Adobe (ADBE) 13 Dec 232023 Q4 Earnings call transcript

Good day, and welcome to the Q4 and FY 2023 Adobe Earnings Conference Call. Today's conference is being recorded. At this time, I would 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 and fourth XXXX results. recorded, year discuss Adobe's On this being will call, financial is quarter fiscal

targets website. The prepared financial may results financial on can press as product those release including and You and on set well as call, Investor forth involve from Actual as remarks December Relations information uncertainty is find our PDFs discussed this results of forward-looking and assumptions. materially of our and XX, plans, Adobe's risks, statements our these in differ today, that contains statements.

please SEC and earnings discuss risks, review we measures. will For today's filings. On and call, more Adobe's non-GAAP financial GAAP on release this information those

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

to otherwise over are revenue our website. Adobe's this currency on Adobe's call now growth will I X the Shantanu. constant between IR will unless refer turn rates, available release Reconciliations and the During executives to earnings presentation, in stated.

$XX.XX, year-over-year earnings year which exited XXXX of new billion, culmination Good fiscal per earnings was for achieved the billion GAAP you record was represents and afternoon, share and GAAP a us. with the company. share earnings for for $X.XX growth. in joining was the earnings and first representing $XX.XX $X.XX, the achieving $X.XX annual XX% per Jonathan. $XX.XX was share ever respectively. QX was year-over-year in billion share revenue year non-GAAP another per both growth, growth. quarter, year-over-year RPO. for non-GAAP of our Adobe $X representing XX% $XX.XX was Adobe, and XX% Thanks, XX% billion We QX thank record growth. XX% revenue, representing per quarter in

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concerns. responding has preliminary and We these provided with of and Commission, Authority the Markets a regulators. We disagree and the of to The to they and provisional the EC regulatory strongly conduct engage U.K. respective Justice Department of with the CMA the statement their are findings reviews. Competition in continue findings objections, European has U.S. as the issued competition

the and EC's current is lines, XX. their CMA's time decision deadline X February per is the As February

a the to have I'll in to bring not decide to now does it complaint, our whether discuss soon. expect line over time a David a momentum turn While to the decision Digital we formal DOJ business. Media

Thanks, platform both Media fueled Creative $XXX and Creative animation of across we $X.XX Shantanu. Document grew for demand for Creative Cloud, video, content web, and by photography, revenue which XX% of everyone. remains global year-over-year to be tailwind the net creators achieved and business. ARR accelerating Cloud innovation for billion, imaging, Starting is a our continues million Hello, design, new In Digital businesses. the with choice creativity XD. QX, in of and

match. and tremendous of and creative March. The enterprises Vector Firefly base models, differentiated Firefly with offering come achieving of Design reached Creative pace Cloud, was drove Firefly in availability which thousands X more highly AI revenue, Adobe growing was a with Image small than for across rapid community engagement Creative commercial grew create AI in and models subscriptions quarter a model, in digital and generative were our growth product-led and individuals, quickly at of MAX business of new innovation, generations with together highlights Cloud in release X.X monetize and The in MAX. QX record record students, professionals, our owners excitement strong We over month product which million Firefly Firefly our continued to our model product with MAX content record online. easily Creative We the with resulting photo traffic XX% million. a event at and drove innovation and and ever Business include $X control customer general social of billion in Los model, levels efforts, their to millions us of from launch model the wide thrilled social interactions quarter. Cloud Tokyo, settings person creators year-over-year. ARR in $XXX and following from Our Net Angeles billion X engaging new before. more is generative empowering amazing XXX new integrations since effects,

for to effects, and workflows icons, Cloud scenes, which enabling Premier Adobe funnel. The seeing students, users Generative capabilities adoption. comes record family text of content Text Creative our of of for making Premiere subscription and among as subjects, already used ChromeOS. and collaboration. users to Express, generative include to the educators now generative improvement including tone a line product. Advances our from to They're across top part combination accessible in is Illustrator with features pros everyone plans. now using adoption move of the and color general on the reach time Adobe Beta, task-based Generative Firefly and Frame.io mapping. advances and and Express, Photoshop dramatically of introduction to of also levels. Express of quickly to significant Vector improved image, sharing gradients. The creative expanding and introduced to new text The performance skill smoother and integrated of our Express and enabling is to in are We widening faster anyone all Expand, most ideation preferences in from beginners Pro text availability template Adobe generative Chromebooks, all Fill and it faster driving faster fill offering editing, even in preinstalled patterns more the Pro generate new it making natively fun are with credits Express

of and collaboration offerings Adobe adoption in to demand and include XD customer Nations. Deloitte, Creative by the overall high-quality Pepsi, with supply United Nexstar Media, Key Discovery Strong part enterprise Cyber mid-market Firefly. chain. driven wins their Agent, upsell content and Adobe Communications, Cloud driven Express enabling as strength by Publicis, video stakeholder for and vector, its image, integrations GenStudio, year accelerating Cloud, ideation, Stock, and Continued best creation which with content. Creative ever, had Firefly

