category, these are the eight solutions in the Marketing Cloud. You can see by each of those categories, what we're saying from a total addressable market. Analytics, business intelligence, cloud BI, these are all things that you guys see and you write about.
We obviously are in that market in a big way and have a significant growth there. I'll talk a little bit about Audience Manager from an opportunity standpoint because this market opportunity, I think, underestimates and understates the strategic importance of that particular category. Okay? All right. Let's keep rolling. For me, three things that if you take away from the Marketing Cloud presentation is enterprises are really trying to put their customer at the center of everything that they do. You hear this at industry events, you hear this consistently from CIOs, CMOs as they think about that. Data about your customer needs to be put in context. It's not just about managing that data individually, but how do you bring that together to see the whole person so you get a sense for what is the things that they want?
How do they want to engage with me? Mobile, clearly with location, where I am has context for how I'd like to engage with you. Next one is that experience matters. This is consistent. You saw it in Shantanu's presentation, you saw it in Brian's presentation, and you're seeing it here. Experience that brands give to their customers, it is the best gauge for whether they're going to be successful. If one of you could write an algorithm or basically a way to look at how do you measure an experience that a brand's providing, you could trade on that because it is going to show whether that enterprise or that company is going to continue to be successful. If you don't, your customers will leave you, and they will go somewhere else because now I think the experience you provide trumps everything else.
Ultimately, the way we think about the Marketing Cloud is everything that we do, we are not successful unless our customers' business are successful. We want to tie ourselves to revenue, to their business results. Everything we do and engaging really comes back to ROI. Okay. Let's pop ahead. We haven't talked for a couple of years about who do we sell to, and it's changed dramatically, so I wanted to spend 30 seconds on this. Practitioners, web, data analysts, SEO, SEM, social media teams. Five years ago, that's who was buying our products. They were making the buying decision. They were buying the tool that they wanted to use to do their job. We still sell to these folks today, and they still use our tools extensively. The buying decisions in many enterprises, it has changed.
We now sell to chief marketing officers, chief revenue officers in media and publishers, chief digital officers. Whether you're in travel or hospitality or financial services, you see chief digital officers as a title that's often out there. You start to see some chief experience officers. We talk about experience and how do you manage the customer experience across all those touch points. Then certainly CIOs. CIOs were not really in the conversation maybe two years ago. We didn't see them as often, but they have reemerged as at a minimum, a key influencer, and most likely as the key decision-maker of what's happening in and around this digital transformation opportunity. For us, it really is a CXO-level sale today. We've continued to invest in our go-to-market efforts around how do you engage at this level? How do you show value at this level?
Because they're not interested in the next feature and the next function. It really is about value and what value you're going to deliver to the organization. You can grab Matt afterwards, and he can continue to update you on some of the investments that we've made there on our go-to-market side. Quickly on the Marketing Cloud, because I often get asked this, and you'll likely ask us about competition in a few minutes. Why is the Marketing Cloud called out by Gartner, Forrester, and everyone as the leading platform? It really comes down to three things. The Marketing Cloud, it is the most comprehensive set of solutions that's available in the market, bar none. Full stop. From end to end, from your advertising dollars all the way to measuring the ROI and everything in between, that's what the Marketing Cloud does.
A lot of Marketing Clouds that are out in the industry, I compete with most Marketing Clouds in one of my solutions. If you do email, I compete with you with Adobe Campaign, but you don't touch anything else on web content management, on analytics and search engine marketing, anything else. Comprehensive, we win, full stop. Integrated. This is investments that we have made in our core services to tie all these solutions together in a common layer, so that as you create an audience in analytics, if this is my most valuable segment, how do I reach out to them more? How do I find another million people who look just like that audience so I can go continue to grow my business? We now have a set of core services that goes across the Marketing Cloud that integrates these things together. We have more work to do.
We hear that from our customers, we're way ahead of where anyone else in the industry is, and Gartner and Forrester called that out as well. The third one is it's actionable. This goes back to, if you have a data asset that's sitting offline and isn't connected to your execution systems, it does you no good. If you have to print out a report or send a report to someone over email for someone to take action on it, you've already lost the opportunity to sell to customers. You have to be able to react in milliseconds, and that's the actionability that we're building into the Marketing Cloud. Those are the three ways that we talk about differentiation. Here are the solutions.
We added two new solutions in 2015, Adobe Primetime, which is the media platform that we talked about that HBO and MLB and others are using, and Audience Manager. These are now the two fastest-growing solutions inside the Marketing Cloud. An Audience Manager is a data management platform. If you've heard the term DMP, it's an explosive category where you basically can manage your audiences and your profiles at the edge, so that you don't have to call a central repository to be able to do real-time marketing. You can do that out at the edge and do it really, really fast. Really exciting technology there. Since Summit, six months ago, we've introduced a whole bunch more innovation into each of these solutions.
For example, in Media Optimizer, we announced last month a new programmatic offering within Adobe Media Optimizer where you've got integrated search buying and integrated display buying all in one platform integrated with that DMP, which is a unique offering if you follow the advertising technology space closely. Okay? Lots of innovation there. I talked to you about core services. This is the role the core services play. Basically, profiles get shared, assets get shared, common login, common interface. That's the way you need to think about core services. Core services, it sounds really techie, and really it's deep in the weeds. You don't log in, you don't have a user interface for core services. You want to understand value and lasting value of what we're building inside the Marketing Cloud, it's here because this is what's going to stitch it together end to end.
Quickly on Creative Cloud, Marketing Cloud. A few years ago, we were talking a lot about this with customers, we're like, "You use Photoshop to create your content. Here, you can store it in a content management platform and then use it for your real-time marketing campaigns. Isn't that fantastic?" We were talking to a lot of customers about this, many times we got a little bit of just blank stares back saying, "That sounds interesting. I'm not sure how I would use it." Today, the conversation has flipped. Customers are now saying, "This is what I want it to do." Under Armour is saying, "This is the way that I want to create my new products. This is how I want to engage with my next generation of consumers. I want to start in Photoshop.
I want an asset management system that's tied to this, to where if I make a change to a particular piece of creative, it dynamically updates in my asset management system, which is tied to my web content management, which is tied to the catalogs that my sales team is using so that it all updates end to end seamlessly." That's the creation of, this really was what drives this content velocity message that you're hearing from us. There's no way that you can move as fast as you need to using manual processes to create your content anymore and to drive personalization. That's content velocity that Adobe uniquely can provide. We're very excited about what we're starting to hear from our own customers. To sum up, the Marketing Cloud, it is an explosive market opportunity. It's even better than we thought it was.
