Adobe (ADBE) 15 Mar 232023 Q1 Earnings call transcript

Good day and welcome to the Q1 FY 2023 Adobe Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Jonathan Vaas, VP of Investor Relations. Please go ahead.

Good afternoon and thank you for joining us. Dan call Wadhwani, Shantanu Anil President of Experience; the and Adobe’s Chakravarthy, on President Digital David Vice CEO; of and me today Narayen, are Chairman President and With CFO. Executive Durn, Digital Media; we which fiscal first financial recorded, XXXX discuss Adobe’s On this being will call, results. is quarter year

our as and well find on Adobe’s results financial Investor PDFs of can You website. as press release Relations remarks our prepared

today, this on and plans, call, including XX targets statements financial forward-looking product of may assumptions. differ uncertainty discussed our is materially set and that as statements. from information these March results risks, contains and those The involve in forth Actual

For non-GAAP in call, On discussion the this these release financial review will SEC should factors today’s GAAP discuss measures. filings. a we discussed and risks, and of you press in Adobe’s

GAAP rates. currency Our rates reported results include as as well constant growth

and Reconciliations website. otherwise this in our executives rates, During Adobe’s presentation, release unless Adobe’s refer to growth are available currency on constant Investor stated. will earnings Relations

Adobe XX. Summit Expo Tuesday, the on Vegas Las beginning Center Convention in March the corner Venetian at and is just around

Following and the will at and in are IR website. replay keynote, Summit the Day at a.m. about a the and XX:XX investors of Time. will agenda Pacific available Audio attendance available be with financial broadcast will on Adobe’s Q&A event host session X live be analysts the we More details summit.adobe.com.

turn I over Shantanu. will now the to call

quarter, was revenue, per and Cloud us. Experience representing you in $X.XX GAAP thank our joining and earnings Adobe a achieved Document afternoon for $X.XX. revenue non-GAAP share for per Good share growth. We year-over-year $X.XX Cloud driving and Jonathan. across the earnings strong had Thanks, was Creative XX% Cloud, businesses. billion QX, record

with how reshaping and connect us. is Digital the world engage around we

are fueling life. create to performance digital in demonstrates global that bring empowering economy, everywhere and critical to playing the imagine, digital everyone Adobe products any the role Our experience

power and document from to enterprises. on innovative creativity individuals to a digital product for small our all, engaging the We roadmap customers productivity against unleash to strategy our of executing and largest businesses, businesses are accelerate delivering universe growing

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potential we the prepared addition, process. In well we as preparing realistic have about the environment. From regulatory been integration for for scenarios all regulatory work through outset, while we are the

We have track be combination. focused believe this opportunities, that the saying demonstrates close a without ruthlessly is for executing goes immense of completed based confident be by that on to our in the independent success an that timing, process on of for the steps, the next the request U.S. discovery are prepared case. a challenge. continue second Adobe or transaction to the It whether current we underlying our we phase of approval end continues against And remains facts DOJ and on XXXX. QX

over you. David, to

everyone. Shantanu. Hello, Thanks,

visual their to need and digital-first creation create out exploding living content students stands world are a content and and profiles. where We consumption in elevates consumers, businesses and that are where online

creativity more well animation remains across which As reality. and new preeminent and media to XD like as Creative imaging, a a and Cloud, illustration turning augmented design, result, as are video, more types people for destination

Pro Lightroom, our with and Illustrator, excited continue to about Adobe applications, traction and Premiere flagship Express. see Photoshop, strong We the including getting demand we Acrobat are for are

routes the Once leaders all is traffic, Galaxy and million Creative S-XX which editing default with and with customer market to year-over-year. two-thirds and in imaging were grew of winners, editor $X.XX video are and photo on resulted QX in in and include Photoshop top-of-funnel across growth Cloud. $XXX Lightroom experience the achieved SMBs, now momentum adoption Over Creative new Everywhere ARR We QX strong XX% films highlights billion, and at in Effects All to Samsung edited to photo was as Premier Oscar Everything products. for like a well cloud editing video our which strong of quarter collaboration. revenue products applications demand Sundance for net high-end Frame.io, enterprises, segments healthy of mobile Series, as the for large After Lightroom. new Navalny demand increased Mobile from At for continued individuals globally and creative which Pro,

technical with across such of capabilities Amazon, Runner users adoption as the films XD significant Vuitton, monthly team and business XXXX honored creative in Louis Substance as for year-over-year by growth Star XD Rapid Oscar small in vector, driven possible. Substance and that a was active Acceleration in for Wars as segments students, with Adobe popular businesses demand of making and such content. Blade XD Momentum our Burberry are brands recognition Spider-Man, the and XD by Stock professionals. high-quality Express video Adobe such imaging

forward capabilities adoption driving of upgrade media. subscribers dramatic and with functionality collaboration both Creative an new of and users who existing are for enhanced want imminent when and now mixed authoring release and new we Express video Cloud ease performance, actively are speed to they a and look using We

wins Nintendo. studio. recorded recording Disney, every those they busy your of Character a industry. growing IBM, Key app, Infosys It the spaces, in new done including recording phone introduction Accenture, is Adobe in for a editing audio Exciting quarter Animator and makes Podcast. web-based and even BBC, beta Podcast on were include AI-powered podcast customer the perfect our and in like products, sound of Adobe releases

