Q2 2024 Adobe Inc Earnings Call

June 13, 2024

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Speaker Change: Good day and welcome to the Q2 FY 'twenty for Adobe Earnings Conference call Today's conference is being recorded.

Speaker Change: At this time I'd like to turn the conference over to Jonathan <unk> VP of Investor Relations. Please go ahead.

Operator: Time, I'd like to turn the conference over to Jonathan Vaas, of Investor Relations. Please go ahead.

Jonathan Vaas: Time, I'd like to turn the conference over to Jonathan Vaas, VP of Invest Relations.

Jonathan Vaas: Good afternoon, and thank you for joining us. With me on the call today, Shantanu Narayen, Adobe's Chair and CEO, David Wadhwani, President of Digital Media, Anil Chakravarthy, President of Digital Experience, and Dan Durn, Executive Vice President and CFO. On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2024 financial results.

Speaker Change: Good afternoon, and thank you for joining us with me on the call today are Sean Tinian Orion Adobe's Chair and CEO, David Wadhwani, President of digital media and Mel Chuckled, Bharti President of digital experience and Dan <unk> Executive Vice President and CFO.

Jonathan Vaas: Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's Chairman and CEO, David Wadhwani, President of Digital Media, Anil Chakravarthy, President of Digital Experience, and Dan Durn, Executive Vice President and CFO. On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2024 financial results. You can find a press release as well as PDFs of our prepared remarks and financial results on Adobe's Investor Relations website.

Speaker Change: On this call, which is being recorded we will discuss adobe's second quarter fiscal year 2024 financial results.

Jonathan Vaas: You can find our press release as well as PDFs of our prepared remarks and financial results on Adobe's Investor Relations website. The information discussed on this call, including our financial targets and product plans, is as of today, June 13th, and contains forward-looking statements that involve risk, uncertainty, and assumptions. Actual results may differ materially from those set forth in these statements. For more information on those risks, please review today's earnings release and Adobe's SEC filings.

Speaker Change: You can find our press release as well as pdfs of our prepared remarks in financial results on Adobe's Investor Relations website.

Jonathan Vaas: The information discussed on this call, including our financial targets and product plans, is as of today, June 13th, and contains forward-looking statements that involve risk, uncertainty, and assumptions. actual results may differ materially from those set forth in these statements.

Speaker Change: The information discussed on this call, including our financial targets and product plans is as of today June 13th and contains forward looking statements that involve risks uncertainty and assumptions.

Speaker Change: Actual results may differ materially from those set forth in these statements.

Jonathan Vaas: For more information on those risks, please review today's earnings release and Adobe's SEC filings. On this call, we will discuss GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates as well as constant currency rates. During this presentation, Adobe's executives will refer to constant currency growth rates unless otherwise stated. Non-GAAP reconciliations are available in our earnings release and on Adobe's Investor Relations website. I will now turn the call over to Shantanu.

Speaker Change: For more information on those risks. Please review today's earnings release, and Adobe's SEC filings.

Jonathan Vaas: On this call, we will discuss gap and non-GAAP financial measures. Our reported results include gap growth rates, as well as constant currency rates. During this presentation, Adobe's executives will refer to constant currency growth rates, unless otherwise stated. Non-GAAP reconciliation is available in our earnings release and non-Adobe's Investor Relations website.

Speaker Change: On this call, we will discuss GAAP and non-GAAP financial measures are reported results include GAAP growth rates as well as constant currency rates. During this presentation adobe's executives will refer to constant currency growth rates unless otherwise stated non-GAAP reconciliations are available in our earnings release and on Adobe's Investor Relations.

Speaker Change: Website.

Shantanu Narayen: I will now turn the call over to Shantanu.

Speaker Change: I will now turn the call over to Sean to now.

Shantanu Narayen: Thanks, Jonathan. Good afternoon, and thank you for joining us. Adobe had an outstanding quarter, achieving revenue of $5.31 billion, representing 11% year-over-year growth. Gap earnings per share for the quarter was $3.49, and non-GAAP earnings per share was $448, representing 15% year-over-year growth. Our success is driven by growing customer value through an innovative product roadmap. The advances we are delivering across Creative Cloud, Document Cloud, and Experience Cloud are enabling us to attract an expanding universe of users. Everyone from creators, communicators, students, entrepreneurs, and businesses of all sizes are using our products to unleash their creativity, accelerate document productivity, and power their digital businesses.

Jonathan: Thanks, Jonathan Good afternoon, and thank you for joining us.

Sean Tinian: Adobe had an outstanding quarter, achieving revenue of $5, three 1 billion, representing 11% year over year growth.

Speaker Change: GAAP earnings per share for the quarter was $3 49.

Speaker Change: And non-GAAP earnings per share was $4 48, representing 15% year over year growth.

Speaker Change: Our success is driven by growing customer value through an innovative product roadmap.

Shantanu Narayen: Our success is driven by growing customer value through an innovative product road map. The advances we are delivering across Creative Cloud, Document Cloud, and Experience Cloud are enabling us to attract an expanding universe of users. Everyone from creators, communicators, students, entrepreneurs, and businesses of all sizes is using our products to unleash their creativity, accelerate document productivity, and power their digital business. Adobe's highly differentiated approach to AI is rooted in the belief that creativity is a uniquely human trait. And that AI has the power to assist and amplify human ingenuity and enhance productivity.

Speaker Change: The advances we are delivering across creative cloud document cloud and experience cloud are enabling us to attract an expanding universe of users.

Speaker Change: Everyone from creators communicators students entrepreneurs and businesses of all sizes are using our products to unleash the creativity accelerate document productivity and power digital businesses.

Shantanu Narayen: Adobe's highly differentiated approach to AI is rooted in the belief that creativity is a uniquely human trait, and that AI has the power to assist and amplify human ingenuity and enhance productivity. We're innovating across data, models, and interfaces, and natively integrating AI across all our offerings. In Creative Cloud, we've invested in training our Firefly family of creative, generative AI models with a proprietary data set and delivering AI functionality within our flagship products, including Photoshop, Illustrator, Lightroom, and Premiere.

Speaker Change: Adobe is highly differentiated approach to AI is rooted in the belief that creativity is a uniquely human trade and that AI has the power to assist and amplify human ingenuity and enhance productivity.

Speaker Change: We're innovating across data models and interfaces and natively integrating AI across all our offerings in.

Shantanu Narayen: We're innovating across data, models, and interfaces and natively integrating AI across all our offers. For example, in Creative Cloud, we invested in training our Firefly family of creative generative AI models with a proprietary data set and delivering AI functionality within our flagship products, including Photoshop, Illustrator, Lightroom, and Premiere. We're re-imagining creativity for a broader set of customers by delivering Adobe Express as an AI-first application across the web and mobile platforms. Since its debut in March 2023, Firefly has been used to generate over 9 billion images across Adobe Creative Cloud.

And creative cloud, we have invested in training, our Firefly family of creative generative AI models with a proprietary dataset and delivering AI functionality within our flagship products, including Photoshop illustrator lightroom and premier.

Shantanu Narayen: We're reimagining creativity for a broader set of customers by delivering Adobe Express as an AI-first application across the web and mobile surfaces. Since its debut in March 2023, Firefly has been used to generate over 9 billion images across Adobe Creative Cloud. Tools. In Document Cloud, we're revolutionizing document productivity with Acrobat AI Assistant, an AI-powered conversational engine that can easily be deployed in minutes. This enhances the value of the trillions of PDFs, which hold a significant portion of the world's information. Acrobat AI Assistant features are now available through an add-on subscription to all Reader and Acrobat Enterprise and individual customers across desktop, web, and mobile.

Speaker Change: We're re imagining creativity for a broader set of customers by delivering Adobe Express is an AI first application across the web and mobile surfaces.

Since its debut in March 2023, Firefly has been used to generate over 9 billion images across Adobe creative tools.

Shantanu Narayen: In Document Cloud, we're revolutionizing document productivity with Acrobat AI Assistant, an AI-powered conversational engine that can easily be deployed in minutes. This enhances the value of the trillions of PDFs which hold a significant portion of the world's information. Acrobat AI Assistant features are now available through an add-on subscription to all Reader and Acrobat Enterprise and individual customers across desktop, web, and mobile.

Speaker Change: In document cloud revolutionizing document productivity with acrobat AI assistant.

Speaker Change: High powered conversational engine that can easily be deployed in minutes.

Speaker Change: This enhances the value of the trillions of Pdfs, which hold a significant portion of the world's information.

Speaker Change: Acrobat AI assistant features on our available to an add on subscription do all reader and acrobat enterprise and individual customers across desktop web and mobile.

Shantanu Narayen: At the end of May, we celebrated the five-year anniversary of Adobe Experience Platform, which we conceived and built from scratch, which is on track to be the next billion-dollar business in our digital experience portfolio. We released AAP AI Assistant to enhance the productivity of marketing practitioners through generative AI while expanding access to native AAP applications. With Adobe Gen Studio, we're bringing together products across our clouds, including Creative Cloud, Adobe Experience Manager, WorkFound, Adobe Journey Optimizer, and Customer Journey Analytics, as well as Adobe Express for Business, to address the massive content supply chain opportunity. Our approach to empower marketers to quickly plan, create, manage, activate, and measure on brand content is resonating with customers and validating our leadership across data, content, and journeys to deliver personalized experiences at scale.

Speaker Change: At the end of May we celebrated the five year anniversary of Adobe experience platform, which we conceived and built from scratch.

Shantanu Narayen: At the end of May, we celebrated the five-year anniversary of Adobe Experience Platform, which we conceived and built from scratch and which is on track to be the next billion-dollar business in our digital experience portfolio. We released AEP AI Assistant to enhance the productivity of marketing practitioners through generative AI while expanding access to native AEP applications. With Adobe GenStudio, we're bringing together products across our cloud, including Creative Cloud, Adobe Experience Manager, Workfront, Adobe Journey Optimizer, and Customer Journey Analytics, as well as Adobe Express for Business, to address the massive content supply chain opportunity.

Which is on track to be the next billion dollar business in our digital experience portfolio.

Speaker Change: We released AAP AI assistant to enhance the productivity of marketing practitioners through generative AI, while expanding access to native AEP applications.

Speaker Change: With Adobe <unk> studio, we're bringing together products across our clouds.

Speaker Change: <unk> creative cloud Adobe experience manager work found Adobe journey, Optimizer and customer journey analytics as well as Adobe Express for business to address the massive content supply chain opportunity.

Speaker Change: Our approach to empower marketers to quickly plan create manage activate and measure on brand content is resonating with customers and validating our leadership across data content and journeys to deliver personalized experiences at scale.

Shantanu Narayen: Our approach to empower marketers to quickly plan, create, manage, activate, and measure on-brand content is resonating with customers and validating our leadership across data, content, and journeys to deliver personalized experiences at scale. We're extending our applications to integrate third-party text, image, and video models and partnering strategically to create multimodal, large-language models, offering customers greater choice in tools, and further enhancing the value of our leading applications and solutions

Shantanu Narayen: We're extending our applications to integrate third-party text, image, and video models, and partnering strategically to create multi-modal, large-language models, offering customers greater choice in tools, and further enhancing the value of our leading applications and solutions. We're driving strong usage, value, and demand for our AI solutions across all customer segments and seeing early success, monetizing new AI technologies across our digital media and digital experience businesses.

Speaker Change: We're extending our applications to integrate third party text image and video models and partnering strategically to create multimodal large language models offering customers greater choice and tools and further enhancing the value of our leading applications and solutions.

Speaker Change: We're driving strong usage value and demand for our AI solutions across all customer segments and seeing early success monetizing new AI technologies across our digital media and digital experience businesses.

Shantanu Narayen: We're driving strong usage, value, and demand for our AI solutions across all customer segments and seeing early success monetizing new AI technologies across our digital media and digital experience business. Given this rich product roadmap, focus on execution, and customer demand in the first half of the year, we're pleased to raise our annual Digital Media Net New ARR, Digital Experience Subscription Revenue, and EPS target. I'll now turn it over to David to discuss the momentum in our digital media business. Thanks, Shantanu. Hello everyone.

Shantanu Narayen: Given this rich product railroad map, focus on execution, and customer demand in the first half of the year, we're pleased to raise our annual digital media net new ARR, digital experience subscription revenue, and EPS targets.

Speaker Change: Given this rich product road map focused on execution and customer demand in the first half of the year. We're pleased to raise our annual digital media net new a or our digital experience subscription revenue and EPS targets.

David Wadhwani: I'll now turn it over to David to discuss the momentum in our digital media business.

I'll now turn it over to David to discuss the momentum in our digital media business.

David Wadhwani: Thanks, Shotnew.

David Wadhwani: Thank you <unk> Hello, everyone. In Q2, we achieved net new digital media <unk> of $487 million and revenue of $3 91 billion, which grew 12% year over year.

David Wadhwani: In Q2, we achieved net new digital media ARR of $487 million and revenue of $3.91 billion, which grew 12% year over year. On the Document Cloud side, PDF has become a global standard for automating business and consumer workflows, and Acrobat is the platform of choice to view, edit, share, and collaborate with these documents. We continue to see steady growth in monthly active users of our Document Cloud solutions, including Acrobat Reader, Acrobat Standard, and Pro, and our Signature, Share, and Review workflows across mobile, web, and desktop.

David Wadhwani: Hello, everyone. In Q2, we achieved net new digital media ARR of 487 million, and revenue of 3.91 billion, which grew 12% year-over-year. On the document cloud side, PDF has become a global standard for automating business and consumer workflows, and Acrobat is the platform of choice to view, edit, share, and collaborate with these documents. We continue to see steady growth in monthly active users of our document cloud solutions, including Acrobat Reader, Acrobat Standard and Pro, and our signature share and review workflows across mobile, web, and desktop. The introduction of Acrobat AI Assistant made generally available in April for English documents marks the beginning of a new era of innovation and efficiency for the approximately 3 trillion PDFs in the world.

David Wadhwani: On the document cloud side PDF has become a global standard for automating business and consumer workflows and acrobat as the platform of choice to view edit share and collaborate with these documents we continue to see steady growth in monthly active users of our document cloud solutions, including acrobat reader acrobat standard in pro.

David Wadhwani: And our signature share and review workflows across mobile web and desktop.

David Wadhwani: The introduction of Acrobat AI Assistant, made generally available in April for English documents, marks the beginning of a new era of innovation and efficiency for the approximately three trillion PDFs in the world. Acrobat AI Assistant is empowering everyone to shift from reading documents to having conversations with them in order to summarize documents, extract insights, compose presentations, and share learning. AI Assistant is available as a standalone offer for use in Reader and as an add-on to Acrobat Standard and Pro.

David Wadhwani: The introduction of acrobat AI assistant made generally available in April for English documents marks the beginning of a new era of innovation and efficiency for the approximately three trillion pdfs in the world.

David Wadhwani: Acrobat AI Assistant is empowering everyone to shift from reading documents to having conversations with them in order to summarize documents, extract insights, compose presentations, and share learnings. AI Assistant is available as a standalone offer for use and reader, and as an add-on to Acrobat Standard and Pro. We're seeing early success driving adoption of AI Assistant as part of our commerce flows and remain optimistic about the long-term opportunities. In Q2, we achieved Document Cloud revenue of 782 million, growing 19% year-over-year. We added 165 million of net new Document Cloud ARR, which was a Q2 record, with year-over-year ending ARR growth of 24% in constant currency.

David Wadhwani: Acrobat AI assistant is empowering everyone to shift from reading documents to having conversations with them in order to summarize documents extract insights can post presentations and share learnings AI assistant is available as a standalone offer for use in reader and as an add on to acrobat standard and probe.

David Wadhwani: We're seeing early success driving adoption of AI Assistant as part of our commerce flows, and we remain optimistic about the long-term opportunities. In Q2, we achieved Document Cloud revenue of $782 million, growing 19% year-over-year. We added $165 million of net new Document Cloud ARR, which was a Q2 record, with year-over-year ending ARR growth of 24% in constant currency. Other business highlights include the general availability of Acrobat AI Assistant support for document types beyond PDF, meeting transcripts, and enterprise requirements. Acrobat link sharing for PDF-based collaboration continues to grow rapidly, more than doubling year over year, and driving viral new user adoption.

David Wadhwani: Seeing early success driving adoption of AI assistant as part of our Commerce flows and remain optimistic about the long term opportunities.

David Wadhwani: In Q2, we achieved document cloud revenue of 782 million growing 19% year over year.

David Wadhwani: We added 165 million of net new document cloud <unk>, which was a Q2 record with year over year, ending <unk> growth of 24% in constant currency.

David Wadhwani: Other business highlights include general availability of Acrobat AI Assistant support for document types beyond PDF, meeting transcripts, and enterprise requirements. Acrobat link sharing for PDF-based collaboration continues to go rapidly, more than doubling year-over-year and driving viral new user adoption. Three monthly active users of Acrobat Web grew over 60% year-over-year as a result of link sharing and our Microsoft Edge and Google Chrome extensions. Continued strength with free-to-paid digital conversion as a result of product growth optimizations. Strong growth in the SMB segment for our teams offering driven by a combination of seed expansion and new account wins.

David Wadhwani: Other business highlights include general availability of acrobat AI assistant support for document types beyond PDF meeting transcripts and enterprise requirements.

David Wadhwani: Acrobat linked sharing for PDF based collaboration continues to grow rapidly more than doubling year over year and driving viral new user adoption.

David Wadhwani: Pre-monthly active users of Acrobat Web grew over 60% year-over-year as a result of link sharing and our Microsoft Edge and Google Chrome extensions. Continued strength with free-to-pay digital conversion as a result of product-led growth optimization. [inaudible] Key Enterprise Customer Wins with AstraZeneca, Chevron, State Government of Florida, State of Illinois, United Healthcare Services, and Wells Fargo.

David Wadhwani: Monthly active users of acrobat web grew over 60% year over year as a result of linked sharing and our Microsoft edge and Google Chrome extensions.

David Wadhwani: Continued strength with free to paid digital conversion as a result of product led growth optimizations.

David Wadhwani: Strong growth in the SMB segment for our teams offering driven by a combination of seat expansion and new account wins.

