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Executives

Mike Saviage – VP, IR

Shantanu Narayen – President and CEO

Mark Garrett – EVP and CFO

Analysts

Walter Pritchard – Citi

Steve Ashley – Robert Baird

Philip Rueppel – Wells Fargo

Brent Thill – UBS

Ross MacMillan – Jeffries & Company

Sarah Friar – Goldman Sachs

Mike Olson – Piper Jaffray

Adam Holt – Morgan Stanley

Phil Winslow – Credit Suisse

Dan Cummins – ThinkEquity

Rob Breza – RBC Capital Markets

Kash Rangan – Bank of America/Merrill Lynch

Heather Bellini – ISI Group

Chad Bartley – Pacific Crest

Brad Reback – Oppenheimer

Adobe Systems Incorporated (ADBE) F4Q2010 Earnings Call Transcript December 20, 2010 5:00 PM ET

Operator

Good day, everyone. Welcome to the Adobe Systems Q4 and fiscal year 2010 earnings conference call. As a reminder, today’s call is being recorded. At this time, I would like to turn the conference over to Mr. Mike Saviage, Vice President of Investor Relations. Please go ahead, sir.

Mike Saviage

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 fourth quarter and fiscal year 2010 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 News Room 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, December 20, 2010, and contains forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For a 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 two 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 re-recorded or otherwise reproduced or distributed without prior written permission from Adobe Systems.

I would now like to turn the call over to Shantanu.

Shantanu Narayen

Thanks, Mike, and good afternoon. I’m pleased to report we delivered record revenue of $1.008 billion in Q4. This performance helped us achieve record revenue of $3.8 billion in fiscal year 2010, which is 29% annual growth versus fiscal 2009.

In today’s call, I’ll start out with a recap of some of the major accomplishments we achieved during the year. Then I’ll turn it over to Mark for more detail on our financial performance in the quarter and the year. Later, after Mark discusses our Q1 targets, I’ll close with a summary of our priorities in 2011 and then we’ll take your questions.

2010 was an outstanding year for Adobe. We are the leader in providing solutions that enable customers to create, manage, deliver and optimize digital experiences. We continue to deliver innovative solutions to a broader set of customers, which is helping to successfully transform Adobe into a more diversified software company with large opportunities for new growth.

In our Creative business, we delivered Creative Suite 5, the latest version of our desktop suite to enable content authoring in a multi-screen world. Content creators are looking to Adobe to help them deal with the complexity of multiple rich formats such as Flash and HTML.

We launched the Digital Publishing Suite, a complete solution that leverages CS5 to enable publishers to deliver and measure the impact of their content across PCs, tablets, TVs and smartphones. We continue to be the leaders in delivering innovative imaging solutions and drove annual record revenue with Photoshop Lightroom 3. We gained market share with our professional video solutions and now offer a complete workflow from plan to playback.

CS5 momentum continues and usage for multi-screen and multi-format authoring is increasing. Revenue for CS5 is now 21% higher than what we achieved with CS4 for the comparable period. Publishers such as Conde Nast, Martha Stewart Living Omnimedia and Bonnier have adopted the Digital Publishing Suite to create digital versions of their magazines. We continue to focus on driving adoption of CS5 and the Digital Publishing Suite, and believe that there is significant untapped opportunity.

Another achievement in 2010 was the delivery of Flash Player 10.1. For the first time, we simultaneously delivered Flash Player for both PC and non-PC devices. We continue to innovate in the areas of video and content protection, hardware acceleration, and support for new input methods. Flash remains the best cross-platform solution for rich Internet applications, video and casual gaming.

Adoption of Flash Player 10.1 on PCs was the fastest ever during the first three months after it was commercially available. Companies such as Google, HP, HTC, Motorola, RIM and Samsung announced or introduced Flash Player 10.1 as part of their new smartphone and tablet offerings. This broad adoption and marketing of Flash by our Open Screen partners is leading to increasing revenue opportunities for Adobe. We’ve seen a doubling in the number of designers and developers who use Flash in the past year.

Given Apple has chosen to not support Flash in the browser of its iDevices, creative professionals are increasingly deploying multiple versions of their content and rich Internet applications. It’s important to note that designers and developers continue to use our tools for their authoring and content creation.

We have not seen any impact on our revenue from Apple’s choice. In fact, given the explosion of smartphones and tablets, the need for a rich cross-platform runtime has become even more important. Because of this, multiple partners are using Flash and AIR as the cornerstone of their developer strategy.

2010 marked the first full year of Omniture as part of the Adobe family. The integration has gone exceedingly well. Customers get it. They love the ability to design and implement a creative workflow without boundaries and leverage the capabilities of Omniture to measure the impact of their content.

The Online Marketing Suite value proposition is resonating with customers and we are seeing strong momentum in the business. In Q4, factoring the deferred revenue write-down, we achieved the first ever $100 million quarter with Omniture and signed customers such as Skype, Expedia and American Express.

We continue to make traction with Search Center and our visitor acquisition products, as well as Test & Target and our visitor conversion products. Advertising spend using SearchCenter exceeded $1 billion in annualized spend for the first time in Q4. More importantly, we had the best bookings year ever for Omniture, giving us great confidence in our ability to drive strong growth in this business in the coming year.

In our Enterprise segment, organizations are focusing on how to improve interactions with their customers in an increasingly digital world. This trend is leading to a new enterprise software category called Customer Experience Management. We are well positioned to lead this emerging category with new solutions integrating our LiveCycle, Connect and Day products.

Our acquisition of Day in Q4 enables us to provide comprehensive web content management, rich media delivery capabilities, and social collaboration as part of our Customer Experience Management offering. Gartner has validated our vision by placing us in leadership positions in their Magic Quadrants for Web Content Management and Business Process Management. This is a large and strategic growth opportunity for Adobe, and we’ve seen an inflection point in our business with more than 30% year-over-year revenue growth in both Q3 and Q4.

Our success in the enterprise extended to our Knowledge Worker business. In Q4, we launched Acrobat X, a major new release incorporating a number of new features and performance enhancements. Strong revenue for Acrobat 9, combined with the launch of Acrobat X, helped to drive 29% year-over-year quarterly growth in this segment.

