Mike Saviage - Former Vice President of Investor Relations Shantanu Narayen - Chief Executive Officer, President and Director Mark Garrett - Chief Financial Officer and Executive Vice President

Brent Thill - UBS Investment Bank, Research Division Walter H. Pritchard - Citigroup Inc, Research Division Brad A. Zelnick - Macquarie Research Michael J. Olson - Piper Jaffray Companies, Research Division Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division Ross MacMillan - Jefferies & Company, Inc., Research Division Adam H. Holt - Morgan Stanley, Research Division Peter L. Goldmacher - Cowen and Company, LLC, Research Division Kash G. Rangan - BofA Merrill Lynch, Research Division Mark L. Moerdler - Sanford C. Bernstein & Co., LLC., Research Division Jay Vleeschhouwer - Griffin Securities, Inc., Research Division Philip Winslow - Crédit Suisse AG, Research Division Chad Bartley - Pacific Crest Securities, Inc., Research Division

Good day, everyone, and welcome to the Adobe Systems Q1 FY 2012 Earnings Conference Call. As a reminder, today's call is being recorded. At this time, I'd look to turn the call over to Mr. Mike Saviage, Vice President of Investor Relations. Please go ahead, sir.

Good afternoon and thank you for joining us today. Joining me on the call are Adobe's President and CEO, Shantanu Narayen; as well as Mark Garrett, Executive Vice President and CFO. In the call today, we'll discuss Adobe's first quarter fiscal year 2012 financial results. By now, you should have a copy of our earnings press release, which crossed the wire approximately 1 hour ago. If you need a copy of the press release, you can go to Adobe.com under the Company and Newsroom links to find an electronic copy. Before we get started, I want to emphasize that some of the information discussed in this call, particularly our revenue and operating model targets and our forward-looking product plans, is based on information as of today, March 19, 2012, and contains forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release we issued today as well as Adobe's SEC filings. During this call, we will discuss GAAP and non-GAAP financial measures. A reconciliation between the 2 is available in today's earnings release and on our Investor Relations website in the investor data sheet. Call participants are advised that the audio of this conference call is being broadcast live over the Internet in Adobe Connect and is also being recorded for playback purposes. An archive of the call will be made available on Adobe's Investor Relations website for approximately 45 days and is the property of Adobe Systems. The audio and archive may not be rerecorded or otherwise reproduced or distributed without prior written permission from Adobe Systems. I will now turn the call over to Shantanu.

Thanks, Mike, and good afternoon. Q1 revenue was within our targeted range for the quarter. We also achieved solid Q1 non-GAAP earnings per share as well as strong cash flow and growth in deferred revenue. At the outset of this year, we outlined our strategy to double down in 2 fast-growing markets, Digital Media and Digital Marketing. In our Digital Media business, our strategy is to help customers create, publish and monetize their content on any device. Demand is building for our upcoming Creative Suite and Creative Cloud launches. And as a result, Creative Suite revenue was lower than expected in Q1. In our Digital Marketing business, our strategy is to help marketers measure, manage and optimize their marketing investments for maximum return. Momentum continued with our Digital Marketing Suite during Q1 with year-over-year revenue growth exceeding 30%. In our Digital Media business, recent research shows our customers are excited about our upcoming launch of Creative Suite and the Creative Cloud. Among Creative professional customers and students, we found that over 40% of those surveyed are waiting for the new release to upgrade. Our upcoming Creative Suite release will include major updates to all of the core CS products, including Photoshop, Premiere Pro, After Effects, InDesign, Illustrator and Dreamweaver. We have created significant anticipation for the release through a series of sneak peeks of great new features. One sneak featured a breakthrough Photoshop innovation called Content-Aware Move, which has driven more than 1 million online viewers on the YouTube Photoshop channel. The upcoming CS release will also advance our HTML5 and mobile content creation and app development offerings where we see strong interest to help our customers deal with the complexity they face. All of this is on track for delivery late in Q2. We continue to extend the creative process for tablets. We recently announced availability of Adobe Photoshop Touch for the iPad. Photoshop Touch, which is also available on Android tablets, offers core Photoshop features as well as new capabilities for creating and sharing images in an app custom built for tablets. Photoshop Touch is a central component of the Adobe Touch Apps, joining other popular iOS apps such as Adobe Revel and Adobe Ideas. New and updated versions of our 6 touch apps will be coming throughout this year. In conjunction with our upcoming Creative Suite release, we will launch Adobe Creative Cloud, which will transform the creative process. Creative Cloud includes all of our key CS desktop products, web services such as online storage, Typekit for online fonts, Business Catalyst for website hosting e-commerce, connectivity with our new touch apps and powerful collaboration and social community features. With the subscription model, Creative Cloud users will also get frequent product updates and access to new, innovative solutions, such as Edge and Muse, for HTML5 content creation. We believe Creative Cloud will transform our business model and drive higher revenue growth over time. This will happen through an expansion of our customer base by acquiring new users through a lower cost of entry as well as keeping existing customers current on our latest release. Success with this model will drive our revenue to be more recurring and predictable. We will continue to offer the perpetual licensing model as we transition our customers to this new subscription model. Our Digital Publishing solution continued its strong momentum. As of Q1, approximately 600 publishers have delivered more than 1,500 applications for devices like the iPad, generating 16 million downloads of their apps. Using our analytics capabilities that help publishers understand the use of their apps, we recently announced that time spent by users of these digital publications has increased 70% over the last 6 months. We attribute this growth to the more sophisticated and engaging content publishers are delivering, as well as the continued adoption of tablets. We expect this growth to continue, particularly with the inclusion of the Single Edition of Digital Publishing in our Creative Cloud offering later this year and the upcoming release of InDesign with its innovative liquid layout capabilities. In February, we announced the industry's first fully integrated digital video solution to power TV-like experiences for ad-driven videos via the Web. Code-named Project Primetime, this new solution delivers premium video and ad content consistently across all major platforms, including Apple iOS, Google Android, desktop operating systems and connected TVs. Primetime is an end-to-end workflow that interconnects Adobe's streaming technologies, content protection, analytics and optimization with our recently acquired Auditude video advertising platform. For Adobe, it places us in the center of helping move premium video content and ad dollars online and represents a larger opportunity across many of our business areas. Earlier this month, we introduced Lightroom 4, a major release of our digital photography workflow solution, helping amateur and professional photographers quickly import, manage, enhance and showcase their images. We lowered the price to broaden the potential user base for this market-leading product, and feedback and reviews and social commentary for the new release has been outstanding. On Adobe Labs, we recently introduced Adobe Shadow for web designers and developers working on mobile projects. This new product enables easy pairing, synchronous browsing and efficient multi-device preview during mobile content creation and mobile app development. Adobe Shadow demonstrates our ongoing HTML5 innovation effort and leadership in the web community and addresses a critical need of designers and developers dealing with the complexity of digital media on multiscreens. In Digital Marketing, we closed the acquisition of Efficient Frontier in January. This is a significant milestone as we continue to build out the value we are providing to digital marketers. Efficient Frontier predictably optimizes how to spend marketing dollars across search, display and social media platforms. It provides an ad buying capability for Facebook, offers real-time bidding for display advertising and expands our Digital Marketing Suite with a social marketing engagement platform to help customers manage their brand presence across the social Web. In Q1, customer acquisition momentum continued with our Digital Marketing Suite. Key customer wins included Fox, J. Crew, Electronic Arts, Samsung, British Petroleum, Citibank and Kohl's. This week, we are hosting our Annual Digital Marketing Summit in Salt Lake City to an audience of approximately 4,000, nearly double the attendance last year. We will present our strategy and announce new solutions to lead in the fast-growing categories of social marketing, multichannel campaign execution, analytics and personalized experiences. Later, I'll have some closing comments. Now I'll turn it over to Mark for a more detailed discussion of our Q1 results. Mark?