David Wadhwani: Key enterprise customer wins with AstraZeneca, Chevron, State government of Florida, State of Illinois, United Healthcare Services, and Wells Fargo.

David Wadhwani: Key enterprise customer wins with Astrazeneca Chevron State government of Florida State of Illinois, United Health Care services and Wells Fargo.

David Wadhwani: Turning to Creative Cloud, creative professionals are leading with a global charge to meet the ever-increasing demand for engaging content across a variety of platforms and channels. Enterprises rely on creative professionals to produce differentiated content to drive increasingly personalized marketing campaigns. Scholar partners and small businesses need to stand out in a crowded digital landscape with engaging videos and designs. Educators are passionate about providing students with the visual communication skills needed to thrive in the decades ahead. Consumers are increasingly looking for ways to share their stories digitally. Creative Cloud Express and Firefly services are uniquely positioned to catalyze this opportunity for everyone by leveraging the promise of generative AI.

David Wadhwani: Turning to Creative Cloud, creative professionals are leading the global charge to meet the ever-increasing demand for engaging content across a variety of platforms and channels. Enterprises rely on creative professionals to produce differentiated content to drive increasingly personalized marketing campaigns. Solopreneurs and small businesses need to stand out in a crowded digital landscape with engaging videos and designs. Similarly, educators are passionate about providing students with the visual communication skills needed to thrive in the decades ahead.

David Wadhwani: Turning to creative cloud creative professionals are leading the global charged to meet the ever increasing demand for engaging content across a variety of platforms and channels enterprises rely on creative professionals to produce differentiated content to drive increasingly personalized marketing campaigns solar printers, and small businesses need to stand out in a crowded digital landscape.

David Wadhwani: With engaging videos and designs educators are passionate about providing students with the visual communication skills needed to thrive in the decades ahead consumers are increasingly looking for ways to share their stories digitally.

David Wadhwani: Consumers are increasingly looking for ways to share their stories digitally, and Firefly Services is uniquely positioned to catalyze this opportunity. Our Creative Cloud flagship applications continue to release new features that significantly improve user onboarding while simultaneously delivering an unprecedented level of power and precision. Generative Fill and Generative Expand are already two of the top three features used by customers on the latest version of Photoshop. Text-to-vector support is off to a great start in Illustrator, and Remove Object is the fastest-growing feature in Lightroom Mobile.

David Wadhwani: Video Cloud Express and Firefly services are uniquely positioned to capitalize this opportunity for everyone by leveraging the promise of generative AI.

David Wadhwani: Our Creative Cloud flagship applications continue to release new features that are significantly improving user onboarding while simultaneously delivering an unprecedented level of power and precision. Generative fill and generative expand are already two of the top three features used by customers on the latest version of Photoshop. Text to vector support is off to a great start in Illustrator. Remove object is the fastest growing feature in Lightroom mobile. A preview of generative AI capabilities in Premiere run production hub award of excellence at NAB, the largest video show in North America. We are integrating our leading applications with Firefly and third party generative AI models to deliver the richest, most engaging content.

David Wadhwani: Our creative cloud flagship applications continue to release, new features that are significantly improving user onboarding, while simultaneously delivering an unprecedented level of power and precision.

David Wadhwani: Generally fill in generative expand our already two of the top three features used by customers on the latest version of Photoshop text.

David Wadhwani: Text of vector support is off to a great start and illustrator remove object is the fastest growing feature in light room mobile.

David Wadhwani: A preview of generative AI capabilities in Premiere won the Production Hub Award of Excellence at NAB, the largest video show in North America. We are integrating our leading applications with Firefly and third-party generative AI models to deliver the richest, most engaging content. Our vision for Adobe Express is to provide a breakthrough application to make design easy for communicators worldwide, leveraging generative AI and decades of Adobe technology across web and mobile. Our launch of the all-new Express application on iOS and Android earlier this quarter was off to a strong start with monthly active users doubling quarter over quarter.

David Wadhwani: Our preview of generative AI capabilities in Premier one production have award of excellence at the largest video show in North America.

David Wadhwani: We are integrating our leading applications with Firefly and third party degenerative AI models to deliver the richest most engaging content.

David Wadhwani: A version for Adobe Express is to provide a breakthrough application to make design easy for communicators worldwide, leveraging generative AI and decades of Adobe technology across web and mobile. A launch of the all new Express application on iOS and Android earlier this quarter is off to a strong start, with monthly active users doubling quarter over quarter. This week's Design Made Easy event, which focused on Express for Business, was another big step forward for us. Companies of all sizes are excited about the integrated power and commercial safety of Firefly, the seamless workflows with Photoshop, Illustrator, and Adobe Experience Cloud, and enterprise-grade brand controls that are now part of Express for business.

Our vision for Adobe Express is to provide a breakthrough application to make design easy for communicators worldwide, leveraging generative AI and decades of Adobe technology across web and mobile.

David Wadhwani: Our launch of the all New express application on iOS and Android earlier this quarter is off to a strong start with monthly active users doubling quarter over quarter. This.

David Wadhwani: This week's Design Made Easy event, which focused on Express for Business, was another big step forward for us. Companies of all sizes are excited about the integrated power and commercial safety of Firefly, the seamless workflows with Photoshop, Illustrator, and Adobe Experience Cloud, and enterprise-grade brand controls that are now part of Express for Business, making it the optimal product for marketing, sales, and HR teams to quickly and easily create visual content to share.

David Wadhwani: This week's design made easy event, which focused on express for business was another big step forward for US companies of all sizes are excited about the integrated power and commercial safety of Firefly, the seamless workflows with Photoshop illustrator and Adobe experience cloud.

David Wadhwani: And enterprise grade brand controls that are now part of express for business, making it the optimal product for marketing sales and HR teams to quickly and easily create visual content to share.

David Wadhwani: Making it the optimal product for marketing, sales, and HR teams to quickly and easily create visual content to share. Mark, we also announce the general availability of Firefly Services and Custom Models at Summit. The platform makes API calls and model customization available to developers, accessible through low code, no code tools, and integrates with our Experience Cloud products. Firefly services can power the creation of thousands of asset variations in minutes instead of months and at a fraction of the cost. This allows us to monetize the volume of content being created through automation services. The increasing availability of Firefly in Creative Cloud, Express, Firefly services, and the web app is giving us opportunities to access more new users, provide more value to existing users, and monetize content automation.

David Wadhwani: We also announced the general availability of Firefly services and custom models at summit.

David Wadhwani: We also announced the general availability of Firefly services and custom models at Summit. The platform makes API calls and model customization available to developers, accessible through low-code, no-code tools, and integrates with our Experience Cloud products. Firefly Services can power the creation of thousands of asset variations in minutes instead of months and at a fraction of the cost.

David Wadhwani: The platform makes API calls and modeled customization available to developers accessible through low code no code tools and integrates with our experienced cloud products.

David Wadhwani: <unk> services can power the creation of thousands of asset variations in minutes instead of months and at a fraction of the cost. This allows us to monetize the volume of content being created through automation services.

David Wadhwani: This allows us to monetize the volume of content being created through automation services. The increasing availability of Firefly in Creative Cloud, Express, Firefly Services, and the web app is giving us opportunities to reach more new users, provide more value to existing users, and monetize content automation. These integrations are driving the acceleration of Firefly Generations, with May seeing the most generations of any month to date.

David Wadhwani: The increasing availability of Firefly in creative cloud Xpress Firefly services and the web App is giving us opportunities to access more new users provide more value to existing users and monetize content automation.

David Wadhwani: These integrations are driving the acceleration of Firefly Generations, with May seeing the most generations of any month to date. In Q2, we achieved $3.13 billion in revenue, which grew 11% year-over-year. Net new Creative Cloud ARR was $322 million. Other business highlights include the launch of Express for Business, including support for brand controls and template locking, Firefly Custom Models, bulk creation and generation of variations, presentation and print capabilities, and workflows with Photoshop, Illustrator, and Experience Cloud. The release of Firefly Image 3 Foundation model with high quality image generation and more control with structure and style reference, the release of the Photoshop beta with reference image and advances in generative fill, the debut of generative remove in Adobe Lightroom, enabling anyone to remove unwanted objects from any photograph non-destructively with stunning high quality photo realistic results.

David Wadhwani: These integrations are driving the acceleration of Firefly generations with Macy's the most generations of any month to date.

David Wadhwani: In Q2, we achieved $3.13 billion in revenue, which grew 11% year over year. Net new Creative Cloud ARR was $322 million. Other business highlights include the launch of Express for Business, including support for brand controls and template locking, Firefly custom models, bulk creation, and generation of variation; Presentation & Print Capabilities, and Workflows with Photoshop, Illustrator, and Experience; and the release of Firefly Image 3 Foundation model with high quality image generation and more control with structure and style reference.

In Q2, we achieved three <unk>, one 3 billion in revenue, which grew 11% year over year net new creative cloud <unk> was $322 million.

David Wadhwani: Other business highlights include the launch of express for business, including support for brand controls and tempo blocking Firefly custom models bulk creation and generation of variations presentation, and print capabilities and workflows with photoshop illustrator and experience cloud.

David Wadhwani: The release of Firefly image, three foundation model with high quality image generation and more control with structure and style reference the release of the Photoshop beta with reference image and advances in generative fill.

David Wadhwani: The release of the Photoshop Beta with reference image and advances in generative fill. The debut of generative remove in Adobe Lightroom, enabling anyone to remove unwanted objects from any photograph non-destructively with stunning high-quality photorealistic results. The release of the Premiere Beta with new audio workflows driving strong usage. The deep integration of Firefly in Substance 3D, which provides an easy way to create textures and materials from reference images.

David Wadhwani: The debut of generative remove in Adobe lightroom, enabling anyone to remove unwanted objects from any photograph non destructive Lee with stunning high quality photo realistic results.

David Wadhwani: The release of the premiere beta with new audio workflows driving strong usage, the deep integration of Firefly in Substance 3D which provides an easy way to create textures and materials from reference images. The introduction of an all-new Frame.io streamlining workflows across content types on a flexible and intuitive collaboration platform.

The release of the Premier beta with new audio workflows driving strong usage.

David Wadhwani: The deep integration of Firefly in substance three D, which provides an easy way to create textures and materials from reference images.

David Wadhwani: The introduction of an all new frame Io streamlining workflows across content types on our flexible and intuitive collaboration platform key.

David Wadhwani: The introduction of an all-new Frame.io streamlining workflows across content types on a flexible and intuitive collaboration platform. Key enterprise customer wins include Credit Agricole, FedEx, Infosys, Rakuten, Ralph Lauren, Samsung, Schneider Electric, and Volvo. We're excited about the accelerating pace of innovation across the digital media business and pleased with the adoption of AI functionality, as well as its early monetization across Document Cloud and Creative Cloud, including our flagship applications, Firefly Services, and Express. We're pleased to raise our annual net new ARR target to $1.95 billion and excited to deliver on our rich product roadmap in the second half of the year. I'll now pass it to Anil.

David Wadhwani: Key enterprise customer wins include Credit, Agricultural, FedEx, Infosys, Rakuten, Ralph Lauren, Samsung, Schneider Electric, and Volvo. We're excited about the accelerating pace of innovation across the digital media business and pleased with the adoption of AI functionality as well as its early monetization across Document Cloud and Creative Cloud, including our flagship applications, Firefly services, and Express.

David Wadhwani: Key enterprise customer wins include credit Agricole, Fedex, Infosys, Rakuten, Ralph Lauren Samsung Schneider electric and Volvo.

David Wadhwani: We're excited about the accelerating pace of innovation across the digital media business and pleased with the adoption of AI functionality as well as its early monetization across document cloud and creative cloud, including our flagship applications Firefly services and express we're pleased to raise our annual net new air our target to $1 95.

David Wadhwani: We're pleased to raise our annual net new ARR target to $1.95 billion and excited to deliver on our rich product roadmap in the second half.

David Wadhwani: And excited to deliver on our rich product roadmap in the second half.

Anil Chakravarthy: I'll now pass it to a note.

Enel: I'll now pass it to Enel.

Anil Chakravarthy: Thanks, David.

Enel: Thanks, David.

Anil S. Chakravarthy: Thanks, David. Hello, everyone. In Q2, we achieved experienced cloud revenue of $1.33 billion, and subscription revenue was $1.2 billion, representing 13% year-over-year growth. We are the industry leader in helping enterprises deliver personalized experiences at scale to their customers by combining the right content, customer data, and journeys in real time. When we introduced Adobe Experience Platform five years ago, it was a revolutionary approach to address customer data and journeys. Today, we're the number one digital experience platform, and AEP with native apps is well on its way to becoming a billion-dollar company. We're now transforming the content supply chain for enterprises with Adobe GenStudio.

Anil Chakravarthy: Hello everyone. In Q2, we achieved Experience Cloud revenue of $1.33 billion. Subscription revenue was $1.2 billion, representing 13% year-over-year growth. We are the industry leader in helping enterprises deliver personalized experiences at scale to their customers by combining the right content, customer data, and journeys in real time. When we introduced Adobe Experience Platform five years ago, it was a revolutionary approach to address customer data and journeys. Arnise, today where the number one digital experience platform and AP with native apps is well on its way to becoming a billion-dollar business. Making it a priority investment for chief marketing officers, chief information officers and chief digital officers.

Speaker Change: Hello, everyone in Q2, we achieved experience cloud revenue of $1.3 billion.

Enel: Subscription revenue was $1 2 billion representing.

Enel: Representing 13% year over year growth.

We are the industry leader in helping enterprises deliver personalized experiences at scale to their customers by combining the right content customer data and journeys in real time.

Enel: When we introduced Adobe experience platform five years ago. It was a revolutionary approach to address customer data in journeys.

Enel: They were the number one digital experience platform and AEP with native apps is well on its way to becoming a $1 billion business.

Enel: We are now transforming the cotton supply chain for enterprises with Adobe Gen studio.

Anil S. Chakravarthy: Enabling them to produce content at scale, leveraging generative AI through native integrations with Firefly services and Adobe Express for Business. Enterprise customers, both B2C and B2B, view customer experience management and personalization at scale as key areas of differentiation, making it a priority investment for Chief Marketing Officers, Chief Information Officers, and Chief Digital Officers. We're excited by the customer interest and adoption of our latest innovations, including AEP AIS A generative AI-powered conversational interface that empowers practitioners to automate tasks, simulate outcomes, and generate new audiences and journeys.

Enel: They bring them to produce content at scale, leveraging generative AI to native integrations with Firefly services and Adobe Express for business.

Enel: Enterprise customers, both B to C and B to B view customer experience management and personalization at scale is key areas of differentiation, making it a priority investment for chief marketing officers, Chief information officers and Chief digital officers.

Anil Chakravarthy: We're excited by the customer interest and adoption of our latest innovations, including AEP AI Assistant, a generative AI powered conversational interface that empowers practitioners to automate tasks, simulate outcomes, and generate new audiences and journeys. For example, customers like General Motors and Haynes Branch have been working with AEP AI Assistant to boost productivity and accelerate time to value, while democratizing access to AEP and apps across their organizations. Marriott International is a great example of a customer that's expanded his decade-long relationship with Adobe and turned to Adobe Experience Cloud to orchestrate highly personalized guest experiences across online reservations and the Marriott-born-voy mobile app.

Enel: We are excited by the customer interest and adoption of our latest innovations, including AEP AI assistant agility of AI powered conversational interface that empower practitioners to automate tasks simulate outcomes and generate new audiences in journeys.

Anil S. Chakravarthy: For example, customers like General Motors and Haynes Branch have been working with AEP AI Assistant to boost productivity and accelerate time-to-value, while democratizing access to AEP and apps across their organization. Marriott International is a great example of a customer that's expanded its decade-long relationship with Adobe and turned to Adobe Experience Cloud to orchestrate highly personalized guest experiences across online reservations and the Marriott Bonvoy mobile app. Adobe Realtime CDP and Adobe Journey Optimizer enable Marriott to connect data from disparate sources and activate relevant experiences in moments that matter, helping the company match individuals with the best options across its portfolio of more than 30 brands and nearly 9,000 properties.

Enel: For example, customers like General Motors, and Hanesbrands have been working with AEP and assistant to boost productivity and accelerate time to value, while democratizing access to AEP and apps across their organizations.

Enel: Marriott International is a great example of a customer that expanded its decade long relationship with Adobe and turn to Adobe experience cloud to orchestrate highly personalized guest experiences across online reservations and the Marriott <unk> mobile app.

Anil Chakravarthy: Adobe Real-time CDP and Adobe Journey Optimizer enable Marriott to connect data from disparate sources and activate relevant experiences in moments that matter, helping the company match individuals with the best options across its network. This portfolio of more than 30 brands and nearly 9,000 properties. Other business highlights include continued momentum with AEP and native applications, growing subscription revenue 60% year over year in Q2. AEP Innovations announced at Summit include Adobe Journey Optimizer B2B Edition, a new application for B2B customers built on AEP to orchestrate account-specific buying group journeys. Federated audience composition, which enables enterprises to minimize data copy and generate audiences directly from their enterprise data warehouses.

Enel: Adobe real time, CDP, and Adobe journey optimizer enable Marriott to connect data from disparate sources and activate relevant experiences in moments that matter, helping the company match individuals with the best options across its portfolio of more than 30 brands and nearly 9000 properties.

Anil S. Chakravarthy: Other business highlights include continued momentum with AEP and native applications, growing subscription revenue 60% year over year in Q2. AEP innovations announced at Summit include Adobe Journey Optimizer B2B Edition, a new application for B2B customers built on AEP to orchestrate account-specific buying group journeys; and Federated Audience Composition, which enables enterprises to minimize data copy and generate audiences directly from their enterprise data warehouses.

Enel: Other business highlights include continued momentum with AEP and native applications growing subscription revenue, 60% year over year in Q2.

Enel: AEP innovations announced at summit include Adobe journey Optimizer BTB edition, a new application for <unk> customers built on AEP to orchestrate account specific buying group journeys.

Enel: Federated audience composition, which enables enterprises to minimize data copy and generate audiences directly from their enterprise data warehouses.