of continues innovation to at Last MAX. generative future the engine AI to reimagine October, Our all Adobe’s on fire some creativity. cylinders we previewed of technology

existing These capabilities as We our new proprietary data Adobe applications our on envisioning creative all and ethics work innovations hard into exciting principles Adobe are Adobe’s some transparency. co-pilot. Stay developed alignment accountability, and responsibility with for at sets, with in training week integrating have next APIs, been slated tuned for and of models deployed creating a services announcements Summit. AI in these conjunction

growth view, of ending and record edit, net $XXX constant XX% share, web Digital powering sign and at form, strong redefining completing transaction. filing ARR which users requesting ARR a bank on Cloud Document year-over-year people documents are of is productivity a how campaign Document home an and represents scan $XXX are feedback submitting online Cloud a million, across currency. in contract, desktop, In had and documents with in or documents, mobile. year-over-year Adobe work, sales XX% a marketing tax revenue new at growing QX, digital leader whether million,

API the X volume by QX offering; users; of Key SMBs with all demand to enterprises. Verizon. to opened growth to Defense PDF growth our for optimized Microsoft extension our new continually include monthly users PDF Chrome customize driven segments Netherlands, continued business for demand billion across Windows continued related for make of of over web in routes Bank significant from search demand verbs outstanding and a will for Share increase and market and and integrated the in and and highlights for continue Montreal, wins funnel as Acrobat Adobe for Edge functionality web, integrate of individuals include services; and documents proliferation in Acrobat such in customer active Chase, to large customer Acrobat PDF HP, Review driven Samsung Reader outstanding globally in that ecosystem Ministry Sign strong for to collaboration JPMorgan document viewer default as integration e-signatures; by transactions customers Acrobat for the

are the to our pleased ‘XX strong the we new Digital raise ARR products for roadmap, target. FY our Given QX, our innovation Media net demand and

I will now Anil. to pass it

everyone. Hello David. Thanks,

record with expectations Adobe platform days the billion experiences During customers. power Digital Adobe by Today, integrated digital positioned their in experience the daily efficient $X-plus funnel, enabling companies according XXXX entire them experience-led across to customer an across uniquely meet and growth. is and anticipate of the critical in Economy profitable BXC growth $XXX season, spend to to especially drove customer holiday e-commerce management is engaging the Companies that and Index. empowers to need XX BXB billion a drive and delivering of

comprehensive and deliver actionable with customer commerce from customer and portfolio online on cycle and Cloud and Adobe of that data businesses products life the planning content experience a Experience to profiles, to natively activation Built insights entire from provides Experience journeys. at data scale. marketing to workflows CDP offers channels platform, leveraging span off-line personalized real-time our experiences and

Journey $X.XX Petco Adobe’s is revenue achieving we comprehensive Experience a growth year-over-year XX% company business, revenue. billion, Subscription BXC set a both growth. great was drive Adobe their to in ecosystem, billion representing example Experience Cloud continued In of CDP engaging in leveraging QX, to strong Optimizer, of our $X.XX experiences. experiences products care, and personalized Cloud, and including orchestrate veterinary to create insurance. content pet Petco Cloud grooming, real-time and create deliver Creative to training care including and across uses

side, On Creative to Qualcomm lines. well and performance harnessing as Cloud improve to as cloud marketing the BXB its accelerate business personalized Cloud deliver velocity experiences Document experience is across content and

MetLife, industry management Quadrant and Analytics; analyst underscore Cross-Channel and Adobe’s inclusive and focus growth Hortons. Platforms; include including a of including Journey Customer Accenture, collaborate CDP Platform the for teams realization; competitors and on help Intelligence real-time IBM, efficiency; Costco, and to of campaigns wins Forrester and leadership applications, product Global, and content services, customers’ rates over Digital highlights strong transformational reports, Paramount, Digital Carnival Forrester Bank and long-term retention QX native our Additional single Marketing Platforms, high for differentiation; Tim demand in strong our value in demonstrating Gartner’s Magic in Experience which TD with for the Aida, Wave Journey significant Pfizer, S&P Adobe Hubs powering deals, that around ease momentum Wave for workflows the Optimizer Experience number launch for Workfront, globe CDP, is significant Adobe analytics,

of focused Experience investments Experience The increasing the world while digital across growth a revenue on help profitable Digital the customers channels to start customer growth. Enterprises experience the Cloud marketing. to driving is unlock and enterprise productivity are had business in their year. positioned through uniquely strong

host from Summit, first time Vegas digital tens and online in coming It’s the we by person around Las thousands excited developers of together are world. week, to conference. be Next XXXX. world’s joined largest Adobe And since the our in customers, we’ll experience partners of

of the new unveiling from we to across at Experience digital host economy. the companies will exciting forefront addition C-level innovation inspirational executives In several Cloud, technology

I pass it to Dan. will now

Today, I’ll Anil. by highlighting in finish I’ll targets. across growth our financial Thanks, businesses, XXXX, with drivers QX Adobe’s summarizing fiscal start performance and