In summary, any way you measure it, 2010 was a great year for Adobe. Later, I will provide some comments on our strategy and priorities for 2011. But first, I’ll turn it over to Mark for more detail on our financial results. Mark?

Mark Garrett

Thanks, Shantanu. Our earnings report today covers both Q4 and fiscal year 2010 results. I will first comment on our full year fiscal 2010 results. Adobe achieved revenue of $3.800 billion in the year compared to $2.946 billion in fiscal 2009. This represents 29% year-over-year growth. Excluding revenue from the acquisitions of Omniture and Day, our year-over-year revenue growth was 18%.

2010 was a great year. In addition to delivering strong growth in revenue and earnings, we expanded our operating margin, generated $1.1 billion in cash flow, committed $850 million towards share repurchases, and strengthened our balance sheet with long-term debt at historically low rates.

We also continue to transform Adobe. We are now one of the largest cloud-based SaaS offerings in software; the total amount of recurring revenue is approaching 20%; and we’ve built out a world-class enterprise sales force that is selling solutions to C-level executives and driving more than $1 billion of annual revenue.

GAAP operating income in fiscal 2010 was $993 million compared to $691 million in fiscal 2009. GAAP operating margin for the year was 26.1% compared to 23.4% in fiscal 2009.

Non-GAAP operating income in fiscal 2010 was $1.393 billion compared to $1.035 billion in fiscal 2009. Our non-GAAP operating margin was 36.6% in fiscal 2010 compared to 35.1% in fiscal 2009.

Adobe’s annual GAAP net income was $775 million in fiscal 2010 compared to $387 million in fiscal 2009. Adobe’s annual non-GAAP net income was $1.016 billion in fiscal 2010 compared to $815 million in fiscal 2009. GAAP diluted earnings per share in fiscal 2010 were $1.47 compared to $0.73 in fiscal 2009. Non-GAAP diluted earnings per share were $1.93 in fiscal 2010 compared to $1.54 in fiscal 2009.

Now I will discuss our Q4 results. For the fourth quarter of fiscal 2010, Adobe achieved record revenue of $1.008 billion. This compares to $757.3 million reported in Q4 fiscal 2009 and $990.3 million reported last quarter. Year-over-year, this represents 33% revenue growth. We entered the fourth quarter with minimal shippable backlog, and we exited the fourth quarter with 5% of reported Q4 revenue in shippable backlog. We had a strong finish in our Enterprise business, and we saw demand ramp later in the quarter in our licensing and shrink wrap business.

Q4 GAAP operating expenses were $613.8 million compared to $521.3 million reported in Q4 fiscal 2009 and $589.2 million last quarter. Non-GAAP operating expenses in Q4 were $535 million compared to $428.8 million reported for Q4 fiscal 2009 and $524.7 million last quarter.

GAAP operating income in Q4 fiscal 2010 was $286.9 million, or 28.5% of revenue. This compares to GAAP operating income of $153.6 million or 20.3% of revenue in Q4 fiscal 2009, and $302 million or 30.5% of revenue last quarter. Non-GAAP operating income in Q4 fiscal 2010 was $384 million, or 38.1% of revenue. This compares to non-GAAP operating income of $265.2 million or 35% of revenue in Q4 fiscal 2009, and $384.9 million or 38.9% of revenue last quarter.

Adobe’s effective GAAP tax rate in Q4 was 6%, and the non-GAAP tax rate was 24.5%. The company’s GAAP tax rate for the quarter was lower due to the resolution of several income tax matters at amounts less than the company’s reserves. Q4 GAAP net income was $268.9 million compared to GAAP net loss of $32 million reported in Q4 fiscal 2009 and GAAP net income of $230.1 million last quarter. Non-GAAP net income in Q4 was $285.7 million compared to $206.8 million reported in Q4 fiscal 2009 and $284.0 million last quarter.

GAAP diluted earnings per share for Q4 fiscal 2010 were $0.53 based on 511.9 million weighted average shares. This compares with GAAP diluted loss per share of $0.06 reported in Q4 fiscal 2009 based on 532 million weighted average shares and GAAP diluted earnings per share of $0.44 reported last quarter based on 523.2 million weighted average shares. Non-GAAP diluted earnings per share for Q4 fiscal 2010 were $0.56. This compares with non-GAAP diluted earnings per share of $0.39 in Q4 fiscal 2009 and $0.54 reported last quarter.

I will now discuss Adobe's results in Q4 by business segment. Creative Solutions segment revenue was $542.1 million compared to $429.3 million in Q4 fiscal 2009 and $549.7 million last quarter. Our Creative business gained momentum as we moved through the quarter, driven by an acceleration in the run rates and strong performance with large CS licensing transactions closed by our direct sales force. A successful launch of our Elements products also contributed to the strong year-over-year growth.

Digital Enterprise Solutions’ Q4 revenue was a record $274.1 million compared to $211.8 million in Q4 fiscal 2009 and $256.8 million last quarter. Within Digital Enterprise Solutions, Knowledge Worker revenue was $169.9 million compared to $131.8 million in Q4 fiscal 2009 and $162.6 million last quarter.

The strong year-over-year growth was due to continued success with Acrobat 9 as well as the launch of Acrobat 10 late in the quarter. This performance was driven by strong enterprise adoption of Acrobat volume licensing, which resulted in Acrobat transactions greater than $50,000 doubling year-over-year.

Enterprise segment revenue was a record $104.2 million compared to $80.0 million in Q4 fiscal 2009 and $94.2 million last quarter. Our first $100 million quarter included $5.4 million of revenue from the acquisition of Day Software, which closed late in Q4. This 30% year-over-year growth demonstrates once again that our Customer Experience Management value proposition is resonating strongly with industry analysts and customers and that our enterprise sales team is executing well.

In our Omniture segment, we achieved record revenue of $98.4 million compared to a partial quarter of $26.3 million reported in Q4 of fiscal 2009 and $91 million last quarter. Omniture transactions increased to 1.32 trillion in Q4 compared to 1.26 trillion in Q3 and up 11% on a year-over-year basis. Omniture revenue diversification continued, with SiteCatalyst representing 53% of Q4 revenue. This demonstrates the value of the entire Online Marketing Suite is resonating with customers. Enterprise renewal rates also ticked up to 95% in the quarter, equaling the highest rate in the year.

