Adobe (ADBE) 15 Jun 232023 Q2 Earnings call transcript

Good day, and welcome to the Q2 FY '23 Adobe Earnings Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Jonathan Vaas, Vice President 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 Chair President and With CFO. Executive Durn, Digital Media;

we which fiscal second 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 June results risks, contains and those The involve in forth Actual

For in discussion the these release review SEC should factors today's filings. a discussed risks, and of you press in Adobe's

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

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

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

now over will the call to turn I Shantanu.

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

achieving outstanding earnings per representing earnings billion, year-over-year had quarter XX% an $X.XX. $X.XX of GAAP record for was $X.XX, share revenue and growth. per the was non-GAAP share Adobe quarter,

demand with Our Media across Document demonstrate Experience Cloud, Cloud strong results and particular Cloud Digital in strength Creative ARR.

to than play. the experiences ever Adobe's rapidly digital mission work, critical change and life world as more to is personalized through transform digital continues

an experiences. the of base creative Photoshop models, latest and advancements CDP including Adobe to deliver including of new Acrobat; AI-powered product create and AI new Express, our customer innovations, empowering generative real-time and the in in standout analytics family imagine, groundbreaking functionality launch creative Illustrator, content are Our in the co-pilot capabilities ever-expanding and applications, our solution a Firefly,

unleash creativity We're executing document businesses. productivity all, for and our digital power strategy accelerate against to

has exciting and presented to cloud true market our increase addressable has innovate opportunity. technology mobile AI. Adobe for and been opportunities This for disruptive Every computing,

Filters in as Photoshop, through AI of Experience Acrobat We and Customer Adobe Adobe Liquid AI in hundreds Sensei in innovations have Mode Neural such delivered Platform.

of development believe generative rapid AI Our technology. ongoing enabled deployment R&D our investments and AI adoption generative products. accessibility a and both Firefly, will further drive of our have We

generative strategy data, interfaces. models and Our AI on focuses

across train on experiences, and Our the customer highest assets. creativity, models documents us to sets quality enable data rich

build in will we models have domain and where vector, We including deep video, foundation imaging, categories the marketing. expertise, documents

for to generative our are We its customers. life deliver incredible generations a set Since of imagination the Firefly to AI just the captured in interfaces over across launch started. gains world bringing we're X.X with array has a copilot as magic of and billion of broader productivity March, getting and

successful Summit across Our the will reinforcing services digital world, engagement digital Cloud. from a industries. hosted business a AI critical products excitement to delivering to and is growth. an drive customers innovative mission-critical EMEA Adobe's with customer integrating growth. tremendous map that across Sensei leadership around we and powering companies gen is thousands of category for our week, and drive continue partners imperative experience-led We're them road personalized enabling product Last experience Experience

now enterprise our our below we be Creative ahead annual end year revenue Document the given previously previous Cloud Cloud expect of target to slightly environment. targets 'XX, FY ARR and the For Experience Digital and current and issued to spend

revenue groundbreaking to and pleased As total execution, we EPS a raise our are continued targets. result and of innovation annual Adobe

you. David, over to

everyone. Thanks, hello, and Shantanu,

expansive of all had Adobe AI. well and the global possible for The extend our a imaging, unleash our in such mission applications core more introduction design, down Express the illustration, through long this as and to our and has will AI power and creativity in attract flagship generative Firefly our moment animation as new audience. video, is will an ever creative XD creative seminal go history. These as in innovative increasingly Adobe leadership than products of copilot a today, categories as

of revenue net and to excited creative will products AI could road Adobe we achieved dramatically even about new QX, We people, an ARR be customers. for of our $XXX map universe grew existing $X.XX In generative not that more million of while XX% more enhancing make productivity billion, year-over-year. accessible larger which

Firefly Adobe's and the a ideation, include refine beta adobe.com/firefly, family models It workflows process. product to and tremendous the users generative directly to exploration Business customer that production Firefly, content. highly differentiated generate market. and creative copilot of pioneering being into release is innovation and highlights attracting the interest a accelerate our in is of and destination AI allows as end-to-end is integrated

on model viable, fill professional is has precision. most designed new catalyzing new commercially into Users X.X response X assets generative media been extraordinary Adobe capabilities have these powered beta images the in other generate copilot of making and Photoshop first Photoshop, trained and content quality website of company creative to stock are to a on Firefly over and Photoshop's integrated licensed The Firefly's in billion across Firefly era releases seamlessly power now generated viral our content. successful openly social platforms. history.

designers earlier we Building Vector Art. Generative a to iterate announced innovation, this as Recolor serve in generative AI to on similarly copilot will millions and week, Illustrator, this which of transform

large overwhelmingly Illustrator, has ease. power small Adobe from that marketers students and Adobe content. to to and groundbreaking Express an technology editing with revolutionizes the magic positive. in business precision We of the and public to our speed Acrobat and the creates response combine generative with to beta capabilities particular all-new The Firefly capabilities Premiere been Photoshop, how everyone, share AI and organizations, Express owners from standout brings also released video

the Experience employee of and to of version in enterprise creation organization will Adobe conjunction in empower an The in participate websites Firefly Cloud. every campaigns content, and Express with