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continues the While we select of out our rolling paid to geographies driver across market. November, subscriptions in pricing routes Cloud be to new new in primary started growth Creative

excited to on are momentum enter 'XX. We this FY as we build

signing. indispensable Acrobat's to revenue sharing, year-over-year files create stakeholder Acrobat of AI comprehension, XX% monthly is in workflows, of $XXX active the stunning our users Mastercard, Strong million expect growing Much demand a Now making and record MAU of Cloud. across become AI served capabilities, Document Bank we Digital Creative on enhance XX% constant in are continues which are is of reviewing, America, in Express collaboration to demonstrating around and State and currency. Business usage value link technology users A customers, XX% how $XXX surpassing enterprise viral Acrobat growth, of include: into with like now Web net essential in creating mobile will customer this a XXX% Affairs, turning X workflows which include and loop has editing, Alshaya, of source easier for devices. Adobe added already Liquid that for QX, Department and out to XXX We lives. mobile. a collaboration year-over-year. in beta. sharing ecosystem. Key files, with Cloud year-over-year, advancing highlights security on PDF new the to are In private productivity, Auto PDFs. additional millions Acrobat our over an bringing growing to new how example documents, accessibility, we Insurance, Document of actions, and new of visually even in ending which Document incredible with increased is users Cloud billion Veterans over great up including million tens has web, This comprehension acquisition and scaling be desktop ARR mobile Document deliver scanning generative million, growth have common ARR, and Farm QX. to documents PLG a Mode we Cloud. Cloud customer Acrobat Document Cloud motions. generative to wins creation, rolled import, innovations powering professional automation document leader achieved been it edit all a attract customers Document enable digital personal document to enablers of Volkswagen. functionality documents of business, year-over-year. surge

Media productivity a been and among in many Anil. best Capping introduction of Mode, transformative inventions year's XXXX. the Generative now accolades, to Generative pass Fill Expand digital of Liquid that the the and recognized coming reshaping experiences. to release extraordinary this Magazine expect creativity, hundreds this Photoshop of with Time I'll it of are the public the We beta an innovations for year future months. It's in Digital business, Adobe

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commerce, empower businesses workflow Our simultaneously audiences, gains. leading and journeys to drive growth productivity engagement data solutions content and delivering marketing customer while spanning insights demand, and and customer

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enterprise with for customers, an entirely areas: developing across that Express one, Experience Experience native year-over-year representing with CDP, continued users had AI AEP and workers new for revenue. GenStudio. In year Cloud strong its like than the Firefly best-in-class enable new across Adobe AI include: two, reimagining three, Journey X existing highlights Creative age Analytics. generative achieving business. Release of million of billion provides together focused our business was an interface QX applications a Journey in augmenting products; our Our XX% quarter of with Adobe intuitive our net applications annualized generative we assistant momentum to demand business to that solutions Platform the help conversational of $XXX Adobe Optimizer provides Customer content in solution creation, drive like growth productivity current to $XXX content. significantly knowledge mid-market end-to-end for Cloud, applications with of Cloud million more in in inclusive applications, use $X.XX efforts and spanning and Experience offering Manager; core an and to did QX, growth. brands the Subscription greater a real-time Cloud ideation, AI revenue strong at built billion, enhances Experience first book the GenStudio, Adobe Adobe with we GenStudio are $X.XX and and Experience Business rising production activation. and the exited meet brings and comprehensive

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Dan. looking our are We leadership forward I'll into and to to XXXX. pass continuing momentum it now

Anil. Thanks,

Adobe in billion, $X.XX of billion. In growth 'XX, of of in XX% represents earnings in revenue cost the and and today What Our was XX% QX of diluted highlights strong the year-over-year quarter business sequential currency. the a net quarterly FY increase QX share of for growth non-GAAP company 'XX revenue revenue a GAAP RPO to $X.XX per of billion; which each FY billion; was $XX.XX and innovation Digital EPS covers constant Digital FY approximately fourth year-over-year delivered million; 'XX our Media of year-over-year. FY we currency. deep growing XX% of approximately achieved ARR represents included: year Media financial continued included: GAAP adding the XX% ARR billion, was our share billion we constant in outstanding segment, in net $X.XX positioning years $X.X customers, and growth. $X.XX for our and XX% XXXX revenue diluted non-GAAP results. product Digital and $XX.XX or and represents $X.XX our growth margins, record growing of which $XX.XX by billion; Digital Adobe Digital execution, earnings quarter, per Digital of results report repurchasing understanding Media of Experience which was. from year both world-class ever; year-over-year, record XX% $XXX revenue a earnings flows XX% and of billion; achieved of In 'XX, $XX.XX, financial shares revenue operations QX $X.XX respectively. and growth Fueled XX% our $X.X was of EPS achieved cash Experience new $X.XX and shares at financial Digital approximately a XX% highlights or stock. In $X.XX, QX billion, revenue year-over-year RPO $XX.XX XX.X flows repurchasing $X.X of during of from the currency. stock operations $X.XX constant billion; cash of year business billion; million Media exiting million X.X highest year; billion; billion of the or new Media