Anil Chakravarthy: And real-time CDP collaboration, a new clean-room application for brands and publishers to collaborate in a privacy-safe way to discover, reach and measure their high-value audiences in a world without third-party cookies. Gen studio innovations to address enterprise content supply chain needs across workflow and planning, creation and production, asset management, delivery and activation, and reporting and insights. Recent advancements include contextual search in Adobe Experience Manager Assets, which enables users to find the right asset and variation in their growing digital libraries. Adobe Workfront Planning, which provides every user with a unified view of all activities across the marketing life cycle through highly visual marketing campaign calendars and dynamic briefs.

Anil S. Chakravarthy: And Realtime CDP Collaboration, a new cleanroom application for brands and publishers to collaborate in a privacy-safe way to discover, reach, and measure their high-value audiences in a world without third-party content. GenStudio Innovations to address enterprise content supply chain needs across workflow and planning, creation and production, asset management, delivery and activation, and reporting and insight. Recent advancements include contextual search in Adobe Experience Manager Assets, which enables users to find the right asset and variation in their growing digital library; and Workfront Planning, which provides every user with a unified view of all activities across the marketing lifecycle through highly visual marketing campaign calendars and dynamic briefs.

Enel: And real time, CDP collaboration a new clean room application for brands and publishers to collaborate in a privacy safe way to discover reach and measure their high value audiences in the world without third party cookies.

Enel: Then studio innovations to address enterprise content supply chain needs across workload planning creation and production asset management delivery and activation and reporting and insights.

Enel: Recent advancements include contextual search and Adobe experience manager assets, which enables users to find the right asset and variation in their growing digital libraries.

We work for and planning, which provides every user with a unified view of all activities across the marketing lifecycle through highly visual marketing campaign calendars and dynamic briefs.

Anil S. Chakravarthy: And AEM generates variations, which accelerates the creation of audience-specific content variations to drive personalized web experiences. Strong industry analyst recognition, including Gartner's Magic Quadrant for content marketing platforms, and leadership for both IDC's B2C and B2B marketscapes for digital commerce applications. Key customer wins include Amazon, British Telecom, Comcast, Mercedes-Benz, Maruti Suzuki, Nationwide Building Society, Novo Nordisk, ServiceNow, Stellantis, Ulta Beauty, and U.S. Department of the Treasury. We have enabled our vibrant partner ecosystem of system integrators and agencies to deliver advisory and implementation services across our product. We look forward to engaging with customers and major agencies at the Cannes Lions Festival later this year.

Anil Chakravarthy: And AEM Generate Variations, which accelerates the creation of audience-specific content variations to drive personalized web experiences. Strong industry analyst recognition including Gardner's Magic Quadrant for content marketing platforms and leadership for both IDC's B2C and B2B market scapes for digital commerce applications. Kee customer wins include Amazon, British Telecom, Comcast, Mercedes-Benz, Maruti Suzuki, Nationwide Building Society, Nova Nordisk, ServiceNow, Stellantis, Alta Beauty, and US Department of the Treasury. We have enabled our vibrant partner ecosystem of system integrators and agencies to deliver advisory and implementation services across our product portfolio.

Enel: And AAM generate variations, which accelerates the creation of audience specific content variations to drive personalized web experiences.

Enel: Strong industry analyst recognition, including Gardner's magic quadrant for content marketing platforms and leadership for both Idc's B to C and b to B market Scapes four digital commerce applications.

Enel: Key customer wins include Amazon British Telecom, Comcast Mercedes Benz Modesty Suzuki nationwide building Society Novo Nordisk service now still Lantus, Ulta beauty and U S Department of the Treasury.

Enel: We have enabled our vibrant partner ecosystem of system integrators and agencies to deliver advisory and implementation services across our product portfolio.

Anil Chakravarthy: We look forward to engaging with customers and major agencies at the Cannes Lions Festival later this month. Our category leading solutions, robust pipeline, and tremendous scale position us to drive strong growth in the second half, and we are raising our subscription revenue target for the year.

Enel: We look forward to engaging with customers in major agencies at the Cannes Lions Festival later this month.

Anil S. Chakravarthy: Our category-leading solutions, robust pipeline, and tremendous scale position us to drive strong growth in the second half. And we are raising our subscription revenue target for the. I will now pass it to Dan. Thanks, you know.

Enel: Our category, leading solutions robust pipeline and tremendous scale position us to drive strong growth in the second half.

Enel: And we are raising our subscription revenue target for the year.

Dan Durn: I will now pass it to Dan.

Speaker Change: I will now pass it to Dan.

Dan Durn: Thanks, Anil. Today, I'll start by summarizing Adobe's performance in Q2, fiscal 2024, highlighting growth drivers across our businesses, and I'll finish with financial targets. In Q2, Adobe delivered strong top-line growth and industry-leading profitability, while accelerating the pace of innovations we're delivering to market across Document Cloud, Creative Cloud, and Experience Cloud. In the quarter, Adobe achieved record revenue of $5.31 billion, which represents 10% year-over-year growth, or 11% in constant currency, with strength across all three clouds. This performance stems from the diversification of Adobe's business across our market-leading products, business models, customer segments, and geographies. When combined with our talented employees, strong execution, and world-class financial discipline, you have the ingredients that make this company incredibly resilient.

Dan: Thanks Chanel.

Daniel J. Durn: Today, I'll start by summarizing Adobe's performance in Q2 Fiscal 2024, highlighting growth drivers across our businesses, and I'll finish with financial targets. In Q2, Adobe delivered strong top-line growth and industry-leading profitability, while accelerating the pace of innovations we're delivering to market across Document Cloud, Creative Cloud, and Experience Cloud. In the quarter, Adobe achieved record revenue of $5.31 billion, which represents 10% year-over-year growth or 11% in constant currency, with strength across all three clouds.

Dan: Today I'll start by summarizing Adobe's performance in Q2 fiscal 2024, highlighting growth drivers across our businesses and I'll finish with financial targets.

Dan: In Q2, Adobe delivered strong topline growth and industry, leading profitability, while accelerating the pace of innovations, we're delivering to market across document cloud creative cloud and experience cloud in.

Dan: In the quarter Adobe achieved record revenue of $5, three 1 billion, which represents 10% year over year growth or 11% in constant currency with strength across all three clouds. This.

Daniel J. Durn: This performance stems from the diversification of Adobe's business across our market-leading products, business models, customer segments, and geography. When combined with our talented employees, strong execution, and world-class financial discipline, you have the ingredients that make this company incredibly resilient. Second Quarter Business and Financial Highlights Included. GAAP diluted earnings per share of $3.49, and non-GAAP diluted earnings per share of $4.48.

Dan: This performance stems from the diversification of adobe's business across our market, leading products business models customer segments and geographies when combined with our talented employees strong execution and world class financial discipline, you have the ingredients that make this company.

Credibly resilient.

Dan Durn: Second quarter, business and financial highlights included. Gapped alluded earnings per share of $3.49, and non-gapped alluded earnings per share of $4.48. Digital media revenue of $3.91 billion. Net new digital media ARR of $487 million. Digital experience revenue of $1.33 billion. Cash flows from operations of $1.94 billion, and RPO of $17.86 billion exiting the quarter. In our digital media segment, we achieved Q2 revenue of $3.91 billion, which represents 11% year-over-year growth, or 12% in constant currency. We exited the quarter with $16.25 billion of digital media ARR, up 13% year-over-year in constant currency. Adobe achieved Document Cloud revenue of $782 million, which represents 19% year-over-year growth as reported and in constant currency.

Dan: Second quarter business and financial highlights included <unk>.

Dan: GAAP diluted earnings per share of $3 49.

Dan: And non-GAAP diluted earnings per share of $4.48.

Dan: Digital media revenue of $3 91 billion.

Daniel J. Durn: Digital Media revenue of $3.91 billion. Net New Digital Media ARR of $487 million. Digital Experience revenue of $1.33 billion, cash flows from operations of $1.94 billion, and RPO of $17.86 billion exiting the quarter. In our digital media segment, we achieved Q2 revenue of $3.91 billion, which represents 11% year-over-year growth or 12% in constant currency. We exited the quarter with $16.25 billion of digital media ARR, up 13% year-over-year in constant currency. Adobe achieved document cloud revenue of $782 million, which represents 19% year-over-year growth as reported and in constant currency.

Dan: Net new digital media <unk> of $487 million.

Dan: Digital experience revenue of $1 three 3 billion.

Dan: Cash flows from operations of $1 94 billion, an RPM of $17 eight 6 billion exiting the quarter.

Dan: In our digital media segment, we achieved Q2 revenue of $3 nine 1 billion.

Dan: Which represents 11% year over year growth or 12% in constant currency, we exited the quarter with $16. Two 5 billion of digital media <unk> up 13% year over year in constant currency.

Dan: Adobe achieved document cloud revenue of $782 million, which represents 19% year over year growth as reported and in constant currency.

Dan Durn: We added $165 million of net new Document Cloud ARR, which was a record for Q2. Q2 document cloud growth drivers included demand for Acrobat subscriptions across all customer segments and geographies. New user acquisition resulting from increasing reader mail. A great start monetizing AI assistant through our digital channel. Strong usage and engagement from Acrobat Web, as well as through our Chrome and Edge partnerships, which are driving free to paid conversion. 13, Growing Team Subscription Unit sold to SMBs, both through Adobe.com and our reseller channel. In strength in our enterprise solutions, demonstrating the importance of PDF as a source of unstructured data in business workflows.

Daniel J. Durn: We added $165 million of net new Document Cloud ARR, which was a record for Q2. Q2 Document Cloud growth drivers included demand for Acrobat subscriptions across all customer segments and geographies, and new user acquisition resulting from increasing Reader Mail, a great start monetizing AI assistant through our digital channel. Strong Usage and Engagement from Acrobat Web, as well as through our Chrome and Edge partnerships, which are driving free-to-paid conversion. Growing Team Subscription Units sold to SMBs both through Adobe.com and our reseller channel, and Strengthening Our Enterprise Solutions, demonstrating the importance of PDF as a source of unstructured data in business work. We achieve creative revenue of $3.13 billion, which represents 10% year-over-year growth or 11% in constant currency. We added $322 million of net new creative ARR in the Q2 Creative Growth Drivers included.

Dan: We added $165 million of net new document cloud <unk>, which was a record for Q2.

Dan: Q2 document cloud growth drivers included demand for acrobat subscriptions across all customer segments and geographies.

New user acquisition, resulting from increasing reader MAU.

Dan: A great start monetizing AI assistance through our digital channel.

Dan: Strong usage and engagement from acrobat web as well as through our chrome and edge partnerships, which are driving free to paid conversion.

Growing team subscription units sold the Smbs, both through Adobe Dot com and our reseller channel.

Dan: And strength in our enterprise solutions, demonstrating the importance of PDF as a source of unstructured data in business workflows.

Dan Durn: We achieve creative revenue of 3.13 billion, which represents 10% year-over-year growth, or 11% in constant currency. We added 322 million of net new creative ARR in the quarter. Q2 creative growth drivers included new subscriptions for Creative Cloud All Apps, with particular strength in digital acquisition on Adobe.com, with multiple product releases during the quarter, driving customer engagement and demand. Strong growth of single apps, including in imaging, photography, design, and stock. Accelerating customer interest and usage for a new express mobile and express for business offerings. Strong renewals as customers migrate the higher value, higher RPU Creative Cloud plans that include Firefly entitlements.

Dan: We achieved creative revenue of $3, one 3 billion, which represents 10% year over year growth or 11% in constant currency, we added $322 million of net new creative <unk> in the quarter.

Daniel J. Durn: New subscriptions for Creative Cloud All Apps, with particular strength in digital acquisition on Adobe.com, with multiple product releases during the quarter driving customer engagement and demand. [inaudible] Accelerating Customer Interest and Usage for our new Express Mobile and Express for Business offers Strong Renewals as Customers Migrate to Higher Value, Higher ARPU Creative Cloud Plans that include Firefly Entitlement. Continued Subscription Unit Growth with Particular Strength in Emerging Markets, and Strength from SMB's Adopting Our Team offering, as well as in the enterprise segment with ETLA Adopt. We're pleased with the performance of our creative business in the first half of the year.

Dan: Q2 creative growth drivers included new subscriptions for creative cloud all apps with particular strength in digital acquisition on Adobe Dot com with multiple product releases during the quarter driving customer engagement and demand.

Strong growth of single apps, including imaging photography design and stock.

Dan: Accelerating customer interest and usage for a new express mobile and express for business offerings.

Dan: Strong renewals as customers migrate to higher value higher ARPA creative cloud plans that include Firefly entitlements.

Dan Durn: Continued subscription unit growth with particular strength in emerging markets and strength from SMBs adopting our team offering, as well as in the enterprise segment with ETLA adoption. We're pleased with the performance of the creative business in the first half of the year, fueled by strong commercial subscriptions in both Q1 and Q2.

Dan: Continued subscription unit growth with particular strength in emerging markets.

Dan: And strength from Smbs, adopting our team offering as well as in the enterprise segment with E TLA adoption.

Dan: We're pleased with the performance of the creative business in the first half of the year.

Daniel J. Durn: Fueled by strong commercial subscriptions in both Q1 and Q2, as we look at the momentum we're carrying into the back half, we expect to deliver year-over-year growth of creative net new ARR in Q3 and Q4 and are raising our digital media net new ARR target for the fiscal year. Turning to our digital experience segment, in Q2, we achieved revenue of $1.33 billion, which represents 9% year-over-year growth as reported and in constant currency. Digital Experience Subscription revenue was $1.20 billion, growing 13% year-over-year, as reported and in constant current.

Dan: Fueled by strong commercial subscriptions in both Q1 and Q2.

Dan Durn: As we look at the momentum we're carrying into the back half, we expect to deliver year-over-year growth of creative net new ARR in Q3 and Q4, and are raising our digital media net new ARR target for the fiscal year.

Dan: As we look at the momentum we're carrying into the back half, we expect to deliver year over year growth of creative net new <unk> in Q3, and Q4 and are raising our digital media net new air our target for the fiscal year.

Dan Durn: Turning to our digital experience segment in Q2, we achieve revenue of 1.33 billion, which represents 9% year-over-year growth as reported and in constant currency. Digital experience subscription revenue was 1.20 billion, growing 13% year-over-year as reported and in constant currency. Q2, digital experience growth drivers included, subscription revenue strength from transformational accounts. Market leadership with AEP and native applications, with subscription revenue growing 60% year-over-year. Additional subscription revenue strength across the data insights and audiences and customer journey categories. And accelerated adoption of our AEM and Workfront solutions from businesses looking to solve their content supply chain challenges.

Dan: Turning to our digital experience segment in Q2, we achieved revenue of 1.33 billion, which represents 9% year over year growth as reported and in constant currency.

Dan: Digital experience subscription revenue was $1 two zero billion growing 13% year over year as reported and in constant currency.

Daniel J. Durn: Q2 Digital Experience Growth Drivers Included: Subscription Revenue Strength from Transformational. Market leadership with AEP and native applications with subscription revenue growing 60% year-over-year. Additional Subscription Revenue Strength across the Data Insights and Audiences and Customer Journey categories, and Accelerated Adoption of our AEM and Workfront Solutions from Businesses Looking to Solve Their Content Supply Chain Challenges. Turning to the income statement and balance sheet, in Q2, Adobe delivered year-over-year EPS growth of 24% on a GAAP basis and 15% on a non-GAAP basis.

Dan: Q2 digital experienced growth drivers included subscription revenue strength from transformational accounts.

Dan: Market leadership with the AEP and native applications with subscription revenue growing 60% year over year.

Dan: Additional subscription revenue strength across the data insights and audiences and customer journey categories.

Dan: And accelerated adoption of our E M and work fronts solutions from businesses looking to solve their content supply chain challenges.

Dan Durn: Turning to the income statement and balance sheet in Q2, Adobe delivered year-over-year EPS growth of 24% on a GAAP basis and 15% on a non-GAAP basis. This was driven by revenue growth and discipline prioritization of our investments, which resulted in non-GAAP operating margin strength in Q2. The company continues to deliver world-class gross margins while investing in ground-breaking AI capabilities. Adobe's effective tax rate in Q2 was 18.5% on a gap and non-gap basis. In line with our expectations for the quarter. RPO exiting the quarter was 17.86 billion, growing 17% year-over-year as reported, or 18% on factoring in a one-point currency headwind.

Dan: Turning to the income statement and balance sheet in Q2, Adobe delivered year over year EPS growth of 24% on a GAAP basis.

Dan: And 15% on a non-GAAP basis.

Daniel J. Durn: This was driven by revenue growth and a disciplined prioritization of our investment, which resulted in non-GAAP operating margin strength in Q2. The company continues to deliver world-class gross margins while investing in groundbreaking AI capabilities. Adobe's effective tax rate in Q2 was 18.5% on a GAAP and non-GAAP basis, in line with our expectations for the quarter.

Dan: This was driven by revenue growth and disciplined prioritization of our investments, which resulted in non-GAAP operating margin strength in Q2.

Dan: The company continues to deliver world class gross margins, while investing in groundbreaking AI capabilities.

Dan: <unk> effective tax rate in Q2 was 18, 5% on a GAAP and non-GAAP basis in line with our expectations for the quarter.

Daniel J. Durn: RPO exiting the quarter was $17.86 billion, growing 17% year-over-year as reported, or 18% when factoring in a one-point currency headway. Current RPO grew 12% exiting the quarter. Our ending cash and short-term investment position at the end of Q2 was $8.07 billion, and cash flows from operations in the quarter were $1.94 billion. In Q2, we entered into a $2.5 billion share repurchase agreement.

Dan: <unk> exiting the quarter was $17 eight 6 billion growing 17% year over year as reported or 18% when factoring in a one point currency headwind.

Dan Durn: Wint, current RPO grew 12% exiting the quarter. Our ending cash in short-term investment position at the end of Q2 was 8.07 billion, and cash flows from operations in the quarter were 1.94 billion.

<unk> <unk> grew 12% exiting the quarter.

Dan: Our ending cash and short term investment position at the end of Q2 was 8.07 billion in cash flows from operations in the quarter were $1 94 billion.

