Adobe (ADBE) 14 Sep 232023 Q3 Earnings call transcript

Good day, and welcome to the Q3 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 Chair President and With CFO. Executive Durn, Digital Media;

we which fiscal third 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 September results risk, 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 refer except stated. earnings will Relations Adobe's amounts, to unless Adobe's are Investor constant release available this executives otherwise per rates, our in on Reconciliations growth presentation, share and currency website.

turn now to the over will I Shantanu. call

Thanks, Jonathan. afternoon. Good

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

customers. set The ever-growing a of and is to Cloud users exciting Experience success Cloud, delivering add this Yesterday's Driving Document and announcements roadmap. an are innovative while advances value product rich delivering roadmap. we Cloud Creative to us existing to across are attract this more enabling

unleashing era AI-enhanced our the of and Experience in Creative globe. millions Express Adobe commercial new customers Adobe availability integrated of of are we Cloud, With AI generative for around natively capabilities, the creativity Cloud, Adobe a

deliver gains. across generative services AI of and to productivity We magic portfolio and our are bringing life apps to

have rich domain enable expertise. deep we in create where to models Our foundation categories datasets us

six have Firefly over around months who since has images. generated world the billion launch, people the captivated X In

integration through of for delivery the our supply customer potential of reimagine We the engaging clouds, personalized the the businesses are excited all content and enabling chain to about experiences.

power document across every accelerate geography. Our a our strategy for industry and to businesses advance unleash customers. and driving services, is universe to platforms growing all, and delight productivity of innovative leadership digital By technology delivering we continue our creativity growth

it to our in the David share turn over now Media I'll business. to about momentum more Digital

Shantanu. Thanks, everyone. Hello,

In QX, we billion, new $X.XX ARR year-over-year, and which driven businesses. of Media achieved by Document grew XX% net both in $XXX of Digital strength Creative revenue and our million

fast, leading flagship XD. type. it about creation category, content. app consumption excited all-in-one On our is that Cloud the the and every offering and imaging, growth across and makes creative a services with fun with comprehensive of across design driving portfolio Creative share digital for exploding side, any creativity are Express, and segment we design, and and products, every animation user to We're content our photography, platform, media creativity creative are customer discipline video, the for AI-first, creative and Adobe easy standout products

creative Yesterday's business: several to our announcements advances highlighted

application saw XXX use. create are in that First, billion commercially Firefly is content Firefly to the prompts web now over enables and Adobe unprecedented generated, and after over designed around X models an safe available. Firefly that for text to world users supports commercial be the images beta languages

and as We design, have rich will continue release and XD where in datasets to video, foundation more. we imaging, train vector, areas new such Firefly and models expertise,

before experiment, power Illustrator, natively and Cloud completely them to Generative and into Recolor more Generative ways. in features customers, integrated to several deliver ideate, Effects in deep integrations in enabling in Image Second, create than new apps, and Adobe are Firefly-powered Adobe including to Expand Text Generative Fill now Text creative Express. Photoshop, ever and Creative These

knowledge Firefly for deploy of into content and workers businesses creation automation for empower branded proprietary Firefly is their AI-generated Adobe generate Adobe customers to and Firefly can teams to offer content. generally available to the using custom and to create assets own Enterprise enable models power workflows. confidently content creative access now Third, APIs to embed will customers both so

a announced of subscription offerings new Generative we content with Credits tokens Free with goal vectors and Generative credits include will of to adoption. include Credits. plan-specific and and users small power of Cloud Adobe's will expose Generative broad AI have the access Express additional text plans enabling finally, top-of-funnel. other prompts Credits will into And including trial a Generative Credit follow. Credits generative is an images, to Firefly, opportunity expanding plans types monthly generative further of allocation and fast the are to packs. the broad of fast enable to subscription a and Creative customers that number fast reached, Paid buy user number effects text-based prospects Generative AI, of base our turn After

billion In Creative XX% ARR highlights include: of we revenue, $XXX of year-over-year. growing $X.XX QX, added Business and achieved million

of integration Photoshop Over beta Photoshop Firefly into downloaded the million Illustrator. users Illustrator The X have and releases. and

for The include videos, Image posting more. Text general Express Firefly-powered Adobe presentations includes images, and to now globally. people and Effects. by Text PDFs, of being availability is and editing of already millions support Express designs, used features Express

Speech The Professional Premiere After Pro in received Excellence. Premiere Editing in XD new Effects. Effects, AI Engineering Editing XXXX Pro Award New Text-Based After and Association a Text-Based in feature and Premiere Enhance for features and Pro and the in workspace XD including Hollywood

directly even a integrates editing now streamlined roll to go. camera interface the mobile and make with on introduced the easier Lightroom New

The record the of strong assets business. motions, video introduction in a for Adobe and Stock Stock new product-led growth QX drove

wins Take-Two U.S. and SAP, customer Energy. Interactive Graphics, include of Department Key Southern Havas, Paramount, Amazon,

creative November new Cloud add announced Creative delivered and offerings, we for applications updates to Europe, certain continued have price innovations across we Americas X, across and the As plans XXXX. our starting

be professional and than mobile. seamless and growth all power us more device a personal web, form, platform document and to back-to-school in Acrobat in Cloud the business. our Document Document lives. to automation and productivity important document powering the continue driver across legal every document or are desktop In of workflows addition is sales being productive Cloud Cloud Whether Creative ever to a a PDF the business, it's for and contract, across

