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Good day, and welcome to the Q3 FY 2026 Adobe Earnings Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Doug Clark, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's Chair and CEO; Anil Chakravarthy, President of Customer Experience Orchestration; and Steve Day, Senior Vice President and Interim CFO. On this call, which is being recorded, we will discuss Adobe's third quarter fiscal year 2026 financial results. You can find our press release as well as PDF of our prepared remarks, financial results on Adobe's Investor Relations website.

The information discussed on this call, including our financial targets and product plans, is as of today, September 10 and contains forward-looking statements that involve risks, uncertainty and assumptions. Actual results may differ materially from those set forth in these statements. For more information on those risks, please review today's earnings release and Adobe's SEC filings.

On this call, we will discuss GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates and non-GAAP growth rates, including constant currency rates. During this presentation, Adobe's executives will refer to revenue growth and constant currency rates, unless otherwise stated. Non-GAAP reconciliations are available in our earnings release and on Adobe's Investor Relations website.

I will now turn the call over to Shantanu.

Thanks, Doug. Good afternoon, everyone, and thank you for joining us. Adobe reported a strong third quarter, achieving $6.76 billion in revenue, representing 12% year-over-year growth. GAAP earnings per share for the quarter was $4.62, representing 11% year-over-year growth, and non-GAAP earnings per share was $6.13, representing 15% year-over-year growth.

Over the decades, Adobe's evolving mission from changing the world through digital experiences to now empowering everyone to create has always focused on creating new market categories to serve an expanding set of customers. It has enabled us to build industry-leading platforms and products in the areas of creativity, productivity and customer experience, setting a high bar for innovation and category transformation. Adobe will leverage AI to increase the reach, value and impact we will deliver to customers to drive our next decade of growth.

AI enables us to democratize access to every creative discipline for everyone from the casual creator to the most seasoned creative professional. It enables us to meet the growing creativity and productivity needs of consumers and business professionals who are looking to stand out and communicate more effectively. With AI, Adobe uniquely empowers enterprises to deliver and orchestrate personalized customer experiences.

As I reflect on 29 years at Adobe, I'm most proud of the innovative products and platforms we've delivered to customers, including Acrobat and PDF, Adobe Experience Manager, Adobe Experience Platform, InDesign, Photoshop, and Premiere; and more recently, Express and Firefly. It's incredible that these innovations are now used by over 1 billion monthly active users across all businesses, a number that grew greater than 20% year-over-year in Q3, with the creative premium MAU crossing $100 million and growing greater than 70% year-over-year.

We created the Digital Marketing category and are the leading provider of Customer Experience Orchestration solutions, delivering over 1 trillion experiences per year for enterprise customers. We're just beginning to capitalize on the massive AI opportunity across creativity, productivity and customer experiences with AI-first ending ARR now exceeding $650 million and growing more than 150% year-over-year. During this time, Adobe's annual revenue has grown from less than $1 billion to over $26 billion.

I'm delighted that Anil Chakravarthy will become Adobe's next President and Chief Executive Officer and join the Board of Directors effective December 1. I would also like to thank David Wadhwani, for over a decade of partnership, leadership and passion for our creative community. I'm committed to working closely with Anil to ensure a smooth transition and support Adobe's ongoing growth and transformation as Executive Chair.

As an experienced transformation leader with strong values, integrity, deep knowledge of our business and passion for products to solve customer needs, Anil is the right person to chart Adobe's growth in this agentic era. He has a proven record of building and delivering category-defining products that serve a broad range of customers. And I have every confidence that Adobe's best days are ahead of us.

I'll now turn it over to Anil.

Thank you, Shantanu. Hello, everyone. I'm deeply honored to lead Adobe at this pivotal moment. I'm excited by the opportunity to drive Adobe's growth and leadership across creativity, productivity and customer experiences in the area of agentic software. Adobe's proven track record of empowering individuals and organizations to express their ideas, tell their stories and make an impact continues to inspire us and fuel our commitment to customers.

Thanks to Shantanu's exceptional leadership in transforming Adobe's product portfolio and business model over the decades, we are well positioned to capitalize on the massive opportunities ahead. I look forward to working closely with our employees and Shantanu to continue serving our customers and transforming Adobe in the era of agentic AI.

Turning to Q3 results. Subscription revenue for Business Professionals and Consumers was $1.91 billion, growing 15% year-over-year. Our strategy for Business Professionals and Consumers is to deliver AI-powered applications that transform how users comprehend, create and share content. We are delivering new conversational and agentic interfaces in Adobe Reader, Acrobat and Express through an integrated freemium experience.

Our differentiation is grounded in a deep understanding of the PDF format and 3 decades of document expertise to transform Acrobat from the world's leading PDF tool into a comprehensive document productivity platform powered by AI. Today, people opened more than 400 billion PDFs with Acrobat every year to read, edit and create content. By integrating AI deeply into our products, we are helping customers realize the value of AI faster, more accurately, securely and cost efficiently. We are meeting users wherever they work and expanding our reach across the digital ecosystem by extending Acrobat's capabilities to major platforms, including ChatGPT, Chrome, Claude, Microsoft Edge and WhatsApp.

This approach to innovation positions Adobe to drive deeper user engagement, unlock new enterprise opportunities and sustain our leadership as the trusted platform for digital documents in the age of AI. Yesterday, we announced significant advances in Acrobat, powered by the Adobe Productivity Agent that help people and teams understand the information in their documents faster, create polished work more easily and access trusted knowledge at scale. Acrobat now turns complex documents into visually rich interactive reports and summary slides as well as audio formats like personal podcasts, enabling users to quickly absorb key insights.

New features like Knowledge Base and Analyzer empower teams to ask questions across massive document collections and surface structured insights from thousands of files. This unlocks the value of existing organizational knowledge, driving smarter, faster decision-making at scale, all with enterprise-grade governance, security, trust and compliance. With a focus on winning the next generation of business professionals, Student Spaces in Acrobat is now available globally, targeting the higher education market and empowering students to generate flashcards, quizzes and study guides to help them better understand and master their curriculum.

Additional Business Professional and Consumer highlights include: Business Professionals and Consumers MAU grew over 25% year-over-year to over 900 million; Acrobat AI Assistant MAU doubled quarter-over-quarter; strong enterprise adoption of Acrobat AI capabilities among ETLA customers; notable customer wins this quarter include Amazon, Deutsche Post DHL, Honeywell, JISC, Renault and The U.S. Department of Energy Los Alamos National Laboratory.

In Q3, subscription revenue for Creative and Marketing Professionals was $4.65 billion, growing 12% year-over-year. Our strategy for Creators and Creative Professionals is to empower everyone to bring their creative visions to life across any media type and surface. With Firefly, we are making creativity more accessible, intuitive and efficient for creators of every experience level. For Creative Professionals, we are delivering the most comprehensive AI-driven power and precision applications through Creative Cloud across every stage of the creative process.

Our differentiation is rooted in our deep domain expertise across media types, including imaging, design, video, photography, illustration, animation and 3D and complemented by our depth of intelligence across creative workflows. With Firefly and Creative Cloud, Adobe is reinventing creative software with agentic AI to deliver immediate personalized value, meeting users where they are with tools and agents that adapt their needs. Adobe remains committed to delivering intuitive, context-aware experiences that honor creative craft, accelerate creative velocity and ensure that the next generation of creators can thrive in an ever-changing world.

Adobe's strategy is to offer customers choice as well as intelligent routing to use the best models for their needs, fully integrated in Adobe applications, eliminating the friction of switching between workflows and platforms. The Adobe Creative Agent empowers customers by handling the orchestration and execution of complex, repetitive creative workflows. We expanded the Adobe Creative Agent to additional Creative Cloud flagship apps, including Photoshop and Premiere, extending conversational, agentic workflows deeper into our professional applications.

We also introduced several innovations in Photoshop, giving professionals more choice and control at every stage of the creative process. This includes a new AI-assisted editor, now in beta, offering customers the option of using a dedicated interface and natural language prompt bar alongside our generative tools powered by leading AI models.

Adobe Firefly is the all-in-one creative AI studio for the next generation of creators. In Q3, we added native generation of music, speech and sound effects, bringing commercially safe AI audio to creative workflows. We released new creative skills and tools like Create Storyboard and Create Brand Kit, purpose built for social creators and solopreneurs, along with additional enhancements that help make Firefly AI Assistant more personalized and context aware over time.

We announced our agreement to acquire Topaz Labs, which adds state-of-the-art AI enhancement models in Adobe Firefly, Firefly Services and Creative Cloud apps, providing creators, designers, video professionals, photographers and enterprises, the tools to achieve exceptional quality across every format and workflow. With over 1 million users, Topaz Labs and its Emmy Award-winning AI technology will be integrated across Adobe's Creative AI portfolio, enabling customers to enhance footage, restore and remaster archival content and blend AI generated and traditionally captured content into seamless final productions. We expect the transaction to close in Q4, subject to regulatory approvals and other customary closing conditions.

Firefly Enterprise, spanning Firefly Services, Adobe Firefly Foundry and Adobe Brand Intelligence helps the world's largest brands industrialized content production with brand-safe custom models. In July, we expanded Firefly Enterprise with Adobe Firefly Graph Enterprise Edition and Firefly Creative Production Enterprise Edition, giving businesses reusable, node-based creative workflows and mass-scale production capabilities, alongside a new Simulate feature in Adobe Brand Intelligence that predicts campaign performance before content goes live.

We announced that Disney Imagineering is integrating Firefly Foundry into its theme park design toolkit, bringing Disney stories, characters and experiences to life in parks, faster than ever. We are aggressively executing our global strategy to attract millions of next-generation creators to Adobe. In conjunction with Saudi Arabia's emphasis on digital literacy and AI, we expanded our partnership with the Ministry of Communications and Information Technology and HUMAIN to enable the nation's 27 million citizens and residents with Adobe Firefly and Express, while supporting the development of a new image generation model tuned to Saudi culture.

Additional Creators and Creative Professionals highlights include: creative freemium MAU now surpassing 100 million and growing over 70% year-over-year; intensity of AI usage continues with credit consumption accelerating quarter-on-quarter across Creative Cloud and the Firefly app; firefly ending ARR across Firefly app and Firefly credit packs grew 40% quarter-over-quarter; enterprise wins this quarter include Academy Sports, Disney, Jet2, Perficient, Premier League, Publicis, Tennis Australia and T-Mobile.

I'm excited to host Adobe MAX, the world's largest creativity conference in November in Miami Beach, where we will welcome more than 10,000 members of our global community and engage with hundreds of thousands more online. This year, we'll showcase breakthrough innovations across Creative Cloud, new capabilities in Firefly and connected workflows for Firefly Enterprise, all powered by agentic AI. MAX is always a celebration of the community's creativity and we look forward to sharing how Adobe magic is transforming creative workflows and unlocking new possibilities.

Turning to Marketing Professionals. Our strategy is to deliver Adobe CX Enterprise, the agentic system of record for Customer Experience Orchestration, serving the entire customer life cycle from identifying and engaging prospects to driving conversion and developing lasting loyalty. Adobe CX Enterprise is focused on 3 critical solutions. It will be experienced platform and native apps for customer engagement, Adobe GenStudio for content supply chain, and Adobe Experience Manager and agentic web apps for brand visibility.

Over 20,000 global enterprises rely on Adobe, and we are helping them transform their customer experience for the era of agentic AI. Through Adobe CX Enterprise, we uniquely bring together creativity, marketing and agentic AI, simplifying and transforming how enterprises manage the customer life cycle. We deliver this value through proprietary CX intelligence, agentic orchestration, governed workflow execution, open ecosystem connectivity and enterprise grade-trust, all of which we have built over several years, providing our customers a practical path from the apps they use today to an end-to-end agentic AI system.

In Q3, we delivered the first unified brand visibility solution, bringing together Semrush AI visibility intelligence with Adobe's agentic content optimization capabilities, grounded in a deep understanding of business and brand context. Adobe brand visibility is a comprehensive solution for generative engine optimization that combines the industry-leading capabilities of Adobe LLM Optimizer with Semrush AI optimization. We are seeing tremendous customer interest in tapping our database of nearly 300 million real-world AI search prompts to understand how their brands are showing up across leading platforms such as ChatGPT, Google AI Mode, Microsoft Copilot and Perplexity AI.

At the Cannes Lions International Festival of Creativity in June, we introduced a major expansion of Adobe GenStudio to help brands meet customers wherever they are in the moment of purchase in a stream or in a scroll. GenStudio for Commerce Media Networks gives retailers a way to attract advertising partners with self-serve, on-brand creative built directly from product listings and category context. We also expanded Adobe Brand Intelligence capabilities, so marketing teams can preview how content will resonate with audiences before it ever goes live.

This is what an agentic content supply chain demands at the speed our customers need. We are seeing tremendous customer interest in CX Enterprise Coworker, the specialized AI agent in CX Enterprise that autonomously execute complex marketing and customer engagement workflows. CX Enterprise Coworker, which became generally available in June meets marketers where they are, embedding agentic intelligence directly into the engagement life cycle, offering choice and control while enabling teams to act faster, scale personalization and continuously optimize outcomes. CX Enterprise Coworker synthesizes insights from Adobe and third-party applications, while coordinating AI agents and workflows across analytics, content creation and journey orchestration. Early customer interest is strong with over 1,700 customers and early adopters of CX Enterprise Coworker.

Additional Marketing Professionals highlights included: ending ARR growth of over 20% year-over-year for each of AEM and agentic web apps, Adobe GenStudio and AEP and apps; continued strength in subscription services, driven by forward deployed engineering and strategic value realization engagements with customers. Q3 industry analyst recognition being named the top leader in 2 Forrester Waves, including customer data platforms for B2C and experience optimization solutions, as well as 2 IDC MarketScapes for Worldwide AI-Enabled Customer Data Platforms for B2B users and B2C users. Global enterprise customer wins in Q3 included Academy Sports, Alpine Racing, BNP Paribas, Humana, IKEA, Jet2, Marriott, MSC Cruises, Publicis, Royal Bank of Canada, Vanguard and Wells Fargo.

Looking ahead, Adobe is well positioned to be the global leader in agentic software for creativity, productivity and customer experience. We are building on tremendous assets, deep domain expertise, proven track record of product innovation, broad community of customers spanning individuals to small businesses to the largest enterprises in the world, diversified global routes to market, values-driven culture, highly motivated employees, a trusted and well-recognized brand and the financial strength to invest for the future. I am incredibly excited by the opportunity in front of us, and I look forward to sharing more updates.

I'll now pass it to Steve.

Thanks, Anil. Today, I will start by summarizing Adobe's performance in Q3 FY '26, highlighting growth drivers across our customer groups, and I'll finish with our financial targets. In Q3, Adobe achieved record revenue of $6.76 billion, growing 13% year-over-year as reported and 12% in constant currency. Diluted earnings per share were $4.62 on a GAAP basis and $6.13 on a non-GAAP basis.

Q3 financial highlights included: total Adobe ending ARR of $27.5 billion, growing 11.2% year-over-year; total customer group subscription revenue of $6.56 billion, growing 14% year-over-year or 13% in constant currency; RPO of $22.16 billion exiting the quarter growing 8% year-over-year and cRPO growing 9% year-over-year, both as reported and in constant currency; cash flows from operations were a Q3 record at $2.52 billion and ending cash and short-term investments exiting Q3 were $5.64 billion; and repurchasing approximately 9.5 million shares of our stock during the quarter. Exiting Q3, we have fully utilized our March 2024 authorization and have approximately $24.55 billion remaining under our April 2026 authorization.

Business Professionals and Consumers subscription revenue was $1.91 billion, increasing 16% year-over-year as reported or 15% in constant currency. Q3 growth drivers for Business Professionals and Consumers included: Double-digit ending ARR year-over-year growth across all geographies; Acrobat+ Express MAU surpassed 900 million, growing more than 25% year-over-year; Acrobat AI Assistant MAU doubled quarter-over-quarter; and strong performance in SMB across inside sales and the reseller channel.

Creative and Marketing Professionals subscription revenue was $4.65 billion, increasing 13% year-over-year or 12% in constant currency. Q3 growth drivers for Creative and Marketing Professionals included: Continued strength in Creative Cloud across our teams and enterprise offerings; creative freemium MAU, which includes Firefly Express and web and mobile versions of Premiere, Photoshop and Lightroom, crossed 100 million, growing over 70% year-over-year; Firefly ending ARR across Firefly apps and Firefly credit packs grew 40% quarter-over-quarter; customer growth in Firefly Enterprise with accelerating usage quarter-over-quarter; ending ARR growth of greater than 20% year-over-year for each of Adobe Experience Manager and agentic web apps, Adobe GenStudio and Adobe Experience Platform and apps; doubled the number of paid customers quarter-on-quarter for brand visibility solutions, helping brands optimize visibility across traditional and generative search; and continued strength in retention across the enterprise customer base.

Now let me turn to our financial targets, which assume current macroeconomic conditions. For Q4 FY '26, we are targeting total Adobe revenue of $6.8 billion to $6.85 billion; Business Professionals and Consumer subscription revenue of $1.93 billion to $1.95 billion; Creative and Marketing Professionals subscription revenue of $4.665 billion to $4.695 billion; GAAP EPS of $4.65 to $4.70; and non-GAAP EPS of $6.30 to $6.35. For Q4, we assumed non-GAAP operating margin of approximately 44% and GAAP tax rate of approximately 22% and a non-GAAP tax rate of approximately 18%. Given strong year-to-date performance, we are raising full year revenue and EPS targets.

For FY '26, we are targeting total Adobe revenue of $26.576 billion to $26.626 billion; Business Professionals and Consumers subscription revenue of $7.47 billion to $7.49 billion; Creative and Marketing Professionals subscription revenue of $18.242 billion to $18.272 billion; total Adobe ending ARR book of business growth of 10.2% year-over-year compared to our FY '26 beginning book of business of $25.66 billion; GAAP EPS of $18.12 to $18.17; and non-GAAP EPS of $24.45 to $24.50. Our FY '26 targets assume non-GAAP operating margin of approximately 45%, a GAAP tax rate of approximately 22.5% and a non-GAAP tax rate of approximately 18%.

We are encouraged by the progress we are making against our strategy. We are expanding our user base and deepening engagement with existing customers through agentic experiences. With focused execution and disciplined investments, we are driving long-term durable growth.

Now I'll turn it back to Shantanu.

Thanks, Steve. I want to express my deep appreciation to all our employees, customers, partners and investors for the support that they've provided to Adobe during my tenure. Thank you. We will now take your questions.

[Operator Instructions] The first question comes from Matt Swanson with RBC Capital Markets.

Anil, in your early comments in the prepared remarks as well as the press releases since the announcement, it feels like agentic has been a very pervasive theme across all of this. Could you just talk about how big of a factor this is going to be in your strategy going forward? And just kind of expand a little bit on what that long-term path looks like for agentic and what the end state could end up being?

Thanks, Matt. Yes, as we -- as I talked about in my remarks, I see immense opportunity for Adobe to be the leader in the agentic software for creativity, productivity and customer experience. Just like we've been the leader in SaaS for those categories. Overall, across the industry, I do believe that every SaaS company will be going through the transformation to agentic software just like the software companies went from on-prem to SaaS many years ago and Adobe executed very successfully.

So when I talk to customers across our categories, what I hear is when they look for agentic software, what they mean by that is they're looking for one product architecture, the product architecture evolving so that people can use an interface of their choice, whether it's conversational or a traditional interface that could be ChatGPT or Claude or Copilot, along with the functionality they get from Adobe. And we are making that possible, as you've seen in our announcements across creativity, across productivity as well as the CX announcement like Adobe marketing agent. We're making that possible through other interfaces as well as our own, like we are doing with our apps as well.

Second, they're looking for model flexibility. They're looking to make sure that they can have access to the best models available. And we, as the provider of the agentic software are matching the best model available to the best task and making it easy for users. And that's something that we are doing extremely well. There will be creativity agent we talked about and there will be productivity agent as well. And then they're looking to make sure that the apps are using their enterprise data and context so that there's no hallucination that they get usable results and they get predictability out of the use of AI.

And that's something that we are doing really well with, for example, the CX Enterprise Coworker we talked about because that's built on top of the Adobe Experience platform where we serve over trillion experiences every year. And then they are looking for value. They're looking to make sure that the provider of agentic software is helping them realize the full value of this software, bringing it all together across all of the complexity of AI and software. And that's what we're doing with the growth we're seeing across our forward deployed engineering and our value realization teams.

So that's how I see it evolving, and I think we see -- I see a massive opportunity for us, to be the leader -- the agentic software leader in creativity, productivity and customer experience.

And the next question comes from Saket Kalia with Barclays.

Congrats Anil, Shantanu. I just want to tip my cap to you on 29 years of leadership at Adobe. Anil, maybe the question here is for you. I think one of the questions that was asked when the announcement was made on your CEO transition, was whether your background in digital experience is a statement on where the Board thinks about the future of Adobe's growth opportunity. I just wanted to give you an opportunity to respond to that and tell us how you think about that?

I'll let him add, Saket, but let me just say a couple of things on behalf of the Board. I mean the first is I'm really thrilled that we were able to have somebody internal who understood the company. We had 2 great internal candidates. So that was, I think, important for the Board. Certainly, Anil is going to own the entire company strategy and put his stamp on it. But I think it's important to remember that when we were looking for the next leader that it was somebody who would embrace everything that the company had in terms of the opportunity. And then figure out how they wanted to transform it moving forward.

But with that as sort of context, I'll let Anil add specifically as it relates to the enterprise. And maybe the one last thing I'll say is I think we both agree, Anil and I that as it relates to how software will be sold, the individuals and making sure that we delight individuals is going to be even more important moving forward. Anil?

Well, thanks, Saket. Appreciate it. The first thing I was going to say is, look, I joined in January 2020. And by the end of that year, Shantanu asked me to take on actually our enterprise feed operations across the company. And in that, starting from that, me, our team, we represented all of Adobe with our customers. So when you look at an example that we showed, like Disney, for example, they think of us as one Adobe. And that's been important. And I have had the opportunity to really represent all of Adobe across creativity, productivity and customer experience with all of our enterprise customers.

And I see that opportunity exactly as Shantanu said, across the 3 product categories and across the entire range of customers from individuals to the hundreds of thousands of small businesses that we have to the 20,000-plus enterprise customers, I see massive opportunity across all of our base.

Great to hear. Congrats to both of you.

And the next question comes from Jay Vleeschhouwer with Griffin Securities.

Let me follow up a bit on Saket's question. When you look at over the next number of years, what do you think are Adobe's most consequential strategic, technical, financial or competitive challenges or executables? And that's a very broad question, but I would very much like to get your thinking on that. And then a quick one for Steve. I'm a little concerned about your RPO number. The single-digit growth year-over-year was the first single-digit growth since fiscal '23 -- early fiscal '23 and down sequentially. Was there anything unusual about the consumption of RPO coming out of Q2? Or maybe just talk about some of the details there.

Well, thank you, Jay. First, looking across our categories, if you look at, for example, our Business Professionals and Consumers, we're obviously building on a lot of assets. We just crossed over 1 billion in monthly active users. We have the decades of domain expertise in PDF. And so we are building on a lot of different assets that we have built over time. And so when you look at the future, obviously, the focus now is on how do we bring all of those assets and build the new capabilities required for the world of agentic software. And we see the same thing playing across all 3 of our major category areas, whether it's the productivity area that I just talked about in the creative world, for example, bringing together the power of these new models, and making sure we deliver the value of AI to the user as fast as we can, securely, accurately and cost efficiently, making that -- that's what our users and customers are looking for. And so being able to bring all of that together is really where our focus is across all of our categories.

Yes, Jay. And as it relates to the RPO, you're right, yes, RPO grew 8% year-on-year, the CRPO 9%, and that reflects the continued execution against our strategic initiatives. The growth is consistent with our ARR trends, I would say. It does reflect our focus to accelerate new user acquisitions through the freemium business model. But if you take a step back and look at these trends over the course of a typical year, both RPO and CRPO step-up in our fourth quarter and then remain fairly flat over the next 3 quarters. And this year is no different to prior years in that shape.

And we'll go to Samik Chatterjee with JPMorgan.

This is Brian Hyska for Samik. Your Q4 guidance implies only modest sequential revenue growth in Creative and Marketing Professionals. Could you walk us through the assumptions driving that outlook?

On Q4, I think if you start turning to Q4, if you look at -- let me go unpack that Q4 for you. First of all, I wanted to say that we reiterated our full year guide of 10.2% growth for the full year in terms of ending ARR. Now if I unpack that across different audiences. So in terms of our -- the Business Professionals and Consumers, we are excited by the innovation that we just announced yesterday in Acrobat and Express, and that is going to give us a tailwind for our growth in Q4 and that will ultimately obviously translate into revenue going into future quarters.

With Firefly and Creative Cloud, we have incredible innovation, breakthrough releases planned in the run-up to MAX, whether it's with creators or with creative professionals. And so we will -- we're going to see -- that gives us confidence for our creative professionals and the creative professionals and creators category. And then in customer experience, we'll have the -- we're starting with a strong pipeline, and we're going to -- we'll get the benefit of seasonality, as I mentioned, and the innovations we made. So that's what gives us the confidence for Q4. And if -- I don't know if you wanted to add on to that, Steve, in terms of the specific revenue comment.

Yes. I mean, I think in terms of the revenue guide that we've put out there, I think you'll see that it's a raise that we've put forward for the Q4, rolling that through against the first 3 quarters of the year and pressed that against the June guide that we put out. It's a raise across the CMP subs, BP&C subs as well as the overall company raising around $50 million at the midpoint. So yes, we take our guide seriously, and we're pleased to put forth a raise in this quarter.