Thanks, Shantanu. In the first quarter of fiscal 2012, Adobe achieved revenue of $1,045,000,000. This compares to $1,028,000,000 reported in Q1 fiscal 2011 and $1,152,000,000 reported last quarter. In mid-January, we closed the acquisition of Efficient Frontier, and our Q1 results include $9.6 million in Efficient Frontier revenue. Q1 GAAP operating expenses were $648 million compared to $617.7 million reported in Q1 fiscal 2011 and $789.7 million last quarter. Non-GAAP operating expenses in Q1 were $571.3 million compared to $539.5 million reported for Q1 fiscal 2011 and $611.9 million last quarter. In Q1, Adobe's effective tax rate was 31.5% on a GAAP basis and 22.5% on a non-GAAP basis. The GAAP tax rate was higher than our targeted rate primarily due to a onetime charge related to our acquisition of Efficient Frontier. Offsetting this charge were tax benefits related to an extension of a favorable state tax ruling and the resolution of some audits in our favor in Q1. The non-GAAP tax rate was lower than targeted due to the state ruling. GAAP diluted earnings per share for Q1 fiscal 2012 were $0.37. This compares with GAAP diluted earnings per share of $0.46 reported in Q1 fiscal 2011 and GAAP diluted earnings per share of $0.35 reported last quarter. Non-GAAP diluted earnings per share for Q1 fiscal 2012 were $0.57. This compares with non-GAAP diluted earnings per share of $0.58 in Q1 fiscal 2011 and $0.67 reported last quarter. The mid-quarter addition of Efficient Frontier revenue and costs did not have a material impact on Q1 non-GAAP earnings per share results. I will now discuss Adobe's results in Q1 by business segment. As a reminder, we adjusted our business segments effective with the beginning of our 2012 fiscal year. Our FY 2011 10-K and the updated investor data sheet we provided in January reflect the segment changes. Digital Media segment revenue in Q1 was $730.3 million compared to $761.1 million in Q1 fiscal 2011 and $827.3 million last quarter. Creative Suite revenue was lower than expected in Q1 with demand building for our Q2 launch of Creative Suite and Creative Cloud. Within the Digital Media segment, Document Services revenue was up $183.3 million compared to $184.6 million in Q1 fiscal 2011 and $203.7 million last quarter. Acrobat was in line with our expectations. Digital Marketing segment revenue in Q1 was $259.9 million compared to $212.9 million in Q1 fiscal 2011 and $269.8 million last quarter. Within the Digital Marketing segment, Digital Marketing Suite revenue grew 33% year-over-year, helped by the mid-quarter addition of Efficient Frontier, which contributed $9.6 million of revenue in Q1. Excluding Efficient Frontier, Digital Marketing Suite revenue grew 26% year-over-year. LiveCycle and Connect performed better than expected, contributing $85.6 million to Q1 revenue. Finally, Print and Publishing segment revenue was $55 million compared to $53.7 million in Q1 fiscal 2011 and $55.1 million last quarter. Turning to our geographic segments in Q1, results on a percent of revenue basis were as follows: the Americas, 48%; Europe, 32%; Asia, 20%. The demand environment remained stable in all of our major geographies. From a year-over-year currency perspective, FX increased revenue by $7.7 million. We had $10.3 million in hedge gains in Q1 FY '12 versus no hedge gains in Q1 FY '11. Thus, the net year-over-year currency increase to revenue, considering hedging gains, was $18 million. From a quarter-over-quarter perspective, FX decreased revenue by $5.2 million. We had $10.3 million in hedge gains in Q1 FY '12 versus a $3.6 million hedge gain in Q4 FY '11. Thus, the net sequential currency increase to revenue, considering hedging gains, was $1.5 million. Employees at the end of Q1 totaled 9,963 versus 9,925 at the end of last quarter. Our trade DSO was 45 days, which compares to 47 days in the year-ago quarter and 50 days last quarter. During the quarter, cash flow from operations was $314.4 million. Our ending cash and short-term investment position was $2.8 billion compared to $2.9 billion at the end of Q4. The decline was primarily due to our acquisition of Efficient Frontier. Our ending deferred revenue balance increased by $17 million to $549 million. In Q1, we repurchased approximately 1.8 million shares at a total cost of $53 million. Entering Q2, $225 million of stock repurchase authority remains against the $1.6 billion stock repurchase authorization announced in July of 2010. This concludes my discussion of our results. I would now to like to discuss our financial targets. In Q2, we are targeting a revenue range between $1,090,000,000 and $1,140,000,000. This factors a full quarter of Efficient Frontier revenue, the revenue tail for CS5.5 in advance of CS6 and delivery of CS6 and Creative Cloud late in Q2. At the midpoint of the Q2 targeted range, we expect our Digital Media segment to grow sequentially with the launch. In our Digital Marketing segment, we expect Digital Marketing Suite revenue to grow sequentially with Efficient Frontier contributing approximately $15 million in Q2 and legacy Enterprise product revenue declining sequentially by approximately $30 million. We expect Print and Publishing to be relatively flat. We are targeting a Q2 GAAP earnings per share range of $0.37 to $0.43 per share and a Q2 non-GAAP earnings per share range of $0.57 to $0.61. In addition, we are targeting our Q2 share count to be 502 million to 504 million shares. We are targeting nonoperating expense to be between $19 million and $21 million on both a GAAP and non-GAAP basis. We are targeting a Q2 GAAP tax rate of 23.5% and a non-GAAP tax rate of 22.5%. For the full year, we are increasing our annual revenue growth target to a range of 6% to 8% to reflect the addition of Efficient Frontier and approximately $60 million to $80 million of revenue. By quarter, we expect Q3 revenue to increase sequentially from Q2 due to a full quarter benefit from the Creative products, which shipped late in Q2. We would also expect Q4 revenue to increase sequentially from Q3 due to normal Q4 seasonality. With the acquisition of Efficient Frontier, our full year GAAP diluted earnings per share targeted range moves to $1.63 to $1.73, and our non-GAAP EPS diluted earnings per share targeted range increases to $2.38 to $2.48. This concludes my section. I'd now like to turn the call back over to Shantanu.