Dan Durn: In Q2, we entered into a 2.5 billion share repurchase agreement, and we currently have 22.7 billion remaining of the 25 billion authorization granted in March 2024.

Dan: In Q2, we entered into a $2 5 billion share repurchase agreement.

Daniel J. Durn: And we currently have $22.7 billion remaining of the $25 billion authorization granted in March 2024. We will now provide Q3 targets, as well as updated fiscal 2024 annual targets, factoring in current macroeconomic conditions, as well as Schultz. Our current FX outlook into the back half of the year with the US dollar remaining stronger as compared to our original expectations when we set our FY 24 targets in December and an expected strong seasonal finish to the year in Q4. For Q3, we're targeting total Adobe revenue of $5.33 to $5.38 billion. Digital Media Net New ARR of approximately $460 million. Digital Media Segment revenue of $3.95 to $3.98 billion.

And we currently have $22 7 billion remaining of the $25 billion authorization granted in March 2024.

Dan Durn: We will now provide Q3 targets, as well as updated fiscal 2024 annual targets, factoring in current macroeconomic conditions, as well as strong momentum across our business. Our current FX outlook into the back half of the year, with the US dollar remaining stronger, is compared to our original expectations when we set our FY 24 targets in December. And then expected strong seasonal finish to the year in Q4. For Q3, we're targeting total Adobe revenue of 5.33 to 5.38 billion, digital media net new ARR of approximately 460 million, digital media segment revenue of 3.95 to 3.98 billion, digital experience segment revenue of 1.325 to 1.345 billion, digital experience subscription revenue of 1.20 to 1.22 billion, tax rate of approximately 18% on a GAAP basis, and 18.5% on a non-GAAP basis.

Dan: We will now provide Q3 targets as well as updated fiscal 2024 annual targets factoring in current macroeconomic conditions as well as.

Dan: Strong momentum across our business, our current FX outlook into the back half of the year with the U S dollar remaining stronger as compared to our original expectations. When we set our FY 'twenty four targets in December.

Dan: And an expected strong seasonal finish to the year in Q4.

Dan: For Q3, we are targeting total adobe revenue of $5 three three to 538 billion did.

Dan: Digital media net new <unk> of approximately $460 million.

Dan: Digital media segment revenue of $3 95 to $3 98 billion.

Daniel J. Durn: Digital Experience Segment revenue of $1.325 to $1.345 billion. Digital Experience Subscription revenue of $1.20 to $1.22 billion. Tax rate of approximately 18% on a GAAP basis and 18.5% on a non-GAAP basis. GAAP earnings per share of $3.45 to $3.50, and non-GAAP earnings per share of $4.50 to $4.55.

Dan: Digital experience segment revenue of 1.3 to five to 134 5 billion.

Digital experience subscription revenue of $1 two zero to 1.22 billion.

Dan: Tax rate of approximately 18% on a GAAP basis, and 18, 5% on a non-GAAP basis.

Dan Durn: Gap earnings per share of $3.45 to $3.50, and non-GAAP earnings per share of $4.50 to $4.55. For fiscal 2024, given our first half performance, we are now targeting total Adobe revenue of 21.40 to 21.50 billion, digital media net new ARR of approximately 1.95 billion. Digital media segment revenue of 15.80 to 15.85 billion, digital experience segment revenue of 5.325 to 5.375 billion, digital experience subscription revenue of 4.775 to 4.825 billion, tax rate of approximately 20.5% on a GAAP basis, and 18.5% on a non-GAAP basis. Gap earnings per share of $11.80 to $12, and non-GAAP earnings per share of $18 to $18.20.

GAAP earnings per share of $3 45 to $3 50.

Dan: And non-GAAP earnings per share of $4 50.

Dan: To $4 55.

Dan: For fiscal 2024, given our first half performance we are now targeting.

Daniel J. Durn: For Fiscal 2024, given our first half performance, we are now targeting Total Adobe revenue of $21.40 to $21.50 billion; Digital Media Net New ARR of approximately $1.95 billion; Digital Media Segment revenue of $15.80 to $15.85 billion.

Dan: Total Adobe revenue of 20, 140 to 20 150 billion.

Dan: Digital media net new <unk> of approximately 195 billion.

Dan: Digital media segment revenue of $15 eight zero to $15 85 billion.

Daniel J. Durn: Digital Experience Segment revenue of $5.325 to $5.375 billion. Digital Experience Subscription revenue of $4.775 to $4.825 billion. Packed rate of approximately 20.5% on a gap basis, and 18.5% on a non-GAAP basis. Gap earnings per share of $11.80 to $12, and non-GAAP earnings per share of $18 to $18.20.

Dan: Digital experience segment revenue of $5 three to five to $5 $3 75 billion.

Dan: Digital experience subscription revenue of $4 775 to $4 85 billion.

Dan: Tax rate of approximately 25% on a GAAP basis, and 18, 5% on a non-GAAP basis.

Dan: GAAP earnings per share of $11 80 to.

Dan: $12 and non-GAAP earnings per share of $18 to $18 20.

Dan Durn: In summary, I'm extremely pleased with the company's performance in the first half of the year, and the momentum we see in our business. Adobe's product leadership, velocity of innovation, diversity of our business, and financial discipline make us unique, enabling us to deliver strong top and bottom line results through dynamic market conditions. I'm confident in our ability to catalyze transformative long-term trends that will position us to win over the next decade.

Dan: In summary, I am extremely pleased with the Companys performance in the first half of the year and the momentum we see in our business.

Daniel J. Durn: In summary, I'm extremely pleased with the company's performance in the first half of the year and the momentum we see in our business. Adobe's product leadership, velocity of innovation, diversity of our business, and financial discipline make us unique, enabling us to deliver strong top and bottom line results in dynamic market conditions. I'm confident in our ability to catalyze transformative long-term trends that will position us to win over the next decade. Shantanu, back.

Dan: Adobe is product leadership velocity of innovation diversity of our business and financial discipline make us unique enabling us to deliver strong top and bottom line results through dynamic market conditions I'm confident in our ability to catalyze transformative long term trends that will position us to win.

Speaker Change: Over the next decade shunting back to you.

Speaker Change: Thanks, Dan.

Shantanu Narayen: Thanks, Dan. Adobe remains one of the greatest places to work in the industry, and I want to thank our employees for their relentless dedication to supporting our customers and community. We continue to invest in hiring, including new college grads and interns, to bring the best and brightest talent to Adobe. This quarter, Adobe was recognized among Fortune's 100 best companies to work for, Glassdoor's best-led companies, and the Civic 50 list of the most community-minded companies in the U.S. Demand for our category-defining products and services continues to grow.

Speaker Change: Adobe remains one of the greatest places to work in the industry and I want to thank our employees for their relentless dedication to supporting our customers and communities.

Speaker Change: We continue to invest in hiring including New College grads and in turns to bring the best and brightest talent to Adobe.

Shantanu Narayen: This quarter, Adobe was recognized among Fortune's 100 Best Companies to Work For, Glassdoor's Best-Led Companies, and the Civic 50 list of the most community-minded companies in the US. Demand for our category defining products and services continues to grow. Our business fundamentals and market tailwinds are strong, and we look forward to building on our momentum in the second half and beyond.

Speaker Change: This quarter Adobe was recognized among fortune's 100, best companies to work for glass doors, best led companies and the Civic 50 list of the most community minded companies in the U S.

Speaker Change: Demand for our category defining products and services continues to grow.

Shantanu Narayen: Our business fundamentals and market tailwinds are strong, and we look forward to building on our momentum in the second half and beyond. Thank you, and we will now take questions. Thank you. If you would like to signal with questions, please press star one on your touchtone telephone. If you're joining us today using a speaker phone, please make sure your mute function is turned off to allow your signal to reach us. Again, that will be star one, if you would like.

Speaker Change: Our business fundamentals and market tailwind is strong.

Speaker Change: And we look forward to building on our momentum in the second half and beyond.

Unknown Executive: Thank you, and we will now take questions.

Speaker Change: Thank you and we will now take questions.

Unknown Executive: Thank you.

Speaker Change: Thank you if you would like to signal what questions. Please press star one on your Touchtone telephone if you're joining us today using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

Unknown Executive: If you would like to signal with questions, please press star 1 on your touchtone telephone. If you are joining us today, use a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that will be star 1 if you would like to signal with questions.

Speaker Change: That will be star one if you would like to signal with questions and our first question will come from Mark <unk> with Bernstein.

Mark Moerdler: Our first question will come from Mark Mordler with Bernstein.

Operator: And our first question will come from Mark Moerdler of Bernstein. Thank you very much and congratulations on the quarter and especially the strong net new ARR. I'd like to ask a little more color on specifically the net new ARR that we saw in Creative. Can you give us a sense of what the contribution near-term and medium-term to digital ERR from seed growth versus up-sell versus consumption, things like Adobe Stock and AI credits, even rank ordering or quantifying, anything you can give us to give us a sense of what's driving that number. And that would be very helpful in really Thanks. Sure, Mark. Let me start, and then, certainly, David and Dan can add more.

Mark Moerdler: Thank you very much, and congratulations on the quarter, and especially the strong net new ARR. I'd like to ask a little more color on specifically the net new ARR that we saw in Creative Cloud.

Speaker Change: Thank you very much and congratulations on the quarter and especially.

Speaker Change: Strong net new <unk>.

Speaker Change: I'd like to ask a little more color on the specifically the net new <unk> that we saw in creative cloud can you give us a sense of what the Contra contribution near term medium term to digitally IRR from seat growth versus up sell versus consumption.

Mark Moerdler: Can you give us a sense of what the contribution near-term, medium-term, to digitally ARR from seed growth versus up-deliver versus consumption, things like Adobe Stock and AI credits, even rank ordering or quantifying anything you can give us a sense of what's driving that number, and that would be very helpful in really understanding what's going on in the drivers of that number. Thanks.

Like Adobe stock and AI credit, even rank ordering or quantifying anything you can give us to give us a sense of what's driving that number.

Speaker Change: And.

Speaker Change: And that would be very helpful. In really understanding what's going on in the drivers of that business that number. Thanks.

Shantanu Narayen: Sure, Mark.

Mark: Sure Mark Let me start and then certainly David and Dan can add to your point, we had a strong quarter and.

Shantanu Narayen: To your point, we had a strong quarter, and I think what's really driving the quarter, the bigger picture, continues to be the innovation that we're delivering. And, you know, the way AI is actually making our applications both more affordable and easy to onboard, as well as, frankly, higher-value uses. New users are still a big driver of the growth that we continue to see in the business. On the Document Cloud side, a lot of that has to do with the introduction of AI Assistant and the fact that people are migrating to higher-value products.

Shantanu Narayen: Let me start, and then certainly David and Dan can add. To your point, we had a strong quarter, and I think what's really driving the quarter, big picture, continues to be the innovation that we're delivering, and the way AI is actually making our applications both more affordable, easy to onboard, as well as, frankly, higher value uses. New users are still a big driver of the growth that we continue to see in the business on the Document Cloud side. A lot of that has to do with the introduction of AI assistant and the fact that people are migrating to the higher value products, and on Creative Cloud, I would say the things that we're doing on imaging with Firefly and what we've seen both in Photoshop and Lightroom.

Speaker Change: I think what's really driving the quarter Big picture continues to be the innovation that we're delivering and the way AI is actually making our obligations both more affordable easy to onboard as well as frankly, a higher value users.

Shantanu Narayen: And on Creative Cloud, I would say the things that we're doing in imaging with Firefly and what we've seen both in Photoshop and Lightroom. I think in his prepared remarks, Dan certainly talked about what's happening with, you know, also, each of the different segments. So the SMB segment actually had a strong quarter. Enterprise continues to have a strong quarter. So, across the board, Mark, we actually saw strength in the business.

Speaker Change: New users is still a big driver of the growth that we continue to see in the business on the document cloud side a lot of that has to do with the introduction of AI assistant and the fact that people are migrating to the higher value products and on creative cloud I would say the things that we're doing on imaging with.

Speaker Change: <unk> fly and what we've seen both in Photoshop and lightroom.

Shantanu Narayen: I think in the prepared remarks, Dan certainly talked about what's happening with also each of the different segments. So the SMB segment actually had a strong quarter. Enterprise continues to have a strong quarter. So you know, across the board, Mark, we actually saw strength in the business.

Speaker Change: In the prepared remarks, Dan thirdly talked about what's happening with.

Speaker Change: Also.

Each of the different segments. So the SMB segment actually had a strong quarter enterprise continues to have a strong quarter. So you know across the board Mark we actually saw strength in the business.

Speaker Change: Okay.

Aleksandr Zukin: And our next question will come from Alice.

Speaker Change: And our next question will come from Alex Zukin with Wolfe Research.

Shantanu Narayen: And our next question will come from Alan. Wolfe, Research. Hey guys, thanks for taking the question. Congratulations on just an incredible result. I wanted to ask something kind of similar to Mark's, How much of Jenny and I... C, in the order in terms of.

Aleksandr Zukin: Alex Zukin, Wolf Research. Hey guys, thanks for taking the question, and congratulations on this very incredible result. I want to ask kind of similar to Mark's question, just how much Jenny I demand that you see in the order in terms of sort of both the Creative Cloud portfolio and the media, you know, in Creative Studio, as well as in Janet's studio, and how does it kind of help pick up more on the enterprise side of the business and the SMD side of the business.

Aleksandr J. Zukin: Hey, guys. Thanks for taking my question and congratulations on an incredible result, I wanted to ask kind of similar to Mark's question, just how much Jenny I demand that we see in the quarter in terms of.

Sort of both the creative cloud portfolio.

Aleksandr J. Zukin: Yes.

Shantanu Narayen: So it's both a Creative Cloud portfolio and digital media, Creative Studio, as well as Ngenet Studio. And how does it kind of help picked up more on the enterprise side of the business from the SMB side? Help us understand that progression and maybe how you're planning forward in the back half of the DMA. Sure, Aleks, again, maybe I'll start with that. And, you know, just taking a step back, I think we've talked about the platform that we have for GenAI that, you know, constitutes data, as well as models, and finally, interfaces. On the models, we release Firefly services, and we've started to see some customer wins with Firefly services. So they're using it for variations.

Aleksandr J. Zukin: And creative studio as well as in <unk>.

Aleksandr J. Zukin: And how does it help.

Speaker Change: Picked up more on the enterprise side of the business from the SMB side of the business.

Aleksandr Zukin: Help us understand that progression and maybe how you're planning forward in the back half of the DNA of our guy.

Speaker Change: Help us understand that progression and maybe how you are.

Speaker Change: Planning forward in the back half of the DNA of our guidance.

Shantanu Narayen: Sure, Alex. Again, maybe I'll start with that, and you know, just taking a step back, I think we've talked about, you know, the platform that we have for Jenny I that, you know, constitutes data as well as models and finally interfaces. On the models we release Firefly services, we started to see some customer wins in Firefly services. So they're using it for variations, and these are the custom models that were creating, as well as access to APIs. I would say that's early in terms of the adoption, but the interest, as customers say how they can ingest their data into our models as well as custom models.

Aleksandr J. Zukin: Sure Alex again, maybe I'll start with that and just taking a step back I think we've talked about.

Shantanu Narayen: And these are the custom models that we're creating, as well as access to APIs. I would say that it's early in terms of adoption, but the interest, as customers say how they can ingest their data into our models, as well as custom models, that's really ahead of us. And we expect that to continue to grow in Q3 and Q4. I think the biggest opportunity for us and why we're really excited about GenAI is in the interfaces, because that's the way people derive value, whether it's in being able to read their tasks faster, whether it's being able to, you know, do new workflows.

Aleksandr J. Zukin: The platform that we have for <unk> that you know constitutes data as well as models and finally interfaces.

Aleksandr J. Zukin: On the models, we are released Firefly services, we've started to see some customer wins in Firefly services. So they are using it for variations in these other custom models that we're creating as well as access to api's.

Aleksandr J. Zukin: I'd say thats early in terms of the adoption, but the interest as customers say, how they can ingest their data into our models as well as customer models.

Shantanu Narayen: That's really ahead of us, and we expect that to continue to grow in Q3 and Q4. I think the biggest opportunity for us and why we're really excited about Jenny is in the interfaces because that's the way people, you know, drive value, whether it's in being able to complete their tasks faster, whether it's able to, you know, do new workflows. And I would say in that particular space, Acrobat has really seen a significant amount of usage as it relates to AI assistant and Photoshop. I'll have David again add, but generative fill and what we are doing there, what we are doing in Illustrator, you know, and that both for existing customers, as well as for prospects who now come in and say, you know, the products are becoming increasingly more productive for us.

That's really ahead of us and we expect that to continue to grow in Q3, and Q4 I think the biggest opportunity for us and why we're really excited about <unk> and the interfaces because that's the way people are you know derive value whether it's in being able to complete their task fastow whether it's.

Shantanu Narayen: And I would say in that particular space, Acrobat has really seen a significant amount of usage as it relates to AI assistant, and Photoshop, I'll have David again add, but generative fill and what we are doing there, what we are doing in Illustrator, you know, and that both for existing customers, as well as for prospects who now come in and say, you know, the products are becoming increasingly more productive for them. That's what's really driving, you know, the value there.

Be able to do new workflows, and I would say in that particular space.

Speaker Change: Acrobat has really seen a significant amount of usage as it relates to AI assistant and Photoshop I'll have David again add but generative fill in what we're doing there what we're doing in illustrator and that both for existing customers as well as for prospects, who now come in and say.

Speaker Change: The products are becoming increasingly more productive for us that's what's really driving the.

Shantanu Narayen: That's what's really driving, you know, the value there. And last but not least, you know, the AI first applications when we think of application like express expresses all about reimagining what we can do for creatives by, you know, sort of leapfrogging existing technologies and providing an AI first application. And so that's also off to a good start.

Speaker Change: The value there.

Shantanu Narayen: And last but not least, when we think of applications like Express, Express is all about reimagining what we can do for creatives by, you know, sort of leapfrogging existing technologies and providing an AI-first application. And so that's also off to a good start.

Speaker Change: And last but not least.

The AI first applications when we think of their application like Express Express is all about re imagining what we can do for creators by you know sort of leapfrogging existing technologies and providing an AI first application and so that is also off to a good start.

