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

Walter H. Pritchard - Citigroup Inc, Research Division Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division Brent Thill - UBS Investment Bank, Research Division Kash G. Rangan - BofA Merrill Lynch, Research Division Peter L. Goldmacher - Cowen and Company, LLC, Research Division Adam H. Holt - Morgan Stanley, Research Division Brad A. Zelnick - Macquarie Research Thomas Ernst - Deutsche Bank AG, Research Division Mark L. Moerdler - Sanford C. Bernstein & Co., LLC., Research Division Jay Vleeschhouwer - Griffin Securities, Inc., Research Division Michael J. Olson - Piper Jaffray Companies, Research Division Michael E. Hoffman - Wunderlich Securities Inc., Research Division Ross MacMillan - Jefferies & Company, Inc., Research Division Heather Bellini - Goldman Sachs Group Inc., Research Division Robert P. Breza - RBC Capital Markets, LLC, Research Division

Good day, everyone. Welcome to the Adobe Systems Q2 FY 2012 Earnings Conference Call. As a reminder, today's call is being recorded. At this time, I'd like 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 will discuss Adobe's second quarter fiscal year 2012 financial results. By now you should have a copy of our earnings press release, which crossed the wire approximately one 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 on this call, particularly our revenue and operating model targets and our forward-looking product plans, is based on information as of today, June 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'll 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. We had a strong Q2 with $1,124,000,000 in revenue, representing 10% year-over-year revenue growth. Our non-GAAP earnings per share was $0.60. Both results were towards the upper end of our targeted ranges for the quarter. In our Digital Media business, our strategy is to help customers create, publish, measure and monetize their content on any device. We launched Creative Cloud in May, a subscription-based offering that is a hub for creating and publishing content and applications. Creative Cloud includes our new Creative Suite 6 desktop software, tablet applications and integrated publishing services. Creative Cloud will enable us to rapidly deliver new technology to our customers, attract new users through its lower cost of entry, help us build more direct relationships with our customers and address piracy. At the heart of Creative Cloud is Creative Suite 6. CS6 includes major updates to all of the core CS products, including Photoshop, Premiere Pro, After Effects, InDesign, Illustrator and Dreamweaver. It advances our HTML5 and mobile content creation and app development offerings. Response to the product innovations in CS6 has been strong. Photoshop CS6 won the PC Mag Editors' Choice Award. We also received positive reviews from Macworld, CNET and Gizmodo. The value of CS6 is enhanced through innovative touch applications on both iOS and Android devices. We've already released apps such as Photoshop Touch, Debut, Ideas, Proto and Kuler. Creative Cloud services include file storage, on services from Typekit, web publishing using Business Catalyst and will be enhanced through cloud-based sync capabilities. A key part of the Creative Cloud value proposition will be the ongoing rapid delivery of innovative products, new features and services. Creative Cloud members will receive new offerings such as Lightroom 4, PhoneGap Build, Edge, a version of Photoshop that supports the Retina display in Apple's new MacBook Pro, and Digital Publishing Suite Single Edition as soon as they're available. While early, feedback from the creative community has been outstanding, and Creative Cloud subscriptions are ahead of our targets. In Digital Publishing, our strong momentum continued during Q2. At our recent Digital Publishing Summit in New York, we announced an array of new features that enhance its display and social capabilities. Digital Publishing Suite now has 850 customers worldwide, up from 600 last quarter. These customers have already published more than 1,700 applications, and we're currently distributing 120,000 publications on average every day to tablet readers with our solution. New customers include Meredith Corporation, which has chosen Digital Publishing Suite to produce and distribute its leading magazine titles, and companies such as Benjamin Moore, Sotheby's and Red Bull, which are using it to deliver apps, which increase customer engagement and sales. In our video business, we announced advancements to Project Primetime, the industry's first fully integrated video technology platform to deliver seamless viewing of ad-supported TV content across TV, PC and iOS and Android devices. Our new Primetime simulcast enables media companies to simultaneously broadcast their channels online and seamlessly replace ads stitched into the broadcast stream with dynamically inserted ads. We believe the upcoming Olympic Games will be the largest video-streamed event ever. Adobe technologies, including Adobe and Media Server, Pass [ph], Access, Flash, AIR and Auditude, will help power the first truly digital and mobile Olympic Games to a global audience. Our Document Services business had a record quarter, driven by a strong Acrobat revenue. These were driven by large enterprise adoption, including landing a $10 million contract with the U.S. Air Force. The record quarter also included momentum in our document exchange services, including EchoSign. In our Digital Marketing business, our strategy is to help marketers measure, manage and optimize their marketing investments. As every business moves online and increases their digital spend, we will deliver an integrated marketing suite that enables our customers to create personalized web experiences, optimize their multichannel campaigns and manage and measure social engagement. Our Digital Marketing Suite, which is the combination of Omniture, Day, Demdex and Efficient Frontier and our recently introduced Adobe Social, is the most comprehensive solution in the market. Our leadership positions in content creation and web analytics and our long-term relationships and brand presence with marketers gives us a unique advantage. No other company in the industry offers the end-to-end capabilities that Adobe provides today. This market is clearly heating up given the recent acquisitions by many enterprise software companies as well as the rising interest in big data. Our Q2 results in Digital Marketing demonstrate the momentum we have. We achieved 35% year-over-year growth with our Digital Marketing Suite. During the quarter, we also hosted successful digital marketing summits in the U.S. and Europe. Overall attendance doubled, demonstrating strong customer interest in our solutions. We repeated this success in Japan earlier this month where we held an innovation Summit that was attended by over 700 digital marketing customers. In key focus areas, such as Web Experience Management, social media management and multichannel campaign management, we announced significant new developments at these summits. We introduced a new cloud-based version of Day content management and extended the current offering with new eCommerce and social capabilities. We announced Adobe Social to give marketers the ability to attribute social activity to business results. In fact, we now manage hundreds of millions of fan engagements and interactions on Facebook through the acquisition of Context Optional via Efficient Frontier. We established leadership in companies providing technology to manage online spend through the integration of Efficient Frontier and SearchCenter in our Digital Marketing Suite. There was significant customer interest in our Digital Marketing Suite's predictive marketing capabilities to reduce the complexity of uncovering hidden behavioral patterns in big data. Predictive marketing is the next frontier in this space, and we're collaborating with our customers to push the envelope in this area. In Q2, we continue to build momentum with our Digital Marketing Suite as we closed business with customers such as Barclays, Electronic Arts, Lenovo, MLB.com and Time Warner Cable. Later, I will have some closing comments. Now I'll turn it over to Mark for a more detailed discussion on Q2 results. Mark?