Thanks, Mark. Our vision at Adobe is to change the world through digital experiences. In Digital Media, we believe our upcoming CS and Creative Cloud releases will transform the creative process and create a new inflection point for revenue growth for the next several years. In Digital Marketing, we're building the foundation for a high-growth SaaS business with the most compelling value proposition in the industry. We continue to execute well against our objectives in this space, and the next few days, at our Digital Marketing Summit in Utah, will be another proof point that this business will positively impact our growth. Adobe is well positioned in these 2 large markets, and we are confident in our ability to execute against that strategy. Thank you for joining us today. Now I'll turn the call back over to Mike.

Thanks, Shantanu. Before we start Q&A, I want to remind everyone about the Adobe Digital Marketing Summit this week. We look forward to seeing all those who signed up to attend our annual conference, the largest of its kind for digital marketers. The first day general session keynote will occur on Wednesday and via webcast on summit.adobe.com for those unable to attend. In regard to today's earnings report, we have posted several documents on our Investor Relations website, including a copy of the script containing our prepared remarks for today's call. To access these documents and the other investor-related information, go to www.adobe.com/ADBE. For those who wish to listen to a playback of today's conference call, a web-based Adobe Connect archive of the call will be available from the IR page on adobe.com later today. Alternatively, you can listen to a phone replay by calling (888) 203-1112. Use conference ID number 6660442. International callers should dial (719) 457-0820. The phone playback service will be available beginning at 4:00 p.m. Pacific Time today and ending at 4:00 p.m. Pacific Time on Thursday, March 22, 2012. We will now be happy to take your questions. Operator?