It continues to grow. If you were at Summit, we talked about it's moving beyond marketing. The fact that Coca-Cola's putting this into the Freestyle machine, a vending machine for Coke products, and they're using the Marketing Cloud to drive those experiences, is that marketing? I don't know. It's customer engagement. We're being dragged into places that you may not expect when you think about a marketing use case. To us, that just opens up the entire customer journey as an opportunity to us. We've got momentum in the business. We're called out today as a clear market leader. I think as you go back to where we've got the most comprehensive offering, we're integrated, and we're driving actionability in real-time like no one else in the industry. That's why we're excited. That's why we're going to continue to drive growth in the business.
I'm going to turn the time over to Mark.
Thank you. Thanks, Brad. I'm going to lead you in some calisthenics now. I'll wrap this up, obviously, with the financial view of what you just saw. I'll give you my perspective on Adobe's large three growth opportunities. First, I'm going to talk about FY 2012 to FY 2015 and give you some of my perspective on our performance. I'll then discuss FY 2016 guidance and FY 2018, sorry, FY 2015 to 2018 three-year targets. We'll go through some key points from today and turn it over to you guys for some questions. You saw this slide a few times. Shantanu discussed our unique differentiation to capitalize on three key market trends. Obviously, we think this is important.
We think we're uniquely qualified to capitalize on these trends, content proliferation, explosion of data, the need for every company in the world to transform from a digital perspective. This is reflected in our business momentum that I'm going to talk about now. It's also reflected in the targets that I'm going to go through. First, I'm going to talk about the business in two three-year intervals because I think there's two related but different stories here. The first, of course, is 2012 through 2015, which, as you know as well as anybody, was really focused on transitioning the creative business, driving growth in digital marketing. I'll talk about our capital strategy a bit. I'm going to discuss how we address the growth opportunity in the second three-year interval, FY 2015 through FY 2018. First, let's look at 2012 through 2015.
As you know, the transformation of the Creative business began in FY 2012. In 2012, 2013, and 2014, we were transitioning the business to a recurring revenue model. We were driving Adobe Creative Cloud and Adobe Marketing Cloud adoption. While doing so, we were increasing ARR and bookings, which, as you know, don't reflect themselves immediately in the P&L, but, of course, continually improved the long-term health of the company. We're now through the major transitions from a financial perspective, and I'll talk more about that. You see revenue and margin are both increasing as focus for me and focus for you comes back to the P&L. We're expecting revenue in 2015 to now exceed FY 2012. We're back from a financial perspective. This chart Brian showed, it reflects the total Creative ARR and revenue, and this view of Creative includes all the components of Creative.
It includes Hobbyist, Lightroom, and some other products as well. ARR, as we've been saying for four years now, remains the best measure of health of the business. Throughout the transition, you can see that ARR has just continued to grow. With the financial transition largely complete, what you're going to see is that over time now, revenue and ARR are going to start to grow together, and you'll see that in the 2015 to 2018 targets. This chart reflects Adobe Document Cloud ARR and revenue, which Brian also showed. As we did with Creative, we're transitioning this business to the cloud as well. This transition has been much more subtle, and as Brian said, we've been able to hold revenue relatively stable while significantly growing ARR since 2012.
ARR growth here is driven by enterprise move to ETLAs, as Brian said, it's also driven by individual Adobe Acrobat subscriptions on adobe.com. Lastly, on the Adobe Marketing Cloud, as Brad just said, we are the leader in this very hot space. Bookings continue to grow over 30%. This is a $1.4 billion business for Adobe this year from a revenue perspective. Very importantly, as Brad said, we're driving larger deals. Customers are now adopting multiple Adobe solutions, which is great for the long-term health of the business. Since 2012, we've driven a dramatic shift to recurring revenue. This is one of my favorite charts and one of my favorite metrics from a company perspective. Our % of revenue from recurring sources is increasing every year across the business. Again, it's driven by Adobe Creative Cloud Individual, Team, and Enterprise.
It's being driven by those Adobe Document Cloud ETLAs and individual subscriptions on adobe.com, and it's being driven by digital marketing SaaS-based services. A view of our business under contract, but not yet recognized in revenue is very important as well. This is where you see the deferred revenue balance for business that's been contracted and will get recognized over the next year, and where you see the longer-term contracts for years two and three show up in unbilled. We've had healthy increases in deferred revenue and in unbilled backlog together. As we said on our last call, we expect this balance to be over $3.5 billion by the end of this year.
From a cash flow perspective, again, as the revenue and earnings have flown back into the model, you see cash flow from 2013 has consistently improved, and you'll see from my guidance that it will continue to do so as we go through 2015 through 2018 as well. From a capital structure perspective, we are well capitalized with significant debt capacity available to us should we need to use it. We have a very strong liquidity position, as you know, with $3.7 billion of cash. We have a billion-dollar undrawn line of credit that we recently extended out to 2020. We've had a conservative approach to using leverage. With the $1.9 billion of debt, we have very strong ratings, and we've been able to maintain an adjusted EBITDA leverage ratio at less than two times. From a capital perspective, we use our excess U.S. cash to buy back stock.
We've consistently done that, we currently have a $2 billion authorization to buy back stock that goes through 2017. Lastly, from a foreign exchange perspective, because this is a topic that I want to talk about as it relates to 2016, we do have a hedging program to protect both the P&L and the balance sheet. I've talked about this on earnings calls several times. We hedge a portion of our revenue, less local expenses in key currencies, specifically the pound, the euro, and the yen. The hedging is laddered in each quarter and typically goes out about three quarters. Since 2012, our hedging has contributed $140 million to revenue, so it's worked extremely well, and we hedge 100% of the balance sheet.
As we look out into 2016 though, we're hedging at current rates, and obviously the rates have already come down dramatically, so the hedging becomes much less effective in a fast rate dropping environment like we had over the past year. Let me shift to a view of each of the major cloud businesses, starting with Creative. As Brian said, Creative is now in 2018, a $17 billion TAM. This is a significantly higher TAM with the cloud strategy than we had before. There are three large pillars of growth in this space. The first is migration of the base, and as Brian showed, there's a large opportunity to move over the rest of the base. The second is new customer expansion, and the consumer market is a good example of an area where we think there's a lot of opportunity for new customer expansion.