Platform revenue in Q4 was $46.1 million compared to $47.0 million in Q4 fiscal 2009 and $40.7 million last quarter. The sequential increase was due to higher toolbar distribution revenue driven primarily by the release of the new Adobe Reader version 10 in the quarter. Finally, Print and Publishing segment revenue was $47.3 million compared to $42.9 million in Q4 fiscal 2009 and $52.1 million last quarter.

Consistent with the strategy we discussed at our analyst meeting and the way we operate the company, we will adjust our business segment reporting in fiscal 2011 beginning with our Q1 results. The biggest change involves the splitting of our former Creative Solutions segment into two new segments called Digital Media Solutions and Creative & Interactive Solutions.

Digital Media Solutions contains our products focused in imaging and video, whereas Creative and Interactive Solutions includes our other creative point products, the Creative Suites, and our former Platform segment. These updated business segments are outlined in our latest investor data sheet that we’ve made available on our Investor Relations website. We will also provide historical segment reporting based on these new classifications.

Turning to our geographic segments in Q4, results on a percent of revenue basis were as follows. The Americas, 49%; Europe, 32%; Asia, 19%. The demand environment in Europe was particularly strong, helping to drive record EMEA revenue in Q4. We also saw stability in the US and Asia, with no significant changes in the Enterprise market or in Japan from what we experienced in Q3.

From a year-over-year currency perspective, FX reduced revenue by $7.4 million. We had $0.7 million of hedge gains in Q4 FY ‘10 versus no hedge gains in Q4 FY ’09. Thus the net year-over-year currency impact reduced Q4 revenue by $6.7 million. From a quarter-over-quarter perspective, FX improved revenue by $24.2 million. We had $0.7 million of hedge gains in Q4 FY ‘10 versus $13.2 million of hedge gains in Q3 FY ’10. Thus the net sequential currency increase to revenue considering hedging gains was $11.7 million.

Employees at the end of Q4 totaled 9,117 versus 8,715 at the end of the last quarter. The increase was due to hiring in sales and marketing and R&D, as well as our acquisition of Day Software, which added 179 employees during the quarter.

Our trade DSO was 50 days, which compares to 49 days in the year-ago quarter and 45 days last quarter. The Q4 DSO result is consistent with previously reported Q4 DSO numbers. The sequential increase from Q3 is attributed to the successful launch of Acrobat 10 late in Q4, the addition of Day Software receivables and strong demand late in the quarter. Our global channel inventory position at the end of the quarter was within company policy.

During the quarter, cash flow from operations was $311 million. Our ending cash and short-term investment position was $2.5 billion compared to $2.6 billion at the end of Q3. Cash declined sequentially due to cash outlays for stock repurchases; the acquisition of Day; and miscellaneous PP&E expenses, including the purchase of Utah land for a future facility. Deferred revenue in the quarter increased by $9 million in the quarter to a total of $430 million. The increase in deferred revenue was driven by maintenance revenue growth.

In Q4, we repurchased approximately 12.1 million shares at a total cost of $333 million. For the fiscal year, we repurchased a total of 31.2 million shares. Entering Q1, $1 billion of stock repurchase authority remains against the $1.6 billion stock repurchase authorization announced in July of this year. This concludes my discussion of our financial results.

I would now like to comment on our financial targets for the first quarter of fiscal 2011. We are targeting a Q1 revenue range of $1 billion to $1.050 billion. While Q1 revenue traditionally declines sequentially from Q4, our Q1 target range reflects how strong Q4 ended and the momentum we carry across multiple business lines into the new year.

Our Q1 revenue expectations categorized by our previous business segments are as follows. We expect our Enterprise and Omniture segments to grow sequentially in Q1 versus revenue achieved in Q4. We believe Creative and Knowledge Worker Q1 revenue will be flat to slightly up with revenue achieved in Q4. And we expect Platform and Print & Publishing to decline slightly.

For margins, we are targeting a Q1 GAAP operating margin range of 28% to 29.5%, and a non-GAAP operating margin range of 37% to 38%. We are targeting our Q1 share count to be 508 million to 510 million shares. We are targeting non-operating expense to be between $16 million and $20 million on both a GAAP and non-GAAP basis.

For our Q1 GAAP effective tax rate, we are targeting 15%; and for our non-GAAP effective tax rate, we are targeting 22%. These targets lead to a GAAP earnings per share range of $0.43 to $0.49 per share and a non-GAAP earnings per share range of $0.54 to $0.59.

I would also like to provide some additional color on the fiscal year. We continue to target at least 10% revenue growth in fiscal 2011. During the year, we expect quarterly revenue to follow typical seasonal trends; a slight revenue increase in Q2 versus revenue achieved in Q1, a normal seasonal decline in our third quarter, and then seasonal strength and sequential growth once again in Q4.

During the year, we anticipate operating expenses will grow sequentially as we make investments in sales and marketing to drive future revenue growth. As a result, we expect margins will fluctuate during the year, including a slight downtick from Q1 to Q2, a downtick from Q2 to Q3, and then an uptick in Q4. For the year, we expect our FY ‘11 operating margins to be slightly higher than what we achieved in fiscal 2010.

Our targeted 2011 tax rate of 22% includes the reinstatement of the R&D tax credit, which benefits our tax rate by a full point for the year. We have also been following the situation in Ireland, where our international operation is primarily based, and we are confident in our ability to maintain this targeted 2011 tax rate should Ireland alter their corporate tax rate.

This concludes my section. I’d now like to turn the call back over to Shantanu.

Shantanu Narayen

Thanks, Mark. We are proud of what we accomplished in 2010 and are even more excited about what lies ahead. Adobe is leading the revolution in how digital experiences are created, managed, distributed, measured and monetized in this multi-screen world.

As we shared with you at our recent financial analyst meeting, we are doubling down on three significant growth opportunities; Content Authoring, Online Marketing Optimization, and Customer Experience Management. The multi-screen explosion offers us a tremendous new opportunity, as our creative solutions are the standard for content authoring across all formats, devices, channels and media. We are and will remain the leader in content authoring solutions and will continue to drive significant innovation in our offerings with an increase in the frequency of releases in the coming year.

In addition to being the leader in imaging solutions, we are now the market leader in the video category. We have taken share from both Apple and Avid, and we will continue to drive strong growth in this market, leveraging the innovations we’ve made in video authoring as well as in media delivery and playback.