[Operator Instructions] We'll take our first question from Brent Thill of UBS. Brent Thill - UBS Investment Bank, Research Division: A question for Shantanu and Mark. Shantanu, just on CS. You mentioned it didn't achieve your goal. Is that, in your sense, it was just pent-up demand ahead of CS6? Or is there a competitive issue that you perhaps haven't seen? And for Mark, if you could just talk through the deferred revenue? You had a pretty strong increase year-on-year, how we shouldn't expect that trajectory going forward?

Yes. So Brent, as it relates to CS6 and really the entire quarter, we did have solid earnings both in Acrobat as well as in the Digital Marketing. So as Mark mentioned in his prepared remarks, the demand that we saw in general across geographies was stable. We started to market the new release for CS and the Creative Cloud more aggressively in Q1. And frankly, that's a little earlier than in previous cycles because there were a number of inbound customer requests for features, both on desktop products as well as the information around the Creative Cloud. And we also did some survey in the demand, and it was clear that the demand for CS6 is more than in prior cycles. And that's what sort of led to this decline in revenue for CS5.5. And that was really in February. And so from our point of view, 5.5 accomplished its key objectives. We were trying to transition the business to an annual cycle. We extended the CS5 cycle so that it exceeded beyond CS3. And now, clearly, what customers are telling us is that they are exciting about CS6. So it's not a competitive issue, and it's really excitement around our new offering.

And Brent, on the deferred revenue, you're right. We did have a nice pop in deferred revenue this quarter. That's mainly driven by a lot of Omniture renewals. This is the quarter where a lot of their contracts renew. We also start building up some free-of-charge upgrade deferral for CS6 and for Lightroom 4. So bottom line, I think you should expect that deferred revenue continues to increase. I think you've seen that trend for quite some time now.

And we'll move next to Walter Pritchard with Citi. Walter H. Pritchard - Citigroup Inc, Research Division: Shantanu, just wondering on the CS6 timing. You said late in the quarter. I'm just wondering. As we look at past releases, especially major releases, should we expect it to unfold very much the way in terms of timing in the quarter as well as the release of the product in various major geographies?

Walter, I -- when we said late in Q2, that is in line with the plan that we had set, so there's no issue with respect to the internal execution against that project. I would say it's probably a little bit later than you would have seen in prior releases. As we move to the annual cycle, we want to make sure that we get both the desktop products as well as the Creative Cloud offering available at the same time. So I would say it's a little later in the quarter than in prior cycles. As it relates to international releases, again, we are moving increasingly to a simultaneous release in the major geographies, which, in addition to the U.S., tend to be the U.K., Germany and Japan and France. So expect to see that. But again, as Mark said, most of the revenue, we'll actually start to see in Q3, and you will see some of it in Q2. Walter H. Pritchard - Citigroup Inc, Research Division: Great. And then just relative to margin in the [indiscernible] business, your commentary was, I guess, you're calling it Document Services now. Your commentary was that was in line. And I know you did recap the numbers. So I just want to make sure we're looking at the right thing here. It looks like that business last quarter was up about 18% year-over-year. I know you had some pricing that we thought you anniversary-ed last quarter. And it looks like it was about flat year-over-year this quarter, but it sounds like in line. Just wondering if you could help us understand why such a severe deceleration in that growth rate and yet it was still in line.

Yes, Walter, I think there, it had to do more with the traditional Enterprise sales cycles where you see a rise in Q4 as a result of everything we're building up. And then again, so there's the run rate business and the Enterprise business. Demand for Acrobat and Document Services continues to be stable. You traditionally see a big uptake in Q4 through the sales cycle and then you start again. So everything -- that's why we wanted to clarify it's in line with our expectations. As it relates to the Document Services itself, the EchoSign as well as the other online services, they're proceeding well. Not a material part but certainly significant growth year-over-year. Walter H. Pritchard - Citigroup Inc, Research Division: And just, Mark, a clarification on that around year-over-year growth rates, which is what I was looking at now sequentially. I mean, you did see, I think, an 18% year-over-year growth rate in Q4, and then you saw basically a flat year-over-year growth rate in Q1. So sort of both are assuming the seasonality of their respective quarters but definitely a change in the year-over-year growth rate. Are we looking at something wrong there?

No, you're not looking at something wrong. I mean, we're still very confident in the Acrobat business. It's getting late in the cycle, but it's a great product and it met our expectations just like what we said.

We'll move next to Brad Zelnick with Macquarie. Brad A. Zelnick - Macquarie Research: Just a follow-up on an earlier question about the CS business. Specifically, if we go to CS5.5, the subscription offering, which I know is specific to adobe.com and only a small slice of the business, being that those customers, I assume, were entitled to CS6 upon release, can you tell us anything maybe from subscriber metrics or even anecdotally about the health of that portion of the business?

