Q2 2025 Adobe Inc Earnings Call

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Steve Day: Good day and welcome to the Q2 FY 'twenty five Adobe earnings Conference call. Today's conference is being recorded at this time I'd like to turn the conference over to Steve Day.

Operator: Today's conference is being recorded.

Steven Day: At this time, I'd like to turn the conference over to Steve Day, SVP, DX, CFO, and Corporate Finance, Interim Head of IR. Please go ahead. Good afternoon, and thank you for joining.

Speaker Change: <unk> Dx CFO and corporate finance interim head of IR. Please go ahead.

Ryan Davis: Good afternoon, and thank you for joining us with me on the call today are shunted into Ryan Davis chat and C E O.

Steven Day: With me on the call today are Shantanu Narayen, Adobe's Chair and CEO, David Wadhwani, President of Digital Media, Anil Chakravarthy, President of Digital Experience, and Dan Dern, Executive Vice President and CFO. On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2025 financial results. You can find our press release as well as PDFs of our prepared remarks and financial results on Adobe's Investor Relations website.

Speaker Change: David Wadhwani President of digital media.

Speaker Change: And they'll Chakravarty president of digital experience, and then 10 executive Vice President and CFO.

Speaker Change: On this call, which is being recorded we will discuss adobe's second quarter fiscal year 2025 financial results.

Ryan Davis: You can find our press release as well as Pdfs, if I've prepared remarks in financial results on Adobe's Investor Relations website.

Steven Day: The information discussed on this call, including our financial targets and product plans, is as of today, June 12th, 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 filing.

Ryan Davis: The information discussed on this call, including our financial targets for product plants is as of today June 12 and contains forward looking statements that involve risk uncertainties and assumptions.

Ryan Davis: Actual results may differ materially from those set forth in these statements.

Ryan Davis: For more information on these risks please review todays earnings release, and Adobe's SEC filings.

Steven Day: On this call, we will discuss GAAP 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-Gap Reconciliations are available in our earnings release and on Adobe's Investor Relations website.

Ryan Davis: On this call, we will discuss GAAP and non-GAAP financial measures.

Ryan Davis: Posted results include GAAP growth rates as well as constant currency rates.

Ryan Davis: During this presentation and type as 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.

Steven Day: I will now turn the call over to Shantanu. Thanks, Steve.

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

Shantanu Narayen: Good afternoon and thank you for joining us. Adobe delivered another strong quarter, achieving record revenue of $5.87 billion, representing 11% year-over-year growth. Gap earnings per share for the quarter was $3.94, and non-gap earnings per share was $5.06, representing 13% year-over-year growth.

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

Sean: Adobe delivered another strong quarter, achieving record revenue of $5 87 billion.

Sean: Representing 11% year over year growth.

Sean: GAAP earnings per share for the quarter was $3.94 and non-GAAP earnings per share was $5 six representing 13% year over year growth.

Shantanu Narayen: At our investor meeting in March, we outlined our growth strategy for the company centered on delivering transformative innovation for diverse customer audiences. Business Professionals, Consumers, Creators, Creative Professionals, and Marketing Professionals. The creative opportunity is expanding across audiences with AI as an accelerant. It is opening the content floodgates, tapping into everyone's imagination and massively expanding the number of creative assets being created, edited, integrated and delivered. There are billions of business professionals and consumers in the world who want to be both creative and efficient to accomplish their objectives. They see AI and conversational interfaces as a more productive way to accelerate creative storytelling and to quickly synthesize information across multiple documents.

Sean: At our Investor meeting in March we outlined our growth strategy for the company is centered on delivering transformative innovation for diverse customer audiences business professionals consumers creators creative professionals and marketing professionals.

Sean: The creative opportunity is expanding across audiences with AI as an accelerant.

Sean: It is opening the content floodgates tapping into everyone's imagination, and massively expanding the number of creative assets being created edited integrated and delivered.

Sean: There are billions of business professionals and consumers in the world, who wanted to be both creative and efficient to accomplish their objectives.

Sean: And conversational interfaces as a more productive way to accelerate creative storytelling and to quickly synthesize information across multiple documents.

Shantanu Narayen: They're looking for quick and easy tools that are available on every computing surface and an easy on-ramp that allows them to trial products and subscribe based on the value derived. As the need for creative expression continues to grow exponentially, creativity and productivity are merging. AI can make them more creative and productive in their business content.

Sean: They are looking for quick and easy tools that are available on every computing surface and an easy on ramp that allows them to trial products and subscribe based on the value derived.

Sean: As the need for creative expression.

Sean: <unk> to grow exponentially creativity and productivity emerging.

Sean: AI can make them more creative and productive in their business context.

Shantanu Narayen: Adobe pioneered creative storytelling through groundbreaking applications like Photoshop and Illustrator, and digital document sharing with the introduction of PDF and Acrobat. Our strategy is to bring productivity and creativity to life for billions of users across a variety of surfaces. Acrobat AI Assistant is redefining how people extract value from digital documents. Unlocking new levels of productivity by cutting time to insights through conversational interfaces. Express is using AI to enable consumers to quickly design and publish engaging content through conversational AI in an easy-to-use, all-in-one application. Our unique value proposition is integrating these solutions to facilitate a smoother creation-to-consumption process through mobile apps, web browsers, and desktop offerings.

Sean: Adobe pioneered creative storytelling through groundbreaking applications like Photoshop, and illustrator and digital document sharing with the introduction of PDF and acrobat.

Sean: Our strategy is to bring productivity and creativity to life for billions of users across a variety of surfaces.

Sean: Acrobat AI assistant is redefining how people to extract value from digital documents unlocking new levels of productivity by cutting time do insights through conversational interfaces.

Sean: Adobe Express is using AI to enable consumers to quickly design and publish engaging content into conversational AI in an easy to use all in one application.

Sean: Our unique value proposition is integrating these solutions to facilitate a smoother creation to consumption process through mobile apps web browsers and desktop offerings.

Shantanu Narayen: Adobe's monthly active users across these categories now exceed over 700 million users.

Sean: Adobe's monthly active users across these categories now exceed over 700 million users.

Shantanu Narayen: In the creative and marketing professionals group, creative professionals need best of breed applications that enable them to bring their ideas to life across media types, including imaging, design, video, photography, illustration, animation, 3D and more. These offerings need to extend across all surfaces and facilitate seamless collaboration with multiple stakeholders. The next generation of creators are looking for powerful on-ramps through web and mobile platforms. Ideation through AI is an emerging category that will be made more powerful through support for multiple creative models.

Sean: And the creative and marketing professionals group creative professionals need best of breed applications that enable them to bring their ideas to life across media types, including imaging design video photography illustration animation <unk> and more.

Sean: These offerings need to extend across all surfaces and facilitate seamless collaboration with multiple stakeholders.

Sean: The next generation of creators are looking for powerful on ramps through web and mobile platforms.

Sean: Ideation through AI is an emerging category that will be made more powerful through support for multiple creative models.

Shantanu Narayen: Adobe is delivering a comprehensive creative platform that extends from ideation through creation to mass production and delivery to address this content supply chain opportunity. At the heart of this creative AI revolution is Adobe Firefly, an on-ramp to creative expression that augments the power of creative cloud desktop applications. The Firefly app is a new destination for AI-assisted content ideation, creation, and production with Adobe's comprehensive family of commercially safe Firefly creative models and an expansive ecosystem of third-party models. Firefly empowers creative professionals to generate images, video, audio, and vectors from a single place with unmatched creative control.

Sean: Adobe is delivering a comprehensive creative platform that extends from ideation through creation to mass production and delivery to address this content supply chain opportunity.

Sean: At the heart of this creative AI Revolution is Adobe Firefly and.

Sean: And on ramp to creative expression that augments the power of creative cloud desktop applications.

Speaker Change: <unk> app as a new destination for AI assisted content ideation creation and production with Adobe as comprehensive family of commercially safe Firefly creative models and an expense of ecosystem of third party models.

Speaker Change: Firefly empowers creative professionals to generate images video audio and vectors from a single place with unmatched creative control <unk>.

Shantanu Narayen: iterate on their creations through Adobe's creative apps and seamlessly deliver them into production. Our support for third party models, including from Google, OpenAI and Black Forest Labs, gives creators the flexibility to choose the AI that works best for them, with Firefly upholding our standards for IP safety and transparency. We rolled out new Firefly offerings globally and will be delivering more innovation over the next few months. Paired with Creative Cloud apps, the Firefly app empowers creative professionals with enhanced precision and performance. ready to support them whenever and wherever inspiration strikes. The Firefly app is attracting new users to the Adobe franchise, with first-time subscribers growing 30% quarter over quarter.

Speaker Change: Iterate on their creations through adobe's creative apps and seamlessly deliver them into production.

Speaker Change: Our support for third party models, including from Google Open AI and Black Forest labs gifts creators the flexibility to choose the AI that works best for them with Firefly upholding all standards for IP safety and transparency.

Speaker Change: We rolled out new Firefly offerings globally, and we'll be delivering more innovation over the next few months.

Speaker Change: Ed with creative cloud apps, the Firefly App empowers creative professionals with enhanced precision and performance.

Speaker Change: To support them whenever and wherever inspiration strikes.

Speaker Change: The Firefly App is attracting new users to the Adobe franchise with first time subscribers growing 30% quarter over quarter.

Shantanu Narayen: Our digital experience business was inspired by our vision to enable this creative output to be delivered at scale by enterprises as part of their digital marketing transformation. We have a unique advantage and opportunity to integrate creativity, marketing, and AI to deliver customer experience orchestration. Marketing professionals need to create an unprecedented volume of compelling content and optimize it to deliver personalized digital experiences across channels, including mobile apps, email, websites, social media, and advertising platforms. They're looking for agility and self-service, as well as integrated workflows with their creative teams and agencies. To achieve this, enterprises require custom, commercially safe models and purpose-built agents tailored to address the inefficiencies of the content supply chain.

Speaker Change: Our digital experience business was inspired by our vision to enable this creative output to be delivered at scale by enterprises as part of their digital marketing transformation.

We have a unique advantage and opportunity to integrate creativity marketing and AI to deliver customer experience orchestration.

Marketing professionals need to create an unprecedented volume of compelling content and optimize it to deliver a personalized digital experiences across channels, including mobile apps e-mail websites, social media and advertising platforms.

Speaker Change: Theyre looking for agility and self service as well as integrated workflows with their creative teams and agencies.

To achieve this enterprises require custom commercially safe models and purpose built agents tailored to address the inefficiencies of the content supply chain.

Shantanu Narayen: Marketing Practitioners, Chief Marketing Officers, and Chief Digital Officers need solutions that enable them to acquire, engage, and delight customers across a variety of channels and geographies.

Marketing practitioners, chief marketing officers, and chief digital officers need solutions that enable them to acquire engage and delight customers across a variety of channels and geographies.

Shantanu Narayen: Adobe's strategy is to deliver a comprehensive marketing technology platform leveraging AI to offer vertical solutions that integrate content, customer data, and profiles across journeys in both B2B and B2C industries. Adobe GenStudio and Firefly Services are revolutionizing the content supply chain across enterprises, empowering marketers to activate personalized on-brand content across millions of touch For more information visit www.firefly.com For marketing professionals, Adobe Experience Platform and apps and purpose-built agents are redefining the future of customer connection by enabling real-time orchestration of content, data, and journey. Adobe's differentiation lies in our best-of-breed, industry-leading applications across web content management, analytics, customer data platforms, commerce, journey orchestration, and workflow management.

Adobe: Adobe strategy is to deliver a comprehensive marketing technology platform, leveraging AI to offer vertical solutions that integrate content customer data and profiles across journeys in both b to b and B to C industries.

Adobe Gen studio and Firefly services are revolutionizing the content supply chain across enterprises, and borrowing marketers to activate personalized on brand content across millions of touch points for marketing professionals Adobe experience platform and apps and purpose.

Adobe: Built agents.

Defining the future of customer connection by enabling realtime orchestration of content data and journeys.

Adobe: Adobe is differentiation lies in our best of breed industry, leading applications across web content management analytics customer data platforms.

<unk> journey orchestration and workflow management.

Shantanu Narayen: We're infusing AI in each of these solutions and combining creativity and marketing in GenStudio by bringing together creative ideation and production, workflow, asset management, content delivery, and content analytics in a seamlessly integrated offering. While our AI-influenced ARR is already contributing billions of dollars, our AI book of business from AI-first products, such as Acrobat AI Assistant, Firefly App and Services, and GenStudio for Performance Marketing, is tracking ahead of the $250 million ending ARR target by the end of fiscal 2025.

Adobe: We're infusing AI in each of these solutions and combining creativity and marketing in Gen studio by bringing together creative ideation and production workflow asset management content delivery and content analytics and are seamlessly integrated offering.