Adobe. a QX maximize for start returns and business I to right resilience and prioritizing content mind the our where to create enables are financial you connect today now, diversification strong and platforms. to to on deliver line environment, Adobe’s this see know top In investments can our them impact, be to customers year looking that operational And was demand global and of across macroeconomy their drive Businesses efficiency. in economy. digital both are is in the the continues to results. digital order investor’s and in a every for individuals world are the strong and stand solutions drive content engagement the out to products our mission-critical as to

engine data-driven are to differentiation, Adobe’s model product operating and continuing of Our growth. innovation drive

a and We margins, sheet, I industry-leading scale cash world-class business drive a to better of businesses core record. proven growth. track think profitable a our innovate can’t and balance have in we create continue and company that’s positioned as to strong emerging flow a profile

$X.XX the of flows billion, per highlights the achieved RPO included: cash $X.XX of earnings operations $X.XX, Digital $XX.XX of financial Digital revenue Media share X growth revenue year-over-year Business X% or of of billion, of GAAP our from billion, during exiting Digital in constant currency. Adobe non-GAAP earnings stock XX% million QX, quarter quarter. ARR revenue record Experience million, which $XXX of new billion, $X.XX Media and and approximately diluted of diluted repurchasing net $X.XX billion per and of represents $X.XX shares share In

X% Media we In segment, with or $XXX of QX year-over-year of and in achieved revenue our $X.XX exited ARR XX% achieved X% growth quarter Digital year-over-year which the $XX.XX new revenue billion, Digital of added We ARR. $X.XX constant currency, XX% represents We Media growth in which or billion the we billion, net Creative quarter. in represents of currency. creative constant million

Stock, professional by our Cloud our adoption QX upselling segments graduating Apps targeted in customer customer which and increased from imaging user continued Creative marketing offerings; quarter; integrated Creative new Acrobat customer we strength are high-growth geographies; where the start with enterprise base; segment successfully a businesses, growth momentum job and Substance fast growth, quarter includes individual into campaigns, which accounts. quarter into sign generating traffic business; cross-selling the offering, applications, which fueled drivers into a we our creative photography included web such demand capabilities; offerings as our our All Education Frame, of selling market; licensing video to and in including CC new across students and strong for large tremendous had of year drove the new our in and a

achieved expansion of the new new Acrobat strength demand in all for represents customer drivers or enterprise, our Adobe demand and mid-market; the QX which for Document Document success million, XX% our SMB across growth Document strategy; Sign growth customer customers; in net rates revenue Acrobat Acrobat year-over-year product-led continued in strength included Cloud driving mobile added quarter. business. constant Cloud and seat generating of currency. of XX% Acrobat conversion retention in demonstrating web, the $XXX for and Acrobat in of segments; subscriptions $XXX success ARR growth million We Cloud of our the growth

strong; drive our applications and CXM Workfront of customers; are content resonating year-over-year; represents multiple momentum Turning that across strategy QX, more year-over-year and platform or closing personalization achieved we of billion $X.XX strength our included Adobe and of with growth rates our with customers in drivers transformational Digital supply their solutions numerous choosing chain subscription to geographies. be our growing enterprise native at large segment. Content enterprises as $X.XX execution to Experience XX% to scale; the currency. growth end-to-end revenue XX% sales continue success our AEP Digital that QX renewal than with is Experience XX% deals billion, revenue In of with business to which with and be book constant

strategy earnings. GAAP was a tax a investments to QX on balance in XX.X% non-GAAP growth making the line our basis with In on income in effective of to Turning drive statement Adobe’s sheet. and to we QX, expectations. drive identifying disciplined cost-saving with while continued basis, XX% rate and opportunities our

This adopting tax financial projection future. assess be which year-over-year FX performance. available Adobe’s is adjusted management existing structure, results, Adobe’s X rate a the a is factoring the may fixed a fixed percentage on based non-GAAP and XXXX, changes legislation long-term clear rate positions, and in a projected our operating operating provides $XX.XX forecast growing exiting XX% or on and for of believe fiscal For point report tax rate The considers headwind. quarter RPO X-year when billion, to we non-GAAP long-term information. was in current view XX%

Our and in ending $X.XX short-term exiting and investment position were cash was quarter billion. QX the billion operations cash flows $X.XX from

we goes investments billion completed repurchase the does Adobe in through a Over In thorough Valley and of Bank a Silicon have review environment any QX, which currently end regional year, our at we into the we higher XXXX, bank. we fiscal XXXX. not authorization $X.X our bias securities billion securities towards $X.X share or entered the of the of granted remaining are prepared assets December current billion for and the agreement, past $XX of or marketable a and hold short-term ensure with spectrum. investment-grade substantial to end

share $X.XX earnings segment XX.X% Experience tax billion, a $X.XX and. to GAAP to billion, to Digital light earnings of $X.XX share $X.XX and in across million, to XX.X% GAAP macroeconomic revenue momentum of net billion per of In Media of for $X.XX the to of strong the billion, rate year per of billion and revenue $X.XX factoring of basis Adobe on Digital segment the our we’re $X.XX $X.XX billion $X.XX non-GAAP QX, revenue to environment, start $XXX ARR approximately on billion subscription revenue $X.XX of business of to total Experience Digital billion, targeting: $X.XX Digital new basis, a Media approximately non-GAAP and $X.XX and