The third is new ARPU enhancing services, and the best example of that has been Adobe Stock. Our financial transition here again is largely complete. However, the elements business on the consumer side is transitioning a bit, and it represents an upside to our ARR opportunity, so we're excited about that. You'll see in the targets, P&L leverage is really coming back into the model. You'll see it in our 2016 targets, and you'll see it in our 2015 to 2018 targets when I go through those in a minute. From a Document Cloud perspective, this is a $4 billion 2018 TAM, and we're using the Creative Cloud playbook here to transition Acrobat user base to subscriptions and grow the overall business. We want to migrate the base like we did in Creative.
We want to attract new Acrobat users like we did in Creative, we want to grow the enterprise also like we did in Creative. This financial transition is definitely going to be much more muted with relatively stable revenue, as Brian showed as we go through the next few years, we're going to significantly grow ARR through that transition. We're going to drive go-to-market synergies and Matt's organization across the three clouds. Acrobat is already part of Creative Cloud, and Acrobat and Creative Cloud are sold together more and more in the enterprise. Finally, Marketing Cloud in 2018 is a $27 billion TAM. This is an explosive growth category for us. As Brad said, we're the leader. We have the most complete and most integrated offering, and we're targeting more and more multi-year, multi-solution engagements, driving better long-term health of this business.
The 2016 targets represent a significant year-over-year decline in perpetual revenue in this space by as much as $100 million, while driving better long-term health through growth in recurring revenue. We continue to invest in this business. We want to capture market share, we clearly want to grow. Let me shift now from 2012 to 2015 to our view of the next three years. We're going to give you some very specific targets for the next three years. Before I do that, I want to talk about some assumptions which drive the business in both the short term and the long term. ARR, we've been saying this for a long time, ARR and bookings still remain our focus to drive long-term growth. As I said, there are a few remaining businesses that are transitioning from perpetual revenue.
Specifically in Digital Marketing, it's AEM and Campaign, I just said that's worth $100 million going from 2015 to 2016, and some Acrobat, some Lightroom, and some Elements. We see over $100 million of impact going from 2015 to 2016 of business that's from a positive perspective, shifting to recurring revenue, comes out of perpetual. Like other companies, despite a really successful hedging program, we do have an FX headwind going into 2016. When you last heard about FY 2016 from us, it was the end of 2014. Since the end of 2014, when we last guided on 2016, rates have come down pretty dramatically. If you remember, we guided the back half of 2015 down $80 million for FX. That carries through into next year, we expect next year's FX impact to be about $200 million.
Together, the $100 million of perpetual plus the $200 million of FX, that's a potential impact of $0.50 on a non-GAAP earnings basis. As you'll see in the targets, we've mitigated a large portion of that EPS impact. Margin continues to expand despite these impacts, we continue to invest in the future of the company. Typically, we don't give you, as you know, next year's targets until we get through Q4. These are preliminary targets for 2016. We're going to update them after Q4 results like we usually would. In 2016, we expect to be a $5.7 billion revenue company after $200 million of FX impacts and after $100 million shift of additional products going from perpetual to ratable. With that, Digital Media grows approximately 20%, ARR continues to grow faster than revenue next year at approximately 25%.
Marketing Cloud bookings, we expect to still grow approximately 30%, with revenue growth of approximately 20% due to those FX headwinds and those impacts from the last moves from perpetual revenue in AEM and Campaign. Despite FX and despite the loss perpetual, we expect to do non-GAAP earnings of $2.70. Earnings leverage returns while we reinvest for growth. Now let me shift to next three years' worth of targets. This is now FY 2015 to FY 2018. I am using here FY 2015 as the base year, and I am using Q4's midpoint of the targets that we provided as the starting point. With that FY 2015 base year and the Q4 midpoint, the total company, we expect over the next three years to grow approximately 20% on a CAGR basis. A $5.7 billion company next year growing 20%.
Digital media revenue and ARR start to grow together, we expect when we get that far out at over 20%. Company grows approximately 20%, digital media revenue and ARR grow over 20%. As Brad said, as we continue to drive larger multi-solution engagements, bookings do take longer in Digital Marketing to turn to revenue. We do not typically start the revenue clock, if you will, on an engagement until a customer is up and running. As customers do larger deals, more complex deals, multi-product deals, it is very good for us, it is very good for the long-term health of the company, but the revenue clock takes a little bit longer to engage. We are showing bookings growth of 30% with revenue growth of over 20% as we look three years out. Earnings grows faster than company revenue.
We expect earnings will grow at approximately 30%, much faster than company revenue of 20%, and cash flow grows in between earnings and revenue at approximately 25%. Good cash flow growth, good earnings leverage, and growing the company 20%. Out of the transition, you see strong growth in revenue and strong growth in operating margin. You see operating margin really return into the business. We end up with three large businesses at very different margin profiles. As you know, Creative and Acrobat are very high margin businesses. Digital Marketing is an inherently lower margin business due to the COGS component with the server infrastructure around the world, and also with a much more direct route to market model, but driving significant growth. We are investing in growth in that space.
Together, as we look out, we are a larger company than we have ever been by quite a bit, and we are a faster-growing company than we have been in quite some time. To summarize, we really feel like we can capitalize on this huge opportunity that is in front of us for the next few years. Content and data is a large expanding market opportunity for Adobe. We have got a $48 billion TAM in front of us in 2018. Our cloud platform provides us with unique differentiation. No one else can do what we do as it relates to content and data. We plan to deliver over the next few years, strong top-line growth and strong bottom-line growth with a very high percentage of recurring revenue. With that, we are going to bring Mike up and we are going to start some Q&A. Thank you.
I said let you brag you in.
We're going to set up for Q&A, so we'll just need a few minutes for that.
While we do that, I'll put my mic up as well.
Yeah.
It is now? Okay.
Yeah.
While we do that, I just thought I'd take the opportunity to introduce the other members of the executive team. I know we'll have question and answers, so if you could just stand when I introduce everybody else on my team and the executive staff. Gloria Chen is here. Donna Morris heads up People & Places. Ann Lewnes, who's our Chief Marketing Officer and put on Adobe MAX. Matt Thompson, whom a number of you know, who heads up the field operations, and our newest member of the executive team, Abhay Parasnis, who's our new Chief Technology Officer. Just thought I'd do those introductions.