David Wadhwani: Yeah, and just add to a little bit of what Shot New said, Alex. You know, we've talked a lot about how FY23 was the year that AI was in the playground. And this is the year we need to bring it into production. And a lot of that is industry-wide, but we're in a pretty special position as released to that. So to shot news point, a lot of active releases this this quarter, right, Acrobat AI assistant, Firefly updates and Photoshop. Firefly was introduced for the first time into Lightroom; Express mobile launched, Express for Business launched, we launched Firefly services for enterprises, you know, to produce content that scale.

David Wadhwani: Yeah, and just to add to a little bit of what Shantanu said, Aleks, you know, we've talked a lot about how FY23 was the year that AI was in the playground, and this is the year we need to bring it into production. And a lot of that is industry-wide, but we're in a pretty special position as it relates to that. So to Shantanu's point, there were a lot of active releases this quarter, right?

Speaker Change: Yes, and just add to a little bit of what's not and you said Alex.

Speaker Change: We've talked a lot about how FY2023 with the year that AI was in the playground and this is the year, we need to bring it into production and a lot of that is industry wide, but we're in a pretty special position as it relates to that so to <unk> point there.

Speaker Change: Lot of active releases this quarter right acrobat AI assistant Firefly updates in Photoshop Firefly was introduced for the first time into light room.

David Wadhwani: Acrobat AI Assistant, Firefly updates in Photoshop, Firefly was introduced for the first time in Lightroom, Express Mobile launched, Express for Business launched, we launched Firefly services for enterprises, you know, to produce content at scale. So as you can see, there was a ton of innovation in our core applications around generative AI. You put that together with some of the activations that we've done at Summit, and we did Max London, and we're getting our word out very broadly, and it starts to create this ability to not just look at and play with AI, but actually use it as part of your workflow. So that's been deeply integrated into everything we do. And that's the key point; the interfaces that people work at, if we bring AI there, everyone becomes more productive. Maybe one last thing, Aleks.

Speaker Change: Express mobile launched express for business launched relaunched Firefly services for enterprises.

Speaker Change: Yes.

Speaker Change: Produce content at scale. So as you can see there was a ton of innovation of our core in our core applications around generative AI you put that together with some of the Activations that we've done at summit and we did a Max London and we're getting our word out very broadly it starts to create this.

David Wadhwani: So, as you can see, there was a ton of innovation of our core in our core applications around generative AI. You put that together with some of the activations that we've done at Summit and we did a max London and we're getting our word out very broadly. It starts to create this ability to not just look at and play with AI, but actually use it as part of your workflow. So that's been deeply integrated into everything we do, and that's the key point. The interfaces that people work at if we bring AI there, everyone becomes more productive.

Speaker Change: This ability to not just look at it and play with the with AI, but actually use it as part of your workflows. So that's been deeply integrated into everything we do and that's the key point the interfaces that people work out if we bring AI there everyone becomes more productive.

David Wadhwani: Maybe one last thing, Alex. Sequentially, if you look at it, you know, from a route to market, digital had a very strong quarter as it relates to what we did on Adobe.com. We had talked about enterprise doing well in Q1 as well; that continued, and SMB also the interest in our teams product also continued to do really well. So I think sequentially I would point to SMB and digital strength as driving, you know, the further growth.

David Wadhwani: sequentially, if you look at it, you know, from a route to market, digital had a very strong quarter as it relates to what we did on Adobe.com. We had talked about enterprise doing well in Q1 as well, and that continued. And SMB also, the interest in our team's product also continued to do really well. So I think, sequentially, I would point to SMB and digital strength as driving further growth. Super helpful, and then maybe just one on the macros, giving your guys' purview.

Aleksandr J. Zukin: Maybe one last thing Alex sequentially, if you look at it.

Aleksandr J. Zukin: From a route to market digital had a very strong quarter as it relates to what we did on Adobe Dot Com. We had talked about enterprise is doing well in Q1 as well that continued and F&B also the interest in our teams product also continued to do really well. So I think sequentially I would point to SMB.

Aleksandr J. Zukin: <unk> and digital this trend as driving.

Aleksandr J. Zukin: The further growth.

That's super helpful. And then maybe just one on the macro and just given your guidance per view.

Unknown Executive: Super helpful, and then maybe just one of the macros, giving your guys this purview.

Shantanu Narayen: You know, what is the story that you're seeing in terms of the macro and the demand environment? Clearly, again, you're commenting on solid performance in the SMB and in the enterprise. Are there any areas where you're seeing pockets of weaknesses that are really vertical dependent?

Unknown Executive: You know, what is the story that you're seeing in terms of the macro and the demand environment? Clearly, again, you're commenting on solid performance in the SMB and in the enterprise.

Speaker Change: Like what is the story that you're seeing in terms of the macro on the demand environment clearly again.

Speaker Change: Commenting on solid performance in the assembly and <unk>.

Speaker Change: Enterprise is there any areas that you are seeing pockets of weaknesses that will be vertical dependent.

Shantanu Narayen: Is there any areas that you're seeing pockets of weaknesses that really vertical dependent, you know, what just maybe give a comment on kind of how we should think about it as we look for the rest of the year? I think from a macro perspective, you know, what I think differentiates Adobe more than any other company is how differentiated and how diverse, you know, the set of products that we have. And you know, again, from individual consumers all the way to enterprises, you know, our products are mission critical. And so at this scale, it's all about execution, you know, and the business cycles will come and go, Alex, but we're actually continuing to focus on that.

Shantanu Narayen: You know, just maybe give a comment on kind of how we should think about it as we look for the rest of the year. I think from a macro perspective, what differentiates Adobe more than any other company is how differentiated and how diverse the set of products that we have. And, you know, again, from individual consumers all the way to enterprises, our products are mission critical.

Speaker Change: Just maybe give a comment on kind of how we should think about it.

Speaker Change: Rest of the year.

Speaker Change: I think from a macro perspective.

Speaker Change: I think differentiate adobe.

Speaker Change: More than any other company is our differentiated and how diverse.

Speaker Change: Set of products that we have and you know again from.

Speaker Change: Some individual consumers all the way to enterprises and our products are mission critical and so at this scale, it's all about execution.

Shantanu Narayen: And so at this scale, it's all about execution, you know, and the business cycles will come and go, Aleks, but we're actually continuing to focus on execution and converting the pipeline and the interest and the awareness of AI into monetization. And so, you know, we just will be ruthlessly focused on continuing to execute against that. So there's really nothing really to report different about the macroeconomic environment from our perspective. Kaufman.

And on the business cycles will come and go out expert, we're actually continuing to focus on execution and converting the pipeline and the interest and the awareness of AI into monetization and so we just will be ruthlessly focused on continuing to execute against that so nothing really to report are different on the.

Shantanu Narayen: Focus on execution and converting the pipeline and the interest and the awareness of AI into monetization. And so, you know, we just will be ruthlessly focused on continuing to execute against that.

Shantanu Narayen: So nothing really to report different on the macroeconomic environment from our perspective.

Speaker Change: <unk> environment from our perspective.

Unknown Executive: Awesome, keep doing what you're doing.

Speaker Change: Yes.

Saket Kalia: And our next question will come from Sackit, Cali, with Barclays.

Operator: And our next question will come from Saket Kalia with Barker. Okay, great. Hey guys, thanks for taking my question here and echo the congrats on the quarter. Maybe for both you, Shantanu and David, you know, there are clearly just so many layers to the Firefly monetization story, but I think one thing that's coming out a little bit in this call and particularly interesting routes to monetize is just the increased engagement that Firefly helps drive in your flagship products, right, or I think what we call sort of the interfaces, right, an example there would be like, And you've clearly started expanding that to other flagships like like Premiere and Illustrator.

Speaker Change: And our next question will come from socket Calia with Barclays.

Okay, Great Hey, guys. Thanks for taking my question here and Echo the congrats on the quarter.

Saket Kalia: Okay, great.

Saket Kalia: Hey, guys, thanks for taking my question here and echo the congrats on the quarter. Maybe for both you, Shantanu and David, you know, there are clearly just so many layers to the Firefly monetization story. But I think one thing that's coming out a little bit in this call and particularly interesting route to monetize is just the increased engagement that Firefly helps drive in your flagship products, right? Or I think we call Sort of the interfaces, right? An example there would be like generator for Photoshop. And you've clearly started expanding that to other flagships like Premier and an Illustrator.

Operator: Maybe to go one level deeper, is there a way that you think about the potential opportunity from things like higher retention rates or, or any other way that I know it's really tough to size, but how have you sort of thought about thinking about an even quality? Yeah, it's a great question. And yeah, the core has been from the very beginning. We've talked to you guys about our primary focus for generative AI being user adoption and proliferation, right? And that has continued to be the primary thing on our minds. And it's the primary thing on our minds for multiple reasons.

Speaker Change: Maybe maybe for both you and David.

Speaker Change: There are clearly just so many layers to the Firefly monetization story, but I think one thing that's coming out a little bit on this call and particularly interesting Ralph monetize is just the increased engagement that Firefly helps drive in your flagship products, where do I think it will be closer to the interfaces right. An example, there would be like generative pill for Photoshop.

Speaker Change: And.

Speaker Change: Clearly started expanding that to other flagships like like Premier and.

Speaker Change: And illustrator maybe to go one level deeper is there a way that you think about the potential opportunity from from things like higher retention rates or or any other way that that I know, it's really tough to size, but how can you sort of thought of it thought about and even qualitatively.

Shantanu Narayen: Maybe to go one level deeper, is there a way that you think about the potential opportunity from things like higher retention rates or, or, or any other way that I know it's really tough to the size, but how have you sort of thought about it even qualitatively?

Shantanu Narayen: Yeah, it's a great question. And yeah, the core has been from the very beginning. We talked to you guys about our primary focus for generative AI is about user adoption and proliferation. And that has continued to be the primary thing on our mind. And it's our primary thing on our mind for multiple reasons. And to your point, there are many different ways that we can monetize this. First is, you know, as you think about the growth algorithms that we always have in our head, it always starts with, as Shantanu said, new users, right? And then it's about getting more value to existing users at hierarchy, right?

Speaker Change: Yes, it's a great question and yes. The core has been from the very beginning we've talked to you guys about our primary focus for generative AI is about user adoption and proliferation right and that has continued to be the primary thing on our mind.

David Wadhwani: And to your point, there are many different ways that we can monetize this. The first is, you know, as you think about the growth algorithms that we always have in our head, it always starts with a shot, and you said, new users, right? And then it's about getting more value to existing users at higher ARPU, right? So in the context of new users, first and foremost, you know, we want to make sure that everything we're doing generative AI is embedded in our tools, starting with Express, right?

Speaker Change: The primary thing on our mind for multiple reasons and to your point there are many different ways that we can monetize.

Speaker Change: First as you know.

Speaker Change: As you think about the growth algorithms that we always have in our head. It always starts with a shot and you said new users right and then it's about getting more value to existing users at hierarchy right. So in the context of new users.

David Wadhwani: So we have Express in the market, and we're seeing a lot of adoption and usage of Express in the market. As that's happening, we're infusing generative AI more and more into Express in a whole host of ways, and that's really helping everything from our marketing message about the completeness of the AI offering in there, all the way through to user engagement and success, and onboarding and retention. Similarly, though, this is having the same effect in our core creative products as well, right? The introduction of Firefly, combined with some of the product-led growth work we've been doing, in particular something called a context bar, makes it easy for new users to come in.

Shantanu Narayen: So, in the context of new users, first and foremost, you know, we want to make sure that everything we're doing generative AI is embedded in our tools, starting with Express, right? So we have Express in the market. We're seeing a lot of adoption and usage of Express in the market. As that's happening, we're infusing generative AI more and more into Express in a whole host of ways. And that's really helping both everything from our marketing message for the completeness of the AI offering in there, all the way through to user engagement and success and onboarding and retention.

Speaker Change: First and foremost we want to make sure that everything we're doing generative AI is embedded in our tools starting with express right. So we have express in the market, we're seeing a lot of adoption and usage of express in the market as that's happening, we're infusing generative AI more and more into express in a whole host of ways.

Speaker Change: That's really helping both everything from our marketing message for the completeness of the AI offering in there all the way through to user engagement and success in Onboarding and retention similar.

Shantanu Narayen: Similarly, though this is having the same effect in our core creative products as well, right? The introduction of Firefly combined with some of the product that growth work we've been doing in particular, or something called the context bar, makes it easy for new users coming in. To just be successful, more successful out of the gate, which then, of course, helps with both conversion and retention. And then, with the AI assistant, you know, the ability to sort of embed that into the purchase flow for Acrobat and get a high attached rate. We always talk about that as it would you like fries with that moment at Adobe when someone's going through the checkout flow.

Speaker Change: Similarly, though this is having the same effect in our core creative products as well right at the introduction of Firefly combined with some of the product led growth work. We've been doing in particular is something called the context or makes it easy for new users coming in to just be success more successful out of the gate, which then.

David Wadhwani: To just be more successful out of the gate, which then, of course, helps with both conversion and retention. And then with AI Assistant, you know, the ability to sort of embed that into the purchase flow for Acrobat and get a high attached rate, you know; we always talk about that as a "would you like fries with that?" moment at Adobe when someone's going through the checkout flow. It's just a great way for people to say, look, this is the value I want; I want to add it and buy up to the higher plan. So there are a lot of different mechanisms that we see.

Speaker Change: <unk> helps with both conversion and retention.

And then with the with AI assistant the ability to sort of embed that into the purchase flow for acrobat and get a higher attach rate. It we always talk about that as a would you like fries with that moment at Adobe when someone's going through the checkout flow. It's just a great way for people to say look this is a value I want I want to add it in.

Shantanu Narayen: It's just a great way for people to say, look, this is value I want. I want to add it and back to the higher plan. So there are a lot of different mechanisms that we see. But by far, the strongest is going to be the fact that we are seeing people like in Creative Cloud migrating to the higher price plans because they include Firefly. And so we just want to get more value to these users as well. In terms of the generations, are case, I think we talked about it. You know, we did a great job at Max in London, talking about some of the new functionality and releasing Photoshop.

Speaker Change: And by up to the higher plan. So there are a lot of different mechanisms that we see.

David Wadhwani: But by far, the strongest is going to be the fact that we are seeing people, like in Creative Cloud, migrating to the higher price plans because they include Firefly. And so we just want to get more value for these users as well. And in terms of the generation, Saket, I think we talked about it. You know, we did a great job at Max in London, talking about some of the new functionality and releasing Photoshop. I think we're up to 9 billion generations.

Speaker Change: But by far the strongest theres going to be the fact that we are seeing people like in creative cloud migrating to the higher priced plans because they include Firefly and so we just want to get more value to these users as well and in terms of the generation sockets I think we talked about it.

Speaker Change: Did a great job at Max in London talking about some of the new functionality and releasing Photoshop I think were up two 9 billion generations and actually.

Shantanu Narayen: I think we're up to 9 billion generations, and actually, you know, I think the greatest amount of generations was in May. So the momentum clearly is the more we integrate this functionality into our interfaces, the more that usage is really driving adoption as well as rich. Dengit. Very helpful. Thanks, guys.

Shantanu Narayen: And actually, you know, I think the greatest number of generations was in May. So the momentum clearly is the more we integrate this functionality into our interfaces, the more that usage is really driving adoption as well as retention. Very helpful. Thanks, guys. And our next question comes from Brent Thill with Jeff. David, on Express, you mentioned the success you're seeing. Can you maybe drill in to some of the other metrics?

Speaker Change: I think the greatest amount of generation was in May so the momentum clearly is the more we integrate this functionality into our interfaces. The more of that usage is really driving adoption as well as retention.

Speaker Change: Very helpful. Thanks, guys.

Brent Thill: And our next question comes from Brent Thill with Jefferies.

Speaker Change: And our next question comes from Brent Thill with Jefferies.

David Wadhwani: David, on Express, you mentioned the success you're seeing. Can you maybe drill into some of the other metrics and accomplishments that you're seeing out of Expressless quarter? Yeah, for starters, there's a lot of buzz at Express here at Adobe coming off the event we just had earlier this week. But it's really based on the fact that the innovation and express is on a tear. A few months ago, we introduced an all-new Express for the Web. This quarter, we introduced an all-new Express for mobile. We introduced Express for Business. We also now have, as we just talked about, been more deeply integrating AI features, whether it's for imaging, generation, or gender to fill, or text effects, character animation, design generations, more deeply into the flow for Express.

David Unexpressed. He mentioned that success you are seeing can you maybe just drilling some of the other metrics and accomplishments that youre seeing out of express this quarter.

Speaker Change: Yeah.

Operator: [inaudible] Yeah, for starters, you know, there's a lot of buzz about Express here at Adobe coming off the event we just had earlier this week. But it's really based on the fact that the innovation in Express is on a tear, right? A few months ago, we introduced an all new Express for the web. This quarter, we introduced an all new Express for mobile, and we introduced Express for business.

Speaker Change: For starters.

Speaker Change: A lot of Buzzard express here at Adobe coming off their event. We just had earlier this week, but it's really based on the on the fact that the innovation in express is on a tear right.

A few months ago, we introduced an all new expressed for the web.

Speaker Change: This quarter, we introduced an all new expressed for mobile.

Speaker Change: <unk> introduced express for business.

Speaker Change: We also now have as we just talked about been more deeply integrating AI features whether it's for imaging generation regenerative fill our tax effects character animation design generations more deeply into the flow for express and that combination has led to an incredible set of.

David Wadhwani: We also now have, as we just talked about, been more deeply integrating AI features, whether it's for imaging generation, or gender to fill, or text effects, character animation, you know, design generations more deeply into the flow for Express. And that combination has led to an incredible set of metrics over the last quarter in particular, but you know, building throughout the year, Express now is growing very quickly. We talked about in the script earlier that now mobile has more than doubled quarter over quarter, which is fantastic to see. And cumulative exports, if you look at year over year, have grown by over 80%.

David Wadhwani: And that combination has led to an incredible set of metrics over the last quarter, in particular, but building throughout the year. Express mal is going very quickly. We talked about on the script earlier that Mal on mobile has more than doubled quarter of a quarter, which is fantastic to see. And cumulative exports, if you look at your over year, has grown by over 80%. So really feeling good about sort of the momentum we're seeing.