Adobe: While our AI influenced IRR is already contributing billions of dollars are AI book of business from AI first products, such as acrobat AI assistant Firefly App in services and Jen studio for performance marketing is tracking ahead of the $250 million ending.

Adobe: Our target by the end of fiscal 2025.

David Wadhwani: I'll now turn it over to David and Anil to discuss the momentum in our business. Thanks, Shantanu. Hello, everyone. In Q2, digital media achieved revenue of $4.35 billion, which grew 12% year-over-year. We exited the quarter with $18.09 billion of digital media ARR, ending ARR 12.1% year-over-year. We continue to see strong performance across our business professionals and consumers group, where users are increasingly turning to Adobe for products that combine creativity and productivity. Virtually every business professional and consumer stands to benefit from AI-assisted consumption, visually rich creation, and natively integrated collaboration. Our investments in conversational experiences in Acrobat and generative AI models in Express allow users to combine the two products in novel ways that empower users to accelerate their time to insight and ability to create compelling presentations.

Speaker Change: I'll now turn it over to David <unk> to.

David Wadhwani: To discuss the momentum in our businesses.

Adobe: Thanks, <unk> Hello, everyone in Q2 digital media achieved revenue of $4 35 billion, which grew 12% year over year, we exited the quarter with 18.09 billion of digital media <unk> growing ending IRR of 12, 1% year over year.

Adobe: We continue to see strong performance across our business professionals and consumers group, where users are increasingly turning to adobe for products that combine creativity and productivity virtually every business professional and consumer stands to benefit from AI assisted consumption.

Adobe: Visually rich creation and natively integrated collaboration.

Adobe: Our investments in conversational experiences and acrobat and generative AI models and express allow users to combine the two products in novel ways that empower users to accelerate their time to insight and ability to create compelling presentations sales professionals can gather industry reports on a prospect.

David Wadhwani: Sales professionals can gather industry reports on a prospect, use AI Assistant to quickly identify effective sales conversations, and automatically generate a pitch deck with Express. A social media marketer can ask AI Assistant for help identifying buying behaviors in market research documents and use that information to create better TikTok videos in Express. The combination of Acrobat and Express can help anyone move from consumption to creation faster and with more impactful content than ever before. As a result, we're seeing steady growth across our family of Acrobat and Express products with combined monthly active user growth accelerating to over 25% year-over-year and crossing 700 million monthly active users as Acrobat users increasingly rely on Acrobat AI Assistant to enhance content consumption and Express to create richer PDFs, customized presentations, and animated designs.

Adobe: AI assistant to quickly identify effective sales conversations and automatically generate a pitch deck with express a social media marketer can ask AI assistant for help identifying buying behaviors and market research documents and use that information to create better tictac videos and express.

Adobe: The combination of acrobat and express can help anyone move from consumption to creation faster and with more impactful content than ever before.

Adobe: As a result, we're seeing steady growth across our family of acrobat and express products with combined monthly active user growth accelerating to over 25% year over year and crossing 700 million monthly active users as acrobat users increasingly rely on acrobat AI assistant to enhanced content consumption and <unk>.

Adobe: Press to create Richard Pdfs, customized presentations and animated designs.

David Wadhwani: Due to increasing customer demand for creative functionality through Acrobat, we saw an approximately 3x quarter over quarter and approximately 11x year over year increase in the adoption of express capabilities within Acrobat. Subscription revenue for the Business Professionals and Consumers group grew 15% year over year. We're rapidly acquiring the next generation of business professionals and consumers across individuals, small and medium businesses, and enterprises. With students, we're driving over 75% year-over-year increase in students gaining access to Acrobat AI Assistant and or Express Premium Plans. These products are also seeing strong adoption by businesses with over 35,000 new businesses added in Q2.

Adobe: Due to increasing customer demand for creative functionality through acrobat, we saw an approximately <unk> <unk> quarter over quarter and approximately <unk> 11 year over year increase in the adoption of express capabilities within acrobat.

Adobe: Subscription revenue for the business professionals and consumers group grew 15% year over year.

Adobe: We're rapidly acquiring the next generation of business professionals and consumers across individuals small and medium businesses and enterprises with students were driving over 75% year over year increase in students gaining access to acrobat AI assistant and or express premium plans. These products are also seeing strong.

Adobe: Adoption by businesses with over 35000, new businesses added in Q2.

David Wadhwani: Express alone added around 8,000 new businesses this quarter, approximately 6x growth year-over-year, including companies such as Microsoft, ServiceNow, Workday, Intuit, and top sports leagues like MLB, the NFL, and Premier League. Other highlights include Acrobat PDF link sharing MAU grew over 20% year over year, helping to drive viral adoption. Use of generative AI features continues to grow quickly with AI Assistant MAU in Acrobat and generative AI MAU in Express growing over 3x year over year. Acrobat AI Assistant engagement continues to accelerate with the number of questions asked nearly doubling quarter over quarter. The Express ecosystem continues to expand with partner add-ons growing more than 25% quarter over quarter with new integrations from Google Ads, Vimeo, and Bitly.

Adobe: Express alone added around 8000, new businesses this quarter, approximately six X growth year over year, including companies such as Microsoft Service now Workday, Intuit and top sports leagues like MLB, the NFL and Premier League.

Adobe: Other highlights include acrobat PDF link sharing MAU grew over 20% year over year, helping to drive viral adoption.

Adobe: Use of generative AI features continues to grow quickly with AI assistant MAU, and acrobat and generative AI MAU and express growing over <unk> year over year.

Adobe: Acrobat AI assistant engagement continues to accelerate with the number of questions asked nearly doubling quarter over quarter. The express ecosystem continues to expand with partner add ons growing more than 25% quarter over quarter with new integrations from Google ads Vimeo and Bentley.

David Wadhwani: Select key global customer wins include Cisco, County of Los Angeles, the Defense Information Systems Agency, Macy's, and Ulta Beauty. We're also seeing the rising importance of creative content across creative and marketing professionals. Demand for creative capabilities across mediums, including imaging, design, photography, video, illustration, and 3D, is on the rise as individuals and businesses need visually compelling content to stand out in a crowded media landscape. Many individuals and organizations are turning to AI to develop high-quality content with more agility and efficiency. As a result, the Firefly app is becoming the creative AI destination for Creative Cloud customers and new users alike to explore, ideate, create, and collaborate with AI-first workflows across media types.

Adobe: Select key global customer wins include Cisco County of Los Angeles, The Defense Information Systems Agency, Macy's and Ulta beauty.

Adobe: We're also seeing the rising importance of creative content across creative and marketing professionals.

Adobe: And for creative capabilities across mediums, including imaging design photography video illustration and <unk> is on the rise as individuals and businesses need visually compelling content to stand out in a crowded media landscape.

Adobe: Many individuals and organizations are turning to AI to develop high quality content with more agility and efficiency as a result, the Firefly app is becoming the creative AI destination for creative cloud customers and new users alike to explore create and collaborate with AI first workflows across media types.

David Wadhwani: The Firefly app empowers anyone, from seasoned professionals to first-time creators, to generate multiple media formats in a single product with unmatched creative control and iterate on their creations across Adobe's creative apps. The Firefly app benefits from our own commercially safe Firefly Foundation models across imaging, video, audio, vector, and design. Earlier this quarter, we launched the new Firefly Image Model 4 for lifelike images and the Firefly Image Model 4 Ultra for impeccable detail and complex visuals. We also made the Firefly video model generally available for the first time, empowering creators to generate 4K footage from text prompts and images with unprecedented creative control and extend video clips in our tools like Premiere Pro.

Adobe: The Firefly App empowers anyone from seasoned professionals to first time creators to generate multiple media formats, and a single product with unmatched creative control and iterate on their creations across Adobe creative apps, the Firefly app benefits from our own commercially say Firefly Foundation models across imaging video audio.

Adobe: <unk> vector and design.

Adobe: Earlier this quarter, we launched the new Firefly image model for for lifelike images and the Firefly image model for ultra for impeccable detailed and complex visuals.

Adobe: We also made the Firefly video model generally available for the first time empowering creators to generate four K footage from text prompts and images with unprecedented creative control and extend video clips and our tools like Premier Pro.

David Wadhwani: In addition to supporting our own Firefly models, the Firefly app now supports a growing family of third-party models for creative ideation. Firefly offers the flexibility to explore the diverse aesthetic styles of Google's Imagine and Veo models, OpenAI's GPT image model, and Black Forest Labs' Flux image model, with Runway, Ideogram, FallAI, Luma, and Pika coming soon. With the release of the Firefly board's public beta earlier this quarter, creators can now ideate and collaborate when generating content with Firefly and our third-party models. To monetize this incredible innovation, we have introduced a comprehensive set of offerings aimed at new and existing creators and creative professionals across all routes to market.

Adobe: In addition to supporting our own Firefly models. The Firefly App now supports our growing family of third party models for creative Ideation Firefly offers the flexibility to explore the diverse aesthetic styles of Google's imagine in vivo models open the eyes, GPT image model and Black Forest Labs flux image model with runway.

Adobe: Graham fall, AI, Luma and Peacock coming soon.

Adobe: With the release of the Firefly boards public beta earlier this quarter creators can now ideate and collaborate when generating content with Firefly and our third party models.

Adobe: To monetize this incredible innovation, we have introduced a comprehensive set of offerings aimed at new and existing creators and creative professionals across all routes to market.

David Wadhwani: The new Firefly app subscription plans are ideal for creators starting their creative journey and are now globally available. Creative Cloud Pro, which combines Creative Cloud All Apps and the Firefly app, represents the best value for content creation and is now available in North America. Creative Cloud Pro will be released in other geographies over the next few months. Other highlights include, the launch of the new Firefly capabilities in February continues to drive excitement. Traffic to the Firefly app grew over 30% quarter over quarter, and paid subscriptions nearly doubled in the same period. Firefly continues to drive new user acquisition, with first-time Adobe subscribers growing more than 30% quarter-over-quarter.

Adobe: The new Firefly App subscription plans are ideal for creators starting their creative journey and are now globally available.

Adobe: Creative cloud pro which combines creative cloud all apps and the Firefly App represents the best value for content creation and is now available in North America Creative cloud Pro will be released in other geographies over the next few months.

Adobe: Other highlights include the launch of the new Firefly capabilities in February continues to drive excitement and traffic to the Firefly App grew over 30% quarter over quarter and paid subscriptions nearly doubled in the same period.

Adobe: Firefly continues to drive new user acquisition with first time, Adobe subscribers growing more than 30% quarter over quarter.

David Wadhwani: We launched Photoshop Mobile and released major updates to our flagship Creative Cloud apps, including Photoshop, Illustrator, Premiere Pro, After Effects, and Substance at Max London, garnering over 350 million video views across social media. Excitement for and adoption of generative AI innovation, such as generative fill in Photoshop, generative remove in Lightroom, generative expand in Illustrator, generative extend in Premiere Pro, video generation in the Firefly app, and production workflows in Firefly services continues to accelerate with over 24 billion cumulative generations exiting Q2. Key customer wins include Cisco, County of San Diego, Depth Holding, Fanatics, Infosys, Schwartz Global Sourcing, and Wells Fargo.

Adobe: We launched Photoshop mobile and released major updates to our flagship creative cloud apps, including Photoshop illustrator premiere pro after effects in substance at Max London, garnering over 350 million video views across social media.

Adobe: Excitement for an adoption of generative AI innovation, such as generative fill in Photoshop generative remove and lightroom generative expand and illustrator generative extend and premiere pro video generation and the Firefly App and production workflows and Firefly services continues to accelerate with over 20.

Adobe: 4 billion cumulative generations exiting Q2 key.

Adobe: Key customer wins include Cisco County of San Diego depth, holding fanatics, Infosys Schwartz global sourcing and Wells Fargo.

David Wadhwani: Creativity fuels the global economy and is the foundation of how marketers engage with their customers effectively across channels. As a result, we're seeing high enterprise demand for an adoption of Firefly services and custom models to automate and scale on-brand content production for marketing use cases. Adobe is uniquely positioned to lead the way in applying AI to amplify creativity across the full continuum of content creation. We're excited about the momentum we're seeing in both flagship apps and new offerings, across our business professionals and consumers, and creative and marketing professionals groups.

Adobe: Creativity fuels the global economy and is the foundation of how marketers engage with their customers effectively across channels. As a result, we're seeing high enterprise demand for and adoption of Firefly services and custom models to automate and scale on brand content production for marketing use cases.

Adobe: Adobe is uniquely positioned to lead the way and applying AI to amplify creativity across the full continuum of content creation. We're excited about the momentum we're seeing in both flagship apps and new offerings across our business professionals and consumers and creative and marketing professionals groups are.