Thanks, Shantanu. In the second quarter of fiscal 2012, Adobe achieved revenue of $1,124,000,000. This compares to $1,023,000,000 reported in Q2 fiscal 2011 and $1,045,000,000 reported last quarter. Q2 GAAP operating expenses were $688.4 million compared to $637.3 million reported in Q2 fiscal 2011 and $648 million last quarter. Non-GAAP operating expenses in Q2 were $611.7 million compared to $556.7 million reported for Q2 fiscal 2011 and $571.3 million last quarter. In Q2, Adobe's effective tax rate was 24% on a GAAP basis and 22.5% on a non-GAAP basis. The GAAP rate was slightly higher than planned due to lower-than-targeted international profits. GAAP diluted earnings per share for Q2 fiscal 2012 were $0.45. This compares with GAAP diluted earnings per share of $0.45 reported in Q2 fiscal 2011 and GAAP diluted earnings per share of $0.37 reported last quarter. Non-GAAP diluted earnings per share for Q2 fiscal 2012 were $0.60. This compares with non-GAAP diluted earnings per share of $0.55 in Q2 fiscal 2011 and $0.57 reported last quarter. I will now discuss Adobe's results in Q2 by business segment. Digital Media segment revenue in Q2 was $818.4 million compared to $754.1 million in Q2 fiscal 2011 and $730.3 million last quarter. Year-over-year, this represents 9% Digital Media segment revenue growth. Before I comment on Q2 Creative results, I'll review our current offerings. Perpetual CS6 products are now available in most geographies to individuals, small and medium-sized businesses and enterprises through our traditional routes to market. Creative Cloud subscriptions targeted initially at individuals include both the entire Creative Cloud membership offering as well as individual point product subscriptions and are primarily available through adobe.com. Subscribers can commit to either offering on a monthly or annual basis. While it's only been a few weeks since the launch of the CS6 and Creative Cloud, we can make some initial comments regarding adoption during Q2. Overall Creative performance was in line with our expectations despite some softness in Europe. We now define performance as a combination of perpetual revenue recognized upfront and our Creative Cloud subscription revenue recognized ratably. The total Creative units, including perpetual and subscription, were slightly up from the CS5 launch. We exited Q2 with more than 90,000 paid subscriptions, exceeding our goal. This total includes CS5.5 subscribers who were transitioned to the new subscription offerings. Approximately 75% of all paid subscribers are choosing the annual commitment as opposed to month-to-month. While early, approximately 65% of total paid subscribers have chosen the entire Creative Cloud membership offering as opposed to point product subscriptions. And of those subscribing to the entire Creative Cloud membership offering, approximately 70% of them are taking advantage of the introductory promotional price of $30 per month for existing customers. We are building a healthy pipeline for potential Creative Cloud paid subscribers through marketing programs, trial downloads and free memberships. Currently, we are adding more than 5,000 total net paid subscriptions per week. Within the Digital Media segment, Document Services revenue was $206.7 million compared to $184.3 million in Q2 fiscal 2011 and $183.3 million last quarter. This was a record quarter for our Document Services products, driven by strong volume licensing of Acrobat as well as continued momentum with EchoSign and our other document exchange services. Digital Marketing segment revenue in Q2 was $250.9 million compared to $215.1 million in Q2 fiscal 2011 and $259.9 million last quarter. Within the Digital Marketing segment, Digital Marketing Suite revenue was $189.9 million compared to $140.7 million in Q2 fiscal 2011 and $174.3 million last quarter. Year-over-year, Digital Marketing Suite revenue grew 35%. Excluding revenue from Efficient Frontier, Digital Marketing Suite revenue grew by more than 20% year-over-year. Mobile transactions increased to 17% of total site catalyst transactions in the quarter, up from 14% last quarter. Print and Publishing segment revenue was $55.1 million compared to $54 million in Q2 fiscal 2011 and $55 million last