The increase in DC ARR was driven by the adoption of Acrobat subscriptions and value-added services such as Adobe Sign. Management is optimistic about CC adoption and expects to build a strong pipeline for its potential paid subscribers through marketing programs, trial downloads and free memberships. Management expects growth to be fueled by three initiatives by migrating the Creative Suite installed base, drawing new clients and driving ARPU higher through cloud services like Adobe Stock. Also, CC mobile apps are continuously driving customer traffic and strengthening customer adoption. Within the Digital Marketing segment, Adobe Marketing Cloud revenues were up 26% year over year to $477 million. The improvement came on the back of strong contribution from TubeMogul acquisition, an increase in the size of accelerated conversions and international expansion. Mobile remains a key component for this business. Mobile data transactions grew to 56% of total Adobe Analytics transactions in the quarter. Margins Gross margin was 85.9%, down 65 basis points (bps) sequentially but up 24 bps year over year. Gross margin is typical of a software company and variations are generally related to the mix of revenues between categories. Adobe incurred adjusted operating expenses of $939.8 million, reflecting an increase of 5.8% sequentially and 11.7% year over year.
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