David Wadhwani: Our growing base of monthly active users, accelerating use of generative AI, steady influx of new customers, inclusion of partner models, and accelerating adoption of automation services drove a strong quarter with digital media revenue of $4.35 billion, and we're pleased to raise our revenue target for the year.

Adobe: Our growing base of monthly active users accelerating use of generative AI steady influx of new customers inclusion of partner models and accelerating adoption of automation services drove a strong quarter with digital media revenue of $4 35 billion and we're pleased to raise our revenue target for the year.

Anil Chakravarthy: I'll now turn it over to Anil to talk about how this creative innovation is amplifying our momentum with marketing professionals. Thanks, David. Hello, everyone. Experience Cloud had a strong cue to achieving revenue of $1.46 billion for the quarter. Subscription revenue in the quarter was $1.33 billion, representing 11% year over year growth, and making us the largest provider in our category. Content creation is the fuel driving personalized experiences at scale. Adobe is the only company unifying the entire workflow, from creation and production, workflow and planning, asset management, delivery and activation, through to reporting and insight. Our customer experience orchestration strategy enables enterprises to combine creativity, marketing, and agentic AI to deliver personalized conversational digital experiences in real time at global scale.

Adobe: I'll now turn it over to Neil to talk about how this creative innovation is amplifying our momentum with marketing professionals.

Neil: Thanks, David Hello, everyone.

Adobe: <unk> cloud had a strong Q2, achieving revenue of $1 46 billion for the quarter.

Adobe: Subscription revenue in the quarter was $1 3 billion.

Adobe: Representing 11% year over year growth and making us the largest provider in our category.

Adobe: Content creation is the fuel driving personalized experiences at scale.

Adobe: Adobe is the only company unifying the entire workflow from creation and production workflow and planning asset management delivery and activation through to reporting and insights.

Adobe: Our customer experience orchestration strategy enables enterprises to combine creativity marketing and <unk> AI to deliver personalized conversational digital experiences in real time at global scale.

Anil Chakravarthy: With Adobe GenStudio, we're amplifying the value of cutting-edge Gen AI capabilities across the end-to-end content supply chain. GenStudio optimizes the process of planning, creating, managing, activating, and measuring content for marketing campaigns and personalized customer experience. We launched GenStudio Foundation, a unified interface to bring together data from our full suite of content supply chain applications, providing visibility and actionable insights into campaign plans, projects, and assets. GenStudio for Performance Marketing empowers teams to create their own on-brand content, supporting ad creation and activation for Google, LinkedIn, Meta, Microsoft, Snap, and TikTok. We're building on the momentum behind Firefly services and custom models, addressing additional highly desired solutions including video reframe and support of third party models for automation and cost efficiency.

Adobe: With that I'll be Gen studio, we're amplifying the value of cutting edge journey AI capabilities across the end to end content supply chain.

Adobe: Jen studio Optimizes, the process of planning, creating managing activating and measuring content for marketing campaigns and personalized customer experiences.

Adobe: We launched Gen studio Foundation, our unified interface to bring together data from our full suite of content supply chain applications, providing visibility and actionable insights into campaign planned projects and assets.

Adobe: Then studio for performance marketing empower teams to create their own on brand content supporting AD creation and activation for Google Linkedin meta, Microsoft Snap and Tic Toc.

Adobe: We are building on the momentum behind Firefly services and custom models addressing additional highly desired solutions, including video reframe in support of third party models for automation and cost efficiency.

Anil Chakravarthy: With the Coca-Cola Company, we co-developed a new AI-powered design intelligence system called Project Fission, built on Firefly services and custom models. Project Fission is designed to scale creative output up to 10 times faster, while tackling the common challenge of misinterpreting brand guidelines in AI powered content. Adobe Experience Platform and native applications are central to delivering unified, personalized customer experience. With the introduction of AEP AI Assistant, we've extended the platform's value by enabling teams across the business to interact with data through natural language, streamlining ingestion, insight generation, audience segmentation, and experience delivery. Building on this momentum, we are now expanding AEP with native AI agents that intelligently orchestrate customer journeys in real time.

Adobe: With the Coca Cola Company, we co developed a new AI powered design intelligence system called project vision built on Firefly services and custom models.

Adobe: <unk> vision is designed to scale creative output up to 10 times faster, while tackling the carbon challenge of misinterpreting, Brian guidelines in AI powered content.

Adobe: Adobe experience platform native applications are central to delivering unified personalized customer experiences.

Adobe: With the introduction of AEP AI assistant we've extended the platform's value by enabling teams across the business to interact with data through natural language streamlining ingestion insight generation audience segmentation and experienced delivery.

Adobe: Building on this momentum we are now expanding AEP with native AI agents that intelligently orchestrating customer journeys in real time.

Anil Chakravarthy: These innovations empower our customers to leverage their first-party customer data and deliver more relevant, high-impact advertising experiences rooted in direct customer relationships. The National Football League expanded our global partnership combining content, data and journeys to deliver a new level of AI-powered fan experience. Adobe will enable all 32 clubs to scale personalized fan touchpoints across NFL channels through project management, audience and campaign development, creative production, and performance optimization. At Adobe Summit in March, we introduced the Adobe AI platform with an agentic layer to scale customer experience orchestration. We unveiled 10 agents, purpose-built for creative marketing and technology teams that leverage Adobe Experience Platform to act intelligently and in alignment with business goals.

Adobe: Innovations empower our customers to leverage their first party customer data and deliver more relevant high impact advertising experiences rooted in direct customer relationships.

Adobe: The National Football League expanded our global partnership combining content data and journeys to deliver a new level of AI powered fan experiences.

Adobe: Adobe will enable all 32 clubs to scale personalized Bryan touch points across NFL channels through project management audience and campaign development production and performance optimization.

Adobe: Our total B summit in March we introduced Adobe AI platform with an agenda clear to scale customer experience orchestration.

Adobe: We unveil 10 agents purpose built for creative marketing and technology teams that leverage Adobe experience platform to act intelligently and in alignment with business goals.

Anil Chakravarthy: These agents coordinate across systems to accelerate the delivery of exceptional experience. We recently launched a product support agent to help enterprises anticipate, troubleshoot, and resolve operational issues. Customers like Wegmans Food Markets and Dentsu Merkle are already using it to streamline onboarding and feature deployment and drive faster resolutions and greater efficiency. Other highlights include strong demand for AEP and native apps, with Q2 subscription revenue growing over 40% year-over-year. Momentum for GenStudio for performance marketing with growth of over 45% quarter over quarter. Continued demand for Firefly services and custom models as part of the GenStudio solution, resulting in 4x year-over-year ARR growth.

Adobe: These agents coordinate across systems to accelerate the delivery of exceptional experiences. We recently launched a product support agent to help enterprises anticipate troubleshoot and resolve operational issues.

Speaker Change: The most like Wegmans food markets and then through multiple are already using it to streamline onboarding and feature deployment and drive faster resolutions and greater efficiency.

Speaker Change: Other highlights include strong demand for AEP and native apps with Q2 subscription revenue growing over 40% year over year.

Speaker Change: Momentum for dentistry for performance marketing with growth of over 45% quarter over quarter.

Speaker Change: Continued demand for Firefly services and custom models as part of the <unk> solution, resulting in forex year over year <unk> growth.

Anil Chakravarthy: The release of AEM Sites Optimizer garnered tremendous interest from customers like Qualcomm, eager to tap its agentic capabilities for valuable insights and recommendations to improve their website's performance, usability, and security. Industry Analyst Recognition, including being named a leader in the Forrester Wave for Collaborative Work Management for the third consecutive time, IDC Marketscape for worldwide connected TV advertising platforms, and the Gartner Magic Quadrant for content marketing platforms with GenStudio solutions including Workfront, Adobe GenStudio for performance marketing, Creative Cloud, Firefly, and etc. Key global customer wins including Aviva, Australia Post, Dyson, Pfizer, Infosys, Major League Baseball, Manulife, Navy Federal Credit Union, O'Reilly Auto Parts, Premier League, SAP, UBS, Ulta Beauty, and Wyndham.

Speaker Change: The release of Aam's sites Optimizer garner tremendous interest from customers like Qualcomm eager to tap its agenda capabilities for valuable insights and recommendations to improve their websites performance usability and security.

Speaker Change: Industry analyst recognition, including being named a leader in the Forrester wave for collaborative work management for the third consecutive time.

Speaker Change: Our ADC market scape for worldwide connected television advertising platforms, and the Gartner magic quadrant for content marketing platforms with <unk> solutions, including Warfront Adobe <unk> performance marketing creative cloud Firefly and express.

Speaker Change: Key global customer wins, including Aviva, Australia post Dyson Pfizer Infosys Major League Baseball Manulife Navy Federal credit Union O'reilly auto parts Premier League.

Speaker Change: UBS Ulta beauty and Wyndham.

Anil Chakravarthy: We are executing on our expanded vision of customer experience orchestration to empower enterprises to deliver personalization at scale in the era of AI. Enterprises are looking for a technology partner and platform to unify fragmented solutions and unlock greater efficiency and value. Leading enterprise players including AWS, Microsoft, SAP and ServiceNow have endorsed Adobe as their partner for customer experience orchestration. We have activated our global partner ecosystem. Spanning top-tier technology and media companies, system integrators, and leading agencies to accelerate customer experience orchestration.

Speaker Change: We are executing on our expanded vision of customer experience orchestration to empower enterprises to deliver personalization at scale in the era of AI.

Speaker Change: Enterprises are looking for a technology partner and platform to unify our fragmented solutions and unlock greater efficiency and value.

Speaker Change: Leading enterprise players, including AWS, Microsoft SAP and service now <unk> Adobe as their partner for customer experience orchestration.

Speaker Change: We have activated our global partner ecosystem spanning top tier technology, and media companies system integrators, and leading agencies to accelerate customer experience orchestration.

Anil Chakravarthy: Next week at the Cannes Lions Festival, we'll unveil several exciting announcements that underscore the power of our category-defining solutions and partnerships. We look forward to engaging directly with customers and agency partners at the event. With unmatched scale and a clear innovation agenda, we are well positioned to continue our growth.

Speaker Change: Next week at the Cannes Lions Festival will unveil several exciting announcements that underscore the power of our category defining solutions and partnerships.

Speaker Change: We look forward to engaging directly with customers and agency partners at dealing with.

Speaker Change: With unmatched scale and a clear innovation agenda, we are well positioned to continue our growth.

Daniel Durn: I'll now pass it to that. Thanks, Anil.

Speaker Change: I'll now pass it to that.

David Wadhwani: Thanks Danielle.

Daniel Durn: Today I'll start by summarizing Adobe's performance in Q2 Fiscal 2025, highlighting growth drivers across our businesses, and I'll finish with financial targets. In Q2, Adobe achieved revenue of $5.87 billion, which represents 11% year-over-year growth as reported and in constant currency. Gap Diluted Earnings Per Share in Q2 was $3.94, and Non-Gap Diluted Earnings Per Share was $5.06, representing 13% year-over-year growth. Second quarter business and financial highlights included digital media revenue of $4.35 billion, digital media ending ARR of $18.09 billion, growing 12.1% year over year. Digital Experience Revenue of $1.46 billion. Cash flows from operations of $2.19 billion, which is a record for Q2.

David Wadhwani: Today I'll start by summarizing Adobe performance in Q2 fiscal 2025, highlighting growth drivers across our businesses and I'll finish with financial targets.

David Wadhwani: In Q2, Adobe achieved revenue of $5 87 billion, which represents an 11% year over year growth as reported and in constant currency gapped.

David Wadhwani: GAAP diluted earnings per share in Q2 was $3 94 and.

David Wadhwani: And non-GAAP diluted earnings per share was $5 six.

David Wadhwani: Representing 13% year over year growth.

David Wadhwani: Second quarter business and financial highlights included digital media revenue of 435 billion digital media ending IRR of 18.09 billion growing 12, 1% year over year.

David Wadhwani: Digital experience revenue of $1 $46 billion cash flows from operations of $2, One 9 billion, which is a record for Q2.

Daniel Durn: And exiting the quarter, remaining performance obligations were $19.69 billion, growing 10% year-over-year, or 11% in constant currency. and CRPO growing 10% as reported and in constant current. In our digital media segment, we achieved Q2 revenue of $4.35 billion, which represents 11% year-over-year growth, or 12% in constant currency. We exited the quarter with $18.09 billion of digital media ARR, growing our ending ARR book of business 12.1% year over year in constant currency.

David Wadhwani: And exiting the quarter remaining performance obligations were $19 69 billion growing 10% year over year or 11% in constant currency and <unk> growing 10% as reported and in constant currency.

David Wadhwani: In our digital media segment, we achieved Q2 revenue of $4 35 billion, which represents 11% year over year growth or 12% in constant currency, we exited the quarter with 18.09 billion of digital media <unk>.