Ground rules. First, there will be microphones being passed. We are webcasting, so we ask that you please wait for a microphone to ask your question. Please give us your name and firm. It just helps with the whole process. We're going to be here as long as we need to answer your questions, so please try to
Be careful what you say, Mike.
It's like, yeah, Mike. Or until the first question Oh, I won't say that. Please one question at a time, and I meant to say that because often if you ask multi-part questions, it's just hard to get to the heart of the first question. Why don't we get the mics passed, hands raised, and we can begin the process.
Walter.
Yeah.
All right. Mark, just one question on, it's Walter Pritchard with Citi. One question on the 2018. It looks like you were projecting something around 36% operating margins, just kind of eyeballing your chart there, which by my math would be 15-plus % OpEx growth sort of from here to there, you haven't grown anywhere near that from an OpEx perspective, I'm wondering what would drive a sustained kind of three-year pace of 15%?
Yeah. It's interesting because I get the other side of that question all the time, which is why aren't you investing more for the past few years? We think that as we continue to drive 30% growth in Brad's business, as we attack that much bigger TAM that Brian's shown in his business, we're going to need to invest to capitalize on that. It's primarily going to be in the sales and marketing lines and the P&L, we really feel that that's necessary to drive that kind of growth as we look out.
Walter, I think the other thing I would just reflect is clearly as we've been making this transition, there's been a number of savings that we've got in terms of cost that Mark has driven on the other forms of distribution that we had and boxes. I think as we start to have these new offerings, we will also continue to invest in R&D to drive this large content and data opportunity that we have. COGS will certainly, in terms of the infrastructure, start to build up as well. You haven't seen as much of that as a result of a lot of the cost savings that we've been driving.
Yeah, it's a good point. The last few years we've been able to find money and reinvest it back and not need to grow OpEx quite as much, that starts to get to be a little bit of a diminishing return.
Thanks. Kirk Materne with Evercore ISI. One for Brad, and I think Mark might want to chime in on this as well. I guess giving 30% bookings growth for the digital marketing business for the next few years I think is a pretty bullish statement. Can you just talk about your confidence and how you get there in terms of how much is just simply upselling into your existing customer base versus some of the investments that are needed to sort of propagate that? Meaning how much of the spend that we're seeing is really going to go back into the digital marketing growth? The 30%, I assume, is related to some of the cost increases we're seeing in the line. Can you just talk about your comfort with that? Because it's obviously a pretty big number when you start looking out a few years from now. Thanks.
Okay. I'll go.
Yep.
I'll add.
Sure.
I think, Shantanu, you may want to provide some color commentary on that, too. I think we don't take that 30% lightly. We know how hard it is to grow an enterprise B2B selling organization at those rates. We're not taking that number and saying that's by any means easy. We're confident in our market position. We're confident in the market opportunity that we can go and execute on that. I think the investments that are going to be required there, we need to continue to invest on the product side. Today, we're the most complete, most integrated everything that we just talked about, but the market's moving so dramatically, that we need to make sure that we're investing to stay ahead. The go-to-market investments that Matt's been making are as enterprises make bigger investments in us, their expectations of what they get back from us has changed.
We've had to do a little bit of a DNA augmentation on Matt's team in terms of what's the right level of individual and teams that are going to go sell in at that level and then implement and help drive value at that level in the organization. Those are two investments that I would call out. The big thing that gives me confidence, Kirk, just to get back to that is the size of the budgets and the size of the importance that enterprises are placing on this digital transformation. We were just in a financial services company last week. I won't name the name, but they've dedicated $300 million internally for digital transformation to drive that across technology services and internal hiring. Those type of budgets and those type of approved budgets were just unforeseen just a few years ago.
Maybe just add a couple of things to what Brad said. I think this digital disruption and what we hear also from our agency partners in terms of how it's become a C-level budget item, in all companies. Everybody will tell you if they have a digital practice, that practice is absolutely growing off the charts. International expansion, when we look at even what we've done for our customers, we've done that digital transformation for existing customers in the U.S., and every one of them has global aspirations as well, and they are now looking to see how we can extend our products into the global markets. The value-based pricing that we do and the transaction-based pricing, even for existing customers, as we see how the volume is increasing, that gives us more confidence.
Ultimately, I think it's as you said, when we look at the number of customers for whom we still don't have the complete array of solutions that we've sold. I'll touch on Audience Manager as well. There is no other company that can look at how do you identify a segment and use that segment consistently across all of our marketing solutions. I think that's going to be a significant advantage because if you believe in this notion of the connected consumer, then knowing who that consumer is so that you can target them and marketing spend and promotions and campaigns, that's why I think that particular solution right now is so well-received by our customers. That doesn't mean that we won't have to work on it, but the opportunity is there. The opportunity is there. It's large.
Everything that we're doing is touching every other adjacency in the enterprise, and we see that. We think that this is just going to become more core to every enterprise. One other maybe quick thing I'll say is we see what we have done with adobe.com on our own transition of the creative business or the document business, and while we think we're best in class in terms of people who have effectively figured out how to take top of funnel and do the conversion, which ironically gives us confidence in Brian's business, we recognize there's so much more that we can do in that particular space. If we invest in the technology to make it more actionable, I think as both Brian and Brad said, we're not unique in that.
If hard goods were the currency of the past and content's the currency of the future, and we have that particular sort of ticket to help people do it, we think it's a big opportunity.
Brad?
Hi, Brad Zelnick with Jefferies. It's great to see the incremental data on the creative market opportunity that you shared with us today. If I look at 2018
You've sized the core creative opportunity at $8.3 billion, and this, I think, is the first time you've also tied units to that, and if I do the math, that would result in an ARPU of a little greater than $24 per unit. I get that education is a huge opportunity, strategic, and an increasing portion of the mix, but how are you thinking about ARPU out to 2018, and what are the levers that'll drive it higher or lower?
Maybe I'll start off, and then Brian, feel free to add. You're right. Again, what we tried to do, all of you had asked for, can you please give us data in terms of how you're thinking about it? Again, the way we look at the business is through the TAM and the ARR. The way I would answer that question is, as you look out from 2015 through 2018, and you look at the 11.7 million new customers that we had talked about. Again, very quickly, we had said we had 8.6 million on Creative Cloud today, which is the 3.3 enterprise and the 5.3 subscribers. We look at the 8.3 million people who are still on CS. Think of them as having about a similar ARPU as the customers that we already have. Then you talk about this 11.7.