across services, of enterprise. to strength demand in market Acrobat on strong as million, Document constant added campaigns demand holiday growth in a as performance customer and outstanding to the offerings web fueled in Express geographies purchasing a our constant emerging ARR. which apps, PDF a particular revenue ARR Our offerings; by segments for included: increased drivers shopping strong All Document usage strength was growth Acrobat users segments, an individual a growth Creative with in the of continued students our subscription typical including to conversion; was drivers $X Document kept ecosystem; well $XXX new constant in QX of back-to-school customer $XX.XX bringing currency, new year-over-year Web; Apps Cloud Reader quarter. proliferation, graduating we of in education, in geographies; including year-over-year which represents routes growth the revenue link new customer full-priced free-to-paid we Creative strength entering offerings. Adobe represents quarter as Acrobat and which Cloud subscriptions workforce; driven Cloud significant quarter. our of continued record record included: virally including with customer or this Firefly CC and off Creative the and strong of sales enterprise, Fourth quarterly throughout Digital targeted year-end new XX% $XXX added weeks. Fourth Mobile in quarter traffic; quarter XX% and upsell the of which Stock, its and markets; well peak offering quarter SMB achieved $XXX by million, the achieved of and XX% desktop Sign, of and single photography for strong as migrations billion Cloud performance across in by and We all growth subscriber Creative or of exited quarter best in new ARR; of and terms a and sharing quarter strong are Media QX year ARR funnels, including Acrobat Driving imaging net XX% collaboration which new Adobe quarter strength $XXX Frame.io growth currency. ever the billion, net in the for as and of currency, and net our million and result the We net acquisition seasonal million strength during ARR was

Experience greater billion, strong of large enterprises in growth. drivers from real-time and to XX% margins with data making Digital solutions marketing in platform our operating value quarter and book XX% In Turning achieved data than or the and GAAP revenue. which new demonstrating on of pipeline multi-solution native bookings that sales, was EPS growth throughout $X.XX We AEP QX in $XX.XX adopters XX% was and subscription than we're our constant deals North RPO the expectations. insights, grew revenue and and for FY across quarter faster offerings; growing strong QX, fiscal year-end Adobe's across R&D, our in XX% included: AEP, Experience realizing in segment. $X.XX growing and we with growing XX.X% effective billion, and year-over-year rate XX% our XXXX XX% by on early in investments continued Fourth disciplined Digital 'XX a the represents content solution. We business year-over-year year-over-year; Workfront non-GAAP revenue achieved and integrated currency. billion, pleased applications, drove are interest with momentum transformational exiting with customer closing strength retention tax a QX America; basis particular and basis, growing and success enterprises; year-over-year. world-class strength of with our exiting net we line for GenStudio dollar solutions of

after entered of and from and remaining flows U.S. into previously repurchase in of third the quarters granted $XX billion. have was QX, 'XX. In agreement, And position discussed we billion in of authorization $X.XX $X.X we currently a billion were taxes exiting from our December FY quarter the XXXX. making cash million short-term second deferred in cash share we that billion $X QX federal ending of and $X.XX $XXX a payment billion quarter the operations Our investment

the million As Media to $X.XX new revalue in approximately and we revenue this a ARR resulted XXXX segment currency ARR our year-end. Digital $XX.XX investor of to total to rate 'XX, and Experience macroeconomic which $XX.XX approximately $X.X updated share to basis $X.XXX current per a 'XX, subscription our foreign FY to environments, $XX.XX rate of billion; GAAP ARR Experience basis and Digital have a of revenue expectations of constant billion we on are segment entering to at across Adobe billion; of of and sheet. Factoring momentum and during year increase billion $XX.XX basis; net reflected billion; balance $X.XX now FX between Digital the revenue tax reminder, billion XX% $XX.XX a for targeting: measure in earnings Media FY December on in exchange revenue and $XX.XX ARR a Digital is billion; for to non-GAAP $X.XXX Media data fiscal year billion Digital $XXX non-GAAP businesses $XX.XX changes billion and of per a earnings XX.X% $XX. GAAP of of billion; on share is $XX.XX;

is As these do a planned reflect reminder not and of acquisition our as Figma. customary, targets

new the normal strong expect quarter, first a into summer QX We with in seasonal business QX a year to the seasonality for and finish throughout seasonality to stepdown QX. year typical QX, the growth from sequential

improve sequentially cash percentage X R&D operating as of points next by deductions tax previously expect to our the capitalized our rate increases next benefiting We flows year. purposes, for year cash tax in FY amortization our 'XX

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

in Experience carrying expect investments of margin XXXX Cloud. summary, to we a growth. In Cloud, Cloud, company's QX starting couldn't in typical annual the Creative into of as result sequentially, up drive Document increases disciplined stepdown momentum performance merit is prouder we're be the QX for and a margin operating implied the across While the I seasonal 'XX FY and and

success. for to of you. execution us back and of sustained profitability speed scale, position years Shantanu, strategy, Our