Apple Gallery empowers mapping platform A Lightroom and solution. base productive. of New value you more collaboration access Frame.io now the to growing Pro Premier expanded in addition video AI-powered major chain increases and text-based mobile-first mobile images, tone supports video iCloud update supply photos Android across makes allows instantly content editing automatic Cross-Cloud An and Adobe's mobile-only users. that and that our of editors from PDFs in to

our with ecosystem Adobe image announced partners announced a Apple VR text WWDC. be for drives will will we and at Lightroom edit NVIDIA our Adobe. products across awareness software. momentum Pro to photos premier Firefly will for and of users on collaborate AI that optimizations generative Vision top-of-funnel Bard, Continued how that highlighted powering Adobe headset Google and generative capabilities. strategic partner on AI empower the hardware of

EY, to TAFE, WPP. Omnicom, Philippines, the and Momentum customer including government market New routes key of customer Wales NVIDIA, and wins, enterprise across segments, South

customer as well multiple new represent additional Our monetization as opportunities. offerings value generative AI

will well available offering as First, be enterprise for last standalone as offering Firefly freemium a both consumers week. an as announced

applications flagship copilot higher retention. AI will Second, drive functionality generative within ARPUs and our

create APIs Third, communities new will available made Firefly their subscription access as Creative acquisition ability will and to the custom who offer partnerships packs allow represent of for need top-of-funnel proprietary opportunities well customers the Fourth, Firefly for Cloud. we with credit to exclusive finally, Express, exciting greater developer to models as enterprises be content. And industry Cloud Document generate content. and amounts

will get Our priority introduce is to year. Firefly for pricing adopted, specific this we and broadly later now

help for products data, Document the Cloud services standard Adobe accelerate to the ubiquitous integrating streamline Now are every automate businesses unstructured seamlessly has of across of facto world's Document and the productivity comprehensive workflows. device Cloud and PDF business. become offers de Adobe set sizes by turning turning all Acrobat. document-based PDF a into to to to document

loop our consumed new PDF services, a PDF among highlights as of accelerated liquid both year-over-year. documents and into In net growth both as and an added searches growing innovation the of achieved in million, Acrobat Document active through Cloud growing Cloud driven ARR significant Business consumption creating ecosystem. further ending Chrome momentum users by include, for increasing collaboration XX% viral active Document Edge explosion QX, $XXX Acrobat We extensions; bring XX% mode. we to existing monthly revenue and users which Mobile and users, million $XXX App in new Store web ARR with across verbs downloads well are of use by growth Acrobat year-over-year. of adoption

process. allows make and workflows Wakefield, PDF market to between Group, users Express segments, Cushman Acrobat their key documents to and to momentum customer fidelity and documents now visually & routes stunning; which Novartis, full import and seamlessly enterprise customer WPP. Boston creative Express into including across New Consulting editing, users allow T-Mobile integrate has wins,

the marks more anniversary XXth significant inspiring that than Acrobat and is both Today of milestone PDF Acrobat, and before. ever relevant today a are humbling.

how continues every yet best of of know world powering transform to communication PDF to and incredibly of are people for productivity is the the that billions we proud and digital day come. We documents,

industry combination and analysts are we The further the unlock. expand benefits pending hear to our acquisition delighted and will Figma from about been that excited customers, have addressable partners market, of who will the

to Commission and engage Competition Department of and their close conversations end European by and with the Markets of in reviews conduct the the Authority the the merits as given U.S. the case, regulatory of they the Justice the believe we transaction continue should We U.K., in XXXX.

roll. business groundbreaking delivering and Creative rapidly Digital Media Adobe's a is We're Cloud across Document on innovations Cloud.

our of both data-driven is Our strength customers, the and of operating incredible growth increasing a established offerings go-to-market broader our and of are breadth proven and universe model reaching propelling businesses. emerging

the new ARR fiscal and revenue are Digital targets net Media momentum, 'XX. we raising our for Given

Anil. to it pass now I'll

$X.XX strong billion we growth in continued revenue. Subscription in $X.XX David. representing revenue drive achieving our Thanks, Experience billion, growth. Hello, XX% everyone. business, QX, was Cloud In year-over-year to

Businesses around to partner category on and deliver EMEA Customer and we to Summit. world Last industries week, Adobe growth and remains turning excited customers of the of to as experience-led interest with are are spend engage digital in were their they the sizes increasingly channels that all and partners on relying high. trusted customers digital at journey. thousands experience time

CDP single Built Adobe provides XX creating commerce, audience businesses platform, customer customers' comprehensive data real-time offers day. Real-time predictive for of view journeys and and on across Adobe Cloud are content our with and set the audiences, their customers and every now marketing data insights platform most segments insights channel. over natively delivers data solutions workflows. of XXX year, every customer over billion trillion each a Experience Experience

is used Cloud XX% of Experience by companies. XXX now Fortune

content example, Cloud customer Adobe Express from creating to personalized uses cross-cloud experiences to with our at end-to-end offerings Prudential and Platform. Financial For with Experience power management experience high-impact Creative its customer scale delivering workflows