The $11.7 billion, as you think about it, think about it first in terms of piracy. There's a very significant amount of piracy associated with it. Even the piracy in emerging markets, we think that that'll be lower ARPU than it will be for what our current is. That's factored into that $8.3 billion now, the two 8.3s, I'm trying to make sure we differentiate between that. The second is enterprise customers. We think that there's additional value associated with selling enterprise customers, and so it increases the ARPU for enterprise customers. In that $11.7 billion, and when we look at the $8.3 billion TAM, there's higher value associated with what we can sell to the enterprise. Education's a fairly large part of it, and education brings down the TAM. I mean ARPU.
What brings it down is education and piracy in emerging markets because that factors into the overall TAM. What I think increases it is a continuous upsell of people who are on a single app to the CC Complete and from people who are in the enterprise without services because we didn't have services. When Brian talked about the 80% that are moved to ETLA but don't have services and the traction that we're seeing in Q3, that 18%. That's sort of the puts and takes as we come up to exactly what you've done, which is the math of sort of a $25 ARPU.
If I could just ask a follow-up to that's a very helpful disclosure. Related, you talked about where we are in the shift to recurring revenue. Fantastic progress. Along those lines, recurring revenue is as good to the extent that it recurs. When we think about the 2018 market opportunity, it's interesting to hear it from a revenue perspective, but when we think in terms of lifetime value, which I'm sure you think about quite a bit, one input is going to be ARPU, the other one's going to be churn. Can you maybe talk about what is it, and also acquisition costs, right? What does it take to actually go after that incremental market, and what are the characteristics that you would expect relative to the churn expectations and performance that you've seen thus far?
I think you're right, we haven't updated churn at this. We thought we were giving a lot of data. I'm sure you'll find the one piece of data that we haven't.
Didn't take long.
Updated you on. Retention, as we've said, has actually played out just as the way we said. The tricky thing around retention, and talking about it, Brad, is going to be retention in which category, correct? Because as we have different offerings, there are different categories of retention. The core creative certainly has higher retention. As we go maybe to the consumer, there may be a little bit less. Without a doubt, retention has played out better than our original expectations relative to what we've said, so we continue to expect that. We will focus on it. Acquisition costs. Acquisition costs is the investment in our online business. I think where most of this happens and where Abhay is going to spend a lot of his time is what's the infrastructure to do all of this acquisition in emerging markets?
Different credit methods, different ways of targeting those customers, different ways of spending it so that we can have the velocity. I would look at that acquisition cost not as much as do we need to try and get the message out, and it's a little bit more of the infrastructure to allow us seamlessly to do things. There's POs. There's so much in terms of the list of what we can do to facilitate acquisition of the traffic that's already coming, and I think that's where you will see a fair amount of investment. Hopefully that helps give you some color.
Okay.
Jefferies, Jay Vleeschhouwer . I'd like to ask about the fundamental value of your IP and your product strategy. I've long concurred or liked the fact that you've been coordinating across your segments, the DM squared effect, as we've called it. What I'm asking is essentially the science of digital marketing. It's been evident for more than 20 years what the value of your IP is in digital media, which you now call digital media, and the same on the Adobe Acrobat side. It's been very clear, at least to me, for a very long time, what your value and capabilities and roadmap are there. In digital marketing, it's really much more of a black box what the science of those technologies are, and particularly now that you have so many solutions, and you have competitors, as you pointed out, that have their black boxes.
Perhaps you could help us understand what the IP is in digital marketing, what the needs of the market are, and how you, in fact, intend to synchronize or coordinate across the various segments, to further add to the value of the differentiation.
You want to start, Brad?
Yeah.
I'll.
The way I'll.
Think about everything we do in the Marketing Cloud as the IP and centering in three pillars with one overlay. The three pillars, you've seen it on the slides multiple times today. We're making huge IP investments in data and data management. I'll go through all three and then come back, Jay, and talk about those. Data, we're making big investments in content and asset management. The third is around experience delivery across channel. That's just not on the web, but all the way, everything to the store to offline experiences. The overlay is the algorithmic engine that we're investing in to let the machines take over to where humans don't need to get involved to drive the experiences. It's really the three key areas of differentiation with basically automation overlay.
In data, it's not just about the 41 trillion transactions that are coming in. What enterprises across the board and what we do better than anyone else is the ability to manage that data at scale, get to the point where you can get to a customer profile. This isn't a CRM record. This is a record where you can wrap all the behavioral attributes, every way that you're interacting with your customers in a data set, and then have that data available for real-time action in 300 milliseconds. Not in a reporting database, not in something that sits out that your query is going to take overnight, but real-time. Are we differentiated in and around data management today? Yes. Do many people know that, and are we effectively leveraging that in the enterprise? Not to the extent that we could. That's one IP.
We've talked about that internally as a moat. What's the technology moat that we're building around the Marketing Cloud? Data is one. Content, you talked about the halo effect, and I agree with you, the digital media in and around content. That halo effect comes all the way into digital marketing, and then we're investing in extending that, which we talked several times today about, not just creating that asset, but how do you manage that, how do you version that, and how do you ultimately deliver that to the experiences? Which brings you to the third one, the investments that we make in delivery. Where can we deliver experiences today? We can go to the website, we can go to a mobile app, we can go to the mobile site, we can go to in-store and control the screen.
We can now go into any IoT device with the IoT API that we basically have to where you can get the power of the Marketing Cloud delivered to whatever screen it is, no matter what the function provides to deliver an experience. Today, we have more capabilities in and around experience delivery than anyone else. Those three pillars are the way you should think about our IP development inside the Marketing Cloud.
I think that's great. Maybe just add a couple of quick things. I think we also have very unique IP in terms of the semantic understanding of what marketers want to do-
On the data side, yeah
On the data side, having that semantic understanding of what is a campaign, what is a customer, what are the demographics, and what do you want to do in terms of a promotion. As we establish that across multiple solutions, it's very hard for anybody else to come in and not participate in the semantic understanding that we've already created for our customers. When Ann's thinking about it, Ann's not just thinking about it from the point of view of the marketing data. She's thinking about it from the point of view of the demographics or the promotions or the campaign. I think we've done a good job of our semantic layer and describing that visually for our customers in terms of how they interface with the Marketing Cloud. I'll just maybe add that one to it.
