Adobe Digital Economy Project - March 2017

2. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Main takeaways: March 2  The Adobe DPI shows March as the fourth consecutive month of inflation in the U.S. across DPI categories (0.3 percent in the all-items index and 0.5 percent in the all-items less grocery index). This is the first time in the 40-month history of the DEP to show four or more consecutive months of inflation. The all-items inflation figure is, however, lower in March than in February (0.4% in the all-items index in February) and prices in the U.S. remain down -0.7% YoY, led by year- over-year price declines in grocery and durable goods  Monthly inflation in March is driven by price increases in non-durable goods and select durable goods:  Prices are up for flights (3.2% MoM), domestic hotels (2.3% MoM), computers (0.9% MoM), appliances (0.9% MoM), and groceries (0.1% MoM)  Grocery inflation in March is small but represents the largest category of spending in the DPI. Price increases in the category in March are driven by price increases in cheese and related products (0.8% MoM), sugar and sweets (0.6% MoM), fats and oils (0.4% MoM), and meats (0.3% MoM)  Historically the DPI shows price increases for flights and hotels in March, but inflation this month is higher than expected for both categories  The March DPI contains state-level inflation data for the second time. The state-level data show that inflation is consistent and affecting nearly all states  35 of the 51 states and D.C. are showing 4 straight months of inflation. Only four states (West Virginia, Delaware, Ohio, and Louisiana) show MoM deflation in March. However, prices remain down year-over- year: 47 out of 51 states and D.C. have lower prices compared to March 2016.  Differences in inflation across states were smaller in March than differences in February because of a small but uniform rise in grocery prices that affected all states similarly. The states with the highest inflation also had high inflation in flights and hotels  The Adobe DPI for the U.K. shows cumulative inflation for groceries of 1.3% YoY (March 2016 to March 2017) with a sixth-straight month of inflation (0.1% MoM)  Prices for computers (down -0.5% MoM) and televisions (down -1.5% MoM) are down month over month following a short period of inflation in both categories. Prices in both categories remain down year- over-year.

3. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Digital Insights Background Based on analysis ofaggregated and anonymous data from Adobe Marketing Cloud: • Adobe Analytics and Adobe Mobile Services Thousands of brands worldwide including two thirds of Fortune 50 companies rely on Adobe Marketing Cloud: • $7.50ofevery $10spent online with top 500 U.S.retailers go through Adobe Marketing Cloud ** • Adobe Marketing Cloud powers: • 20 ofthe top 30 U.S.employers • 9 of10largest hotel groups • 7of10largest airlines **Latest IR Top 500 Report 2015 3 Adobe Analytics Adobe Mobile Services

4. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Economist Advisors 4 Austan Goolsbee, University of Chicago  Robert P. Gwinn Professor of Economics at The University of Chicago's Booth School of Business  Formerly served as President Obama’s Chairman of the Council of Economic Advisers  Served as the youngest member of President Obama’s cabinet Pete Klenow, Stanford University  Professor, Department of Economics, Stanford University  Currently Visiting Scholar, Federal Reserve Bank of San Francisco  Member of editorial boards for Econometrica, American Economic Review, Quarterly Journal of Economics and others

7. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Methodology – U.K. 7 Based on analysis of aggregated and anonymous data • Fisher Ideal Price Index • $6 of every $10 spent online with top 100 European retailers go through Adobe Marketing Cloud ** • Based on analysis 1 billion website visits and 100k products sold online ONS: Consumer Price Index Adobe: Digital Price Index Quantities Sold No Yes Products/quantities updated Annually Daily Number of Products 180,000 100k (currently covered categories) Data Collection Frequency Monthly Daily Data Availability Monthly Daily Offline Prices Yes No Long history Yes No All categories of spending Yes No ** Latest IR U.K. Top 500 Report 2015

8. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Methodology – U.S. 8 Based on analysis of aggregated and anonymous data • Fisher Ideal Price Index • Adobe measures 80% of all online transactions from top 100 U.S. retailers ** • $7.50 of every $10 spent online with top 500 U.S. retailers go through Adobe Marketing Cloud ** • Based on analysis of 15 billion website visits and 2.2 million products sold online BLS: Consumer Price Index BEA: Personal Consumption Expenditures Adobe: Digital Price Index Quantities Sold No No Yes Products/quantities updated Every 2 years Monthly Daily Number of Products 83 thousand (all categories) 83 thousand (all categories) 2.5 million (currently covered categories) Data Collection Frequency Bi-Monthly Monthly Daily Data Availability Monthly Monthly Daily Offline Prices Yes Yes No Long history Yes Yes No All categories of spending Yes Yes No Index Type Laspeyeres Fisher Ideal Fisher Ideal ** Latest IR Top 500 Report 2015

9. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. DPI Coverage of U.S. CPI Categories 9 DPI Category February 2017 DPI Weights All-Items All-Items Minus Groceries Grocery 54.00% N/A Furniture and bedding 5.16% 11.22% Hotels 4.99% 10.85% Personal care products 4.79% 10.40% Tools & Home Improvement 4.61% 10.03% Flights 4.27% 9.27% Pet Products 4.01% 8.72% Alcohol 3.99% 8.68% Sporting goods 2.95% 6.40% Auto Parts 2.62% 5.71% Nonprescription drugs 2.45% 5.33% Toys 2.00% 4.35% Computers 1.87% 4.07% Appliances 1.21% 2.63% Televisions 0.66% 1.44% Medical equipment and supplies 0.41% 0.89% Shelter Food Away From Home Vehicles Apparel Electricity, gas etc. Grocery Furniture Lodging Personal Care Np. DrugsCurrent DPI To be added to DPI Unlikely Professional services Hospital services

10. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Big data in DPI decreases uncertainty 10 DPI CPI Appliances 0.15% 0.46% Airfare 0.08% 0.51% Computers 0.28% 0.49% Furniture and bedding 0.07% 0.31% Grocery 0.10% 0.12% Hotels: domestic 0.04% 2.30% Medical equipment and supplies 0.20% 0.39% Nonprescription Drugs 0.18% 0.47% Sporting Goods 0.12% 0.31% Televisions 0.24% 0.60% Toys 0.25% 0.59%

11. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges 11 • Televisions have seen higher-ticket items deflate faster than lower-ticket items in 2015 • For computers, mid-range models priced between $700 and $1,200 showed the highest deflation last year *Price bins are determined based on the price the product had when originally launched (first price).

12. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. The Importance of detail: Black Friday discount comparisons 12 • DPI captures the effect of major discount holidays like Black Friday and Cyber Monday because it measures quantities and does so in real-time • Prices online for Televisions dropped later in November 2016 than in 2015, with more discounts during the Black Friday week (Monday 11/21 through Cyber Monday), which accounted for more than half of all Televisions units purchased between November and December • Television prices then increased more in December 2016 than they did in December 2015, a sign that retailers were able to capitalize on later shopping

13. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Measuring rapidly shifting consumer preferences 13 • Electronics see an average of 77% of online spend on new* products** • 17% of monthly online spend for groceries on new products * Products that have been available for 1 year or less ** A product is defined as an item for purchase which has an unique identifier (such as a SKU)

14. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. State-by-state inflation: examples of sources of variance 14 1. Different baskets across states • Consumers in western states buy more on organic fruits and vegetables than other regions • Consumers in southern states buy more meats, poultry and fish than other regions 2. Different shopping attitudes, preferences across states • Consumers in states with lower median incomes tend to shop more on heavy-promotion days 3. Different prices for same products across states • Price-only variances across states tend to be bigger in groceries and smaller in consumer electronics

16. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Consistent Inflation across the U.S., but prices down YoY 16 • Consistent inflation is occurring everywhere across the U.S: 35 out of the 51 states and D.C. showed 4 straight months of inflation • Regional prices and consumer preferences are less significant in March: Monthly inflation in March was more uniform than previous months due to a small but uniform rise in grocery prices across states • Prices are still down compared to March 2016: 47 out of 51 states and D.C. are showing YoY deflation compared to March 2016

17. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Travel driving price changes across states 17 Highest inflation by state Lowest inflation by state State March MoM Inflation Major Inflation Drivers Massachusetts 0.8% Flights*, Hotels** Alaska 0.8% Flights*, Hotels** Washington 0.8% Flights*, Hotels** Illinois 0.6% Hotels**, Flights* New York 0.6% Hotels**, Flights* State March MoM Inflation Major Deflation Drivers Florida 0.0% Hotels**, Alcohol Louisiana -0.1% Flights*, Hotels** Ohio -0.1% Alcohol, Toys Delaware -0.1% Alcohol, Appliances West Virginia -0.2% Alcohol, Medical Equipment * Flight prices are determined by the state of flight origin ** Hotel prices reflect hotel properties in a given state *** New categories introduced in this month’s Adobe DPI

18. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe DPI Findings in the United Kingdom 18 • Adobe DPI for the U.K. shows cumulative inflation for groceries of 1.3% YoY (March 2016 to March 2017), with a sixth-straight month of inflation and (0.1% MoM inflation) • U.K. computers and television inflation have diverged in recent months, though both saw MoM inflation in January • Computers in the U.K. saw a -0.5% deflation in March; the category is still showing -0.2% deflation YoY • After two straight months of inflation in televisions, computers saw a --- -1.5% deflation in March, bringing the category to -15.7% YoY

19. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. February 2017 U.S. Recap 19 MoM: January to February MoM: January to February Difference (percentage) Same Sign? YoY: Cumulative February 2016-2017 YoY: Cumulative February 2016-2017 Difference (percentage) Same Sign? DPI CPI DPI vs. CPI DPI vs. CPI DPI CPI DPI vs. CPI DPI vs. CPI Alcohol 0.3% -0.1% 0.4% No 0.3% 0.1% 0.2% Yes Appliances -1.3% 0.8% -2.1% No -4.5% -3.8% -0.7% Yes Auto Parts -0.2% 0.2% -0.4% No -1.3% -0.9% -0.4% Yes Computers -0.6% -0.2% -0.4% Yes -7.9% -4.2% -3.7% Yes Flights 5.3% 4.2% 1.1% Yes 3.7% -1.3% 5.0% No Furniture and bedding -1.1% -0.1% -1.0% Yes -3.6% -1.4% -2.2% Yes Grocery 0.4% 0.2% 0.2% Yes -1.0% -1.7% 0.7% Yes Hotels 2.9% 4.3% -1.4% Yes 3.2% 1.3% 1.9% Yes Medical equipment and supplies -0.3% 0.8% -1.1% No -1.0% 0.1% -1.1% No Nonprescription drugs 0.3% 0.1% 0.2% Yes 0.3% 0.3% 0.0% Yes Personal care products -0.6% 0.1% -0.7% No -3.6% -0.8% -2.8% Yes Pet Products -0.1% -0.2% 0.1% Yes -0.1% -0.2% 0.1% Yes Sporting goods -0.9% 0.2% -1.1% No -6.1% -1.2% -4.9% Yes Televisions -1.0% 1.4% -2.4% No -19.1% -20.1% 1.0% Yes Tools & Home Improvement -0.1% 0.0% -0.1% No -2.0% -0.8% -1.2% Yes Toys -1.8% 0.2% -2.0% No -7.1% -7.9% 0.8% Yes Weighted Average Inflation* 0.4% 0.5% -0.2% Yes -1.3% -1.3% 0.0% Yes Weighted Aggregate Inflation, Less Grocery** 0.4% 0.8% -0.2% Yes -1.6% 0.0% -1.5% Yes * Weighted average inflation is calculated using CPI-U relative component weights (2014-2015) across the shared categories in the DPI and the CPI ** Grocery is a large component of the current CPI weights, so changes in grocery prices drive the majority of weighted average inflation. As we add more categories (like housing, auto etc.), these aggregate numbers will change. *** New categories introduced in this month’s Adobe DPI

20. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. March 2017 U.S. Summary 20 • Main MoM inflation in March: • Flights, hotels, computers, appliances • Main MoM deflation in March: • Tablets, medical equipment and supplies, toys YoY MoM Alcohol -0.9% -0.2% Appliances -4.5% 0.9% Auto Parts -1.3% 0.0% Computers -4.9% 0.9% Electronics -9.2% 0.2% Flights 5.0% 3.2% Domestic Flights 4.8% 3.1% Intl Flights 4.7% 3.6% Furniture and bedding -4.2% -0.5% Grocery -0.4% 0.1% Domestic Hotels 3.7% 2.3% Intl Hotels -1.4% 1.0% Medical Equipment and Supplies -1.3% -0.7% Nonprescription Drugs 0.6% -0.1% Personal Care Products -1.3% 0.5% Pet Products -0.7% -0.1% Sporting Goods -5.2% 0.0% Tablet -15.7% -2.5% Televisions -17.5% 0.6% Tools & Home Improvement -2.2% -0.2% Toys -4.9% -0.6% Weighted Average Inflation* -0.7% 0.3% Weighted Aggregate Inflation, Less Grocery** -1.1% 0.5% * Weighted average inflation is calculated using CPI-U relative component weights (2014-2015) across the shared categories in the DPI and the CPI ** Grocery is a large component of the current CPI weights, so changes in grocery prices drive the majority of weighted average inflation. As we add more categories (like housing, auto etc.), these aggregate numbers will change. *** New categories introduced in this month’s Adobe DPI

21. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Alcohol 21 • Adobe DPI shows cumulative deflation of -0.9% YoY (March 2016 to March 2017) • Prices for Beer show cumulative inflation of 3.4% YoY • Prices for Spirits show cumulative inflation of 0.4% YoY • Prices for Wine show cumulative deflation of -3.2% YoY • For March 2017, prices decreased -0.2% vs February 2017 MoM METHODOLOGY: • The data used reflect transactions for ~120 K products

22. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Appliances 22 • Adobe DPI shows cumulative deflation of -4.5% YoY (March 2016 to March 2017) • Main YoY price decreases for Appliances priced between $200 and $400 • For March 2017, prices increased 0.9% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~110 K products • Products include large appliances such as fridges, ovens, washers, dryers as well as smaller appliances such as vacuums, mixers, blenders etc

23. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Auto Parts 23 • Adobe DPI shows cumulative deflation of -1.3% YoY (March 2016 to March 2017) • Main YoY price decreases for Auto Parts priced greater than $200 • For March 2017, prices increased 0.0% vs February 2017 MoM METHODOLOGY: • The data used reflect transactions for ~300 K products

24. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Airfare 24 • Adobe DPI shows cumulative inflation of 5.0% YoY (March 2016 to March 2017) • For March 2017, prices increased 3.2% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable

25. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Airfare: domestic 25 • Adobe DPI shows cumulative inflation of 4.8% YoY (March 2016 to March 2017) • For March 2017, prices increased 3.1% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable

26. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Airfare: international 26 • Adobe DPI shows cumulative inflation of 4.7% YoY (March 2016 to March 2017) • Largest price increases for airfare were to South America, with inflation of 19.2% YoY • Largest price decreases are for airfare to Europe with deflation of - 6.2% YoY • For March 2017, prices increased 3.6% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable

27. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics 27 • Adobe DPI shows cumulative deflation of -9.2% YoY (March 2016 to March 2017) • Main YoY price decreases for Electronics priced greater than $1500 • For March 2017, prices increased 0.2% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~1 M products • Products span across dozens of diﬀerent categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games,printersetc..

28. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics: computers 28 • Adobe DPI shows cumulative deflation of -4.9% YoY (March 2016 to March 2017) • Main YoY price decreases for Computers priced between $700 and $1200 • Main YoY price increases for Computers priced between $0 and $300 • For March 2017, prices increased 0.9% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~63 K products • Products span across dozens of diﬀerent categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games,printersetc..

29. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics: televisions 29 • Adobe DPI shows cumulative deflation of -17.5% YoY (March 2016 to March 2017) • Main YoY price decreases for Televisions priced greater than $2000 • For March 2017, prices increased 0.6% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~33 K products • Products span across dozens of diﬀerent categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games,printersetc..

30. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics: tablets 30 • Adobe DPI shows cumulative deflation of -15.7% YoY (March 2016 to March 2017) • Main YoY price decreases for Tablets priced between $350 and $550 • For March 2017, prices decreased -2.5% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~13 K products • Products span across dozens of diﬀerent categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games,printersetc..

31. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Furniture and Bedding 31 • Adobe DPI shows cumulative deflation of -4.2% YoY (March 2016 to March 2017) • Main YoY price decreases for Furniture and bedding priced between $150 and $250 • For March 2017, prices decreased -0.5% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~173 K products • Products include interior and exterior furniture, mattresses and other bedding products

32. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Groceries 32 • Adobe DPI shows cumulative deflation of -0.4% YoY (March 2016 to March 2017) • Main YoY deflation for eggs (-20.6%), beverages (-2.8%) and sugar and sweets (-1.8%) • For March 2017, prices increased 0.1% vs February 2017 MoM • Main price increases for cheese (inflation 0.8% MoM), sugar and sweets (0.6% MoM). Fats and oils (0.4% inflation MoM) and meat products (0.3% inflation MoM) also contributed to the rise in grocery prices in March METHODOLOGY: • Our dataset covers an estimated 30-40% of all online grocery purchases. It contains transactions for ~195k products • The mix of grocery products bought online is not the same as oﬄine – the top category for online shopping is drinks (nonalcoholic), while for oﬄine shopping it is meat

33. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Hotels: domestic 33 METHODOLOGY: • The data used contains transactions for ~250 K hotel properties • Includes associated fees, where applicable • Adobe DPI shows cumulative inflation of 3.7% YoY (March 2016 to March 2017) • For March 2017, prices increased 2.3% vs February 2017 MoM

34. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Hotels: international 34 METHODOLOGY: • The data used contains transactions for ~250 K hotel properties • Includes associated fees, where applicable • Adobe DPI shows cumulative deflation of -1.4% YoY (March 2016 to March 2017) • Largest price increases were for hotels in South America (4.1% inflation YoY) • Largest price decreases were for hotels in Asia (-1.5 deflation YoY) • For March 2017, prices increased 0.9% vs February 2017 MoM

35. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Medical Equipment and Supplies 35 • Adobe DPI shows cumulative deflation of -1.3% YoY (March 2016 to March 2017) • Main YoY price decreases for medical equipment and supplies priced between $45 and $135 • Main YoY price increases for medical equipment and supplies priced greater than $135 • For March 2017, prices decreased -0.7% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~6,000 products • Includes supportive and convalescent equipment, dressings and first aid kits, and medical equipment for general use

36. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Nonprescription drugs 36 • Adobe DPI shows cumulative inflation of 0.6% YoY (March 2016 to March 2017) • Main YoY price decreases for Nonprescription Drugs priced between $0 and $10 • Main YoY price increases for Nonprescription Drugs priced between $25 and $40 • For March 2017, prices decreased -0.1% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~16 K products • Includes all non-prescription medicines taken by swallowing, applying on your skin (such as topicals), inhaling, as suppositories, or enemas.

37. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Personal care products 37 • Adobe DPI shows cumulative deflation of -1.3% YoY (March 2016 to March 2017) • Main YoY price decreases for Personal care products priced between $10 and $30 • Main YoY price increases for Personal care products priced greater than $150 • For March 2017, prices increased 0.5% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~110 K products • Includes cosmetics, lotion, hair (shampoo, conditioner) and nail care

38. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Pet products 38 • Adobe DPI shows cumulative deflation of -0.7% YoY (March 2016 to March 2017) • Main YoY price decreases for Pet Products priced between $10 and $20 • Main YoY price increases for Pet Products priced between $0 and $10 • For March 2017, prices decreased -0.1% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~70 K products • Includes pet food & treats, kitty litter and accessories (leashes, pet beds)

39. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Sporting Goods 39 • Adobe DPI shows cumulative deflation of -5.2% YoY (March 2016 to March 2017) • Main YoY price decreases for Sporting Goods priced between $200 and $350 • For March 2017, prices increased 0.0% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~300 K products • Products include small equipment and accessories (balls, gloves, uniforms) as well as large equipment such as treadmills, weightlifting tools etc.

40. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Tools & Home Improvement 40 • Adobe DPI shows cumulative deflation of -2.2% YoY (March 2016 to March 2017) • Main YoY price decreases for Tools & Home Improvement priced greater than $600 • For March 2017, prices decreased -0.2% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~225 K products

41. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Toys 41 • Adobe DPI shows cumulative deflation of -4.9% YoY (March 2016 to March 2017) • Main YoY price decreases for Toys priced between $70 and $200 • For March 2017, prices decreased -0.6% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~249 K products • Products include toys, games as well as playground equipment

43. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Online job seeking continues YoY declines 43 METHODOLOGY: • Based on analysis of aggregated and anonymous data from more than 1 billion visits to U.S. employment-search websites and top employer career pages • Adobe Marketing Cloud powers 20 of the top 30 U.S. employers** US online job seeking is down -19.3% YoY in March

45. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Online housing search grows YoY 45 METHODOLOGY: • Based on analysis of aggregated and anonymous data from more than 2 billion visits to U.S. housing search websites Online search for purchases and rentals is up 13.0% YoY in February.

47. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges, cont’d (tablets) 47 • Tablets have seen higher-ticket items deflate faster than lower-ticket items • The greatest price decrease and increase in November and December were for tablets priced between $350 and $600 *Price bins are determined based on the price the product had when originally launched (first price).

48. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges, cont’d (televisions) 48 • The highest priced televisions have have seen faster deflation than lower priced items • The greatest price decrease in November and increase in December were for TVs priced between $600 and $1,000 *Price bins are determined based on the price the product had when originally launched (first price).

49. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges, cont’d (televisions) 49 • Mid-range computers have seen faster deflation than lower and higher priced models • The greatest price decrease in November were for mid range computers between $700 and $1,200 while the greatest price increase in December were for lower priced models between $300 and $700 *Price bins are determined based on the price the product had when originally launched (first price).

50. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Digital Price Index: Fisher Ideal Price Index ∑𝑖𝑖=1 𝑛𝑛 𝑃𝑃𝑖𝑖𝑖𝑖 𝑈𝑈𝑖𝑖𝑖𝑖−1 ∑𝑖𝑖=1 𝑛𝑛 𝑃𝑃𝑖𝑖𝑖𝑖−1 𝑈𝑈𝑖𝑖𝑖𝑖−1 ∗ ∑𝑖𝑖=1 𝑛𝑛 𝑃𝑃𝑖𝑖𝑖𝑖 𝑈𝑈𝑖𝑖𝑖𝑖 ∑𝑖𝑖=1 𝑛𝑛 𝑃𝑃𝑖𝑖𝑖𝑖−1 𝑈𝑈𝑖𝑖𝑖𝑖 • The Fisher Ideal Price Index uses quantities purchased on the current period (month) and a previous period (previous month) to determine actual consumer’s preferences. Instead of assuming that consumers preferences for what goods to buy are constant over a certain number of years, it is able to account for the fact that they are constantly changing what they buy. 𝐹𝐹𝐹𝐹𝐹𝐹 𝐹𝐹𝐹𝐹𝐹 𝜋𝜋𝑡𝑡 =