Journey and experiences customer connect is optimizer Prada real experiences shopping CDP addition, real-time digital using reimagining Substance in XD. in-store and time using to while In

our Cloud vision of scale, at personalized accelerates experiences that. generative AI power and is Our the deliver for Experience ability to do to

by audiences delivering We customer they marketers are reimagine can position as copilot, it. Sensei generated with real-time innovations Experience to Cloud personalized their tailored Adobe can the high gen Express audiences. how their generate activate AI created Firefly and content compelling for journeys campaigns with They do With work AEP. for these in and marketers audiences offers do leveraging and profiles with applications, gen on-brand AI customer Sensei design and visual

make Sensei just a Conversation of AI in by insights their for will derive interfaces is are to transformational language campaigns. journey that customer to to marketer gen natural Cloud. these analytics it Experience time any easier These Sensei gen apply significantly insights and powered innovations real optimize from in few the bringing AI

applications innovation native our and include demand Business million. business and highlights of strong book for Experience platform exceeding $XXX Adobe now with

Major delivery Cloud This supply and insights Realtime journey unveiled Henkel, content look-alike brands industries, with Analytics, global partners, Cloud connects by Sporting that the and personalized in to demands. Creative enable data launch including chain drive their help and accelerating experiences. supply DICK'S effectively capabilities Goods, to of of used Bank; to scale the Adobe delivery combines creation new that level ServiceNow a across significantly IBM, delivery is comprehensive real-time League of content growth; working Omnicom first-party scale audiences, joint Publicis manage chain customer to which quarter, our the CDP will with brands a content TSP product Experience to customers. solution analytics we content including Product General new We're and Motors, Accenture, across Baseball, enterprises CDP product-led with of

plan, and campaigns to as marketers and owned at becomes solution orchestrate Modeler demand a Workfront scale. solution to measure for accurately Adobe AI-powered, to Global self-service channels. of Strong paid, Mix for launch choice an it availability of teams earned personalized with campaigns rapidly provide across

perform on New AI performance in by Manager, predictions provide content best content that and Adobe segment. Experience audience will real-time data which innovations

enterprise IDC for Leadership the a in platforms in of including Marketscape and Adobe's annual analyst industry rating retail positive reports, Gartner's commerce assessment strategy.

Key JPMorgan, Royal ICICI customer ServiceNow, and Volkswagen. Bank, Canin, DSV, wins, T-Mobile including Omnicom, Kroger,

which out overall While targets. in some we the enterprise healthy, strong is our we pushed win products the reflected remain environment, Adobe demand keep annual enable drive enter as spend has current reach and and end-to-end have profitability. is second rates are winning customers, growth being In uniquely we updated a projects seeing in to customer world where power to and with channel enterprises simultaneously experiences innovative engage positioned and predominant digital the to become that half,

it I'll now to Dan. pass

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

individuals QX a the demonstrate across channels results from of digital products buying enterprises. largest Adobe's to strong world's diverse demand portfolio through

to While win. the we work position businesses has profitability, Adobe current in and technologies grow be change I will tools. how and how environment world-class existing couldn't of our deliver groundbreaking incubate continues company democratize and new navigated people access to invest to prouder that the Adobe and

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

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

utilizing strong growth new conversion year-over-year offering out rolling single by included, by for growth solutions another and greater continue operating currency; and our capabilities; user and driven creative quarter Can and targeted geographies, strong mobile, success for with Stock success with Frame.io; data-driven than ARR our model, the in Lightroom imaging our quarter see including Sign by driven traffic insights adoption. and Second emerging promotions exiting Substance in Adobe enterprise on quarter CC demand new driven strong for campaigns and customer Photoshop campaign; constant from creative to collaboration growth across growing strong offerings businesses app for and subscriptions, photography strong Everyone drivers accelerated continued and integrated a adobe.com, in other as both XX% creative Acrobat segments

represents Cloud in of We growth Document in currency. achieved year-over-year Adobe XX% the revenue billion of exiting $XXX Cloud million, $XXX million ARR $X.X XX% crossing the constant with net Document milestone which or in growing year-over-year quarter, added constant new XX% ARR currency.

to monetizing geographies, our across included: quarter strong integrated web offers, with with as drivers our demand mode and XX% success driven the greater Acrobat growing subscription Acrobat Second Cloud and capabilities liquid than in engagement targeted product-led for XX% sign perform up growth with funnel year-over-year conversion campaign, growth mobile Insights customer strength year-over-year, downloads, in segments over Acrobat enterprise, seat strength and active by Got and It DDOM through driven expansion. users well, monthly new the Document usage by strategy continues customers Acrobat's

This sales X% for Cloud of quarter revenue. perpetual than accounted Document less

currency. XX% constant Turning $X.XX $X.XX XX% currency. XX% our constant revenue year-over-year represents of which year-over-year In we which billion, XX% Digital QX in growth or QX, or was to revenue billion, Experience in segment. achieved represents subscription growth