And our next question will come from Brad Zelnick with Deutsche Bank.

Great. And I'll echo my congrats to Shantanu on an epic run and Anil on the exciting journey ahead. For my question, Anil, it's great to hear Firefly and credit pack ARR continues to grow well, and that credit consumption is accelerating. Can you talk about what's driving the acceleration there? Is there a broad usage or certain types of generations that are really behind it? And how do you think that evolves from here?

Yes. I think if -- just going back to what we talked about in how we're driving our freemium strategy for growth. We're first focused on making sure that we are acquiring new users. And then as we talked about that, that has performed very well. We talked about it on the June earnings call. And creative freemium MAU we saw has grown to over $100 million, growing over 70% year-over-year. So that's bringing people into the funnel. That's when we still focus on increasing their intensity of AI usage and increasing their engagement with the products. And that's -- that engagement is what is starting to translate into ARR, right, with the Firefly ending ARR, the apps and the credit packs showing the 40% quarter-over-quarter growth. It's really that intensity of usage that's leading to that growth.

The other thing maybe I'll add is, I mean, as it relates to specifically what's driving it, if you look at the amount of innovation that's going into Firefly, it's magical. And video, in particular, you're seeing a lot of usage of video. And so that certainly helps across that. And within Creative Cloud as well. I know we talk a lot about the AI first revenue. If you think about the AI influence revenue and what's being driven by Creative Cloud, all of the core desktop applications, the credit consumption there also is very robust, which just reflects how fundamental AI has become to the usage of those products. So those are 2 other things I would add.

And we'll go to Alex Zukin with Wolfe Research.

This is Ivan on the line for Alex. First of all, Anil, congrats on the role and Shantanu, of course, on the amazing ground. Maybe going back to the last quarter, when you guys guided, you called out that you expect headwinds from doubling down on premium strategy and then deferring the pricing initiatives. So to the extent you can, can you provide a little more color in terms of how much of the headwind came from each of these 2? And then as a quick follow-up, like are there any updated thoughts in terms of when those deferred Creative Cloud pricing optimizations will resume?

Yes. I think the 2 things we said and then I'll have Anil add. I mean, the 2 things that we said that were really important for us was, one, within the company, let's make sure we have an absolutely singular focus and align the company on what was important. And I always like to say, I like to be impatient for something, and we are incredibly impatient to drive a whole bunch of users, which is what you saw in the MAU. I mean, the MAU growth and how we're inspecting MAU and driving MAU growth, we believe is going to be fundamental to the future growth of the company. And so the 2 things that we had said at that point was let's get a singular focus.

The other thing I would say is that we're actually in an incredibly fortunate position now. If you look at the segmentation of our products, we certainly have tremendous value that we deliver depending on which segment of the population is using it. I think to your point, within the Creative Cloud, we can continue to always find ways to deliver more value. But I really think the company has performed really well in the singular focus of let's deliver a lot of innovation around Firefly and the platform for Firefly, let's make sure we focus on MAU.

And so that was really the driver of it. If you look at BP&C, we had good growth on BP&C. And so this is within the creative establishing Firefly, I would say. And I'm actually really happy that we didn't focus on the pricing actions because that -- while it may have provided some short-term relief would not be as critical as continuing to drive new user adoption. So that's how I'd answer that question.

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

This is Vinod on for Kirk. So net new ARR was down 36%, 37% year-over-year. And I just wanted to get a sense of some of the drivers. Is it really more about seat volume softness, lapping pricing? Or is it really just the freemium funnel that you've talked about and you're doing intentionally that's kind of impacting that?

Yes. I mean, just as we -- as Shantanu just described and we talked about in June, it's -- our strategy is to drive both and balance across acquiring these new customers as well as growing ARR. So one of the things we've obviously done is, for example, taking a portion of our traffic to make sure that we are sending them to the right place so we can acquire customers for -- through the freemium funnel. And then we engage them and then the increased the density of their use. And obviously, at the right time, we will calibrate where we convert them in ARR. So that's the approach we've taken to make sure that we're really tapping into this large base of next-generation creators that we can bring into Adobe family, and that's what is driving the performance that you see.

Okay. And did you guys quantify the Semrush contribution this quarter?

Yes. I mean, I think when we gave you a view of that in the call last quarter, the rough size of how much Semrush is adding to the book of business.

I think you really have to think about it as directionally what we've done with Semrush is to really integrate that into our combined offerings. And so I think you understood what the book of business was, we did it. But I think moving forward, the real selling motion is all around how do we combine SEO and GEO with all of our web content management as well as those solutions. So I think increasingly, and Anil can certainly add, the sales motion is all around the combined new offerings as it relates to what we are doing around brand visibility, what we're doing around content supply because those are the ones, and I think we talked about how all of those are growing north of 20%, the must wins. And so that's how we are going to market with those solutions.

Yes, exactly. I think the real focus is bringing the -- we've already brought it together as we announced at the Cannes Lions Conference of what Semrush had in their AI optimization technology with what Adobe already had. That's what we released at Adobe brand visibility, has had a great reception from customers. In fact, as Steve pointed out, doubled the number of paying customers and Adobe brand visibility quarter-over-quarter. So we're seeing terrific customer interest there.

And we'll take a question from Billy Fitzsimmons with Piper Sandler.

I guess one question we get a lot is you kind of meet customers where they are with -- or how they want to consume in terms of how you monetize AI across either Creative Cloud, Acrobat or enterprise products, and that's through bundled credits, credit packs, premium tiers, per seat pricing. There's also usage-based contracts. Over time, which pricing model do you expect to become the primary driver of AI revenue?

Yes. Our first focus exactly is to make sure that we get -- we are bringing in as many customers as we can into our funnel and into the Adobe family. And that's what you're seeing with the premium strategy and all the focus on customer acquisition. After that, it really depends on what exactly they're doing. What are they trying to get done? What is their skill level, what they're doing in the context of. And so that can vary based on whether they are individuals or enterprise customers and so on. So it really then starts to focus on what they're actually doing with it.

And so we are happy to work with, say, for example, something like Microsoft Copilot in the enterprise to ChatGPT for consumers and so on and making sure that they are getting value and driving up that intensity of usage and the engagement. And then beyond that, depending on the product area, it will -- once we have the value, we can map it to the monetization that Shantanu talked about, which helps us with better segmentation, understanding what the segments are. And how they're getting value. And so we have a wide variety of ways, as you pointed out, to monetize that. And we're going to be applying that both based on the context of the customer and the context of what they're doing.

And then a quick follow-up, if I can get in. On the Topaz Labs deal, what's your strategic gap does Topaz help fill in the product portfolio that maybe couldn't have been addressed with internal development or partnerships? And understanding the deal hasn't closed yet, how should we just think about how those Topaz capabilities could be folded into existing solutions?

Yes. Topaz really was the state of the broad state-of-the-art technology for us in terms of AI enhancements across imaging, video. So we have actually -- a number of our customers have been using our technology along with Topaz. And so we had a lot of great feedback on them from our customers. So we believe that they'll bring a great natural adjacency and fit right into what we have with Creative Cloud, with Firefly, with Firefly Enterprise. And so we see -- we're excited about closing that in Q4. That's what we are anticipating. And I think it will fit right in into what we're doing, and we're excited to talk more about it at MAX coming up soon.

And we'll take a question from Brent Thill with Jefferies.

Anil, congrats on the role and Shantanu, has been great being part of the story and watching it for as long as we have and the success you've had. Anil, just as you think about -- I know it's going to take time to formulate probably your strategies and your top priorities. But maybe if you have a couple of top priorities as you make this transition, how would you just characterize the 2 most important things for you over the next year?

Thanks, Brent. Appreciate it. It's great that I have until December 1, work closely with Shantanu for the transition. First focus is obviously on Q4. We remain focused on executing our FY '26 strategic initiatives and closing out the year strong, that's going to be critical. MAX is a big deal for us. We have had tremendous innovation in the company, really breakout innovations across what we're doing with for creators, what we're doing with credit professionals and then for the enterprise in terms of workflow and automation for the entire creative process. So we are really looking forward, and this will be my first MAX, and I'm looking forward to hosting that. And then I'm spending a lot of time with our community, with customers, with our Adobe employees and building the leadership team and putting all of that in place. So it's going to be a busy fall. So I'm really looking forward to making all of that happen between now and the new year.

And we'll take the next question from Tyler Radke with Citi.

This is [ Andrew Girard ] on for Tyler. And echoing again, all the congrats to Anil and Shantanu. It's good to see the kind of one point sequential uptick in Creative and Marketing Professional growth and constant currency here. Anil, I was just hoping to kind of like understand your perspective on creative positioning, where you believe the kind of largest opportunities lie there? And kind of any new strategy you're bringing into creative as you take on the helm here?

Yes. First of all, in terms of creativity, we believe that the market is larger than ever in terms of people across the -- whether they are individuals or whether they're in small businesses or enterprises around the world, where they're really using creativity to express themselves and their ideas. And it's getting more and more important for people to just stand out using creativity. So we think the market is extremely large.

I think in terms of my own personal view, I do believe that there is real opportunity as the world goes from this world of SaaS to agentic software with all the new innovation around AI, with all the innovation around models, I think there's opportunity across all of these categories. So one of the things that I believe in it is that the innovation that we have already done, we are going to showcase at MAX. And the innovation you're going to see from us over the next year will really show how what we are doing really brings together everything that has -- the AI has and brings the power of AI across all of our customer segments and across all the categories.

Okay. Yes, that's great. And just another quick one on kind of the revenue guidance and see that kind of the guidance raised on the full year was slightly short of kind of the beat in Q3. So I just want to kind of understand any dynamics in Q4 that are in the model now that might have been incremental to kind of what you all saw last quarter, kind of a maybe greater amount of prudence or greater expected pressures stemming from the premium push? Any changes in macro, anything like that?

Yes, yes, yes. Yes, nothing changing in the business at all. So as you said, we pushed through the beat that we saw in Q3, but there is a slight FX headwind that we're having coming into Q4, and so it's just netting that off. So otherwise, we feel pretty good about sort of the full year guide, as we said or the implied guide based on this Q4 guide and sort of demonstrating a slight raise on the year. So other than that FX, nothing from a business perspective.

And we have a question from Michael Turrin with Wells Fargo Securities.

Shantanu, our congrats as well. For Anil, I know it's early, but just relative to last quarter, it seems you're seeing the user growth on the freemium side. I'd be curious just to hear more on how you plan to evaluate trade-offs there. And contemplate when you attempt to capture more of the value via price versus letting the freemium strategy continue to run from here?

Yes. Thanks, Michael. So in terms of looking at the entire funnel, Obviously, that's one of the things that we have over a decade of experience with what we call the data-driven operating model, as you know. And we are optimizing that for freemium as we attract this next generation of creators and business professionals. So the goal is, of course, to prove value first. And once they get value, we get a lot of signals about the engagement, about the intensity of AI usage, about whether they're ready to move to -- for us to convert them into ARR. And so we are constantly calibrating that. Well, what is the best conversion point, what kind of paywall tuning, for example, would we do? So there's a number of things that we could do. And obviously, we've done that now for well over a decade. And we're going to continue optimizing that across our customer segments that Shantanu referenced.

And just as a small follow-up. I know you're holding on to the ARR guide, but if we could just revisit the uptick and just any seasonal assumptions from a net new perspective. Just maybe remind us what you're expecting and how to think about the uptick in implied net new ARR for 4Q relative to what we saw in 3Q.

Yes, I mean, if you remember back on the Q2 call that we gave some shape towards the second half ARR guide when we reiterated the 10.2%, and we said that Q4 will be larger than the Q3 number, and that's exactly how it's playing out. So Q4 is our seasonally strong quarter, a very strong enterprise quarter for us. So those things are still in effect. We're very pleased with the performance of the businesses so far, we expect to see good contributions across each of the segments that Anil has referenced and deliver that 10.2% guide.

Maybe if I were to give a little bit more color on that. I mean, the way I would look at that is, again, on the creative side, just making sure we focus on the combination of MAU and ARR, on the BP&C side, we would expect our traditionally strong Q4. There's a lot of great new innovation that we've delivered. That's a business that continues to perform. And so making sure that we monetize all of the BP&C is an expectation in Q4.

And perhaps the most important is the traditional enterprise finish that we have with a big pipeline as it relates to both the CXO business as well as what the worldwide field operation is selling into both the creativity as well as the productivity segments within the enterprise. So that factors into how I think we are guiding Q4 and how you should think about it. Traditional strong good pipeline, great innovation in BP&C driving and continued focus on driving both revenue, but more importantly, now as it relates to the creative segment. So that's how I would think about it.

Given that's the last question, I was really pleased to see so many questions about the go forward. And we look forward to sharing more updates. Thank you for joining us.

Well, thank you. And that does conclude today's conference. We do thank you for your participation, and have an excellent day.

Welcome to FY 2026 Adobe Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Doug Clark, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's Chair and CEO; David Wadhwani, President of Creativity and Productivity; Anil Chakravarthy, President of Customer Experience Orchestration, and Steve Day, Senior Vice President, Corporate Finance and CFO of Customer Experience orchestration.

On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2026 financial results. You can find our press release as well as PDFs of our prepared remarks and financial results on Adobe's Investor Relations website.

The information discussed on this call, including our financial targets and product plans, is as of today, June 11, and contains forward-looking statements that involve risks, uncertainty and assumptions. Actual results may differ materially from those set forth in these statements. For more information on those risks, please review today's earnings release and Adobe's SEC filings.

On this call, we will discuss GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates and non-GAAP growth rates, including constant currency rates. During this presentation, Adobe's executives will refer to revenue growth and constant currency rates, unless otherwise stated. Non-GAAP reconciliations are available in our earnings release and on Adobe's Investor Relations website.

I will now turn the call over to Shantanu.

Thanks, Doug. Good afternoon, everyone, and thank you for joining us. We achieved $6.62 billion in revenue in Q2, representing 11% year-over-year growth. GAAP earnings per share for the quarter was $4.25, representing 8% year-over-year growth, and non-GAAP earnings per share was $5.96, representing 18% year-over-year growth. Strong revenue growth was driven by subscription bookings to revenue conversion. We drove EPS growth through record top line revenue and disciplined investments across the company. At Adobe, we continue to be driven by our mission to empower everyone to create and deliver innovative products to delight users based on our customer strategy. We're focused on business professionals and consumers, creators and creative professionals and marketing professionals. For business professionals and consumers, we're delivering AI-powered quick and easy apps to stand out through creativity and productivity. For creators and creative professionals, we're delivering power and precision to bring creative visions to life across any media type and surface. For marketing professionals, we're delivering customer experience orchestration to create, deliver and optimize personalized digital experiences.

As we reflect on the market context and our first half performance, it is clear that relative even to the beginning of fiscal 2026, AI is accelerating customer behavior at an unprecedented speed, and we need to evolve our strategy and execution to address these changing expectations. Much like our developers have embraced and expanded the AI coding market. There's a transformation underway for how consumers are discovering, experiencing, onboarding and purchasing products across all categories, including creativity, productivity, gaming and entertainment. As it relates to creativity and productivity, there is an unprecedented demand across additional surfaces for the combination of content consumption and content creation. Conversational interfaces and agents now orchestrate across tools to achieve outcomes faster. The proliferation of media generation models is reshaping and democratizing content workflows from ideation through delivery.

AI-first applications that will serve broader audiences need to provide free intuitive onboarding that drive usage and monetization through paywalls. Big picture, the immediate opportunity for Adobe is to accelerate new user acquisition and lifetime value through a freemium offering. As it relates to business professionals and consumers, we have dramatically increased Acrobat and Express Mile from greater than 700 million to greater than 850 million year-over-year. The opportunity is to serve billions of business professionals and consumers through a comprehensive freemium funnel, building on the success of the Adobe Reader model. Over the last year, we've delivered tremendous innovation across AI assistant PDF spaces, Express and conversational interfaces and made these innovations available across surfaces, including AI mode in Reader, Edge, Chrome and WhatsApp.

Business professional and consumer traffic on adobe.com seeking Adobe capabilities is growing 35% year-over-year. We believe this traffic is better served through a customized friction-free onboarding experience without immediate paywalls and will result in greater customer acquisition and deeper engagement over time. Based on the early success and now adoption of freemium journeys for Acrobat and Express, we're ready to expand this experience more aggressively. For next-generation creators, the opportunity is to deliver an AI production studio across web and mobile that seamlessly integrates with the power and precision capabilities of Creative Cloud. We have increased our creative freemium MAU from $50 million to $90 million year-over-year. The opportunity is to attract hundreds of millions of additional creators through a freemium funnel based on the early success of Firefly.

Over the last year, we have delivered tremendous innovation across ideation through boards, generation with support for multiple media models, semantic image and video editing and conversational interfaces that are available across surfaces, including mobile, web and flagship creative cloud applications such as Photoshop, Illustrator and Premier. New personalized journeys for creators drove approximately 50% increase in Firefly ARR quarter-over-quarter through Firefly apps and credit packs. Based on this early success, we are confident that we should expand the Firefly premium experience to acquire and delight the next generation of creatives.

Creative Cloud continues to perform well as the best-of-breed offering for creative and marketing professionals globally. While we focus on accelerating creator acquisition through the premium Firefly funnel, we have made the decision to defer previously planned Creative Cloud second half line optimizations. As it relates to the customer experience orchestration, agentic opportunity in the enterprise, marketing professionals are looking to automate and rapidly create, deliver and personalize content at scale across every channel in a way that drives customer engagement and elevates their brand. Content creation designed specifically for marketing use cases is exploding.

New AI coworkers and agents offer organizations the ability to deliver automation and outcomes powered by context, data, MCPs and skills. These address the dual needs of enterprises to expand consumer centricity and cost savings in the era of AI. Business models are expanding to include consumption and outcome-based pricing along with subscriptions. The total marketing opportunity across people, software, agency and channel spend is enormous. AI is changing enterprise behaviors, they're increasingly bringing more marketing capabilities in-house through their adoption of software platforms and the creation of custom models that uniquely capture their brand intelligence. IT organizations are looking to Adobe to accelerate their provisioning, deployment and customization to serve their consumers through the availability of headless and agentic capabilities with pricing models that address outcomes as well as AI usage.

Customer Experience orchestration, AI-first ARR grew 4x year-over-year, reflecting how Adobe is the leader in both the traditional marketing category and the emerging customer experience orchestration category. The introduction of Adobe CX Enterprise and CX Enterprise Coworker at Adobe Summit expands the vision and delivery of our category-defining CXO solutions. The successful acquisition of Semrush unifies our search engine optimization generative engine optimization and EM solutions to further extend our CXO offering. We will deliver this integrated offering that addresses brand visibility at the Cannes Lions Festival of Creativity later this month. This combination of creativity and marketing uniquely differentiates Adobe. No other company brings together what creators and marketers can do across our applications and delivery platforms.

Adobe GenStudio ARR grew over 25% year-over-year, reflecting enterprise demand for an end-to-end solution that spans workflow and planning creation and production, asset management, activation and delivery and reporting and insights. Adobe's AI innovation has driven an impressive 3x year-over-year increase in AI first ARR to greater than $500 million. We believe now is the time to aggressively acquire the next generation of Adobe loyalists. The strategic shift to acquire more freemium customers through Adobe and Firefly lowers our second half ARR growth expectations from individual subscribers. We believe these changes do make Adobe even stronger. We continue to target double-digit total ARR growth for Adobe, which now includes the Semrush acquisition.

Based on our strong first half revenue performance and the inclusion of Semrush, we are pleased to raise our fiscal year revenue and non-GAAP EPS targets. As we announced, Dan Durn has decided to pursue a new opportunity outside the software industry. I'd like to thank Dan for his contributions to Adobe and wish him well. I'm pleased that Steve Day, who has been at Adobe for 20 years, serving in numerous financial leadership roles will serve as interim CFO upon Dan's departure. I continue to be incredibly energized by Adobe's long-term AI opportunity and the innovative products we are delivering to a broader set of customers. Given my decision to transition to Board Chair, I wanted to provide an update on the CEO search, which is progressing well. The Board has been actively engaged in a comprehensive process. While we all continue to be ruthlessly focused on driving execution, our goal is to have Adobe's next CEO in place to put their stamp on planning for fiscal '27 and beyond.

I'll now turn it over to David.

Thanks, Shantanu. Hello, everyone. AI is rewriting how the world creates and gets work done, and the audiences for creativity and productivity tools is bigger now than at any point in our history. From social creators and students to business professionals and large enterprises, the opportunity for Adobe is massive. These customers are looking for a range of products from easy-to-use creative tools to professional levels of power and precision and are increasingly turning to conversational experiences to accelerate their work. Adobe is the only company that has the portfolio breadth to meet this broad range of creativity and productivity needs. We see this interest manifest in traffic growth, signaling demand for our existing products and accelerating demand for new AI-first experiences. The demand for these new AI experiences begins with LLM conversations and intent-based searches and requires immediate gratification, so is best served with friction-free experiences. This shift in user behavior is playing out across business professionals and consumers and creators and creative professionals.

While we continue to attract strong traffic to adobe.com, which grew over 40% year-over-year, our traditional direct-to-pay journeys may not always fulfill visitor intent as a growing number of new users are first looking to quickly complete their intended task as they begin their relationship with Adobe. Given products like Adobe Firefly, Express and Acrobat AI assistant have friction-free onboarding and significant adoption, we can now rebalance our journeys to better serve this new generation of users rather than send them predominantly to direct-to-pay journeys. This shift will come at the cost of short-term ARR, but will accelerate user acquisition in MAU, while building the foundation for long-term growth by removing friction from user onboarding, enabling deeper user engagement and driving stronger lifetime value.

In Q2, subscription revenue for business professionals and consumers was $1.85 billion, growing 15% year-over-year. BP&C traffic grew 35% year-over-year, with now growing from greater than 700 million to greater than 850 million in Q2 year-over-year, with significant contributions from AI assistant, Express Creation and PDF spaces sharing. This quarter, we introduced the Adobe productivity agent, shifting Acrobat from a static document tool to an interactive experience. The productivity agent is an AI experience built into Acrobat that draws on Adobe Acrobat Document Intelligence and Adobe Express's AI-first creation capabilities to help business professionals understand, create and share information. It can turn documents into rich outputs like presentations, podcasts and social content, support conversational PDF editing and power the new sharing capabilities in PDF spaces.

Customers get the agent through Acrobat AI plants. Users can also now share branded PDF spaces with customizable AI assistance tailored to a specific audience, whether for sales prospecting, content marketing or research delivery. Early adopters of PDS spaces, including Vice Media, Kid Cudi, Jessica Yellen and Mindy Wise are using PDF spaces to move audiences from passive reading to interactive engagement. Additional business professional and consumer highlights include Acrobat AI assistant paid MAU grew over 150% year-over-year and lifetime AI users in Acrobat tripled year-over-year, showing both monetization traction and broad-based engagement. Express MAU grew more than 20% quarter-over-quarter and express users in Acrobat exported 9x more content year-over-year, demonstrating that the integration is driving creative output at scale.

Acrobat student spaces launched this quarter to strong early adoption. The number of higher education students with access to express premium through their schools has grown more than 60% year-over-year. And customer wins this quarter include Accenture, DataV, KPMG, Merck, NHL, New York State Court System, the Church of Gisis Kris of Latter Day Saints Defense Information Systems Agency and U.S. Department of Housing and Urban Development. In Q2, subscription revenue for creative and marketing professionals was $4.54 billion, growing 11% year-over-year. Demand for AI content creation is exploding across ideation, generation and semantic editing and generative creative consumption continues to show strong growth. Our strategy is to empower everyone to create from first-time creators to seasoned professionals to large enterprises seeking to scale content production.

In Q2, C&CP traffic to adobe.com grew over 50% year-over-year with creative freemium MAU growing from greater than 50 million to greater than 90 million. This immense volume of traffic drawn to the Adobe brand includes users seeking to purchase Creative Cloud, Photoshop and other CC apps and an increasing number of new users who are looking for Adobe Magic to complete a creative task with a friction-free experience. Firefly freemium users who convert to our paid plans are highly engaged with early indications of significant credit consumption. Firefly ARR grew approximately 50% quarter-over-quarter through Firefly apps and credit packs. We were excited to launch the Adobe Creative Agent beta in Q2. The agent is available as part of Creative Cloud and Firefly subscriptions and provides a conversational experience to achieve complex and repetitive creative tasks. Agent usage will be monetized through our existing credit consumption model.

The Adobe Creative agent is also available in Claude, ChatGPT and soon, CoPilot in Gemini. Additional creators and creative professionals highlights include: In Premier, we launched a brand-new color mode, a first-of-its-kind color grading experience built specifically for video editors. We continue to deepen AI capabilities across our flagship Creative Cloud applications, Photoshop-added rotate object and Illustrator release turntable, both enabling subscribers to turn 2D photos and illustrations into 3D renditions they can rotate and harmonize into their work. Capabilities like these drove record AI usage within our flagship applications. Firefly continues to support third-party models now with Kling 3.0 and Kling 3.0 Omni. Firefly ending ARR across Firefly app, Firefly credit packs and Firefly Enterprise is approaching $300 million exiting Q2. Firefly Enterprise spanning Firefly services, Adobe Firefly Foundry and Brand Intelligence is helping the world's largest brands industrialized content production with brand-safe custom models. The number of generated assets grew more than 4x year-over-year making it an AI content engine for marketing at scale.