As and and a the in our ARR strong result of are targets. QX we of fiscal raising performance XXXX trajectory the new business, EPS net

earnings $XX.XX $XX.XX XXXX, of fiscal earnings of $XX.XX. are $X.XX $XX.XX net ARR share we new share Media and GAAP now to Digital For non-GAAP targeting approximately of billion, per to per

our in QX, line the pleased line for top summary, year. momentum with the and I’m bottom we’ve strong execution In established demonstrating

are our growth profitable rigor, our with engine growth to the at position driving and us of doorstep. operational well massive strong opportunities innovation, capture Our combined

you. to back Shantanu,

underscore have the we significant Thanks, Dan. results opportunities across Adobe’s our QX our momentum and businesses. strong

thrilled next We’re Summit in back Adobe Vegas for week. Las to be

you innovations experiences. Experience forward share seeing We unveiling that to to our will we leadership addition Cloud, Creative Document creativity there. In to AI how and several are across Cloud, generative new deliver customer building on of and AI redefine Cloud technologies look we decades

the to Adobe’s motivate the around employees world continuously create bar the us raise future. and

to A were Xth leadership Places named row; Best the environmental CDP and This year Equality Glassdoor’s a which and for quarter, in we Index Work; recognizes Gender impact. Bloomberg’s to List, the

Our mission-critical unmatched an vast products, fuel advantage of growth. that and base renowned will brand, create our customers

Thank you, questions. now we take and Operator? will

will Thank we ahead. take And the line our Brad from Deutsche you. of Instructions] Bank. first [Operator question go with Zelnick Please

congrats you guidance so question. macro your for a changed might the us for Thank and assumptions those from the Great. you environment. those explicitly the assumptions much with on share Can taking embeds guided? really to how Dan, strong months year. Thanks. last have are few start a And when ago you what

environment. really Yes. Thanks, is change the view our Brad. in There macro in no

I the that we’re others pretty time in. set see the think annual we environment guidance, clear at see. We environment we’re our that the

company I well is performing that backdrop. think you can the see that really against

engaging environment. So and way customers we the in broad that about performance with its feel diversified situated, which good how we’re across we’re

that is no environment. the we environment assumptions we’re like to really see change the set so same but macro how up, We there do. And others the underlying

Thank you.

ahead. will Wolfe our line Please Alex the of question next we from take go Research. And with Zukin

guys. Hi, Yes.

so think to difficult closing talking you behind about business. longer are is the many do – what cycles, companies just maybe So sales force driving

an outstanding enterprise. quarter, You the specifically had within

just seeing looked for driving resiliency on about those was did lighter you Media there specifically? your that deferred headwinds as there than flow what’s not or like what we revenues, talk was others headwind, a the little operating metrics, in was free ARR of you’re cash margins. at maybe So can were bit RPO, every revenue look metric it But because Digital quarter? that Anything And topic the expecting? a we macro then strong maybe

see whether refer mean, take situation, maybe can then I’ll strong I when Dan whether said, think I the medium it’s companies we is is whether the Dan that them reality you and it’s globally, actually second. the Alex, the at macroeconomic look board, to digital And across businesses, it’s have it’s speak imperative. I small the can solutions, think, for as first, innovative to this tailwind. enterprises an and and consumers, companies that for really a

I our enterprise them are at on document at think profitable of them are are cost, prior help I what And the customers. a if the with but side, companies We enterprises for any creative profitable that with is solutions engaging was if look focus them. we think more and with growth. lot growth, is help on you the sharing message help or growth growth certainly, that focused looking certainly they we

and is differentiate how some the our closure larger I address go looking and thing difference I may making attract is in think do say if is there even our would we this we job TAM The you rates. think so have second job an a here, sure pipeline that that I in saying ourselves. that look we it there But and aggregate, is large it at because at in environment be

single be the at associated of of campaigns implementation engaging one customer digital, And that I from on a lot may think probably a are as advertising saying more companies that it I spend, offer have of management put of more and data because Alex, the we with to the content offerings, companies or they in seeing certain might are think headwind focus what might I attribution part platform if focus there they the a ensuring looking change is I priority. lot that would also the one say, think our not we’re thing company product the it. the or a a

try So and drive the a I opportunity. has continuing team executed large think to against

good think in that person being in both I thing we as in because the fact the can other we The UK, engage looking we’re as person forward more well feel to with Summit U.S. is them. about and

than gives that you showing some of So stronger macro companies hopefully, companies. other perhaps the color why more strength are

Alex, the in the of jump And part second I’ll on question.

backlog, about RPO of the constant it’s basis, of XX% a profile similar think of both those dimensions RPO. currency up deferred performance being we about you on unbilled underlying As the think year-over-year across very revenue,

we cash set R&D signaled of know a the cash point thing in there and we profiling that time step-up change what really I you you tax this around one see quarter, think see a regulation annual about We would If the targets we through all operating is to, in capitalization at cash. expenses. taxes been starting flow, the that’s that would our

guys. you, Thank Congrats. Prefect.

will our Instructions] ahead. Weiss Keith Please take go next line Stanley. [Operator Morgan of We with question from the

for you, nice Hi, taking excellent. the A quarter. Thank guys question. really

the think prior deep dive bit Brad into what actually my a maybe digging Dan, a asking. sort little was I of questions. is two into question

and a of We from a big seeing impacts in continued Meta Silicon market And a go-forward Valley failures. these like like and from like reduction on perspective, headcount incremental kind are an Bank other worrying about bank shops investor like, perspective you’re basis.