Dan. Thanks,

Brands breakthrough be innovations. Best for year's Fast the work. Adobe were a Global eighth for massive as year as a approach their addition in a best incredibly grow the were customer Glassdoor base, content all are the brand brand well AI innovative Index. to focused one Sustainability lead our Dow again us businesses to in our proud Interbrand and continues opportunity, to rising of again row. Digital as ranked of leadership. map, and sizes Adobe's to experiences. Content global accomplishments, Jones credentials remains named positioned one responsible financial to is thanks In places as road the industry once in are our to the demand to world. Company on XX Adobe tailwind to and consumption on we and recognized expanding We employees this recognized strong best listed and of capitalize top the And by customer the transforming

us. that I'm line ever 'XX and confidence days you, best world-class and we certain profitability. now questions. drive continuing ahead fiscal top financial take of Our targets Operator? to strong than in growth more reflect Thank Adobe's are our will

Instructions] We'll Goldman Rangan first our Kash with [Operator from Sachs. question take

the it and you of BM [indiscernible] AI, generative gone from started 'XX, has you you but and very got that quarter, and improving for those going is on pricing the very all stable including as you that unfolded in yet we help in like going process. to definitely what to but feels general, exclude economy, Shantanu Because thought isolate the how software economy, have, to happy if Firefly. Can the metrics like thing the same optionalities I'm your the the us you seems holidays. Congrats XXXX, in into the And year tailwinds 'XX it's conservative. just maybe guidance? and as looks just footing wondering, that's from your guidance your and into do guidance tailwinds benefit last that, economy's got wanted understand the it like the you factors, not team, understand, if this from are different right year

$X with $X really a certainly, of business, was performance. Digital Thanks, all what Yes. and we certainly, I ARR billion thrilled aspects year Kash. exiting in now phenomenal quarter, book whether the of across mean, business DX it had Media the billion

I you mean, if about guidance reflect, talked -- you 'XX. the 'XX that and of we gave Let's beginning at the

we ]. XX actually [ you had XX ] as then upped you XX XX ended with [ ] to know, to first, If and it, recall, guided XX XX [ we

to your delivered customer flagship with new making on sure point, We're like surfaces products. great execution on our and some expanded innovative so available certainly of base We've products across the and we've front, products surfaces. all focused are And Express all the Firefly.

drivers so your on are the do to point, guide have very I take we multiple And seriously. say growth we focused we and our monetizing mean, opportunity. I would

want large of The and again, another it's other have the year. way guide of terms execute record in opportunity And what against looking highest issued. highest at go, guide it, annual we is Kash, to this our ever we've It's our QX ever. guide

is business, good. there seriously. certainly So take point this our The but of feeling the we're the year we at very in guidance momentum

happy Thank the holidays. best so All much and you XXXX. for

our with next Morgan question take We Keith will Stanley. from Weiss

to a actually those at basis. a was more adds actually you the price the or last Digital in comp of explains growth for Cloud new little surprise on were why have Document equation investors, net get from you had a in seen I positive trying momentum translating strong maybe new growth this year-on-year year saying. a price in adds. in particular? for isn't Cloud bit ARR time look was think ARR this the what a below looks increase to Creative something we down since there QX but was the Really Cloud the that's we're XXXX, surprise Was is think in to trying vein innovation net the million. And and particular. on And $XXX increases QX, and focused into we Kash Media this tough at or net that new similar it ARR all the When net we've out. strong investors the excitement Cloud. something Creative on Record Creative quarter, for of Firefly, year all Creative figure where is and dragging Cloud, a first that that very, year-on-year saw out Adobe very a like MAX I side we negative like

Yes, to here. that, happy take David Keith.

noted. excited We AI first above DME the and obviously in for of coming new business, over customers mentioned an we're expanding as all, net $X.X you So gen well billion of base 'XX, the guide. momentum you really ARR, a from results as of lot about in see the

was part was of new in delivered net in constant a ARR As -- this, ARR new we record we QX -- delivered net currency. what

your Now you commercial is that interpret this Cloud new record and how subscriptions because underlying Creative year. we see Creative of all the a in numbers specific number the momentum momentum strong to there, question Cloud very on delivered to

really forward. that just but quarter in of foundation is also in coming we customers that not we and this from and the how really benefiting base So the going what build on get

really So sets us up FY 'XX. it well for

As you FY new it -- look look FY you in as you Creative the QX at ARR the at ARR, Cloud quarter, 'XX, relative QX have relative 'XX to numbers net for to mentioned.

QX Creative to lower had FY consider X accrued Cloud that FY 'XX. pricing to You now actions that 'XX that are in much need

on, impact of the currency QX Creative grew normalize rolled the constant new in So if that and pricing basis. came that net off a the pricing for Cloud you on ARR