In of ARR We Document XX% Cloud QX, $XXX of achieved ending Business added new Cloud XX% ARR, million with revenue growing in Document constant year-over-year. $XXX year-over-year net growing include: we million, highlights currency.

in our across third-party web, mobile, of the Significant active growth our growth and reflecting monthly execution. ecosystems, users and growing of effectiveness app funnel top product-led embedded

value an of Strong mobile on devices. momentum application the as essential productivity mobile Acrobat reflecting

through workflows. Adoption Acrobat Sign approval increased of link Acrobat for collaboration and and enhanced sharing

Express to Acrobat seamless Enhanced and create PDFs. across PDF making it workflows visually stunning

PDF a applying for electronic scale. enterprise PDFs on is end-to-end cloud-based, Adobe Electronic A which API, solution seals new Seal at

include Key customer Stanley Citibank, wins Morgan and GlaxoSmithKline, Volkswagen. Emerson Electric,

future We excited regulators case. of acquisition, and continue remain pending engaged will with reimagine creativity which Figma be have to the productivity. of and confidence in We about the the the merits

in to MAX, online. we of next creativity of largest engage thousands with Angeles, community month Los hosting Adobe welcome forward world's will XX,XXX members more hundreds conference, the look We where our global and

from We Cloud, and Creative will inspiring across unveil creators innovations and hear Firefly Express.

drivers. and across about execution In growth summary, excited innovations we multiple products across pace our continued Digital Media are the of

I'll now to Anil. pass it

everyone. Hello, David. Thanks,

drive Every company experience-led growth. an as sees to opportunity digital

it's clear to management spent I've the operational experience that customer they technology investments efficiency. engagement, improve across in customers acquisition, and As customer time world, are prioritizing retention with

strength leveraging commerce, and the We our marketing journeys, data across insights Adobe and customer the and audiences are driving workflows, Platform, revenue growth business. demonstrating of Experience content

Adobe globe around scale personalization Brands AI. the are to generative accelerate working through with at

and automation. and we the with intelligent commercially speed scale With modify are content generative GenStudio, entire be Adobe capabilities to create process and announcement the creation-to-activation chain content experiences AI teams are the now creative increase at supply Marketers which of revolutionizing will by delivered. to safe simplifying able the and

customer achieving billion growth, to Experience as of in revenue, was Cloud $X.X billion, drive Adobe in management. experience revenue representing as year-over-year Subscription growing enterprises business, their In turned we a $X.XX growth. year-over-year representing growth QX, partner XX% continued trusted to number our strong XX% for

Adobe predictive, acquisition from real-time Experience experiences, Cloud monetization delivers retention. personalized, to to digital

strong Customer Real-Time Adobe native driving Adobe of apps Analytics. Optimizer enterprise and Platform, adoption are and Journey Experience including CDP, Journey We

quickly ability using Experience Adobe the an and of leveraging personalize Adobe all-electric and Adobe Journey example, automotive include: into Creative smart CDP Europe, Real-Time Adobe million Workfront, CDP customers globally Optimizer experiences. brand, to Adobe their profiles through integration personalized and Cloud to For to Company customer a deliver single together purchases bring Coca-Cola the Cloud XX highlights is vehicle the offer to Business Adobe is Manager. Experience campaigns

book native business engagement. of AEP business Strong during Optimizer than momentum and quarter. omnichannel increasingly of as doubled million and book drive $XXX the apps customers with year-over-year Journey Adobe across personalization more the total surpassing

reuse Express, in Firefly Manager innovation enabling Continued Experience with integrated and beautiful Assets organization content. AEM any now to natively with and employee on-brand across an Adobe generate

workflow Adobe and their the ability Growth of the added agencies. customers growing Workfront business, our needs of to reflecting for QX, supply to In enterprise serve agencies we top our of standardizing on chain. Havas collaboration list content and

Expanded with strategic Amazon. partnership

customer Cloud we Given deploy their on will enterprise. across will Experience Amazon deliver demand, AWS jointly and AEP

the Adobe's CMS industry Full-stack Content recognized the Hybrid leadership Gartner OmniChannel MarketScape for Marketing Management and as including Wave MarketScape for for Content MarketScape in Digital IDC also well IDC Content Magic for was named Adobe Systems, reports, Enterprises. Forrester Leader Quadrant in across analyst for Systems Management three Platforms BXC a the the was Commerce the Management as Systems. Headless IDC for

Cruises, General, Novo Havas, of Intuit, Amazon, and Nordisk SAP. Blue include customer MSC IRS, Florida, JetX.com, wins Key Shield Macy's, Cross Lufthansa, Dollar Blue

and in These scrutiny other spend. continue enterprise prioritize investments increased of IT customer experience despite solutions to customers management

deliver solutions to of looking offerings, acquisition to positioned to for and to close of customers innovations ability ROI the achieve and is record enterprises drive profitable to strong across winning the serving with We're a customer to new simultaneously industries. companies existing Adobe our growth. Our differentiated driving year. well forward enable track keep goals twin

Dan. pass I now it to will

Thanks, Anil.