David Wadhwani: Growing our ending <unk> book of business 12, 1% year over year in constant currency.

Daniel Durn: Within digital media, second quarter growth drivers for business professionals and consumers included. Greater than 25% year-over-year growth in monthly active users driven by PLG optimization of the combined Acrobat and Express freemium funnel. Strong acquisition, usage, and monetization of our AI offerings, including Acrobat AI Assistant, Acrobat Premium, and Express. Accelerating adoption of express creative functionality through Acrobat driving approximately 11 times year over year growth of monthly active users due to increasing customer demand. Record mobile app store performance for Acrobat and Express combined, growing ending ARR greater than 40% year over year. and Strong Adoption of Acrobat and Express by Individuals, SMBs, and Enterprises Across Geography.

David Wadhwani: Within digital media second quarter growth drivers for business professionals and consumers included.

David Wadhwani: Greater than 25% year over year growth in monthly active users driven by <unk> optimization of the combined acrobat and express freemium funnel.

David Wadhwani: Strong acquisition usage and monetization of our AI offerings, including acrobat AI assistant acrobat premium and express.

David Wadhwani: Accelerating adoption of express creative functionality through acrobat, driving approximately 11 times year over year growth of monthly active users due to increasing customer demand.

David Wadhwani: Record mobile App store performance for Acrobat and express combined growing ending IRR greater than 40% year over year.

David Wadhwani: And strong adoption of acrobat and expressed by individuals smbs and enterprises across geographies.

Daniel Durn: Within Digital Media, Second Quarter Growth Drivers for Creative and Marketing Professionals Included. Growth of Creative Cloud flagship offerings driven by CC All Apps, Photoshop, and Lightroom, with particular strength in emerging markets driven by Latin America, India, and Eastern Europe. Growing traction of the newly-launched Firefly app web subscription and Photoshop mobile offering. Significant usage of Firefly and our Creative Cloud and Firefly apps with total generations crossing $24 billion exiting the quarter. And rapid acceleration of creative and marketing automation with Firefly services integrated with GenStudio in the enterprise.

David Wadhwani: Within digital media second quarter growth drivers for creative and marketing professionals included.

David Wadhwani: Growth of creative cloud flagship offerings, driven by Cc, all apps Photoshop and lightroom with particular strength in emerging markets, driven by Latin America, India and Eastern Europe.

David Wadhwani: Growing traction of the newly launched Firefly, App web subscription and Photoshop mobile offerings.

David Wadhwani: Significant usage of Firefly in our creative cloud and Firefly apps with total generations crossing 24 billion exiting the quarter.

David Wadhwani: Rapid acceleration of creative and marketing automation with Firefly services integrated with Gen studio in the enterprise.

Daniel Durn: Turning to our digital experience segment, in Q2 we achieved revenue of $1.46 billion, which represents 10% year-over-year growth as reported and in constant currency. Digital Experience Subscription Revenue is $1.33 billion, growing 11% year-over-year as reported and in constant currency.

Turning to our digital experience segment in Q2, we achieved revenue of 146 billion, which represents 10% year over year growth as reported and in constant currency.

David Wadhwani: Digital experience subscription revenue was 133 billion growing 11% year over year as reported and in constant currency.

Daniel Durn: Within digital experience, second quarter growth drivers for marketing professionals included. Industry demand for customer experience orchestration solutions, requiring integrated offerings across content, data, and journey. driving higher value from AI infused prime and ultimate tiered offerings with existing and new customers. AEP and app subscription revenue growing greater than 40% year over year. Strong adoption of GenStudio with greater than 25% year-over-year growth in ARR. and increasing customer value, ensuring strong customer retention.

David Wadhwani: Within digital experience second quarter growth drivers for marketing professionals included in.

David Wadhwani: Industry demand for customer experience orchestration solutions, requiring integrated offerings across content data and journeys.

David Wadhwani: Driving higher value from AI infused prime and ultimate tiered offerings with existing and new customers.

David Wadhwani: AEP in App subscription revenue growing greater than 40% year over year.

David Wadhwani: Strong adoption of Gen studio with greater than 25% year over year growth in IRR.

David Wadhwani: And increasing customer value, ensuring strong customer retention.

Daniel Durn: Adobe Success is being driven by innovation in service of both business professionals and consumers, and creative and marketing professionals. For the Business Professionals and Consumers Group, subscription revenue was $1.60 billion, which represents 15% year-over-year growth, as reported, and in constant currency. for the Creative and Marketing Professionals Group. Subscription revenue is $4.02 billion, which represents 10% year-over-year growth or 11% in constant currency. Additionally, historical subscription revenue for these customer groups is now available in the Adobe Investor Relations Data Sheet under Supplementary Customer Group Data dating back to FY 2023.

David Wadhwani: Adobe success is being driven by innovation in service of both business professionals and consumers and.

David Wadhwani: And creative and marketing professionals.

David Wadhwani: For the business professionals and consumers group subscription revenue was 160 billion, which represents 15% year over year growth as reported and in constant currency.

David Wadhwani: For the creative and marketing professionals group subscription revenue was 4.02 billion, which represents 10% year over year growth or 11% in constant currency. Additionally.

David Wadhwani: Additionally, historical subscription revenue for these customer groups is now available in the Adobe Investor Relations data sheet under supplementary customer group data dating back to FY 2023.

Daniel Durn: Turning to the income statement and balance sheet, Adobe's effective tax rate in Q2 was 19.5% on a GAAP basis and 18.5% on a non-GAAP basis. RPO exiting the quarter was $19.69 billion, growing 10% year over year, or 11% in constant currency. and CRPO growing 10% year over year, as reported, and in constant current. Our cash flows from operations in the quarter were a Q2 record of $2.19 billion, and ending cash and short-term investments exiting Q2 was $5.71 billion.

David Wadhwani: Turning to the income statement and balance sheet Adobe's effective tax rate in Q2 was 19, 5% on a GAAP basis, and 18, 5% on a non-GAAP basis.

David Wadhwani: <unk> exiting the quarter was $19 69 billion growing 10% year over year or 11% in constant currency.

David Wadhwani: And CRP growing 10% year over year as reported and in constant currency.

David Wadhwani: Our cash flows from operations in the quarter or Q2 record of $2 $1 9 billion and ending cash and short term investments exiting Q2 was $5 seven 1 billion.

Daniel Durn: In Q2, we entered into a share repurchase agreement totaling $3.50 billion. And we currently have $10.90 billion remaining of our $25 billion authorization granted in March 2024.

David Wadhwani: In Q2, we entered into a share repurchase agreement totaling 350 billion.

David Wadhwani: And we currently have 10 nine zero billion remaining of our $25 billion authorization granted in March 2024.

Daniel Durn: Let me now turn to our financial targets, which assume current macroeconomic conditions. For Q3 FY25 we're targeting total Adobe revenue of $5.875 to $5.925 billion. Digital Media Segment Revenue of $4.37 to $4.40 billion. Digital Experience Segment Revenue of $1.45 to $1.47 billion. Digital Experience Subscription Revenue of $1.35 to $1.36 billion. Gap earnings per share of $4 to $4.57. and non-GAAP earnings per share of $5.15 to $5.20. For Q3, we expect non-GAAP operating margin of approximately 45.5% and a non-GAAP tax rate of approximately 18.5%.

David Wadhwani: Let me now turn to our financial targets, which assume current macroeconomic conditions for.

David Wadhwani: For Q3, FY 'twenty five we are targeting total adobe revenue of five 875 to $5 95 billion.

David Wadhwani: Digital media segment revenue of $4 37 to $4 four zero billion.

David Wadhwani: Digital experience segment revenue of $1 45 to $1 47 billion.

David Wadhwani: Digital experience subscription revenue of 1.35 to $1 36 billion.

David Wadhwani: GAAP earnings per share of $4 to $4 <unk>.

David Wadhwani: And non-GAAP earnings per share of $5 15.

David Wadhwani: The $5 20.

David Wadhwani: For Q3, we expect non-GAAP operating margin of approximately 45, 5% and a non-GAAP tax rate of approximately 18, 5%.

Daniel Durn: As a result of us driving strong performance in the first half of the year, we are pleased to raise our targets for FY25 total revenue, digital media segment revenue, and EPS. As well as reaffirmed digital experience subscription and segment revenue and digital media ending ARR growth for the year. Additionally, we're on pace to surpass $250 million in AI First Direct ARR Book of Business exiting the year.

David Wadhwani: As a result of us driving strong performance in the first half of the year. We are pleased to raise our targets for FY 'twenty five total revenue.

David Wadhwani: Digital media segment revenue and EPS.

David Wadhwani: As well as reaffirm digital experience subscription and segment revenue.

David Wadhwani: And digital media ending IRR growth for the year.

David Wadhwani: Additionally, we are on pace to surpass $250 million.

David Wadhwani: AI first direct <unk> book of business exiting the year.

Daniel Durn: For FY25, we are now targeting. Total Adobe revenue of $23.50 to $23.60 billion. Digital Media Segment Revenue of $17.45 to $17.50 billion. Digital Media Ending Error, our book of business growth of 11.0% year over year. Digital Experience Segment Revenue of $5.80 to $5.90 billion. Digital Experience Subscription Revenue of $5.375 to $5.425 billion. Gap earnings per share of $16.30 to $16.50 and non-gap earnings per share of $20.50. to $20.70.

David Wadhwani: For FY 'twenty five we are now targeting <unk>.

David Wadhwani: Total Adobe revenue of $23 five zero to $23 six zero billion.

David Wadhwani: Digital media segment revenue of $17 $4 five to $17 five zero billion.

David Wadhwani: Digital media, ending IRR book of business growth of 11.0% year over year.

David Wadhwani: Digital experience segment revenue of $5 eight zero to 590 billion.

David Wadhwani: Digital experience subscription revenue of $5 $3 75.

David Wadhwani: To five four to 5 billion gap.

David Wadhwani: GAAP earnings per share of $16 30.

David Wadhwani: The $16 50.

David Wadhwani: non-GAAP earnings per share of $20 50.

David Wadhwani: To $20 70.

Daniel Durn: In summary, Adobe's Q2 performance and revised FY25 targets reflect excellent execution and the momentum we're building across our portfolio in a dynamic macroeconomic environment. With a disciplined approach to investment and focus on driving customer innovation, we remain confident in our ability to deliver strong shareholder value.

David Wadhwani: In summary, Adobe Q2 performance and revised FY 'twenty five targets reflect excellent execution and the momentum we are building across our portfolio and a dynamic macroeconomic environment.

David Wadhwani: With a disciplined approach to investment and focus on driving customer innovation, we remain confident in our ability to deliver strong shareholder value shantaram back to you.

Shantanu Narayen: Shantanu, back to you. Thanks, Dan. A strong Q2 performance highlights our momentum and how we're leveraging AI to drive exponential value in the creative economy. As a result of our strategy and execution, we're confident in our ability to deliver value to existing customers and attract new users.

Dan: Thanks, Dan.

Dan: <unk> Q2 performance highlights our momentum and how we're leveraging AI to drive exponential value and the creative economy.

Dan: As a result of our strategy and execution, we are confident in our ability to deliver value to existing customers and attract new users.

Shantanu Narayen: I'm incredibly proud of how our teams around the world continue to create the future, raise the bar, and bring our purpose to life. Adobe continues to attract great talent, and we're excited to welcome new college graduates and interns to help us change the world through personalized digital experience.

Dan: I'm incredibly proud of how our teams around the world continue to create the future raise the bar and bring up us to life.

Dan: Adobe continues to attract great talent and we're excited to welcome New college graduates and in tons to help us change the world through personalized digital experiences.

Operator: Thank you and we will now take questions. Operator. Thank you. If you would like to signal with questions, please press star one on your touchtone telephone. If you're joining us today, use a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our Again, that is star one if you would like to signal with.

Dan: Thank you and we will now take questions.

Dan: Operator.

Dan: Thank you.

Speaker Change: I would like to signal with questions. Please press star one on your Touchtone telephone.

Dan: Joining us today using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

Dan: Again that is star one if you would like to signal with questions. The first question comes from <unk> <unk> with Barclays.

Saket Kalia: first question comes from Saket Kalia with. Okay, great. Hey guys, thanks for taking my question here.

Speaker Change: Okay, Great Hey, guys. Thanks for taking my question here.

Saket Kalia: David, maybe David and Shantanu, maybe for both of you, you know, the merging of creativity and productivity definitely seems thematic. And maybe around that, it's interesting to see the growing adoption of Express within Acrobat. Can you just maybe talk about why that combo works and how does the the pricing work there? Does the customer subscribe to both or just one? Thanks. Great. Thanks, Saket.

Speaker Change: David maybe David and Sean maybe maybe for both of you.