Creative related backed you ARR of to that first, if grown Keith, to out would have said, subscriptions punctuate in as just points record it had a the was it Creative XXXX, David ARR And X pricing. and for the QX

to extremely continues business to the your be point. healthy, So

question We from our with Wolfe Zukin will take Alex Research. next

that up year, how into you're base Creative that tailwind the is Cloud specifically about beta, next as type functionality 'XX? of at 'XX, uplift, at Cloud Creative for the for product of look renewal we to Cloud calendar look an from should pricing AI as monetization potentially Acrobat, Document public looking pricing at the we maybe releasing much the perspective AI for specifically to how and guess I both think and in from we

try to lot tease me let into Yes, that it Alex. so apart. packed happy take A question, to that,

and pricing. start Let around of me the question impact 'XX first the with FY

do attention and to just the mix impact offers in everyone of subscriptions added as want a there's couple bit more ARR from value. I I higher know we have that had subscriptions, the lot that QX; just because do points. you as a I we've we transitioning that, as primary a upsell beyond number pricing want you've always take on and of to price to from to for noted driver the that, 'XX. ARR and be subscriptions that in that of have been things: of But I increases is And points of they're optimization. And down years, add-ons lastly, in few remind a that we've sell mentioned, the Digital Before where does new step the have now include last people this had a All which, Media then even the plans course, capabilities cross-sell, we way on; Apps to we jump seen stress offer mentioned straight pricing price a new the plan All Apps all which well. new of growth to the number is back record free to into all of broadening of we continue really will believe and

opportunity that Creative also on the base to as so impact your the in a on years specific we're new that customer of value it gives will very forward. recently the us So the new pricing, asked. to that's Cloud was ahead things: answer. a our you But focused question less first, the acquisition. But you and changes move so funnel you to announced price Hopefully, half than pricing leaves specific we question in consider top need why few

actions back few as be the we previous visible to pricing the lap of in we the FY out about from and I ARR in impact new talking the half 'XX over quarters. net pricing more as will that year the Second, last Keith roll next was

'XX, the half new ARR. benefits we'll more net into of visibility So the that second to FY see of

'XX is pricing plans 'XX across to than geos really impact and And fourth, was the if actually in year, Third, to and pencil, over will actually in of that 'XX to Cloud. FY prices FY sort 'XX. given impact incrementally Creative sharpen out ARR lower rolling across across the the on ARR benefit your the pricing be spread we're you want these

quickly then the through the to it next so strategy, public growth and year. really people you in is free of we seeing beta. bring monthly term. all to market, not in Cloud lot web the as really have gives the for Acrobat integrating has momentum a to of there the then mobile that service which, to AI also the converting sense. But motions long to in on about about of performance you A about a we're and hopefully, by up now our the around we're just new in back paid been But later subscriptions, a really assistant that we're business Cloud, and the the being base product-led what comes So we're Cloud. and few it way, in driving which of core year again, that usage really reader the down into is and as private bodes out excited a that. What comes that is to why ecosystem excited thrilled GA base. on really gives which this I desktop, months the the start well able the the single excited that And this good bring back Expect Hopefully, pretty mentioned, the we active we're but to end of with that. with on Document Document beta as Document sense come

Cloud as year well. So lots the excitement Doc ahead opportunity and of for for

Evercore our Kirk with question take Materne will from ISI. next We

uptick of terms particular? new In the being in talked on qualitative the more, those again you're expand an guess in seeing again. enterprise I -- continue like? and sort they upselling on congrats you give I seeing about that strength into leading to talk product commentary, indicators in just can discussions the quarter you're go what holidays. can what guess, of your and back sort in that subscriptions fiscal of is And you of enterprise Are an this enterprise in of Express of are I'll reason color enterprise 'XX? and happy about the David, base. just some part us And you then Firefly specifically you Express, to Can on customer

start, then cross our I'll add and X Maybe Anil because Yes. does this over can businesses.

So with Firefly and the Express, to see. that continue about very we momentum excited

it that stand-alone see of workflows. And our see usage of it business context it, the generations and but integrated existing using starting within ecosystem into but partially strong X.X we're interest as Illustrator to heard You the the these now and and Photoshop billion just we of so using a lot products enterprises. we as adoption also really really, a also in of as continue part part crossed to not of existing

their content been assets number own them which customers customers growth that in is already we've of a with extensions also into model predominance of own bring QX adoption seeing and generates. they that the working enterprise of for not number So so enable custom Firefly their with around Firefly, the a but can to engaged what just have pilot we're

that posts start to are And APIs into in then capabilities people enabling start create are workflows. there to things of expose of and features it, all in which create to third, and content sort assemble trying has stakeholder also course, to not schedule we're start can we're, Express, additional can now around do workflow to also tying all to you the Photoshop social own Second, are a from it using just marketers externally. and that Firefly that but that working it post it, the it its build so into it like their existing Adobe those multi-language then already translations, connecting they through so ability Firefly

have exciting the doing. very of and we where terms that's everything things get is interesting that with GenStudio and connection Anil in So

have Just discussed for is up building production a agencies well. amount speed as brand of number primarily, And Henkel it of quality really like at, and in we've since had Cloud, we And Creative like what we customers Cloud, number of the company let grow enterprise what other from at around we on scale. Pepsi on Summit. to Xx of can back areas what Adobe content marketing, to interest, the Experience create brand is of in how Manager that, combination and the of at enterprise people hey, a cost and lets producing the looking Verizon announced both tremendous get have and of we we How GenStudio assets, own agility according a Experience The the especially other the content that enterprises MAX, well standards? And Express over every as goes effectiveness kind as it Digital of Creative the and expected at content in content? next years. in the their the world of we the can well portfolio, to couple as as demand