Our announced NVIDIA partnership will bring accelerated computing to Adobe Firefly foundry for faster, higher-performing custom models across image, video, audio, vector and 3D plus a cloud-native 3D digital twin built on Omniverse and Open USD. And enterprise wins this quarter include Merck, SAP ServiceNow, Tesco, the Coca-Cola Company, Workday and Xfinity.

In summary, demand for creativity and productivity in the AI era is dramatically increasing as evidenced by our record traffic on adobe.com. While we continue to fulfill demand for Acrobat and Creative Cloud, the early success of Firefly, Express and Acrobat AI assistant gives us conviction that this is the time to aggressively serve new users with a friction-free freemium journey. We're confident that driving MAU, which has an impact on ARR is the right trade-off and will drive future business growth.

I'll now turn it over to Anil.

Thanks, David. Hello, everyone. In Q2, AI continued to be a tailwind for our enterprise business, enabling us to deliver creative and marketing professional subscription revenue of $4.54 billion, growing 11% year-over-year. These results underscore the continued explosion in content and the imperative to deliver personalized customer experiences at scale. The opportunity for AI-powered marketing automation and customer experience orchestration is large and growing. And we are continuing to gain market share and expand our leadership. We are focused on three critical AI for solutions. It will be experience platform and native apps for customer engagement, Adobe GenStudio for content supply chain and there will be experienced manager agentic web apps for brand visibility.

Q2 highlights included. GenStudio ending ARR grew over 25% year-over-year as leading brands and agencies continue to standardize on Adobe to power their content supply chain. Subscription revenue for AEP and native apps grew over 30% year-over-year. AEP delivers over 70 billion profile activations and 35 trillion segment evaluations per day as well as more than 1 trillion experiences per year. Over 80% of AEP and AEM customers are now using agentic capabilities built into our products. Over 1,500 customer trials are underway for our agentic web offerings. Adobe LLM Optimizer, Sites Optimizer and Brand Concierge. 60% quarter-over-quarter growth for forward-deployed engineering and integrated services offerings designed to co-innovate and deliver customized AI-powered CXO solutions.

Q2 industry analyst recognition being named a leader in two Gartner Magic Quadrants, including customer journey analytics and orchestration and content marketing platforms and two Forrester waves, including e-mail marketing service providers and customer analytics technologies. And global enterprise customer wins in Q2 included Dentsu Merkel, Defense Information Systems Agency, Lidia Company, Kaiser Foundation Hospitals, Merck Sharp and Dome, NHL, SAP, ServiceNow, Stagwell, Stellantis, Tesco and the Coca-Cola Company. In April, we closed the acquisition of Semrush, a leading provider of search engine optimization and generative engine optimization solutions. Semrush added $480 million ARR to our book of business and expands our ability to serve marketers of every scale. We are rapidly integrating semis into Adobe, uniting Seres' discoverability intelligence with Adobe's agentic web apps. We look forward to unveiling a comprehensive brand visibility solution combining Semrush with Adobe at the Cannes Lions Festival of Creativity later this month.

Adobe Summit in April, where we hosted over 14,000 in-person attendees. We launched Adobe CX Enterprise, a new end-to-end agentic AI system that simplifies how enterprises manage their entire customer life cycle, from acquiring and engaging prospects to driving conversion and lasting loyalty. Adobe CX Enterprise brings together AI agents, agent skills and model context protocol endpoints with an intelligence and governance layer to deliver reliable and auditable agentic workflows that enable highly personalized differentiated customer experiences. Over 20,000 global brands have built their business on Adobe and CX Enterprise will help assure them into the era of genic AI. As part of CX Enterprise, we announced CX Enterprise coworker, a specialized AI agent that executes tasks based on business goals dramatically increasing productivity and campaign execution. DX Enterprise coworker has garnered tremendous customer interest since launch with over 150 leading enterprises in the early adoption program prior to general availability this week.

At Adobe Summit, we also introduced Adobe Brand Intelligence a continuous learning system that helps enterprises create and validate on brand content faster and with less effort. Adobe Brand Intelligence learns from creative and marketing team feedback approvals and rejections in real time. It is a headless platform exposed through APIs, so it can integrate with existing first and third-party apps rather than running as a separate app. Customer experience is one of the first areas of AI power transformation for enterprises. Around the world, our conversations with C-level executives reflect how they view Adobe as the trusted partner for this transformation in the era of agentic AI.

In Q2, we announced native integrations with major enterprise AI platforms, including Microsoft CoPilot, Anthropic, OpenAI and Google Gemini. Our partnership with NVIDIA brings CX enterprise coworker capabilities into the Nemo Claw enterprise agent platform. enabling brands to deploy Adobe's customer experience intelligence within NVIDIA's secure policy governed open shell run time, leading global agencies, including Densu, Havas, Omnicom, Publicis, Stagwell and WPP are standardizing on Adobe combining our AI-powered capabilities with their unique IP and industry expertise to co-develop innovative, differentiated solutions for joint clients.

Our vision, deep expertise in creativity and marketing track record of innovation and broad partner ecosystem uniquely positioned Adobe as the partner of choice for AI-powered customer experience orchestration. Our extensive customer base innovative CXO products and robust pipeline give us confidence for a seasonally strong second half.

I'll now pass it to Steve.

Thanks, Anil. Today, I will start by summarizing Adobe's performance in Q2 FY '26, highlighting growth drivers across our customer groups, and I'll finish with our financial targets. In Q2, Adobe achieved record revenue of $6.62 billion, growing 13% year-over-year as reported and 11% in constant currency. Diluted earnings per share was $4.25 on a GAAP basis and $5.96 on a non-GAAP basis. Our GAAP results reflected a $70 million or $0.17 per share of a noncash goodwill impairment charge related to our publishing and advertising reporting unit. Q2 financial highlights included: Total Adobe ending ARR of $27.1 billion, growing 12.5% year-over-year, including approximately $480 million from the acquisition of Semrash. Total customer group subscription revenue of $6.39 billion, growing 14% year-over-year or 12% in constant currency, including approximately $40 million from the addition of Semrush. RPO of $22.27 billion, exiting the quarter with RPO and CRPO, both growing 13% year-over-year or 12% in constant currency. Cash flows from operations in the quarter were $2.17 billion and ending cash and short-term investment exiting Q2 was $5.63 billion and repurchasing approximately 8.5 million shares of our stock during the quarter.

Exiting Q2, we have approximately $27 billion remaining under our authorizations, including the new $25 billion authorization announced in April. Customer group results and insights. Business professionals and consumers subscription revenue was $1.85 billion, increasing 16% year-over-year as reported or 15% in constant currency. Q2 growth drivers for business professionals and consumers included sustained double-digit ending ARR year-over-year growth across all geographies. Acrobat and Express MAU surpassed 850 million, growing approximately 20% year-over-year. Acrobat AI assistant ARR growing approximately 3x year-over-year. And strong performance in the enterprise across both commercial and government. Creative and marketing professionals subscription revenue was $4.54 billion, increasing 13% year-over-year or 11% in constant currency. Q2 growth drivers for creative and marketing professionals included growth in Creative Cloud driven by the CC Pro offering. Creative freemium MAU, which includes web and mobile versions of Firefly, Express, Premier, Photoshop and Lightroom, crossed 90 million, growing over 70% year-over-year. Continued strong generative credit consumption driven by video and audio. Firefly ending ARR, including Firefly apps and credit plans and enterprise Firefly offerings approaching 300 million with the intent to drive more traffic to Firefly freemium in H2. Ending ARR across Genco, AEP and apps and AEM and AgenticWeb growing over 20% year-over-year. Enterprise customers with over $10 million in ARR growing greater than 20% year-over-year and continued strength in retention across the enterprise customer base.

Let me now turn to our financial targets, which include Semrush and assume current macroeconomic conditions. Given [Audio gap] [ $26.5 ] billion to $26.6 billion. Business professionals and consumer subscription revenue of $7.44 billion to $7.48 billion creative and marketing professional subscription revenue of $18.21 billion to $18.27 billion, which now includes approximately $280 million from Semrush. Total Adobe ending ARR book of business growth of 10.2% year-over-year compared to our FY '26 beginning book of business of $25.66 billion. GAAP EPS of $17.90 to $18, and non-GAAP EPS of $0.2435 to $0.2445. Our FY '26 targets assume a non-GAAP operating margin of approximately 45%, a GAAP tax rate of approximately 22.5% and and a non-GAAP tax rate of approximately 18%. Our FY '26 total Adobe ARR growth target of 10.2% now reflects both the addition of the Semrush book of business as well as the strategic choice to accelerate MAU, freemium growth and defer previously planned creative cloud line optimizations. We believe this is the right long-term strategy to expand our customer base and strengthen the foundation for durable growth.

For Q3 FY '26, we are targeting total Adobe revenue of $6.67 billion to $6.72 billion. Business professionals and consumer subscription revenue of $1.87 billion to $1.89 billion. Creative and marketing professional subscription revenue of $4.61 billion to $4.64 billion. GAAP EPS of $4.40 to $4.45 and non-GAAP EPS of $6.05 to $6.10. For Q3, we assume non-GAAP operating margin of approximately 44% and and a GAAP tax rate of approximately 23% and a non-GAAP tax rate of approximately 18%. We believe Adobe is well positioned to capitalize on the expanding AI opportunity. Our focus remains on helping customers achieve better outcomes through innovation, relentless execution and deep integration of AI across our portfolio. We are expanding our user base, deepening engagement investing with discipline in the opportunities that will drive Adobe's next phase of growth.

Thanks, Steve. We are at a transformative moment in the industry and for the company. The convergence of AI agentic workflows and the explosion of content demand is creating significant opportunities that play directly to Adobe's strength. My focus continues to be driving execution against our product road map and successfully expanding to new monetization models that reflect how the diversity of our customers want to engage with Adobe. I'm committed to driving this as we finalize the right leader for Adobe's next chapter of growth. It gives me confidence beyond our products and groundbreaking technology is our people. Adobe remains one of the greatest places to work in the industry and the talent and culture we have built over decades is the foundation for this transformation. Thank you.

We will now take your questions.

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

I guess just realized it wasn't planned, but with Dan leaving, I think we're going to field questions on how the company manages through this level of transition in a world where there are a lot of questions around just disruption or changes to the market across software. So maybe you can just speak to how you maintain continuity with both the CEO search and CFO transition in motion and maybe also touch on the profile of what you're looking towards or think the company needs in its next stage at this point?

Sure, Michael. Let me take that. And I will first start off by saying the leadership team that exists in the financial organization is absolutely, absolutely seasoned and top notch. So I wish Dan well. It's clear that where he's going is where his background and expertise has been, but I'm confident that we won't miss a beat. I think as it relates to any other questions associated with the transition, I'm happy to answer that, but my short answer is we have an incredibly seasoned leadership team. And I will continue to work with them closely as I have in the past to make sure that we drive all our strategic objectives.

And just if I may, a follow-up just on the decision to defer line optimizations on Creative Cloud. I assume we're coming up on just potential price increase there. So maybe speak to why that's the right decision for Adobe today, and how you think that kind of sets the creative business up for future growth?

Yes, happy to, Michael. I mean, I think if we really look at it, we just look at what's happening with the AI opportunity for creativity as this incredible opportunity that is upon us right now. And no other company is as well positioned given what we have across our models, across our products and across our interfaces to take advantage of it. So this is really about saying what we have done as it relates to capturing MIL with Acrobat and Express, what we've done with respect to Firefly the entire creative market. Sometimes, I like to also characterize this much like what's happened with the code opportunity. If you think about what's happened with the code opportunity across AI, it's just completely being turned upside down. And every company is thinking about how they can add to all of the billions that is already spent in code. The same opportunity exists, I think, in every single category, whether that's gaming, entertainment and creativity. And this is an opportunity for us not just to focus on creative pros and communicators who've traditionally been the strength of this company, but to actually become that AI platform for all creativity across every single surface. The success that we've seen associated with what we have done on these new products. We talked about the Mal,we've talked about the ARR that's coming. We want to just have a singular focus right now to make sure that we go capture that immense opportunity with a singular focus and a clear marketing message. It also is based on our complete confidence that we have that the creative business is extremely stable. The amount of innovation that we have delivered in that space continues to make us a category of one as it relates to our focus on that particular market. And so that one we can differ. It's not going away. But anything that comes in the way of the company aligning and the market understanding that we're going to go after that entire creative opportunity right now. I think will detract from what is the real price for this company. So hopefully, that gives you some color. And I think in terms of the impact on ARR, you can think of it as maybe half of the impact of ARR is as a result of what we are doing around deferring that creative price line optimizations. And the other half is about going full steam on what makes -- what it takes to deliver the freemium experience.

And the next question comes from Alex Zukin with Wolfe Research.

I apologize for any background noise. Maybe just at the risk of redundancy or simplification, just why now to accelerate the freemium [ now ] motion? I think before we were thinking that the previous messaging was that it could actually positively impact second half ARR, the freemium motion and now it's turning into a headwind as they convert or so maybe just simplify why now is the right time? And then I've got a quick follow-up.

Sure. I mean I think you should think of it more in terms of does that early success that we're having across all of them give you confidence to actually go even more aggressively about this. So that's how I think about this, Alex, in terms of why now. We all recognize that when you look at the traffic that's coming to the Adobe side, that traffic is just gushing. And so when we think about how we can capture that with a unique value proposition associated with delighting them and making sure we have a friction-free experience anything that comes. When we take a step back, we have built this incredible business, but it's a balanced business. We're always trying to figure out what we sent to the premium, and what we send to ARR. I think this singular clarity will enable us to capture way more people in the audience. And so the why now has more to do with the fact that we are seeing the success associated with what we've done the products, whether it's Acrobat Express or Firefly are there, the ability to support third-party models is there, and I'll have David also add. So it's really the success that we are seeing and the incredible amount of traffic that says if this -- if we don't take advantage of this opportunity right now, we will just unnecessarily diffuse it, and we will send people on other places when they want to come have that engagement with Adobe and are looking for the Adobe brand and Adobe Magic to help them solve their creativity needs. David?

Yes. And maybe, Alex, I'll just add on a couple of examples to what Canton was saying to demystify what we mean by user behavior changing and evolving. Let me give you one example with Acrobat, one example with Creativity and Firefly to hopefully snap this a bit. So what we see is a shift in -- or an emergence in terms of LLM usage, and that is driving a lot more intent-based search. So what is an intent-based search? Someone might type into a search engine, summarize this PDF, right? And what we do is we are using SEO and SEM and some of Anil Semrush capabilities now to make sure that we're ranking high when someone types in something like summarize PDF. When the user clicks on our link, we take them instead of taking them to adobe.com and talking to them about Acrobat, we're now making them directly into Acrobat web with a single call to action, which is upload your PDF and then we summarize it for them. And when we summarize it for them, we then introduce them to this idea that they can use AI assistant to even to have and ask some questions. And we use this process to let them build habit before we start giving them paywalls. So that's an evolution. If we just took that traffic direct to a paid flow to [indiscernible] download Acrobat, it wouldn't produce as much opportunity long term for Adobe. Similarly, in Firefly, we see things like growth in terms like generating pixel art for social media posts. Again, we have ranked really high in SEO SEM then we take them directly into Firefly so they can upload an image of themselves create this pixelated version, maybe introduce them to this idea that you can convert that to video, but it's a very different flow. And that's where the world is going. That's how users are engaging to lead to that. And we think, as Shan has said, we have the right products for that now. So this is the moment to go for.

Maybe the last thing I'll say to that to just punctuate what David said is, not only are we seeing the MAU increase, but we're seeing the engagement increase then as a result of serving that first experience because they're looking for Adobe. So I think it's the satisfaction associated with completing their task that wants them to engage with Adobe more and those signals that give us confidence that now is the time.

And then maybe just a follow-up then. If we think about the combination of that action that you described and the postponement of the line optimizations as driving roughly, I think, by our math, about a $0.5 billion adjustment to the organic ARR downward. Like what is the payback period on that? So that $500 million, let's say, that you're investing in this motion, what is the payback period and multiple that you think you can get as a result of the successful strategy that you're -- or a potential successful strategy that you've embarking on?

Well, let me give you some color. I think on the second 1 first, which is the Creative Pro line optimization we can introduce them as we continue to deliver value. So that one is just a face shift. And as we add that, we will actually think -- we believe that we're going to have better offerings that are more differentiated, the more these freemium offerings are successful. So that one for us, we just look at it and say, we're deferring it but not closing it. So hopefully, that gives you some color. And then in terms of the traffic, if the disproportionate amount of traffic is going to go to these premium offerings. You're right about, hey, how does that sort of start to come back? And we're already seeing some of it as it relates to the math that we have on Firefly. So we shared some numbers on that as well as on Express. We are growing well, but that will play out, I think, over 2027. More important, I think it sets the company up for the right sort of really growing our customer base, which, like we've done with Reader, then pays off for decades. And maybe the other thing just to give color, because I'm sure people will ask this question. As you think about it in terms of how it plays out over the second half, maybe the way to think about it is if you go back and look at our fiscal '24 or our fiscal '25 results, you can understand whatever our second half ARR expectations are, they probably typically pay out 40 and 60 in Q3 and Q4 given we'll be making more of these changes in Q3 as it relates to changing the traffic patterns, and we expect our seasonal enterprise strength, the enterprise and everything we're doing around content continues to be an area of strength for us. That will be perhaps a little bit more proportionately in Q4 than it was in Q4 in the last few years. So hopefully, that gives you both color on the line optimizations we can always introduce but we wanted to be transparent with you. I think as it relates to the moving of the freemium, hopefully, we gave you a lot of indication as to why now all of the early success that we're seeing. And I just wanted to make sure you do color as to how that might play out in in Q4 as you do your modeling.

[Operator Instructions] And we'll take our next question from Matt Swanson with RBC Capital Markets.

Not to front-run can too much, but if we could focus a little bit on the brand visibility solution, kind of the broader idea of what Semrush brings to the Adobe platform. Could you just kind of talk a little bit maybe more holistically on how that fits to your broader portfolio? And kind of what the maybe compounding benefit could be over time?

Thanks for the question, Matt. Brand visibility is a topic of huge interest to CMOs as you just heard from David, as well. We are seeing a lot of that play out in our own traffic patterns. And every brand across the world wants to have the right placement regardless of which LLM consumers are using. They want to have the right message, and they want to have their messages show up on LLM and social media and all the other new platforms that consumers are going to. And we believe that the best way to do that is to take their content that they have already within their content management system like Adobe Experience Manager, and make sure it gets out there, whether it's the bots and the agents that the LLMs have or third-party sites, which have credibility with these LLMs, making sure that all the brand visibility shows up in the right places. That requires the integration of what Semrush brings, which is the outside in knowledge of how -- what is actually being prompted for what's being searched for and that the database that they have of all of the prompts and search queries and so on and combine it with the inside-out intelligence that we have with all the content, marrying those two provides us the opportunity to bring the most comprehensive brand visibility solution in the market, and that's what we're introducing it Cannes later this month. So we are super excited about that, and we believe that this is going to be a must-have for every CMO.

And the next question will come from Brad Zelnick with Deutsche Bank.

Maybe on a different topic, we saw the announcement on the creativity connector with Google Gemini. Wondering how you're thinking about relationships with companies like Google that are seemingly developing their own design tools versus making Adobe innovations available in their apps. And more broadly, how are you thinking about competition partnerships and coopetition in the age of AI?

Yes. Thanks for asking that question, Matt. I think it's -- the -- we've made a lot of progress in terms of how we think about the evolution of a creative agent and productivity agent and they'll also introduced basically customer experience coworker at Summit a couple of months ago. Overall, what we've done is we've taken all of our core capabilities in our creative flagship applications as an example. And we've used that to create a series of capabilities that are accessible to the endpoint. So in other words, the creativity agent can now really access 50 creative tools across our ecosystem. And that AI assistant is then available in Firefly and to our Creative Cloud subscribers. But we've also, to -- exactly to your point, we've also taken that AI system that creative agent and made it available inside of both ChatGPT and inside of Claude with CoPilot and Gemini coming very soon. And what that lets us do is it lets us again, similar to what we were talking about go-to where user experience and user intent actually initiate. So if someone starts to want to do something with AI assistant to create a logo, convert that logo to some merchandise, be able to post that merchandise across social media networks, you can do all of that conversationally at this point. In that context, if you have anything you want to do that goes beyond what you can do conversationally, we use that opportunity to journey them over to Firefly for a deeper, richer AI tooling experience. So the whole end-to-end experience here is about getting to users where they are, letting them do a lot more conversationally, really reducing the bar to create more content, but then also leveraging the opportunity to monetize them by converting them over to Firefly as an example. And the last thing I'll say is the monetization model for these AI agents is similar and that it's basically about credit consumption, and we think it drives a lot more credit consumption and opportunity for upsell.

And as it relates to your question on partnerships, maybe just add a couple more points. I mean Firstly, you have to look at what the economic model is for a lot of these companies. So whether it's Amazon, Microsoft or Google, we are huge users of their cloud services which at the end of the day is a significant revenue stream for them. So we have great partnerships with all three of them. I think with Google specifically, we also partner on how we can jointly go to media and entertainment. We are a big user of the [ Nano Banana ] within our applications. So I think there's a lot of synergy associated with that, I think with open AI and with Anthropic. They are looking to say, how can they become more of a sort of platform of choice and provide us. I think all of their focus right now, I would say, Brad, is on code. And that's where everybody is doing a student body left on that. And I think creativity is an area that we not only have a passion for that we're uniquely qualified, and so this is our time and our opportunity to leverage everything that they are providing. And so with every one of them, we have a great partnership. But I think as it relates to the consumer side of creativity, which is where this is going after, where, I think, a company of one in terms of the focus that we can have on that particular business.

And the next question will come from Billy Fitzsimmons with Piper Sandler.

I want to go back to the discussion earlier. There's a lot of debates right now around kind of moats in software. And if I think back to Summit, there's a big focus on kind of what you're doing with AI agents internally. And I think there's an important emphasis on your differentiation of being having 20 years of customer relationships and proprietary data around that as well as being that governance on ability layer for agentic workflows. Can you just talk about the importance of that in the ecosystem? And then if I could sneak another one in. And to be honest, I don't really know this is four at this point, but -- you announced a $25 billion share repurchase authorization at Summit. That's a significant chunk of your cap, but we're also in a much more -- or it feels like a more relaxed regulatory environment. How do we think about kind of your ability and propensity to do kind of tuck-in M&A in this environment?

Maybe I'll start with the second, and then we can all touch on the first. And we are all a team of one. So you can ask anybody that question, Billy, and we will get the same answer. I think as it relates to the stock buyback, I think you know we had a $25 billion authorization previously. We added to that with another $25 billion authorization in April of the first authorization. I think if you look at it, there's $2 billion left, and we would have completed it in less than 11 quarters or so. So we're clearly showing a lot of confidence that we should be using our capital allocation to buy back our stock. Semrush was a good acquisition. We're confident about our ability to monetize that. It further differentiates our marketing solutions, and I'll come to the marketing part. But we are continuously looking at a whole bunch of companies. There's going to be some very interesting tuck-ins as it relates to technology because none of them have business models that are sustainable or monetizable. So it is actually a good time for us to look at technology companies. I think as it relates to differentiation, we always talk about content. And the fact that we have these behaviors, and we have the data is a huge differentiator for us. I know there's a lot of talk about what's happening in the enterprise. The number of CEOs and CFOs who are coming to us and talking about, hey, we have this transformation. A big, big component of that transformation is customer experience and Adobe. You're the one who's going to help us with that in terms of both the content and the understanding of the customer, that's a huge differentiator. I think we're clearly focused on that has separated us from anybody else in the customer experience orchestration. On the Creative Pro, as I continue to say, our understanding of that customer base is unique. And this is now about saying how do we extend both of those into also the consumer space in the era of AI. And so that's how we look at it. And to your point, our ability to take the depth of our technology, whether it's in audio, whether it's in video, whether it's in imaging and bring that to Firefly, the speed and velocity by which we can bring it has to do a lot with what the technology code base is underlying and the understanding of behaviors. So that's how I would describe our differentiation. Anybody who wants to create content and use it for marketing, that's Adobe.

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

I guess this one is maybe for David. David, when we think about this push in the freemium and changing that up a little bit, I guess, how do you comfortable on sort of the long-term economics in terms of lifetime value. I guess, what are you seeing in terms of those customers going through sort of a gestation period, then monetizing over a certain period of time. Can you add some more color to that? Because I get the idea of adding a lot more new users to the platform, but just trying to get a sense on how you guys get comfort about sort of the stickiness of those users after a certain period of time and the ultimate monetization opportunity?

Yes. Happy to take that. Again, just the foundation of the press here really starts with understanding user intent and user behavior. As I mentioned in the example of that transition to increasing intent-based expression when they're searching that just gives us an opportunity to massively open up the top of funnel, which you're starting to see with the over 40% increase in traffic to adobe.com through those activities. And if you think about the journey the user goes from, they go from searching directly to using our product, which does result and we see that in our stats that results in higher engagement which you then start to see in terms of monthly active user growth. And what we see is on the back end of that, when they convert to a paid user they tend to have much higher engagement and usage patterns than those that go directly into paid, which translates into long-term -- lifetime value and long-term value for the company. And in terms of why now, again, that question was asked earlier, why now? Because we see all the right signals, right? The product is there. We see the traffic is up 40% year-over-year. We see the strong usage of the product. We see that now is up year-over-year when looked at it. And we even talked about how that has started to translate into ARR growth with 50%, as an example, ARR growth that you see quarter-over-quarter for Firefly. So all of those early indicators are there. And really what we're working to do as we bring more of that traffic over is that, that just needs time to play out. All of that sort of in the backdrop of this is where the world is going. The opportunity is bigger than ever instead of trying to balance both things really go all in on this opportunity because it's ours to win. We have all of the foundation here.