Speaker Change: The merging of creativity and productivity definitely seemed thematic.

Speaker Change: And maybe around that it's interesting to see the growing adoption of express within within acrobat.

Speaker Change: Can you just maybe talk about why that humble works and how does the pricing work there does the customer subscribe to both or just one thanks.

Speaker Change: Great. Thanks, Yeah.

David Wadhwani: Yeah, as we've talked about for quite a while, we're seeing an absolute explosion in the demand for, you know, content creation and more and more visually rich content creation. The reason this works and why Acrobat and Express are really, you know, effectively part of the same value proposition to business professionals and consumers is that there's been a significant amount of, you know, work that we've done, research we've seen, where content consumption for many people is really the beginning of a content creation process. As I mentioned in the past, when we launched AI Assistant about a year ago now, what we started noticing is that as people were having conversations with the documents they were using, the very next step or the last, one of the last steps they did was basically ask the AI Assistant to write a, write a summary for an email or write an outline for a presentation or give it stats for an infographic, right?

Speaker Change: As we've talked about for.

Speaker Change: For quite a while we're seeing an absolute explosion in the day.

Speaker Change: Demand for content creation, and more and more visually rich content creation. The reason this that this works and why acrobat and express our really effectively part of the same value proposition too.

Dan: Professionals and consumers is that theres been a significant amount of work that we've done research, we've seen where we're content consumption for many people is really the beginning of our content creation process.

Dan: As I had mentioned in the past when we launched AI assistant and.

Dan: About a year ago now when we started noticing is that as people were having conversations with the documents. They were using the very next step over the last one of the last steps. They did was basically asking the AI assistant to write a.

Dan: Right, a summary for an E mail or write an outline for a presentation or give it stats for an infographic right and so so what what we've done here as we start we brought these products really into the same surface or they are one product in effect.

David Wadhwani: And so what we've done here is we've brought these products really into the same surface, so they are one product in effect. And if you are using Acrobat, you are able to get access to all of the capabilities of Express and what you get as part of freemium there. But what you will expect to see is more and more deeper integration of the two going forward.

Dan: And if you are using.

Dan: Acrobat, you are able to get access to all of the capabilities of express and what you get as part of freemium there, but what you will expect to see is more and more deeper integration of the two going forward and we have a lot of exciting things to share in the back half of this year around that.

Saket Kalia: And we have a lot of exciting things to share in the back half of this year around Very helpful. Thank you.

Speaker Change: Very helpful. Thank you.

Mark Murphy: And the next question will come from Mark Murphy with J.P. Morgan. Thank you so much, and congratulations on the Beat and Raise performance. I noticed on the Adobe Stock website that the volume of video content really took off during Q2 positively, and I'm interested in just what you see happening there to drive the contributor-uploaded content higher than also. Just having seen the news with the Disney and NBCUniversal filing a copyright lawsuit that related to some of the AI-generated imagery, I'm just curious if you have any view that that might validate the Adobe strategy of being commercially safe and having the content authenticity, and if you think there's any ramifications of that.

Mark Murphy: And the next question will come from Mark Murphy with Jpmorgan.

Speaker Change: Thank you so much and congratulations on the beat and raise performance.

Speaker Change: I noticed on the Adobe stock website that the volume of video.

Mark Murphy: Content really took off during Q2, it positively and I'm interested in just what you see happening there to drive the contributor uploaded content higher than also just having seen that news with the Disney NBC Universal.

Dan: Filing a copyright cover a lawsuit.

Dan: Is that related to some of the AI generated imagery.

Dan: Im just curious if you have any view that that might validate the adobe strategy of being commercially safe and.

Dan: Having the content authenticity. It if you think there's any ramifications of that.

Shantanu Narayen: Yeah, thanks for the question. You know, one of the things I think if you aggregate the question, the way you're asking it, I mean, I think one of the core principles for Adobe has and continues to be that we have a great deal of respect for content creators. We want to make sure and help them monetize content, the content they create in any way possible, because we think it's just good for the industry. One of the things that we've been doing over the last many years is taking Adobe stock from being this independent, you know, capabilities and just integrating it throughout so more users get more value and the demand for content as it continues to grow is really at their fingertips.

Speaker Change: Yes, thanks for the question.

Speaker Change: One of the things I think I think if you aggregate the question the way you're asking it I mean, I think one of the core principles for Adobe has and continues to be that.

Speaker Change: We have a great deal of respect for content creators.

Dan: We want to make sure and help them monetize.

Dan: Content the content they create in any way possible because we think it's just good for the industry.

Dan: One of the things that we've been doing over the last many years is taking adobe stock from being this independent.

Dan: Capabilities and just integrating it throughout so more users get more value and the demand for content as it continues to grow is really at their fingertips and as a result, if someone's using express or if someone's using creative cloud or if someone's using firefly boards. They are able to access this incredible set of content that's being developed by.

Shantanu Narayen: And as a result, you know, if someone's using Express or if someone's using Creative Cloud, or if someone's using Firefly Boards, they're able to access this incredible, you know, set of content that's being developed by the community. More recently, to your point, we expanded that set to invest in a lot of what we call creative mission so people can submit more video content and video content of all forms for all different kind of outputs, whether it's vertically oriented or horizontally oriented. And as that corpus of video content has been building up, we're seeing a lot more pull through.

Dan: The community more recently to your point, we expanded that set to invest in a lot of of what we call creative mission. So people can submit more video content and video content of all forms for all different kinds of outputs, whether its vertically oriented horizontally oriented and as that corpus of video content has been has been building up where.

Dan: Seeing a lot more pull through and so the whole economy around that is working.

Shantanu Narayen: And so the whole economy around that is working. And so we have trained our Firefly models, as many of you know, on stock and other content that we have access to. We do have a contributor fund that pays out to those individuals. And as a result, we feel like we're in a very advantaged position when it comes to people choosing models. I will say, especially in enterprises, we see a lot of companies selecting Firefly, partially because of the quality, partially because of the controllability of it, but also very, very strongly because of the commercial safety of it.

Dan: And then.

Dan: Secondly to the point you were making around the training data set and how we train and compensate creators. This has been one of the core things that we believe from the very beginning is that the right transparent and really the only commercially safe way to build these models.

Dan: To do it on a set of content that were the contributors are themselves.

Dan: Excited and willing participants in the process and so we have trained our Firefly models as many of you know on stock and other content that we have access to access do we do have a contributor a fund that pays out to those individuals and as a result, we feel like we're in a very advantaged position when it comes to people choosing models I'll say, especially in enterprises.

Dan: We see a lot of companies selecting firefly.

Dan: Partially because of the quality, partially because of the.

Shantanu Narayen: And we believe that it's just a it's the right way to approach it. And we believe it's a safe bet for the long term in the future. And Mark, maybe if I were to just add, I think on the, as it relates to the other services, they've all just really focused on the, you know, tip of the iceberg in terms of ideation. And I think Firefly, with the support for all of those models, will be the ultimate creative destination and to, you know, I think punctuate what David said. In the enterprise, the value proposition that we have resonates, because even if you use it for ideation, you're not going to use something that's not been designed to be intellectually, yeah, the intellectual property being correct for production.

Dan: The controllability of it but also very very strongly because of the commercial safety of it and we believe that it's just it's the right way to approach it and we believe it's a safe bet for the long term in this industry.

Dan: Maybe if I were to just add I think on the as it relates to the other services. They are all just really focused on the.

Dan: Tip of the iceberg in terms of ideation, and I think Firefly with the support for all of those models will be the ultimate creative destination undue I think punctuate, what David said in the enterprise.

Dan: The value proposition that we have resonates because even if you use it for ideation youre not going to use something that's not being designed to be intellectually the intellectual property being correct for production and so I think thats why youre going to continue to see our stuff being used for scaled production.

Shantanu Narayen: And so I think that's where you're going to continue to see our stuff being used for scale production, because it's so unique.

Speaker Change: Because it's so unique.

Mark Murphy: Excellent. Thank you so much.

Dan: Excellent. Thank you so much.

Kirk Materne: And the next question will come from Kirk Materne with Evercore ISI. Yeah, thanks very much. David, I was worried if you just walk through sort of the initial reaction to the change on, you know, the Creative Cloud Pro, you know, what you're seeing on that front, and then sort of what you might be expecting in terms of those changes in the back half of the year from a revenue perspective. Thanks. Yeah, if we take a step back, and this is one that we have been, I think, fairly consistent over the last few years in terms of our core strategy, and we reiterated it at Summit a few months ago, is, again, the demand for content has been, you know, almost insatiable.

Speaker Change: And the next question will come from Kirk <unk> with Evercore ISI.

Kirk: Yes, thanks, very much David I was wondering if you can just walk through sort of the initial reaction to the change on.

Speaker Change: The creative cloud pro Whats Youre seeing on that front, and then sort of what you might be expecting in terms of those changes in the back half of the year from a from a revenue perspective. Thanks.

Speaker Change: Yes, if we take a step back and this is one that we have been I think fairly consistent over the last few years in terms of our core strategy.

Speaker Change: We reiterated it at summit a few months ago.

Speaker Change: Again, the demand for content has been.

David Wadhwani: The number of, you know, people wanting to create richer content has been very strong. And one of the things that we've talked about is that historically, you know, Creative Cloud was, you know, a single offer, whether it's Creative Cloud All Apps or Creative Cloud Pro, really doing double duty or triple duty across the entire ecosystem of people wanting to create content. And so we've been very methodically over the last couple years, extending the offering lineup, right, so that we can meet the needs of business professionals and consumers with Acrobat and Express, we can meet the needs of creators with the new Firefly plans that we've, that we've released recently, whether it's Firefly Standard for in the US $10, Firefly Pro for $20, or Firefly Premium, which is unlimited access to video generation as well, for $200 a month.

Speaker Change: Almost insatiable the number of.

Speaker Change: People wanting to create richer content has been very strong and one of the things that we've talked about is that historically creative.

Speaker Change: Creative cloud was a single offer whether it's creative cloud all apps on creative cloud pro.

Speaker Change: Doing double duty or triple duty across the entire ecosystem of people wanting to create content and so we've been very methodically over the last.

Speaker Change: Couple of years, extending the offering lineup right. So that we can meet the needs of business professionals and consumers with acrobat and express we can meet the needs of creators with the new Firefly plans that we've that we released recently, whether it's Firefly standard for in the U S $10 Firefly probe for $20 or Firefly premium which is unlimited.

Speaker Change: Access to video generation as well.

David Wadhwani: And for Creative Pros, we've been adding, very steadily, we've been adding more and more of these capabilities directly in the tools, the desktop tools they know and love and use every single day. The value they're getting out of it is enormous. We talked about the fact that we've crossed 24 billion generations to date. And as a result, we've been able to introduce the Creative Cloud Pro plan, which is a higher price plan, but it has a lot more value integrated into the ecosystem of the desktop applications, but it also comes with the Firefly application as well.

Speaker Change: For $200 a month.

Speaker Change: And for creative pros, we've been adding very steadily we've been adding more and more of these capabilities directly in the tools. The desktop tools, they know and love and use every single day the value they're getting out of it is enormous we talked about the fact that we've crossed $24 billion generations to date and as a result, we've been able to introduce the creative cloud <unk>.

Speaker Change: Which is a higher priced plan, but it has a lot more value in integrated into the ecosystem of the desktop applications, but it also comes with the Firefly application as well and then in the context of enterprises, we're seeing a huge.

David Wadhwani: And then in the context of enterprises, we're seeing a, you know, huge, you know, growth of Firefly services and GenStudio for, for automation of that content. And that really fits into what we've been talking about as our monetization architecture of P times Q plus V, right, where quantity growth comes from the business pro and consumer, we talked about how Acrobat and Express is seeing strong malgrowth at 25% year over year, crossing 700 million. Quantity also comes from the Firefly app, we talked about traffic being up 30% quarter over quarter, we talked about 2x subs growth there, 30% growth in terms of new users to Adobe quarter over quarter for Firefly.

Speaker Change: Growth of Firefly services, and Jen studio for for automation of that content and that really fits into what we've been talking about as our monetization architecture of P times, Q plus V right, where quantity growth comes from the business grow and consumer we talked about how acrobat and expressed is seeing strong MAU growth of 25%.

Speaker Change: Year over year crossing $700 million.

Speaker Change: Quantity also comes from from the Firefly App, we talked about traffic being up 30% quarter over quarter, we've talked about <unk>.

Speaker Change: Subsequent there 30% growth in terms of new users to adobe quarter over quarter.

Daniel Durn: In terms of the pricing part of that equation, we, you know, we talked about the increased value that we have in Creative Cloud Pro, that gives us some opportunity to match the value we're providing with the pricing. And then in terms of the value is around Firefly services and GenStudio. So that's really the growth algorithm. The thing to note is that, you know, as we go down this path, some of this will take some time to play out, because we have, you know, for the quantity side, we have premium and lower priced offers, but we're starting to see the early signs of that.