Speaker Change: Metrics over the last quarter in particular, but building throughout the year Express MAU is growing very quickly we talked about on the on the.

Speaker Change: And in the script earlier that.

Speaker Change: MAU on mobile has more than doubled quarter over quarter, which is fantastic to see and cumulative exports. If you look at year over year has grown by over 80%. So really feeling good about the momentum we're seeing but if you take a step back I think I think it is important to take a step back and understand our vision.

David Wadhwani: So really feeling good about sort of the momentum we're seeing. But if you take a step back, I think it is important to take a step back and understand our vision. Express, that is now in the market, is built on a brand new platform, right?

David Wadhwani: But if you take a step back, I think it is important to take a step back and understand our vision. Express that is now in market is built on a brand new platform. And that brand new platform lays the groundwork for the AI era. And this will be, Express will be the place that anyone can come and create through a combination of conversational and standard inputs. That's the vision that we have. And I think it's an opportunity for us to really leap forward in terms of what we can do on the web and mobile or Adobe.

Speaker Change: Express that is now in market is built on a brand new platform right and that brand new platform lays the groundwork.

David Wadhwani: And that brand new platform lays the groundwork for the AI era. And this will be, Express will be the place that anyone can come to create through a combination of conversational and standard inputs. That's the vision that we have, and I think it's an opportunity for us to really leap forward in terms of what we can do on the web and mobile at Adobe. And you know, it's taken us a little time to get here.

Speaker Change: For the AI era.

Speaker Change: And this will be express will be the place that anyone can come and create through a combination of conversational and standard inputs. That's the vision that we have and I think it's an opportunity for us to really leap forward in terms of what we can do on the web and mobile with Adobe.

David Wadhwani: And it's taken us a little time to get here. It hasn't happened overnight.

Speaker Change: And it's taken us a little time to get here and it hasnt happened overnight, but now that we are here, we are going to pour the gas on go to market right.

David Wadhwani: But now that we are here, we are going to pour the gas on go-to-market. You know what we can do with our data-driven operating model. We've been ramping up what we're doing in digital and Adobe.com journeys. We now can do the same thing and unleash all of that expertise in the mobile app store. You know what we're capable of in terms of our product-led growth motions. Now embedded Express workflows into Acrobat Editor. We obviously have been embedding it into Creative Cloud workflows. And also, as we showed at Summit with Anil, we've embedded it into our Experience Cloud workflows as well.

David Wadhwani: It hasn't happened overnight, but now that we are here, we are going to pour the gas on go-to-market, right? You know what we can do with our data-driven operating model? We've been ramping up what we're doing in digital and adobe.com journeys. We can now do the same thing and unleash all of that expertise in the mobile app store. You know what we're capable of in terms of our product-led growth. We have now embedded Express workflows into Acrobat Editor.

Speaker Change: So what we can do with our data driven operating model, we've been ramping up what we're doing in digital and Adobe Dotcom journeys. We now can do the same thing and unleash all of that expertise in the mobile App store you know what we're capable in terms of our product led growth motions acrobat now embedded.

Speaker Change: Express workflows into acrobat editor, we obviously have been embedding it into creative cloud workflows.

David Wadhwani: We obviously have been embedding it into Creative Cloud workflows, and also, as we showed at Summit with Anil, we've embedded it into our Experience Cloud workflows as well. In addition to all of that, we're now unleashing our Insight Salesforce to target small-medium businesses. And our education teams are really gearing up for the back-to-school launch for K-12 and higher ed. And our field and enterprise sales now have Express for Business. And we're doing all this globally, right? It's a massive market, and we're ramping up, and we're ready to go. And the next question: Gregg Moskowitz

Speaker Change: And also as we showed at summit with a narrow we've embedded it into our experience cloud workflows as well.

David Wadhwani: In addition to all of that, we're now unleashing our Insight Salesforce to target the small medium businesses.

Speaker Change: In addition to all of that we're now unleashing our inside salesforce to target the small medium businesses.

David Wadhwani: Our education teams are really gearing up for the back-to-school launch for K through 12 in higher ed. And our field and enterprise sales now have expressed for business. And we're doing all this globally, right? It's a massive market, and we're ramping up, and we're ready to go.

Speaker Change: Our education teams are really gearing up for the back to school lunch launch Avalanche launch for K through 12 and higher Ed.

Speaker Change: And our field and enterprise sales now have expressed for business. So and we're doing all this globally right. It's a massive market and we are ramping up and we're ready to go.

Speaker Change: Thank you.

Gregg Moskowitz: And the next question comes from Greg Boff. Moskowitz, Nizubo. Thank you very much, and I'll add my congratulations.

Speaker Change: And the next question comes from Gregg Moskowitz with Mizuho.

Speaker Change: Yes.

Gregg Steven Moskowitz: Okay. Thank you very much and I'll add my congratulations for your accretive business. How are you thinking about the acute side of the P times Q equation over the balance of the year based on these numbers anyway I would certainly assume that you had really healthy unit growth in Q2, and I'm wondering if you expect that to continue.

Operator: Okay, thank you very much, and I'll add my congratulations. For your creative business, how are you thinking about the Q side? [inaudible] Kuhn, and I'm wondering.

Gregg Moskowitz: For your creative business, how are you thinking about the Q side of the P times Q equation over the balance of the year based on these numbers, anyway? I would certainly assume that you had really healthy, unique roast in Q2, and I'm wondering if you expect that to continue. Yeah, I mean again, I think what it is this mix of product innovation that we've been putting out there and the steady drum beat of that. A lot of it getting attention because of the quality and the hooks of AI and being able to sort of bring people onboarding them quickly and successful into the product. And then, as we talked about, the more they use these AI features, the more they retain, and we feel really good about really that whole workflow.

Speaker Change: Yeah, I mean again I think what it is this mix of product innovation that we've been putting out there in the steady drumbeat of that.

David Wadhwani: Yeah, I mean, again, I think what it is this mix of product innovation that we've been putting out there and the steady drumbeat of that, a lot of it getting attention because of the quality and the hooks of, you know, AI, and being able to sort of bring people onboard quickly and successfully into the product. And then, as we talked about, the more they use these AI features, the more they retain. And we feel really good about that whole workflow.

Speaker Change: A lot of it getting attention because of the quality and the hulks of AI.

Speaker Change: And being able to sort of bring people onboarding them.

Speaker Change: Quickly and successfully to the product and then as we've talked about the more they use. These AI features the more they retain and we feel really good about really that whole workflow. So yes.

Shantanu Narayen: So yeah, the new user growth continues to be our primary focus, and when you add in everything we're doing with express, we're again, like I said, we're off to the races and we feel very good about the momentum on new user acquisition and existing member retention. And Greg, as you're aware, I mean, certainly with Express, we also have the model of, you know, customer acquisition as it relates to people coming in through trial and free and then conversion. So we are seeing, you know, the interest level as it relates to express in particular, you know, significant interest.

Speaker Change: New user growth continues to be our primary focus.

David Wadhwani: So yeah, new user growth continues to be our primary focus, and when you add in everything we're doing with Express, we're, again, like I said, we're off to the races, and we feel very good about the momentum for new user acquisition and existing member retention. And Greg, as you're aware, I mean, certainly with Express, we also have the model of, you know, Customer Acquisition as it relates to people coming in through trial and free and then conversion.

Speaker Change: And when you add in everything we're doing with that with the express.

Speaker Change: Again like I said, we're off to the races, and we feel very good about the momentum in new user acquisition and existing.

Greg: Member retention and Greg as you are aware I mean, certainly with express we also have the model of you know.

Greg: Customer acquisition as it relates to people coming in through trial and free and then conversion. So we are seeing.

David Wadhwani: So we are seeing, you know, the interest level as it relates to express is, you know, significant. Shantanu, since you also called out the strength in digital earlier, including driving new creative all-app subscriptions from your website, are you doing anything different that's helping to drive that behavior? And if so, is that something you think can continue as well? You know, I would, Greg, in a sort of modesty say we've been world class at, you know, sort of driving that for a long time now. But the team, I think, continues to do an amazing job.

Greg: The interest level as it relates to express in particular, a significant interest.

Shantanu Narayen: And chance to do since you also called out the strength and digital earlier, including driving a new creative all-ass subscription from your website, are you doing anything different that's helping to drive that behavior? And if so, is that something you think can continue as well? You know, I would drag in sort of modesty say we've been world class at, you know, sort of driving that for a long time now, but the team I think continues to do an amazing job. And I would say David referred to the D DOM, you know, Adobe home is now sort of increasingly the way that we're driving a lot of, you know, people to get aware of our new products.

And <unk> since you also called out the strength in digital earlier, including driving new creative all App subscribers subscriptions from your web site are you doing anything different thats, helping to drive that behavior and if so is that something you think can continue as well.

Greg: Hi.

Greg: Greg in sort of a modest you say, we've been world class asset.

Speaker Change: Driving that for a long time now, but the team I think continues to do an amazing job and I would say David.

Shantanu Narayen: And I would say, David referred to the D-DOM, Adobe Home is now sort of increasingly the way that we're driving a lot of people to get aware of our new products. And so I would say the mobile part as well, and the mobile journeys, as we've got these mobile products, whether it's Lightroom, or whether it's, you know, certainly Express, that's an area of increasing focus for us. And, you know, the traditional sort of understanding where search terms are. I think we're getting better and better at that, which leads to way more digital traffic for us.

Speaker Change: Two the D Dom.

Speaker Change: Adobe home is now sort of increasingly the way that we're driving a lot of.

Speaker Change: You know people to get aware of our new products and so I would say the mobile part as well in the mobile journeys as we've got these mobile products, whether it's light room or whether it's.

Shantanu Narayen: And so I would say the mobile part as well in the mobile journeys as we've got these mobile products, whether it's Lightroom or whether it's, you know, certainly Express that's an area of increasing focus for us. And, you know, the traditional sort of understanding where search terms are, I think we're getting better and better at that, which leads to way more digital traffic for us. So I think it's across the board, but I also highlight, I mean, the commerce team that we have at Adobe that understands, you know, what the segments are and how, for those particular segments, we can attract people. That's great.

Speaker Change: Certainly express that's an area of increasing focus for us and you know the traditional sort of understanding where search terms are I think we're getting better and better at that which leads to way more digital traffic for us. So I think it's across the board, but I'd also highlight I mean, the commerce team that we have at Adobe.

Shantanu Narayen: So I think it's across the board, but I'd also highlight, I mean, the commerce team that we have at Adobe that understands what the segments are and how, for those particular segments, we can attract people. That's great. I think, in his prepared remarks, Dan also talked about the strength in emerging markets. And, you know, I think the beautiful part about AI is that since they need access to the cloud to get, you know, all of the AI functionality, emerging market growth has been really strong. Morgenstern.

Speaker Change: Understand.

Speaker Change: What the segments are and how far those particular segments. We can attract people that's great I mean, I think in the prepared remarks.

Shantanu Narayen: I mean, I think in the prepared remarks, Dan also talked about the strength in emerging markets. And, you know, I think the beautiful part about AI is that since they need access to the cloud to get, you know, all of the AI functionality. The emerging market growth has been really strong for us.

Dan also talked about the strength in emerging markets and you know I think the beautiful part about AI is that since they need access to the cloud to get all of the AI functionality and emerging market growth has been really strong for us.

Keith Weiss: Very helpful.

Speaker Change: Very helpful. Thank you.

Keith Weiss: And moving on to Keith Weiss with Morgan Stanley. Thank you guys for taking the question. And again, congratulations on a really solid set of results in an environment where not very many software companies have been able to beat and raise in this type of uneven environment. I wanted to maybe focus in a little bit on the question that Mark Mordler asked in particular on what gives you guys the confidence to see you return to year on your growth and create a cloud net new error. It declined in Q2, defining Q1, and I'm not mistaken; the client in Q2 was a little bit deeper than what we saw in Q1.

Speaker Change: And moving on to Keith Weiss with Morgan Stanley.

Keith Weiss: Thank you guys for taking the question and again congratulations on a really solid set of results in an environment, where not very many software companies have been able to beat and raise.

Operator: Thank you guys for taking the question. And again, congratulations on a really solid set of results in an environment where not very many software companies have been able to beat and grow in this type of uneven environment. I wanted to maybe focus in a little bit on the question that Mark Moerdler asked, in particular, on what gives you guys the confidence to see a return to year-on-year growth in Creative Cloud Net New ARR. It declined in Q2, declined in Q1, and if I'm not mistaken, the decline in Q2 was a little bit steeper than what we saw in Q1.

Speaker Change: In this type of uneven environment.

Speaker Change: Or is it mainly.

Speaker Change: Focusing a little bit on the question that Mark Modeler asked.

Speaker Change: In particular on what gives you guys the confidence to see a return to year on year growth in creative cloud net new IRR.

Speaker Change: It declined in Q2 declined in Q1, and if not mistaken decline in Q2 was a little bit steeper than what we saw in Q1. So what are the particular drivers.

Keith Weiss: So what are the particular drivers and maybe some detail on those drivers that give you guys the confidence that that trend line that has been actually heading in the wrong direction is going to head in the right direction now. We're actually going to keep growth in those metrics in Q3 and Q4.

David Wadhwani: So what are the particular drivers, and maybe some detail on those drivers, that give you guys the confidence that that trend line that has actually been heading in the wrong direction is going to head in the right direction now, where we're actually going to see growth in those metrics in Q3 and Q4? Yeah, thanks, Keith. You know, this is one of the areas that I think we've shared with you, the complexity of the year-over-year comparisons in the first half based on prior pricing marks that we had.

Speaker Change: Detail on those drivers that give you guys the confidence that that trend line that would have been.

Speaker Change: Actually heading in the wrong direction is going to head in the right direction now we're actually again, we'll see growth in those metrics in Q3 and Q4.

Keith Weiss: Mark. Yeah, thanks, Keith. You know, this is one of the areas that I think we've shared with you: the complexity of the Euroverear comparisons in the first half based on prior pricing marks that we had. But more importantly, to your point, the Euroverear complexities are now behind us. And we're very excited about the momentum of the first half and how it sets us up for the second half. Frankly, across both Document Cloud and Creative Cloud, both are really momentum stories. You know, the 478 is 487. Sorry, just to be clear, the 487 that we printed this time is obviously strong performance.

Yes, Thanks Heath.

David Wadhwani: But more importantly, to your point, the year-over-year complexities are now behind us, and we're very excited about the momentum of the first half and how it sets us up for the second half. Frankly, across both Document Cloud and Creative Cloud, both are really momentum stories. You know, the 478 – sorry, just to be clear – the 487 that we printed this time is obviously strong performance, and it implies that both CC and DC came in over what the growth guide would have implied otherwise, right?

Speaker Change: This is one of the areas that I think we've shared with with you the complexity of the year over year comparisons in the first half based on prior pricing.

Speaker Change: Mark that we had but more importantly to your point the year over year compare complexities are now behind us and we're very excited about the momentum of the first half and how it sets us up for the second half frankly across both document cloud and creative cloud both are really momentum stories.

Speaker Change: 478 at four.

Speaker Change: 487, sorry, just to be clear the 487 that we printed this.

Time is obviously strong performance and it implies that both CCN D. C came in over what the growth. The guide would have implied otherwise right. So it's giving us a lot of good momentum going into the back half.

Keith Weiss: And it implies that both CC and DC came in over what the growth, the guide would have implied otherwise. Right? So it's giving us a lot of good momentum going into the back half.

Keith Weiss: Now, the momentum is really driven by three things. And just I'll try to share a little bit more context here and hopefully gives you first as new user acquisitions. Right? We're seeing, you know, Express starting to perform well in terms of bringing a lot of new users into the franchise across, across mobile and web. AI assistant and reader has been, you know, a really nice start for us. And we've been very pleased with how the uptake on that’s going. And then Firefly itself, as I mentioned, has been increasingly more productive in terms of bringing in onboarding users and then retaining users because of the growth.

Now the momentum is really driven by three things and I'll kind of share a little bit more context here and hopefully gives you first as new user acquisition right. We're seeing express starting to perform well in terms of bringing a lot of new users into the franchise across.

Speaker Change: Across mobile and web.

David Wadhwani: So, it's giving us a lot of good momentum going into the back half. AI Assistant and Reader have been a really nice start for us, and we've been very pleased with how the uptake on that is going. And then Firefly itself, as I mentioned, has been increasingly more productive in terms of bringing in new users and then retaining users because of the growth. As we drive that more holistically throughout the product set, we start to see more people using it, including, as Shantanu mentioned earlier, in emerging markets.

Speaker Change: AI assistant and reader has been.

Speaker Change: A really nice start for us and we've been very pleased with how the uptake and thats going.

Speaker Change: And then Firefly itself as I mentioned has been increasingly.

Speaker Change: More productive in terms of bringing in Onboarding users and then retaining users because of the growth. We continued as we drive that more holistically throughout the product set.

Keith Weiss: We continued as we drive that more holistically throughout the product set. We start to see more people using it, including, as shot new mentioned earlier, in emerging markets. So we are seeing very good strength and usage in emerging markets. And that has certainly been a bright spot for us, which is something that, you know, obviously represents a lot of potential and upside for us.

Speaker Change: We start to see more people using it including as Sean mentioned earlier in emerging markets. So we are seeing very good strength and usage in emerging markets and that has certainly been a bright spot for us which is something that obviously represents a lot of potential and upside for us.

David Wadhwani: So, we are seeing very good strength and usage in emerging markets, and that has certainly been a bright spot for us, which is something that, you know, obviously represents a lot of potential for upcycling. In terms of existing customers, the migration has been going very well for us as well.

Keith Weiss: In terms of existing customers, the migration has been going very well for us as well. So more people are moving to the higher price, higher value plans because of the Firefly capabilities. We're even seeing this in enterprises where people are moving up to the highest versions of Creative Cloud, which is what we're called Creative Cloud Enterprise 4, because they get more access to features, you know, beyond just generation. They have more collaborative capabilities. Beyond just kind of, you know, we're seeing a lot of progress. And we're seeing a lot of progress. We're seeing a lot of progress.