Customer Adobe drivers our Second real-time Journey applications, Optimizer. digital Journey Analytics Experience and Adobe quarter including strong demand growth experience included: and platform native for CDP,

in is customer management and large retention to significant is year-over-year; of driving across from connecting a book content and with cloud accelerated Omnicom. chain growth our supply workflows customer solutions, value content Workfront and QX; our momentum strong apps In creation and experience in transformational applications, solution. to content of business with including continued value enterprises, more our suite in enterprises leading AEM commerce resonating selling end-to-end realization customer interest and seamlessly T-Mobile and adopting seeing content for QX, than deals our AEP subscription service, XX% proposition solutions growth strength The our platform as grew revenue for to of segments, and

and tax year-over-year expectations. rate line a growing basis a $XX.XX with a on effective GAAP exiting was Adobe's FX non-GAAP or XX.X% RPO XX% in XX% XX.X% headwind. in the quarter was our QX billion, basis, when for adjusting on X%

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

$X billion billion agreement, of was through entered granted In end goes and fiscal into a have $XX in billion our repurchase and QX, that the $X.XX on December we remaining share authorization we XXXX. XXXX currently

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

relentless company's net the and for half driving in focus profitable performance fiscal on ARR. first Given our annual of we're Digital EPS the targets growth, XXXX year new our disciplined the and Media raising

with and our revenue slightly Media our total fiscal raising Experience targets of previously Adobe lower. also target Digital are XXXX Digital ahead We for issued

$XX.XX Digital billion, now billion we're of of fiscal ARR $XX.XX billion, segment revenue Media rate Digital of billion Digital XXXX, subscription of XX.X% basis revenue to GAAP total non-GAAP of $XX.XX $X.XX on to $XX.XX billion, $XX.XX. For Media new $X.XX billion approximately of to segment $XX.XX revenue $X.XX $X.XX per to Adobe billion Experience Experience targeting, tax revenue of share approximately to to and per a earnings share on billion, $XX.XX billion, $XX.XX non-GAAP basis, and $X.XX a XX.X% of GAAP earnings Digital net

Digital Experience to year-end in we In demand Digital strength and Media QX, for see expect customer solutions.

Our updated fiscal demonstrates compared as solid half XXXX. to for targets expansion second the fiscal the in margin second of XXXX operating half

drive extremely top customer the our same I'm time, will XXXX companies year. strong while delivering a shaping In summary, growth performance in be Adobe's of for at for generating first Few the innovations the demand the decade pleased are challenging of Adobe. capable strong bottom-line wonderful half products, and fiscal environment, in growth. innovations to are that These delivering game-changing of next another year with

Shantanu, back to you.

Thanks, Dan.

strong Our I'm business. the significant around continue the raise opportunities underscore employees create have our momentum QX the proud and we our our results bar, live of our across world the purpose. how and to future

to grads and in continue to the bring brightest new and hiring Adobe. talent college We interns invest to best

category-defining our incredibly grow. continues an at It's for Adobe. time and services products exciting to Demand

Our set deliver is expand as going another innovation that we success engine market an expanding opportunity. XXXX top continue for Adobe to customers a line decades. technologies of year to for to investing is and phenomenal is and while delivering enabling fundamental massive our global be Adobe for margins Magic execution us in strong address growth Adobe's

you. Thank

questions. will now We take Operator?

Fargo comes with Securities. from And Instructions] Michael first the Wells [Operator question Turrin

the mean, think of starting this of the Nice obviously, size results. questions fielding on just job alters on market. how number with point is the We've Firefly. been I a I

can both content market just useful of you how the some on of and early expecting on velocity up commentary the demand you. market. the Thank this the add and overall your monetization show context both on signals You just had and generation? around But side you're user some to views

this on Firefly about the that. exhilarating and early talk of you what customer to about for absolutely community The been We're excited, Happy really represents. tell us. and if has call, response the all Sure. can't

support billion heard obviously, that going product about being had good that. talk us than to content both the And have of to feel Generations generated. created were You projected beta. we into ability higher assets about originally also XXx from and really scale been the the already over the quality X.X the Photoshop we

what we product, using The Firefly set. the seen social didn't the and Photoshop incredible were doing ways building think it Photoshop, initially And is always we we when buzz. that and community of does feature have in is both even

So all and it's organic great development to coming up. buzz see this

also business a we're as And about means from talked what we opportunity excited about, this perspective.

the we going be are for On in existing value great flagship applications retention add that the think side, we to users. the

makes with top new accessible creating of the funnel, In helps to us billions users of reach conversion. that we terms of it of think this regard act because more

for excited far them. more the onboarding also in We what Photoshop user both of and customers early are mean Illustrator especially very Express for onboarding, can about new and that achievable success this makes new

that be an to It last introduces we what talked for of week as new of everything And we around at and we enterprise-grade destination with a with adobe.com/firefly opportunity as monetize course, Summit offers this an sell all packs have opportunities. can this, about offering. that upsell credit can subscription

if of that an we out, opportunity. opportunity. because of also So number and users ARPU opportunity, net LTV a We an see all retention, you net see

play expect to over We're we mentioned, now it to this And user of some it the ramp expect QX over more right years. we'll QX as all very to the start but numbers. on of many our we None don't see see And acquisition. impact be to specifics we I it this we'll material. But Now of of to this, focused ahead. share we few months expect years. in out in expect next