quarter. Turning to our geographic segments in Q2. Results per percent of revenue basis were as follows: The Americas, 49%; Europe, 29%; Asia, 22%. We experienced stable demand in the U.S. and Asia, which was partially offset by some softness in Europe during Q2. From a year-over-year currency perspective, FX decreased revenue by $14.5 million. We had a $10.7 million hedge gain in Q2 fiscal 2012 versus $0.2 million hedge gain in Q2 fiscal 2011. Thus, the net year-over-year currency decrease to revenue considering hedging gains was $4 million. From a quarter-over-quarter perspective, FX decreased revenue by $8.3 million. We had a $10.7 million hedge gain in Q2 fiscal 2012 versus a $10.3 million hedge gain in Q1 fiscal 2012. That's the net sequential currency decrease to revenue considering hedging gains of $7.9 million. Employees at the end of Q2 totaled 10,474 versus 9,963 at the end of last quarter. The sequential increase was driven by hiring in our field organization as well as the addition of summer interns. Our trade DSO was 43 days, which compares to 51 days in the year ago quarter and 45 days last quarter. During the quarter, cash flow from operations was $448.2 million. Our ending cash and short-term investment position was $3 billion compared to $2.8 billion at the end of Q1. Our ending deferred revenue balance increased by $43.9 million to $592.8 million. In Q2, we repurchased approximately 5.3 million shares at a total cost of $175.7 million. This concludes my discussion of our results. I would now like to discuss our financial targets. In Q3, we are targeting a revenue range between $1,075,000,000 and $1,125,000,000. At the midpoint of the Q3 targeted range, we are factoring continued softness in Europe and expect our Digital Media segment to be down sequentially. In our Digital Marketing segment, we expect Digital Marketing Suite revenue to grow sequentially in Q3, offset by a slight sequential decline in our legacy Enterprise products. We expect Print and Publishing to be relatively flat. We are targeting a Q3 GAAP earnings per share range of $0.38 to $0.43 per share and a Q3 non-GAAP earnings per share range of $0.56 to $0.61. In addition, we are targeting our Q3 share count to be 501 million to 502 million shares. We are targeting nonoperating expense to be between $18 million and $20 million on both a GAAP and non-GAAP basis. We are targeting a Q3 GAAP tax rate of 23.5% and a non-GAAP tax rate of 22.5%. For the full year, we are narrowing our annual revenue growth target to a range of 6% to 7% to reflect the current European economic conditions. Our updated full year GAAP diluted earnings per share targeted range is now $1.69 to $1.76, and non-GAAP EPS diluted earnings per share targeted range is now $2.40 to $2.46. 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. Over the last few years, we've laid the groundwork for the future of the company through product innovation, acquisitions and business model changes. We talked earlier this year about focusing our efforts on 2 large market opportunities: Digital Media and Digital Marketing. The goal of our Digital Media business is to revolutionize the creative process. In Q2, we delivered CS6 and Creative Cloud, an offering that provides a comprehensive set of creative tools, applications and services that will take content creation to the next level. Customer and industry response has been outstanding with subscription adoption ahead of our internal projections. We will build on this early success by providing more rapid innovation and believe this will lead to increased loyalty among our existing customers while attracting the next generation of creative users. In Digital Marketing, our goal is to be mission critical to digital marketers by transforming how they manage, measure and optimize their marketing campaigns. We are uniquely positioned to win in this rapidly growing category given our leadership addition, the breadth of our offering and the strong relationship we have with the creative community. We intend to expand our offerings and integration across our product lines to ensure we stay ahead of the market and our customers' evolving needs. Thank you for joining us today. Now I'll turn the call back over to Mike.

