Jay Vleeschhouwer: Shantanu, I’d like to ask about a term that you used often at MAX. And in fact, a new three-letter acronym that you use as well, namely product-led growth. And the question is Adobe has arguably been a product-led growth company for the more than 30 years that I’ve known you. And I’m wondering now what does product-led growth mean differently today from what it might have meant historically? And relatedly, how are you thinking about the cross-sell and upsell opportunity that you also spoke about at MAX, specifically for 2023.
Shantanu Narayen: Yes. Jay, thanks for recognizing that our innovation has really come through an extremely close relationship with customers. So, I think in the past, in the desktop era, what product-led growth really was all about was making sure that as we engage with the customers, as we engage with the community, that we were able to use that. I think the best example perhaps in the desktop era was what we did with Lightroom. And when we first came up with Lightroom, given the fact that we had Photoshop already as a product, just getting the millions of people to use it even before we release the product, having all those evangelists and a great product, I think was a great example. What the team in both Creative Cloud and frankly, in the Experience Cloud, are doing is actually also following on the great work that we pioneered in the Document Cloud.
And so, in the Document Cloud, I think product-led growth really related to as we think about what people were doing on searches when we introduced our web-based offerings for Acrobat, that’s when we just started to see this velocity of how we engage with customers and prioritizing what’s clearly top of mind for them, our ability to immediately satisfy them, I think, escalated quite a bit. When David came in, David really said, we’ve got to take this to a whole new level with product-led growth, and it’s integrating both the community as well as, frankly, right now, engagement and engagement marketing in the product. And so when you get into product sessions right now, and you see the product manager and the engineering manager as well as the product marketing manager, all of them are on the same page.
We have data. We have things instrumented in the products and your ability to do both AB testing and here’s where we use our own products and the products that Anil does. And so, product-led growth right now is about saying, at any given time, we probably have three tests in market for a particular feature as well. And we’re using that to really learn from the customer interactions and to deliver better quality products sooner. But David has really been the pioneer. So, David, if you’d like to add? And then maybe a little bit, Anil, on what we are doing for that in Digital Experience as well.
David Wadhwani: Yes, Shantanu, I think that was a pretty complete summary. The only thing I would add is that there’s an interesting inflection point that we are in terms of our product development cycles that give us an opportunity to take what we’ve always been doing, to your point, with product-led growth and drive even more use of it, which is the introduction of all the web applications that we have. So, we now have Photoshop Web, we have Illustrator Web, we have Acrobat Web, we have Adobe Express, and you combine that with the sharing focus that we have with Share for Review as an example. And we have new growth loops that we can start optimizing, and that’s been a huge area of focus for the teams.
Anil Chakravarthy: Yes. I just wanted to add, Shantanu, as you said, several of our enterprise customers are starting to deploy their own product-led growth using our analytics technology, a banking customer, for example, one of our best customers. They have their online mortgage application, and they want to track who is able to use it successfully, who’s able to complete applications completely online, and they’re using our analytics technology to do that and see what works and what they need to do to fix it. So, we’re starting to see like exactly, as you said, our technology being both used inside Adobe to drive our own PLG as well as customers doing it.
Shantanu Narayen: And Jay, maybe to get to your second question and taking a step back, I do have to say, when we look at our annual targets that we had provided for Digital Media ARR at the beginning of the year of $1.9 billion. And I know even with our Q4 guide, I think people had some questions about where is the momentum. And I think the team crushed that, which I feel really good about. And so, a lot of that is happening as a result of just first, attracting and acquiring customers to the platform. And then what you’re referring to is the cross-sell, upsell, whether it’s people who first engage with us on a mobile device, whether it’s people in Acrobat. We’ve used Adobe Reader as a very, very good on-ramp to allow people to engage with PDF functionality and then either get a license for our Acrobat web product or for the desktop product.
Individual apps, the success and the driving of individual apps has always been an on ramp, and we then do a really good job because we use Adobe Experience platform to then convert them and even promotional pricing. I know we’ve had some questions in the past. And we have incredible data that shows us when people come in, whether that’s on educational pricing and then they graduate or on promotional pricing, converting them to customers. So, I think there are numerous ways in which we’ve demonstrated that by personalizing our offer to every creative or knowledge worker that we’re able to monetize that as well after they derive the value from it.
Operator: We’ll move on to Derrick Wood with Cowen & Company. Please go ahead.
Derrick Wood: Congrats on a strong net new ARR customer — quarter. I wanted to ask about the composition of this number. The growth dynamic between Creative Cloud and Document Cloud was a little surprising. I mean Creative Cloud had, I think, the second strongest sequential percentage growth Q4 ever. But looking at Document Cloud, net new ARR didn’t grow much sequentially in what’s typically a stronger uptick in Q4. Can you just give a little more color on the seasonal dynamics you saw between Creative and Document Cloud in the quarter?
David Wadhwani: Sure. Yes, I’m happy to do that. So first of all, yes, as Shantanu mentioned, we’re very pleased with how FY22 has gone and how the quarter closed out, we saw a lot of strength in the core businesses. And our primary focus across these businesses continues to be around new customer acquisition, new customer ads. We also have a lot of diversity in terms of the drivers that we have and the leverage we have to drive the business. As we mentioned, we saw great strength across all of our creative segments imaging, photo, video, design. We also grew a lot of — focused a lot in terms of new campaigns that are targeting new audiences for creative as well with a new campaign called Everyone can Photoshop, that’s bringing customers in directly into the products and has been very productive in terms of driving top of funnel and conversion.
On the — in terms of new businesses for Creative, we’re seeing a lot of strength from new businesses like Frame and Substance that have contributed more this quarter than ever before. And to your point, we’ve also been seeing a lot of strength in the core business around Acrobat. We’re running a Acrobat’s Got It campaign really targeted at new customers in SMB where we show them all the capabilities that Acrobat has now, including specifically focused on signatures and things that really help them drive the business. So overall, the business is doing very well. The one dynamic that — if you look at from an Acrobat perspective that we’re really proud of too, is that we saw — for the year, we saw growth of ARR at 23% despite the complicated macro.
And it’s important to remember that some portion of this is also — the Acrobat business is also represented in the creative business. So, the Acrobat growth number is probably a bit understated in this point.
Operator: We’ll move on to our next question from Michael Turrin with Wells Fargo Securities. Please go ahead.
Michael Turrin: Maybe one on the digital price side. We fielded some questions there just around guidance for next year in the current backdrop. You’re holding on targets, grew well at 16% in constant currency for the quarter. So, can you just talk more around how much visibility you have in the targets there and it’s how you closed the year at all, particularly given that EMEA comment provides incremental confidence in those targets going forward. Thank you.
Anil Chakravarthy: Thanks for the question. We are pleased with the performance of the Digital Experience business. I mean just as a quick reminder, at the beginning of the year, we had guided DX at 17% of digital growth for the year, which is what we achieved in a really tough year with all the different macro issues. So if I really take a step back, we’re — first of all, we’re in a really strong position with our product portfolio. We are a clear leader in the market with the investments we made at the Adobe Experience platform starting 5 years ago. And that is really paying off with the book of business that we are seeing and all the customer adoption that we are seeing. And what we are hearing from our conversations with our customers is that they’re really eager to invest in a platform that enables them to meet the mission-critical priorities around digital.