there. about be lots Thanks. Clearly excited to

next will And Saket question from Kalia with Barclays. the come

as through demand for and for generate Firefly what consumer and some demand I'm that pull Obviously, still on curious, the quarter. or with seeing Hey, here. in Express But taking Congrats in my Adobe of point side Firefly well side. are on guys. of zero ability you. Firefly Express. generating and Great. very ahead. potential around with great David, that Okay. the want for billions both the of early you to that as Express, Thanks maybe for years users question I Adobe some to but on a enterprise the

fronts. Very on both Yes. excited

week have we and had of may beta this you release last Express a update massive to As a is Express. seen,

brand-new In up, fact, you as is the the because for from has mentioned, absolutely response a to been integration of The Broad-based built product believe positive, the use. everyone ground incredible. Firefly, it's of this has feedback effectively been overwhelmingly product but and we is into integrate flows user integrations directly people and journeys and utilization able for generation marketing the are PDF collateral end-to-end content, to the able to also PDF. workflows build user generate in for of with to and so video amazing Firefly how bring also

we've out Firefly has had also vote it together. for in we specifically and We've together seen week, pipeline beta, CC our their excited the enterprises. Illustrator users, the that output, of excited both into Photoshop. seen push which Photoshop brings and are users from it their are taking editing existing they're that's to add very social. the that easy about making of that really coming templates, generation terrific. the And sort organizations. seen Express has and bring announcements that confidence interest and marketing with and subscribers for the been workflows incredible of we're the Illustrator interest users foundation animation that terms driven And we've is sharing corpus associated an CC able for using enterprise their last of and everyone announcement with to clouds what package particularly illustrator that for introduced about Photoshop we've take Express, around of it out been And

other applications. able to and Photoshop into are Marketers are in our and able that Workfront of they're So content AM. and through Creative to flagship it and and in Illustrator edit orchestrated Frame.io create these pushed pros more quickly Both take Express. are

an supply well. as of So feels for like part Express point It our content a core chain. really really inflection

maybe if that. Saket, to I were add two to things And

consumer can think it. you it, I the Express, imagine if new on can First, side, the do with you

really to And much And so an have now want we employee every Acrobat, Express. of like Acrobat powerful. within combination and a enterprise, enterprise both it's I think

Kirk next with come And will Evercore our ISI. question Materne from

the it's a prepared of guess perspective I on for and How, perspective some sure David, from about congrats of think and are capabilities guys just are and Adobe Visual data the customers curious And content again. Media bringing might much to frankly, probably the the both very I AI into on data of quarter. was that Experience David too, part the aspect when how one, guess, that interplay generative talk business. I if you you about help, just this kind and Thanks you I of take to Thanks. this Media Experience Manager. a the I'm market? wondering on blends the businesses. the of Digital guys was could sides But Anil, Digital enterprise

a Sure. to hand few I'll say then words well. and it off Anil as

So the few talked beginning, about, core as has a Firefly, we've from principles.

quality The So text. of first is the right? output,

effect. We capability text imaging, have text-to-text of

in well. now. design, working vectors have We there We're video on XD generation as

velocity. a So needed for everything content we have a be cornerstone series will of all this incredible enterprise think content that of we

it that Illustrator integrations into started a announce existing way is we to we're workflows. that Express. into We've can building and thing and in second already The integrate Photoshop

integrate start you'll it You'll those points, the integration also also directly see workflows well. into Digital Experience start to to us but continue us see as more

we've importantly, where able front been generated. and inclusion Diversity of about content are we transparent can Third customers because center. also safe is way most with generated we share Harmful being is the get use. is being perhaps are tell and content, our that violated. Firefly and Copyrights their not for to not is that commercially we imagery

that's created. indemnification So of them content for we're give part able enterprise And confidence. the being as give our plans, that to also, them

that. fundamentally them I So engage think, those things, help

said. Just picking up on you what

a announced unique services I Experience, and you when Express And the mass whether or the through personalization at think gen of to has to we marketing personalized Firefly that's if Digital marketing audiences, journeys. is at comes customer going at for And it's that for be advantage at scale, everything look and scale. content shift AI have. from a we also sort Sensei the time big personalized, marketing

interfaces We And like have through the Campaign, that have models working on. Adobe have with so and profiles. Adobe the real-time the the then experience the We the Firefly. then we're within Experience customer like Adobe with data apps Manager platform we

can together that of and the customers that do we with manner that's marketing put a at really expect personalized to their used scale. that So only data governance use context is in in their consistent all data that

well really it So fits together. very

we how quick given around things. this, have excitement just three Kirk, Maybe much

and it marketer for really every participate allows to, production content. first within The of in have us company, a is the delivery

And so an enterprise for great. agility is

maybe We Anil models. and what custom add said. David create I'll now thing Second to both can

you create company to a So to like customized think with with if things. that can Express what really try tailored want for Firefly particular have in to of that and And you're these be company. Disney them. it or it campaigns like allows out AEM, where want conjunction Coke model we be and different you for a The company

wanted also entire just completely go-to-market is clarify company. the aligned I already that within that, to

have Creative we so across them on Express, sales And as as Cloud one enterprise solutions. well Experience calling Cloud force