Speaker Change: Firefly.

Speaker Change: In terms of the pricing part of that equation.

Speaker Change: We're talking about the increased value that we have in creative cloud pro that gives us some opportunity to match the value, we're providing with the pricing and then in terms of the value is.

Speaker Change: Is around Firefly services and Jen studio. So that's really the growth algorithm. The thing to note is that as we go down this path. Some of this will take some time to play out because we have.

Speaker Change: <unk>.

Speaker Change: For the quantity side, we have premium and lower priced offers but we're starting to see the early signs of that and if you do the math and maybe turn it over to Dan If you do the math.

Daniel Durn: And if you do the math, and you know, maybe turn it over to Dan, if you do the math, our core creative business subscription revenue has been accelerating over the past Yeah, and just to build on that, David, you know, if you take a look at the supplemental disclosure that we provided, between the subscription revenue for creative and marketing professionals, the subscription revenue for DX, you can pretty quickly derive what the subscription revenue is for the creative and creative pro audience that we serve. And I think what you'll see is in the current quarter, growing 10.1% year over year, which is up from 10% in Q1.

Speaker Change: Our core creative business subscription revenue has been accelerating over the past few quarters, yes, and just to build on that.

David Wadhwani: David If you take a look at the supplemental disclosure that we provided.

Speaker Change: Between the subscription revenue for creative and marketing professionals. The subscription revenue for Dx you can pretty quickly derive what the subscription revenue is for the creative and creative pro audience that we serve and I think what Youll see is in the current quarter at growing 10, 1%.

Speaker Change: Year over year, which is up from 10% in Q1, and when you think about the acceleration over the last.

Daniel Durn: And when you think about the acceleration over the last four or five quarters, you know, in the year ago period, that same 10.1% would have been about 7.9%. So just over 2% acceleration over the last four quarters. So we feel good about the way the strategy is unfolding, and our ability to execute against that growth strategy. Kirk, to your other question about how this rolls out, just to be clear, it's, you know, all this happens on renewal. And so, you know, the good news is it's all ahead of us in terms of where that happens.

Speaker Change: Four or five quarters in the year ago period that same 10, 1% would have been about seven 9%. So just over 2% acceleration over the last four quarters. So we feel good about the way the strategy is unfolding and our ability to execute against that growth strategy.

Speaker Change: To your other question about how this rolls out just to be clear.

Speaker Change: All of this happens on renewal and so you know the good news is it's all ahead of us in terms of where that happens and we'll roll it out in enterprise will roll roll it out in regions and so the good news is that.

Daniel Durn: And we'll roll it out in enterprise, we'll roll it out in regions. And so, you know, the good news is that the initial feedback has been good, but it's early as it relates to, you know, the rollout. So that just speaks to the organic strength. Thank you all.

Speaker Change: The initial feedback has been good but it's early as it relates to you know.

Speaker Change: The rollout so that just speaks to the organic strength.

Speaker Change: Thank you all.

Tyler Radke: And the next question will come from Tyler Radke with Citi. Thank you very much for taking the question. I wanted to ask about how you're thinking about, you know, overall gen AI usage versus monetization. In the quarter, it looked like you saw another quarter of about 4 billion Firefly generations, which which is a huge number, but I think that's been pretty consistent with what you've seen the last two quarters. So, you know, two questions. Are you, are you, are you pleased with that level? You know, are there things that you're doing to increase the generations of that and then of that 4 billion, like how far through the monetization?

Speaker Change: And the next question will come from Tyler Radke with Citi.

Speaker Change: Thank you very much for taking the question I wanted to ask about how youre thinking about overall Jennie O you said versus monetization.

Speaker Change: In the quarter. It looked like you saw another quarter of about 4 billion Firefly.

Speaker Change: Generations, which is a huge number but I think thats been pretty consistent with what you've seen in the last two quarters. So two questions are you are you are you pleased with that level or are there things that youre doing to increase the generation to that and then.

Speaker Change: Of that $4 billion like how far through the monetization.

David Wadhwani: Are you I mean, it seems like you're seeing a lot of good success in terms of new users to the Firefly standalone apps and, you know, on track on some of the, you know, standalone AI targets for the year. So just help us, you know, think through the monetization and kind of that usage incentivization dynamics here. Yeah, Tyler, I think underlying, you know, the numbers, there's been a fair amount of re-architecture to make sure that AI is really driving it. I mean, even at the financial analyst meeting, we talked about the AI influence revenue and the AI direct revenue.

Speaker Change: I mean, it seems like Youre seeing a lot of good success in terms of new users to the Firefly Standalone apps.

Speaker Change: On track on some of the Standalone AI targets for the year. So just help us.

Speaker Change: Through the the monetization and kind of that usage incentive physician dining.

Speaker Change: Dynamics here.

Speaker Change: Yes, Tyler I think on underlying.

Speaker Change: The numbers there has been a fair amount of re architecture to make sure that AI is really driving it I mean, even at the financial analyst meeting, we talked about the AI influenced revenue and the AI direct revenue.

David Wadhwani: The AI influence revenue is already in the billions, because that speaks to the value that people are getting across both, you know, our DX products, Acrobat products, as well as, you know, the creative products. So across the board, there's no question that AI is being a nice tailwind as it relates to adoption. And we also said, we're, you know, tracking ahead of the 250 million. The immense opportunity is all ahead of us. And as we get this entire offering that we keep talking about, which is Acrobat, Express, Firefly single app, Creative Cloud Pro, which includes Firefly, GenStudio, and, you know, the APN apps, each one of them, we think has tremendous opportunity ahead of us.

Speaker Change: Influence revenues already in the billions because that speaks to the value that people are getting across both.

Speaker Change: Our Dx products acrobat products as well as you know the creative products. So across the board. There is no question that AI is.

Speaker Change: Being a nice tailwind as it relates to adoption and we also said we're tracking ahead of the $250 million.

Speaker Change: The immense opportunity is all ahead of us and as we go.

Speaker Change: This entire offering.

Speaker Change: We keep talking about witches Acrobat Express Firefly single lap creative cloud Pearl, which includes Firefly Gen studio in.

Speaker Change: The AEP and apps each one of them. We think has a tremendous opportunity ahead of us. So it's very early in terms of the.

David Wadhwani: So it's very early in terms of the AI monetization, but we're very advanced in terms of how much innovation we've delivered. And so, you know, it feels really good right now.

Speaker Change: AI monetization, but we're very advanced in terms of how much innovation, we have delivered and so you know it feels really good right now.

Speaker Change: Thank you.

Aleks Zukin: And the next question will come from Aleks Zukin with Wolf Research. Hey guys. Maybe just one two-part question for me, and that's on the topic of competition. It looks, at least by our math, it looks like Express is now at 50 million MAUs. So maybe just comment on the competitive environment that you're seeing downmarket with some of the disruptors. And then, with respect to outside of your traditional competitive environment, maybe just a competition with vendors like Meta, where at least it's a little harder for some investors to understand, given their increasing usage of AI to automate ad creation and campaign optimization, to what extent does that overlap versus partner with some of the Gen Studio offerings?

Alex Zukin: And the next question will come from Alex Zukin with Wolfe Research.

Alex Zukin: Hey, guys.

Alex Zukin: Maybe just one two part question for me and that's on the topic of competition.

Alex Zukin: It looks at least by our math it looks like express.

Speaker Change: Now with $50 million in May you. So maybe just comment on the competitive environment that youre seeing.

Speaker Change: Down market with some of the.

Speaker Change: The disruptors.

Speaker Change: And then with respect to outside of your traditional.

Speaker Change: Traditional competitive environment, just co op partition with vendors like meta.

Speaker Change: At least that's a little harder for some investors to understand given their increasing usage of AI to automate kind of AD creation campaign optimization to what extent is that overlap versus partner with some of the Gen studio offering single would be helpful to just go into that a little bit.

David Wadhwani: I think it would be helpful to just go into that a little bit.

David Wadhwani: Great, yeah, maybe I'll start and I'll hand it over to Shantanu and Anil to address the second part. When it comes to, you know, the growth of our new web and mobile offerings, you know, if you look at everything we've been doing with Express, everything we've been doing with the launch of Photoshop on mobile, of course Firefly is on web and we've said that it's coming to mobile soon as well. We have Lightroom, of course, also being a very significant part of that. You know, what we've been doing over the last few years is taking that data-driven operating model that we've perfected in terms of the web journeys and really reallocating it, you know, all of the significant part of what we've learned there from, you know, top of funnel generation to, you know, performance marketing to conversion and retention to virality, you know, that entire ecosystem has been flowing very well.

Speaker Change: Great, Yes, maybe I'll start and I'll hand, it over to Shout Nu and <unk> address the second part when it comes to that.

Speaker Change: The growth of the of our new web and mobile offerings.

Speaker Change: If you look at everything we've been doing with express everything we've been doing with the launch of Photoshop.

Speaker Change: On mobile of course Firefly is on web and we've said that is coming to mobile soon.

Speaker Change: As well.

Speaker Change: We have a light room of course also being a very significant part of that.

Speaker Change: And what we've been doing over the last last few years is taking that data driven operating model that we've been that we've perfected in terms of the web journeys and really reallocating. It all of that a significant part of what we've learned there from top of final generation two.

Speaker Change: Two our performance marketing to conversion and retention to virality.

Speaker Change: That entire ecosystem has been flowing very well a lot of that we learned with what we're doing with acrobat.

David Wadhwani: A lot of that we learned with what we were doing with Acrobat and now we're applying it to the other areas. You know, the other thing that has been playing in our benefit, especially with something like Express, is the fact that we're part of a broader ecosystem. One of the things that has been most exciting to see is that Express adoption within businesses. We talked about how 8,000, you know, we onboarded into 8,000 new businesses in the quarter with Express. We mentioned a number of really great logos, obviously, with Intuit and Cisco and the NFL and Premier League entering these things.

Speaker Change: And now we're applying it to the to the other areas.

Speaker Change: The thing that has been playing in our benefit, especially with something like express is the fact that we're part of a broader ecosystem one of the things that has been most exciting to see.

Speaker Change: Is that express adoption within businesses, we talked about how 8000.

Speaker Change: Yes.

Speaker Change: On boarded into 8000, new businesses in the quarter with express.

Speaker Change: We mentioned a number of really great logos, obviously with with Intuit and Cisco and.

Speaker Change: The NFL and Premier League entering these things and what's really great about that is its really part of our enterprise wide content supply chain.

Shantanu Narayen: And what's really great about that is it's really part of an enterprise-wide content supply chain sale where Express is integrated with AEM, Express is integrated with Workfront, and it's a way of taking all the work that we're doing on the DX side of the business and empowering more people to participate in that and create content that's. I think the two things that I just maybe add to that is first as it relates to even, I think what you're calling the low end when you consider, you know, the business professionals and consumers, the amount of Moe that we have, you know, is, is very significant.

Speaker Change: L where express is integrated with <unk> Express is integrated with with work front and it's a way of taking all of the work that we're doing on the Dx side of the business and empowering more people to participate in that and create content that is on brand.

Speaker Change: I think the two things that I would just maybe add to that is first as it relates to even I think what youre, calling the low end when you consider the business professionals and consumers the amount of.

Speaker Change: Now that we have.

Shantanu Narayen: So I just wanted to make sure that you understand that because they also use a lot of the products that are perhaps, you know, referred to within the creative professional. But I think to your other point, as it relates to, you know, the amount of content that's being created for digital advertising, and the third party support, we've already announced a whole bunch of third party support, you're going to see a whole bunch more announced. And every, you know, sort of advertising platform, if that's what I can call it, once the Adobe partnership as it relates to GenStudio for performance marketing, I think initially, you'll probably see SMEs, you know, go with perhaps a more proprietary channel.

Speaker Change: <unk> is very significant so I just wanted to make sure that you understand that because they also use a lot of the products.

Speaker Change: Perhaps you know are referred to within the creative professional but I think to your other point.

Speaker Change: As it relates to the amount of content, that's being created for digital advertising.

Speaker Change: And the third party support we've already announced a whole bunch of third party support or Youre going to see a whole bunch more announced and every.

Speaker Change: Sort of advertising platform, if that's what I can call. It once the Adobe partnership as it relates to Gen studio for performance marketing I think initially you'll probably see Smes.

Speaker Change: Our goal with perhaps a more proprietary channel, but I think across each one of these channels, we're going to be the one company that people look at to make sure of that.