We see an opportunity to expand our content authoring revenue by augmenting our traditional pricing models with new subscription business models and growing our maintenance revenue. We will drive revenue growth by increasing our focus on large and under-penetrated categories such as Education. To capitalize on the trend of tablet usage, we look forward to introducing new products, which leverage our innovative creative products and technologies.

We are seeing excitement among our customers in the digital publishing category. Leading publishers have bet their digital future on Adobe, and we expect hundreds of publishers to adopt our creative tools and Digital Publishing Solutions in 2011. As content and applications make their way online and to a broader array of devices and formats, Online Marketing Optimization becomes increasingly important.

ROI is job one for marketers. Adobe’s Site Catalyst product remains the leader in web analytics. Our goal now is to expand the adoption of other critical Online Marketing Suite solutions like SearchCenter and Test & Target. Our Omniture business is already one of the largest SaaS businesses in the world, and in 2011, we will expand our geographic footprint, while continuing to deepen integration with our content authoring products. In addition, video and mobile content represent explosive growth opportunities. Combined, we expect to grow our Omniture business by at least 20% in 2011.

The emerging category of Customer Experience Management is a large and strategic opportunity for Adobe. Customer Experience Management solutions enable our customers to attract and retain their customers with powerful online experiences. The combination of LiveCycle, Connect and Day make us a formidable force in this category. We have strong momentum in this business, and we expect to grow Enterprise segment revenue by at least 20% in the coming year

It’s an incredibly exciting time for Adobe, as we transform our business to take advantage of these significant opportunities. Whether they are publishers, government agencies, educational institutions or enterprises, our customers are looking to us to help them navigate through this new world. We will do this by providing them with solutions in the expansive categories of Content Authoring, Online Marketing Optimization, and Customer Experience Management. These opportunities give us confidence in our ability to grow total Adobe revenue by at least 10% next year.

Thank you for joining us today. Now, I'll turn the call back over to Mike.

Mike Saviage

Thanks, Shantanu. In regard to today’s earnings report, we have posted several documents on our Investor Relations web page today, 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. We also encourage you to sign up for easy access to updated documents and communications via RSS feeds that you can subscribe to on the website.

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 5203268. Again, the phone number is 888-203-1112 with ID number 5203268. International callers should dial 719-457-0820. The phone playback service will be available beginning at 4 PM Pacific Time today and ending at 4 PM Pacific Time on Thursday, December 23rd, 2010.

We would now be happy to take your questions. In addition to questions that come in from those participating on the live phone call, we have also enabled the question pod in the Connect session. So those on the Connect session, feel free to send in your questions and we’ll try to take a few.

Operator, we’ll take the first question from the phones.

Question-and-Answer Session

Operator

(Operator instructions) And our first question will come from Walter Pritchard from Citi.

Walter Pritchard – Citi

Hi. Shantanu and Mark, it was good to get some of the color on the segments around Enterprise and Omniture for next year. I’m wondering if you could help us understand what sort of assumptions you have embedded in the 10% or greater growth around Creative and particularly in the past you’ve had an interim release of the product on embedding in the Acrobat release. I’m wondering how a potential release like that might factor into your guidance for the year. Thanks.

Shantanu Narayen

Sure, Walter. As we’ve said at the recent financial analyst meeting, again, we’re targeting 10% annual growth for the entire company, and we try to break it up by our different growth segments that we talked about. In the Creative segment specifically, what we’re hearing from our customers is this ability for Adobe to help them with their entire workflow, associated with both authoring as well as publishing for multiple formats is an increasingly important one. As you know, their multiple OS is being released. We expect to see probably another set of tablet devices also come out in the first part of the year. And so while we’re not announcing new products, what we’ve said is that we anticipate giving new functionality to these customers to help them deal with that multi-format, multi-screen proliferation. So we won’t talk about products today. We’ve given targets, as you know, Walter, for Q1, and we look forward to sharing more about specific products later in the year.

Walter Pritchard – Citi

And then just around Enterprise, we noticed you had a good performance there. We did notice that the large deals year-over-year for the Enterprise business looked like it was sort of flattish and yet the revenue performance is strong. Just wondering – was it a number of small deals that drove the business? Or any color there qualitatively would be appreciated.

Shantanu Narayen

Actually, in the Enterprise segment, we had a very strong close to Q4 and the fiscal year. As you know, in the Enterprise segment, you tend to have a very strong close as a result of the sales force being focused on trying to drive revenue and accelerate us. And the value proposition of Customer Experience Management is really resonating with customers. So we are actually finding that we are driving some significantly larger deals. The pipeline is healthy, and we’re looking forward to a great 2011, Walter. So when I look at the indicators of that business, they are actually all positive. And the introduction of Day will actually only strengthen our offering and provide us with better value to our customers moving forward.

Walter Pritchard – Citi

Great. Thanks a lot.

Operator

And we’ll now go to Steve Ashley from Robert Baird.

Steve Ashley – Robert Baird

Good. My question just follows right on to that. In terms of guiding sequentially revenue up in the first quarter, up slightly, is it due to the number of large deals you have in the Enterprise businesses and other businesses that just gives you that confidence?

Mark Garrett

Steve, it’s Mark. Actually, before I even answer that, let me correct one thing in our prepared remarks. I said we saw stability in the US and Asia with no significant changes in the enterprise market. I meant to say Education market. So just to clarify – the point there was we haven’t seen any significant change in education or Japan based on our comments for Q3. So with that out there, it’s a couple things, Steve, that’s guiding us up as we go into next quarter. We saw really good performance towards the end of the quarter, both in our run rate business, our shrink wrap, sell-through and licensing business, as well as what Shantanu just spoke about, the larger deals in the enterprise. So, with the strength that we saw towards the end of the quarter in both, we thought it was appropriate to give the guidance that we did for Q1.

Shantanu Narayen

Maybe just one more comment to add on that, Steve, when we look at all the three growth opportunities that we’re talking about, the market dynamics are driving us and we are seeing increased demand across all three of them. On the online marketing optimization, we had a really strong bookings quarter and we’re driving annual contract value. We’re seeing more usage of the entire marketing suite. In the Enterprise segment, yes, we are confident. We will have Day for an entire quarter. And the Customer Experience Management value proposition is resonating. And even on the Creative side, as people are dealing with this explosion of devices. Our authoring tools are being adopted increasingly to deal with both multi-format as well as multi-screen. In the sales and marketing initiatives that we’ve put in place, we’ve started to see in that Q3 and Q4, are clearly resonating and were driving demand. And so, all of those give us confidence for Q1.

