Chief Financial Officer and Executive Vice President, Finance, Technology Services and Operations at Adobe
Thanks, Anil. Today I'll start by summarizing Adobe's performance in Q1 fiscal 2022, highlighting growth drivers across our businesses, and I'll finish with targets for Q2.
Adobe's strong financial results demonstrate the company's ability to execute in a challenging macroeconomic and geopolitical environment. Across our business, we are attracting new customers, signing up transformational deals, growing our recurring book of business and seeing emerging businesses ramp and, in some cases, reach escape velocity.
We are witnessing the digitization of everything, and Adobe's products offer customers access to a digital future, underpinning how they live and work. Our investment in products, marketing and a data-driven operating model are continuing to drive Adobe's growth. In Q1, Adobe achieved record revenue of $4.26 billion, which represents 9% year-over-year growth, or 17% on an adjusted basis.
Business and financial highlights included: GAAP diluted earnings per share of $2.66 and non-GAAP diluted earnings per share of $3.37; Digital Media revenue of $3.11 billion; net new Digital Media ARR of $418 million; Digital Experience revenue of $1.06 billion; cash flows from operations of $1.77 billion; RPO of $13.83 billion exiting the quarter; and repurchasing approximately 3.8 million shares of our stock during the quarter.
In our Digital Media segment, we achieved 9% year-over-year revenue growth in Q1, or 17% on an adjusted basis. We exited the quarter with $12.57 billion of Digital Media ARR. Global demand for digital content continues to explode, and with the strength of Adobe's product innovation and our data-driven operating model, our net new Digital Media ARR in Q1 grew on a year-over-year basis after factoring out the additional week in the year-ago period.
We achieved Creative revenue of $2.55 billion, which represents 7% year-over-year growth, or 16% on an adjusted basis. We added $315 million of net new Creative ARR in the quarter. First quarter Creative growth drivers included: strong Creative engagement and retention across individual and SMB segments; new customer demand across large organizations, small and medium businesses, driving growth in our Creative Cloud for Teams offering, which was the highest Q1 on record; sustained growth of subscription licensing for individual flagship applications, such as Photoshop, Illustrator and Premiere, as well as strength in our Adobe Stock business; and enterprise adoption of new collaboration capabilities, including Frame.io, as well as our 3D and immersive applications.
We're also pleased by the adoption we see in some of our newer initiatives such as Creative Cloud Express, Substance as well as Acrobat, Photoshop and Illustrator on the web. We are driving strong usage growth and have already attracted millions of monthly active users to our cloud-native offerings. We expect these businesses to be drivers of future ARR and revenue growth.
Adobe achieved Document Cloud revenue of $562 million, which represents 17% year-over-year growth, or 26% on an adjusted basis. We added $103 million of net new Document Cloud ARR in the quarter, surpassing $2 billion in ending ARR, growing at 29% year-over-year. Document Cloud continues to be our fastest growing business, demonstrating that our strategy of accelerating document productivity is working and reflecting how Acrobat and PDF are essential to the way people work in a digital-first world.
First quarter Document Cloud growth drivers included: customer demand for Acrobat subscriptions, the strongest Q1 on record; new licensing and renewal for our Acrobat for Teams offering in the SMB segment, both on Adobe.com and through our reseller channel; momentum in Adobe Sign, with strong year-over-year growth of sign transactions within Acrobat; strong demand for our PDF solutions on mobile; and continued momentum with our frictionless onboarding of new customers through Acrobat Web, with ARR growing approximately 90% year-over-year.
Turning to our Digital Experience segment. In Q1, we achieved revenue of $1.06 billion, which represents 13% year-over-year growth, or 20% on an adjusted basis. Digital Experience subscription revenue was $932 million, representing 15% year-over-year growth, or 22% on an adjusted basis. When we look at the quarterly sequential revenue growth, we continue to see acceleration, as our strategy of delivering personalization at scale is resonating with enterprise customers.