Digital is new macro But QX, think taking guys Like you kind Media. I you’re went worried way. market the in ARR incrementally getting So underlying additions other of about for your impacts. the the net up

the tune kind a for just taxes you us the over specify can cash those model? taking of is that free to kind you guys us sense that kind walk that on cash of the time heightened the comfortable us you on or you side where of year then if that the up guys can will, us anything of in mechanical can So confidence going go volatility our guide? give tactical, you in other and we’re out even sort flow, like through are QX equation of And full you to there help specifically, seeing just there that of feel gives with

Yes.

order. in them take me let So reverse

In that terms R&D. there of around cash capitalization amortization the is a of taxes, X-year period

X-year a So But step-up amortization see on rate. tax initially. it converge that period, will you’ll pretty over the dramatic reported tax cash

so significant QX that the profile, that’s and process that’s just step-up And the see why starting general in now. you

terms company performing is In the the well. environment of we in, clearly, are

diversification that’s see across just business company way our portfolio. industry we we year. the of have, into company-specific performance of base and strength You We product it’s performing think geographies, a sectors the the the The broad is the at see on that a the well visibility in the investors thing prudent as the full have way opportunity to what performance. set with we expectations reflects that momentum in

performance I this back differential about driving and are I is products what step think mission-critical I think to that our customers. When take environment, our a in

things critical them underlying as underlying with and help goes not we why with productivity digital our only the in the line addresses them those is we on do go line but to gains generating success. revenue. as top of are enable path that prioritizing growth, We It top as It around investments But customers. help well are that. this profitability prioritized, companies the world that of sell customers we are environment performance their drive

the of this the the shine. critical mission path, on of of customers, power the to the performance company think critical gets is being where So Adobe and type we to environment being

growth smaller business. the business. the just still this even Shantanu Yes. of content strength in very tailwind foundation is Digital a feel business to And The the that as Digital and add have, specific market. about we little well. we I’ll for global significant bit a digital Every of to Media. enterprise be the organizations true fueling needs That’s economy. talked a individuals

we’re in seeing come to start their you look online own creator to people brands. If personal create the economy, at more

strong So saw very a we digital funnel.

need As small, had is they we’ve part had And well, to digital their adobe.com. ever traffic businesses, in medium come invest talking about. to even of Dan the in the business as was the highest channel most we that that

it’s rates, of existing Every it’s packaging the you it’s like growth one we diversity, acquisition, have. the at of pricing retention the it’s levers that that the users, Stock Substance or look on whether layer those productive new for in that drivers of new and diversity businesses whether business, You user have whether whether then very has we been us. or opportunities upsell

In it and that been a that last funnel. is the always top year It or PLG years of by lot work conversion not funnel, growth driver, the the terms we’ve acquisition. and of but done is primary of top biggest of of contributor, is far to over user X.X has just new contributing also

strong terms and priced have all migration, more now very That or a decade of drove upgrade and and efficient graduate for we’ve been migrate investing very In upsell that education, we effectively students in full a Cloud a channel Creative where quarter offerings. into individual apps for us.

a work but Adobe business. Express we’ve of utilization Creative PLG, in also lot of Retention, we’ve of as retention driving been of the doing a lot part through Cloud been

combined very of makes a for All that retention rate. strong

CC we that, contribute been pricing whole. talked packaging a Acrobat Substance course, and the CCDC And Frame doing having about and of outsized and for to as both along and businesses, all we’ve continues New to growth. that work

drivers levers So of we lots and opportunities of ahead, these have these looking forward and all intact, as going are well.

half net it putting signaling have second we we you just are ARR done asked the in this altogether new the it maybe hadn’t And of what you hey, The that, about QX. year. if are million $XXX $XXX in was million would you if look question targeting and did of us we at say QX,

think there it’s that showing way So the I is in a momentum of the business.

Super helpful. Thank guys. you,

Roberge line with next William And Blair. of question Jake from proceed. we Please the will take our

you macro uncertainty to driving down started customers have see retention that want remarks. double there areas on retention can click all Is Hey, actually with Express And period of congrats those tier out the that – graduate doing called that’s that to prepared in you differently anything this to? in several as I on great the during at help the results. business just results? you’re you commentary they specific metrics said, of now several

couple called data-driven years a the operating focused being with driving been number. pretty the model right and narrative we’ve the really really of for both on past, now, and Well, in the focused what the business on we’ve

the to, think so mentioned, really what’s in on are PLG, know how continue to engaging reflect are about has continuously the we we they them tell the I focused think I product value making customers getting them, we introduced how as usage, how and David as have sure new. also are And sure that that and we in features how are the for David what’s them, have. And do that that he acquiring as building different do points pain for we I of is then make notion products. started they really And think come relevant has we’re products part that product,