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

are. This for who good on winners says the is is it's see but [indiscernible] [indiscernible] Alex right he flying now, Alex to Zukin.

what is unpack underlying uptake DM of you're help newer So impressive now Can for Whether to rank layers or the success? of continues my talk seeing? of it's the an demand some to you driving and success you Can products way. levers business question, in stack strength? the cross-selling outperform to the content,

more And have new announced with then Fill Recolor. Generative Generative you AI, recently, on offerings and just gen

the the are helping monetization As Thank greatest creative community, how about you. of you seeing where getting is the within you online opportunity is? inform kind are it you traction

funnel as Yes, first start we strength like the of thanks all, And for the at Yes, look it, we're of the feel a was Sure. very off to question. first we great half for the year. was strong, messaging a and adobe.com resonating clear long. frankly, well that with reach. broader top set and all And audiences it's to Traffic of that is quarter our we broad-based. broader can of

we Second, conversion. strong saw a

focused Our investments now starting that area dividends. product-led are growth we've making is been pay a time to for for we've some time. long an Adobe.com

leveraging in to And customer we've terms as of We been of scale experiences improvements of continue at a core there. in more lot that growth recently like in-product us see personalization And motions been Acrobat well. work allow significantly journey in much to do Digital Photoshop more and Anil's in product-led investing our flagship terms applications we've conversion. products Experience and

in quarter lastly, mobile performed And then see on and mobile well started mobile as inflection our particular, to like well. really very some we've applications, it in this Acrobat Lightroom good feels

like that, we're slipstream addition Frame the in opening Dan In into enterprise products conversation sort to that emerging as really mentioned customers. the supply having chain of with continue comments, his to grow very and Substance nicely content and

it to years. Xx content at our in Anil terms content EMEA creation next enterprise frankly, the are last week for And to continues over Summit grow expecting said demand few creation of that customers grow.

continue see into And pull enterprises We penetration see accounts. more to for their we're more in Acrobat apps. to also, invest much creative starting

people So want really more Acrobat they to have Adobe. from

year, few up are excited So that's a Things the shaping about the great things. direction name and to for just very the we're business. of

from next question Mark Research. come Moerdler will with Bernstein our And

color can that? this on beta, give you very much on to you substantial be us once think Thank gen billion guidance. AI X.X some AI, about going launched, and is assets for is Dan, How margins? updated we in going the is impact gen should all Especially how to created potential the and enormous. just the congratulations quarter strong the

the for Yes. Mark. Thanks question,

material unlock this making it These product integrating for As the in deliver I disciplined playing and Adobe of are it innovation progression, strong across in we've line got the do company's seamlessly we drives and very a but flow of platform profitable journey, portfolio. are growth. investments the reflect the technology top similar a They to long investors. which see I cash history fashion. on driving margin investments. the a out we're the real way, We magic and

storage cost think think drivers, investing about envelope create this to very the think we rapid inference, to we think we about ruthlessly a in about The we're we how about training, spend to technology what and life is we're a costs. spending bring When company projects prioritizing in fashion.

quarters. We've discipline at for play. can You see at the been several this

back an a standpoint. profitability in QX. print we followed second over profitability you're into the half, second from print second in QX. half strong standpoint We year, seeing again, uptick half look the a showing again part from strong a through see You the year-over-year, of with And

create to prioritize bring how technology we we it to focused continue what kind make very stay don't we disciplined, sure of to being going do, on and and life. the we're do for So as envelope this we right spend

investors. for drive at way an I and think profitable that's time we've the and generative innovation, here. flow us company done Drive what long it's value statement do cash line growth a for very and creative a strong top very for it in

we've mind. number managing on I'll finance to and front discipline sure between very on a organization organization to that closely engineering that working been keeping and Yes. of because levers bit of add our we're the little cost and And a make just

has train more The first models are doing optimize been team to training itself. of number is to our the larger a efficiently. things There the model ability

second and The distillation doing pruning both cutting-edge I things inference much training that more quantization the optimization. coming a work There's inference like work we're in of out around post think, execution research lot is and here, and make of, the terms efficient.

about like sure Third folks and hand working make go and compute more itself. the NVIDIA the we're leveraging more is, we're past, to in pathways as that and are advances the we've talked glove, chip in software with on that hardware

a sure do experience, things big of these it about way user the is Four making unlock users, we course, And end. expose to term that we the in more as approaches. efficiency generative longer in is drives hybrid back that

a be major to of the So that But this lot will more road. very to significant and as seriously. and the desktop of how a it well, work effort move benefit take a do it's we cost down do, we computing

work that addition excited going doing just we're all us. line growth to to saving I is for great on top cause of And to this add, costs, that wanted about I'm that more in the Mark,

next our Radke And Citibank. come Tyler will with question from

last question. wanted I quarter. that I saw improvement Thanks business saw nice the taking Cloud the for strength a saw the you quarter. to the relative about ask in to Document

secondly, strong clearly, really outlook, the in just a at And full year unpack seen years. could we've biggest then I speeds bit. look as you that If a quarter, one the of

is kind mind just pricing we conservatism? QX, of As about in is to anything that as there keep think should we implied I factors or one-time year-over-year any out the compare call initial just the decline around guide,

talk QX to can I'll Maybe Acrobat that. get about business Yes. we the and after

in growing is great another PDF see basics this for And incredible ARR XX%. So a the tailwind of remarks, grow. facto mentioned, and prepared after first had demand quarter. grow. years of to to I yes, lot searches as of PDF this was We've XX great Shantanu become And the PDF continuing the It right? standard continue with seen And all, has data. unstructured to PDF-related for this mentioned PDF demand, launched. de