Thanks, Shantanu. In regards 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 4622651. International callers should dial (719) 457-0820. The phone playback service will be available beginning at 4 p.m. Pacific Time today and ending at 4 p.m. Pacific Time on Friday, June 22, 2012. We will now be happy to take your questions. Operator?

[Operator Instructions] And our first question will come from Walter Pritchard with Citi. Walter H. Pritchard - Citigroup Inc, Research Division: Mark, I'm wondering if you could just walk us through the math a little bit on the 90,000 subscribers. First of all, I'm not sure if that was in the quarter. I'm just trying to get a sense of -- you talked about a little bit more of an adoption of Creative Cloud than you're expecting. I'm wondering sort of any quantification you can provide and how much revenue that caused? I mean, if I do 90,000 subs x $300 or $400 equivalent product, that's $30 million or so. Just wanted to make sure I understood kind of what was going on there. That 90,000, if that was all new subs in the quarter. It sounds like somewhat converted.

Sure, Walter. It's Mark. So you're right. We did have some people that converted over from the 5.5 memberships. As we mentioned on the call, we are now running at about 5,000 net new subscribers per week. And if you look at the quarter, to answer your question on the revenue impact, we overachieved our projection, and that had an approximately $10 million impact to Q2. But again, this is the impact of the overachievement of subscribers relative to our expectations. It's clearly not the impact of all subscribers. So net answer -- the net answer is about $10 million in the quarter can be attributed to our overachievement on subscribers. Walter H. Pritchard - Citigroup Inc, Research Division: And then if you say about your guidance, in order to bring it a bit towards the low end, it sounds like Europe is obviously a piece of that. Is a piece of that also you guys are projecting that, that continue going forward and that it's more of a headwind for the year than you might have anticipated back in November when you started talking about that?

Yes. So when we originally guided 6% to 8%, a few things were different. And we've tightened that to 6% to 7%. On the year, our business looks really healthy, and we're happy with how the business is progressing. But we are trying to be prudent about European demand and the currency impacts of what's going on in Europe. And then the third piece is we are more optimistic about the move to subscriptions and to the Creative Cloud, and that will have some impact on the revenue for the year as well.

And our next question comes from Steve Ashley with Robert W. Baird. Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division: I'd just like to follow-up on Walter's question. Just specifically, of the 90,000 paid subscribers, how many of those were new to the franchise?

So Steve, let me take that question. I mean, first, in terms of the subscribers that we had coming into the quarter, there were approximately 30,000 coming into the quarter in terms of subscribers from the CS5.5 and earlier. And so we did see a good adoption. The other thing, I think, to remember that we're really very pleased about is when you look at the pipeline that we have for new subscribers, and these are both the people who have awareness as a result of the trials and the free downloads, that's a significant portion. And so as Mark, I think, also said in his prepared remarks, given the proportion that we're running, a number of the customers are adopting -- about 70% of them are adopting the lower promotional pricing. And of the rest, a significant portion are new to the franchise. Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division: And could I just ask, if we were to look at the business by addition, if we were to look at the older CS4, CS3, when we see those people come forward and move to CS6, I think the expectation that we had, maybe you had, was that a large percentage who choose subscription are older customers. Is that indeed happening?

Well, the perpetual business is also very healthy. And again, I think it's important to remember that at this time, the only thing we're offering, Steve, is subscriptions to individual users. So I think it's important to remember as we actually think about subscriptions, that as we introduce the team offering and the Enterprise offering, we would expect to see more subscription adoption. And so at this point, the subscribers are primarily individual users, either former users or new people to the platform. Over time, certainly, we believe that it's in our best interest to move more and more people to the subscription because that makes it more loyal to Adobe.

And our next question comes from Brent Thill with UBS. Brent Thill - UBS Investment Bank, Research Division: Shantanu, I was wondering if you could talk about the higher education business. Correct me if I'm wrong, but this is still, I think, one of your -- your #1 vertical and perhaps one of your largest revenue verticals. What you're planning for in the third quarter? And if you could just kind of walk you through what you expect on the perpetual versus subscription in that particular segment of the business?

Sure. So Brent, I mean, we would expect in Q3 to have a seasonal uptick relative to Q2 in the educational business. It certainly is the back-to-school part of the education business, which, as you correctly point out, is one of our largest verticals. And I think in terms of the mix, again, we would expect that individual students could start to adopt the subscription mix. We think it'll be on the same order as individual outside and the broader commercial space. But we would imagine that the Enterprise or, in this case, the education licensing business and the site license will continue to be the majority of the revenue in the quarter. Brent Thill - UBS Investment Bank, Research Division: And Mark, I don't know if you can follow up just in terms of what is the percent of revenue that higher education represents? And I -- just one quick follow-up on the European demand. I would assume that this is just customers holding off rather than talking through [ph] a competitive solution. I guess, from your perspective, you're not seeing this spill into other territories, correct?

Correct. We haven't seen it spill into other territories. On the education side, Brent, we haven't really disclosed a number every quarter, but it's north of 10% as a vertical.

And our next question comes from Kash Rangan with Merrill Lynch. Kash G. Rangan - BofA Merrill Lynch, Research Division: I was wondering if you could give us some color...

Kash, we lost you.

We'll go to Peter Goldmacher with Cowen and Company. Peter L. Goldmacher - Cowen and Company, LLC, Research Division: In the Digital Marketing category, you have Digital Marketing -- you have the Digital Marketing Suite and then you have LiveCycle and Web conferencing. Digital Marketing Suite did well, and you've talked about stopping investing in LiveCycle and Web conferencing. But the sequential decline was pretty dramatic. Can you give us a little color on that, please?