So I I while that imperative, I teams and appreciative do the underlying have sometimes look sort to How are respectful done. I we’re hours cross-sell? selling? how underestimate do appreciated, they of the the of but understand the and what of on is you think work that mean the the say wouldn’t you business, that goes not DX. do team hours the execution or incredibly upsell? you And solutions How continues would understand in digital in incredible at do I’m

the think, So I a is, execution lot of answer. short

Great. taking questions. my Thanks for

from with Bank And question we of the Sills go ahead. Brad of America. will Please take next the line

these Express have funnel I the like Cloud that seeing Creative new success top with mean been funnel enhancements with there, activity you’ve wanted you’re that you Creative and of you’re It thus of sounds activity exciting that that here. about so much. announcements to Creative to newer coming on coming away here. consumer that generating successful upselling far? to with features those here and Express ask towards the that Express, segment customers Communicator some from Could are top you very offerings Cloud Cloud perhaps some Thank with more we Thank Great. of been you. pivoting that interpret

Yes.

talked it’s process. Shantanu As a about, holistic

to when they last of couple They the years, which product-led us over been all, growth experience. world come have that convert, onboarding terms to confidence us of give already value. a confidence with then of terms starts a and more the they lot into likely going to what more lifetime great products, in that of gives improving First are more What they in we’ve, get likely stay, time of class growth. is to people and to are Adobe.com are has and a spent

As landing we’ve pages of campaigns marketing targeted and that been themselves. are And more the Photoshop products an all and in and with we’ve the outbound that landing Illustrator the targeted been running products pages for activities in themselves. growth actually more connecting to activities as happens, with the example things our Acrobat

the have we with really of demand ROI more to to able funnel. bring increase our and associated top So to been efforts that traffic

growth lot that, investing addition loops. a in we have In to been

content Those now So top some also able are to the the become of stakeholders – people when using able share of at out opportunity actually share content, for to to look funnel us. products stakeholders. are but that

Acrobat massive Web in Share If increase you like we terms look seen by of an things at example, usage driven Acrobat have Review. for a as Web,

more funnel top for that third is us. So, partnerships. And then drives of

have Microsoft an closely working with example. We very as been

the an be Reader, Windows-based billion that on us now devices. have announced as will PDF viewer in over which default users to example, Edge, gives We access

conversion. activities that about cacophony scale, as hard talked a of results at businesses to these top about, drive of of and DX data it’s it’s leveraging the funnel. to users strong experiences in the then drive lot products a to all way personalized And we Anil’s and the ultimately really So, through work

Thank hear. to Wonderful you.

question will from Turrin with take next go And the Fargo our ahead. Michael of Wells Please we Securities. line

taking for Thanks question. Thanks. Great. the Hey.

maybe One into go and private bit digital the side. Thank Can on you stood is of? a presenting bit just here I what’s happening more a the advantage that would a as there. able take be over you. single just company environment side, experience the mentioned curious DX of and maybe to on competitors you we both the that out are and opportunities side, now areas things this DM on few happening wins deeper product some key what’s of

Yes.

Let side. on me the start digital experience

it’s Platform. Adobe comprehensive Experience We integrated broad and and have with a portfolio, the

customer get They So, workflow, Platform workflow, Experience whether the or and they the perspective, or the there. best with built those get of and marketing Adobe commerce both or customer data best-in-class and a it’s we journeys content insights native have get that the from benefit of applications, integration they worlds. apps

to we which channels at platform growing that’s are aspects address as helps efficiency architecture. I have to so digital similar can IT on And and It consolidation. benefit really their you combination. their getting They build keep of my that I powerful really at also how around, what was of believe get they in a looking that’s what enterprise stack, the you done and about, is who your other shine you but Shantanu do that So, is getting are really will choice. growth, where talking through of through overall the are standardize we looking the customers revenue go-to we get benefit and

really driving of market web And product it’s excitement as the all funnel it’s on a do. we top awareness app doorstep this it’s lot and AI whether in it’s around those have our want see forward. generative the players, focused around ultimately, incredible – as just to at as we accretive, the at DME excitement, the going because look side, up creativity they energy leverage And is things apps, they single mobile a that inevitably themselves and whether whether they as a driving of like that more the people end of app, well or on

Sachs. our the take Please we Rangan go Kash from of will Goldman ahead. And with next line question

pick want Thank you there. very to much. up I just

more? Adobe Is qualitatively. massively all talked you What Is for substitutive thoughts Thank does or that for you separate you it and And monetize David charge to Adobe? about jump wants SKU think or or this something to incremental? somewhat excitement just this mean much. I I generative your with create this how so somewhat is in. incremental the AI? a the does anybody can get AI, have, that generative that opportunity am curious quantitatively

three Kash, related. or all questions, about was but four I think there

really take happy quickly. those So, to Nicely played.