Speaker Change: In terms of existing customers the migration has been going.

Speaker Change: Well for us as well so more people are moving to the higher priced higher value plans.

David Wadhwani: So more people are moving to the higher price, higher value plans because of the Firefly capabilities. We're even seeing this in enterprises where people are moving up to the highest versions of Creative Cloud, which is what we call Creative Cloud Enterprise 4, because they get more access to features beyond just generation. They have more collaborative capabilities beyond just sharing via email, and we're starting to see that create nice momentum and upgrade cycles in the enterprise segment as well. And then, certainly, let's not forget the new offerings, either.

Speaker Change: Because of the Firefly capabilities, we're even seeing this in enterprises, where people are moving up to the highest versions of creative cloud, which is what we call creative cloud enterprise for because they get more and more access to features.

Speaker Change: Beyond just generation.

Speaker Change: More collaborative capabilities beyond just kind of sharing via E mail and we're starting to see that create a nice momentum in upgrade cycles in the enterprise segment as well.

Keith Weiss: We're seeing a lot of sharing via email. And we're starting to see that create a nice momentum in upgrade cycles and the enterprise segment as well.

Keith Weiss: And then certainly let's not forget the new offerings, too. While still early, automation and content production is something that, you know, we're driving effectively in a lot of these accounts with Firefly services. So that makes of new users, existing user migration, and also the new offerings that we have in market. But are driving that growth formula that we talked about, which is now P times Q plus V for value with these automation services. It is a great answer.

And then certainly let's not forget the new offerings too.

David Wadhwani: While still early, automation and content production is something that we're driving effectively in a lot of these accounts with Firefly services. So that mix of new users, existing user migration, and also the new offerings that we have in market are driving that growth formula that we talked about, which is now P times Q plus V for value with these automation.

Speaker Change: While still early.

Speaker Change: Automation and content production is something that we are driving effectively a lot of these accounts with Firefly services, so that mix of new users existing user migration and also the new offerings.

Speaker Change: That we have in market are driving that growth formula that we talked about which is now Pete times Q plus V for value with that with these automation services.

Speaker Change: Okay.

Speaker Change: Great answer thank you so much.

Keith Weiss: Thank you so much.

Speaker Change: Yes.

Brad Zelnick: And we have a question from Brad Phil with Bank of America. Oh, great. Thank you so much.

Speaker Change: And we have a question from Brad Sills with Bank of America.

Operator: And we have a question from Brad with Bank of America. Oh, great. Thank you so much.

Operator: I wanted to ask a question around the generative credit. Blake, with all the progress, embedding Firefly across the key flagship products and the engagement. Ramp, and that generative credit component to your price. Is that a fair assessment? Would you expect to start to see that coming in, or not? Smith.

Bradley Hartwell Sills: Oh, great. Thank you so much I wanted to ask a question around the generative a credit component to your pricing here. It seems like with all the progress you've made embedding firefly across the key flagship products and engagement levels that you're seeing we should start to see perhaps some ramp in that general credit component to your pricing is that a fair.

Brad Zelnick: I wanted to ask a question around the generative credit. Debt component to your pricing here. It seems like with all the progress you've made embedding Firefly across the key flagship products in the engagement levels that you're seeing, we should start to see perhaps some ramp in that generative credit component to your pricing. Is that a fair assessment? Would you expect to see that coming in, or should we look to other services like the video capabilities that you're going to be launching shortly as a key catalyst there? Thank you. I think you're right, Brad. When we think about what we've done, we've done with imaging and video.

Bradley Hartwell Sills: Assessment would you expect to start to see that coming in or should we look to other services like the video capabilities that youre going to be launching shortly.

Speaker Change: As a key catalyst there thank you.

Speaker Change: I think youre right, Brad when we think about what we've done with imaging and video we've.

Shantanu Narayen: Thank you. I think you're right, Brad. When we think about what we've done with imaging and video, we've done the right thing by making sure the higher-value paid plans have people don't have to think about the amount of generative capability. And so there, you know, the balance between free and trialist users; they're going to run into the generative capability limits and therefore have to subscribe. And but for the people who actually have imaging and vector needs, who are not constantly thinking about generative, I think we've actually got it right.

Shantanu Narayen: We've done the right thing by making sure the higher value paid plans that people don't have to think about the amount of generative capability. And so, there, you know, the balance between for free and trial as users, they're going to run into the generative capability limits and therefore have to subscribe. And, but for the people who actually have imaging and vector needs that they're not constantly thinking about generative. I think we're going to be able to see that. I think we actually got it right.

Speaker Change: We've done the right thing by making sure the higher value paid plan that people don't have to think about the amount of generative capability and so there.

Speaker Change: The balance between for free and trial list users, they're going to run into the generative capability limits and therefore have to subscribe and but for the people who actually have imaging and vector needs that they are not constantly thinking about generative I think we actually got it right do.

Shantanu Narayen: To your point, as we move to video, expect to see different plans, because those plans will, you know, by necessity take into account the amount of work that's required to generate video. So you're absolutely right as a framework for you to think about it. The two other things that I would say are, I mean, clearly express is really being driven by sort of the need for AI and how people are able to describe what they want and get the final output. You know, when David talked about exports, just to clarify what that means is people who have successfully got what they want to get done.

Shantanu Narayen: To your point, as we move to video, expect to see different plans because those plans will, you know, by necessity, take into account, you know, the amount of work that's required to do video generation. So you're absolutely right as a, you know, sort of framework for you to think about it. The two other things that I would say is, I mean, clearly express is really being driven by sort of the need for AI and how people are able to describe what they want and get the final output. You know, and David talked about exports. Just to clarify what that means is people who have successfully got what they want to get done, done.

Speaker Change: To your point as we move to video expect to see a different plans because those plans will by necessity take into account the amount of work that's required to do video generation. So you're absolutely right is the sort of framework for our for you to think about it. The two other things that I would say is I mean clearly <unk>.

Speaker Change: Express.

Speaker Change: Israeli being driven by sort of the need for AI and how people are able to describe what they want and get the final output when David talked about exports.

Shantanu Narayen: And that's, you know, a key measure of how we are doing it, and AI is certainly facilitating and accelerating that. And last thing I would say, Brad, is that, as you know, on the Acrobat side, it's a slightly different model, which we like, which is anybody who has Reader and is looking at a document can have an upsell to their AI assistant. If you have Acrobat Pro, you can upsell to the AI assistant.

Bradley Hartwell Sills: To clarify what that means is people who have successfully got what they wanted to get done done and that's you know a key measure of how we are doing it and AI thirdly, facilitating and accelerating that and last thing I would say Brad is as you know on the acrobat side, it's a slightly different model, which we like which is anybody who is reader and is looking.

Shantanu Narayen: And that's, you know, a key measure of how we are doing it, and AI is certainly facilitating and accelerating that.

Shantanu Narayen: And last thing I would say, Brad, is, as you know, on the Acrobat side, it's a slightly different model, which we like, which is anybody who has Reader and is looking at a document. They can have an upsell to the AI assistant. If you have Acrobat Pro, you can upsell to the AI assistant. And if you're a brand new acquisition of a user when you're coming in, you know, the adoption of the highest value products. So, between Standard Pro and Pro Plus Assistant, we've been pleased to see how many people are migrating to the Pro Plus Assistant.

Speaker Change: Our document.

Speaker Change: You can have an upsell to the AI assistant.

Shantanu Narayen: And if you're a brand new acquisition of a user, when you're coming in, adoption of the highest value products, so between standard pro and pro plus assistant, we've been pleased to see how many people are migrating to pro plus assistant. So hopefully, that gives you some color of how we think about it differently by product. Very helpful.

Speaker Change: If you have acrobat Pearl you can upsell to the AI assistant and if you're a brand new acquisition of a user when youre coming in.

Speaker Change: The adoption of the highest value products. So between standard Pearl and Proclus assistant we've been pleased to see how many people are migrating to the proclus assistant. So hopefully that gives you some color of how we think about it differently byproduct.

Shantanu Narayen: So hopefully that gives us some color of how we think about it differently by product. Very helpful.

Very helpful. Thank you Sean.

Brad Selnick: And we'll take a question from Brad Selnick with Deutsche Bank. Great. Thank you so much, and congrats to all of you. You know, I don't want an ill to feel left out. So I'm going to ask a DX question.

Speaker Change: And we'll take a question from Brad Zelnick with Deutsche Bank.

Operator: And we'll take a question from Brad Zelnick with Deutsche Bank. Great, thank you so much and congratulations to all of you. I don't want Anil to feel left out, so I'm going to ask a DX question. Daniel, it's good to hear AEP is on track to become the next billion-dollar business. How important are cloud migrations?

Speaker Change: Great. Thank you so much and congrats to all of you.

Speaker Change: I don't want to nil to feel left out so I'm going to ask a dx question.

Anil Chakravarthy: An ill, it's good to hear AEP is on track to become the next billion-dollar business for Adobe. Can you expand on the journey and drivers that get you there? And in particular, how important are cloud migrations? And how do you see AEP AI assistant perhaps accelerating the journey to a billion thanks? Thank you very much. Appreciate it.

Brad Alan Zelnick: It's good to hear AEP is on track to become the next billion dollar business for Adobe can you expand on the journey and drivers that get you there and in particular, how important are cloud migrations and how do you see AEP AI assistant, perhaps accelerating the journey to 1 billion.

Anil S. Chakravarthy: And how do you see AEP, AIS? Perhaps accelerating the journey to a billion thanks. Thank you, Brad. I appreciate it.

Anil S. Chakravarthy: As you know, I mean, customer experience management, and especially it's been a hugely important priority area for chief marketing officers, and with CIOs and chief digital officers as well. And for us, since we are focused on personalization scale, which is really built around the AEP platform, we're the largest provider in this space, and we're growing faster than any of our peers, and we're the number one digital experience platform as a result And that has really helped us keep the momentum.

Brian: Thank you Brian I appreciate it as you know me customer experience management.

Anil Chakravarthy: As you know, I mean customer experience management, and especially it's been a hugely important priority area for chief marketing officers and with CIOs and chief digital offices as well. And for us, if we are focused on personalization scale, which is really built around the AEP platform where the largest provider in the space and we're growing faster than any of our peers and was the number one digital experience platform as a result. And that has really helped us keep the momentum. When you think about the AEP AI assistant, it's doing a couple of things. One, it's really making it easier for customers to deploy use cases when you think of use cases that they have around.

Brian: Especially it's been a hugely important priority area for chief marketing officers and.

Speaker Change: CIO since you've digital offices as well and for US we are focused on personalization at scale, which is really built around the <unk> platform.

Speaker Change: The largest provider in this space and we are growing faster than any of our peers and we're the number one digital experience platform as a result, and that has really helped us keep the momentum when you think about the EPA assistant it's doing a couple of things one is really making it easier for customers to deploy use cases, when you think of use cases that they have.

Anil S. Chakravarthy: When you think of the AEP AI Assistant, it's doing a couple of things. One, it's really making it easier for customers to deploy use cases. When you think of use cases that they have around, for example, generating audiences and running campaigns around those audiences, these are things today that require some data engineering. They require the ability to put these audiences together.

Anil Chakravarthy: For example, generating audiences and running campaigns around those audiences. These are things today that require some data engineering. They require the ability to put these audiences together. So they require marketing and IT teams to work together. The AEP AI assistant is making it much easier for marketers to be able to do it themselves and be able to deploy a lot more use cases. So as there's more usage, it'll help drive more consumption and help drive growth in terms of number of profiles, number of users. And we see it helping us grow towards that bill in order.

Speaker Change: Around for example, generating audiences in running campaigns around those audiences.

Speaker Change: Things today that requires some data engineering the required the ability to put these audiences together so the required marketing and it teams to work together the Aps as tinder is making it much easier for marketers to be able to do it themselves and be able to deploy a lot more use cases, so as theres more usage, it'll help drive more consumption and help draw.

Anil S. Chakravarthy: So they require marketing and IT teams to work together. The AEP AI Assistant is making it much easier for marketers to be able to do it themselves and be able to deploy a lot more use cases. So as there's more usage, it'll help drive more consumption and help drive growth in terms of the number of profiles, the number of users, and we see it helping us grow towards that billion dollar business. Heer, and keep up the great work.

Speaker Change: The growth in terms of number of profile as number of users and we help obviously.

Speaker Change: Helping us grow towards that billion dollar business.

Anil Chakravarthy: Great to hear, and keep up the great work, guys. Thanks.

Speaker Change: Great to hear and keep up the great work guys. Thanks.

Unknown Executive: Hey operator, we're almost at the top of the hour. We'll take two last questions, and then wrap up. Thanks.

Operator: Hey, operator, we're almost at the top of the hour. We'll take two last questions and then wrap up. Thanks. We'll take a question from Cash Rangan with Goldman Sachs. Thank you very much. You guys could have three separate earnings calls. Even the smallest.

Speaker Change: Hey, operator, we're almost at the top of the hour, we'll take two last questions and then wrap up thanks.

Thank you, we'll take a question from Kash Rangan with Goldman Sachs.

Kasthuri Rangan: We'll take a question from Kasthuri Rangan with Goldman Sachs. All right. Thank you very much.

Speaker Change: Alright. Thank you very much you guys could have three separate earnings calls because you have three different businesses that even the smallest one is very large.

Shantanu Narayen: You guys could have three separate earnings calls because you had three different businesses that even the smallest one is very large. So, yeah, sorry, Anil, David, and Shantanu, we may not be, I may not be able to ask all the questions that I want. I'm sure we have plenty, but I'll just keep it super high level. Shantanu, Gerda Vei, it seems to swing back and forth just so early in its evolution. The possibilities seem magical sometimes; analysts sometimes, sometimes it feels very disappointing. But with every quarter that Adobe is executing on this path, where do you stand with the question that we do get from investors?

Operator: Very large. So yeah, sorry, Anil, Dave, and Shantanu; we may not. I may not be able to ask all the questions that I want, I'm sure we have plenty, but I'll just keep it super high level, Shantanu. In generative AI, it seems to swing back and forth; this is so early in its evolution. The possibilities seem magical sometimes, endless sometimes, and sometimes it feels very disappointing. But with every quarter that Adobe is executing on,

Speaker Change: So, yes, sorry, I know, David and Jonathan and we may not be.

Speaker Change: May not be able to ask all the questions that I want I'm sure we have plenty, but I'll just keep it super high level genre.

Speaker Change: Narrative AI, it seems to swing back and forth.

Speaker Change: So early in its evolution.

Speaker Change: Possibly same magical sometimes analyst, sometimes sometimes it feels very disappointing.

Speaker Change: But with every quarter that Adobe is executing on this.

Shantanu Narayen: Pat, where do you stand with the question that we do get? Will Jarrett of AI be so good that... That sounds a little far-fetched, but I'm just throwing it out there to see how you would react to that proposition. Same in the Experience Cloud as well; could generative AI create its own marketing campaign? Marketing people out of, or maybe it doesn't. I'm sure you have a strong... Maybe flipped on the other side, it does create category growth, on the other hand, not category compression.

Speaker Change: This path, where do you stand with the question that we do get from investors will generative AI be so good.

Shantanu Narayen: Will Gerda Vei be so good? That it's the end of the creative process. So, we don't need creative folks; that software will do everything. That sounds a little far fetched, but I'm just throwing it out there to see how you would react to the proposition. Same in the Experience Cloud as well. Good Gerda Vei created its own marketing campaign, but marketing people out of business, or maybe it doesn't. I'm sure you have strong views. Maybe flipped on the other side, it does create category growth; on the other hand, not categorical compression. So, sorry for that super high level question, but that seems to be a big debate on the stock here, at least from the long term perspective.

Speaker Change: At the end of the creative process. So we don't need creative folks that software will do everything.

Speaker Change: That sounds a little farfetched, but.

But I'm just throwing it out there to see how you would react to that proposition.

Speaker Change: Same in the experience cloud as well good generative AI credits on marketing campaign, great put marketing people out of business or maybe it doesn't I'm sure you have strong views.

Maybe flipped on the other side it does create category growth on the other hand, not category compression. So sorry for that Super high level question, but that's that seems to be a big debate on the.

Shantanu Narayen: Sorry for that super-high-level question, but that seems to be a big debate in this talk. A Long-Term Perspective. Yeah, Kash, I think the two things that when we talk to investors that are perhaps on their minds are, I think the first is, it's fair to say, that the interest that exists right now from, you know, investors, as it relates to AI is all associated with the infrastructure and chips, and perhaps rightly so, because that's where, you know, everybody's creating these models.

Speaker Change: The stock here at least from the long term perspective. Thank you so much.

Shantanu Narayen: Thank you so much.

Shantanu Narayen: I think the two things when we talk to investors that are perhaps on their mind. I think the first is it's fair to say that the interest that exists right now from investors as it relates to AI is all associated with the infrastructure and chips. And perhaps rightly so, because that's where everybody is creating these models. They're all trying to train them. And there's a lot of, I think, deserved excitement associated with that part of where we are in the evolution of generative AI. If the value of AI doesn't turn to inference and how people are going to use it, then I would say all of that investment would not really reap the benefit in terms of where people are spending the money.

Shantanu Narayen: They're all trying to train them, you know, and there's a lot of, I think, deserved excitement associated with that part of where we are in the evolution of generative AI. If the value of AI didn't turn to inference and how people are going to use it, then I would say all of that investment would not really reap the benefit in terms of where people are spending the money. And so, you know, we're always convinced that when you have this kind of disruptive technology, the real benefits come when people use interfaces to do whatever task they want to do quicker, faster, and when it's embedded into the workflows that they're accustomed to, because then there isn't an inertia associated with using it.

Kash: Yes, Kash I think the two things when we talk to investors that are perhaps on their mind I mean, I think the first is it fair to say that the interest that exists right now from investors as it relates to AI is all associated with the infrastructure and chips and.

Kash: Perhaps rightly so because that's where you know everybody is creating these models.

Kash: They are all trying to train them, you know and there's a lot of I think deserve it excitement associated with that.

Kash: That part of where we are in the evolution of generative AI.