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

Adobe's something the and profitability. performance combination us in growth QX exceptional, of that makes demonstrates

or been fact, for about delivering both we statement. profitability, at Growth Adobe, it new than not have for rather we is talking profitability "and" trade-offs a an operating call growth us, very and between focus all long our results. on execution. starts a QX This core time and sharp prioritization, of and through with the it in is our philosophy It at innovation shines philosophy. In

attract customers and recruiting people the We global platforms, millions to of engage and campaigns best investing industry. our in are and technology brightest in

what margin a Adobe on that, are. company While performance demonstrating earnings, doing driving special and we is

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

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

in billion, We of added $X.XX represents year-over-year XX% ARR of We constant currency. million achieved offerings. across $XXX revenue XX% our with strong which new Creative in QX, demand Creative growth, net or

Express customer and customer continued great by demand another for strong Creative for quarter engagement campaigns Adobe.com; that CC; innovation operating Adobe Acrobat retention product-led of success enterprise, Stock Expand; driven collaboration, CC to growth value-added top-of-funnel resulting and customer in entire ETLAs in geographies, for by strong model; Frame drivers growth adoption driven outstanding performance app segments user from the Generative across Stock; strategy, for quarter content. including offerings, the growth and subscriptions Apps teams, single data-driven from Creative of for driving customer Fill insights knowledge All segments; driven utilizing Creative for and our Firefly portfolio, Firefly, the excitement Generative viral new services, our magic for across and traffic and workers, community interest Photoshop success Third by Adobe targeted and transformational and of including included: span creative

Document of Cloud year-over-year constant which Cloud million, Document currency, quarter. and revenue $XXX the XX% achieved added or in new we $XXX ARR XX% Adobe growth, net million in represents of

across Team with our funnels distribution growth monetization by in in for to from for and users success offering BXB, in over XX% innovation Acrobat strength up offers; acquisition through ending strong and and direct constant which ARR traction and with Third mobile, quarter subscriptions Acrobat geographies, targeted web; active driven customer partners, through currency, and the conversion; Document by for routes demand year-over-year Acrobat grew customer our unit strong product year-over-year with market. over reseller Cloud XX% drivers web included: monthly segments and demand Acrobat new Reader driven

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

Digital to Experience large chain our Adobe quarter, growth and of set Third with In and strength collaboration customers; including in Workfront Analytics content XX% as applications. drivers Experience Platform business, quarter adopting AEP and our Apps of growth rates on end-to-end demand continue and grew Journey Experience Real-Time of Experience platform CDP, for focus enterprise Journey momentum Optimizer. revenue for strong are transformational enterprise management; year-over-year; applications, workflow our components Adobe Manager enterprises subscription we and to an our native Commerce, and supply continuing continued Digital with Adobe included: the as for in deals content in realization Content Customer standard to the essential solution; value retention suite QX,

quarter. Adobe's tax and a came tax than XX.X% payments to the with in of due associated in on XX.X% in benefits tax on basis the GAAP basis. GAAP vesting lower QX non-GAAP The rate effective share-based a rate expected was

RPO exiting or the a for X% XX% headwind. quarter XX% was adjusting $XX.XX growing billion, FX year-over-year, when

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

XXXX. of $X.XX QX, $XX granted agreement, $X authorization repurchase December entered billion billion into share in In remaining we and currently billion we have our

macroeconomic to billion $X.XX seasonal strength, and $X.XX tax billion subscription XX% $X.XX of current approximately QX, new Digital on year-end to net to billion; $XXX basis; Digital a to per conditions billion $X.XX XX.X% Digital rate segment for billion; Experience $X.XX; billion on revenue non-GAAP Media ARR billion; targeting: Adobe Digital of and of $X.XXX and total of are $X.XX $X.XX basis in $X.XXX Media of to $X.XX segment GAAP earnings revenue of million; we revenue Factoring share of a billion; approximately revenue to $X.XX share non-GAAP earnings Experience GAAP of $X.XX. per

where continue deep and pleased there. great see I be our positioned Meeting Adobe a quarter couldn't at do MAX We're and Adobe, for looking to to company innovation. I how forward October is customers into we'll for was Investor the our with QX to investors. you deliver a dive more to our XX, on AI hope

back to Shantanu, you.