First quarter Digital Experience growth drivers included: new logo acquisition across our solutions; strong customer retention as a result of investments we've made in product innovation, greater value realization and customer experience; larger deal sizes in our Workfront business; traction upselling customers to new cloud-native solutions; and momentum with our Content & Commerce, customer data platform and Customer Journey Analytics offerings.
In Q1, we continued to increase investments in initiatives that will drive long-term revenue growth, including ramping headcount across R&D and sales capacity. Travel and facilities remained at lower levels in Q1, but we are increasing facilities utilization and travel in Q2 as we resume in-person meetings with customers and partners. Adobe's effective tax rate in Q1 was 18% on a GAAP basis and 18.5% on a non-GAAP basis. The tax rate came in higher than expected primarily due to less-than-expected tax benefits associated with stock-based compensation.
Our trade DSO was 36 days, which compares to 38 days in the year-ago quarter and 42 days last quarter. RPO grew by 19% year over year to $13.83 billion exiting Q1, benefitting from enterprise bookings. Our ending cash and short-term investment position exiting Q1 was $4.70 billion, and cash flows from operations in Q1 were $1.77 billion. We repurchased approximately 3.8 million shares in Q1 at a cost of $2.1 billion. Included in this purchase was the partial settlement of an accelerated share repurchase entered into during Q1 to repurchase shares at an aggregate cost of $2.4 billion.
The final number of shares to be repurchased under the ASR will be based on a discount to the volume-weighted average price of our common stock during the term of the agreement with the final settlement and delivery of incremental shares to Adobe scheduled to occur in early Q3. These share repurchases are part of the previously announced program, under which we currently have $10.7 billion remaining of our $15 billion authorization that was granted in December 2020 and goes through 2024.
Before we get to our Q2 targets, I want to discuss the impact of the devastating situation in Ukraine. Earlier this month, Adobe announced a cessation of all new sales in Russia and Belarus. In addition, we've made the decision to reduce our Digital Media ARR balance by $75 million, which represents all ARR for existing business in these two countries. While we will extend subscriptions automatically in Ukraine during this period and continue to provide Digital Media services, we reduced ARR by an additional $12 million, which represents our entire Ukraine business. This results in a total ARR reduction of $87 million and an expected revenue impact of $75 million for fiscal 2022. The impact to our Digital Experience business is de minimis.
For Q2, we are targeting total Adobe revenue of approximately $4.34 billion; net new Digital Media ARR of approximately $440 million; Digital Media segment revenue growth of approximately 13% year-over-year, or 14% in constant currency; Digital Experience segment revenue growth of approximately 15% year-over-year, or 16% in constant currency; Digital Experience subscription revenue growth of approximately 17% year-over-year, or 18% in constant currency; tax rate of approximately 20% on a GAAP basis and 18.5% on a non-GAAP basis; GAAP earnings per share of approximately $2.44; and Non-GAAP earnings per share of approximately $3.30. As a result of the lower-than-expected deductions from stock-based compensation, our effective tax rate for fiscal 2022 is now targeted to be 19.5% on a GAAP basis and 18.5% on a non-GAAP basis.
As we look towards the back half of the year, we expect quarterly sequential revenue and EPS growth in Q3 and Q4. In Digital Media, we expect strong second half ARR performance across Document Cloud and Creative Cloud, including continued strength of emerging businesses like Acrobat Web, Frame.io, Substance and Creative Cloud Express. In addition, we expect ARR contributions to increase sequentially in Q3 and Q4 from a new offering and pricing structure, which starts late in Q2.
We expect Digital Experience bookings to show continued momentum in the second half with a traditional strong Q4 finish. We will continue to invest in product innovation, sales capacity, marketing awareness and demand generation given our immense market opportunity. As the world reopens, we expect to increase our travel and facilities expenses.
In summary, I'm pleased that Adobe delivered another record quarter in Q1, with sustained growth and world-class profitability. Adobe continues to show its resilience through unprecedented circumstances that all companies face today and I'm confident we will emerge stronger. We are on track for another year of strong financial performance.
Shantanu, back to you.