Kash: If the value of our AI doesn't turn to influence in how people are going to use. It then I would say all of that investment would not really reap the benefit in terms of where people are spending the money and so you know we're always convinced that when you have this kind of disruptive technology the real benefits.

Shantanu Narayen: And so, you know, we're always convinced that when you have this kind of disruptive technology, the real benefits come when people use interfaces to do whatever tasks they want to do quicker, faster, and when it's embedded into the workflows that they're accustomed to because then there isn't an inertia associated with using it. So, you know, with that sort of as a broad segment, I am a big believer that generative AI is going to, for all the categories that we're in, it's actually going to dramatically expand the market because it's going to make products more accessible, more affordable, more productive in terms of what we can do.

Kash: Come when people use interfaces to do whatever task they wanted to do quicker faster and when it's embedded into the workflows that they're accustomed to because then there isn't an inertia associated with using it so with that sort of as a broad segment.

Shantanu Narayen: So, you know, with that sort of as a broad segment, I am a big believer that generative AI is going to dramatically expand the market for all the categories that we're in because it's going to make our products more accessible, more affordable, and more productive in terms of what we can do. I'm still acting as CMO at the company, and I see the excitement around how we can, with agility, create way more content, and create variations.

Kash: I am a big believer that generative AI is going to for all of the categories that we're in it's actually going to dramatically expand the market because it's going to make our products more accessible more affordable more productive in terms of what you are what we can do I'm still acting CMO at the company and I see the exciting.

Shantanu Narayen: I'm still acting CMO with the company, and I see the excitement around how we can, with agility, create way more content, create variations. When Annel talked about personalization at scale, I think there are two aspects to it, right? I mean, the first was always data. And Annel and the team have done a great job with, you know, sort of the real-time customer data platform to get that. And that's hydrated with users, but the real value is when you infuse that with the right content to make that personalized experience. So, I think the demand is there for way more content than people can do, and generative AI is going to be, you know, an accelerant in that as well.

Speaker Change: And around how we can with agility create way more content and create variations when enel talked about personalization at scale I think there are two aspects to it right. I mean, the first one is always data and Arnold and the team have done a great job with.

Shantanu Narayen: When Anil talked about personalization at scale, I think there are two aspects to it, right? I mean, the first was always data. And Anil and the team have done a great job with, you know, sort of the real-time customer data platform to get that. And that's hydrated with users.

Sort of the real time customer data platform to get that and Thats hydrated with users, but the real value is when you infuse that with the right content to make that personalized experience. So I think the demand is therefore weigh more content than people can do and generative AI is going to be you know an accelerant in that as well.

Shantanu Narayen: But the real value is when you infuse that with the right content to make that personalized experience. So I think the demand is there for way more content than people can deliver. And generative AI is going to be, you know, an accelerant and that as well. And so, you know, net net, I am absolutely betting on the fact that, you know, five years from now, there'll be more people saying I'm using creative tools to accomplish what I want.

Shantanu Narayen: And so, you know, net net, I am absolutely betting on the fact that, you know, five years from now there'll be more people saying I'm using creative tools to accomplish what I want. And there'll be more marketers saying I can now, with the agility that I need, truly deliver marketing campaign and an audience that's incredibly more specific than I could in the past. So, and, you know, that's Adobe's job to demonstrate how we are both leading in both those categories and to continue to innovate. But I recognize and I understand, you know, the question that exists in the industry associated with AI. If the value doesn't accrue to interfaces, I'll leave you with that.

Speaker Change: So yeah.

Speaker Change: Net net.

Speaker Change: I am absolutely betting on the fact that five years from now there'll be more people, saying I'm using creative tools to accomplish what I want and there'll be more market is saying I can now with the agility that I need truly deliver marketing campaign and an audience that's incredibly more specific.

Speaker Change: Then I called in the past, so and that's adobe's job to demonstrate how we are both leading in both those categories and to continue to innovate, but by recognized and I understand that.

Shantanu Narayen: And there'll be more marketers saying, I can now, with the agility that I need, truly deliver a marketing campaign and an audience that's incredibly more specific than I could in the past. So, you know, that's Adobe's job to demonstrate how we are leading in both those categories and to continue to innovate. But I recognize and I understand the question that exists in the industry associated with AI. If the value doesn't accrue to interfaces, I'll leave you with that.

Speaker Change: Question that exists in the industry associated with the AI is the value doesn't accrue to interfaces I'll leave you with that.

Shantanu Narayen: I think the investment would not be as beneficial as I believe it can be.

Speaker Change: I think the investment would not be as beneficial as I believe it can be.

David Wadhwani: I think the investment would not be as beneficial as I believe it can be. And maybe one thing to add to that, Kash, just to build on what Shantanu was talking about, I think the other thing we get asked a fair amount is about the comparison between different models, right? So Firefly might be better at something, Midjourney might be better at something else, you know, Dahle might do something else. And the key thing here is that, around this table, we get excited when models innovate.

David Wadhwani: And maybe one thing to add to that cash, just to build on what Chuck was talking about, I think the other thing we get asked a fair amount is about the comparison between different models, right? So, Firefly might be better at something; mid-Journey might be something at something else, you know, Dolly might do something else. And the key thing here is that around this table we get excited when models innovate. We get excited when Firefly does something amazing. We get excited when third party models do something because our view to shot this point is that the more content that gets generated out of these models, the more content that needs to be edited.

Speaker Change: Maybe one thing to add to that cash just to build on what China was talking about I think the other thing we get asked a fair amount is about the comparison between different models right. So firefly might be better at something mid journey might be something at something else.

Speaker Change: We might do something else and the key thing here is that around this table, we get excited when models innovate we get excited when when firefighters something amazing we get excited when third party models do something because our view to shot at this point is that the more content that gets generated out of these models the more can't.

David Wadhwani: We get excited when Firefly does something amazing; we get excited when third-party models do something, because our view, to Shantanu's point, is that the more content that gets generated out of these models, the more content that needs to be edited, whether it's color correction, tone matching, transitions, assembling clips, or masking, and compositing images. And the reason for this is that this is not a game where there's going to be only one model.

Speaker Change: Sent that needs to be edited whether it's color correction tone matching transitions.

David Wadhwani: Whether it's color correction, tone matching, transitions, assembling clips, or masking compositing images. And the reason for this is that this is not a game where there's going to be one model. Each model is going to have its own personality, what it generates, what it looks like, how fast it generates, how much it costs when it generates that. And to have some interface layer to help synthesize all of this is important. And so just sort of to note, we've said this before, but I'll say it again here: you will see us building our products and tools and services leveraging Firefly for sure.

Speaker Change: Emblem clips are masking compositing images and the reason for this is that this is not a game, where theres going to be one model and theres. Each model is going to have its own personality, what it generates what it looks like how fast that generates how much it cost when it generates that and to have some interface layer to help.

David Wadhwani: Each model is going to have its own personality, what it generates, what it looks like, how fast it generates, how much it costs when it generates that, and to have some interface layer to help synthesize all of this is important.

Speaker Change: All of this is important and so just just sort of to note. We've said this before but I'll say it again here you will see us building, our products and tools and services leveraging Firefly for sure, but Youll also see us leveraging best of breed personalities from different models and integrate them altogether.

Shantanu Narayen: But you'll also see us leveraging, you know, best of breed personalities from different models and integrate them all together. Oliver. Awesome. The message here is that Jennie is going to create more growth in the category.

Speaker Change: Awesome that message here is that it's going to create more growth in the category and sharpening you did that with the pivot to cloud you grow the category. So here. We go again, thank you so much.

Shantanu Narayen: And so just sort of to note, we've said this before, but I'll say it again here, you will see us building our products and tools and services, leveraging Firefly for sure, but you'll also see us leveraging, you know, best of breed personalities from different models and integrating them all together. Awesome. The message here is that Gen AI is going to create more growth in the category, and Shantanu, you did that with the pivot to cloud. You grew the category.

Karl Keirstead: And Shantanu, you did that with the pivot to cloud. You grow the category. So here we go again. Thank you so much. Thanks, Keirst.

Operator: So here we go again. Thanks, guys. And next will be Jake.

Speaker Change: Thanks Kash.

Jacob Roberge: And next will be Jake Robert with William Blair.

Speaker Change: And next will be Jake Weberg with William Blair.

Jacob Roberge: Hey, thanks for your taking the questions, and I'll echo my regards on the great quarter. I know it's early, but what's been the feedback in customer behavior for those users that are on Firefly services in Gen Studio? And then thinking more longer term, what type of price up list could you see from those customers over time? Just given what you said about the acceleration and Firefly generation generations being driven by those products.

Operator: Hey, thanks for taking the questions. And I'll echo my congratulations on the great quarter. I know it's early, but what's been the feedback on Studio, and then, thinking more longer term, what type of price uplift could you see from those customers over time, just given what you said about the acceleration and Firefly generations being driven by those products? Thanks.

Jake Weberg: Hey, Thanks for taking the questions and I'll Echo my congrats on the great quarter.

Jake Weberg: I know, it's early but what's been the feedback and customer behavior for those users that are on Firefly services and Jen studio and then thinking more longer term what type of price uplift could you see from those customers over time, just given what you said about the acceleration in Firefly generators generation is being driven by those products. Thanks.

Shantanu Narayen: Thanks.

David Wadhwani: Maybe I'll start with customer zero. Right before this meeting, I was in a meeting with our CMO. And sometimes it's hard to tell if he's wearing the CMO or CEO hat, but he was wearing the CMO hat this time.

Shantanu Narayen: Maybe I'll start with customer zero right before this meeting. I was in a meeting with our CMO. And well, sometimes it's hard to tell if he's wearing the CMO or CEO hat, but CMO this time. And we were reviewing a full funnel campaign that we're planning on launching later this year. And exactly as Shantanu mentioned earlier, we saw, you know, saw benefits in terms of cost of the campaign, faster time to market for the campaign. And the amount of content that we can create to personalize that campaign, and that is one of those things that we've been doing more and more around our D DOM, which has actually been very productive for us, as you can see this quarter.

Speaker Change: Maybe I'll start with customers Euro right before this meeting I was in a meeting with our CMO.

Speaker Change: And sometimes it's hard to tell if he is running the CMO. Our CEO had been CMO at this time and we were reviewing a full funnel campaign that we're we're planning on launching later this year and exactly as John mentioned earlier, we saw.

David Wadhwani: And we were reviewing a full funnel campaign that we're planning on launching later this year. And exactly as Shantanu mentioned earlier, we saw benefits in terms of the cost of the campaign, faster time to market for the campaign, and the amount of content that we can create to personalize that campaign. And that is one of those things that we've been doing more and more around our D-DOM, which has actually been very productive for us, as you can see this quarter, and what we're pitching to other customers.

Speaker Change: Our benefits in terms of cost of the campaign faster time to market for the campaign and the amount of content that we can create to personalize that that campaign and that is one of those things that we've been doing more and more.

Speaker Change: Around our Ddos, which has actually been very productive for us as you can see this quarter and what we're pitching to other customers. So we have been working with.

Shantanu Narayen: And what we're pitching to other customers. So we have we've been working with a list of some of the customers earlier, but we've been working with a long list of customers on everything from, you know, accelerating the content creation for social, accelerating content creation for regional. And then increasing the number of amount of content that's created for increased personalization, which then of course flows into all of the Experience Cloud products that the mills working on to get targeted better. And Jake, maybe in terms of what I would say we're seeing usage off, I think the initial usage of Firefly services in most companies was all around ideation.

David Wadhwani: So we've been working with – we listed some of the customers earlier, but we've been working with a long list of customers on everything from accelerating content creation for social, accelerating content creation for regional, and then increasing the amount of content that's created for increased personalization, which then, of course, flows into all of the experience cloud products that Anil's working on to get targeted better. And Jake, maybe in terms of what I would say we're seeing usage of, I think the initial usage of Firefly services in most companies was all around ideation.

A list of some of the customers earlier, but we've been working on with them long list of customers on everything from.

Speaker Change: Accelerating the content creation for social accelerating content creation for regional and then increasing the number of amount of content. That's created for increased personalization, which then of course flows into all of the experience cloud products that Enel is working on to get targeted better and.

Jake Weberg: And Jake maybe in terms of what I would say we are seeing usage off I think the initial usage of Firefly services in most companies was all around ideation, how can they create multiple variations of them and you know we're in the ideation process really just accelerate that ideation process.

David Wadhwani: How can they create multiple variations of them? And you know, in the ideation process, really just accelerate that ideation process. Most companies are then starting with, as they're putting it into production, how can they, with the brand assets and the brand guidelines that they have, do this in terms of the variations, whether they be geographic variations, or they be just variations. I mean, if you take a step back, also, every single ad company right now will tell you that the more variants that you provide, the better your chances are of, you know, appropriately getting an uplift for your media spend.

Shantanu Narayen: How can they create multiple. Variations of them and you know in the ideation process really just accelerate that ideation process. Most companies are then starting with as they're putting it into production. How can they with the brand assets and the brand guidelines that they have. Do this in terms of the variations, whether they be geographic variations or they be just variations. I mean if you take a step back, also every single ad company right now will tell you that the more variance that you provide, the better your chances are of, you know, appropriately getting an uplift for your media spend.

Jake Weberg: Most companies are then starting with as they are putting it into production how can they with the brand assets and the brand guidelines that they have do this in terms of the variations whether they be geographic variations or they be just variations I mean, if you take a step back also.

Jake Weberg: Every single AD company right now will tell you that the more variance that you provide the better your chances are of you know.

Jake Weberg: Appropriately getting an uplift for your media spend so I would say that most companies are starting with.

Shantanu Narayen: So I would say that most companies are starting with creating these variations for geographies. The other one that we see a fair amount of is engaging with their communities. So when they want their communities to have assets that they have blessed for usage within community campaigns, that's the other place where Firefly services are being used. And a company has a community portal where the community can come and take something and then, you know, post whether it's on whatever social media site that you want. So I think that's the initial one. All of the agency companies are companies that have actually even publicly said how Jen Studio is something that they have embraced.

Shantanu Narayen: So I would say that, you know, most companies are starting with, you know, creating these variations for geographies. The other one that we see a fair amount of is engaging with their communities. So when they want their communities to have assets that they have blessed for usage within community campaigns, that's the other place where Firefly services are being used. And a company has a community portal where the community can come in, take something, and then, you know, post it on whatever social media site that they want. So I think that's the initial one.

Jake Weberg: Creating these variations for geographies. The other one that we see a fair amount of is engaging with the communities. So when they want their communities to have assets that they have blessed for usage within community campaigns. That's the other place where Firefly services are being used in a company as a community.

Jake Weberg: Waterloo, where the community can come in and take something and then post whether it's on whatever social media site that you want so I think thats. The initial one all of the agency.

Shantanu Narayen: All of the agency companies are companies that have actually even publicly said how GenStudio is something that they have embraced. But even the large media companies, because the media companies are certainly interested in understanding how all of this GenAI could be used to automate as well as accelerate the amount of content that they can produce. So hopefully, that gives you some, you know, color of it. If there's been any, you know, sort of the questions that they ask along the way, which, hopefully, and actually, luckily, we have great answers for. It's all around indemnification and how they can use it.

Jake Weberg: Companies are companies that have actually even publicly said how gen studio is something that they have embraced but even the large media companies because the media companies are certainly interested in understanding how all of this journey II could be used to automate as well as accelerated the amount of content that they can produce so I hopefully that.

Shantanu Narayen: But even the large media companies, because the media companies are certainly interested in understanding how all of this JNAI could be used to automate as well as accelerate the amount of content that they can produce. So I hopefully that gives you some, you know, color of it. If there's been, you know, sort of the questions that they ask along the way, which hopefully, and actually, luckily, we have great answers. It's all around the indemnification and how they can use it, and I would say that continues to be a really key differentiator for us.

Jake Weberg: Gives you some.

Jake Weberg: Colorado fit if theres been.

Jake Weberg: Sort of the questions that they ask along the way, which hopefully and actually Luckily we have great ounces, it's all around the indemnification and how they can use it and I would say that continues to be a really key differentiator for us.

Shantanu Narayen: And I would say that continues to be a really key differentiator for us. But since that is the last question, you know, let me just say, I'm proud of how we executed in Q2, both across the product innovation delivery, as well as, you know, the go-to-market, because clearly, a number of you asked how we were able to put these numbers together when others have perhaps talked about the macro economic environment.

Shantanu Narayen: But since that is the last question you know, let me just say I'm proud of how we executed in Q2, both across the product innovation delivery as well as, you know, the go to market, because clearly a number of you asked, you know, how we were able to put together these numbers where others have perhaps talked about the macroeconomic environment. We certainly remain focused on leveraging technology to delight a broader set of customers, and at the end of the day, to the questions that we were asked, we believe that the real value of AI will be in the interfaces that individuals and enterprises use to accomplish their tasks and workflows, and we think we're incredibly well positioned.

Jake Weberg: But since that is the last question you know, let me just say I am proud of how we executed in Q2, both across the product innovation delivery as well as the.

Jake Weberg: The go to market because clearly a number of you asked.

Jake Weberg: We were able to put together these numbers, where others, perhaps talk about the macro economic environment. We certainly remain focused on leveraging technology to delight, a broader set of customers and at the end of the day to the questions that we were asked we believe that the real value of AI will be in the interfaces that.

Shantanu Narayen: We certainly remain focused on leveraging technology to delight a broader set of customers. And at the end of the day, in response to the questions that we were asked, we believe that the real value of AI will be in the interfaces that individuals and enterprises use to accomplish their tasks and workflows.

Jake Weberg: Individuals enterprises used to accomplish their das and workflows and we think we're incredibly well positioned so thank you for joining us.

Shantanu Narayen: And we think we're incredibly well positioned. So thank you for joining us. Thanks everyone, this concludes the call. Thank you. This does conclude today's conference. We do thank you for your participation and have an

Shantanu Narayen: So thank you for joining us.

Unknown Executive: Thanks, everyone.

Speaker Change: Thanks, everyone. This concludes the call.

Unknown Executive: This concludes the call. Thank you. This does conclude today's conference. We do thank you for your participation and have an

Speaker Change: Thank you. This does conclude today's conference we do thank you for your participation and have an excellent day.

Q2 2024 Adobe Inc Earnings Call

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