The last one I would probably add is what Brad's team has done is a significant amount of integrations with other people's data. If you believe this, that we're not going to be a data in isolation, being able to integrate and assimilate data with partnerships with companies who help you, the ETL vendors of the past, I think that's another significant advantage that we'll build because it's getting normalized in our view of what the customer looks like online.
Let's go Sterling Auty and then Ross in the back.
Great. Steve Ashley, Robert W. Baird. Jay stole my question. I am never sitting next to him again. Actually, I just want to drill down on what Brad asked, and my question relates to outside of the creative pros, the consumers, the hobbyists, what does your guidance through FY 2018 assume about your success pushing out into those markets? Number 2, can you give us a little color on how you might do that? We do understand that you have got some Elements people out there, and you would love to get them into the cloud, if there is any more color on using mobile and how you might do that.
Sure. Again, I will start and feel free to add, Brian. A couple of key points. First is, I think we did not update the numbers, in terms of mobile downloads. I think we had told you last, we had approximately 40 million Adobe mobile applications that were downloaded. That number is over 60 million. Steve, to your point, mobile is definitely a top-of-the-funnel driver of people who are first exposed to us. Today, all we have is the mobile apps help with retention of the core Creative Cloud customer. There is nothing that precludes us from having a mobile-only offering which targets this next generation of customers. When we see the usage of our products, we think that is an upside.
The 5 million that we talked about with respect to Lightroom and Elements customers, clearly the install base is much larger than that in terms of what we have sold over the years. What we did was try to factor that down into who continue to be hobbyists and enthusiasts. It is also reflected, which we did not sort of talk about, the number of free trial users that we have. I think what gives us confidence associated with it is we see the traffic that is coming to our site. We see the number of people with the CCP, the photography offer that is coming in. That continues to give us confidence associated with targeting that customer. The biggest asset, without a doubt, is creativecloud.com.
If that becomes that one-stop shop for inspiration, the way we've integrated it into the Marketing Cloud, where when you're creating a campaign, you can go find stock photography. The more that becomes the single-stop community, and we can expose people to different things, I think that's the ultimate driver of what happens in the consumer business.
I think a lot of it comes to, getting back to Shantanu's point around the hobbyist products. We've identified the propensity of a subset of that hobbyist segment to move to
Kind of our photography ecosystem that we're building out. We have pretty large confidence in that. I think the rest of it is really the efforts that we're putting on mobile, and it's bringing them together in a way where we can test subscription pricing at various price points. We can test how one mobile application actually promotes the full suite of applications to bring them into kind of a more complete family. If you look at the numbers that we talked about for the new growth in that market in the core, a lot of the focus will be placed on education as well, where we think this new generation of creativity, where that foundation is going to be built.
Obviously, we have a very strong presence in the education market, and we think that will in turn, as we establish new sets of applications and new suites of mobile only or mobile and web applications in that market, that will then play out in the broader market as those students graduate and enter the marketplace.
I don't think it's surprising that if you think of the two major sort of PC platforms that exist and what Apple is doing with the iPad Pro and highlighting us as one of the companies that's really driving what happens with creativity on the iPad Pro or what Microsoft's doing with Surface Pro. Again, today in their announcements, you can see pictures of Lightroom and what they do. If what we have done in embracing touch, I think that next generation of creative will all look at one of these devices and say, "What are the applications that I use to create whatever I want with touch?" Brian mentioned in the Max keynote, every one of our products right now is touch-enabled on the Windows side with Surface Pro as part of the Creative Cloud.
I think it'll require us to innovate, but the awareness of what you can do with these devices is only going to be a tailwind for us.
Sterling Auty with JP Morgan. Brad, I want to turn the question on digital marketing maybe the other way, meaning the segments that you showed with the $27 billion of market opportunity. You mentioned what you're investing in. What does that leave left? What are the areas that Adobe would be underrepresented in, whether it be inbound marketing or other? Are there going to be plans to attack those either through buy versus build?
Is the question in the total addressable market, where are we underinvested? Or outside what we're currently calling out a total addressable market, what are the opportunities?
No, within that.
Within that $27 billion. Within the $27 billion, each of those lines, we've got product in that market already today.
Right.
If you go and you poll the third party, whether Gartner, Forrester in that segment, how do we compete in each of those segments? In all eight right now, we're called out as a leader. That doesn't mean our products are perfect, but we feel confident that we're best of breed in each of those categories, but we're investing in each of those categories, obviously, because it's a dynamic market to make sure we continue to stay ahead. We continue to have an active partner program with ISVs to where our products don't fit as particular need. At the end of the day, we're about delivering customer value. We have a thriving integration program where we can integrate with other ISVs and other categories and provide that integration for customers.
We use that as actually an opportunity to see what are we not currently doing that customers are interested in, and whether we develop that or acquire that, it's almost we think about it a little bit like minor and major leagues. What are the things that we're providing? That's what we want to do in major leagues, and integrations are a little bit in the minor leagues, and we can kind of look at what's happening and potentially do something ourself there.
Ross.
All right, thanks. A financial one first and then one follow-up. Mark, I think we're all trying to triangulate this multi-year revenue and EPS growth. You said something earlier that I thought was important. You said COGS could actually increase a little bit more maybe than we've seen, and it's been going down by about one percentage point per year over the last couple of years. Just wondering if you could provide some color on where you think that's going to go over the next three years to your fiscal 2018 target.
I think that Abhay is going to help us drive a lot of efficiencies in the three clouds from an infrastructure point of view because there's definitely room to continue to improve that. As especially Brad's business scales, there's going to need to be more and more COGS, right? There's a variable component to his business that just comes with revenue. I think the point that Shantanu was making is as we look out, we're going to spend more on COGS just because revenue is going to increase, and that's a variable cost that comes with it.
We should think about that continuing to decline on a group basis.
I think at some point, there'll be a point where we just can't drive gross margin any higher, we have, and we will continue to drive a little bit of gross margin improvement.
Okay. Then just for Brian, I noticed when you talk about Adobe Document Cloud, the TAM for Adobe Acrobat is about half or less than half the size of these enterprise services.
I was curious, you could say two things. One, what is that mix like in terms of that revenue base today that you have between core Adobe Acrobat and enterprise services? What beyond digital signature are we talking about in that second bucket?
