Adobe Systems Exec Insights: Subscriber Overachievement, Creating Loyal Customers
Walter Pritchard – Citigroup: 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 all 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 expect and I’m wondering sort of, any quantification to provide and how much revenue that approximate? If I do 90,000 subs times $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 in that 90,000, if that was all new subs in quarter, it sounds like some were converted?
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Mark Garrett – EVP and CFO: Sure, Walter, it’s Mark. So you are 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 5000 net new subscribers per week. 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 expectation, it’s clearly not the impact of all subscribers. So the net answer is about $10 million in the quarter can be attributed to our overachievement on subscribers.
Walter Pritchard – Citigroup: If you think about your guidance renewal to range 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 kind of projecting that that competed going forward and then it’s more of a headwind for that year than you might have anticipated back in November when you start talking about that.
Mark Garrett – EVP and CFO: 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 than to the Creative Cloud and that will have some impact on the revenue for the year as well.
Creating Loyal Customers:
Steven Ashley – Robert W. Baird: I 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.
Shantanu Narayen – President and CEO: 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 really are very pleased about is, when you look at the pipeline that we have for new subscribers. These are both the people who have awareness as a result of the trials and the free downloads that’s a significant portion. So as Mark I think also said in his prepared remarks. Given the promotion that we are 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 Ashley – Robert W. Baird: Can I just ask, if we were to look at the business by addition. If we were to look at the older CS4 or CS3 we see those people come forward and move to CS6. I think the expectation that we had, maybe you had, with a large percentage would choose subscription of those older customers, is that indeed happening?
Shantanu Narayen – President and CEO: The perpetual business is also very healthy, and again, I think it’s important to remember that at this time, the only thing we are 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. 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.