So Brad, as it relates to the CS offering, CS6 will really be the first time that we go to market on a global basis with an aggressive launch of subscriber metrics. So as we've said at our analyst meeting, we certainly expect to give you more data once the CS6 launches. Maybe I can speak a little bit to the comprehensive plan that we have to market the new release of Creative products and what you might expect. First, again, let me reiterate that we think the transition risk is really minimized as a result of offering perpetual with the subscription base. All the math that we have done shows that the more we convert the existing customer base over to a recurring revenue, we are able to grow the business. I think that individuals and specifically new users will be likely the early adopters for the subscription and Enterprise will probably stay longest with the current perpetual offering. And so we have offerings not just on adobe.com. You can expect to see us offer subscription also through the other online and e-tail stores in the market. And for Enterprise offers, specifically, we'll continue to offer Enterprise licensing agreements. So while all of this gets launched in Q2, we continue to think that we have a really comprehensive go-to-market to attract new customers and not introduce any risk in the business. Brad A. Zelnick - Macquarie Research: Helpful, Shantanu. Just in follow-up to that, can you give us any sense of what the metrics you're thinking of sharing with the Street? The revenue guidance into next quarter is very helpful, but, obviously, through this transition, it's also going to be helpful to get a sense of what you're targeting for subscribers or what have you that you're going to look to manage the business by.

So again, at the analyst meeting, we had talked about how we can get new unit adoption. I think subscriber growth will be clearly one of the metrics that we are measuring internally. And the third one will be for customers who exist, what are the churn rates. So directionally, those are the 3. I think starting -- as the offering gets delivered, we'll certainly start to share more of that information with you, Brad. Brad A. Zelnick - Macquarie Research: Great. And if I could just sneak in a quick one for Mark. Mark, the LiveCycle guidance to be down $150 million this year. Clearly, this quarter and then your guidance for next look better than that. Does that expectation still stand?

It's probably going to be better than $150 million down, Brad, just based on what we saw in the first quarter. It did end up being better than we had anticipated, and Q2 looks a little better than we anticipated. So it'll probably be a little better than the $150 million.

I should just add, though, that what we have done is all of the OpEx changes that we were going to make to help us focus on Digital Marketing, those are all behind us. And so now, clearly, we've represented to the existing customers what we are doing with respect to both government and financial services. So plan's on track with respect to how we transition-focus within the company, Brad.

We'll move next to Mike Olson with Piper Jaffray. Michael J. Olson - Piper Jaffray Companies, Research Division: Just kind of following on that first question there. Without getting into maybe what you think specific subaccounts, et cetera, will be, can you just talk about the pace at which you expect to see Creative Cloud adoption? And in general, what percent of revenue you would classify as recurring today? And where you think that'll be 2 years from now?

Yes, Mike, it's Mark. So we expect the pace to be relatively not slow, but I think it's going to take a little while. I think people are going to want to see the product, understand what we can offer. I think there will be people that will wait till we iterate on the product. So while we're very excited about it and we expect to transition more and more people to the cloud-based offering, it's going to take a little bit of time. In terms of recurring revenue, if you remember last year, we had been saying that we were running around 20%-ish in terms of our recurring revenue. That's actually picked up now to over 23%. So we're making good progress on that recurring revenue front. That's a combination of subscription revenue from the Omniture business, from Efficient Frontier, from Connect hosted, from the subscriptions that we have on CS today that includes maintenance and support as well. So we're making good progress towards driving that recurring revenue percentage up. Michael J. Olson - Piper Jaffray Companies, Research Division: Okay. Do you think that pace is reasonable, like a few percentage points per year?

We'll have to see what the adoption on CS is, to be honest with you. But I do expect that it will continue to grow every year.

We'll move next to Steve Ashley with Robert W. Baird. Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division: Mark, just actually I'd like to follow up on Mike's line of questioning there. Regarding just moving the enterprises over on to the subscription, Shantanu, maybe you've had some time to talk to some of these people. What is it that they are looking for to get more comfortable to maybe adopt subscription? And do you need to offer some sort of subscription volume pricing to entice them economically to move?

Steve, those are both good questions. Let me maybe again talk a little bit about what is coming in the next version so to set the stage for what we are going to do as it relates to pricing and what we are hearing from customers. The first thing is clearly, with Imaging and Photoshop, it's not been updated for close to 2 years. And that's our longest gap in a Photoshop release and with significant more features. So folks are really excited about what's coming in imaging. On the HTML5 side, the innovation with new products like Edge and Muse, as well as mobile application development, I know you've asked me in the past what's happening with developers. PhoneGap's being downloaded, for example, at almost 1 million a year run rate. On the Publishing side, we've continued to make InDesign a must-have to go with the Digital Publishing Suite so that enterprises can deal with multiple screens. And so we offer that again as part of an Enterprise ELA. Video. High-end video, we're now the leader. And clearly, in the next release, there's significant new innovation that's happening in the video market. And the Flash HTML compatibility, we have millions of Flash developers who will be able to continue to innovate using Flash and easily convert to HTML using Create GS [ph] capabilities. We've demonstrated that as well. So Steve, once we go in with this entire value proposition, frankly, for the enterprises, what they're interested in doing, as they do today, is an enterprise-wide license for all of the desktop applications. They get all of the Touch applications in conjunction with that. They want content management so that they can have a collaborative authoring process. So typically, we go on in and either offer Day content management as well as we're going to be providing a digital asset management solution for the enterprise later this year. And then they can also then provide all of this external to the firewall through the Creative Cloud offering. And so for enterprises, it's typically, again, a per-user basis in terms of the pricing, and that will continue with the Creative Cloud offering as being areas of interest for them. So we don't actually anticipate that it'll be a big issue for enterprises.