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

Shantanu one of the questions we get is just the reset for this next tectonic shift. And I realize you're guiding margins down a bit, but I think many investors believe that you could be doing more and putting a much bigger moat and investment in to protect yourself. I don't know if that view is right or wrong, but I'm curious why not be a little more severe in terms of the push in the pivot. You went through this from perpetual subscription, you obviously nailed it and had incredible results from that pivot. Maybe it's not the right analogy, but I think we're doing a lot of questions on that.

Yes. I think, Brent, this is actually an indication that we are really going to pivot as you -- to use your words into getting this acquisition and customers. I mean perhaps what's not as evident is under the surface, how we're increasingly moving all of the expenses that we have and spend that we have and the scrutiny on just making sure that we find the money to spend. So we will not be short-term focused on this brand in terms of spending money to make sure we capitalize on the opportunity. And -- but we are spending on this and we will continue to, whether it's on the models, whether it's in marketing, whether it's in the product associated with these, we do not intend to be short term at all about trying. This is -- as you point out correctly, Brent, this is not about balance. This is about saying, hey, be clear about your strategic intent, and we are saying it's about becoming that platform of choice for AI right now. it is about getting those users to engage with Adobe and partner with Adobe. But be assured that as it relates to cloud spend, what we are doing on models as well as what we are doing in marketing, we are spending the money. The good news is we get a lot of Anil's products relatively cheap in order to be able to use it. So our efficiency on that is probably better than anybody else in the industry.

And moving on to Saket Kalia with Barclays.

Maybe for Shantanu and David. As I think about the original freemium business at Adobe, it's really Acrobat. And I think the hope here is that some of your products like Express and Firefly can replicate that success. Maybe the question is, can you just compare and contrast maybe the next generation of freemium products in terms of what's similar, what's different than some of the really successful freemium businesses that we've built up over the years.

Yes. Thanks, Saket. Happy to share a little bit about this. For the broader context of folks that may not have been tracking us as long as you have, if you really take a step back, we've talked a lot in terms of the Acrobat funnel as part of our data-driven operating model. And the level of scrutiny and detail we understand around the breakup of -- when we talk about the 850 million monthly active users, many of them are on desktop readers. Some of them are in our chrome extension. Some of them are in Microsoft Edge extension. Some of them are on mobile devices. We're able to look at the utilization of all of that reader experience in those free experiences and understand the specifics of how users are engaging in each of those and look for the right opportunities in those surfaces to put up paywalls and opportunities to convert. So we found in that process, things like Edit PDF or Redact PDF inquiries are a great opportunity to take a user that's built up a habit using these products and convert them to a long-term paid customer. a lot of that same learning that infrastructure that we have in place for Acrobat that we've developed over the years, that same infrastructure applies to everything we're doing, as you said, with Express, with Firefly, with Acrobat AI assistant. And the foundation of how we're taking that 90 million of creative freemium MAU and covering that is identical. Maybe the difference that we see as an opportunity, and this goes back to why we're investing so heavily right now in going after where we see user behavior is that, that intent no longer just starts in the product. That intent now also starts as part of their search history and the things they're doing in search. And so the investment in terms of driving a broader percentage of that search directly into the same flows and the same model that we've done with Acrobat over the years, I think that's really the opportunity to fundamentally change and reshape this business for decades to come. So very excited about what we've learned, and there's growth that we can apply to new experiences as well.

Maybe I'll just add a little bit to it, Saket, having been there for that journey, which was I think a lot of people may not remember that we actually tried to charge for the Acrobat Reader and most customers told us that, "Hey, allow us to use it, and you'll find different ways to monetize it." And so in addition to what David said, I would add that I think what's common across all of these is product first and foremost, which is how do you get usage. In the reader case, it was distribution. In this case, the new model is premium, and that's the underlying theory behind both of those is get the product right and get usage going because that's the way to monetize it. I think as it relates to the two other things that are, I think, learnings from what we will continue to do on Firefly, how we can expand from Firefly into Creative Cloud. And we are doing a really great job of that, which is you try things in Firefly and you want to expand to Creative Cloud, that's pretty seamless. You want to start with Creative Cloud and have Firefly, that's also very seamless in terms of how much innovation we delivered. It's slightly different with Acrobat Express and that with Acrobat Express, it's a little bit more of paywalls in terms of how we are doing it. So what I look at when we see what we are doing is usage is common, getting the product is common and then making sure that at the appropriate times, we find ways to add value and find ways to monetize it. And so I think that's the learning that we have, but usage at the end of the day. And since I believe that's the last question, I mean let me just -- because I think the whole set of questions has really been around, hey, as you think about this era of AI and as you think about what's happening with creativity, what gives you confidence associated with some of the things. And I'll repeat what I said, which is we really think this is this unique opportunity for creativity with everything that's changing with AI and user behavior and user intent and how users discover products based on the early success to say now is the time to have the singular focus in the company, get the alignment and go really drive. The Creative Cloud business continues to do well. That is not where tweaking. It is going to allow us to get the next hundreds of millions of customers. And on the marketing side, enterprises, we just continue to extend the offerings that we have and tying together content between what we are doing on the client side and the enterprise that entire economic pool, as I think Anil talked about in terms of how much money is being spent across content creation, marketing folks, practitioners, the agencies as well as the channels that is only going to increase, and that's going to go. The benefit of that and the economic pool is going to go to folks who can help automate that and provide technology and software to do that. So that's why we feel really good about these changes, and we feel this is the way to continue to drive. We're also pleased with what we have done as it relates to the conversion of ARR to revenue. I should recognize that. That's why you've seen the overachievement. And so that speaks to, again, the stability, I think, that we see in the ARR from customers. So thank you for joining us today, and we look forward for those of you who are going to be at Cannes, certainly stop by and see what Adobe has to offer. Otherwise, we'll see you at the next call. Thank you.

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

Welcome, everyone, and thank you all for joining and to the countless folks online as well. Thank you for tuning in. I'm Doug Clark, Head of Investor Relations here at Adobe. I hope all of you have had a chance over the past 2 days to check out some of the keynotes and the incredible innovation that we've had here on display.

This session is an opportunity to tie all of those amazing innovations with our business strategy, especially how we're embedding AI into our entire product portfolio. We have Shantanu, Anil, David and Dan to provide updates, and we'll really have a lot of time for Q&A at the end.

So some standard housekeeping. The statements that we make today may include forward-looking statements that involve risks, uncertainty and assumptions as of today, April 21. Our actual results could differ materially from those set forth in these statements.

Please refer to our presentation and our risk factors in our SEC filings for more information. Today's slides, including non-GAAP disclosures, reconciliations and additional information are posted on the Investor Relations website.

Also, a brief update on our pending acquisition of Semrush. We've received all regulatory approvals and following the expiration of required waiting period, we anticipate closing Semrush in the coming weeks. We look forward to incorporating Semrush into our business, and we'll provide an update to our full year financials as part of our Q2 earnings in early June.

Today is really about the transformation of the customer experience orchestration and making Adobe's agentic vision a reality. It's my pleasure to welcome Shantanu, Anil, David and Dan to the stage.

Great. Thanks, Doug. And let me also extend my welcome both to those who are joining here in person today, as well as those who have tuned online. What we thought we'd do is just actually talk a little bit about all the innovation that we've delivered and put it in the context of what we've always talked to you about.

The mission continues to be empowering everyone to create. We certainly believe that AI is going to be a massive tailwind. And over the next few slides, I'll talk a little bit about how we think it both expands and accelerates the opportunity that's available for us across all of the audiences that we serve, which is on this slide.

We have been for a while now talking to you about how we've been actually ensuring that all our innovation is really focused ruthlessly on the customers that we serve. The 3 key customer audiences that we serve on the business professional and consumers, making sure that we deliver these AI-powered new conversational quick and easy apps to ensure that we can actually deliver both creativity and productivity. We've been the first company to talk about the fact that we think creativity and productivity are coming together.

And anybody who's trying to be productive has to ensure that there's a significant amount of creativity involved in that. The core of the company continues to be everything that we do around creators. These are the next-generation folks who are embracing creativity as a profession as well as the core creative professionals. And for them, ensuring that we have AI as well as the power and precision that they really need in order to bring any media type, any content that they want to life across any surface and David will touch more on that as well.

So that continues to be a significant opportunity for us, and we'll touch on that. And we all know that more and more of this digital content is actually being produced by organizations and as part of what marketing professionals do. And today, as you saw, we unveiled significant amounts of innovation as it relates to this area and category that we are calling customer experience orchestration.

And we continue to believe that our ability to do what we also call as GenStudio, which is create, deliver, optimize, analyze and ensure that all of the content that's being created is being served to address for every enterprise, their next generation of consumers, we think that's a big opportunity.

And you have seen us over the last few quarters talk about how when we think about where all of this creative content is going, it's increasingly going from the creators and creative professionals to the marketing professionals and within enterprises. So the 2 things we thought we'd all touch on is if you take a step back and think about those audiences that we serve, it's clear that we serve a lot of end users. We've talked about MAU. We've talked about the 850 million people who are using our products and enterprises, enterprises who are all increasingly focused on what we used to call digital marketing, what we call customer experience management, now we call customer experience orchestration.

So we thought we'd just take a step back and talk about what's happening. As you hear all of these massive announcements that seem to come every single day, how do we put that in context of what that means for Adobe, how do we innovate as well as how do we monetize all of what you're hearing every single day as it relates to AI and we decided to bucket that as it relates to what's happening on the individual side, how are individuals thinking about it and what's happening on the enterprise side.

And you see this. And again, as I said, Anil and David will also add to that. But the first thing that we think is that this market opportunity is actually not just changing, but it's expanding. And we continue to believe that it's -- AI is going to be a tailwind for the entire category as it relates to the number of people creating, the amount of money that's spent on creating as well as the same thing as it relates to customer experience.

So these additional surfaces, every single time you hear about a new additional surface, whether it's Microsoft Copilot, whether it's ChatGPT, whether it's Anthropic and Claude, we just look at this and say it's an additional surface, much like when you had desktops and you had mobile devices and then you had the web browsers, it represents another surface on which people want to create as well as they want to consume.

And so it's a big opportunity for us to make sure that our technology is available, maybe in different forms, but that's at the highest level, how we think about the additional surfaces. AI has also provide this unique opportunity to provide conversational interfaces as well as agents.

There was a lot of announcements. You'll see more information on the second page. But we think, again, that further democratizes the ability for you to do content creation as well as productivity. And so these conversational interfaces and agents that we're seeing is all about achieving your outcomes faster.

Media generation models. Every single day, there's probably a media generation model. I think Adobe has done a phenomenal job of incorporating it. They're all going to have different characteristics, different attributes and in our products, whether it's Firefly or Photoshop or Illustrator or Premiere Pro, we're going to make sure that we support these different models and over time, ensure that we can actually deliver for the customer the ability to understand what's the right model for whatever task they're performing, and we'll talk on that.

Certainly, there are new AI-first applications that will emerge. We have with Firefly, a new AI production studio, and we can talk about how we're doing semantic editing in there, how we're doing mood boards in there, what we are doing with graph, what we are doing with idea generation. And so these new AI-first applications is another way for us to attract people to our platform.

And the business model, as we think about it, and a lot of these are ands as it relates to our opportunity, the business model is also an and.

And so in addition to the core subscription-based pricing, we'll talk about how we're doing consumption-based pricing, whether it's credits, whether you call it tokens as well as freemium.

So that's what's happening on the individual side as individuals are like, how do I discover where I can go for creative expression? How can I start a marketing process as an individual with an end user application. And on the enterprise side, if you think about it, and again, those who were here both yesterday and today, the excitement around that, every single customer that I've talked to on the enterprise has been talking about, hey, help us take advantage of all of these new things that are happening that we all have to deal with, with your products.

And so additional channels, where these conversations are happening, we have the new LLM channels. That's where we have to make sure that we allow people to understand what conversations happening, what's their brand visibility. So these additional channels, whether they're channels to acquire customers, whether it's channels to place their ads or whether it's channels to engage customers, the importance of that certainly becomes more important.

And much like on the individual side, all enterprises have to make sure that they offer conversational interfaces for anybody who's coming to their site in order to do that. These new coworkers and agents, the fundamental way in which we can make all of our technology available first as MCP endpoints, then as skills and now as coworkers and agents.

And the monetization model for that is when we have a deal with an enterprise, we ask them what kind of capacity that they want for these agents to be able to automate content production. For those who were here this morning, you heard Shailesh talk about for all of his brands across Procter & Gamble, he wants to just create ginormous amounts of content. Some of that will be created by individuals, some of that will be created by coworkers and agents.

And that's the provisioning as well as the licensing that we will do with enterprises. Certainly, there's a lot of conversation around AI coding and what's happening with AI coding. We believe this AI coding will allow further personalization and further customization within enterprises. There hasn't been a single customer who's been telling me that they intend to use the AI coding in any way to replace what we are doing, but they all want to know how can they augment everything that they have.

And that's the reason why we call it orchestration because orchestration is going to become way more important. There's going to be this proliferation of different workflows, different applications that are built within an enterprise, but we still have this unique opportunity to make sure we bring it together. [ Anjul ] talked a lot today about when you think about wherever your systems of record are in order to orchestrate all of that through whether it's the journey optimizer or customer journey analytics.

So AI coding will ensure that people within companies do more coding, but it actually puts even more focus for us on making sure that we can orchestrate all of that, both through individual services that we offer to those customers as well as orchestration across that.

An area that we're getting a lot of interest in and excitement, and you heard people talk about that is these enterprise models, which is how can you take whether you're Procter & Gamble perhaps and you think about what is the Old Spice model in order for me to create content. And this is what we represent both as it relates to Firefly and Firefly Foundry as well as what we can do with GenStudio creative production.

So we're going to continue to push the envelope on making sure that in an intellectually appropriate way that we can provide these enterprise models that actually leverage all of the data that an enterprise has in their organization, whether it has to be with an individual or whether it has to be across the organization. And similar to the end user that we're doing on the individual side, the business models will also now include consumption and outcome-based pricing in addition to subscription.

So if you want to create a whole bunch of content using GenStudio, we can certainly understand how much content you want to produce and price that accordingly. So hopefully, this gives you some flavor of framing all of the things that you're hearing about AI. And what the next slide does is actually then talk about some of the incredible innovation that we've done across each one of these.

So I won't spend all my time on this, but I think you can see whether it's, wow, as the additional surfaces have emerged, Adobe has very quickly delivered the appropriate creative technology in there. Conversational interfaces, David will talk on creative agent and the availability of that in addition to what we've done with like the Acrobat AI Assistant or a Photoshop AI Assistant. The proliferation of media generation models, we monetize that through what we are doing with Firefly.

And as I mentioned, the subscription as well, we have both the freemium as well as consumption-based models that are now available for us. And on the enterprise side, all of the new offerings, LLM optimizer, the fact that everybody wants to now understand how they can optimize their LLM. Doug mentioned that Semrush, we've got all the regulatory approval.

We will now have GEO as well. All my customer visits, they can't wait to hear how we're going to help them both with the SEO as well as with their GEO, and I'm sure Anil will talk about that. Brand Concierge does the conversational interface.

So the message, I think, to all of you is our innovation has captured all of the ways in which AI can actually be a tailwind and make sure that we continue to deliver innovation across each one of that. So -- and the metrics that we use in the company, given the breadth of the business, given the scope of the business, certainly, I think as it relates to the freemium, we have to think about MAU.

We monitor credits and the consumption of credits, both within our applications and tiered subscription tiers or as additional credit packs. AI-influenced ARR and AI-first ARR were ways in which we want to make sure that we're actually innovating faster and looking around the corner to make sure we deliver that. And at the end of the day, we think that the total ARR for the company, given how customers also want to procure from us is the right way to continue to look at how we are growing the business, as you can see in a profitable way.

So with that, why don't I have Anil maybe touch a little bit on Summit and some of these announcements and then David, and we'll give it to Dan then.

Awesome. Thank you, Shantanu. Summit has been an extraordinary response from our customers and our partners, nearly 14,000 people in person. 3 key highlights I would call out. One, this -- the category that we have talked about customer experience orchestration in the era of AI, resonating really well with enterprise customers.

Enterprise customers telling us, look, customer experience is a fragmented area for us. We have 25-plus applications, lots of manual processes. We are looking to you, Adobe, to really help us with this agentic software to help unify that and bring that in orchestration and help us use the AI technology in the context of what we are doing and really help with business outcomes like revenue growth, additional customer satisfaction and loyalty and also with cost savings as well.

So that's been one great one. Second, all the innovation has resonated extremely strongly. I'll touch upon that in the next slide. And the third was the partnerships we announced, especially with all the major AI platforms. If you think of today, who is playing in the enterprise AI platforms, we have Claude, OpenAI, Microsoft, AWS, NVIDIA, all announcing partnerships and expansions with us. So that's been very gratifying.

And we've clearly seen that response from our customer base as well. In terms of the highlights, the ones in red are some of the ones that I'll call out as Shantanu went through the exact framework. It's been extremely well. The response has been great in terms of understanding what we do and how we can help them bring the orchestration to life in the customer environment.

A few highlights. additional channels. Shantanu started talking about the LLMs, the LLM optimizer, especially with what we can do with the pending acquisition of Semrush has been extremely well received because customers already see that as part of one process. I want to have the same team do both search engine optimization as well as generative engine optimization, whether it's for Google or AI Overviews or for ChatGPT or Perplexity, and so on.

And you guys are bringing that together. That's awesome. So that's something that's been extremely well received. Brand Concierge enables them to offer a conversational experience and also enables them to have direct interactions with their customers without getting disintermediated. So we've seen a lot from customers in retail, travel and hospitality and other verticals show a lot of interest.

And we were one of the launch partners for ChatGPT ads. Actually, Kramer from OpenAI was here for one of the keynotes yesterday, and we launched GenStudio for ChatGPT ads to enable our customers, our brands to have ads placed through ChatGPT, that the ads that they develop through GenStudio get activated directly.

A couple of examples of the new AI coworkers. We launched CX Enterprise Coworker, which is really a specialized AI agent that knows the entire context of customer experience in a given customer and can augment the capacity and dramatically increase the productivity of marketing teams. Every marketing team that we talk to tells us that they are bottleneck because they just have too much work to do.

They have too many markets, too many customer segments, too many products, too many brands, all demanding attention, and they just don't have enough capacity to do it. So it's not just capacity, you also need governance because you got to make sure that just because you have capacity, the same consumer doesn't get 10 different offers from you in the space of an hour. So you got to make sure that it gets done in a governed manner, and that's what CX Enterprise Coworker does.

And we really brought the entire power of what we do with all of our AI and Agentic technologies through the CX Enterprise Coworker. And then we are surfacing that not only through our platform, but through third -- through all the major AI platforms. We -- for example, the Adobe Marketing Agent, which runs with Microsoft Copilot was one, and we saw the example yesterday in the keynote where Charles Lamanna talked about how we are using Microsoft Copilot Cowork with all of Adobe's portfolio.

In terms of enterprise models, one of the things that customers tell us is, look, we now know that generating content is getting easier. But to make the content really usable, like David was talking about yesterday, to make sure that the content stands out, it reflects the brand, it is compliant and it's available in any channel that they want, they need to be able to infuse their brand intelligence into the content.

You get the output of the generative models, but to turn that into usable marketing content, that's what Adobe Brand Intelligence does and the response to that has been phenomenal. You saw the example of Xfinity on stage yesterday, and we expect to see a lot of customer demand for that going forward. In terms of our new AI-first applications, the family of applications we announced called the Agentic Web, where LLM Optimizer, Sites Optimizer, brand concierge, all part of that is -- takes the footprint that we have in our content management systems.

Virtually every major website runs on Adobe Experience Manager. And that is probably the best content that a lot of companies have because it goes through a governance process, a validation process and every product, every brand gets described on their websites. And now they need to make sure that, one, they're allowing the LLMs to pick that up. Many of them block it because they're blocking all bots, and that's not a good thing to do. They need to be much more selective about allowing whether it's ChatGPT or Perplexity or other LLMs to pick up that content because that's the only way they show up in the responses to prompts.

And then they want our help to truly understand how these LLMs work, how these -- the new personal agents work like OpenClaw or NemoClaw, how are consumers actually looking for information? How is the discovery process happening? And they want us to help understand that so that they can get their content in the right place.

And so when the consumer asks for something that's related to them, their brand shows up in the right way in a trusted and accurate manner. Huge demand for that because there's really no comprehensive solution like we are offering with Adobe Experience Manager and the Agentic Web for what we call as brand visibility.

And the last area Shantanu touched on is around business models. We -- the subscription business model, we've obviously started to expand that already with AI credits for all of the agents that we have. We started doing that last year with AEP Agent Orchestrator. We're now expanding that with more consumption-based token-based approaches.

Our unified pricing has been super successful. It was -- it's internally named as Pangea, which is our unified pricing model. Virtually all of our largest deals right now are done with a unified pricing model that gives the customer the ability to swap without having to do any paperwork, extra, without having to do any kind of extra agreement, being able to swap one Adobe product for another.

That way, they have the assurance that even if they get the demand wrong in terms of how much they're expecting, they're able to -- they will not have a capacity problem within their Adobe agreement. That's been super popular. And with customers like the one you saw with DICK'S Sporting Goods, for example, today, with leading customers, we have a lot of forward deployed engineering going on and outcome-based pricing that we are doing based on business metrics that matter to them.

So those are some of the things that I wanted to highlight. But overall, I would say it's been a very, very heartening response here at Summit.

All right. And I'll talk to the other red boxes that show up in a second. So as Anil and Shantanu talked about, I'm going to use this as the framing. I'm going to try to use this to actually tell the narrative.

I think many of you have been following what we've been up to over the last few years, but give you a little bit of that narrative thread and then tie it back to the products and the monetization. Let's start at the proliferation of media models. We started by building our media models in a very different way. The foundation of Firefly was around commercial safety and making sure that everything we developed in there, people knew that they were able to use for production output, but also with a high degree of focus on editing capabilities.

So the pixel preservation as opposed to just the generation. And that's really been the foundation and control and precision that we've been relying on the Firefly models for. Over time, we started to incorporate more and more third-party models from Google and OpenAI, Runway, Flux and a whole host of others that, as Shantanu mentioned, bring in different personalities and different strengths that each of the models have into that family.

So we've created this really great foundation of model capabilities that are across the industry's best models, including Firefly and third parties into our platform. We realized, though, as we were working with brands that out-of-box generation was not sufficient for production output for these brands. That's why we then evolved and we introduced this idea of Firefly Foundry and custom model development because when a brand generates something, they want that generation to be pixel perfect to the brand elements and the historical way that they've been creating content or their franchise and their characters and their scenes and their props if they're a media and entertainment company.

So we started to evolve there. And as Anil just talked about, brand intelligence is the next step in that direction because what we find is that not everything is necessarily codified in what they've done to date. There's a lot of implied value based on things that they've released in the past. So Brand Intelligence now takes all of the capabilities and understanding of what an enterprise is trying to achieve and integrates that into the generation models across the board.

So that's been a really, I think, powerful foundation that we've built on. On top of that, we think that the introduction of conversational interfaces has been a huge opportunity for us. And we started investing heavily in that about a year ago. About 6 months ago, we released Photoshop Express and Acrobat into the wild in OpenAI. And the way we did that was we took the 40 years of technology development for Photoshop, Illustrator, Acrobat, Premier, After Effects.

And we took all of the capabilities within those products, and we started to atomize those as individual, what Shantanu referred to as MCP endpoints. And what that means is that any feature in those applications can now be called on by a chatbot or an LLM. And that fundamentally changed the way I think people are going to be able to experience our applications.

No longer they're going to use one application or another application, they're going to conversationally use across these applications. And we took those and we exposed those in ChatGPT and Copilot with Gemini and Claude coming in the not-too-distant future.

But as we did that and as we were working with Anthropic, we realized that the generic LLM capabilities still lack the awareness and the depth of what a creative professional understands. It still lacks the depth and the precision of what a knowledge worker in a marketing group or a salesperson understands in terms of how they want to use those MCP tools.

And so working with them, we introduced this idea and announced last week this idea of a creative agent. And the creative agent is a more deterministic agent that understands how creative professionals work. And it is a better outcome. It drives a better outcome using all of those 40 years of innovation in those tools.

And that's what we announced last week, along with Anthropic talking about how impactful that will be both in terms of what shows up in Claude, but then what also shows up in our first-party applications. And the other thing I just want to emphasize here is we've done this, we've done this in partnership with all of the chatbot providers so that the conversational experience has also evolved.

No longer is it about ask a question and get a response. Now when you ask something to be done, we've worked with them to insert UI responses. So if you ask for something to happen that requires more input that might be more precise through a slider or through some sort of UI mouse-based input, it will give you that opportunity to do that. So that has fundamentally changed the way we look at the top of funnel here because now if anyone wants to engage with creative or productivity capabilities in these interfaces, we're right there for them.

And because our creativity and productivity agent understands it better, we're going to do a better job on their behalf. But we also have the user interface to journey them into richer, more precise capabilities in our first-party applications as well. So that becomes a really productive form of top of funnel for us. So then if I take all of this and I say, if I take a step back and let's look at it through the lens of business professionals and consumers and creators and creative professionals.