So seeing that's we're a interest amount what that. we're for of and tremendous seeing

Firefly and the that, mean, think a standardizing the what enterprise. is they're about the on I doing entire bit I'll are maybe for just responsible thing add fact And I generations we Kirk. people to exciting have little that

that enterprise. or the do vector in for to that do So how all we or around the they knowledge for interest image all been generations the other of workers standardize has the level want

really Firefly. So of good adoption

from next question Karl with take UBS. our We will Keirstead

subject, the a competitiveness and could that's I'd the your some ramp, like the and revenues Canva driving now color it's ask changed versus you to Wondering product enterprise. at the that in all. plans if offer around being Express Express adoption user Creative driving adoption about whether different versus have sold on

happy take great Great. a to start. is to off Yes, that. Express

added will PDF We canvas. paint a things since as change template an you for given can you built draw fully Fill video the very that support went create response. the image and and so we've of with a iteratively the there template availability of text and now on support. text effects, Generative on it. fly. of latest let formed to We've in new Acrobat more integration also text positive well. to remember, with innovation. in We've then we version reaction users much with workflow too, really lot getting And you incredible ton and very, best-of-breed August we frankly, It's been in added QX started you As a general but Firefly

XX don't organization like an people now over on One our some users start enterprise, which they paid We've up And their exciting now quickly broadly. What quickly can Cloud launch, to very the that base do seen this see. schedule talked think, broad-based this is disseminate We've coming seen can momentum extensions. GenStudio. And have so police brand geographies we've setting year the partner part locking the we've workflows enterprise selling adopt this that I Creative of in, benefits we've from languages. is then integration from you and bleed when to perspective. very are also, and that growing manage quickly Some their want the and And template again, plug-ins growing usage in a education about, this to can team trialists really, auto more enabled locked integrated that And we've is thing exciting in last AEM terms is elements make you brand and the come. just features this. starting after in is that translation of been for now like and the new Anil social usage. core very we up sure ecosystem very enterprise we and as core things of has how opened are added changing We've seen other into to a post so so coming well. to for posts. Express as people The is multiple

for users mobile will able be the be a have release We go. use exciting this on out, very to coming which to

thousands to partnership, so going a anyone of that Chromebook have new is We Chromebooks using that buys our beta. have already We announced people this.

deeper their Wix workflows. for have with Acrobat. be like integrations folks going into to doing We're We partnerships

very a people using around of lot a the So We continues we're question. very excited funnel. so focus our this answer be goes. That simple a broadening want of this, way to about where is to top long primary

products. for our as we to paid mentioned, journeying and continually, and other and I But the over as broad Creative to upsell course, be constantly and to in opportunities primary continues that, people Of Cloud adoption are proliferation. plan of cross-sell part focus

with Zelnick will Bank. question We next take from our Deutsche Brad

for Anil. maybe or is This Dan

strong the As the DX degree about momentum things within year-end that XX% next and account talked maybe dollar for ahead, your pipeline overall you're and about of AEP business, you that apps like we about the decel great retention bookings. But is or for it guiding strong increase the bookings in conversion the net the to it's of perhaps business, hear book think what other factors year? into native

Thanks, Brad.

We massive are really multiyear excited this about opportunity.

customers. we and deploying if million If going these And our into are. enterprise the software world, long-term then some impact, annualized cost seeing you like example, customer transforming first that caution enterprise we're companies we're would software look AEP, it and the said, a book But of said, deals that at the the that there. next what take result, in scrutiny of get imperative total definitely of year, the definitely we as $XXX ROI. at transformational payback there's at everybody and ending to the customers million both the And business. With and as any see for $XXX around recognition mid-market their verticals other net you continue new both our across our mentioned, it's recognizes market, over leader as from look we talked that with about, Every just customers. that seeing macroeconomic and customer And in experiences. our do with in pipeline and to the we the business we industry analysts looks be quarter well as did get

take Thill Jefferies. with from question Brent We our next will

review the assumptions in if Dan, could guide. you broader your just

from environment why the if to we think improving? high you guiding any it's just Do stabilizing? you're there's concern think where Street just us give the terms just little relative a think you're you your still thoughts view of guide, a as Shantanu, you like into is And the tying year. top Street happening was of you next to at. Just I go guiding of in level in, terms maybe could in of where what line do sort feel is the

Yes.

momentum of as you as the and from innovation question, of the been a this we The flow profitability FY at for top see performance we're financial When both engine take looking look at, think in in clearly, about strong we're time if Brent. lot see standpoint. and a That's business. into So company's the as where 'XX, guide, company. at the forward a point strong, the of standpoint incredibly has we well thanks line cash we

So the business. clearly, momentum a around lot of

a where operating about we margin. printed XX.X% I today, As think we sit

take As into can look next account we forward we everything we see. into year,

in the better said, way. an opportunity expectations Shantanu is we be and we company the a we guidance that. seriously prudent to set. There's that expectations the take As Clearly, set driving towards than to going do

the we innovation, only growth. When towards going we in of about about invest is to going we're those strong. drivers This engine of think is profile, company the to growth. continue I invest to to to in going but drivers disciplined orient pipeline we think of think As the be going growth. We're to the continue investment not are