Sure. Yeah, the TAM on the individual productivity side or on the Adobe Acrobat side is both representative of individual productivity and then ETLAs that we have in the enterprise. On that side of the business, a lot of that is looking at the headroom we have to actually go convert more of the perpetual over to subscriptions of our recurring revenue. On the larger part, I'd say the blend definitely skews more to the established Adobe Acrobat business since our sole line on the other side is our e-sign line. We're looking to add things that are logical extensions, both from our core Adobe Acrobat offering and our e-signature position around workflow review and approval and more collaboration and document protection categories where we have technology that we can bring to bear on that.
That's where we see more of our focus and more of the growth coming on the enterprise side of the business. Let's go to Derrick.
Thanks. Derrick Wood at Susquehanna. You guys talk about 8.3 million, I guess, installed base that hasn't moved over yet. I think that's probably a bigger number than most people thought. I guess two questions on that. What is still kind of the major pushbacks in getting those guys to migrate? Then I would think now that we're over three years since the release of CS6, we would see an acceleration. How are you thinking about that velocity of migration business going into the next year?
Maybe I'll start, Brian, and then again.
Go ahead.
Which is, you have to think about the fact that CS6 was still in market, especially in many international markets, till pretty recent. When you look at that 8.3 million number as opposed to the 8.6, that's the install base, don't think of it as somebody who hasn't moved recently. We were selling CS6 product into many foreign markets till a few months ago. There was a steady stream of CS6. We definitely think that's the most low-hanging fruit in terms of people who'll move, but that continues to be it. I would say international has lagged in terms of subscription adoption, partly because of the propensity to buy there. The other thing I would say that's lagged is we don't have some of the things that people want in order to transact business with us directly on adobe.com outside and inside the U.S.
Small and medium businesses wanting to be able to buy through POs, and there's a whole list of things, or having the right, not just a credit card, but a direct deposit in a particular country outside. That all of them represent a good base on which we can move. I would argue that that's a little bit more of more recent purchases, and in addition to that, people who wish to transact business with us directly on the subscription in a way in which we still haven't had all of the spectrum of ways in which people want to do business with us.
Yeah, just to comment. There are markets where the propensity to move to subscriptions has lagged just from a cultural standpoint. We're putting extra energy into those markets to make sure that we are promoting Creative Cloud, we are promoting all of the integrated functionality, we're promoting it as a platform, and to make sure that people realize if they don't eventually jump on board, they're going to be left behind in terms of bringing forward the best of creativity. Germany and Japan are both examples of those markets where we're putting a fair amount of energy.
Jessica, go over here.
Hey, Alex Zukin with Stephens. I wanted to ask a question about the Digital Marketing Cloud, as you're selling to new constituencies like the CMO and the CEO, how does that change the sales cycle and the deal funnel process? Also, how important do the agencies become versus just the direct channel?
Yeah. Do you want me to take that? Okay. I think obviously the higher you sell and the more products we're selling in at that initial deal, the longer the sales cycle is. They bring a broader set of folks from across the organization to weigh in how is it going to be used. We still have our transactional business where we're selling into practitioners and directors of marketing that are much faster sales cycles. The enterprise ones, I would say, that's why we've seen the sales cycles become a little longer. The average deal size for those initial deals has gone up.
Both agencies and SIs are critical in those CXO- level deals. For the most part, most enterprises are looking to have an SI or an agency either implement that and then the enterprise runs it, or they're looking to have it implemented and then have an agency or an SI actually run that on an outsource basis for them. That's why that partner program that we talked about with over 3,000 partners, why that's so critical. We've seen, because we track it in a very data-intensive way, the average deal sizes that we do with partners are bigger than the deals that we go and do direct, just on our own.
Two other things maybe to add, Brad, that I think we are seeing. The first is we're actually seeing that in a lot of these transactions, there are multiple agencies/SIs bidding for the business with the company.
Yeah.
All of them are bidding Adobe. We get this question of which of these SIs or agencies is the one that we should be bidding with. We've definitely remained Swiss in terms of doing that. The second thing I would actually point to is you can look at some of the agencies and the companies that they are buying. They're increasingly buying companies that build their business on Adobe's. You have these boutique agencies that were created completely on the Adobe Marketing Cloud, and a lot of these big agencies are actually buying them to jumpstart their digital practices.
The one thing that I will mention as well is it's not just the big agencies and big SIs. A major part of our business is done with local and regional partners that because this digital marketing and this experience delivery is so the skills are so critical, there are times that in Chicago, a 15-person agency opened up and now there are 75 people, and they're just doing great business and they have deep expertise in Adobe Experience Manager product. A big company in Chicago ends up working with them and not maybe with one of the big guys. It's a mix of we're constantly working with the biggest and local and regionals to just enable them so that they know what the Marketing Cloud's all about.
Zain Krane with Bernstein Research. Just a couple of questions on Adobe Stock. Obviously, it's a very attractive opportunity. I was wondering if you could talk about what kind of attach rates you're seeing with either new or existing customers in the Creative Cloud. Even though it's clearly accretive to earnings, it seems like there could be potential for margin dilution for the creative business. Could you talk about what type of gross margins you're expecting for that once it's fully at scale?
I think it's early in terms of the stock market. If you remember when we bought Fotolia, we said we'd have approximately 75 million-
75, yeah
of revenue this year. We're on track to that, so the business is performing the way we expected it to. What Brian showed you, I think, in the keynote on Monday was I think just a clear reflection of how well we've already integrated that into all of the products. We've added video into it. We look at it as, just to be completely clear, we offer a subscription that has all of the Creative Cloud products plus Stock, okay? We're seeing adoption of that. We have an upsell, where if people have been using the Creative Cloud, they can now buy a Stock subscription. You can buy just a Stock subscription. I think we're early in figuring out which of these should be the sweet spot of how we go to market.
There's the on-demand, which is somebody who just says, "Hey, I need an on-demand piece of Stock content." I guess the three quick things I would say is on track relative to what our expectations were when we acquired it, probably ahead of track with respect to how quickly we thought we would integrate it and how we've integrated it into our products. Now I think a little bit of experimentation of all of these different offers, which is the one that we should focus on. Net, it's actually an accretive part to the-
Yeah, I was going to say before we acquired them, they were a very profitable business. It was run very well, very profitable. We expect it to be very profitable also, not dilutive.