For business professionals and consumers, what that's meant is taking everything we're doing with Acrobat and Express, and we're bringing those closer and closer together, as you know, so that you have a single experience for content comprehension, content creation and content publishing into one integrated experience across that -- those surfaces. And what these -- what the productivity agent means in that context is I don't have to do everything myself manually by pointing and clicking.

I can actually ask that of Acrobat and Express, and it will do that for me. Similarly, in terms of Firefly and Creative Cloud, the creativity agent is now a sidebar in all of those applications. The creativity agent for those of you is actually launching next week. And so you'll be able to start to see that. And in the context of that, you'll be able to have conversations, entire conversations around designing a logo, taking that logo that you've designed, putting it into on different merchandise and then taking that and prepping it for social, all through these conversational capabilities using our underpinning capabilities from Photoshop Illustrator and so you're having a fully conversational element, opens up the top of funnel so more people can participate but drives the usage there.

In both of these context, we monetize the same way we've been monetizing. We talked about the growth of generative credit consumption, the tokens that we drive has been very significant for us. We talked about in the last earnings call, the growth in Firefly add-on packs as well. What these capabilities do with these conversational experiences, it drives more utilization, drives more token consumption and more value to the user. So that's how the monetization flows. And then similar to what Anil was saying in terms of enterprise, because of Firefly Foundry, Custom Models, brand intelligence, all coming together in Firefly creative production, now what we're able to do is move to outcome-based pricing.

So we all know when a marketing organization wants to create content, they sometimes want to create that content and publish it across multiple social endpoints. If they do that, the creative production and the creative agent will take that and actually do all the work to resize, reframe and publish that content and recharge based on outcome there. Or similarly, for -- you heard [ Shailesh ] today, as a CPG brand, they have a lot of content that's physical content, 3D digital twins.

How do you drive that all the way through. So all of that -- those capabilities that the creative agent does on behalf of enterprise customers is really capable of being priced at outcome. And so all of this is about growing the number -- amount of usage, growing the value, growing the token and that becoming a new line of monetization that's additive to Adobe.

Thanks, David. And thank you all for joining us, both in person online. It's great to be here with all of you. You heard from Shantanu, Anil, David on Adobe's strategy, on our product innovation and how we're thinking about that opportunity ahead, particularly as AI reshapes how our customers create, how they work and how they engage.

And what I'm going to do is connect that to how we're executing on our customer-focused strategy because ultimately, for me, it comes down to 3 things: executing with discipline, driving durable growth and creating long-term shareholder value. Adobe, we're operating at scale, and we're doing it from a position of strength. We've got over $26 billion of ARR, and we're delivering double-digit customer group subscription revenue growth.

But at the same time, we're seeing strong momentum from our AI-first solutions with ending ARR more than tripling year-over-year. And if you take a step back and look at the demand signals, the signals are clear. We're seeing growth across our user base. We've got over 850 million monthly active users, and that's growing 17% year-over-year. Just think about that. Over 850 million monthly active users, we're touching greater than 1 in 10 people on the planet each and every month in the Adobe ecosystem, and that's growing greater than 17% year-over-year. That's a significant addressable market. Engagement, engagement is increasing, credit consumption.

Credit consumption is increasing. And that's the clearest signal that you see of customers who are embedding AI into their creativity and productivity workflows. And that's translating directly to growth of the Firefly family of solutions. And in the enterprise, we're helping their customers. We're helping our customers transform how they operate in the era of AI. And we have 3 solutions now. Each of them is greater than $1 billion. And in the aggregate, those [ three $1 billion ] businesses are growing greater than 20% year-over-year.

That is incredible growth at that scale. And I think it illustrates and underscores both the importance and differentiation of our content supply chain solutions, our customer engagement and our brand visibility. And it reflects both the scale of the opportunity we're pursuing as well as the differentiation and durability of the Adobe platform. And all of this is underpinned by a strong financial model. And we continue to deliver durable financial performance, and we're generating significant operating cash flows. We've generated more than $10 billion in FY '25 alone.

And that gives us an incredible amount of flexibility to continue to invest in the innovation that's fueling the growth and also return capital to shareholders. And it also reflects the confidence we have in the long-term opportunity ahead of us. In the past 3 years, we've reduced our net share count by almost 10%, and that's through disciplined capital allocation. Today, we're announcing a new $25 billion share repurchase authorization, which is a strong commitment to significantly reduce the shares outstanding in the next several years.

And it also underscores the long-term optimism that we have in the business opportunities in front of us. We've got a clear strategy. We've got strong momentum, and we've got a disciplined approach to execution. And we're focused on driving durable growth and delivering long-term value. And so with that, let's switch to Q&A. And Doug, turning it back to you.

Thanks, Dan. Thank you, everybody. We have, I think, ample time to get to as many questions as possible.

Please try to limit yourself to the best you can to one question where possible. Let me see where the [ mic runners should ] start. Jessica, there. Let's start close to you.

This is Peter Burkly here on behalf of Kirk Materne with Evercore ISI. A lot of focus for obvious reasons around just the concept of orchestration. And I guess I would be really curious to just have you guys explicitly state what's your right to win in terms of being that orchestration layer within the enterprise? And I guess secondarily, I'm sort of curious, do you view it as being more of a domain-specific type of concept where maybe you guys own the marketing department and other vendors can still also exist within the enterprise? Or do you view a scenario where it's one or a couple of platforms sort of dominate this orchestration conversation?

I'll start and then maybe Anil can go. I mean when we talk about the orchestration solution, just to clarify, we're talking about it as it relates to customer experience. So there may be orchestration as it relates to dealing with HR within the company.

But I think as it relates to what needs to happen to both have the fundamental customer platform, which was the Adobe Experience Platform, you mentioned 70 billion profiles, the 1 trillion experiences. That's really what we are focused on as well as all of the content that needs to be created, the infrastructure to engage with customers so that the entire customer funnel is something that we address.

Exactly. Yes, we don't see ourselves as a general purpose orchestration layer. We are focused clearly on customer experience orchestration. We have the Adobe Experience Platform, the agent orchestrator for what we build, but those agents are accessible through any other major orchestration layer as well, ServiceNow, Microsoft, et cetera.

And I will say that we're clearly the largest provider now of sort of marketing technology in the world. And I think with the innovation that we have, we feel we're further going to differentiate ourselves, both in terms of the focus as well as in terms of the delivery of what needs to be done in that particular space because customer orchestration will come with all of these different channels, how do you deal with it? How do you make sure you have your presence? How do you then engage with them? How do you do commerce.

So we think it's a massive addressable opportunity, and that's really what we continue to be focused on, which, again, as Anil said, it's an evolution of what we started with digital marketing, what we did with customer experience management and now we're doing with customer orchestration. And customer validation seems to be even more positive as it relates. And I hope you've had the chance also to talk to customers while you're here.

Okay. Great. Keith.

Excellent. Thank you guys for hosting Summit and the investor meeting. I wanted to ask a question about timing, right, and when this comes to fruition. I would say like coming to Summit for the past decade or whatnot, the broader story has always been how do we get our customers to use a broader set of our solutions here, right? We have a lot of capability.

We want to consolidate that capability. And there's new technologies that enable that. Like we were talking about workflow 5 years ago. We were talking about GenStudio on the data side. And now we're talking about agentic layer on top of it.

But the timing is still an open question. And I think Dan talked about GenStudio is like it's almost like an ERP uplift, right, in terms of the structural change needed within your customers. So the question is, when does this occur? Like are these innovations getting to a point of where it's enough to really catalyze these ERP-type migrations to get people to restructure how they're doing marketing? Or should we temper our expectations on, this is going to take a while.

This is going to be a 3- to 5-year cycle as people go through this heavy lift of restructuring how they're doing their marketing. And then the other side of the question is monetization, right? Does this entail a shift in monetization away from seat-based, away from consumption? And is that something that we should be starting to think about in our models of what does it mean moving from primarily a seat-based business model to these other new types of whether it's outcome-based or consumption-based types of pricing models?

Maybe the 2 of us can touch on that. Keith, first, we look at it and say, are we pulling away already from the other providers in this space as the provider -- platform provider of choice for customer experience management. We certainly believe that.

As you look at the approximately $6 billion book of business as it relates to ARR, the double-digit subscription revenue growth, we think we are already pulling away from anybody else who's been there in that market. We think that the small single product providers of technology will be even more challenged. But to your point, I think this agentic stuff will continue to be now an accelerant to allow more people to adopt different pieces and scale it because the urgency of it from the customer is more significant than it's ever been before.

Yes. And I would add that the agentic software enables enterprises to integrate applications much faster than before. In the old world, you needed a lot of things to line up. You had your data models had to line up, the schema had to line up, the user interfaces had to line up. There was a lot more that you had to line up. The beauty of the agentic model is because of the way these layers work, you don't have -- you can have -- within -- underneath the MCPs, it can be very different, but the MCPs enable you to have loose coupling.

And the reasoning capabilities enable you, so you don't have to have perfectly defined interfaces to get going. So that will make the integration go much faster. And we believe adoption will be faster as we move towards more like outcome-based pricing and other things that show the customer that our interests are aligned more closely with theirs.

Okay. Let's come down in front to Brad.

Awesome. Thank you, Doug, and thanks so much for hosting us, Brad Zelnick, Deutsche Bank. This is one of the best summers that I can remember for real. I've been to many, especially as we consider the agentic capabilities that you've shown us, things like Enterprise Coworker are really showing the incremental opportunity that can be captured, not just cost takeout, which everybody associates with AI.

My question outcome-based pricing, Anil, you mentioned it, David, you followed up on it. Can you expand how do you implement this in a way that avoids friction with the customer? Where is it appropriate, for which types of customers? And maybe for Dan, what are the upside and downside risks to the financial model?

I'll start in the context of customer experience. In the deals that we have done, the best deals of outcome-based pricing are the ones where customers say, look, we do want it to reflect the risk sharing that we have. We want you to show that the technology is working in our environment. We want it to align with the business outcomes that we are looking for. But we also want predictability. We don't want runaway costs. And we also want to make sure that over time, as we get the benefits of revenue growth and so on, we really want to make sure that you have predictability that you don't have a curve that's actually outpacing our revenue growth or you're even keeping in pace with our revenue growth. We want to get the benefit of scale.

That's what we've been able to do. When we look at metrics like, for example, how many campaigns they're running, how much content that they're actually producing, what time it takes for them to actually get a campaign out to market? Those are the types of outcomes that we have seen in these early customer engagements that we have done. And then what we have done is to translate them into -- ultimately into subscription, which is we'll define the outcome. This is your subscription cost until we get to that. It might be -- we might start at a lower base level. Once you get to that, the subscription goes up in a stair step. That's what works very well from a predictability perspective for the customer and obviously works for us from our subscription and ARR perspective. So that's what we will intend to continue, and we'll see where it goes. This is obviously a market that's moving quickly.

I can add maybe one very specific example of where we're doing this. Firefly Creative Production. This is what we've been talking to you about the automated content creation part of it. We've been working with customers, and we've basically broken it down into for every content creation action that you take, how much are you actually spending on that content creation? So I'll give you a simple example that I've shared before. I've got a video, and I need to resize and reframe that video for every social network. right? I need to translate that video into these languages. How much are you spending on each of those tasks? And if we were to automate it, you'll have it faster and we'll charge you a fraction of the cost you would have done the traditional way.

And so that becomes a very easy way, as Anil was talking about earlier, to align our pricing to their -- the way they think about it. And it takes risk out of the equation for everyone. And the good news is it's deterministic in the outcome. And so that's been what's driven the growth that we've started to see so quickly. Dan talked about Firefly crossing $250 million. That was a $0 million business a couple of years ago, right? And so that continues to be the foundation of it.

In terms of the error bar then from a financial model, both Anil and David touched on it. I think when you go and evolve from just a pure subscription model to augment that to either consumption or outcome-based, there's a bit of variabilization in the outcome. But what I get really excited on was the point that David just made, when you capture a fraction of the economics versus how it was done before, that gives you a ton of value headroom to price into. And it's based on tangible outcomes. There's a direct through line between outcome, value delivered and what portion of that becomes ours. And so I really like the cleanliness and the look-through on outcome to pricing and the headroom that gets created versus the way things are currently done.

Maybe, Brad, just one other trend that we are seeing actually, we certainly monitor and inspect each of the deal bands significantly, which is -- and I think this was Keith's question as well, how are you doing on the deal bands, how are you doing on the selling? The one way in which people want to actually engage with us much faster, I think Anil and I were talking, we have over 50 people trying out the stuff that we announced today.

So you're also seeing a lot more as it relates to proof of concepts where people are like, hey, can we just get going? And so that's happening in parallel. In the past, you probably would have gone there and said, okay, what is your capacity? How much can you -- what do you want? And that process -- so it's a different process. But the good news is it's already embedded in how they're using it. And so actually, that allows a different kind of conversation. So again, that's a clear trend that we're seeing differently.

Okay. Let's stay down the middle, I'll go to Jay.

Thank you, Jay Vleeschhouwer. This is largely a product management or complexity management question. Over the last couple of years, GenStudio has been arguably the center of gravity, let's call it, within DX. I'd still like to call it Dx in terms of customer upselling...

Within the company, we get everybody to pay $20 the moment they say Dx, I'll collect later, Jay.

Okay. I'll say it again. And in terms of customer upselling and migration now, however, GenStudio is sitting at the top of the new CX Enterprise stack, which is a very interesting architecture, but along with brand intelligence and customer engagement. The question is, how are you thinking about GenStudio as still a focus area in terms of upselling and migration? Or what is the focus in terms of more broadly upselling the base to the new broader architecture that you've shown in the last couple of days?

And secondly, what is the right number of agents? That is to say, how do you decide against having too many agents versus too few agents? The road map sessions in the last couple of days like Marketo this morning and GenStudio yesterday, very interesting, but a lot of agents coming. So how do you avoid having too much complexity in the portfolio in that regard?

Maybe I'll start on the GenStudio stuff. As the team knows, I'm particularly passionate about GenStudio because I actually view GenStudio, Jay, and others as a way to actually integrate everything that the company is doing. I mean the 5 pillars of GenStudio for me have always been creation and production, which is, if you think about it, that's Creative Cloud, and that's Firefly in terms of now ideation with boards and graphs. How do you think about the beginning of a campaign or the beginning of a content workflow as it relates to everything that you're doing with Firefly.

I mean, Frame as well as what you're doing with Workfront, core asset management. I mean the first thing I asked when I was acting as interim CMO was like, tell me how much pieces of content that were created. And if I want to, as Shailesh said, move from 1 campaign every 2 years to 1 campaign every 10 seconds. How do I think about that? The activation and the delivery of that and then the analysis.

So I think the way, in particular, Anil's field organization is now selling GenStudio. It's part of that entire what content are you producing? How much are you going to be producing within the company? How are you going to be producing it with individual seats. So it's actually really served for us as the way in which people are like, yes, I want that strategic partnership with Adobe, and we want it. Now they may have already provisioned for some parts of Creative Cloud, they may have provisioned for some parts of Workfront, but this actually allows us to really elevate the relationship.

And so as an overarching solution of how we deliver it, I think we are positioning it as the umbrella for all of Adobe, in terms of the content supply chain. And then the second thing we're doing is we're introducing these new products. So as you have GenStudio for performance marketing and you think about, hey, there's a new channel. I think you talked about OpenAI and the ads associated with ChatGPT or what we are doing with Amazon.

So it has both the benefits of individual new components that are being monetized separately. But I think more than anything else, this has been the best way in which we go in and say, we're going to be a strategic partner for all of your content creation tools. And I have to mention that this is where all of the agency and SI partners have been great because the way they also think about it, they want a GenStudio within the agency to run it. They want a GenStudio that's shared between us and them and the client for how the client wants to operate. And if some people want to bring it in-house, they have a Genstudio between the client and us.

So I think there are just many ways in which we're monetizing GenStudio. And so that's the way I look at it. On the MCPs and -- it's an M multiplied by M multiple. I thought you'd ask the question, so how many MCP endpoints do you have? How many skills do you have? And then how many agents do you have? But I'll let these 2 folks answer it because there's clearly -- the benefit of that for Adobe don't underestimate. It allows us to take our ton of technology and make them available in very different ways at the speed at which nobody can do it. So I think the benefit is not just in offering these agents. It's the fact that we can take in Photoshop, you have how many agents and how many skills?

Hundreds of MCP endpoints and probably 100-or-so skills already sort of in pipeline.

Does that answer your question, Jay?

And just one thing to think about as you think about these agents and these skills, not everything is generative, right? The reasoning can happen. But because we have this proliferation of these across the Anil's Group and my group, the proliferation of these skills and MCP end points so much of what you can do is more deterministic, faster and cheaper. It doesn't cost the generative effects that used to have in the past.

Let's go to Alex in the middle.

Alex Zukin from Wolfe Research. I echo the sentiments about a great DX Summit and great seeing you again, Shantanu, for the -- for everything that you've done for Adobe over the many, many years. I guess, I want to ask a question about AI anxiety. And specifically, it feels like we're in the midst of this anxiety period for customers, obviously, for investors around cost, around security, around quality, around whether the investments they've made in their platforms are the right ones.

And it seems like it introduces more pausing and lengthening of sales cycles. But as you are talking to customers today, with respect to all of the innovation and all of the integration that it's driving across your platform. How are you both managing that anxiety? How does it impact your ability to actually get more out of the contracts or the expansion opportunity in these deal bands? And when you think about kind of where that money is coming from, ultimately, whether it's from experimental AI still [ FOMO ] budgets, whether it's from lines of business, whether it's from impacting hiring plans for their marketing organizations going forward. How do you kind of think -- how are they sharing their thoughts about that and influencing the growth rate of the product portfolio?

I'll just start with 2 quick thoughts, and then actually, Anil and David have you add. The 2 things I'll say is we were at an executive forum, which all of the executives associated with big companies, the word that's still being used a lot is AI transformation, to your point, within the company. But everybody acknowledge that 12 months from now, success for them will be AI execution.

So the good news is from where the customers are, they are talking about, yes, we recognize it's an AI transformation but AI execution is how we will measure ourselves success. So it feels like they've crossed that bridge associated with saying it. And the anxiety, the one thing I'll say is -- when people see the technology, I was actually very curious when people saw all of the stuff that we did, these agents and coworkers and conversational interfaces, what would the response be?

And I actually think seeing it in action and what it does actually reduces anxiety because now it's real, it's the innovation. They can get their feel on it and they're like, "Oh, my God, I can do more as opposed to, am I going to be impacted by it." So in my own way, I feel like the more you make it real, the more people actually will embrace it because they're like, wow, this actually can help me do my job.

I would say exactly that. The feedback has been -- the Coworker has made it really tangible, right? It used to be very abstract. We have put all marketing departments out of business and so on. It's just very abstract or very simplistic. You see something like the coworker you say, that's solving a real problem. I need to find audiences. I need to have the right content. I need to make sure the campaigns are launched. I need to measure them and then I trade and test and go.

And that is something marketers know is bottlenecked today. And if you can help me do that for all my markets and so on, it's actually very tangible. And what they -- what the other conclusion that we have seen so far at least the feedback we've heard is, they know the AI platforms are moving really fast and innovating fast. Sometimes too fast. They announce things and then they back away from things and you just -- you can't build a long-lasting enterprise system based on that. So they see us as a great partner that can help them balance that out.

And as it relates to the budget, Anil, where it's coming from, I do think there's an AI budget that people have because everybody has to say, "hey, here's how I'm using AI budget." And this is a good way to actually leverage that.

Yes. Alex, I think AI anxiety is exactly the right phrase that I think people are feeling. And what do you do when you're anxious, you go to someone you trust, right? And I think the brand that Adobe has represented in marketing, in media and entertainment, in the creative space, even in productivity, it's the place you can go. The one thing they know is something is going to happen tomorrow that completely upends their strategy or their thinking.

But if Adobe is the company that's coming in and saying, we've got your back. And whatever that is, to Anil's point, because of the orchestration work we've done, because of the agentic work we've done, we will incorporate that in a way that has the least impact and the most upside to your organization. That trust is one of the most important things I think we bring because we also have the domain expertise and empathy of what they go through every day that I don't think the broad-based AI companies have the time to think about.

It seems -- my perception is that like Express has taken a little bit of a back seat the last couple of days. I just always thought it was the marketers tool, right, to create content. It was a lighter weight version of the flagship stuff on the creative side. And so it was like a nice -- there's some synergies there. And it seems like some of the agentic things that Adobe is coming out with, along with some of the third-party kind of general use agent stuff is filling that need instead. And I'm curious whether that is just my perception or whether it's true that these agentic capabilities still a need that Express used to.

Yes, happy to take that. First of all, I assume you all noticed how much innovation was on stage. And how much we can jam in is a function of how long you guys are able to sit in your seats. And so what we did over the last couple of days was talk about sort of the rise of agents and how people are engaging. What we are seeing is that there's a transformation of away from sitting down with a blank screen or sitting down with a template and more to a generative capability to generate an outcome, as you saw with Firefly, with the creative Agent and what you saw with Firefly Creative Production, all of this content is being generated. How you then do the last mile of editing continues to be a focus for us in that ecosystem.

So we are seeing adoption of Express continuing to rise very quickly in the enterprise. We're seeing adoption of Express actually doing -- growing very quickly in individual users as well. The input into that is the agentic and generative capabilities. But it's a significant part of that freemium monthly active users that we're talking about grew to over 80 million, and I think it was 50% year-over-year growth. It's the fastest -- this whole ecosystem of freemium onboarding is the fastest we have. And it's also an integrated part of the GenStudio content supply chain work for marketing self-service that we have at the end of the chain with -- in the enterprise.

Let's come back up to the middle in front.

Stefan Slowinski from BNP Paribas. Dan, on the shift to consumption and outcome-based pricing, does the long-term gross or operating margin look different for Adobe?

Yes. So I actually think the growth profile will get enhanced as we, again, think about the way work gets done today, the friction cost in the ecosystem and putting the power into the hands of our customers to take campaigns on a global basis and ramp their content to connect in a more personalized way through that digital channel, that has significant benefits not only from a top line standpoint, but from a bottom line productivity standpoint. And when you think about that equation and our ability to price into that headroom, I actually think it's an accelerant as we begin to proliferate these capabilities across the customer base.

From a margin structure standpoint, I think there's a couple of factors at play. We've done a great job with unit cost of compute today. And you can see even though like generative credit consumption up 3x quarter-over-quarter in Q4, up again 45% quarter-over-quarter in Q1, you see the margin structure and profile that the company is driving forward. We're going to continue to stay hyper-focused on the things that we can control, make sure we drive training in the right way and make sure we drive unit cost of inferencing down over time with the models we bring to market.

But there's also going to be an industrial response. to the cost equation at play. And semiconductor industry is going to drive better cost of compute profiles, and we will all take advantage of that as that cost of compute comes down structurally from an industry response, but also controlling the company-specific issues that we see over time. So we're going to continue to drive our strategy, give the customers the tools that we know they want, and we're uniquely positioned to provide and then stay hyper-focused and diligent and disciplined in how we do that and drive value for shareholders long term.

Matt.

Yes. Great. Matt Swanson from RBC. Maybe going back to that conversation about transformation versus execution, transformation feels very much like what can we do conversation and execution becomes the what should we do conversation. And that ultimately really feels like it's going to come down to ROI, right? And can you just talk more about what experience cloud's role is long term in justifying the spend of the Creative Cloud and really getting away from any of these conversations people are having about AI slop or just the proliferation of content not being the end goal, but driving better results being the end goal.

Yes. I mean we see -- from a customer perspective, what we see is, look, we need to -- when you think of what it takes for customer experience orchestration, we need the entire spectrum of all the way from going -- understanding the customers, addressing all of these different challenges that we saw, the proliferation of channels, the explosion of content required.

When customers look at the content that's required, obviously, they don't want to produce [ slop ]. Nobody is going to click through it. It's a waste of marketing dollars and a waste of campaigns. So they're looking to say, "I want to use the power of the generative AI. I want to use the power of these models, Firefly and third-party models, but it's got to be in the context of the marketing campaigns." That, I believe, is the unique role that we play. Shantanu referenced the Adobe Experience Platform. We have that information in the billions of profiles that we have, in the segment analysis that we have.

So we can make it very specific and then bring together GenStudio, Firefly Enterprise. That's what makes the content very relevant, very personalized. That's where you get better open rates, better click-through rates, if you're doing it on other channels, you get the most effective response. So that's what we believe that we bring together by putting all of this into a single orchestration platform.

It's important to also sort of realize that Creative Cloud and Photoshop and Illustrator Premier are fully formed part of GenStudio and what we do with creative and production. I don't know if you were here yesterday, as an example, but we showed that end-to-end workflow about how we're moving from a world where marketers and creatives are working to create these campaigns to a world where marketers, creators and agents are coordinating to create this. So that core human element is what ensures that you can not produce slop, but the production and the scale production at the end is what gives you the personalization.

It's Michael Turrin with Wells Fargo Securities. I echo thank you for hosting a great event. And Anil, you mentioned the partnerships. There are a number of announcements across the hyperscalers, OpenAIs, Anthropics of the world. And a question we get often is just are there ways that you ensure that the value accrues from those partnerships back towards Adobe as the core incumbent system of record versus starts to flow in different directions. So can you talk more about how you evaluate and approach these partnerships and how you ensure that the value stays and ideally continues to accrue on top of Adobe?

Yes. When you look at the Adobe CX Enterprise, which is the main offer that we -- the main offering that we launched, we think of that in a couple of different architecture layers. And that's the easiest way to understand how the value accrues to us. You think of the UI layer where we're really bringing together the conversational capabilities but really combining that with the things that we are really good at, whether it was the user interfaces that really people know well that they can do -- perform their activities in.