Next, we move to Ross MacMillan of Jefferies & Co. Ross MacMillan - Jefferies & Company, Inc., Research Division: When you guys sort of extended the upgrade path for the CS3 and CS4 users, did that change your thoughts around the mix between who might go to an upgrade and who might go to subscription? And the reason I'm asking this is to try to get a sense for whether -- because it doesn't seem like anything changed in your underlying assumptions for the Creative and Digital Media business relative to where you've started last time.

No, Ross, there are no underlying assumption changes. Frankly, most of the customers have been telling us they're excited about CS6, and they said, "Can we have a little bit more time to evaluate all of the offerings?" And so all our modeling shows the more we convert existing customers to the Creative Cloud, the better off we are. Again, I think new users will be the primary usage of subscription. That's what we've seen in all of the pilots that we're running. Piracy will be one of the issues that we hope to address with the cloud offering, better pricing for people to adopt the platform. And I think customers who've been relatively current with our products will probably continue with the perpetual. What I will say also is that we have actually a very healthy road map of features that we're going to be providing on the cloud. So we show that sustained innovation and continue to promote the cloud as a better offering long term. Ross MacMillan - Jefferies & Company, Inc., Research Division: And maybe just to follow up. Can we expect to see other sort of segmented products offered on a cloud basis with the CS6 release? Or will it really just be the full Creative Cloud and segmentation of the offering will come later?

Our current thinking is to offer the individual products that's turned out to be a great on-ramp for people want to use it and then to offer the Creative Cloud, which is the comprehensive offering of all of our tools. That is not to say that some of the services that we offer will not be charged separately. So I think you'll see individual point products offered through subscription, you'll see comprehensive offering and you'll see other services for which we might charge separately.

Next, we'll move to Adam Holt with Morgan Stanley. Adam H. Holt - Morgan Stanley, Research Division: My first question is about the annual guidance. It looks like the delta to the midpoint is sort of towards the upper end for what we thought Efficient Frontier might actually be. Does that mean that you're sort of tweaking out implicitly some of other businesses? And if so, what would that be? Or do you have just better feel for Efficient Frontier?

I mean, I think if you net it out, we just have a better feel for Efficient Frontier. We're very happy with the CS6 release, as we had talked about earlier on the call. We’re very excited about the subscription offering. But basically, we're reiterating the guidance that we had for the rest of the business, and then adding a more comfortable commitment to Efficient Frontier on top of that. Adam H. Holt - Morgan Stanley, Research Division: Perfect. And then if I could just go back to the LiveCycle business? Somebody asked a question on this before, but holding up a lot better than we thought, certainly, going through a transition. Why do you think that is?

Well, Adam, I would say first that there are a significant number of customers who have adopted LiveCycle, and I think they've started to feel more comfortable with at least the support plan that we have for them. So we had certainly modeled what would happen with maintenance, and that has actually turned out to be more positive than we had originally modeled. And in government and financial services, as people continue to have LiveCycle, there may be a little bit of acquiring enough licenses to keep them going. But we've done the right thing by changing the focus, and I think customers are comfortable with the support that we've put in place for existing customers. Adam H. Holt - Morgan Stanley, Research Division: And just a follow-up on that transition. Your headcount growth was pretty modest quarter-on-quarter. So you said earlier you're through all of the headcount changes on the Enterprise side. Is that sort of what the net impact is there? Why is it so little? Or is there something else at play?

Yes, I think what you're -- well, what you are seeing there, Adam, is 2 things. One is the addition of Efficient Frontier, and that's offset by the restructuring that we took last year.

And we'll move next to Peter Goldmacher with Cowen and Company. Peter L. Goldmacher - Cowen and Company, LLC, Research Division: I want to switch gears a little bit to the Digital Marketing business. You talked about refocusing on that business and retraining some of your expenses on that business. Can you give us an update operationally on what you're spending your money on and how you're thinking about investing in that business for the next year?

Sure, Peter, and I'll make another pitch for the Digital Marketing Summit. As I said, we have close to 4,000 attendees, which is double the number of attendees, almost, from last year. So the interest in the Digital Marketing business is actually really high. There are 4 key areas in Digital Marketing. The first is analytics, and we will continue to focus on analytics. Mobile and traffic on mobile is increasing. So we actually continue to see a fair number of transactions. There's a new field that's emerging there called cross-visit analytics. So you'll see us do more with social cross-visit, and the core area of analytics and measurement, I think, will continue to be a healthy area for us. The second is going to be all about personalized engagement. These are people who are rethinking their web presence, moving their business online. Virtually every CMO that I talk to wants a new interactive experience online. So that's an area with their -- Day Software as the core offering that we have in there as Day moves to the cloud. As we offer more functionality for people to be able to deal with social sites, that's another area of focus for us. The third, I would say, is multichannel campaign execution. This is where Efficient Frontier really helps in us being able to predict how you should spend your money online and get a -- get better ROI for everything that you're spending. And the fourth is media monetization, which is everything to do with, if you are a publisher, how do you make sure that all of the assets that you have and you're moving online, you are effectively monetizing it. So whether you're a marketer who wants an online presence, whether you're an advertiser who wishes to optimize your ad spend or whether you're a publisher who wishes to optimize your inventory, I think we now have a really comprehensive offering across each one of them. And again, you'll get a lot more details about that next -- this week.