Thanks, Dan.

are reflection execution. a our of exceptional strong results Adobe's QX team's

He We our inspiration and of John's industry. recently our beloved of was lost inventors technology co-founder John to Warnock. one greatest brilliance and an innovations changed generation the the world. the

While me to so we Adobe was of that all innovation it the gives great miss deliver. continues John knowing him of comfort tremendously, proud

to at are product someone across I'm technology innovation, As who AI by three John's and exceptionally shares we platforms for energized the delivering with the passion center customers. clouds our delight

Adobe's of best us. us for come. to in employees growth Our decades brand, and are strong technology days our to position talented a continued close year the the and ahead

you. Thank

now will take questions. We

will from Morgan Weiss Instructions] Keith our Stanley. Thank question with you. [Operator first come And

guys a a for for And AI been and margin costs to taking really nice quarter. The and thinking kind that, high. is been inference run. expensive training like, you. question, actually riddle you told really the We've we've Thank about. really Excellent. of generative are question Dan,

of lot product. up. X There's are running been while, You for beta guys operating a margins functionality images generated. million your And the in a have a already

a Your gross margins year-on-year are up on basis.

where generally AI the are gross on basis, this basis? impact a a these costs that? go-forward impact about available, stuff to you of overall think will? if Thank we all margin go-forward you. going, how or do how you And generative if margin So, becomes that able Like, should are on

Yeah. Thanks, Keith.

innovation the started the now from innovation bringing strong. lot rightfully life. you Firefly this point AI but of this as generative company So, announcements an we've week, exciting is out, really just getting engine at a we're at magic to of the standpoint. A of and And year, been

it's months, Over images. last our And on have you lost people. beta. out, point not has margins. as we've generated six -- I with billion live over done know we're All we've the delivering the strong while And generated X been this customers

have when we R&D media a standpoint, creating foundation COGS his for about a back from as and out. we inferencing, David and other family it models is types standpoint, well. training, market think comments, investments step in we're to take of an to content, prepared But these alluded from bring technologies, models, the model image to Firefly going But

making we're investments. So, substantive

time: back long results at of for We're alive we're company. financial philosophy prioritize, go through the and and a I execute to of going When the to rigor, company profitability. coming my have you we innovate, of operating been a with going growth all in comments, the to that going framing prepared that's see and to fundamental the we're really

As we is, to initially was is think the what fiscal XXXX -- operating those targets forward, going XX.X% a back margin. implicit about when going in set targets, profile we I'll come

we just guided of products you lineup, QX, into in do base If enthusiasm new again to that our product how MAX around guide these the about roll the got and support four we infused down XX.X%. out an keep the building, of operating the is where conference implicit we've these great think these margin customer as in technologies going with in all we're and to L.A.

unfolding is about of So, of leading the front about industry, this the that leadership. drive think structure margin as and ballpark technology number right as the in to us, to you mid-XX%s this think we continue inflection think company us that's we leading the

to our Looking XXXX where share we call the QX will earnings targets. forward fiscal about more

you like the we're future, investing video, investors XD, make for forms way who not that, new for are to add to of seconds for vectors. training we in any imaging for XX and want in on not just Keith, sure investing maybe to And

So, Dan is as are can to what EPS. to continue while continue that drive in well we flow other on that expenses, the and scrutiny his invest cash we we confident as have team growth that, top-line and

we're respect. So, in I think that unique

Thank so for impressive, Definitely. the much Very question. you guys. taking

from question Kash come will our Rangan And Sachs. next Goldman with

Sorry But on to Warnock's hear congrats the condolences. John of passing. My quarter.

consumption, do company for offerings of look that based growth are the AI products pricing AI the forward? generative how do which we to model rather, think the the additive be on you these at you will going think -- As profile generative

-- for looks one any And to changed you show Because can not the contemplated embedding QX they be Are at guidance much. to Thank also largely when contemplating we Dan. it's prior largely fall what not so like had versus you what are do? it the generative guidance, When gave look your AI you Street's opportunities products been first year. incremental of last seem you to expectations.

Well, to take the and on can of the just we've parts that maybe And think again, summarize call, announced we subscription. that new everybody David Kash, first the I the I a have have, we offerings for question. Firefly

So, free actually use subscribe of to that, after you can and you can trial a credits, Firefly. number

now Cloud Creative certainly We Adobe products and Firefly. it. have Express, the have Illustrator We includes of have an allocation which Photoshop that and

Generation We and the for have Enterprise GenStudio able and with be to have it. deal Credit we Packs, to

innovation I the with that that wanted So you to sure delivering first, we're tremendous that. associated just make recognized

allocation as is for they given be user renew you increase, to as there with it and all that of that to associated to their to one going acquisition, as existing see done is on offerings, roll And with the start really as both over they driven have across well price will subscription. we they customers, new focus of an the those have know, things which is

of David wanted just then bit see how maybe little add we about ask that and bit, to and each these set I a out. to play So, that I'll

book Yeah, business grow Shantanu. sort opportunity lenses: user said, to Yeah, two this adoption, the and continue Shantanu we thanks, implications look as of to those business. of at the then first through and foremost, existing new of

us. this believe We users on front side, said user a number of proliferation. years, to we the continues in massive for On have our we've new that focus be of

have primary being to continue adds our user focus net and We subscribers.