So we allow for flexibility and that is something that really that our customers value. So more often than not, while it's open to other UIs, we do believe that a lot of customers will use our UI because it commands the power of conversational as well as the other kinds of UIs that we provide. At the next layer, which is the agentic player. We have all of the domain capabilities that we produce as agents. They are open. You can use them through agent orchestration systems. But by combining that with everything that they do with the partners, we can also let them integrate third-party agents and agents that they build into our system. That again provides that flexibility there.

The third layer is the model layer. Again, in addition to Firefly, we now have 30-plus models. So we'll have a lot more models. Customers are building their own small language models that we can integrate with. And that openness provides for the agentic reasoning and provides for the autonomous operations.

And the data layer is where we really differentiate. That's when you have the data that -- like the AEP has with the 70 billion-plus profile activations, 1 trillion experiences every year. That's very hard to replicate outside our context. It's not that it's locked in. It's just very hard to replicate outside our context. So if you're going to run a full-fledged campaign, a full-fledged orchestration system, you need all of that together. So we believe that optimization, the ability to integrate with their layers is very, very appealing to customers. If you have to replicate that in the context of a cloud or in the context of Google Gemini, for example, that's a lot more work for the customer than doing it with the architecture that we provide.

Anil talked about the sort of differentiation. The other way I would actually answer that question as well is every time we've added another "infrastructure" or hyperscaler, it's accelerated the business. So as you know, we first came out with AEP on Azure. When we added AEP on AWS, that accelerated the business. One -- and same thing with GCP, et cetera. So you have to be available where it is. One trend that we're definitely seeing is that the customers are actually saying, "Hey, I may have an allocation for Anthropic, and I may have an allocation for GCP, and I want to have an allocation."

And actually, everybody is sort of saying as long as the Adobe consumption is on one of those, we can use it. And so I think our flexibility actually helps us say, it doesn't matter what your infrastructure allocation is. And they are also working well to make sure that, that is not negative for them as a company. So we're very convinced that making this available on every platform that's out there is actually in our best interest and in the customer's best interest.

This is going to be our last question. We'll come up in front, Keith.

Keith Bachman from Bank of Montreal. I wanted to direct this maybe to you, Shantanu or Anil, but sort of a similar vein that the last question, but through the eyes of the consumer and trying to understand how the value chain may alter. And so in the keynote today, there was an example of DICK'S Sporting Goods and buying a golf club. And in that example, you're interacting with the brand and/or the retailer.

And just recently, I was buying a new set of golf clubs. I did 80% of my research through Claude and then a little bit of interaction with either the brand or the retailer. And so I'm just trying to understand how that dynamic still creates value for Adobe through brand identity or the orchestration layer, if most of the perceived value from the consumer perspective, actually arises through Claude rather than, say, the brand or the retailer.

I actually think -- I'll start maybe -- that's the exact value that DICK's Sporting Goods in that particular example or Titleist. I don't know which set of golf clubs you bought, TaylorMade, actually wants to make sure that the content that they're producing actually shows up the way that they want that content to show up in Claude.

And so when we talk about brand visibility, when we talk about LLM optimization, it's to make sure that when you're having that conversation irrespective of where you're having it, I mean how do the LLMs get that? They go get the information from the websites, and this is again what Anil said. When we produce all of that content so that it actually shows up with the right attributes across all of that, that's a significant value that we are providing, again, whether it's to the golf manufacturer or to the retailer. And so that's actually the value add for us. So we get value because every single company is now saying, how did the content management business actually grow?

The content management business, when we acquired Day Software, I think we saw that, wow, everybody is now going to create an alternate representation on a mobile device. Then everybody is going to create an alternate representation on a tablet. Now they have to create an alternate representation with a conversational interface. And they have to represent a conversational interface that's happening on a channel that they don't own with the fidelity that they want.

And so that's actually our opportunity and that's what we are providing. And so when we say, hey, we'll make sure that your content is available everywhere, whether it's social, whether it's search, that's why it's an and, and, and. And that's what every company wants to know, which is they all spend all their time creating these websites where they actually turned away bots. I mean, remember when we all had to go through those 14 hoops about, are you a human? CAPTCHA, exactly. Now they have to completely revamp that website so that the right agents, if the right agents aren't allowed, you're definitely not going to transact and you're going to get upset and go away.

So as a company providing that content as a company providing that infrastructure and a company providing that visibility, our role becomes more important, right? And it ultimately serves you as a consumer and it serves the right company that's providing the product. That's why I think it's an immediate opportunity going back to the transformation as well as the AI. One last story, which is in a customer visit yesterday, they actually, in order to bring urgency to where they wanted the budget, they apparently did this demo with their leadership team to say, look at the conversation that's happening on LLM and that company was conspicuously missing.

Now if you're a C-level executive, and you see that demo, what's the first thing you're going to do, you're going to fund that money to say, "Hey, go make sure that we're available, " because if this is where the conversation is happening. So that, I think, is the reason why all of the innovation that we showed today is actually more relevant, more important and more critical to roll out ASAP.

Okay. Thank you, team. Thank you, everyone, for coming, for tuning in for your time, for your support of Adobe. We really appreciate it, and we look forward to seeing you again next time.

I'd also maybe like to add my thanks as well. I mean when you spend your time and come to Summit, I think it's the best way, frankly, for you to learn about what the innovation is, to wander the hall. So again, from me, a personal thanks because when you come here and you spend the time, I think that's the best way to understand what the customers, what's important for the customers. So I just wanted to express my appreciation as well for coming here and being at this event. Thank you.

Good day, and welcome to the Q1 FY 2026 Adobe Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Doug Clark, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's Chair and CEO; David Wadhwani, President of Creativity and Productivity; Anil Chakravarthy, President of Customer Experience Orchestration and Dan Durn, Executive Vice President and CFO. On this call, which is being recorded, we will discuss Adobe's first quarter fiscal year 2026 financial results. You can find our press release as well as PDF of our prepared remarks and financial results on Adobe's Investor Relations website.

The information discussed on this call, including our financial targets and product plans, is as of today, March 12, and contains forward-looking statements that involve risks, uncertainty and assumptions. Actual results may differ materially from those set forth in these statements. For more information on those risks, please review today's earnings release and Adobe's SEC filings. On this call, we will discuss GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates and non-GAAP growth rates, including constant currency rates. During this presentation, Adobe's executives will refer to revenue growth in constant currency rates, unless otherwise stated. Non-GAAP reconciliations are available in our earnings release and on Adobe's Investor Relations website.

I will now turn the call over to Shantanu.

Thanks, Doug. Good afternoon, everyone, and thank you for joining us. Earlier today, we announced that I will be transitioning from my role as CEO after over 18 years and 100 earnings calls. Over the coming months, I will be working with Frank Calderoni, Adobe's Lead Director and the Board of Directors to identify my successor and to ensure a smooth transition. Until then, I will continue to lead Adobe as CEO and will stay on as Chair of the Board to support my successor just as John and Chuck did when I took on this role. What attracted me to Adobe 28 years ago remains unchanged. Our leadership in creating new market categories, world-class products, a relentless drive to innovate in every functional area of the company and our employees who continue to invent the future. The privilege of leading this company has been the greatest honor of my career, and I'm committed to setting it up for its next decade of growth with the right leader and executive team in partnership with the Board while driving our fiscal '26 strategic priorities. Our mission to empower everyone to create represents an even larger opportunity in the AI era.

Let me outline what Adobe is doing to drive our top line growth, while maintaining a high level of profitability. As a company that has prided itself on creating categories, our AI transformation begins with a focus on customer-centric product strategy to anticipate and fulfill the diverse needs of a large and growing customer base. At Adobe, we are targeting business professionals and consumers and creative and marketing professionals through differentiated AI-infused and AI-first product offerings across various routes to market and different monetization models. With creativity at the core, we are expanding innovation in all our flagship applications as well as investing in new offerings. These new products include Adobe Acrobat Studio with Adobe Express, Adobe Firefly and Adobe Gen Studio. Our new AI-first offerings ending ARR more than tripled year-over-year, reflecting progress against this opportunity with individuals and enterprises alike.

Adobe's continued success in AI will be underpinned by our deep understanding of creativity domains, the vast amount of data to which we have access, delivery of complex workflows driving business outcomes, and a great brand across individuals, small and medium businesses and enterprises. Content is at the heart of all Adobe solutions, which powers educational, social, marketing, brand, entertainment and business content. Our growth has always been fueled by attracting new users, individual consumers, students and business professionals into our products, delighting them and driving adoption. We ruthlessly focused on monthly active users as an indicator of adoption and success for Acrobat and Express, Creative Cloud applications and Adobe Firefly across different surfaces, including desktop, web, mobile and LLM platforms.

In Q1, we surpassed $850 million monthly active users of Acrobat, Creative Cloud, Express and Firefly, achieving 17% year-over-year growth, a clear indication that we have both strong usage and a foundation for monetization. In addition to broad end-user adoption, Adobe has always been a trusted partner for enterprises and we're increasingly being asked to help them drive their AI strategy across customer experience, orchestration globally. Enterprises are looking to the combination of employees and automation to deliver on the demands of content and marketing at scale. Agentic AI will further enable outcome-focused enterprise workflows as customers look beyond speed to elevate creative differentiation, brand governance and personalized experiences across channels.

Adobe's end-to-end solutions are uniquely designed to meet these needs at scale. Strong momentum across our enterprise offerings underscores our leadership and customer confidence in Adobe's ability to deliver AI-driven value. In Q1, globally, we achieved over 30% year-over-year growth in AEP and apps as well as Adobe Gen Studio ending ARR. Our goal has always been to meet customers wherever they work across the broad range of surfaces they use every day and emerging new platforms have always been additive to our market opportunity. In addition to Windows, Mac, iOS, Android, Chrome and Edge, we intend to integrate with leading AI platforms such as Anthropic, Google, Microsoft, NVIDIA and OpenAI, providing customers with access, choice and flexibility.

We're jointly driving enterprise transformation at scale in collaboration with global leaders such as Accenture, Cognizant, Deloitte, Dentsu, EY, IBM, Infosys, Omnicom, Publicis, PwC, Stagwell, TCS and WPP. Given the strategy, I'm pleased with how Adobe is transitioning to an AI-driven business. We had a strong start to the year achieving $6.4 billion in revenue in Q1, representing 11% year-over-year growth. GAAP earnings per share for the quarter was $4.60 and non-GAAP earnings per share was $6.06, representing 11% and 19% year-over-year growth, respectively. Driving this momentum were Acrobat and Express, Creative Cloud Pro, overall strength in the CXO enterprise solutions as well as in our AI-first applications.

Importantly, we saw tremendous MAU growth in our new initiatives that dampens ARR in the short term but sets us up to deliver in the quarters ahead. As we continue to transform the business to capitalize on the AI opportunity, our customer-focused strategy, rich product road map, innovation momentum and early success across all routes to market, position us well to empower everyone to create. I'll now turn it over to David.

Thanks, Shantanu. Hello, everyone. AI is fundamentally reshaping how people create and work. As experiences become increasingly conversational and outcome driven, more people than ever will benefit from our creativity and productivity tools. Our approach is to expand access to AI across our existing audiences in products like Creative Cloud and Acrobat reach new audiences with products like Firefly and Express and help automate content production in enterprises with Firefly Enterprise. As we execute on our strategic initiatives, we're pleased with the progress we're making against 3 growth drivers: First, new user acquisition is gaining momentum and we are reaching more new users than ever before as measured through the growth of monthly active users. Notably, Creative Premium MAU crossed $80 million, growing 50% year-over-year and includes web and mobile versions of Firefly, Express, Premiere, Photoshop and Lightroom.

Second, AI usage continues to grow quickly as measured through record levels of generative credit consumption. Third, our content automation solutions continue to see strong enterprise adoption as measured through record numbers of API calls. These metrics highlight that we're executing against our strategy to empower individuals and businesses to create content in new ways in the era of AI. In the first quarter, subscription revenue for business professionals and consumers was $1.78 billion, growing 15% year-over-year. Our vision for business professionals and consumers is to deliver AI-powered applications that reinvent how users comprehend, create and share content. PDF Spaces transforms collections of files and links into dynamic knowledge hubs that allow you to easily collaborate with others.

Acrobat AI Assistant provides users conversational experiences that help them comprehend information faster and more accurately with an individual PDF or across documents in the PDF space. Our Acrobat and Express integrations empower users to turn content they're consuming into generated presentations, infographics, audio summaries and more. It's clear that these AI-based capabilities are resonating with users as AI assistant MAU doubled year-over-year and Express MAU tripled year-over-year. Express is now used in 99% of U.S. Fortune 500 companies. In Q3, we introduced Adobe Acrobat Studio, a single offering that brings together all these AI creative capabilities with the PDF tools users know and rely on.

Subscription upgrades to offerings that include Acrobat Studio value are off to a strong start across [indiscernible] to market, including Adobe.com and Enterprise license renewals. We are embedding Adobe's capabilities directly into new conversational platforms. In Q1, we have launched Acrobat and Express for ChatGPT, significantly expanding the reach of our creativity and productivity workflows. You can expect to see similar integrations into Copilot, Claude and Gemini as those platforms support integrated application experiences. We activated new Express partnerships, including Airtel in India, illustrating how our distribution strategy continues to accelerate new user acquisition at scale.

Partnerships like these are helping to drive momentum across our business, professional and consumer offerings across individuals and businesses. Subscription revenue in Q1 for creative and marketing professionals was $4.39 billion, growing 11% year-over-year. Our strategy for creators and creative professionals is to empower everyone to create from first-time creators, to seasoned professionals to large enterprises seeking to scale content production. Firefly, an all-in-one creative AI studio is the right tool for the next generation of creators and creative professionals. Creative Cloud with deeply infused AI capabilities continues to be the destination of choice for power and precision creation and enterprises are increasingly turning to Firefly enterprise to unlock a new era of content automation.

Firefly is quickly becoming the go-to destination for content generation, ideation and assembly. Users can generate with over 30 industry leading models, including Adobe, Google and OpenAI. They can collaboratively ideate with stakeholders in Adobe Firefly boards. They can edit and assemble image, video and audio using Firefly's prompt base editing capabilities with integrated Photoshop and Express Web journeys.

Firefly momentum is strong with generative credit consumption growing over 45% quarter-over-quarter. While that growth is broad-based, generations are skewing toward higher-value modalities with video generative actions growing more than 8x year-over-year and audio generative actions doubling year-over-year, reflecting customers moving deeper into AI-assisted creation across the full creative process. As a result, firefly subscription and credit pack ending ARR grew 75% quarter-over-quarter.

Creative Cloud applications continue to embed new AI capabilities, making users far more productive. Photoshop added new partner models and support for higher resolution image generation and editing Illustrator expanded its generative design capabilities with models from OpenAI, Ideogram and Google to support frequent vector workflows. Premiere added AI object masks, which quickly became one of the most used AI features in the application as Creative Cloud users increase AI usage, we're seeing purchases of Firefly credit packs ramped nicely.

Firefly Enterprise, the combination of Firefly services and Firefly foundry is empowering the world's largest brands to scale content production to unprecedented levels. Firefly services provide enterprise-grade APIs, giving businesses more than 30 content production capabilities, which can be run in automated workflows. These include 3D digital twin workflows showcasing physical products, image and video resizing across every social and digital channel and campaign variant generation and assembly for personalized marketing content. Firefly Foundry enables the world's largest marketing teams and media companies to build private deeply tuned AI models trained on their own IP. Unlike generic AI models, Firefly Foundry gives enterprises a commercially safe model that understands and is able to accurately generate their branded assets.

Together, these products are driving measurable business outcomes by increasing production scale, accelerating velocity and reducing cost. Firefly Enterprise new customer acquisition grew 50% year-over-year. Additional Q1 creators and creative professionals highlights include: Photoshop launched a conversational editing experience in ChatGPT. 85% Of films premiering at the 2026 Sundance Film Festival were made using Adobe Creative Cloud tools. [indiscernible] is emerging as the cross-media work-in-progress repository to manage the rapidly increasing volume of content being created and doubled the number of assets under management year-over-year. An Firefly Foundry continues to build momentum in the media and entertainment vertical with partnerships, including B5 Studios, Cantina Creative, Creative artist Agency, United Talent Agency and WME.

While Q1 had many highlights, our traditional stock business saw a steeper decline than we expected. This shift is playing out more quickly than we had planned for, and our focus remains on giving customers meaningful choice between stock and generative AI as they build their creative and marketing workflows. Q1 reinforced our confidence in the strategy and opportunity across creativity and productivity. We're thrilled with the new user acquisition and usage growth for creative freemium offerings. We're excited to see the momentum continue with workflow and automation capabilities, driving incredible efficiencies in enterprises. I'll now turn it over to Anil.

Thanks, David. Hello, everyone. Adobe provides the leading AI-powered solutions for creative and marketing professionals to deliver personalized customer experiences at scale. AI remains a tailwind for our enterprise business, enabling us to deliver creative and marketing professional subscription revenue of $4.39 billion in Q1, growing 11% year-over-year. Adobe pioneered the category of customer experience management. Enterprises around the world rely on our software to identify prospects, acquire new customers, engage and delight them with personalized experiences and grow customer lifetime value. We are the leading provider of content management systems for websites and mobile apps and the leading customer data platform that services the foundation in enterprises for digital customer engagement.

We serve 99 of the Fortune 100 and are the digital platform of choice for Chief Marketing Officers and Chief Digital Officers for their ongoing campaigns and for major marketing moments like the Olympics and Super Bowl. During the 2026 Super Bowl, Adobe enabled experiences peaked with more than 8 billion analytics server hits, 21 million concurrent viewers, 34 million page views, 1.5 million video requests per minute and 216 million e-mails turnover. In the era of AI, every enterprise needs to drive their current business while harnessing AI to address new trends in consumer behavior and expectations. Companies must ensure their brands remain front and center, even as consumers are increasingly discovering new information, engaging with businesses and buying products through LLM and agents.

These trends vary significantly by geography and consumer segment, adding complexity for global companies that need to provide personalized experiences through well-established channels like websites, e-mail and mobile apps while ramping up new channels like LLMs. Adobe has become the trusted partner for AI-powered customer experience orchestration through our thought leadership, rapid innovation and omnichannel capabilities while providing the security, reliability, data governance, global scale and partner ecosystem that enterprises require. Adobe's unified CXO platform provides solutions for brand visibility, content supply chain and customer engagement.

Adobe Experience Platform is a leading platform for digital customer engagement and brings together new AI-powered apps and agents to transform how businesses build, deliver and optimize marketing campaigns and customer experiences as well as reduce costs. In Q1, we introduced new AEP agents along with expanded agent orchestrator capabilities now available to all AEP customers via a try-and-buy program. The scale of our platform has grown to over 35 trillion segment evaluations and more than 70 billion profile activations per day.

Subscription revenue for AEP and native apps grew over 30% year-over-year demonstrating continued momentum and value realization. As consumers increasingly use LLM and agents to discover brands and purchase products, brand visibility has become critical to success in the agentic web. According to Adobe Digital Insights, during the 2025 holiday season, traffic to retail sites from LLMs increased nearly 7x, bringing qualified referrals that convert 31% higher and generate 254% more revenue per visit. Adobe's brand visibility solution, which includes Adobe Experience Manager, Adobe LLM Optimizer and Adobe Brand Concierge empower's brands to engage consumers across their own properties, search, social media, LLM and agentic channels. Adobe LLM Optimizer enables enterprises to enhance the discoverability of their websites by LLMs and significantly increase their organic traffic. Adobe Brand Concierge is an AI-first application, enabling businesses to configure and manage genetic AI experiences on their websites and mobile apps to guide consumers from exploration to purchase decisions using immersive and conversational experiences.

We expect our pending acquisition of Sem Rush will expand our offering to provide marketers with a comprehensive solution to shape how their brands appear across their own websites, LLM, traditional search and the wider web. Content is at the heart of delivering personalized customer experiences and the demand for high-quality on-brand content has exploded. Gen Studio is our comprehensive content supply chain offering, spanning content ideation, creation, production and activation. Gen Sudio is highly differentiated by integrating best-in-class capabilities across Adobe's creativity and marketing applications, including Creative Cloud, Firefly enterprise frame Adobe Experience Manager and work from.

In Q1, we delivered breakthrough innovations, enabling Gen Studio created assets to flow directly into activation workflows across the Adobe stack and a broad ecosystem of advertising platforms including Amazon ads, Google, LinkedIn and Meta. Ending ARR for the Adobe Gen Studio family of products grew over 30% year-over-year as the world's leading brands and agencies increasingly turn to Adobe to power their content supply chain. Q1 accomplishments and business highlights include strong customer demand for our agent web offerings with over 650 customer trials underway for Adobe LLM Optimizer, Site Optimizer and Brand Concierge. Continued adoption and momentum for AEP AI assistant with 70% of all AEP customers using the agentic capabilities, partnership in the OpenAI initiative to enable brands to create ads for ChatGPT. Accelerating momentum for Firefly Services and custom models as part of the Gen Studio solution with over 2,500 custom models since launch and Q1 industry analyst recognition, including being named a leader in 2 Forrester waves, for digital asset management solutions and revenue marketing platforms for B2B as well as the Gartner Magic Quadrant for personalization engines.

Adobe's unique value is helping enterprises solve their comprehensive customer experience and content supply chain needs, balancing creativity, automation and costs. Global customer wins in the enterprise in Q1 included Centene, DanskaBank, Deutsche Bank, Heineken, HP, MongoDB, Nordstrom, Paramount, pilot travel centers, RACQ, Revlon, Sherwin-Williams, Southwest Airlines, Stagwell, Target, 2E Travel Group and WPP. Customer experience orchestration is a critical imperative for every business to drive both top line and bottom line growth.

Our unique vision, comprehensive offerings, rapid pace of innovation, extensive partner ecosystem and laser focus on delivering business value position Adobe as the partner of choice for AI-powered customer experience orchestration. We look forward to unveiling significant innovations and partnerships that will further advance our leadership position at Adobe summit in April. I'll now pass it to Dan.

Thanks, Anil. Today, I'll start by summarizing Adobe's performance in Q1 fiscal 2026, highlighting growth drivers across our customer groups and I'll finish with our financial targets. In Q1, Adobe achieved revenue of $6.40 billion, growing 12% year-over-year as reported and 11% in constant currency. EPS was $4.60 and non-GAAP EPS was $6.06, increasing 11% and 19% year-over-year, respectively. GAAP operating margin was 37.8%, and non-GAAP operating margin was 47.4%. Q1 financial highlights included: total Adobe ending ARR of $26.06 billion growing 10.9% year-over-year. Total customer group subscription revenue of $6.17 billion, growing 13% year-over-year or 12% in constant currency. RPO of $22.22 billion exiting the quarter, growing 13% year-over-year or 12% in constant currency and CRPO growing 12% as reported or 11% in constant currency. Cash flows from operations in the quarter were a Q1 record of $2.96 billion and ending cash and short-term investment position exiting Q1 was $6.89 billion and repurchasing approximately 8.1 million shares of our stock during the quarter. Exiting Q1, we have $3.89 billion remaining of our $25 billion authorization granted in March 2024. Business professionals and consumer subscription revenue was $1.78 billion, increasing 16% year-over-year as reported or 15% in constant currency. Q1 growth drivers for business professionals and consumers included, sustained double-digit ending ARR growth across all geographies. Acrobat and Express Mow grew approximately 20% year-over-year.

Acrobat AI Assistant ARR grew approximately 3x year-over-year and strong upgrades to Acrobat Studio as part of enterprise license renewals. Creative and marketing professional subscription revenue was $4.39 billion, increasing 12% year-over-year or 11% in constant currency. Q1 growth drivers for creative and marketing professionals included growth in Creative Cloud driven by the CC Pro offering. Creative freemium MAU crossed $80 million growing over 50% year-over-year and includes web and mobile versions of Firefly, Express, Premiere, Photoshop and Lightroom.

Generative credit consumption increased more than 45% quarter-over-quarter. Firefly ending ARR across Firefly app, Firefly credit packs and Firefly enterprise exceeded $250 million. Gen Studio and AEP and apps ending ARR each grew over 30% year-over-year, strong pipeline momentum for new AI offerings across LLM Optimizer, Sites Optimizer and brand concierge, continued strength and retention across the enterprise customer base, and continued success in the enterprise as total customers with ARR over $10 million grew greater than 20% year-over-year.

As we transform our business, we continue to deliver double-digit total Adobe ARR growth at scale, driven by innovative technology, the breadth of our solutions and strong go-to-market motions. From a product perspective, Q1 ARR growth was driven by Acrobat on Express, Creative Cloud Pro and AEP and apps in Gen Studio in the Enterprise as well as growing momentum in our expanding portfolio of AI-first applications, including Firefly App and Firefly enterprise. In total, ARR from AI first applications more than tripled year-over-year. In Q1, we drove significant male growth for our new creative web and mobile freemium offerings, including Express, Firefly, Photoshop and Premiere.

While this freemium approach is intentionally designed to serve the next generation of creators build the Adobe brand and set the foundation for accelerated growth over time. These offerings have a near-term impact on ARR. In addition, we continue to monitor and drive utilization of AI functionality across our products. In Q1, this AI functionality drove significantly greater credit consumption quarter-over-quarter. However, in Q1, we experienced a greater-than-anticipated decline in our traditional stand-alone stock book of business. While this is happening faster than expected, our strategy is to provide customers with the choice to use stock or generative AI offerings for creative and marketing workflows.