Sure. So Peter, at the beginning of the year and at the Financial Analyst Meeting, we had talked about in both the LiveCycle and the Connect business to actually focus just on government and financial services. And for the year, we had mentioned that we would expect to see something like $150 million decline. It's actually probably a little bit even less than that. And so it's very much in line with the strategy to drive focus on Digital Marketing. And so we would continue to expect to see declines in the LiveCycle and Connect business moving forward as well.

And our next question is from Kash Rangan with Merrill Lynch. Kash G. Rangan - BofA Merrill Lynch, Research Division: On the Digital Media guidance for down sequential, I was wondering if that's driven by Document Services or is it more of a Europe commentary or really driven by the subscription revenue, which clearly you would recognize less of upfront. I'm curious to get your take on the mix behind the guide down because if I recollect right, in the prior cycle at CS5, your August quarter was actually sequentially up for Digital Media. I know that there's been a reclass, but it was up rather meaningfully sequentially. I'm just trying to get at what's different about this cycle versus the previous one.

Kash, it's Mark. Yes, you touched on both of the reasons. It is different this cycle. Like I said, we're optimistic about the move to subscriptions, and that might have some impact in the third quarter, as well as the fact that we're trying to be prudent about Europe, both from a demand perspective and from a currency perspective. Kash G. Rangan - BofA Merrill Lynch, Research Division: Got it. Mark, at this point, the -- the mode of subscription, do you feel like your revenue guidance for the year fully contains the transition to the subscription model? Or do you think that we need to see one more quarter before we can size up the subscription impact on your revenue growth rate this year?

We feel pretty good that we've now captured the impact to 2012 as people move to subscriptions based on the run rate that we had seen so far.

And maybe 2 other things to just add to that, Kash. Clearly, relative to what we had outlined at the Analyst Meeting in terms of the impact that we thought we would see in this year as we move to the subscription, we think subscription adoption is better than expected and what we had said at the Analyst Meeting. And therefore, the impact to revenue is higher. The other thing I'd just like to point out is that during the quarter, we launched both the perpetual as well as the subscription offerings. And it's gone extremely well from our point of view because we had to deliver all of the perpetual product. We've delivered individual subscriptions in over 30 countries via adobe.com and through some other partners. And the response actually of people who got subscriptions, their success rates are actually higher than all other traditional means. And so that really bodes well for customer sat [ph] and loyalty moving forward. And so I just wanted to point out that the execution on the move towards the Creative Cloud globally has actually gone really well.

And our next question comes from Adam Holt with Morgan Stanley. Adam H. Holt - Morgan Stanley, Research Division: I wanted to go back to the subs question -- and apologize, I'm having a little bit of trouble hearing some of the answers. So if you said this, I apologize. But it sounds like you said 30,000 of the subs came from 5, which implies maybe 60,000 were net new. And, a, is that right? And if that's the case, can you update us on your thoughts for what you would expect to see seed growth be this fiscal year?

Yes. So Adam, I think there are 2 questions in that. We had said that subscriptions moving forward, we are sort of modeling it for the time being given it's only the individual subscribers at about 5,000 a week moving forward. You did catch it right, we said we had about 30,000 coming into the quarter of CS5 and before subscribers. And your third question was? Adam H. Holt - Morgan Stanley, Research Division: Oh, just update us on what you expect. You’d given some parameters for what you expected seeds to do this year at the Analyst Day. How are you -- so what's the updated target for seed growth?

And we're tracking to that. I think at the Analyst Day, we had said that we expect to see something like a 10% seed growth, and we think we're on track to accomplish that.

And we have a question from Brad Zelnick with Macquarie. Brad A. Zelnick - Macquarie Research: Just to follow up on Adam's question. And not to belabor this, but specifically, I think you had said that -- and I know it's only 25 days shipping the product in the quarter, but the total seeds or total units were up just slightly from the CS5 launch. So we're trying to resolve that against what else was said and tracking to that 10% target, Shantanu, which you say is still on track. Is that -- should we then -- and for that -- the perpetual sales perhaps were less than you had expected in the quarter? Or is that not a fair conclusion?

I think, Brad, continuously comparing sort of units with the old models given some of the new offerings we have in subscriptions is actually going to be harder. What we were really trying to give you is a health of the business, which we feel the health is really strong in the business. Perpetual continues to do well as it relates to small and medium business and Enterprise. And individuals, the subscription offering is seeing an uptick that is higher than our projections. So what we were trying to do was give you a flavor, not just of units and subscriptions for individuals, but the overall business. And so we continue to be optimistic about this move towards the cloud as being the right strategic move for the company. In terms of total units, we had talked about how the cloud enables us to attract new customers and to drive seed growth. And again, in response to Adam's question, we think we're on track to accomplish that. That certainly includes units not just as part of subscriptions but also everything that we're doing with respect to Enterprise seed licenses. Brad A. Zelnick - Macquarie Research: And just a separate topic I want to ask: how the acquisitions of Vitrue and Buddy Media changed the competitive dynamic around social marketing? I think Oracle and salesforce.com would argue that this capability is an extension of CRM. Is it an advantage or disadvantage to be selling this type of solution separate from a CRM Platform?