Anil Chakravarthy: But I think across each one of these channels, we're going to be the one company that people look at, to make sure that in a seamless collaboration, they can post, whether it's to Microsoft, whether it's to Google, whether it's to, you know, Snap, TikTok, Meta, you name all of them, Amazon, as all of these come online, they will be using our GenStudio for performance marketing.

Speaker Change: Seamless collaboration they can post whether it's to Microsoft whether it's through Google whether its too.

Speaker Change: Snap <expletive> Dark matter you name all of them Amazon as all of these come online they will be using our gen studio for performance marketing, but I'll have analogs or talk about some of the other things.

Anil Chakravarthy: But I'll have Anil also talk about some of the other things. And hopefully, you know, you'll track what we are doing at CAN as well. Thanks, Shantanu. Yeah, Shantanu mentioned, you know, in terms of ad platforms, obviously, their primary goal is to grow the ad revenue. The best way to do that is to make sure that the creative is optimized and the ROI from the advertiser's perspective is clear to the advertisers, which is where our marketing stack and everything that we're doing around GenStudio for performance marketing comes together really well. And so, you know, we already announced at Summit, including Meta and a number of others, including Google and so on.

Speaker Change: And hopefully.

Speaker Change: Track, what we're doing at Canada as well.

Speaker Change: Okay. Thanks, Anthony Yes shutdown.

Speaker Change: As Jonathan mentioned in terms of the AD platforms. Obviously their primary goal is to grow the AD revenue at the best way to do that is to make sure that the creative is optimized and the ROI from the advertiser's perspective is clear to the advertisers, which is where our marketing stack and everything that we're doing around Gen studio for performance marketing comes together really well and so we already have.

Speaker Change: Announced that summit, including meta and a number of others, including Google and so on and next week can we will be announcing all the other major platforms as well.

Anil Chakravarthy: And next week at CAN, we'll be announcing all the other major platforms We'd love to join you guys and Ken, but thank you for answering the question.

Speaker Change: Would love to join you guys and Ken.

Speaker Change: But thank you for thank you for answering my question guys.

Keith Weiss: And we'll take a question from Keith Weiss with Morgan Stanley. Thank you guys for fitting me in and congratulations on a solid quarter. Dan, just two clarification questions on the guidance for the year. You guys talked about the changes in the All Apps Creative Cloud pricing already being reflected in guidance. This is an example of you guys stratifying that pricing and there's an ability for people to sort of upsell or to the pro or sort of get a lower priced edition with the standard. How did you guys think about that mix? Any guidance you could give us on sort of your assumptions on where customers go, number one.

Speaker Change: And we'll take a question from Keith Weiss with Morgan Stanley.

Keith Weiss: Excellent. Thank you guys for fitting me in and congratulations on solid quarter.

Speaker Change: Dan just two clarification questions on the guidance for the year.

Speaker Change: You guys talked about the changes in the all apps creative cloud pricing already being reflected in guidance.

Eric: First I'm sure this is Eric.

Eric: An example of you guys stratify net pricing and there is an ability for people to sort of upsell or to the pro or sort of get a lower price addition, with the standards.

Speaker Change: How do you guys think about that mix.

Speaker Change: Any guidance you could give us on sort of your assumptions on where customers go number one and number two any.

Daniel Durn: And number two, any change in the FX assumptions on the revenue side of the equation for the guide for the full year?

Speaker Change: Any change in the FX assumptions on the revenue side of the equation for the guide for the full year.

Daniel Durn: Yeah, Keith, maybe I'll start off by saying that. I mean, you know, I think as it relates to a creative professional, we want CC Pro to be the sweet spot for you know, where the majority of users will go. It's not dissimilar to what we've done where let's get more Firefly app adoption. Let's get more adoption of the AI features within the desktop applications, and move them to CC Pro being the best product as they also experience what we are doing with ideation and multiple products. So, you know, the goal there is clear. You know, all of the AI and generative capability will increasingly be best available for our customers through the CC Pro application.

Speaker Change: Yes, Keith maybe all of us.

Speaker Change: Start off by saying that I mean.

Speaker Change: I think as it relates to creative professional we want <unk> to be the sweet spot for.

Speaker Change: You know where the majority of users will go it's on.

Speaker Change: Not dissimilar to what we've done where let's get more Firefly app adoption.

Speaker Change: Let's get more adoption of the AI features within the desktop applications and move them to <unk> pro being the best product as they also experienced what we are doing with ideation in multiple products. So the goal there is clear.

Speaker Change: All of the AI and generative capability will increasingly be best.

Daniel Durn: On the other hand, that takes the while as it comes to renewal if they have annual cycles. So that's the other thing that you have to think about. And as we roll that out and in different regions, but from our perspective, we want CC Pro and Firefly app to be you know, the sweet spot of how this emerges. But we also believe that CC, you know, standard as well as Firefly single app will continue to be meaningful parts of the business and an on ramp to the other. So hopefully that answers your question on, you know, mix.

Speaker Change: Available for our customers through the Cc pro application.

Speaker Change: On the other hand that takes the while as it comes through renewal if they have annual cycles. So that's the other thing that you have to think about and as we rolled that out and in different regions, but from our perspective, we want <unk> pro and Firefly app to be the sweet spot of how this emerges, but we also believe that cc.

Speaker Change: Standard as well as Firefly single App will continue to be meaningful parts of the business and an on ramp to the other so hopefully that answers your question on <unk>.

Speaker Change: Mix.

Speaker Change: Yes.

Daniel Durn: And on the effects side of the equation. Yeah, I think on the effects, I'll go and then certainly we can add. I mean, as you think about, you know, what we've done with our DME revenue, there are two things that are, you know, impacting the strength in the revenue. There's some effects, I mean, think of that as maybe a third of, you know, where you're seeing the benefit, the vast majority of the benefit is really happening as a result of how we're driving ARR and the revenue conversion for the business. So, you know, hopefully, that helps in terms of how you think about, you know, what role FX has played in our business.

Speaker Change: And on the FX side of the question.

Speaker Change: Yes, I think on the FX I'll go and then certainly we cannot I mean as you think about what we've done with our <unk> revenue.

Speaker Change: There are two things that are.

Speaker Change: Impacting the strength in the revenue there is some FX I mean think of that as maybe a third of <unk>.

Speaker Change: Where youre seeing the benefit the vast majority of the benefit is really happening as a result of how we're driving IRR and the revenue conversion for the business. So hopefully that helps in terms of how you think about what role FX has played in our business, but the vast majority of the raise.

Daniel Durn: But the vast majority of, you know, the raise has to do with, you know, ARR performance as it relates to the revenue conversion of that into revenue.

Speaker Change: Has to do with <unk>.

Speaker Change: Our performance as it relates to the revenue conversion of that into revenue.

Speaker Change: Excellent.

Daniel Durn: Thanks for the call, everybody.

Speaker Change: Alright, thanks for the clarification.

Shantanu Narayen: And we'll go to Brent Thill with Jeffrey. Thanks, Shantanu, you've used double digit growth as your your true north for, you know, growing the company. I think everyone's curious with with AI, are you less or more bullish on that 10% true north that you've been you've been talking through? Well, Brent, I mean, let's look at some of the facts. And maybe, you know, as we think about, you know, what's happened in this business, you know, I think at the FA meeting, we tried to talk about, hey, while the growth on growth, and this is what you folks have been talking about for net new ARR has been relatively consistent.

Speaker Change: And we'll go to Brent Thill with Jefferies.

Brent Thill: Thanks, Sean.

Speaker Change: You've used double digit growth as your true north for growing the company I think everyones curious with with AI are you.

Speaker Change: They are more bullish on that 10%.

Speaker Change: Bruno thank you've been you've been talking through.

Speaker Change: Well, Brian I mean, let's look at some of the facts and May be you know as we think about what's happened in this business.

Speaker Change: At the FA meeting, we tried to talk about hey, while the growth on growth.

Speaker Change: And this is what do you folks have been talking about for net new IRR has been relatively consistent.

Shantanu Narayen: I mean, we have reaffirmed DME ARR for the quarter, and that's at 11%. When you look at it also in the new model that we're providing by customer segments, and you think about what's happening between the business professional and consumer, and what's happening on creative and marketing professionals, you saw, I think the revenue growth was 15%, and 10 or 11, depending on whether you take as reported or constant currency. And I think Dan alluded to this, what has really been gratifying for us to see is, when you look at the creative subscription revenue growth, now that you have these additional disclosures, you will see relative to Q2 of 2024 versus 2023.

Speaker Change: Have reaffirmed the EMEA IRR for the quarter and that's at 11%. When you look at it also in the new model that we are providing by customer segments and you think about what's happening between the business professional and consumer and what's happening on creative and marketing professionals. You saw I think the revenue growth was 15%.

Speaker Change: 10, 11, depending on where do you take <unk> as reported or constant currency.

Speaker Change: And I think Dan alluded to this what has really been gratifying for us to see is when you look at the creative subscription revenue growth now that you have these additional disclosures you will see relative to Q2 of 2024 versus 2023, and then you look at it as Q2 of 2010.

Shantanu Narayen: And then you look at it as Q2 of 2025 versus 2024. It's also at 10% growth. So you know, what we've been talking about, which is we're retooling the business is happening. And so yes, the opportunity is there, we want to, you know, make sure that we invest in AI to enable more people to use the platform. And yes, that's really been the focus. And then on the other side, the business and consumer side, you know, that's been growing around 15%. So as I think about the growth initiatives, Brent, to answer your question, on the business professional and consumer, the things that you have to think about is AI, and AI assistant first with a single document with multiple documents, increasing, you know, the relevance and usage of Acrobat.

Speaker Change: 25 versus 2024, it's also a 10% growth so what we've been talking about which is we're retooling the business is happening and so yes. The opportunity is there we want to make sure that we invest in AI to.

Speaker Change: To enable more people to use the platform.

Speaker Change: And yes, that's really been the focus and then on the other side of the business and.

Speaker Change: Consumer side, that's been growing around 15% so as I think about the growth initiatives brand to answer your question on the business professional and consumer the things that you have to think about is AI and AI assistant first with a single document with multiple documents increasing.

Speaker Change: The relevance and usage of acrobat I think as it relates to express if you look at it Express Standalone. The fact that in the post Stempler data AI will even further democratize the ability for people to take the story that they have in their head and make sure that that's available youre seeing the momentum in that business, but again.

Shantanu Narayen: I think as it relates to Express, if you look at it Express standalone, the fact that in the post template era, AI will even further democratize the ability for people to take the story that they have in their head, and make sure that that's available, you're seeing the momentum in that business. But again, really, they're the North Star is the combination of creativity and productivity driving, you know, growth for us. We never talk enough, I think about the marketing, and you know, what kind of a trend that is, if you look at our marketing performance, we look at what others are also at this scale, and reporting, it's clear that we're, you know, growing our business faster than them.

Speaker Change: Really there the Northstar is the combination of creativity and productivity driving.

Speaker Change: Growth for us.

Speaker Change: We never talk enough I think about the marketing and you know what kind of a trend that is if you look at our marketing performance. We look at what others are also at this scale reporting it's clear that we're growing our business faster than them and the impact of the content and the marketing business.

Shantanu Narayen: And the impact of the content and the marketing business, you know, we continue to be really bullish about it. And for those who sometimes say, wow, your seats are not growing, and automation will take over, guess what, we're the leader in automation. But we think it's really a combination of both of that that also make us really unique. I know the question that came up earlier, I'll just touch on that I do believe the fact that Firefly has been designed to be, you know, preserve intellectual attributes of people, that is going to become an increasingly important thing in the enterprise.

Speaker Change: Continue to be really bullish about it and for those who sometimes say while your seats are not growing and automation will take over I guess what were the leader in automation, but we think it's really a combination of both of that that also make us really unique I know the question that came up earlier I'll just touch on that again.

Speaker Change: I do believe the fact that Firefly has been designed to be.

Speaker Change: Preserved intellectual.

Brent Thill: Attributes of people that is going to become an increasingly important thing in the enterprise everybody is experimenting with it as it becomes a mainstream that's going to be so yes Brent.

Shantanu Narayen: Everybody's experimenting with it. As it becomes mainstream, that's going to be. So yes, Brent, the short answer is I'm more bullish about it. And I'm what I'm really pleased about is underlying 2025, how we've re-architected the business to be this AI-driven growth.

Brent Thill: The short answer is I'm more bullish about it and I'm what I'm really pleased about is underlying 2025, how we've re architected the business to be this AI driven growth.

Jay Vleeschhouwer: Thank you, Sean.

Speaker Change: Thank you Scott.

Jay Vleeschhouwer: And our next question will come from Jay Vleeschhouwer with Griffin Security. Thank you. Good evening.

Speaker Change: And our next question will come from J, 's less shower with Griffin Securities.

Speaker Change: Yes. Thank you good evening.