We expect strength for our core Acrobat and CC products and enterprise demand for our CXO solutions coupled with new MAU growth for Firefly in Express and increasing AI usage and monetization to gain momentum as we move through the year. We continue to expect total Adobe ARR growth of 10.2% for FY '26.

Let me now turn to our financial targets, which assume current macroeconomic conditions and do not include the contribution of Semrush, which we continue to expect to close in Q2, subject to regulatory approvals and closing conditions.

For Q2 fiscal 2026, we're targeting total Adobe revenue of $6.43 billion to $6.48 billion; business professionals and consumers subscription revenue of $1.80 billion to $1.82 billion; creative and marketing professional subscription revenue of $4.41 billion to $4.44 billion; GAAP EPS of $4.35 to $4.40 and non-GAAP EPS of $5.80 to $5.85. For Q2, we expect non-GAAP operating margin of approximately 44.5% and non-GAAP tax rate of approximately 18%.

In addition, we are reaffirming our FY '26 targets. Adobe remains focused on executing our growth strategy in a period of profound technological change. As customer behavior evolves, the strength of our platforms and the rapid pace of our AI-driven innovation and creativity productivity and customer experience orchestration workflows position us to drive profitable growth and seize the opportunities ahead. Shantanu, back to you.

Thanks, Dan. Q1 represented a strong start to the year, both for our existing platforms where we've been innovative with AI as well as the new strategic initiatives that will drive future growth. Adobe remains steadfast in its commitment to innovation and delivering value to our customers, partners and shareholders. We're confident that our customer-centric approach, groundbreaking product innovations passionate employees and unwavering execution will continue to drive growth and create durable value. Thank you, and we will now take your questions. Operator?

[Operator Instructions]

And we will take our first question from Jay Vleeschhouwer with Griffin Securities.

Shantanu, first, for you, I just want to say how much I have appreciated our 3-decade relationship. And they do want to commend you, if that's a strong enough word, for the multiple transformations at the company that we've seen over that long period of time. So I just wanted to make that personal and professional remark before I ask my question, which this evening is actually for Dan, not a product question. One of your most important metrics, I think, is and will be the progression of your current RPO. The constant currency growth rate for CRPO was about 1 point better than Q4 and also, over the last number of years, we've seen that CRPO has fairly consistently been somewhere around 51%, 52% of your estimated next 12-month revenue on a rolling quarterly basis. Is there any reason to believe that your revenue visibility via CRPO coverage might proportionately increase over the next number of years. Maybe just talk about that perhaps structural change that you foresee, if any, in your CRPO?

Yes. Thanks, Jay. I appreciate the question. We're pleased with the momentum that we exited the year last year 2025, strong progression across all 3 customer audiences, and the business performed well as we window into this year. You can see the strength in terms of our enterprise business and the way we're combining solutions from creativity to marketing to create those content automation solutions and help brands drive their business in this environment. So we're pleased with the progression and the performance and the strategy and the execution against that strategy. I don't see any reason why the trends we've seen in the business historically would inflect to drive a different dynamic as it relates to RPO, CRPO and translation to revenue.

And Jay, I just wanted to say thank you for those kind thoughts. And I have to -- I'd be remiss if I didn't say that I'm even more excited about what we've been accomplishing as it relates to the AI transformation and the opportunity ahead of us. So we're going to stay really focused on capitalizing on that opportunity.

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

Okay. Great. Shantanu, I just want to start by echoing Jay's comments. I mean, clearly, this has been a very dynamic space, but you've helped build one of the largest SaaS businesses in the world over the years. So let me just start by saying congrats. But maybe on that point, I was wondering just a bit of a broad question. What is the Board looking for in Adobe's next CEO?

Well, thanks again, Saket. I think at our core, we're always going to be a product company. And I think taking advantage and looking around the corner as it relates to the immense opportunity that AI has across creativity and marketing is the real opportunity for not just the CEO, but the company as well. And I think from my perspective, it's a massively scaled business right now. And so just continuing to have a growth agenda. And we're all about our people. And so the values associated with it. And I'm actually really confident that the board and the special committee will do a great job of shepherding that search.

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

Great. Firstly, Shantanu congrats on an epic run. Your impact on Adobe in the industry at large, I know will be enduring for decades to come. But my question is for David. David, it's great to hear the generative credit consumption is ramping so meaningfully up 45% sequentially and much of the expansion has been skewing towards video and audio. Would love to understand what use cases you're seeing consume credit so meaningfully in video and audio. Are we still in more of an exploration stage or maybe asked differently, what are the use cases you're seeing from leading-edge customers that are driving this type of consumption?

Yes. I think that's a really important question and indicator in terms of where we're going. If you take a step back, I think when you look at the evolution of AI, it has gone from a fun thing to play with to something that's evolving and being integrated more and more into existing workflows. And now I think people are very much relying specifically on the need for AI to be part of their creative process. And so you can -- for those who haven't been tracking, you can think about generative credits like tokens for our creative applications. Obviously, we do a lot of generation across the entire business, but that's effectively what that is. The net of what you're seeing here is we have more people generating than ever before. You saw that monthly active users of our freemium creative software, as an example, is up to over $80 million, 50% year-over-year.

So we have more people generating. They're generating higher resolution because it's not just a fun thing to play with. It's actually part of their existing workflows and they're generating higher modalities, things like video, audio, design. And so you see all of that pushing generative credits up. The second thing is they're actually generating in more places, right? We've certainly started the process by having them create and use generative AI in our core flagship applications, and that continues to grow nicely. Firefly is becoming really more of a destination. We talked about how that group -- that business grew 75% sequentially quarter-over-quarter Express boards for broad-based ideation and stakeholder value. So lots of reasons to look at this as the right leading indicator. And the last thing I'll say is we're starting to see a nice ramp in terms of existing creative professionals, adding on additional accretive packs as a result of this.

We will take our next question from Mark Murphy with JPMorgan.

Congrats on one of the greatest and longest CEO tenures and growing Adobe to $26 billion in revenue. I want to ask you and also the others, it's remarkable to see 13% subscription revenue growth. We haven't seen that in quite some time. It's intriguing that total revenue growth accelerated in constant currency to 11% or maybe I should say, uptick, but can you speak to the revenue acceleration we were not expecting to see revenue accelerate quite yet. And I'm just trying to understand, should we assume the stock business is pretty small. And therefore, whatever minor setback you saw, it's just being more than offset by tripling in AI revenue and the step-up in credit consumption that Brad asked about in that maybe -- is it that kind of netting out that drove this top line acceleration during the quarter?

Yes. A couple of things, Mark. I mean if you take a step back and really look at as we've been going through this transition, what we've been focused on. First and foremost, it's about are we driving the right product innovation with great new customer audiences in sight. And the way I tend to think about that, it's on the user side, as we have been saying, really driving a huge amount of new user adoption and usage is the early indicator for us that we are driving success with the next generation of creators and business professionals and consumers because our strength with the creative professional continues.

And so I think we've done a really good job of -- with Firefly and Acrobat and Express continuing to drive innovation in those particular areas. And then on the other side of the spectrum, I mean, we've always said one of our sustainable differentiation is what we do within the enterprise. And so the enterprise pipeline and continuing to make sure that we deliver, you saw both Gen Studio as well as AEP and apps growing 30%. I think as it relates to the revenue, we're doing a better job of really making sure that as it relates to translating ARR to revenue that we're really focused on it. That continues to be both a focus on making sure that we drive retention. And just looking at linearity. So the linearity also associated with the business tends to help with that. So we're pleased with revenue as well as EPS. But I think bigger picture, we just look at it and say the fact that we're driving AI across the individual user segment and the enterprise, which was a really strong quarter.

I think as it relates to your question around stock or order of magnitude, it's about a $450 million book of business. And maybe just to talk a little bit about that, if you had -- if you take out the stock business like-for-like, instead of the 10.9% growth, it would have been approximately 11.2% growth. So just to give you a flavor. Now we still look at that entire business as an opportunity because people do like to start any creation or marketing workflow with a piece of content. That's increasingly become generative. That's why you saw the scale, I think, and how we are doing generations. But hopefully, that gives you a flavor of how we think of that business. And we want to make sure that we offer a combined royalty-free stock, plus generative AI offering to take advantage of that opportunity.

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

Excellent. And Shantanu, I don't think we can start a question without congratulating you on what was really an amazing career. I think it's pretty safe to say that you've been a north star of leadership for the entire careers of probably most of the people on this call and your stewardship of Adobe has just been legendary. So you'll be surely missed. So it's been a pleasure working with you. So thank you for all of that. And best of luck on your future endeavors.

Maybe as a little bit of an advertisement for your future successor, you talked a lot about laying foundation for future growth. You talked about some of the initiatives in the near term that near term ARR, but sets us up for success in the longer term. Can you talk to us a little bit more about those initiatives and a little bit more about those foundations and how you expect that to evolve? And maybe the time frame for what today is a foundation building initiative to when that becomes more of an ARR driving initiative when that becomes more of the acceleration story within Adobe.

Yes. Sure. Keith, and again, thank you all for the kind remarks. I'm not done yet. I just want to make sure -- make no mistake, I'm going to be laser-focused on continuing to drive the company until we have a new CEO and to make sure they are successful. But the things that we tried to outline as strategic priorities. I mean first, creativity is at the core, on the DNA and as it relates to the business professional and consumers, we just believe that the combination of creativity and marketing, creativity and productivity with the Acrobat plus Express is what's going to drive both usage as well as in ARR. And so I think in terms of how we look at that particular business that's driving good mid-teens growth, and we want to -- as we continue to drive applicability of Express in that accelerate that business. And so the good news is the early indicators, which is MAU, is really increasing. Same thing with the freemium. I think in our prepared remarks, we talked about the $80 million that we're seeing as it relates to the creative freemium MAU. And so I think even that's driving the business.

The slight difference, Keith, in those businesses tend to be that in the traditional business when somebody came and bought it, you would just immediately translate that into ARR. And here, they have to see a little bit of the paywall and they have to get -- so it's a little face-shifted is how I think about it. But for that particular customer segment, the fact that we're driving MAU, that is the right early indicator for us to focus on much like we did with Reader for so many years, which is you get the adoption and you get the usage. And reader ubiquity even in new environments like Chrome as well as Edge are really what's driving the revenue. So that's sort of the early indicator in driving that.

The core creative professional, I think the ARR will continue to be driven by adding more value to the products, Creative Pro, which is the offering there. It's good to see the success associated with that. And I think on the enterprise side, hopefully, both from our prepared remarks and from the answers to your question, that's really an area of strength for us because people are looking at it and with AI, everybody wants to know how you transform your business. Every CEO that I talk to wants to ensure that they deal with the next generation of consumers and attract them as well as what they want to do then is say, how do I ensure that from my marketing spend, I'm getting as much breadth as I can as well as how much automation and productivity in terms of revenue.

And so I think the fact that we have all these new offerings, specifically, Firefly. Dan, I think, talked about a $250 million book of business for Firefly, that didn't exist a few years ago. As we talk about what's happening with Gen Studio, 30% growth, AEP and apps and I would venture to say, Keith, that we should hopefully see what we had identified as the AI first sort of book of business. That tripled, but that should be our next $1 billion business. So that's -- we're ruthlessly focused on all of those. So hopefully, that gives you some color on why we're excited about the performance that we put up.

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

And again, echoing everybody's phrase out here on the call. It's truly been a special opportunity to work with you and follow your progress. I guess maybe a quick 2-parter, which is -- if I think about the impact of AI MAU growth on ARR growth in the quarter, can you maybe just unpack exactly why it was dampened. And as [ consumption ] trends improve, how do we think about that kind of impact as we head through Q2, Q3, Q4, when does net new ARR growth start to maybe go positive? And then maybe just anything on the timeline that we and investors should expect around the CEO search. Is this something that is a quarter, multiple quarters? Any timing there would be helpful.

Maybe I'll cover the second part and start, which is if I take a step back, actually, because this is a question that is on people's minds, I just wanted to actually say that there never would have been a good time given how much Adobe is part of me. So I do want to start off with that. And in many ways, I've always believed that my role is looking around the corner, whether it's positioning the company for the future or about product and leadership. And as we've said many times, on product, I feel really good about how we've transformed our road map based on this AI and customer audiences, the new products are both exciting and groundbreaking.

On leadership, we've always invested in developing a really deep bench of outstanding execs. But timing-wise, part of it is it was really important for me to be transparent about my decision and communicate and allow the Board to take ownership for the selection. So I would suspect it will take a few months. This is not because I have just notified them. So hopefully gives you that a little flavor for that.

And I'll start on the other question, Alex, a little bit and then ask David and Dan, which is the way you have to think about it is our traffic patterns in terms of creativity at adobe.com is only going up and to the right. We have 2 options in terms of how we guide that traffic. We can guide that to ARR that comes immediately or we can guide it to a long-term value and what drives greater long-term value in terms of getting the right product. And increasingly, we're ensuring that we transition.

So top line traffic is good, and that's why when we say dampen, I like phase shift also a little bit because that sort of moves out. If you think about the fact that we reaffirmed our targets, I mean, that would imply that we would expect double-digit ending book of business growth. for the remaining 3 quarters. So hopefully, that gives you some flavor. But David?

Yes. I'm happy to just add on a little bit there. So as Shantanu indicated, we look at creativity as a whole as bigger than it's ever been. And if we look forward, we couldn't be more excited about the fact that literally everyone in the world is going to be creating. They're going to be creating visually. They're going to be creating images, the videos, designs, and that's really our wheelhouse, right? And if we think about the shape of that broader creative audience, that is evolving, right? So we have creators now representing basically anyone in the world that wants to create visually. We have creative professionals who are under more and more pressure to create more prolifically and more content and we have enterprises that are looking to automate more of that creativity.

And so as we think about that creativity and fusing itself into everything, we think about it in 2 columns. The first is around the end user, right? And if you think about that, it really is about reaching the end user where they are. And so we have freemium offers like Firefly and Express. We have power and precision by embedding AI in our existing creative products. And we have more and more products for businesses around automation with Firefly foundry and Firefly services now part of Gen Studio. So as we think about the growth algorithm for growth, we're going to see more traffic to adobe.com. We continue to see record traffic levels, traffic continues to grow very nicely. And how we route that traffic to freemium offers is going to be really the evolution that Shantanu is talking about in terms of the change that we should expect to see. And as that traffic goes to these new offers, it's just going to take a little time for them to use the product to hit the paywalls and then translate out.

So again, as we said on the prepared remarks, this is really on strategy to drive now drive credit consumption, drive enterprise usage. And we should expect to see that start to accelerate in the back half.

We will take our next question from Matthew Swanson with RBC Capital Markets.

Yes. Great. Shantanu, I'd echo my congratulations, I guess, as I work for this, too. I want to talk to you about the partnerships that we've had announced the last 2 quarters. So last quarter, with all the embedded models in this quarter, building on even more so with a lot of the advertising platforms, Amazon ads, Google, Meta. It's a lot of different companies that I think over the last year on this Gen AI journey, investors have brought up to us as potential competitors or maybe almost a risk to Adobe that are now kind of part of the ecosystem. Steve, can you talk a little bit more about kind of how you're evolving in this role of orchestration to really help monetize all this new creative content for all these stakeholders.

Great. And so maybe I'll touch on the enterprise one first, and then I'll touch on the models. I mean, I think as it relates to the enterprise, I mean what's completely clear is as we are helping people with customer experience, orchestration, and Anil can certainly add to that. I mean people are looking to us from everything. They're looking to us for brand visibility, acquiring customers, serving them and then ensuring that they create a long-term engagement. So if you think of it that way, there's just no question that from the perspective of a CMO or CIO or the head of business. They're looking to Adobe because in this LLM world, it's going to become even more important to them that they actually have a direct engagement with their customers and their own sites actually take way more importance in terms of the value.

And so as a multichannel work multichannel world emerges in the LLM space, our ability to support it. So those specifically are like the partnerships with Google and Amazon, Meta as well as the other ad places. I think to your point, all of them may have an offering because they have to allow a self-serve offering, those typically tend to be geared towards the small and medium business and maybe even smaller part because it's important, but they value the fact that we can actually help them get campaigns faster and understand the efficacy of those campaigns by closing the loop, and they would like to work with us to jointly go to a customer and say, "see, if you advertise on our channel, your return on investment is much better." So that's as it relates to that side. Same thing with the agencies because the agencies are partnering with us to say, we need more automation. We need more technology to help deal with how AI is going to impact marketing spends. Let's partner with you. And so that's why a partnership with Publicis or WPP accomplishes that. I think on the model side, my take on the model side would be as follows, which is they're going to be 2 or 3 really large language models that actually succeed. All of these individual models that exist, small model companies in 1 part of a media ecosystem, I just don't see how long term they survive because people aren't interested in just the model, they're interested in the workflow. And so for us, offering customers with that choice was actually very strategic because we can actually then provide for all of our creative customers the right model for the right case because these all have different brands.

And so I think as it relates to the support of all these models, I think it's a win-win. They would like access to customers, which Adobe has, and we would like access to these different models because they have different brand attributes. And I think if you look at the larger companies like Google, we're actually with them and with Nano banana. It's been a great partnership because we are providing them with a lot of customers and they're providing us with great technology. And so -- and to some degree, I look at that, and I think I may have said that in my prepared remarks. I definitely look at that as I looked at when iOS came along or Android came along or the browser came along, whether that's Edge or Chrome, or MAC and PC, frankly, every single environment in which people want to engage is additive to the opportunity.

And if we don't think it's additive to the opportunity, we're just unnecessarily ignoring that. So that's the way I look at it. And frankly, you'll continue to see more partnerships. So stay tuned. I mean that's something that we continue to work on.

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

The dampening of ARR with new premium offerings, I guess, what gives you confidence on the back side that you can monetize this.

Yes. So I would say, first of all, we already are monetizing it. You see the momentum we have with Express. You see the momentum we have with Firefly. And we've got a long history. Acrobat, I think, is the first freemium funnel around software, and it's the one of the most performing parts of our business. And so we feel good about the journey we've been on which takes a large surface area of highly engaged users, takes them on journeys where they dive deeper from a feature functionality standpoint hit pay walls and bring them down the funnel.

And once they are paying customers in these freemium models, and frankly, this is where customers' preferences and behaviors are going. They want to try before they buy. And so it's meeting the customers where they are. But we've got an incredible ecosystem that's pervasive. And once they become deeper customers around those entry points, the opportunity to more deeply monetize that over time with a well-worn motion around upsell and cross-sell is one of the historical strengths of the company and will continue to be. So we feel confident that it is on strategy, meet the customers where they are, allow them to engage in the way in which they want to engage and then continue to bring them deeper into the Adobe ecosystem, which becomes an effective monetization lever over time. So we feel good about the strategy and how we're executing against it.

And then Dan, one quick follow-up just on capital allocation. From an M&A perspective, I know you backed off quite a bit, but the environment has changed considerably where other large companies are feeling things are easier to get done. Have you shifted your view at all on the buyback versus M&A?

Yes. I won't say there's a change in our philosophy. We've always said there's 3 elements to our capital allocation strategy. First pillar is to grow the company, grow it organically by investing in game-changing category-defining innovation, but also complement it from time to time with inorganic activity that maintain a flexible, strong balance sheet and return excess capital to shareholders. That framework is standing the test of time. We've announced Semrush, great asset, great acquisition complements the business well. and allows us to engage from a brand visibility standpoint in an evolving environment where you're layering in LLMs next to search engine optimization, and we'll have the industry's best leadership product category defining products. And so we continue to look, but we won't be cavalier about M&A.

We've got great innovation in flight. We've got an organic engine that we're pleased with the innovation we're bringing and the strategy that we're executing against. But we continue to look to see how we complement that organic growth engine within organic and the bar is going to be high. But when we see something that's interesting and attractive, we will absolutely go out and action it. And so I would say there's really no change to the approach, Brent.

We will take our next question from Michael Turrin with Wells Fargo Securities.

Great. This one's for the broader team. The company is still delivering greater than 47% operating margin. It's an impressive number, but the net new ARR number was down a touch this quarter. So I'm just wondering what the team's thoughts are on potentially taking margin down to grow faster. It's the question we're getting from investors across software. So is that something you think you could do with some of the newer revenue streams and engagement levels you're seeing? Or maybe talk to us around how you're evaluating the trade-offs there just given the current environment.

Sure. I'll start. And then, I mean, we are always looking to make sure that we spend money to drive long-term value. And on some of the businesses, namely, I would say, Firefly and Express, you're absolutely right, which is the more marketing we spend on it, the more with our data-driven operating model we continue to see it. I think you'll see as it relates to the Q2, there's a slight degradation that has as much to do with the Summit and the other events. But maybe what's not well understood is how below the surface, we're actually constantly getting more efficient as it relates to our spend and making sure that we spend that more on marketing as well as on the COGS associated with what's happening. So we now track tokens and token usage within the company, and it's nice to see that token usage increase because that means that our AI products are seeing great value associated with it, and we will continue to do that, we will continue to do that.

And given we have the best customer experience orchestration solutions, we know where that ROI is helpful and where that ROI can be wasteful. But it's a good question. And be assured that we're spending on the newer initiatives, and that's why tripling that revenue, and you're right. I mean, we will continue to see how we can accelerate that as well. I mean given that is the last question, maybe, again, in summary, what I would say is that as it relates to our business, a strong start to the fiscal year. And as we think about where the company is focused, namely AI products and ensuring that at the user level, we continue to see accelerated acquisition and usage and on the enterprise, making sure that we combine the power of our creative tools to enable them to accomplish their business objectives with customer experience orchestration. We feel really good about that. So thank you for joining us, and I hope to see all of you at Summit. Doug?

Thank you, everyone, for joining.

Thank you. And this does conclude today's question-and-answer session. I would now like to turn the call back to Shantanu for any additional or closing remarks.

I think we actually closed. Thank you very much.

And this does conclude today's call. Thank you for your participation, and you may now disconnect.

Good day, and welcome to the Q4 and FY '25 Adobe Earnings Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Doug Clark, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's Chair and CEO; David Wadhwani, President of Digital Media; Anil Chakravarthy, President of Digital Experience; and Dan Durn, Executive Vice President and CFO.

On this call, which is being recorded, we will discuss Adobe's fourth quarter and fiscal year 2025 financial results. You can find our press release, as well as PDFs of our prepared remarks and financial results, on Adobe's Investor Relations website.

The information discussed on this call, including our financial targets and product plans, is as of today, December 10, and contains forward-looking statements that involve risk, uncertainty and assumptions. Actual results may differ materially from those set forth in these statements. For more information on those risks, please review today's earnings release and Adobe's SEC filings.

On this call we will discuss GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates and non-GAAP growth rates, including constant currency rates. During this presentation, Adobe's executives will refer to constant currency growth rates unless otherwise stated. Non-GAAP reconciliations are available in our earnings release and on Adobe's Investor Relations website.

I will now turn the call over to Shantanu.

Thanks, Doug. Good afternoon, everyone and thank you for joining us.

In fiscal 2025, Adobe delivered significant AI-influenced and AI-first ending ARR, which accelerated through the year. We achieved record revenue of $23.77 billion and non-GAAP EPS of $20.94, which represent outstanding financial performance.

We are leveraging AI to accelerate innovation to anticipate and serve the needs of large and expanding audiences: Business Professionals and Consumers, Creators and Creative Professionals and Marketing Professionals.

Our vision for Business Professionals and Consumers is to deliver AI-driven, quick and easy applications that enable them to be creative and productive, consuming or generating content across multiple media types and channels. We do this by delivering new conversational and agentic interfaces in Adobe Reader, Acrobat and Express to provide a freemium integrated experience for billions of users.

For Creators and Creative Pros, our vision is to deliver the most comprehensive power and precision applications from ideation and creation to production and delivery. We have done an outstanding job of both creating our own commercially safe Firefly models as well as seamlessly integrating third-party partner models across Creative Cloud flagship applications like Photoshop, Illustrator and Premiere.

With the Firefly application, we are giving Creators a rich set of generative AI capabilities that allow users to generate with Adobe and partner models, ideate with Firefly Boards and create and edit videos and images through conversational experiences blended with direct manipulation. Along with the Firefly app, we've introduced new products like Premiere mobile with YouTube integration and Photoshop mobile to further serve Creators anywhere they create.

We're transforming the enterprise content supply chain by integrating creative applications, workflow management, asset management, Firefly Services and Custom Models with Firefly foundry.

We have the most comprehensive vision for Marketing Professionals, whether they are freelancers or working at an agency or within an enterprise, to create a brand or address the expanding needs of the content supply chain in the era of AI to deliver customer experience orchestration solutions.

Adobe Experience platform and apps power customer engagement and loyalty. Adobe Experience Manager and agentic web solutions including LLM Optimizer, Sites Optimizer and Brand Concierge deliver brand visibility and discovery; and Adobe GenStudio enables enterprises to optimize their full content supply chain to realize true personalization at scale.

FY '25 accomplishments and highlights include: Establishing ourselves within leading AI ecosystems with partnerships and integrations across AWS, Azure, Google Gemini, HUMAIN, Microsoft Copilot, OpenAI and others, offering unprecedented access, choice and flexibility to customers; leading the way in AI innovation around conversational and agentic interfaces, including products like LLM Optimizer and Acrobat AI Assistant, creating custom models through Firefly Services, Firefly Foundry and GenStudio as well as infusing AI within our applications including Photoshop, Lightroom, Express and Premiere. We continue to leverage inorganic strategies to deliver more value to customers and are pleased with our recently announced intent to acquire Semrush to help brands enhance their visibility and expand audience reach; driving significant new user acquisition across individuals and enterprises with products, including Acrobat, Creative Cloud, Express and Firefly achieving total MAU growth of greater than 15% year over year; accelerating adoption of our AI functionality by enterprise customers further highlights our leadership and their trust in Adobe's ability to deliver AI value seamlessly across workflows. In Q4, globally, we drove record bookings of deals greater than $1 million and achieved over 25% year-over-year growth in the number of customers with $10 million-plus in ARR.