is proliferation to price. in here right value to the audience right the the goal right the get so, And at

about be that Shantanu the of of if to And earlier new maybe them I think primed offerings up, the on that. four are think two teed I side

things a market into the everything broader and that for the new in Express the individual massive into been -- support beyond it First, has, and into for of video both workflows. the abilities forward and It's step over release side, terms PDF a illustration, on now, from a performance Express. document design, in of year to of is set

including So, a value of AI amount into that. added, just generative we've new tremendous that there's

talking think we're Express that of So, that will be early we about. that an indicator success

in GenStudio, work business actually of Anil the of content. second to use enterprises, and the that to in in DME Express The conjunction with enabling using business is Cloud the DX on we're use Creative the marketers one doing with Creative conjunction their and Studio broad so base the teams of creation around accelerate really

in will So really -- really that be think the context we meaningful. contributors, the of short-term that

and we greater as family, drive new into lot a -- products, them the value to ramp to that the free a that's expect also take see bring new them users, the we expect do get to going to into them ramp. time And come using little over plans. this We'll of Adobe We users and time.

on So, and proliferation users. new first foremost,

book second And we're on thing -- going pricing here, of the changes. is be the business. The basically, to

given going the countries it reminder, measured timing over then it years. start about late also have have three in place. the new we're we contracts impact. certainly Just the couple And to We're geos rollout QX. certain multi-year relates that rolling in of probably the start of customers, as have as in course to will take enterprise years, only. renewal they next to we're And them And going a a a in then, to going

this years the business, a we about see for as moment and new the for means to into what we're but really sort how truly to excited a grow it's few franchise. going take we're of play customers net-net, bringing seminal going So, this to out,

if then think tie we've the beginning to year, the you together, just that Digital I we Kash, for that the all from in to of remember, terms asked given guided numbers Media ARR, maybe because or QX, billion, $XXX than question guide And million and in $X.XX the that something we of guided QX more $XXX million. QX, $X.XX it even to at I for our look that effect. that, since is with you what QX think billion And

So, we to be confident the excited and continue roadmap. we're really about

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

of I'm business. great. generative guys, you. outlook. you taking the my but in in clearly and the And great on a do and opportunity revenue actually congrats business. chain, Digital Obviously, wondering a roadmap we Anil, Hey, a it's or question, how quarter generative Firefly the AI Okay, thanks in lot for your talked about my how for Digital you with question part think business? the about think is opportunity about talk very there. know AI Experience content the of I future about Media the to revenue supply

personalized David within excited Shantanu as about that. entire look at Yeah, what you efficiency. already is for thanks, through and customers and on and a agencies for said, Adobe campaign. to the opportunity, through of we do and a to own the content to really apps as drive create talked chain Photoshop do then really production, we're This our creation, GenStudio, we activation have and working workflow, through, When about in number we're you efficiencies opportunity go DX, Saket. automation platform, all deployed of well unique the have it content Adobe the from that. -- with enterprises enterprises unique that. And through We already our have and

opportunity net Adobe So, with us this is big a for GenStudio. new

for organizations to to co-pilot the DX share bring we'll opportunity they of accelerate it'll act that more and together a use or Experience cases AI AI the Adobe similar working And a a in life. at generative as platform across with see But October, the be meeting users ability to to as the and for to other apps marketing details. we also on departments use applications number We're well. able investor bring generative

So, meeting. we'll share that more investor the about at

and Saket, maybe, they the as the lot the Digital just the GenStudio, of of Anil in Experience. the both to accomplished well, a actually QX as credit QX what lot enterprise in in in wins actually a give for Media well components Digital included of the as team in

between certainly So, a deals transformational of two part clouds. synergy is big talking the about, the the that that we're

So, out well. to I as point that wanted

could the quarter. if is to GenStudio the quick this that Digital that doing, And that we've released the actually has already just within that we've been of business add Anil release using one I team thing some work actually campaigns Media been

see of great one other our it's for these it's point becomes it's So, things that to selling the impact businesses a and having that on business, too.

Great to Thanks. hear.

with to on moving And Mizuho. Gregg Moskowitz

as you question. Congratulations well thank strong Hey, on taking for a the quarter.

you're you. color, able is look clearly just of if be any additional I some top-of-funnel, whether to when So, additionally improvements period monthly is your pretty six-month provide stunning. us level, I'm at to may Firefly, the that Thank wondering amount active image Firefly generation a it et in to driving metric of engagement help your other that the all users or gauge cetera?

It's that. said mean, things. remarkable a been a few we've I to happy about months. talk few Yeah,

excitement been viral has hugely saw us. the and that beneficial that driven is Firefly on we First social top-of-funnel of a it's because opportunity lot certainly of for

our gives a sense like thirsty before. is applications, that saw to something seen base over into well. generative beta we've the when addition existing how customer that, of we the That that applications, of for we X never primarily, about is and downloads we which -- Illustrator very those is the of integrated excited In it things we betas capabilities million CreativePro you Photoshop one were have as

very we're of don't this users very both track a in what does Adobe. that of us integration excited of to And and giving particular come things Firefly, that and to access carefully, the Express, real obviously one accelerant and in Firefly is been lastly, that. to new And about, the terms do typically and Express we has

in, for nice millions their but that would typically giving the Express. users come excitement Adobe getting been it's to journey with current through to coming and then not us and Adobe base, seeing product and of just within -- starting a So, have see Firefly not other

and financial indicators first Dan actually of the benefits in Single retention that, App, beta, Photoshop of the maybe book that. early the indicators of entire App think Photoshop Even other drove I lot Gregg, Two that a to how that Single and also are business. in referred the to

both good those of So financial the potential are of of also indicators AI.

you, Great. both. Thank

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

my I question. earlier would a Thank I bit, so David I design click is in frontier is love double make working for the be for where to the you're comment option, made taking Wonderful. that much you the option on hard enterprises? this for Adobe how making wanted how Firefly company think option generative safe the content a in to safe call the to little Firefly about this to that, and safe. new ask understand

Yeah.