AEM to book On the growth. incorporating products. scaling and engaging We're from delivering sites, and technologies solution, strong content those customers groundwork chain DX ideation side, GenStudio Anil into go with supply the and to of AEP the talked activation, apps, intelligence creation business, laying with that products, about to motion new strong

It's in be in public months. it beta. On to AI Acrobat. the see across can private DME you going beta the assistant in the portfolio, in coming It's side,

deeply the investment at it technologies integrating innovation. these relates There to that Express portfolio. You to be throughout going product look as and continual Firefly, is natively

as momentum QX, the guide into continuing. about think this you As the that about see think momentum you exiting and can year you

for a year, shaping the around got You margin last throughout a said as we can key markets. and investment at you our earnings little markets in day company as leadership operating FA the call, expectation we then are cycle, year's and mid-XXs the in see drive at our bit. And up a trends catalyst drive this those operating as core are we that margin

core that to and to see the business taking investment a everything set it. nets if better an lead a macro it do to drive standpoint expectations, we opportunity Anil into step profile about from going going we certainly than where talked there's we're that back, account those to we're So again, the do

nothing to just to there's to that indicators it Brent, first, as the relates give economic for asked, us anything pause add maybe since that me that, you we concern. And clarify, saw would let

So by let that. off start me saying

meeting, our would strong I quarter. investor a at expect you we we told think that

momentum acquisition, that's driven I think to and acknowledge think some the as it sell would you the and of what driven really some a to spread I put 'XX numbers Creative which we the is And perhaps pricing it's business. maybe strong continues. And and that 'XX. impacts. the the engine posted And the bit at in base be new by relates more Cloud, looked put going 'XX will and perhaps in of of little more than out that in side customer percentage that they

platform. On adoption new by really my Document strong news into the good is the Creative from massive perspective, Cloud, being So driven results. about it's

it's $XXX business, I next-generation that think is of I Digital I asked will apps. architecture. as reflect Dan that said, the pack mean, great also the mean, the customer should annualized book the million question. which that of put more on fuel as adoption mean, as think well, AI I in I I help million experiences, clearly experience we that And AEP the future Brad and the quarter, digital adoption. driving $XXX of see there to Experience. know

positive go feeling to going and Brent. we're against So that, execute we're

horizon the from And that have not we another I year. to going of and the way, that any is fiscal would as that that of we're that nothing terms in tell So invest mean, in cloud well. we're we the competition both mean that model. see either does the profitability for us not, on as poised at numbers 'XX. economic as look or the -- And not foundation posted, QX all to well in great

really So I feel good.

going decent then a to were into pretty be expectations a thing the X ago, the was performance. we to year And headwind to year If FX going here the just where Brent. add,

a spread QX, the You pretty in results spread the started a We our then constant you to between By we and compare that with as-reported constant reported compress. way the see basis. numbers currency to currency decent it time got we've saw that in QX. in

that a slightly slight a versus to but to 'XX, maybe As with footing year look set call just precision, up I seeing ago. being really I more into of FY slight we it's a early maybe forward headwind and Too were headwind. a neutral see it what different

our next with question take We from will Griffin Securities. Vleeschhouwer Jay

talk RPO growth talk by that You about the revenue talk you'd it continue as in fiscal 'XX? several noted 'XX? record you in that points thinking in be fiscal by RPO you're did outgrow able to to ingredients about increase. to how to about the any the you for Would considerations will about segment strength like or perhaps including And quarter, drive RPO either the that? other you sequential in continue Could expect to

Yes. Thanks, Jay.

Anil dynamic the top pull driving the see some this of on a of talked imperative side driving line Experience seeing to of new We're As a those market on enterprise. we're choice about in simultaneously we've transformational similar the and with Customer the being around that market. the with pull deals, call, line threads the bringing I are technologies DME investments an platform Management, strong We business. from the productivity bottom the and heard large that together

it see, QX. be to year. sequential against saw it for RPO the company, should dynamic that throughout that I the out strong environment as type the opportunity, Every we for produce large, so and but quarter progression we QX backdrop that performance around And another given be of the that our RPO won't goes to net the year setup that

wrap Operator, up. questions then top the we're getting more close of take hour. and the We'll we'll to X

our take with question Kalia Barclays. from next Saket will We

to model the for Cloud started customers' really subscription? Congrats there that Firefly I'm packets early I observations any credit just -- know they're about for initial with allocation for X for on you. the a weeks get those on the Firefly how I seen you've willingness just and Creative they David, credit packets on the just commercial a subscription packets. consuming Are quarter. add maybe nice had ago. sorry, that or question maybe commercial that

take Yes, happy to that.