Steve Ashley – Robert Baird

Maybe you could give us a quick update in terms of the Flash 10.1 player and its penetration and what kind of attach rates you're seeing in the mobile market with that. Thanks.

Shantanu Narayen

Sure. So, Steve, as you know, we’re shipping on Android and virtually the entire set of Android devices. We’ve announced that RIM is going to start shipping it. HP with their Palm set of devices are also going to start shipping it. So it’s really going to be, I think, 2011 where you see this explosion of smartphones. And increasingly, all of them are going to use Flash as a mechanism to, as they call it, browse the uncompromised web. So we’re excited about that. We’re also excited about the adoption of AIR because a number of these manufacturers look at AIR as a way to, frankly, attract our developer and our content ecosystem to their platforms.

Steve Ashley – Robert Baird

Okay. Thanks.

Operator

We’ll now go to Philip Rueppel from Wells Fargo.

Philip Rueppel – Wells Fargo

Yes, thanks. Just a couple comments. Just a clarification. So you did not see an improvement in education and you aren't expecting that going forward until we see some of these new products? And then second of all, on the large transactions, do you think that was more a function of the fiscal year-end or where we are in the cycle, where you tend to see enterprises start to buy CS5, at least in the Creative product line?

Mark Garrett

So I’ll start. On the education side, we had a good quarter in education. We had a good quarter in last quarter in education. It always does tick down a little bit in our fourth quarter. It actually didn’t tick down as much as it usually does. What we are commenting on is the fact that in the third quarter, education was a little below our expectations. And that market has still got budget constraints around it as it relates to the institutions. But we still believe that will be a very successful large vertical for us going into next year. So we’re still upbeat about that business. We just haven’t seen any significant change. And then on Japan, we will see a seasonal uptick in Japan as they go into their fourth quarter. So, from a geographic perspective, if you assume kind of the midpoint of our range, you would expect North America, EMEA and Asia without Japan to be flat to slightly up, and you would expect Japan to be up.

Shantanu Narayen

And Phil, as it related to the enterprise performance in the quarter, again, our enterprise sales force actually has sales numbers for the Acrobat and the Creative Suite deals where we are driving site-wide licenses as well as for both the Omniture annual contract value and the LiveCycle enterprise license revenue. Across the board, we had a very strong quarter. And so certainly in the Creative segment, because you asked about that, we were able to drive a number of significant transactions where the customers are adopting CS5 across the breadth of their publishing platform. And even in the enterprise space, which is in the LiveCycle space, we had a strong quarter. And we just have to continue to execute against that in Q1 and moving forward.

Philip Rueppel – Wells Fargo

Great. That’s helpful. Thanks.

Operator

And we’ll go now to Brent Thill from UBS.

Brent Thill – UBS

Thanks. Mark, on the margins, you mentioned before, I think, flat for fiscal '11. Now you're saying slightly up. Can you just help us understand what slightly up means? And just give us a sense of your confidence around margin improvement and what's changing this tone from your perspective.

Mark Garrett

Yes, Brent. So you’re right. We had been saying for a while that we would keep margins at 2010 levels, which would be 36.6. And our view now with the cost controls that we’ve been able to put in place in the company, the Q4 demand that we see, the three focus areas that Shantanu talked about from a solutions perspective, we believe that we can expand those margins slightly in 2011. Exactly what slightly means, I can’t say for you at this point, but they will be better than 36.6.

Brent Thill – UBS

Okay. And just a quick follow-up for Shantanu. It’s pretty clear at your recent user conference, the momentum behind the suite. Can you just give us a sense of, with Apple announcing the news earlier in the quarter, what type of impact that had, if any, in this current quarter?

Shantanu Narayen

Brent, I’m not sure what question –

Brent Thill – UBS

Just in terms of the developer – relaxing some of the developer –

Shantanu Narayen

I see. Okay. No, I got that. Yes. What we’re hearing from our customers across the board is they are trying to get their content and they are going to try and get their applications across as many platforms and as many devices as they can. And we think that the focus that existed on the format, frankly, was overblown, because if you are a customer, you’re just trying to deal with how do I get my content and applications across to multiple devices, multiple formats, multiple screens. Specifically with respect to Apple, you’re right. We now do support AIR. On the iDevices, we continue to make enhancements with respect to AIR on the iDevices, and we do expect that customers, if you are a content creator or an application developer, would like to use Adobe’s creative tools in that entire workflow. And so we do think long-term this need for a consistent cross-platform reliable environment will continue to be there. And so – and we’re the company that’s going to produce the best tools for all of them.

Brent Thill – UBS

Thanks.

Operator

And we’ll now go to Ross MacMillan from Jeffries & Company.

Ross MacMillan – Jeffries & Company

Thanks a lot. Shantanu, I wonder if you could comment on the evolution of Android and how important is the 3.0 Gingerbread release next year, do you think, for the ecosystem into which you're selling ultimately as that could drive more formats, more tablets, larger screen sizes, et cetera?

Shantanu Narayen

Sure. So, Ross, I think we’ve talked about the mobile revolution clearly being upon us. And I do think Android is going to be one of the clear winners in that mobile ecosystem. We’re already working with them very closely. As you know, they support Flash. They also support AIR to do a lot of their publishing as well as casual gaming and enterprise applications. I think in 2011 you’re going to see more enterprise applications also emerge on Android platforms. The RIM platform as well, the playbook is getting a lot of very positive accolades as well.

You’re just going to see hundreds of millions of these smartphones emerge, with people then wanting to create content and applications for them. And I think our challenge and our opportunities, how do we move quickly as these operating systems change to make sure that our tools are being used effectively, not only to create the content but also to emulate content. But more specifically with Android, the momentum in the marketplace is definitely there. And as they continue to release new versions of that, we’re definitely going to stay lockstep with them to make sure that our authoring applications are used.