Well, a couple of responses to that. The first is it's clear that Digital Marketing as a category is absolutely heating up. And we continue to think that we're very, very well positioned in that entire space with respect to everything we offer. The content management business continues to do really well. Efficient Frontier, we had the best quarter in bookings in terms of Efficient Frontier. The integration between analytics and content management and the integration between analytics and multi-campaign -- multichannel campaign is going really well. So specifically as it relates to social, we introduced Adobe Social. And we think that since Adobe SiteCatalyst is widely deployed on all of these thousands of brand sites because we collect 1.6 trillion transactions, we're uniquely positioned, frankly, to correlate those social media mentions with the business metrics on the site. And that continues to be, from our point of view, a key thing from customers. The other thing we can actually do is demonstrate the impact on business results. We also now enable them to actually do the content creation through Context Optional. And we're the first and actually, I think, the only Facebook preferred marketing developer who supports all of Facebook's marketing APIs. So clearly, the space is heating up. I think different companies are going to come at it from the CRM point of view, the IP point of view and the marketer. We think we're uniquely positioned on the marketer and the content. And this is such an explosive space. I think all companies will continue to do well right now.

And our next question comes from Thomas Ernst with Deutsche Bank. Thomas Ernst - Deutsche Bank AG, Research Division: I'm curious what feedback you're getting from your Enterprise customers or your nonindividual customers regarding the Creative Cloud. What's your sense for the demand? Are they asking for the availability of cloud?

So Tom, what we're hearing from the Enterprise customers is the rapid innovation that we're going to be delivering as part of the Creative Cloud, they certainly want access to that. I would say the file storage capabilities, they not only want it with -- across the enterprise through Creative Cloud, they really want digital asset management through the Day solution. And so we've provided that. And so their content requirements and their app requirements, we're hearing more demand not just for the content creation tools but, frankly, for content management through Day as well as the Digital Publishing Suite set of solutions. So that's really what we continue to hear from the enterprise. And selling the entire solution, I think, is really resonating with them. Thomas Ernst - Deutsche Bank AG, Research Division: Do you -- as a follow-up to that, do you think that this might be something you pursue and open up ahead of the next major cycle?

Yes, we'd intend to do that before the next major cycle, Tom. And for those of the customers who are on enterprise site license agreements, since they are on a per-seed basis, there really is no risk associated with them, whether they get the perpetual or the subscription, to get access to all of this technology.

And our next question comes from Mark Moerdler with Sanford Bernstein. Mark L. Moerdler - Sanford C. Bernstein & Co., LLC., Research Division: Two quick questions on it. The first is what drove the -- what looks like an increase in the cost of goods in the Digital Marketing? Is this one-time? Or should we see this as part of a bigger -- of a change in trend that we're going to need to model to a bigger cost?

This is Mark. On the Digital Marketing side, the cost is mainly around hosting. On the Digital Media side, COGS were up this quarter primarily due to the shipment of the CS6 product, things like localization, increased Shrink Wrap product that went out into the channel, things like that. Both of those are somewhat unique to this quarter. Mark L. Moerdler - Sanford C. Bernstein & Co., LLC., Research Division: And the second one is Mark, what data would you be able to supply us Q-over-Q the next couple of quarters to be able to model the growth in the subscription?

Well, we gave you quite a few numbers given the fact that the product has only been out for 4 or 5 weeks. As we move forward, we'll certainly continue to give you the numbers that we did this quarter, and we'll look to expand that as it starts to settle into a range that's a little more predictable. So you can look forward to us providing more information as we move forward.

And our next question comes from Jay Vleeschhouwer with Griffin securities. Jay Vleeschhouwer - Griffin Securities, Inc., Research Division: A couple of questions around 2 subjects that came up at the Digital Marketing Summit in Salt Lake a couple of months ago. First, Adobe mentioned in one of the presentations that adobe.com does over $0.5 billion in revenue. And the question first, Mark, is how are you thinking about the progression of adobe.com revenues this year and beyond when you take into account all the mix of upgrades plus subscription, plus perpetual? So can you talk about that outlook? And then secondly, for Shantanu, also at Salt Lake, there was a good amount of discussion about the integration plans you have between Creative Cloud and the Digital Marketing Suite. The question there is: Could you talk about some of the critical next steps along that integration path that you have for those 2 sides of the business?