And then from an -- sorry, from an investment perspective, the big push has been to add sales capacity. We've organized the field now such that they're integrated with the rest of the Adobe sales force. And we continue to add sales capacity in that business to drive revenue. Peter L. Goldmacher - Cowen and Company, LLC, Research Division: And when you're adding sales capacity, is it one person selling everything? Or are there divisions by products? Do you have an orderly [ph] organization? There are specialists? How does that all look?

So Peter, what we did at the beginning of the year is we started to have a single Digital Marketing Suite that integrated all these offerings, the majority of the current sales force that is selling direct into Enterprise will have in their basket all of this combined offering. For some of the newer products, we will always continue to have a specialized sales force to make sure that we get attention on nascent businesses or the ones that are growing really rapidly.

And next, we'll move to Kash Rangan with Merrill Lynch. Kash G. Rangan - BofA Merrill Lynch, Research Division: Sounds like this is the last transition quarter you guys sound -- talking about the CS6 cycle ahead, although you're not willing to quite dial the guidance up all the way. Certainly, it sounds like you guys are excited about it. My question is HTML5, what kind of new opportunities are open to Adobe that you could not pursue with the CS5? And could this lead to a little bit more of a higher sense of urgency in what has been a typical normal upgrade cycle? I'm just wondering if people have to upgrade their product a little bit more rapidly than prior cycles to keep up with the demands being posed by HTML5? And also, secondly, if you can, what gives you the confidence that the offering, the subscription, will not derail the core business model of the company?

So Kash, I thought there were 3 questions in that. First, as it relates to the excitement around the CS6, yes, I outlined a number of the reasons. Imaging continues to be very high among what people are looking for with the next release. But the second one is HTML5. I'll give you a flavor of a couple of things. As I said, PhoneGap's on track. I think we had the most number of unique visitors to PhoneGap. So as people are creating applications across multiple app stores, that's continuing to gain traction. So we now have support for that, both as new services that we'll introduce as well as in Dreamweaver and our other applications. EaselJS, yes, that's some innovative, new functionality that we've also provided. So the millions of Flash developers who are out there, they can now, with a single button with the next version, not only output Flash, but they can also output HTML that will work within browsers. And so it actually enhances their productivity. And so while we continue to see the new version of Angry Birds taking advantage of Flash with Stage 3D, suddenly the same tool opens up new vistas for all of these Flash developers to develop animated or interactive content for HTML5. Edge and Muse, our brand-new applications. So I think we have a fair amount of new innovation to attract developers and designers to upgrade when the next release comes out.

And then in terms of the subscription not derailing the overall offering, from our perspective, by keeping the perpetual product choice for customers, we don't derail the CS6 launch at all. They still have the option to buy the perpetual product. If they really like the subscription and more people flock to the subscription than we anticipate, that would be a great problem to have. But like we said, we think adoption will be at a slower pace on the subscription offering.

And we'll move next to Mark Moerdler with Sanford Bernstein. Mark L. Moerdler - Sanford C. Bernstein & Co., LLC., Research Division: Two questions. The first is you've now brought out a new revolver out there, but you haven't thrown the old one down for the past 8 quarters. Is there some new plans as to what you're expecting to do with the extra revolver? And the second question is going back to Creative Suite 6. Since you announced it earlier and now you've given people some more wiggle room till the end of the calendar year to move from CS3 and CS4 to CS6, isn't it possible that what you're going to do is effectively delay people moving to CS6 into the fourth quarter who might otherwise have moved either to CS5.5 in the third quarter or moved immediately to CS6 in the beginning of the third -- the end of the third quarter?

Thanks, Mark. Well, and so we'll split this up. So on the revolver, yes, we just basically closed out the old revolver and adopted a new one. It just extends basically our ability to have access to $1 billion in credit should we need it. It's really just good financial management from my perspective. The rates are very good. And if you remember, we actually did use it to help do the Omniture transaction a few years ago. So it's just opportunistic to have it in our coffers should we need it.

And on the second one, Mark, we feel confident that everything that we've shown customers, the long lead press, our advanced customers, the excitement and the value associated with CS, the next version, is going to be evident as soon as it ships. So we're confident. As I said again, imaging hasn't been updated for a long time. And the new features are very compelling.

We'll take our next question from Jay Vleeschhouwer with Griffin Securities. Jay Vleeschhouwer - Griffin Securities, Inc., Research Division: Mark, a couple of modeling questions for you first. Several months ago when you first talked about the revenue profile for fiscal '12, in addition to the LiveCycle decline, you suggested that there would be about a $50 million to $100 million revenue delta due to ratability effects as compared with the what model would otherwise have been. Is it absolute the range of revenue delta that you foresee as you transition to the new model? Then a couple of follow-ups.