So are going. it's see to things amazing how

of in heavily very top our investing been funnel. expanding We've

seen Chrome Mobile and foundation We And in have make Web. driving Acrobat about also lot the been We've we've users. talked the or Acrobat Reader, well. Edge our past, Acrobat the that's Acrobat of us. in in viewed extensions to Edge. opportunity really and as also with of Microsoft our a new all partnership to good PDF mentioned foundation source a directly We of new Web been growth has for documents

we enormous continue an top for of that. of broaden creates to that us, So funnel and sort

all of combined a capabilities. strong conversion. our more motion, we've driving that, proliferation and collaboration is growth of with been to value directly into the that, product-led And addition In signatures with adding products

really we business. good So that foundation feel about the of

the in guide, a lot a momentum is to we date year, strong QX. fiscal Tyler, this I'd QX. about this around strong the way the we about a print in print had think of it coming to if business. We've think had We And got journey

continuing. half As see weeks back into we into QX. momentum we momentum that We the continuing. the that year, We're of look X see

see setting drives to in a then the executing way and as those And record value for in against that of And finish we got investors. a inside of long track expect, expectations year would you QX. strong we've expectations a the company

And so is different than back the setup year half I that. think the no for the of

And our Swanson from Matt RBC. with question next will come

Yes. And for on congratulations talked could kind an Firefly that generative add I'll model. from my how create enterprise-safe beginning issues and differentiation solutions. that generative insights major Thanks your this around the the just for taking my using is of that the question. maybe enterprises focused a a give customer is We've conversations other trademark really Could copyright point quarter. or us you some into potential, are

maybe around actually chart Matt, I in launch that asking we the where that. areas. just following even customers our We here say were U.S. three off I'll had the us questions. Summit successful had the are the London, interest. take would been And there It's in

as I with said the perhaps the and charts. came think and The had other associated them is interest commercially this with we in safe designed been well models, can has of All the create both as off for custom Adobe safe solutions. that experimented moment

of secret We've already model tweak products. that we're within provide can unlocking where also we each assets and that us. created models our some And with our the of people core that custom a that's integration sauce

So on terms use of frankly, to number the been the launches want to it of product is has not of sign in but is successful available wanting certainly It's not the paces the ready, say one customers within yet most available, them their to And I I'm for we've that company. product through it's the had. when available. all generally saying put not is who

sounds good that to a CEOs No, fantastic. agree same combination. on product. the We the and users That's Yes. get the

Thank you.

Griffin Vleeschhouwer with from question Jay next Our comes Securities.

Thank with of concept analyst product? and still heavily for for that is the chain the you at pretty year be, about impact talking in consulting you. the business average each been in with terms the you of about top effectuated be business number broader impact. new news, the that investing supply content your X,XXX supply top Good of last example, at might Adobe disclosed that you required meeting? or Shantanu, of company do And What newly pipeline content question the X,XXX Summit, is for And to think years. implementing evening. much what potential chain. book is something Could you've talk fundamentally about customers in That the seem your development capacity. you

chain? So is that foreseeing that the content necessary part for of supply development you're

couple then of to and Anil Jay, A points, can certainly, it. add

AEM chain supply First, content do we a talked allows as to campaign product-led them with them our putting as good are create all be and start well what's really to we're us David happening. these for asset relates where user deliver and is I the start through place the website. within growth, have workflow, the that what on case reality deliver management Experience through brief campaigns, Manager think, solution of about are with it as assets Adobe The the what marketing to that the then is

as content more the So want efficient both think all do creating, we interest of globalize, a associated this all which both why driver say as content to I make has supply that about is people chain. this that of been we well we how with are can the trying big understand how

I have customers. usage our The traditional all solution this. think, Anil think they're not this only, to but for I to solution joint procured collectively They referred also agencies, internal their taking

in actually So how actually can workflow. continue it to Anil's really everything aligns motion, we sales think beautifully from workflow, we enterprise which go great I growth so just see within good had with quarter, a

doesn't That's expenses and there now. isn't it of that think the what the right I aligns want. our are partly And So because customer all of offerings. cost scrutiny on one additional all

Yes.

and every Experience now getting this And Cloud. teams terms as field needs. And Publicis. with you mentioned, geographies, content partnerships verticals have with so our just with to with gets working across chain of the implemented implemented and across differentiated very all are us, specifically for customer of for them Accenture, we their the sure with Omnicom, in uniquely We IBM, supply customers, are for that closely different Cloud make Creative with