Ross MacMillan – Jeffries & Company

And a follow-up. Can you say anything about the dot release that we expect in 2011? I know you said you didn't want to make any product announcements. I just wondered if there was any other color you might want to provide on the dot release, either in terms of timing or the sorts of things we can expect to see. Thanks.

Shantanu Narayen

I think there are two things that we’re hearing from our customers that we’re really going to be looking at, as we target future releases. The first one is, as these new Oss come that you yourself asked about, are we making sure that we have support for them pretty coincident with the releases of the operating system so people can not only get the OS, but they can get great tools that work in conjunction with that. So that’s one of the trends that driving or looking at more frequent releases.

The second one, and we talked about this, was the pilot that we ran in Australia where, as we introduced new versions, we have a unique ability to also introduce new business models with it. We had a subscription pilot that we talked about in Australia where we found that a number of people were attracted to the platform and the net revenue to Adobe was actually greater than what it would have been have we not introduced this alternate pricing models. And so that’s another one of the macro factors that is driving how we look at future releases. So hopefully that gives you two pieces of color of how we are thinking about the release.

But again, make no mistake, for Q1, we’re really focused on continuing to drive the untapped opportunity that we think exists to make sure that CS5 continues to be adopted, both by individual freelancers, by non-creative professionals, as well as by large creative houses. And finally, I would say, targeting these customers, not just with the Content Authoring applications but with the Digital Publishing Suite. So, as we modify the Digital Publishing Suite, we want to make sure that support for that publishing suite also finds its way in the authoring tools as well as support for the online marketing tools. So there is a lot going on within the company.

Ross MacMillan – Jeffries & Company

That's helpful. Thank you.

Operator

And we’ll now go to Sarah Friar from Goldman Sachs.

Sarah Friar – Goldman Sachs

Thanks for taking my question. Shantanu, on the enterprise side, with maybe less focus there in the last year, given all the news on the CS side, and as we look at Street growth rates, they're still leaning more toward single digit growth, and I think your commentary is it being much of it being a teens, even a 20% grower. Could you just give us a little bit more perspective on what is it that drives the enterprise to say upgrade to Acrobat 10 or to deploy LiveCycle and why do you have that confidence in that higher teens type growth rate on the Enterprise side?

Shantanu Narayen

Sure. So Sarah, first, the three growth trends that we talked about, that was the reason why at the analyst meeting we were trying to give you different growth rates for each of them. Specifically in the enterprise, we’re definitely seeing this fast-growing trend for both enterprises and government to invest larger amounts of money in re-platforming their customer experience efforts. And for those customers, actually it’s being driven by this multi-device, multi-channel world, in which customers need to figure out a way in which how they are attracting customers, on-boarding them and rolling them, as well as providing support for them. And so these offerings are actually increasing in sophistication.

So whether it’s streamlining order management processes, whether it’s multi-channel self-service applications like telecom communication companies are doing, whether it’s new platforms or online banking, we’re definitely seeing a new era of what we are calling the CEM applications, interactive statements invoices, customer communications. And now our offering with what we did with LiveCycle with PDF forms, the ability to put Flash and engaging user experiences on top of that, the ability to provide content management and social interaction with the Day offerings, and frankly the majority of our own sales and marketing efforts in targeting those customers, all of that lead to a greater confidence in our ability to drive meaningful growth rates for us as a company.

Sarah Friar – Goldman Sachs

Got it. That's very helpful. And then, Mark, just a really quick one. So, on the write-down of deferred revenue for Omniture, are we now fully through that that we've annualized the acquisition or was there any mild impact left in this quarter?

Mark Garrett

Going into Q1, we are fully through that. This quarter there was approximately 3 million impact, but we’re now done with that.

Sarah Friar – Goldman Sachs

Great. Thanks very much.

Operator

And we’ll now go to Mike Olson with Piper Jaffray.

Mike Olson – Piper Jaffray

Hi, thanks. Good afternoon. Just one quick one here. on 20% of revenue recurring today, I think you mentioned, can you just talk about what will be the biggest drivers to pushing that higher and is there any guess on what portion of revenue could be recurring a year from now? Thanks.

Mark Garrett

Yes. It’s Mark. The biggest piece of that right now is Omniture, but there is more than just Omniture in there. We have some Connect revenue in there. We have Scene7 in there. As we build out some of these subscription services that we tested in Australia that Shantanu just mentioned, that will go in there. So I can’t give you a number per se, but clearly we want to drive that 20% higher and higher, getting people to buy maintenance on our Creative tools is another major stream for that. So there’s a lot of opportunity to drive that number up, as we look out into 2011 and beyond.

Mike Olson – Piper Jaffray

Okay. And then actually just one other one on Omniture regarding the deferred revenue. So in Q1, if I remember right, you'll be able to recognize deferred revenue that you were previously unable to because of purchase accounting. Is there going to be a step-up function from Q4 to Q1? And if so, what will be the magnitude from that as you're able to recognize that revenue?

Mark Garrett

It’s not a significant step-up. It happens over the course of the year, as people start to renew. So you don’t get that step-up all at once.

Mike Olson – Piper Jaffray

Okay. Thanks very much.

Operator

We’ll now go to Adam Holt from Morgan Stanley.

Adam Holt – Morgan Stanley

Terrific. Thank you. You noted that you had a very strong close in Europe, and I was wondering, it's not something we've necessarily heard from a lot of companies, what you think drove that and what the assumptions are for the first quarter. And then secondly, sorry if I missed this, but what was the Day contribution for the first quarter?

Mark Garrett

Yes, Adam, it’s Mark. Day’s revenue in the quarter was $5 million.

Shantanu Narayen

And with respect to Europe, Adam, I’d attribute that to a couple of different issues. The first one is, we definitely do see an uptick from Q3, which as you know is our seasonally weak quarter in Europe to Q4. And I think it was great execution on the part of both our sales and our marketing team. We had a healthy pipeline going into Q4, and frankly we executed against that.

Adam Holt – Morgan Stanley

I guess just a follow-up on that. I was looking for the contribution in the guide for the first quarter and maybe just generally how you're thinking about the revenue contribution for next year. Thank you.