I don't think it was $100 million, Jay, when we did that. We said $150 million due to LiveCycle and Connect. And the difference between our original 4% to 6% guidance, and something that might have been closer to 8% to 10% without Efficient Frontier, was a combination of the LiveCycle and Connect decline as well as any impact from people moving to subscription. But it wasn't $100 million. We can do that quick math offline if you want. Jay Vleeschhouwer - Griffin Securities, Inc., Research Division: Okay. Second, a quick question for Shantanu. You mentioned a survey or some survey work that you had done a number of times. Considering the revenues per customer that you had talked about at the analyst meeting in terms of what you thought the customer value would be for perpetual license customers per month and subscriber customers per month, is there anything in that survey work that would suggest to you that perhaps there are some opportunities to tweak those numbers as you presented them to us as to the long-term value of those kinds of customers?

Jay, this survey was designed more to really understand interest in CS6 and resonance of the value proposition with customers across designers and developers and how much they knew about the product. So what was surprising was, first, the knowledge of CS6 was higher than what we've seen at similar cycles in the past. And that's clearly as a result of us doing more sneak peeks, which gave us confidence. And the second one was the actual number of people who said that they would upgrade was quite a bit higher than previous. In this particular survey, we didn't survey them for pricing, but we do have comprehensive pricing surveys that happen in Mark's organization. But this was just about interest level, understanding of the message and value proposition. Jay Vleeschhouwer - Griffin Securities, Inc., Research Division: All right. Just 2 last quick ones for Mark. Under the new segments, you've got about a 67% gross margin on Digital Marketing or 70% in the most recent quarters, 67% last year, and 96% for Digital Media. Could you talk about the prospects for improving the gross margin in Digital Market? I assume that the services component of the Omniture business is weighing that down?

Well, there's 2 aspects to the Digital Marketing business that create that different profile from a gross margin perspective. One is the professional services business, although it is very profitable business the way it's run today. And then secondly is the servers around the world and just the hosting costs that you have to run that business. So in both of those, we continue to try to squeeze more gross profit out of those businesses, and I think we do have the opportunity to do that, especially on the server side of the business, as we consolidate colos [ph] around the world and drive virtualization on some of those servers. Jay Vleeschhouwer - Griffin Securities, Inc., Research Division: Okay. And any comments on how Day did in the quarter versus the strength you saw in Q4 or how you're thinking about it for the fiscal year?

I -- the core Web Experience Management continues to be very healthy, Jay. It continues to, relative to our expectations, do better, and I think that's just as a result of people rethinking their entire content and delivery infrastructure. So the integration between that offering and analytics has also happened. We certainly expect to integrate that with everything we're doing on the social side, which is a big ask right now of CMOs. So continues to be sticky and a core part of the value proposition.

And we'll take our next question from Phil Winslow with Crédit Suisse. Philip Winslow - Crédit Suisse AG, Research Division: Just one quick housekeeping item. I'm just wondering what you expect in terms of the backlog this quarter. And then also just on to the Digital Marketing Suite, I mean, obviously, this is a sort of evolving space with multiple acquisitions by some of your competitors going on. But when you kind of put sort of your product set, some organic, some acquisition versus, let's say, what IBM is doing or salesforce or Oracle, what are the key differentiators in your mind especially as you kind of build this out going forward?

Hey, Phil, it's Mark. On the backlog question, we did not have any backlog coming in. We didn't have any backlog leaving. And we've talked about this during prior calls. We won't have backlog going forward anymore. We're managing the channel much more tightly, and it's just not going to be a material number going forward.

On your other question, Phil, as it relates to the differentiation in the Digital Marketing Suite, I think when you think about the entire content life cycle, nobody has as comprehensive an offering as Adobe. So much like we did on the Creative Suite, we have to have best-of-breed in each of the 4 segment areas that we talk about. In analytics, we're a market leader. In Web Experience Management, in media monetization as well as multichannel campaign. And so each of our offerings, I think, are best-in-class, and the integration of those is fairly unique in the industry. In addition, I think you'll see us announce some innovative, new things at Summit. And so it's clearly we're pushing the envelope on how people are thinking about marketing, which is, in addition to automation, how do you make sure it's more predictive. So really exciting things coming up ahead.

We'll move and take our final question from Chad Bartley with Pacific Crest. Chad Bartley - Pacific Crest Securities, Inc., Research Division: I wanted to ask something that I think you guided to at the Analyst Day as it relates to the Digital Media segment. I think you talked about 5% to 7% growth in 2012. Is that still realistic as we think about our model and kind of the sequential ramp that you talked about in Q3, Q4?

Yes. I mean, like I said earlier, Chad, we have not changed our guidance of the core business with this 8% to 10%. We basically are reiterating that guidance and just adding Efficient Frontier to it. So we're still comfortable with that. Chad Bartley - Pacific Crest Securities, Inc., Research Division: Okay, yes, I just want to make sure that, that applied to the Creative and the Knowledge Worker and the Acrobat business?

Yes, it does.

So I'd just like to again thank everybody for joining us today. I think in Digital Media, it really is all about the excitement around the innovation that we're going to be delivering later this quarter, both on the desktop side as well as our Touch applications and connected services. And we continue to be really excited about how we are transforming the creative process. And in Digital Marketing, we hope you can join us at the Digital Marketing Summit, where you'll continue to see how we're leading this really rapidly growing emerging category of businesses online. Thank you for joining us.

And this concludes our call. Thanks for joining us today.

And everyone, that does conclude our conference call for today. Thank you all for your participation.