Keith our from next And Stanley. will come question with Morgan Weiss

investment on AI. across generative the the around question you news for Keith a is again This of clearly Elizabeth much. And industry. and Great. Congrats my Porter lot is quarter. Weiss. Thank very strong There's on

that become two time areas leadership? really where those that generative So monetizable market the drive are evolving are could what you AI between Adobe see pieces differentiation for over stakes? solidifies table Adobe? there is real do capabilities that How And its this

Yes.

of have space, in first customers is I dictate strategy, all it unique of the our have models think, generative that for layers is on behalf creative talked we amount AI with our the when commercially that think document entire we going starts be want this AI to in the us, with in really if three differentiator really to And the for about about. design do data And can generative use that you safe. we space both PDF well the as is that the a data to clearly, marketing because we key as you customers.

we focused the expertise, second or think it that or where domains models. really we the thing on vector are imaging consider is in you we're our marketing, I have incredible or documents own whether creating foundational

you understand model enterprise And when an understand a you foundation create custom that. models, for works, can that the really so take and how how you you create it to

automate well But marketing whether campaigns in creative trying a as Adobe people they in user And Photoshop. where in Generative structure they create get I that's or how seen, have, much I we to or a ubiquitous side, create understand production continues PDF, and that on of value? or on Recolor interfaces think a which the these both of Adobe differentiator how everything touched create real it's for as the we've the documents, the to Generative are mobile website be, with today, clearly, does similarly the the Fill how that And get the think as we PDF. synthesis Illustrator haven't app, in

life, to Adobe would have where that's long and as comes differentiated. As is say, this I we all the delight interfaces customers that magic really,

we've three weren't these result out that than Adobe community of And imagination for well of work other layers anybody that. the like the better of imaging there The you've there. all fact else. how models really captured is It's seen not a

we're the the hour. top of Operator, at right

more take conclude. Let's we'll and then question one

Thank you. Jefferies. with Brent from And that Thill question will come

spill seats a question operator's to one when confident and you. Cloud available last you the reduce asking for Shantanu, the will the questions the that? Can think of all number you one why just just number the over? lot well. I'll to on won't AI Thank around Thanks. you. David get. address give getting, That's Why question, the number Cloud one you about as we're the question on, we given DX the continue won't are policy of [indiscernible] Creative this break And

that. and with the first start the we I'll after can Great. to second, go

to you look increase result So always jobs. productivity, do, workflows, what desktop you video imaging, is look Adobe's editing, take if has you in is and Adobe's the importance at at if at focus look at an Brent, history, a always if the this that of you here we publishing, new these of increasing If increasing right? creative look about led

of Effects with for lowered content. work editing did video an significantly to was it as After Audition. production that in the cost and We And video our take people the what Premier example, with create Let's in ability increased more right?

niche we the same people. with personalization, of opportunities. did So content business that they was the new and they around they streaming led didn't to what that content do. and in industry They an What more fewer video explosion created create That's created amount video found production.

of And a a we're see expansion well. host years. of in types a at coming also out. products seat And themselves, moment sitting we of as in we're opportunity where our ARPU as value increase telling for into this. of the couple see content here because And you increase in both production new a us next the companies adding media out there's are that coming And result Xx the

who to catalyzes our professional in this opportunity creative. should things the there's like I and this, need the of creation, much a be beyond world also ability after professional of because this Now massive of around content creators more effectively all to go billions video terms say,

create to also we're help So going standout content. them

say, an franchise. more again, a I the back people into have take we step opportunity I get and So to

have We more products. to the make and ability more to people we successful our have drive drive And ARPU through ability more LTV. the

I So the strong. think, foundation, is very

the think these as how will as together I the And are the right, Digital Summits, doing business. catalysts at what the are is interest DX actually working question look the that Brent, I the the Creative Media and offerings Cloud, mean, we customer understood base both help for with clouds Experience associated I one of well you both on interest if Digital within if

a where finding we this from go of and saying, create all the all half, And the has for is is enterprise you to that the created Cloud Creative with the the as understanding way think have customer Experience bottom sales the the really joint are I that. top that's more with can we mean, actually going we've I a right. when have selling, way the in lot helps, going of Digital every I line. you're And think to we've aligned us the second because delivery the that and materials these we're to both this what been well you're every a both bill start combined happen really to way In campaign to with team see. enterprise and around the associated offerings it. it as So analytics saying, as line

And the I wanted thank And since saying last execution innovation. that to the amazing team years let Adobe XX quarter. me great by end particular, half. congratulate as the as, appreciate have it again, made We team first comments Acrobat mean, the in the all a about for it was question, for I was great of you real well

the delivered model, terms has last what across happening most Adobe Digital mix and of proud product the few the at Firefly Generative Fill if just look Recoloring, the I'm with you Acrobat of in serve coming how Experience, well. company web, think continue and content What are months in Generative as what and customer goes around what's across well customers serve I real we an chain, all to increasing problems we innovation new that supply for will offerings will analytics, of the really that set for doing customers are drive is,

to So terms well growth. excited in about top line second I'm continue we're as to and of delivering going bottom half line really what as do the

hand that, to Jonathan. And I'll it with over

joining you concludes Thanks, Shantanu, call. event. and with for everyone, this I thanks, speaking to many soon, the of look and forward the

conference. conclude your you do for does That you. Thank and an day. have thank today's participation excellent We