Shantanu Narayen

Sure. So, as it relates to Day’s contribution in our Enterprise segment moving forward, Adam, the real focus for us is to position our offering as the Customer Experience Management offering and to continue to drive higher transactions with respect to the customer, much like we did with LiveCycle where we had a LiveCycle product for bar code or a LiveCycle product for document generation, we’ve been selling the entire platform and driving greater value to our customers. So we would expect, and the sales strategy is very much one offering a solution-based sale where LiveCycle, Day and Connect will be parts of the components that are built into it. So all of that factor into the 20% enterprise growth that we expect to see in 2011.

Adam Holt – Morgan Stanley

Great. Thank you.

Operator

We’ll now go to Philip Winslow with Credit Suisse.

Phil Winslow – Credit Suisse

Hi, guys. Just to spend a little bit more time on the geographic side, when you start to think about your fiscal 2011 guidance, obviously you had a strong bounce-back in Europe this quarter. Just what are you kind of just generally thinking about your geographies, what you believe will actually outgrow or under-grow the others? Thanks. And actually, Mark, just one quick housekeeping. For Q4, the interest and other income came in a bit less negative than what you guided to. Anything on that? Thanks.

Mark Garrett

Yes. There was one unique item in other income. We had hedged for the Day acquisition, and it turned out that we were able to book as a result of the Swiss Franc strengthening versus the dollar, a gain of $12 million in the quarter, and it goes to other income for that Day hedge. And as it relates to geographies, as we look at next year and we expect to grow at least 10%, we’re basically going to have to see that growth across every geography. Like I said, for Q1, I would expect North America, Europe and Asia to be flat to up. We would expect Japan to be up. And over the course of the year, we would expect every geography to be up.

Phil Winslow – Credit Suisse

Got it. Thanks, guys.

Operator

Dan Cummins from ThinkEquity has our next question.

Dan Cummins – ThinkEquity

Thanks. Just a couple quick questions here. Do you have any idea what your market share is among really the top tier mobile developers on the Apple mobile store? Are you able to say with confidence how many of the successes originate with your tools? And then I just had some questions on Omniture and Day.

Shantanu Narayen

Sure. So, Dan, as it relates to creating content and applications, when you think about the kind of content and applications that are being created, when imaging is part of the workflow, certainly Photoshop plays a pretty key role in making that happen. When you’re trying to deal with Vector, we have products like illustration – like Illustrator that is used. And for video, as I also outlined, you’re continuing to see adoption of Premiere Pro in the video category. And so one really has to look at it across each of the segments. We certainly have hundreds of apps that are built completely in AIR that are also on the Apple store right now. But it’s hard to take one particular number, but certainly we know that when images are being touched up for introduction within an application, or Vector is being done, or you are trying to animate page layout or repurpose page layout, a lot of that originates in Adobe tools.

Dan Cummins – ThinkEquity

So you think it's safe to say you still have a high majority market share in mobile app development?

Shantanu Narayen

Again, I think when you talk about each of the different categories, we certainly have high market share in each of the categories. I think our products, as I said, are also certainly being used more for multi-format as well as multi-screen. Take some of the innovation that we’ve provided as well with the HTML5 support, both within Dreamweaver as well as within Illustrator, we know that we’re getting a lot of customer adoption from that. When we look at BrowserLab, which is investigating how people are using the different browsers on different platforms, again the adoption of that service on our website is increasing quite a bit. So it’s hard to pin a number on it. What we do know anecdotally is that our customers are certainly looking to us to help them with this multi-format. And as the mobile system actually fragments even more, we will increasingly be used to create products.

Dan Cummins – ThinkEquity

Okay, thanks. Just a quick one on the Omniture numbers. The write-down was $3 million for the fourth quarter, and what was it for the full fiscal '10?

Mark Garrett

It was about $30 million.

Dan Cummins – ThinkEquity

Okay –

Mark Garrett

Slightly over $30 million.

Dan Cummins – ThinkEquity

And I'm sorry, last question. On Day Software, when you bought that asset, that was kind of a 20% to 35% grower, was it not?

Mark Garrett

Yes, I think that’s about right.

Dan Cummins – ThinkEquity

Okay. Thank you.

Operator

And we’ll now go to Rob Breza from RBC Capital Markets.

Rob Breza – RBC Capital Markets

Hi, Shantanu. I was just wondering if you could give us kind of a perspective as see the CS5 cycle going forward, talk to us about any kind of new product releases, seasonality, what your customers are telling us. Maybe weave into that your thoughts around geographic presence. Any kind of just general thoughts around the CS5 cycle would be great. Thank you.

Shantanu Narayen

I think the key takeaways from me, Rob, as it relates to the CS5 cycle are, first, the amount of innovation that we’ve produced. Across the world, people are appreciative of what we’ve done. From shape of the cycle, we continue to expect that cycle to have adoption across our customers, as traditionally happens, and moves from the early adopters to more enterprises and more broad-scale deployments. And nothing that we’ve seen in the cycle suggests that it would be different from the previous cycles that we’ve had, and it continues to show strength relative to the CS4 cycle. So we continue to be pleased with what we are seeing in CS5.

Rob Breza – RBC Capital Markets

Thank you very much.

Operator

We’ll now go to Kash Rangan from Bank of America/Merrill Lynch.

Kash Rangan – Bank of America/Merrill Lynch

Thank you very much. Just along that line, Shantanu, can you give us some sense as to what really happened in the Americas? It looks like it was sequentially down. We would have expected almost a full class of Americas versus Europe. So any commentary there would be useful. And also, for you, Mark, just a clarification. Non-GAAP tax rate, I thought you said 22%, but wasn't quite sure. If you could clarify that, that would be great. Thanks.

Mark Garrett

Yes, Kash, it’s Mark. On the tax rate, yes, 22%. That’s both from the R&D tax credit as well as frankly some good tax planning on our part. And one of the things that I want you all to focus on like we do is earnings per share. We’re not just driving strong operating margins. We’re trying to drive strong earnings per share growth as well. And that’s a factor of both managing the tax rate proactively and driving the share count down, which I think we’ve done a really good job on. So with the tax rate next year, you’re looking at 22%, which includes the R&D tax credit. From a US perspective, the beauty of Adobe is we’ve got this very diversified business. So the US, maybe it was a little lighter than you would have guessed, but look at how strong Europe came in. So we believe that we’re going to grow 10% next year. Like I said, we believe all geographies will grow next year. And we’re pretty happy with the performance across the board.