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foundation that's what So the we've of done.

now we're content with to the been bring base we a than we adding We've Stock effectively, have able of fact, call to Stock to if call yesterday see we to in to actually had we've training they're put that and a that, training. to contributors. licensed fully of working in out for additional further contributions gone very And that We've participating content, -- can been payout announced, our content that need them, able leverage that action, and first we've we way. so contributors and our course, AI for Adobe

we a that images needed earlier million example, of this new scenes. for decided So, crowd we quarter,

But to to what And were so, We we of put action moderated licensed fully and gather in. in that in. terms fully able a out. it's comes content call

result, the safe use. commercial a generate content of is as we So for all

go second in they're also of market it customers of leveraging and thing using to terms generated. we're because content that able that's The and how content indemnify that, actually is that to for being

And Firefly it so, bring we that Creative integrate our to Express Cloud as very we context into enterprise customers just find as standalone, in, that applications in applications not well. the but and of important be

ecosystem So, has the built on that. whole been

I'll thing on very say been last we've And generation. focused is fair the

And others. we those differentiate So, we're cause of us from and harm. really that any intentionally are doesn't are all decisions for generate and diversity to that people the generated create or things we looking look good sure make content business

Great hear. David. to Thanks,

question And we have from a BMO Keith Capital with Markets. Bachman

look is sort you I out Yes, thank key Firefly to Experience what itself be wanted Document Cloud, tailwinds the Cloud? look in you. the to thanks. at -- given gen provide with associated XX your But we I next things help about whatnot, are the for months. cloud, Cloud, and is it question lot any kind Many as Document over does there's of kind the the But drivers will, existing that spirit we wanted a just hear on that Document thinking perspective any so, of contribute growth go should year? will the of as David, or And we even appropriately and the Cloud. to if AI of next lending perhaps the attention, the of third -- back

Yeah.

are all, of grew the driven top-of-funnel very XX% that based strength currency. of in really happy constant The business book on quarter of had. the is ending Doc growth. And Cloud with First we

more are and more more themselves using as drive been web the a Signatures We've deployed actively a to build a share just on Acrobat rate. so the people browsers. work very of sort but products So, with been of the links, not had phenomenal has to growth within also get great -- Acrobat loops. in sharing, people We've doing we're incredibly as we've got growth growth our lot that product-led able actually year-over-year plugins to -- well. working been link doing and capture they products,

of proliferation a of can usage, terms area surfaces paid got our introduce continue to both free So, this in as interesting grow we've that a lot available that we of surface things are creates and broad-based really and into. it

with anything to haven't gen Acrobat. we relates the makes Acrobat, you is Acrobat particularly think but I soon. have us hear as of expect safely that interesting gen associated And AI announced it distribution publicly to inside directly that We AI with can fairly more about what from

to the generative of people Acrobat are basis, of So, hundreds becomes front if and -- sauce to of able we a their secret AI of folks, workflows into been workflows, that work like on monthly ability on how by our creative insert differentiate really creative I into our we've is the AI in in Reader ourselves. just to millions inserting generative it differentiate think

very Thanks much. Interesting.

from And come Thill our next with question will Brent Jefferies.

What's lingering, what's a driving ETLAs. starting to in and the you success Especially mentioned are you jitters macro that's with of some of go result still happening given that? jitters away those the Shantanu, are ETLAs? see

Express content, to ways plus what can it, of combination Cloud I find think to to their that that people mentioned, that they costs. spending the Anil comments well are the to really improve production a are people the interest AI first as with David that the lot the associated understand there's ensuring it, amount specifically, creating, use is localize Creative Brent, automate content on to and ETLAs in of of both as

Acrobat enterprise, fact Express as certainly is I be a can in application message worker think And much that So, like resonating every people. well. with that productivity the the knowledge for

those to significant both are leading of So, a I amount think great really conversations. of

remarks how mobile prepared of seen, perhaps even his I one the been that mobile Brent. think, tailwinds David has -- we've mentioned in

also So, I think that's working.

is I that investment in clearly well top narrative gains now. productivity think in right into enterprises. these So, both of of And mind play

Thanks.