Sure, Jay. It's Mark. So for adobe.com, directionally, we fully expect adobe.com to be a larger and larger percentage of our business, especially as we move more and more subscription people over onto adobe.com. It gives us a one-to-one relationship with our customers that we don't always get when product is sold elsewhere. And frankly, it's better margin as well. So we would expect that business to grow going forward without a doubt.

And Jay, on the second question as it relates to the integration plans, I mean, there are probably 3 key areas that we focus on right now both between the Digital Marketing Suite and across them, which is content management and analytics. That's been a huge customer request, which is if they are implementing the content management system to make sure there's analytics associated with it. I would say the second one has been with content creation tools, the CS tools, and digital asset management so that all of the content that we are creating is automatically stored in these digital asset management areas. And so you can consider that an integration between CS as well as the Day content management repository. And the third, I would say, and it’s related to the question that was asked earlier, is everything to do with analytics and measuring whether it's marketing spend or conversion. So I would say the integration's going really quite well. We will continue to push on it. And we just -- there's so many ideas on the table. I'll put one more out there. Virtually every customer is interested in also exploring Digital Publishing Suite because they all recognize that they have to publish things not just on their website through Day or on social sites through Context Optional but also increasingly through app stores using the Digital Publishing Suite. And so that's clearly another area of integration between the content creation tools and our services. Jay Vleeschhouwer - Griffin Securities, Inc., Research Division: Okay, just one follow-up on the subscriber numbers that you talked about earlier. At the Analyst Meeting, you mentioned that you had a new subscriber goal of 800,000 by 2015. If all we do is just extrapolate the 5,000 a week that you've been seeing, then you get there by early 2015 assuming no change in the 5,000 a week. Is there any reason to believe from the pipeline comments you made that you should, in fact, see some step-up in the net adds of subscribers and perhaps you hit that 800,000 goal sooner than 2015?

So Jay, firstly, as Mark said, I think it's really early. We've only introduced the individual offering. We haven't yet introduced the team. We haven't yet introduced the enterprise. As we committed to at the Analyst Meeting, we wanted to give you some color, but we will have to wait and see a couple of quarters to see the mix, how this all plays out. What we clearly wanted to share, what -- overall feedback has been really positive. And the fact is that people are looking at this as a natural way. We've talked about piracy. We're definitely hearing anecdotal evidence that people who pirated copies in the past are now wanting to become legitimate by paying the monthly fee. And so it's all off to a good start, but I think it's too early to project 2015 right now.

And we'll take our next question from Mike Olson with Piper Jaffray. Michael J. Olson - Piper Jaffray Companies, Research Division: On the Creative Cloud in talking with volume resellers, I think there is a lot of Enterprise interested in that. So when that does become available for volume license distribution, as you indicated would happen maybe sometime before the next version launch, would you anticipate a material acceleration in Creative Cloud uptake rate, potentially accelerating later in the year, whenever it is launched, above the 5,000 new subscriptions per week that you're seeing at the end of the May quarter?

Yes. So Mike, the 5,000 is only as it relates to individual subscribers. And yes, we would expect acceleration when the other offerings come to market because the numbers there are -- for individual customer do tend to be large. Michael E. Hoffman - Wunderlich Securities Inc., Research Division: Okay. And then just quickly, what was the -- if you could share, what was the recurring revenue as a percent of overall in the May quarter? I think it was 23% last quarter. I'm just wondering if you can just give an equivalent metric for Q2.

Yes, this is Mark. It was 23% last quarter. It's about 23% again this quarter. Keep in mind that the subscription revenue from the cloud really doesn't impact our financials this quarter at all because obviously, the offering was late in the quarter and it takes a while to ramp up from a revenue perspective. One other thing while I'm on this that I should mention is if you look at deferred revenue, we had a nice, healthy deferred revenue increase, which is great. Deferred revenue does not, and will not, include cloud revenue because we bill on a monthly basis. We don't bill in advance even for the annual subscriptions. So I just want to make sure you understand not to look at deferred revenue as some metric to figure out future cloud revenue.

And our next question comes from Ross MacMillan with Jefferies & Co. Ross MacMillan - Jefferies & Company, Inc., Research Division: I just had one follow-up from the Digital Media business. I think you said 90,000 subscribers and 30,000 coming from the CS5.5 or earlier, which implies 60,000 from CS6. But if the run rate is about 5,000 a week, I'm just curious as to whether that math is right. And was there a bulge at the front? Or is there some other reason why that 60,000 number has happened over a 4- or 5-week period?

Ross, it's Mark. Those numbers are correct. And yes, we did have an initial spike when we first launched the product, and then we've settled into the 5,000. Ross MacMillan - Jefferies & Company, Inc., Research Division: Great. And then just one follow-up. As you thought about making some slight adjustments for the full year, you talked about Europe demand, FX and then better adoption of the Creative Cloud. And I think from our own work, and I think you said 70% of existing customers seem to be driven by the promotional pricing, could you help us understand the weight of those 2 items, Europe plus FX, as one versus the higher proportion moving to subscription? Any sort of sense of that sort of mix, if you will?