said capabilities, is and of with at drive working. philosophically, usage what think the all, I see focus meeting and of billion to you images MAX, is at we our the First That primary strategy back to investor going generative that the generated. here X.X

into intent those. And express seeing adoption generative the credits and we usage we plans. ability directly paid packs use priced those of the getting to -- within is capabilities plans paid integrated the we our Secondly, plans broad heavy the of what subscription are generative driving of and the with sorry, paid proliferation

earlier in that fastest-growing mentioned past, the as we've is the as put think in for we memory. think feature into I we've I Photoshop in well -- mentioned today Generative example, Photoshop, I Fill, recent

great. integrating plans. But The happens, itself plans customers product of our then Express that next people that as And applications like drive take video on course our be that will we in then the more capabilities is which the the capabilities subscription really the that in expect few drive utilization rest don't in getting impact -- flagship become that and will growth year and a market primarily existing I is or than and that the is a to So drive to ahead. great. usage drive right generation, the But will paid subsequently. more will of more this will generation, And cost focused for natural paid into Adobe into generative driver over the have be will more and the the care X generative usage inflation to years will year is of what years a sense. integrating personally happen packs and in existing other large workflows. we'll short term than that and

We will take Moerdler Mark our final question from Bernstein with Research.

Dan, it you I'd and little discussed were bit. MAX, on a like paid we excited drives how to how At adoption. Cloud Creative seat seat and look Firefly

Firely-driven you can you've drive it be? it about a market, could time how this how expect strong of think seat should in we bit Is that you the be higher going enterprise? And will had how explain are get because sales lower unit paid think seats you to level? be a to offset those by into entry Or priced the price going they're do that these growth? will Now

Mark. Thanks, Yes.

to at think life, them customers that case technology the into I the area the as drive workflows part a this of lot in gives it surface value define use to an bringing stand-alone the capabilities needs the of of creation specific core but us particular application they meeting ideation are flagship process these their deeply in applications and and with and a needs. process, where integrating

really of efficiently that and segmentation establishing creation companies velocity of product top with people process how across portfolio, funnel, bringing driving ideation, activation customers. into And the the and so engage creation, instrumentation enter the to to allowing that refine then efficiency

So life it the very our us is them DDOM is company the the digital over way cross-sell skilled then use our they in them groundwork upsell something with journeys, specific case ecosystem. and their customers take engagement to lays at more the with on which are ecosystem, for in of to where and touch bring on board

to thing biggest product and they everybody From the for over blank that increasing us, Firefly perspective, fear that will set I have. we further products we affordable those do when want our of you help And fun how get inflection think make for about one is Mark, that accessible, do is of a points the it, screen customers. think

I AI to Express And that right other to an is so part. do introductory more into And the individual a agencies, the as you're certainly is them the adoption ability the that entire to would sort you Express, process. And about pricing, an millions be creative to ideation start going just now, just that into lot whether which coming is the we're of that. whether Express templates? be as on-ramp you're user, Well, the Firefly think the about worry and get have of want creative as an to first, have other to of fold. seeing it and completely and in ability inspiration, right brings Firefly this people all change used offerings is

own our models. have We

to have Firefly make take And anybody and available. idea that allow will they that creative so whatever

helps think Firefly really I with So Express the offering.

upload go spectrum GenStudio, on know spending you so own the On and marketer this. if campaigns? terms is that they therefore, the see both Firefly into look ability of and And models to we greater a them the usage brand mentioned then have Firefly, it's every we do well providing adoption of CFO fact Firefly have really I agility both consistency being at data? well where certainly now, their and the that mean, end they other do the at the monetization. And to custom as that's the pricing as if in and all Cloud, my you're whether video, CMO and David I as Express will, are in of aspects as Illustrator, want. add adoption much in get as uplift going integrated how of models retentive the for the both can as value, will Photoshop the am think lot How about as right interesting functionality when we that well the then I you for I single that how driven, Creative of that's I in enterprise, drive worried

is that across a catalyst adoption people localization own of content, great the really increasingly of of as also variants Firefly that's usage the have in business emerging we're usage the fact the models, markets a In our emerging to these we shows seeing where technologies. markets, particular spectrum. And and for all So tremendous that. are and create content used there

have PDF, we have ability both then Document more for as thereby the compelling. think said, technology conversational we and creation David to exciting. the both when same with PDF, in about really communication, and that making single So far again every have And impact Creative its and that do and Cloud collaboration take interfaces in you summaries

which monetization and usage to great about is in be uplift Clearly, this of we was for that Experience to of ARR extremely we will of set Cloud a side. And spectrums, line proud uplift kind what we able 'XX book us, look new is we're and RPO Cloud, more the drive And across Document you as questions same mean, therefore, we a that a have. Acrobat see that we what it driving benefit that think Creative last all going And be as to and going to around the pricing the 'XX, at the I is there's again business. And since impact FY you're on think question, and business, overestimated. perhaps and I the really I Media we're think revenue, know And exactly were continues how growth profitability. and top accomplish profitability. we Cloud, continuing of is same, and confident growth, said, been multiyear of innovation, to growth be that. us Digital a for our was think about the take business, product great great on pricing

to So you you hope happy on holidays, see we We and we're like us. joining you you Thank us, call pleased. of many for the being wished really and appreciate soon.

concludes everyone. holidays. Thanks, the call. Happy This

Once again, this your you concludes participation. today's call. for Thank

You disconnect. may now