Kash Rangan – Bank of America/Merrill Lynch

Great. Mark, good to hear. I think you mentioned you're looking at Europe being sequentially up, if I'm not mistaken for Q1, right?

Mark Garrett

We said each geography would be flat to slightly up at roughly, you know, if you assume the midpoint of the range.

Kash Rangan – Bank of America/Merrill Lynch

Got it. In light of the fact that Europe rebounded very nicely from the depressed Q3, I'm just curious what is it that you're seeing in the pipeline that gives you the confidence that it can be up sequentially again, maybe flattish sequentially, but just comparing to a rebound quarter would seem tough in my opinion, and just wanted to get some more color behind your confidence there why you might think Europe should be flat or sequentially up in the upcoming Q1. Thank you.

Mark Garrett

So, again, Kash, what we saw at the end of the quarter gives us confidence going into next quarter. We saw strong demand towards the end of the quarter in all of our businesses, particularly in Europe, and that’s what gives us the confidence going into Q1.

Kash Rangan – Bank of America/Merrill Lynch

Great. Thank you very much.

Operator

And we’ll now move on to Heather Bellini from ISI Group.

Heather Bellini – ISI Group

Hi, thank you. Shantanu, I just wanted to circle back to a comment you made earlier in the presentation about more frequent product releases. And I was just wondering if that's also kind of something that you are trying to signal to us that given you're embracing the subscription model more and the types of changes that need to occur in terms of what you're delivering to your customers that goes along with that, should we be thinking about more frequent incremental releases going forward than maybe the timeframe in the past of the big bang releases that we've all gotten used to?

Shantanu Narayen

Heather, I think that’s a good assumption. I think fundamentally the messages that customers are saying that they have had to deal with some much change so quickly. The publishing industry, which may have seen a little bit less innovation is actually going to a phase of more tremendous innovation and change, and they want Adobe to help address that for them. And so we are definitely going to step up. You saw us introduce the digital publishing solution. You’re seeing us introduce content protection solutions to help them protect that content. You’re seeing us do more streaming solutions. And so we’re going to respond to our customers and make sure that we can continue to deliver leading solutions and not let anybody come in. I think tablet devices is another opportunity for us to introduce a new functionality. We showed some of that at MAX where you can use tablets in conjunction with our desktop products. And so it’s just the pace is accelerating, and we intend to continue to be the market leader there.

Heather Bellini – ISI Group

Great. Thank you.

Operator

And we’ll now go to Chad Bartley from Pacific Crest.

Chad Bartley – Pacific Crest

Hi, thanks. Couple quick questions, Mark. I think this was asked, but not answered. Can you give us any additional color on the Day Software acquisition, the accounting treatment around the deferred revenue and really what we can expect for a net revenue contribution next year? And then a follow-up on the Americas question is, the sequential decline in Q4, is that really just about the US education vertical not being quite as strong as you would have thought? Thanks.

Mark Garrett

Hi. Yes. So on the Day acquisition, there was – I think it was a few million dollars of deferred revenue write-down. It’s not significant. It’s not worth even worrying about to tell you the truth. And on the –

Chad Bartley – Pacific Crest

Is that for the full year 2011?

Mark Garrett

No, that was – yes. Next year, it’s insignificant. Don’t worry about it.

Chad Bartley – Pacific Crest

Okay.

Mark Garrett

And on the sequential decline in the US, no, that’s not driven by education.

Chad Bartley – Pacific Crest

Okay. Thanks.

Operator

And we’ll take a question from Brad Reback from Oppenheimer.

Brad Reback – Oppenheimer

Hey, guys. Thanks a lot. Just real quick, a small little point. On the average selling price for Creative Suite, did you see any meaningful change in the quarter versus last quarter?

Mark Garrett

No, we haven't seen any meaningful change in the ASPs. We continue to see customer adoption.

Brad Reback – Oppenheimer

Thanks a lot.

Operator

And there are no further questions. I will turn the conference back over to our presenters for any additional or closing remarks.

Mike Saviage

Hi, this is Mike. We’ll take one question from the Connect session. So there were several questions regarding the education market, which we’ve addressed. But there are a few questions on Omniture, specifically around the competitive environment, what we see out there with respect to competitors like Google, but also is there an opportunity to leverage Omniture more in the enterprise opportunity that we’ve been discussing.

Shantanu Narayen

Okay. So two separate questions, Mike, in that. The first question as it relates to what we are seeing on the Omniture side, we were very pleased with what we were able to do on our bookings and annual contract value, both in Q4 and frankly in 2010. And the customer adoption of Omniture continues to be, from our point of view, ahead of what we have thought when we made the acquisition. Clearly, our focus is on continuing to drive adoption of not just site analytics but the entire suite, which is the visitor acquisition products and the visitor conversion products. And that dynamic continues. And the larger customers who wish to save their own data and click their data proprietary to them are certainly adopting Omniture.

The other thing that we monitor and keep track of is the number of mobile transactions that we are now monitoring as well as the amount of video because we see these as two explosive areas that we want to make sure that Omniture is being used to track usage, both on mobile devices as well as video. And I think for mobile devices at something like 6 million now are coming up to in a week. And so we’re seeing nice adoption of our Omniture technology in these new particular areas. And so, excited about it, as we expand into new geographies, as we invest in sales and marketing, as we integrate with our Creative set of products, we definitely see upside.

As it relates to synergies with our other businesses, I think there is a very significant synergy between the Day business as well as the Omniture business, because anybody who is moving their business online, what Day allows you to do is have a leading content management solution that allows you to publish their web content as well as now analyze and optimize it. So, expect to see us have templates, so to speak, within the Omniture offering, which allow us to say, as you bring up Day, you can automatically start to do the site analytics associated with it. So there is both low-hanging fruit and deeper integrations that we will continue to work on as we move through the year.

And maybe in summary then, as we look at it, certainly we think that 2010 was a successful year for Adobe. We’re really looking forward to 2011 and continuing to deliver great innovative products to a broader set of customers and focusing frankly on our vision of helping change the world through digital experiences. So, thank you again for joining us today. Happy holidays, and we look forward to talking to you next year.

Mike Saviage

And this concludes our call. Thank you for joining us.

Operator

This concludes today’s presentation. Thank you for your participation.

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