Well, if you look at the fact that we had a $10 million impact in terms of overachievement in the second quarter, you can use that as a surrogate for what that might mean going forward. We took 1 point, if you will, off the top end of the range. We didn't lower the range. We just took 1 point off the top of it. And you can look at $10 million impact in the second quarter as a surrogate to come up with what the subscription impact might be as you go forward. And then the rest is Europe and FX.

Our next question comes from Heather Bellini with Goldman Sachs. Heather Bellini - Goldman Sachs Group Inc., Research Division: I had 2 do in particular, just to follow up to some of the ones people were asking. Where in particular are you seeing demand for Creative Cloud? I was just wondering if you could characterize the customers for us that are coming into that fold? And then also, Shantanu, you said comparing units to the old model is going to be hard. What, in your opinion, should we be using to judge the performance of CS6 collectively then?

So Heather, first, with respect to the interest and demand that we're getting for our Creative Cloud, it's actually very broad based. The number of customers who've signed on for the free membership, the trial downloads, the volumes associated with that has been broad. It's across multiple countries in which we are offering it; and it's across multiple customer segments, so whether you consider them imaging or video or folks who are creating web applications; and it's across all of the individual point products as well, which suggest that it's a broad-based demand right now for the Creative Cloud. The thing I will remind everybody who's listening is that it is so early, and none of them have actually seen the amount of innovation that we can add on a monthly and a quarterly basis. And so I think the beauty of the Creative Cloud offering really is that it feeds on itself with respect to all of the new innovation that we can provide. And we're so early. While we have a road map for all of that development, it really hasn't materialized yet. And so we think that, that actually should help accelerate adoption of the Creative Cloud, as well as when we move people through the funnel because there is a significant amount of awareness of the Creative Cloud. With respect to your second question on units, as Mark said in his prepared remarks, the way we look at performance is going to be a combination of the perpetual revenue, the site license revenue as well as subscription. So we'll start to give you that data as the quarters proceed. And so you have to look at all of that cumulatively as you get a true state of the business.

And our last question will come from Robert Breza with RBC Capital Markets. Robert P. Breza - RBC Capital Markets, LLC, Research Division: Mark, you just -- your recent comments here in the last question or 2, you talked about not reading too much into a deferred revenue move. I'm wondering. I know you don't give financial targets for deferred revs, but can you talk to us directionally on how you think that will trend? And then also, maybe just directionally help us understand how you think cash flow will trend given the mix versus subscription and perpetual. It'd be helpful.

Yes, sure. So like I said, deferred revenue, you can see, was up $44 million. That's driven by the Omniture and the Digital Marketing businesses that are subscription-oriented businesses and substantial ones today, as well as maintenance and support. And we actually also have from time to time some royalty contracts in the Print and Publishing business that get renewed and they're booked to deferred and then recognized ratably over time. I would expect over a longer period that deferred revenue will continue to go up. I think next quarter, it's conceivable that it's flat to maybe even slightly down next quarter, just because of this royalty contract that got renewed this quarter. And that was worth -- I'll tell you that was worth $13 million in deferred. Of the $44 million, $13 million was from a royalty contract in Print and Publishing. So that would come out next quarter, and we might see it slightly down. But over the longer period, I would fully expect deferred revenue to continue to increase even though Creative Cloud subscriptions won't be reflected in deferred because we've got the Digital Market business, which is going to be a very large SaaS business moving forward. And then from a cash flow perspective, I don't foresee any changes in the near term. We continue to have a very healthy cash generating business model, and I fully expect that to continue. One thing I did want to add before I turn the call to Shantanu to wrap up is I think there's been some question about the Digital Marketing revenue, and I just want to make sure, if you look at the data sheet, that you understand that Digital Marketing includes the LiveCycle and Connect businesses. And if you look at our supplementary data, it's a better way to look at those businesses so that you can see how much was LiveCycle and Connect and how much is what we call the Digital Marketing Suite revenue, which is the Omniture products and the WEM products together, which is really where the growth is going to come from.

Thanks, Mark. Again, I think at the beginning of the year, we had talked about 2 key goals for the company. We were going to move the Creative business to the cloud to attract new customers, to make that far more predictable and to continue to drive innovation. And while early, we think we're off to a really successful start with respect to the Creative Cloud introduction that we've seen so far. As we've said, subscriptions are ahead of track, and we have now a platform on which we can build to drive continuous innovation. The second goal that we had talked about was focusing on this fast-growing category of Digital Marketing. It's clear that that's spanning out and that the acquisitions and the organic innovation that we have done position us very well. As Mark said, we've had 35% year-over-year growth in revenue in that category. The pipeline is healthy. And so while there was some softness in Europe, we do not think that it impacts our confidence, both in our strategy as well as in our execution. So thank you for joining us today.

And this concludes our call. Thanks for joining us.