First number of users, believe, of all, this is really about we very increasing total strongly. the

not this we need you able solo hearing create to at is As about enterprise, that And it. you are more replacing or talked SMB printer are human we an is are thing, you whether same the today. ultimately, enhancing content MAX, to about which create than individual creativity,

really plays this strengths. our into so well core And

it have based they for with know, and creativity, have a our to they decades-long into us, focus easier demand people filters things and have object people increased have got core to helped also for neural to productivity, and and you increased and products. we They like for able been experiences, of the and AI broaden the opportunity have content. AI, made other start on up have on onboard As people we keep so they been selection. have features And hundreds for the using leveraging

industry innings. We still our early really work generative have all that everyone going is people are leverage target but them we And technology, forward, are we the step which a in else to organization huge now towards able step hundreds of done, the have we the the been believe in of and and in leveraging research huge forward. forward a

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have Adobe all output we best-of-breed So, the the think the about so years we combining generative over and quality, AI. of to makes we have images is technology it’s the going and that about be magic and that with talked takes But better, them that differentiated.

here of distribution Summit, and in value of the this really with with fruition. make model And a our advantaged there. question. and harmful and the that into is something seriously, and bring supply we Creating the fact, the or we is is content a progress I our to around announcements to everything really seeing That’s created. of being the lot we is around workflow the and workflow There other out we have this, companies lot embedding in integration. gentech the full take do. more, Anil fifth more at about tuned, And start. end-to-end player copyrights, we a is very we commercial because tools lot Adobe everything like reuse. are then and position where digital actual thing inclusion, going business, place stay thing workflow, that’s that out a we own we we not the doing diversity second your, is of with content around partnering And are last us play are that distribution. where not just just media feel The and questions going next the to an and that products can of only about and wanting content third image end. because a to the within point are are but we of market, And in we fourth we be sure to so to to others to the come exciting week partner also It’s make And around the have has chain that complex in think

yes, correct. Monetization,

means the Monetization, this for we about are what excited very business.

think you great New to retention. you creative take can again, It’s we user through journey using full imagine text start can other onboarding. that We as into also yourself if you offerings. and that, by Adobe a prompt, for onboard

and can We to value think these opportunity. the think our We do up-sell used better there have offerings, new market up-sell bring in is to. the more that that distinct we rates LTV. always seen and are core the the better packages gets the people we retention And

we Vleeschhouwer take our Securities. Griffin of line from And the Please next will ahead. Jay go question with

for the subject ingredient something Thank was on monetization, you this you. you we Good you pricing at to have that to a that you plans spoke evening. the alluded alluded third me that at like and new packaging, was there back of MAX segmentation, pre-CC the and for sounded But also time, first, David, success days. with in when which which evening. to Adobe’s to alluded you

for terms a not segmentation with in that the of it’s the to Anil, single of talk course. could is the about rather something so competition that past company? And hear returning this to well reference your techniques phenomenon, companies. new of for your you to And interesting That’s the product then work

You have had multi-solution for some DX portfolio time.

last the you wins So, is single It’s investments larger you And you that in part enabling magnitude has the say the a would critical business? product now ingredient pronounced evidently that are more of growth capacity against say, year for or the you wins been therefore the now? the DX? DX would seeing making competitors been over that consulting of a have in

Yes.

to and Adobe the they offerings, beyond Express, like to a Stock creative Cloud that that but understanding, So, we and MAX years what starting way for Adobe recognition this of introduced also that go all the about can Jay, all Frame talked do set from with like what ago, the at XX allow we more Creative side, model beyond broad packages since much years with capabilities high-end was comprehensive DME cloud and have people XX with freemium we core now products. our the additional like way a creative Substance or capabilities

necessarily that, that today that that’s to have are but with we expansion they experience more using not what that the DDAM buy, they with growth, customers, in The in as [ph] been of driving addition product-led automatically already. how and thing terms they are to more we products happened second is starting segment

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we expect can but and them, we how new retain bring businesses to we everything So, from to see in, with how continuing play to also us users, new how up-sell get point. packaging users, your you pricing we

that punctuate have different reality different. a we which is the actually to little for is today, different mean that pricing I just And devices maybe bit, completely Jay.

search they We example. come this people of through for for pricing experience web-based web result a Acrobat as have and who that have successfully Web, a more made

to design like so had be laps, sort to a really stakes collection And the or good is the have we is is new happening of which table actually I the web collection, if offerings. or do mean other And our that’s those Photoshop said, we we whether doing it whether are for David creative, in or these customer, is offering. a it’s is there, be we reality had are for and CCO people what the great personalized. a Stock by offerings, one I differential question perceived collection think as what Substance when video and really are perceived how mean offerings get of XD them things And the quarter, use that to that

that So, I really think we on have good front. job particular done a

in obviously DX perspective, ago. AEP started the From X years investing we Yes.

unified customers scale like the the profile capabilities lots using of real-time production. at real-time of have CDP some or Now we in are who performance the of and examples

they to a if and a product think have single know their actually like, about looks own. they on they that’s So, perspective, they realize integrated what build would from product, what build an together, that customers’

from a with put versus would think a that’s going of best-in-class product is which the integrated applications with I Adobe, product together. already So, it making single they also to choice have where

stark. that’s making more the contrast think I

more the more thinking the the There as say, part solutions. the think Digital is more around comprehensive Chief is there provide is scrutiny, about what’s Chief wouldn’t this scrutiny who of can And you Anil, us holistically. so is Officer, the is Marketing happening company Officer that that I or IT

that, a seen, again strengths. customers our So, to have you viewing certain in how that difference plays Jay, – which are

you. Thank

will of Barclays. Kalia take next with we our go And Saket from line Please question ahead. the

still dig Hey and would well I well. taking understanding process. bit, into Great. little my done in that Okay. as Thanks it’s the quarter in question to guys. for a here well very love Figma