we Alex Research. have Wolfe from with a Zukin question And

a question. And Hey, for I the generative guess guys, thanks AI. two-parter on taking

pricing we guess should progressive. hobbyist how the and Firefly professional given use a the in and And I about seen obvious forward? model do the the And for typical are very Express. we How generative obviously, user two or case a some credits at many of credits, on How least around of just of you've to of think First usage go within think about creatives? drive likely month? side, both we cohorts kind as for

question going And is of innovation, you the to the new levers generative product come of more is on incremental pricing the Cloud next pricing business, to that AI that's impact the wave from a announced, it that got more fair kind Document come? or of to that think we about given enabled been think should availability, that and about to

adoption segments all first where to how they of think I GenStudio existing with I as ARR. think we Firefly think, the of I the to at important run about in of Alex, subscriptions, about focus recognize did adoption. remember the the associated we new how mean, within fair usage question philosophically, is the for we upgrade. world. terms think in to enterprise we going going K-XX words, pricing how included I think serve. short customers, we user bulk that the other more In the primary first, it's can how subscriptions, least Express the on terms drive well is pricing, of and in to the breadth is And And it the that to pricing of relates wanted the be all the for therefore, And enterprise in largest what's much be adoption, it's getting to an as way to get say the as that

we how that's think about it. So

packs, just exposed ability to getting it. but the need certainly We have everybody the think I to generative

what aware that's menus of Photoshop. of within is uptake real that innovations One in context we've the sort that we did tremendous driven called this

out to you'll being other front so and that it's of rolled the in applications. start So, all see center,

that's of So focus. the sort

get Let's covering of it, them took. the get to to that we that we're make let's and the by sure need all pricing let's we core exposed subscriptions, what actions

So of the that sort was focus.

have all part across just it, how and on the mean, really Not my can think interface want the Doc some know folder, I PDF with but my now, system, again that PDF of I said, open across David that conversational look management people at I I to have? across and I PDF add to have then a right that to that enterprise knowledge the what entire Cloud the things then the universe. is are entire we the how

[indiscernible]. to own So, get you enterprise, within we're train much doing to in your -- start where like you creative, can images your models an upload

do I me with be own having space, a to or as have within the that. Nike, them say, how our of will understand start now Coke document talk want is we we the same to which knowledge how safe customers associated you're that, can think of like all and whether helped services designed The us who an in think interest model? our that to sort AI you're deliver PDFs. number of happen, Adobe we've this enterprise your a to hey, create commercially Whether

should there able are and advantage taking trillions PDFs you do people way that out think So, of also more that's I being that in at the things. the to just the look world the exists, PDF opportunity of

The front, the is last this thing maybe Alex, APIs. I'll mention on

is semantic of as all now have doing can PDFs we that the this So not workflows. APIs, that all context starting PDF, also through just part of specific to of to understanding accessible of what with it's the you are that fact the well. do of We're enable the

hopefully So, you that flavor. some gives

the been high generative careful much designed now, how about we were to also end, allow. right, for we wanted adoption but the generative that make to You're credits credits sure has right we more at

drive convert. real the terms planned, and of to in as intended give imagine, users. do can then really how things and that for that, Alex, usage. thoughtful, deliberate to are, set to Yeah. and flavor to try And things just thing limits goal of considered paid of And apps limits, of is we're one fairly go help and people free we the one all, very it is you low we to with first course there very, the of we in a of them Credit of for The model proliferation was our one for it the them users, single The was did, add very especially all Generative the decision a apps them.

as them out use credits it. time to we as as We We introduce up We capabilities wanted wanted getting that was of And it. be introduce XD, We because the about, are build go the to any anxiety introduce didn't that habits Acrobat and that generation generative we and value continues vector wanted and and Fill want the to more Expand. of happen creation. used using wanted talking will over vectors, design they're Shantanu given put we Generative these month there Generative video We in the product. way. to what then, the in

We now key the that's build so thing. very right using And actively and people to want just those habits. it start

impact you clear. from Dan. assume Super the the in talked product Is about for million? that new minimal million Super net $XXX this Of having very sneak that to fair to one in going I generative you've the If QX, could roughly, it's ARR in $XXX thoughtful. some just year. launch before for it were AI

business from And QX. but now a more quarter say our XXXX we'll FY of what QX. in again, I have when Yeah, to in going modest that targets, it's like modest the impact give looks say we would impact to forward,

guys. you, Thank Perfect.

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

about available very much. own workflows. creation you Firefly talked something to leveraging is partners talk Can customers this and you foresee content David, to and their own about monetization? thanks their making APIs into embed into offerings? Firefly well the you third-party Great, cases And as use

absolutely. Yes,

and things. few enterprises with is we provide to goal now third a for Our is that parties right work

it stack. The that we automation that are first their to into everything can is building in, build their have so they and to ability, this API access workflows obviously,

The extend second or to give them is as well. ability models train the own thing to their

model their want relevant is is content great content foundation that very is Firefly to to model content So, that as be model model so extend or a rely able that generates our we with clean it in brand style. customers you them to on mentioned that can We earlier, our and to their partners commercially. generate able core and -- in

train So, them to give as model the ability their we'll well. own

some we'll they with workflows least, doing work integrate core that give it's then our everything it's as they're onto Cloud can our Creative whether whether last then, existing but so that or GenStudio or them And certainly not platform. products, core well, Express will

as And metering enterprises. will of deals concepts can to then, have course, and API you calls perspective, And from imagine the a that those partners well. extending negotiated be for we monetization Credits, with Generative all custom