I would just add that we've actually just rolled out an offering that we can attach at the enterprise level to our ETLA agreements.
That's a good one, right.
Given that you saw the success that we had in Q3 just with our services in general, we have high aspirations for what we'll be able to do there. I think this is another area of the business that will lend itself very well to applying Brad's secret sauce from a data-driven marketing standpoint to really optimize flows and funnels and from the product experience on out. I guess the message is we believe it's a huge opportunity and communicated that. We're just getting started on actually activating that opportunity across the full suite of touchpoints in the Creative Cloud, but we're very optimistic with this.
Was there one more down here? Right there.
This is Keith Weiss from Morgan Stanley. A question maybe for Brad around the Marketing Cloud. When we talk to CMOs, it still seems like a lot of best-of-breed buying activity taking place versus people looking towards a suite. You showed some metrics at the high end. The top 100 accounts you're seeing really good traction with multi-solution sales. Is that occurring across the broader market opportunity for you guys? Or is that missing the point of that with this suite, you guys could really do well at the high end of the market, and eventually, that's going to drift down?
I think you see market leaders in all segments. Certainly, we see more of that activity at the large enterprise segment in terms of we don't want just one thing, because guess what? The best-of-breed approach is what's slowing us down. We've got a search tool. We've got a social tool. We've got a web tool. We've got a different analytics system. A CMO says, "I can't understand how all this comes together. I look at the attribution across all this. My business should be twice as big as it is." What's the issue? Well, you got different measurement, you got different execution systems. The CMO comes, says, "I'm going to bring this together." Boom. That's how the conversation comes about. We see that probably happening more at the large enterprise.
Even midsize companies with really forward-thinking head of digital or CMOs, you see them taking down the whole thing. I think your statement on it's probably going to be one of those trickle-down moves to where the large enterprises are going to get that. Small to medium enterprises may come later. Small to medium-sized businesses actually need it more because they don't have the same size teams that large enterprises do. They actually need that automation, and they need the systems to work together better. We may be surprised and start to see the SMB segment really take the leadership in and around buying at the cloud level.
One more question back there.
Barton Hooper with Weitz Investments . Thanks for all the detail here. I was just wondering if you could talk about the progression of free cash flow per share and how that will work. I assume as revenue goes up, deferred revenue might level out, and that contribution to operating cash flow may diminish. Capital expenditures as well, how you see that given your comments about OpEx.
I gave you what I think cash flow does over the next few years from a CAGR perspective as revenue and margin comes back into the business. We are not a high capital, CapEx-intensive company, right? There are really just two things that we use capital for the most part. One is servers to run the infrastructure, and that has not been historically a huge spend, and then the second is facilities. We have done some work this year around the world from a facilities perspective in terms of buildings and building out our infrastructure. But as I look out, I do not foresee a large facilities CapEx need, and I think we have settled into a rough run rate of what we need from a CapEx perspective as it relates to servers to run primarily Brad's business.
Like I said on the prepared remarks, I see from a cash flow perspective, 25% CAGR as we look out growth on cash flow.
Maybe one last question back here.
Hi, this is John Byun for Brent Thill at UBS. A lot of your migration to sub has happened with strength in the U.S., and looking at your fiscal 2018 targets for either TAM or revenue growth, how big of a role with international and especially emerging markets playing there?
I think for the most part, we still have opportunity even in the developed markets. I do want to clarify that in terms of what the opportunity is, but certainly emerging markets will continue to play a bigger role moving forward. If you remember four or five years ago, we used to talk about emerging markets as the largest growth opportunity. There was so much opportunity with the developed markets when we made this transition that that's what we focused on. International will play a disproportionate growth, in terms of the Creative Cloud moving forward, and we're starting to see. I think we talked about that on the Q3 call. If you start to see what's happening in Japan, we're starting to demonstrate both success. We're addressing the concerns that people had with respect to moving to a subscription offering.
The beauty of this model is, for the first time, we can actually offer the Creative Cloud in emerging markets at a very different price point. In the past, if we did that, we'd have a gray market where people would either buy the English product and ship it back on eBay or they'd pirate it. All of that's gone away for the first time. We do think international will represent a growing focus in the company and more as we talked about whether it's the 8.3 million who still haven't moved or the new 11.7. International will represent a large opportunity for that.
Before you have some closing comments, Shantanu, I just want to, as we conclude today, I know you're going to have some questions afterwards for our speakers. If you could just give them a few minutes to remove their mics, grab a quick drink of water before there's the attack, we appreciate that.
Maybe I'll just end by saying, three years ago, as we talked about how the business has progressed from 2012 to 2015, we had this belief that we could completely reimagine the creative process and create a business that would grow very significantly and that we'd have a better relationship with our customers. When I look at what we delivered at MAX and the opportunity ahead of us to be that single-stop inspiration for the entire creative community, we think our opportunity is greater than it's ever been before as a result of all of the innovation that we've done as well as of all the infrastructure and hard work that we've put in into transitioning our business from the traditional two-tier distribution model to a completely online business. We feel really good about it.
Everybody is a creative, I think we're better positioned across the spectrum of desktop, mobile, as well as services than any other company to help address that unmet need of content. I think we all know every digital experience that we see, the amount of content that's being created is more than it's ever before. I think at that same point, we said to ourselves, if all we stick to is focusing on the creative business and the management of this content, that we'd be unnecessarily and artificially limiting the aspirations that we had for our company. We wanted to scale our business with the volume of content. We had this goal of getting far more serious into the data business and addressing what we thought would be new needs for the Chief Revenue Officer, the Chief Digital Officer, and the Chief Marketing Officer.
I think it's very clear today, in terms of what's happening with digital disruption, that we're in a very unique position to be one of the most mission-critical enterprise software providers for any industry that's thinking about how they make online a tailwind rather than a headwind on which they're going to be disrupted. When you add that to what's happening with paper to digital, I don't think there's another company that has the breadth of offerings and the customer segment across everything to do with content and everything to do with data. As a management team, we're very excited about what the prospects are for us, which is why we feel confident about giving you long-term targets. I know that we have an incredibly aligned and motivated employee base. That's a huge reason why we've been able to execute with the discipline that we have.
Thank you for joining us. We look forward to the Q4 earnings call when we give you our next update. Thank you.
Thanks, everyone.