Shantanu Narayen: Shantanu, since you alluded earlier to headcount, maybe we can focus on the permanent part of your headcount, not just the summer interns. And there's some very interesting trends there with regard to where you're looking to add in terms of open positions. And in the last few months, including very recently, there are four specific areas where there's some prevalence of functions. And I'd like to ask you about those and go-to-market, number one, number two, product management, number three, strategy, and number four, marketing, both across DME and DX. And maybe talk about some of the rationales or needs that you have internally with regard to where you're looking to add in those respects.

Speaker Change: <unk> since you alluded earlier to <unk>.

Speaker Change: Head count maybe we can focus on the permanent part of your head count and not just the the summer interns.

Speaker Change: And there are some very interesting trends there with regard to where youre looking to add in terms of <unk>.

Speaker Change: Open positions in the last few months, including very recently.

Speaker Change: There are four specific areas, where there is some prevalent.

Speaker Change: Prevalence of functions and I would like to ask you about those.

Speaker Change: Go to market number one number two product management.

Speaker Change: Number three strategy.

Speaker Change: And then before marketing.

Speaker Change: Both across DMA in Dx, So maybe talk about some of the the rationales for needs that you that you have internally with regard to where youre looking to add in those respects.

Shantanu Narayen: Sure, Jay. I mean, I think if Dan were answering that question, he would say, as you look at the Q2 versus Q1 expense, you'll see that we're investing in the right areas, given the innovation roadmap, being able to ensure that we, in conjunction with the launches, market the product, express, you know, we still need to get more awareness of it. The product's great. We really focused on going big in a few countries. We're seeing dramatic improvement as a result of, you know, that focus. So the marketing investment is clearly as a result of making sure that we invest a lot more to ensure that the launches that we have and the product roadmap that we have, the awareness is high.

Speaker Change: Sure Jay I mean, I think if Dan we're answering that question. He would say as you look at the Q1 versus Q2 versus Q1 expense, you'll see that we're investing in the right areas given the innovation roadmap.

Speaker Change: Are you able to ensure that we are in conjunction with the launches market. The product express we still need to get more awareness awareness of the products great.

Speaker Change: We really focused on going big in a few countries, we're seeing dramatic improvement as a result of that focus so the marketing investment is clearly as a result of making sure that we invest a lot more to ensure that the launches that we have in the product roadmap that we have the awareness is high I think when product management.

Shantanu Narayen: I think on product management, the sort of theme that David and Anil would probably talk about is PLG and how PLG is really helping it. The refinements that people are making, and you know, the traditional way of releasing products, Jay used to be that, you know, you design a product and then you'd release it. Now it's this ongoing iteration. And you know, we measure every single morning. And so I think the product management has to do a lot with, you know, are we investing in the right PLG motions to make sure that that's happening? And then on strategy, I mean, again, I think AI will offer folks a lot more.

Speaker Change: The sort of theme that David and Enel would probably talk about <unk> and how PLD is really helping at the refinements that people are making in the traditional.

Speaker Change: We're releasing products <unk> used to be that.

Speaker Change: You design a product and then you release it now it's this ongoing iteration.

Speaker Change: We measure every single morning, and so I think the product management.

Speaker Change: Has to do a lot with you know are we investing in the right <unk> motions to make sure that that's happening and then on strategy I mean, again, I think AI as well.

Speaker Change: We'll offer folks a lot more we've talked about in on data models agents and interfaces, how we continue to be well positioned and so I think on strategy. It's the interfaces and the agenda stuff that we're focused on we are but I guess I should also clarify at large we're not.

Shantanu Narayen: We've talked about, you know, on data models, agents and interfaces, you know, how we continue to be well positioned. And so I think on strategy, it's the interfaces and the agentic stuff that we're focused on, we are.

Shantanu Narayen: But again, I should also clarify, at large, we're not really looking to grow our headcount very dramatically, we're finding a lot more efficiency, people are, you know, using AI to be more efficient within the enterprise. So you're right about the focus areas. But the real increase this quarter, I think had to do more with interns, and we love hiring more interns, because it's a try before you buy both ways, right? And the fact that we're such an attractive place for people to come, you know, I'm really excited about the number of people who want to come to Adobe, you know, on that site.

Speaker Change: Looking to grow our head count very dramatically we are finding a lot more efficiency people are using AI to be more efficient within the enterprise. So youre right about the focus areas.

Speaker Change: But the real increase this quarter I think had to do more with <unk> and we love hiring more in tons because it's a try before you buy both ways right and the fact that we're such a attractive place for people to come.

Speaker Change: I'm really excited about the number of people who wanted to come to Adobe.

Speaker Change: On that site.

Kasthuri Rangan: We have time for one more question. Thank you and that question will come from Cash Rangan with Goldman Sachs. Hi, Shantanu and team. Golden Flags loves your, shares your love for interns. Our interns also just started. So the question for your business is that clearly there's a lot of innovation happening in AI. And when you look at the targets for AI, you've got the 125 million book of business projected to go to 250. Is there any evidence at all that you can point to with your DDOM or maybe other sources that the push towards AI be it through Firefly or GenStudio is actually visibly, tangibly, quantifiably.

Speaker Change: We have time for thank you question.

Speaker Change: Thank you and that question will come from Kash Rangan with Goldman Sachs.

Speaker Change: Hi, Sean.

Speaker Change: One team Goldman Sachs loves your shares your love for inter our endurance also just started.

Speaker Change: So the question for your business is clearly there is a lot of.

Speaker Change: Innovation happening in AI and when you look at the targets for AI that the $125 million book of business for us that could go to.

Speaker Change: <unk> is there any evidence at all that you can point to with your D. D O M or maybe other sources that the push towards AI to Firefly or Jim studio, it's actually visibly tangibly quantifiably.

Shantanu Narayen: moving the pace of creative adoption and driving business to a larger degree than was possible without AI. So in other words, you have an AI bucket of revenue, which is which is what it is. Any evidence to suggest that the core is tangibly being energized, and is poised for some growth curve ahead? It's easy to extrapolate the 10-11% like Brent was talking about, right? But where could we be wrong? And not seeing that change of that curve and the adoption that you might be seeing and may not be manifesting financial metrics, but maybe you see things under the hood that give you the conviction that we're at the beginning of that curve.

Speaker Change: Moving so creator adoption and driving.

Speaker Change: Business to a larger degree than was possible without AI. So in other words.

Speaker Change: Do you have an AI bucket of revenue, which is which is what it is and the core.

Speaker Change: Any evidence to suggest that the call is.

Speaker Change: Tangibly being energized.

Speaker Change: And is poised for.

Speaker Change: Some growth curve ahead, it's easy to extrapolate the 10, 11% like Brent was talking about.

Speaker Change: Where could we be wrong.

Speaker Change: And not seeing that change up that curve and the adoption that you might be seeing it may not be manifesting financial metrics, but maybe you see under the hood.

Speaker Change: Give you the conviction that we're at the beginning of that curve.

Shantanu Narayen: adoption that could lead the company to a phase of growth that we kind of saw in the 2014-18 time frame when people wrongly extrapolated the flattish trends in the on-prem business and then the cloud really just took off, right? Is there any evidence?

Speaker Change: Adoption that could lead the company through a phase of growth that we kind of thought.

Speaker Change: 2014, 18 timeframe when duplex wrongly extrapolated the flattish trends in the on Prem business and then the cloud really just took off rate.

Speaker Change: Is there any evidence.

Shantanu Narayen: Yeah, Kash, I think what I would point to is maybe three things from the D-DOM, as you refer to it, on, first, the new book of business, you know, if you build a new book of business that's going from zero to 250 million dollars, I think most people would say, you know, that's pretty phenomenal, because these are products, whether it's Acrobat AI Assistant, the new Firefly app, Firefly services, you know, which is, you know, continues to rock, frankly, and GenStudio for performance marketing, those are pretty good. So that, you know, on one vector, you look at it and say, we're driving new businesses, and the scale is good.

Speaker Change: Yes, Kash I think what I would point to is maybe three things from the <unk> as you referred to it.

Speaker Change: On first the new book of business. If you build a new book of business, that's going from zero to $250 million I think most people would say.

Speaker Change: That's pretty phenomenal because these are products, whether its acrobat AI assistant the new Firefly App Firefly services.

Speaker Change: Which is continues.

Speaker Change: Continues to rock frankly, and Jen studio for performance marketing those are pretty good.

Speaker Change: So that on one vector you look at it and say, we're driving new businesses and the scale is good clearly.

Shantanu Narayen: Clearly, you know, at our scale, the bigger metric that we track is, in DX, let's talk about DX, and in DX, how much of this technology that we have been delivering is being adopted? What is the scale at which, you know, we're driving, whether it's campaigns, whether it's engagement through email or SMS, the amount of transactions that are going through AEP and apps, and all of that is because the agility of marketing and the ability to personalize these experiences with customers is dramatically increasing. So that's one underlying trend that we clearly see, and the demand for that is only increasing and not decreasing.

Speaker Change: Our scale the bigger metric that we track is in Dx, let's talk about Dx and in Dx how much of this.

Speaker Change: Technology that we have been delivering is being adopted what is the scale at which.

Speaker Change: We're driving whether its campaigns, whether its engagement through E mail or SMS the amount of transactions that are going through AEP and apps.

David Wadhwani: And all of that is because the agility of marketing and the ability to personalize. These experiences with customers is dramatically increasing so thats one underlying trend that we clearly see and the demand for that is only increasing and not decreasing and I think in David's business, whether it's in acrobat or whether it's in the.

Shantanu Narayen: And I think in David's business, whether it's in Acrobat or whether it's in the creative products, it's generations, which means our people using AI to be more productive. And the output, you know, I think last quarter, we had talked about, hey, even Express, it's gone over a billion exports. So those are sort of the two underlying. That, as we have always said, is sort of this influence revenue. But, you know, the influence revenue and the underlying usage point to the fact that adoption is good. So hopefully, that gives you, you know, some insight into how we're looking at it, which is the core products that we have that are driving this $20 billion.

David Wadhwani: Our creative products is generations, which means our people using AI to be more productive and the output I think last quarter. We had talked about hey, even express had gone over 1 billion exports. So those are sort of the two underlying that as we've always said is sort of this influence revenue, but the influence revenue and the underlying.

David Wadhwani: <unk> usage point to the fact that adoption is good so hopefully that gives you.

David Wadhwani: Some insight into how we're looking at it which is the core products that we have that are driving the $20 billion I'll be making sure that usage and retention and adoption of the new features.

Shantanu Narayen: Are we making sure that usage and retention and adoption of the new features, you know, implies that people are seeing value in it? And then on the new ones, hey, are we building these new businesses that allow us to create new offerings like CC Pro, like Acrobat with, you know, AI Assistant and Acrobat and AI Assistant and Express. And I think those are sort of some of the underlying trends that we see. The ultimate tier, which is this is the new AI tiers or prime tiers within the enterprise. So those are some of the underlying early indicators, to your point.

David Wadhwani: Implies that people are seeing value in it and then on the new ones Hey are we building these new businesses that allow us to create new offerings like <unk> parole like acrobat with.

David Wadhwani: AI assistant and acrobat NAIA assistant in express and I think those are sort of some of the underlying.

David Wadhwani: Trends that we see the ultimate tier which is this is the new AI tiers or prime tiers within the enterprise. So those are some of the underlying.

Shantanu Narayen: And Mao. And Mao just means that, hey, this premium model is attracting a new set of customers that allows us to feel confident about go forward, you know, prospects for the company.

David Wadhwani: Early indicators to your point and mall and mall just means that hey, this freemium model is attracting a new set of customers that allows us to feel confident about our go forward.

Shantanu Narayen: But since that's the last question, and I think we're out of time, you know, maybe I'll just sort of summarize. We're really pleased with the first half performance. You know, the fact that we continue to, you know, drive both top line and bottom line is something that's meaningful to us. And, you know, we're focused on driving continued success for this in the second half and beyond. And we look forward to sharing more at our next earnings call.

David Wadhwani: Prospects for the company.

David Wadhwani: But since that's the last question and I think we're out of time.

David Wadhwani: Maybe I'll just sort of summarize we're really pleased with the first half performance.

David Wadhwani: The fact that.

David Wadhwani: We continue to.

David Wadhwani: Drive both topline and bottom line.

David Wadhwani: Something that's meaningful to us and we're focused on driving.

David Wadhwani: Continued success for this in the second half and beyond and.

David Wadhwani: And we look forward to sharing more at our next earnings call.

Operator: And with that, I'll turn it back over Okay, that ends the call, thank you. Thank you. That does conclude today's conference. We do thank you for your participation.

Speaker Change: Matt I'll turn it back over to Steve.

Speaker Change: That ends our call. Thank you.

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

Operator: Have an excellent day.

Speaker Change: Okay.