And of the that was complementary opportunity specifically really that revenue time then, the revenue And just Figma? us David, more FigJam Dan, Can complementing believe spend you remind it’s other team the you looks with know Cloud. for some in opportunities and just see have remind maybe product like like the you business. products just could what you maybe the what as a you, of Creative us sort I looks wondering if with opportunities seen XD for of you so I overlap there sort Adobe quick where overlap overlap, with maybe where like? housekeeping I but is sort question. of

length they I are remember before arm’s I operating I maybe mean in Saket, doing. these in. let’s so think are terms we will separate first companies, what two are of Yes. and at answer, they jump just

I the can of to can that upfront is XD minimis, speak strategic ideas I think do. the shared David the de And we and wanted that’s to have certainly revenue we part get some that so what for across. and rationale then

Yes.

there ton in at figure think opportunity look Figma and terms opportunity. Figma the out we I So, how of of business a is

we accelerate of that just First we can doing all, product as have what we discussed, fundamentally in believe they are design. today

footprint. global a have We

with together accelerate just accelerate things lot we customers we that the to We everything with accomplish enterprise they across from are the and – and are working productive by do that about getting companies to them customers these of our is lot globe, feedback and these a terms they enterprise of excitement of want kind the two more just are in of a make what doing. bringing can

just and that core the to for and with we the productivity use the operationalizing bring on around between evolution in core The these that more. and really second workflows Photoshop photography illustration taking third them the the FigJam, thing – Figma and around really way And real-time video capabilities is editing XD into disciplines Figma platform can and like Illustrator and collaboration to based and design a is cases. bringing

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We is products. them limited to we say – what we in employees of I this in from get employees, to can But wait about And so ton actually can moment. Figma so to see this. we close on can’t moving what are opportunities the to our can’t everyone to can all Adobe customers, see a we we – integrate talk a just for

Very helpful. Thanks guys.

the Operator, we are hour. top about just of at the

We more will question, please. one take

Thank you.

We will Please Jefferies. with of line take our next ahead. the from Brent question go Thill

just business, there. of just Shantanu, just I you of you am seeing what – general and anything? are kind Are seeing you transactions, the in what number overall curious you number on how deals? the business Just the talk you seeing smaller customers if overview through an us are could seeing DX of terms set the you higher of give behaving? are Are DX a of smaller still pipeline? up, Can big

whole meet we and Brent, I you hope customers. of to get then because Happy see Summit to, week at get next you willalso to a bunch

transformational saw some really good we I and think certainly deals. Anil, – add. think free to I I feel mean

Dan referred that. think I and Anil both to

And at it years so strength companies tend that really help Adobe we are that experience good and at many those to looking a end-to-end that them their I have ones Brent. customer to management, some looking strategic. there, with for are entire with worked as be mean

that segment, CXM for are is with So, and comprehensive solution I would say pipeline a who the associated looking pretty large. integrated people

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one. So, that is

success and customer driven, Given penetrate And think that’s us. customer customer continuing we customer by that’s that’s to pipeline have account, we have I a and where engagement, we frankly, a see have relationship pipeline. managers, also the the we

to continue North strength geographies, think America. I see the terms in in we of

think Asia. of you when area There in Asia, remains in some about some that countries areas strength. are think I EMEA, an

that have to if quarter, pipeline, has are a is So, our Anil, how job drive but market. specific at you on there, I going don’t Brent, addressable do there stuff understanding different this been add. you be the look differently large focused to other in that know companies we really,

that think key is they I hit going is I product, customers who themes the starting content are and say thing scale, at chain, single to the I driving profitable Summit, with personalization think vision for digital growth driving we to that, is they know because that growth. supply at would only the that like are a on even what

they So, their have even with value and focusing that our term relationship longer on if are with and realization, they them. starting on eye one a roadmap, benefits

time. big a customer And focus been given a on think a for Brent, of us long the theme content been mean platform The a say, at time. for has just has the CDP been other some has will and I you see I the theme one. for Summit, I question certainly, us last thing Data will themes. for is, a long

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are as not what we have offering. today just So, we an integrated resting on

doing on Anil going roadmap businesses, really product in what’s to documents been are creative, happening in web our across of and has innovative show. mobile the what is each the what and Dave We one devices

a think us confidence lot are and I what customer gives also problems. anticipating we that’s of that solving

opportunity about it we innovation, QX. we Adobe, excited forward the look at based continue And strong really and on product we the so you to at be all Summit. have seeing that start of was to a And to

see for and at many to the Shantanu look many of you Tuesday everyone you Summit. to next Like concludes forward to call. this we Thanks of said, joining call. I talking soon the hope

meeting. you disconnect. Thank for you Thank now does you. your today’s and attendance This conclude may