Congrats. Thanks the Great. much questions. very for taking

getting we're operator, more one close Hey, hour. to top the please. take of the question, We'll

you. Thank

Jay with Our will Vleeschhouwer from Securities. next Griffin come question

how and is, very acronym inter-segment the Shantanu, the been know, have of you that. attributes most important There DX. decade integrations, and Thank portfolio a you Great. you've as much. over of your last for one managed or product famous particularly Digital the intra-segment more, between Media

from the aside are had differently what you about the Firefly, What some of think you you internal to adoption? in and make And integrations support we developmental customer of the you terms order the in, externally, new the generation generation what products, of to including product Firefly-ing new of invest of the yourselves are proliferation changes have that particularly yesterday, and announced, doing are to the integrations, having new of when support then, packaging? development just Now that to line their of in current internally? support enabling

you'll think see I innovation. certainly at a bunch the mean, Jay, I of more Yeah, also MAX

remiss with as we've provide, in the the how well embed new the scale how that's this think I is offering. we start of betas at have if we've thrilled Photoshop, AI am by in dealing we that there indemnification, with the already how as these saying out didn't run that company and the I'd data, really of unprecedented, the whether embraced with said, how deal of Express, internally, all can stuff all differentiation the be has that, create Illustrator, AI, how off a we we possibilities shown understanding quickly interfaces, I first I as

truly the commercially gone into of lot fact of available, done take very from what the I So, think don't of talking actually have want amazing. I to about that that. and to companies for making internally is we've are that I the pace we the very, there out of to innovation this went a that it work mean, quickly relative amount granted

galvanized, our I Can it, internally we this it biggest technologies. these associated doing Firefly, because as of or we the as day. much day, will Express the GenStudio we we and our for of campaign, we own David really user Got every Photoshop this technology. with think for alluded use all are are like is It that Acrobat using, as or campaigns campaigns to Everyone What we Acrobat's every are campaign, Express And built the on delivering be is use how further well

are say, think embracing phenomenal company? offering, our had very within been use very, usage think I really different internally. because I the And this a certainly big now can all to really So, is it's within the technology that's of us we the change, combined which products, creative XX,XXX the to enabled extent the employees that but we've company,

include associated groups. right that So, manifests now of very pleased that. product reviews our with think which way is And that all three in all one I

and So, there's that product Document sort and part of the little Creative Experience without very from people Cloud of being happen it. reviews

So them. that's one of

we the I with have this the Part of can that do offerings?" we gives personalize put was how D-DOM, offering, Jay, think sure we to quarter, of lot in of already of do the the digital this us excellence part of, work a "Now driven also on that was that that the in confidence we I terms that and have success fact excellence across understanding breadth as make and the in offerings with very that how of team segmenting have that right we they make now the at customers Stock think and these have all and have digital the D-DOM got web. offering. really the desktop that think mobile And value-added that our the of services, sure can good we of of breadth

and of embrace externally, fire a internally real has how think AI. the I we sort from So, this of again been drinking hose

really it. are done so, how two we've And examples those I of think

say to we're had our said, Jay, we've to may of we Where to happen and everybody not an internally It which as to both that have one parallel, else magic has to is as just Today, would thing And happen that API third has okay, really in is prior to but I certainly are. it. in a Firefly which make has happen the so playground, applications. really this, it change. that we've application, of within all can what going the use this happen Express web-only done,

that's So, another release but thing. would the of sure the simultaneous all in the not just available model, investing surfaces, across I making that's say

the with you've And all XD this whether underway. or leave are animation I'll -- or in last or same imaging. mistake, seen investments, those Make those video it's is no for of thing vector certainly you

I this parallelism so, opportunity, I how associated think also the embrace change. that's saying And we big with think another been do

breakthrough now on focused before I But understanding been all announcements that a we of given right all that sort to of at it associated it's the the clear lot I to of and hand think our a this delivered Jonathan monetization pace. this did of was innovation have want question with over But acknowledge again last questions have it. the I

more this more to believe see And targets, to certainly the us relates so, as how visibility how XXXX well a with we we you'll information see it embracing out. as new get both we'll and products. customers. into And why opportunity share MAX, is the certainly start play this you'll as on growth have more At

back joining will to for And Jonathan. with over I you that, thank So, us. it turn

thanks everyone and Shantanu, Thanks, for joining today. us

planned after you'll plan on offerings Investor of At able keynote, one and lineup to Adobe's expand October to have AI MAX starting reach. we our conference. technology we previews the entire the be impact Meeting we across with our exciting and an the on these hope ahead, customer roadmap focus attend Looking the for day how into XX, innovations

Given be provided that, targets call. at fiscal our earnings December will XXXX

you more In there. into give event Summit addition, our planning performance. we're see markets at Adobe in and addressable to to investor We financial hope insight another March

and call. everyone, the this concludes Thanks,

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