Our customer group strategy, large market opportunity and product innovation drove strong FY '25 results. This is the foundation for our FY '26 Total Adobe ARR growth target of over 10% and we're focused on accelerating this momentum beyond FY '26.

I'll now turn it over to David.

Thanks, Shantanu. Hello everyone.

Digital Media had a record Q4, driven by user acquisition and expanded customer value across Business Professionals and Consumers and Creators and Creative Professionals underpinned by 2 big areas of innovation: generative AI models and agentic experiences.

Digital Media achieved revenue of $4.62 billion in Q4, and full year revenue of $17.65 billion, both of which grew 11% year-over-year. We exited the quarter with $19.2 billion of Digital Media ARR, growing ending ARR 11.5% year-over-year.

As it relates to generative AI models, we have continued to develop our own commercially safe Firefly Models, while dramatically expanding our ecosystem of GenAI model partnerships.

The new Firefly Image 5 model is performing incredibly well with generation quality, native 4-megapixel resolution and industry-leading prompt-based editing capabilities. At Adobe MAX in October, we significantly expanded Firefly to become the only app with our own commercially safe models and over 25 leading partner models including Google, OpenAI, Black Forest Labs, Luma, Runway, Topaz Labs and ElevenLabs. These models are now integrated into our Firefly Express and Creative Cloud applications. We also announced advanced model capabilities, including custom model support for Firefly and Creative Cloud customers.

Usage and monetization of new Adobe and third-party models is measured and charged through generative credits. Different models, Firefly, Gemini or Flux, for example and different media types, video and high-resolution images, for example, consume different quantities of generative credits. Generative credits are a great indicator of high-value usage and credit consumption increased 3x quarter-over-quarter. As subscribers consume more generative credits, they have the choice of moving to higher value Creative Cloud offerings or acquiring Firefly credit Add-ons.

We also took a huge step forward in Q4 as we showcased the work we've been doing to atomize Photoshop, Express and Acrobat capabilities as Model Context Protocol endpoints at Adobe MAX. In addition to delivering applications, we are providing imaging, video and productivity functionality in ChatGPT, Copilot and other conversational platforms in order to deliver and monetize creative and PDF functionality in new surfaces.

Users will be able to work conversationally while still benefiting from the power and precision of Adobe's industry-leading features and direct-manipulation tools, making it easier than ever to go from intent to outcome whether editing a PDF, refining an image or generating a design.

The advances in generative models and agentic capabilities position Adobe well to take advantage of the long-term opportunities servicing Business Professional and Consumer and Creator and Creative Professional audiences.

Our vision for Business Professionals and Consumers is to deliver AI-driven, quick and easy applications that enable users to be creative and productive whether consuming or generating content across multiple media types and channels. The strategy is showing real traction, and we are driving strong business momentum.

We revolutionized how users consume and comprehend documents by introducing Acrobat AI Assistant in FY '24 and recently added PDF Spaces, allowing individuals and teams to create knowledge hubs to collaborate across multiple documents. Users package multiple documents not just PDFs, but other file types and web links into a single workspace they can share with others, enabling a collaborative conversational experience. Usage of these AI features inside Acrobat and Reader has grown more than 4x year-over-year, as users increasingly turn to Acrobat to help them discover insights, synthesize new ideas and share knowledge.

Adobe Express made significant advances in Q4 with the introduction of an AI Assistant capable of generative content creation and complex editing. Express now supports generative presentations and designs, moving the industry into a post-template world. Express AI Assistant is capable of conversationally editing images, flyers, presentations, infographics and more. Innovations like these have contributed to significant Express MAU growth.

Adobe Acrobat Studio brings together the conversational consumption and comprehension capabilities of AI Assistant and PDF Spaces with the generative creation power of Express, alongside the PDF tools people know and rely on into an unified offering. Customer reception of Acrobat Studio has been strong, with nearly 50% of Acrobat commercial ETLA’s renewed in Q4 already upgrading to this offering, reflecting user enthusiasm for unified document comprehension and content generation.

FY '25 Business Professional and Consumer accomplishments and highlights include: continued growth of Acrobat Web, which saw MAU increase over 30% year-over-year; strong adoption of Express in education, with over 70% year-over-year growth of students with access to Express Premium; over 45 new partners added to the Express ecosystem in Q4, including Bynder, Hootsuite and Sprout Social; over 25,000 businesses purchased Express or Studio for the first time in Q4 alone, accelerating quarter-over-quarter; and key enterprise customer wins include Allianz, American Automobile Association, Bundeswehr von Deutschland, Nippon Life, PwC, Sony and the U.S. Navy.

Turning to Creators and Creative Professionals, our vision is to deliver the most comprehensive power and precision applications from ideation and creation to production and delivery. We continue to succeed in our goal to attract the next generation of content creators, provide creative professionals with game-changing generative AI capabilities and automate content production at scale in enterprises.

We are attracting new creators to Adobe through the Firefly application, which can be purchased through our Firefly Standard, Pro and Premium subscription plans. Firefly has a rich set of generative AI capabilities that allow users to generate with Adobe and partner models, ideate with Firefly Boards and create and edit videos and images. Simply put, Firefly is a one-stop shop for accessing industry-leading models integrated into rich creative workflows, at an affordable price.

In addition, we’re seeing strong adoption of Firefly from Creative Cloud customers, as they embrace the growing breadth of AI models and tools, seamlessly integrated into creative workflows. We drove 2x quarter-over-quarter growth in first-time subscriptions of Firefly.

The release of Premiere Mobile in Q4 marks an important milestone in next-generation AI video editing. In partnership with Google and YouTube, we are introducing AI-driven audio and video tools to streamline how creators remix YouTube Shorts, which receive 200 billion daily views.

Creative Cloud delivered massive new value at Adobe MAX including the release of new models for Generative Fill, upscaling and prompt editing in Photoshop, reflection removal in Lightroom, Turntable in Illustrator and smart masking in Premiere. We also announced the general availability of Firefly Boards, a new ideation surface that brings together everything creative professionals need to explore visual and design concepts with stakeholders using industry-leading models, from Adobe and our partners. Use of AI in these applications continues to accelerate, underscoring the impact AI is having on what creative professionals can produce.

As part of the overall content supply chain solution for marketing use cases, we continue to advance automated content production with Firefly Services that include video resizing, video reframing, image composition, image harmonization, digital-twin generation and more. We also announced Adobe Firefly Foundry at MAX, which delivers enterprises with proprietary foundation models trained on their own content, data and brand catalogs.

Interest in Firefly Foundry has been strong from enterprise marketing teams and media and entertainment companies, where there is increasing desire to produce content faster and more cost-effectively.

FY '25 Creator and Creative Professional accomplishments and highlights include: Hosting Adobe MAX, the world's largest creativity event with over 10,000 members of the creative community in attendance with millions more online. The tremendous innovations we showcased earned over 2,000 articles and garnered 820 million video views; growing our base of creative users across Firefly, Express, Premiere Mobile and other freemium offerings, MAU for these offerings surpassed 70 million in Q4, growing over 35% year over year; accelerating adoption of Firefly Services within enterprises with over 100 new deals signed in Q4; accelerating Generative Credit consumption in Creative Cloud, Firefly and Express by individuals and enterprises, which grew approximately 3x quarter-over-quarter; strength across all routes to market and geographies, with particular strength in SMB, Enterprise and emerging markets; and key enterprise wins include Coca Cola, HUMAIN, IKEA, JPMorganChase, Lowe's, Nintendo and Sony.

Over the last few years, we have extended our line-up to anticipate and serve the diverse needs of creative users. The continued strength of Creative Cloud, Generative Credits and Firefly automation underscores the success of this strategy with creative professionals across both individuals and enterprises. The accelerated growth in creative freemium MAU demonstrates success with offerings that target creators, consumers and business professionals and is already starting to have an impact, as evident in our Q4 results and FY '26 targets.

Overall, we delivered strong business results and record Digital Media net new ARR in Q4 and are excited about our opportunity in FY '26.

I'll now turn it over to Anil.

Thanks, David. Hello, everyone. Our success serving Creative and Marketing Professionals in the enterprise has been driven by having the most comprehensive vision for customer experience orchestration, enabling enterprises around the world to deliver personalized experiences at scale in the era of AI. Digital Experience had a strong close to the year, achieving revenue of $1.52 billion for the quarter and a record $5.86 billion in revenue in FY '25. Subscription revenue in the quarter was $1.41 billion, representing 11% year-over-year growth.

Adobe delivers an unified, AI-powered platform for customer experience orchestration spanning brand visibility, content supply chain and customer engagement. Adobe Experience Platform is a leading customer data platform that serves as the foundation in enterprises for digital customer engagement and brings together new AI-powered apps and agents to drive engagement and loyalty, as well as to reduce costs.

Our platform operates at scale with over 35 trillion segment evaluations and more than 70 billion profile activations per day. We released 6 new AI agents powered by AEP Agent Orchestrator to transform how businesses build, deliver and optimize marketing campaigns and customer experiences. Subscription revenue for AEP and native apps grew over 40% year-over-year, demonstrating our continued leadership.

We have the best pulse on digital conversations across search, social media and LLMs and enable marketers to get an unified view of where online traffic is originating, how to create and promote brands and drive engagement and commerce. In fact, our most recent Adobe Digital Index data, which is based on online transactions across more than 1 trillion visits to U.S. retail sites, shows that generative AI traffic is up 760% thus far in the 2025 holiday season.

Our data shows that AI-powered traffic from LLMs and agentic browsers is rising and requires different approaches to conversion, underscoring the growing importance of the agentic web and our opportunity to provide insights and automation to marketers.

Brand visibility is critical to success in this new agentic web, and Adobe solves customer needs through solutions like Adobe Experience Manager, Adobe Analytics and the newly available Adobe LLM Optimizer. The pending acquisition of Semrush, which we announced a few weeks ago, brings complementary assets to help us address marketers' growing need for sustained brand relevance in AI search.

Over the past decade, Semrush's data-driven search engine optimization and generative engine optimization solutions have earned the trust of industry leaders like Amazon, JPMorganChase and TikTok. Together, Adobe and Semrush will deliver a comprehensive solution to enable marketers to shape how their brands appear across owned channels, LLMs, traditional search and the wider web. We anticipate the transaction to close in the first half of 2026, subject to regulatory approvals and other closing conditions.

Adobe Brand Concierge, which was launched in Q4, is an AI-first application enabling businesses to configure and manage AI agents that guide consumers from exploration to purchase decisions using immersive and conversational experiences. By uniting data, content and agentic AI in a single experience, Brand Concierge gives businesses ownership of the critical discovery and consideration phase. We're pleased with the significant customer interest and the wins we had for Brand Concierge in Q4.

The third pillar of customer experience orchestration is the content supply chain. GenStudio is our comprehensive offering spanning content ideation, creation, production and activation. At MAX, we introduced new scaled content production capabilities through Firefly Services, enhanced model customization with Adobe Firefly Foundry and integration with a growing ecosystem of ad networks. Ending ARR for the Adobe GenStudio solution grew over 25% year-over-year as the world’s leading brands increasingly turn to Adobe to power their content supply chain.

FY '25 Marketing Professional accomplishments and business highlights include: Strong customer demand for our newly introduced agentic web offerings with over 50 customers in Q4 for Adobe LLM Optimizer, Sites Optimizer and Brand Concierge; growing international momentum resulting in a record quarter for our Enterprise business in our Europe, Middle East and Africa and Asia regions; expanded ad network partnerships with Amazon, Google, LinkedIn, Microsoft, Snap and TikTok; Q4 industry analyst recognition, including being named a leader in the Forrester Wave for Digital Experience Platforms and 3 Gartner Magic Quadrants including Multichannel Marketing Hubs, B2B Marketing Automation Platforms and Digital Asset Management; and key global customer wins for the quarter include AstraZeneca, AT&T, Citigroup, Comcast, Costco, CVS Health, Ernst & Young, General Motors, IKEA, JPMorganChase, Lowe's, NatWest Group, PwC, Sony, Walgreens, Wells Fargo and Woolworths Group.

Customer experience orchestration continues to be a critical area of investment for companies of all sizes. We are helping brands across the world turn the promise of AI into tangible marketing ROI. As a leader, we are well-positioned to grow our business and help our customers drive customer loyalty, revenue growth and profitability.

I'll now pass it to Dan.

Thanks, Anil. Today, I will start by summarizing Adobe's performance in Q4 and FY '25, highlighting growth drivers, and I'll finish with our targets.

In FY '25, Adobe delivered record revenue of $23.77 billion, growing 11% year-over-year as reported and in constant currency. GAAP EPS for the year was $16.70, and non-GAAP EPS was $20.94, growing 35% and 14% year-over-year, respectively.

We delivered over $10 billion in operating cash flows while investing in AI product innovation. We executed record share repurchases totaling nearly $12 billion, reducing our shares outstanding by over 6% during the year, underscoring our confidence in the company's long-term opportunity.

FY '25 business and financial highlights included: Digital Media revenue of $17.65 billion, growing 11% year-over-year as reported and in constant currency; Digital Experience segment revenue was $5.86 billion, growing 9% year-over-year as reported and in constant currency, Digital Experience subscription revenue was $5.41 billion, growing 11% year-over-year as reported and in constant currency; Digital Media ending ARR was $19.20 billion, growing 11.5% year-over-year, exceeding our prior target of 11.3%, over 75% of Digital Media net new ARR was driven by continued growth in subscriptions and cross-sell and up-sell, with the remainder from value-based pricing, reflecting the success of our customer acquisition strategy; Total Adobe ending ARR, across Business Professionals and Consumers and Creative and Marketing Professionals, of $25.20 billion, growing 11.5% year-over-year; cash flows from operations of $10.03 billion, and ending cash and short-term investment position of $6.60 billion; RPO of $22.52 billion exiting the year, growing 13% year-over-year, or 12% in constant currency, and cRPO growing 11% as reported or 10% in constant currency; and repurchasing approximately 30.8 million shares of our stock during the year. We currently have $5.90 billion remaining of our $25 billion authorization granted in March 2024.

In Q4, Adobe achieved revenue of $6.19 billion, growing 10% year-over-year as reported and in constant currency. GAAP EPS in Q4 was $4.45 and non-GAAP EPS was $5.50, increasing 17% and 14% year-over-year, respectively.

Q4 business and financial highlights included: Digital Media revenue of $4.62 billion, growing 11% year-over-year as reported and in constant currency; Digital Experience segment revenue was $1.52 billion, growing 9% year-over-year, or 8% in constant currency, Digital Experience subscription revenue was $1.41 billion, growing 11% year-over-year as reported and in constant currency; Total new AI-influenced ARR now exceeds 1/3 of our overall book of business, as we integrate AI deeply into our solutions and continue to launch new AI-first offerings, which are now included as part of the AI-influenced metric, as we've shared over the past year, our strategy is to drive the entire book of business with AI-influenced solutions; record net new Digital Media ARR, growth re-accelerated year-over-year, driven by strong demand for AI-influenced offerings including Creative Cloud Pro, Acrobat and Express as well as AI-first products including Firefly, when combined with strong net new Digital Experience ARR in Q4, we delivered record net new Total Adobe ARR in the quarter; record cash flows from operations of $3.16 billion; adding a record $2.08 billion to RPO in the quarter.

For the Business Professionals and Consumers Group, subscription revenue was $1.72 billion, increasing 15% year-over-year as reported, or 14% in constant currency.

Q4 growth drivers for Business Professionals and Consumers included: Double digit ending ARR growth, with strength across digital, SMB and enterprise and across all geographies; mobile ending ARR grew greater than 30% year-over-year; monthly active users of Acrobat and Express surpassed 750 million, growing 20% year-over-year; and strong customer reception of Acrobat Studio, with nearly 50% of Acrobat commercial ETLAs renewed in Q4, already upgrading to this offering.

For the Creative and Marketing Professionals Group, subscription revenue was $4.25 billion, increasing 11% year-over-year, or 10% in constant currency.

Q4 growth drivers for Creative and Marketing Professionals included: Growth in Creative Cloud driven by CC Pro; growth in Single Apps, driven by strength in Photoshop and Lightroom; consumption of Generative Credits in Creative Cloud, Firefly and Express increased 3x quarter-over-quarter; significant web and mobile user acquisition across Firefly, Express, Premiere and our other freemium offerings, growing over 35% year-over-year to greater than 70 million monthly active users; AEP and Apps ending ARR grew over 30% year-over-year; demand for Content Automation offerings like Firefly Services and Firefly Foundry with ending ARR more than doubling year-over-year; GenStudio solution ending ARR grew over 25% year-over-year; and continued success in the enterprise, adding a record number of customers to the group with ARR exceeding $10 million. Total customers with ARR over $10 million grew 25% year-over-year to over 150.

On November 19, we announced the intent to acquire Semrush Holdings for an equity value of approximately $1.9 billion in an all-cash transaction. We expect the transaction to close in the first half of FY '26, subject to regulatory approvals and other customary closing conditions. We expect the non-GAAP EPS impact of the acquisition to be negligible in the first year post-close and accretive thereafter.

Let me now turn to our financial targets, which assume current macroeconomic conditions. Our targets do not include any contribution from Semrush.

As is customary, we revalued ending ARR at the end of FY '25 which resulted in a $460 million increase to Total Adobe ARR, from $25.20 billion to $25.66 billion entering FY '26, primarily from FX rate changes. We've now provided historical information on Total Adobe ARR going back to FY '23 in our investor data sheet.

For FY '26, we are targeting: Total Adobe revenue of $25.9 to $26.1 billion; Business Professionals and Consumers Subscription revenue of $7.35 billion to $7.4 billion; Creative and Marketing Professionals Subscription revenue of $17.75 billion to $17.9 billion; Total Adobe ending ARR book of business growth of 10.2% year-over-year; GAAP EPS of $17.90 to $18.10; and non-GAAP EPS of $23.30 to $23.50.

This Total Adobe ARR book of business growth target of 10.2% translates to approximately $2.6 billion of growth, which would be our highest beginning-of-year guide for total net new ARR. This target is based on the strength exiting FY '25 and continued momentum across all 3 audiences: Business Professionals and Consumers, Creators and Creative Professionals and Marketing Professionals.

Our FY '26 targets anticipate non-GAAP operating margin of approximately 45.0%, a GAAP tax rate of approximately 20.5% and a non-GAAP tax rate of approximately 18%. This non-GAAP tax rate is based on a 3-year projection and may be adjusted for changes in the future.

For Q1 FY '26, we are targeting: Total Adobe revenue of $6.25 billion to $6.3 billion; Business Professionals and Consumers Subscription revenue of $1.74 billion to $1.76 billion; Creative and Marketing Professionals Subscription revenue of $4.3 billion to $4.33 billion; GAAP EPS of $4.55 to $4.60; and non-GAAP EPS of $5.85 to $5.90.

For Q1, we expect non-GAAP operating margin of approximately 47.0%, a GAAP tax rate of approximately 21.5% and a non-GAAP tax rate of approximately 18.0%.

In summary, Adobe delivered another outstanding year, fueled by strong global demand for our AI solutions across Business Professionals and Consumers and Creative and Marketing Professionals customer groups. Our disciplined execution and strategic investments position us to extend our leadership, as we deliver an ecosystem of AI models, conversational interfaces and agentic experiences. Looking ahead to FY '26, we are confident in our ability to deliver industry-leading innovation, double-digit ARR growth and world class profitability.

Shantanu, back to you.

Thanks, Dan. Our success is fueled by the incredible ingenuity of our global employees who are passionate about delivering innovation with relentless execution in service of our expanding customer base.

Adobe is well positioned to seize the immense market opportunities that we are creating, driving continued growth and shaping the industry in 2026 and beyond.

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

[Operator Instructions] The first question comes from Mark Murphy with JPMorgan.

Congratulations on a great finish to the year. Shantanu, down at Adobe MAX, the energy, the enthusiasm was just truly phenomenal. And it felt to us like a breakthrough moment. Talking to customers down there, there was just quite a bit of interest in Firefly Foundry specifically because customers can end up with this private AI model and something that will understand their identity and their style. Can you speak to how customers are starting to use foundry in the early stages and perhaps just what type of economic potential that might be able to unleash for Adobe?

Sure, Mark. And thanks for the comment. I'll start and then maybe David can add as well. And I did see in your report that you had sort of the work that you've been doing behind the scenes to understand customer sentiment. So we appreciate that.

From our perspective, we just look at it and for enterprises, the entire content supply chain, GenStudio is really the offering that we want to provide that takes care of every aspect of their content production, whether it's the creation part of the campaign, whether it's then creating custom models, whether it's training it at the back end, whether it's automating it and then certainly delivery. And so Firefly services is off to a great start, continues, I think, in the prepared remarks, David talked about the hundreds of deals that we're signing in that particular space.

And Foundry just takes it to a different level in terms of our ability to customize, whether it's for a retailer, whether it's for media and entertainment, the ability to do a lot more. So we really view that as a massive opportunity in terms of whether it's a marketing team or the entire media and entertainment workflow that allows them to create content, deliver that content, localize it. But maybe, David, you can add to some of the sort of customers and what we can do there as well.

Yes. As Shantanu talked about, because we have this great position with GenStudio and the content supply chain, we've been hearing more and more from customers that in order to take it to the next level, they need more than what off-the-shelf models can provide. And as a result, we introduced Foundry, like you mentioned, at MAX. And the core value is that we train on their content, their data and their brand guidelines. We're able to generate images, videos, audio and 3D models and we operate it as a managed service.

So marketing teams can then train on product shots, environment, styles, brand guidelines and media companies actually train on their individual franchises, whether it's a movie or whether it's a series, they'll train their characters, their sets, their props, their locations so they can generate the whole thing.

I'll give you one example from a financials or economics perspective. Let's take a media and entertainment company we're working on, and I'm rounding the numbers here, but to give you a little bit of context, let's say, that organization was spending $10 million with us ARR on our core creative products that we've been selling with them. We ran a sales process with them and engagement with them for about 6 months. We were able to sell them Firefly services and Firefly Foundry for about $7 million, so a pretty significant step up in terms of the engagement that we have with the customer.

We were able to train models within 2 or 3 months, and now we're running some of those models specifically as managed services for them for ideation and production processes. They're already seeing increased efficiency in content production. They're able to generate more production content, and they're now getting into opportunities that are revenue-bearing opportunities like increasing the types of content they produce for social shorts and personalizing more of it for fan engagement with the integration with our real-time CDP. And of course, that's with just a few of their franchises, more opportunities to expand beyond that. So very excited.

And maybe one last thing to just punctuate what David said. So the vision clearly is that for every single brand, if you're a consumer company or for every single TV show or a movie, we can create a foundry specifically for that particular franchise, as David said, because the ability to help with the automation of that content and production is massive.

And the next question will come from Matt Swanson with RBC Capital Markets.

Great. I had a question kind of as we expand the product portfolio and the go-to-market motion of really marrying up the Creative Cloud and the Experience Cloud. Could you just talk about maybe the ROI focus on kind of justifying the value creation of these new productivity enhancements, right? We've seen through all your product demos, how much more content can be created. So really being able to marry that up to results and really kind of why is it a good thing for the enterprise that they have all these new capabilities?

Well, if you take a step back, Matt, and you think about every single business, I mean, there are trillions of dollars that are spent in marketing. And our opportunity is to really say we can help you make sure that, that content is more personalized. I'll have Anil also add after this and deliver it. And the fact is that since we can deliver that content through an ad network and then we understand through our analytics where that is resulting in traffic, where that is resulting in conversion, where that's not, we're the only company that can close the loop from the creation of a campaign, the execution of that campaign as well as then actually looking at what that causes in terms of commerce.

And so I think our real value proposition in all of this is that as increasingly, people are saying, "Hey, I want to use AI to create more." We can not only optimize and accelerate the amount of content that they're producing, but we're the only company that can then help them say, "Hey, this caused so much traffic." And I think we can speak more to that as well as it relates to what we are doing around search, LLM and ROI.

Exactly, as you say Shantanu, depending on the industry, 10% to 20% of the total marketing budget is actually spent on content, on content creation and production. And exactly with the content supply chain, the solution we offer to GenStudio, one, we are helping them reduce the content production creation and production cost. But equally importantly, we're helping them create the content much -- in a much more agile manner and create a lot more content. So most marketers are moving from traditional marketing channels to a lot of these new channels, like Shantanu was saying, digital channels, both for paid media as well as their own media. And that requires a lot more agility in content production. And therefore, the content supply chain solution that we offer helps them get a lot more effectiveness out of their marketing and better ROI.

And we'll take our next question from Alex Zukin with Wolfe Research.

This is Ivan here on the line for Alex. Maybe one question on -- going back to Semrush acquisition. Can you maybe talk a little bit about what was the strategic rationale, a little more color on that and maybe how we should think about the synergies from the deal for next year?

Yes. If you look at what's top of mind for marketers right now, when we think of customer experience orchestration, brand visibility is one of the key areas that's top of mind for marketers, how their brands appear, how they're positioned, especially in new channels like the LLMs, whether it's ChatGPT or Google or Perplexity, that's top of mind for marketers.

So one of the things that we do really well by bringing Adobe and Semrush together, we will be able to offer a comprehensive solution for marketers so that whether it is their own media, like their own websites and their mobile apps, whether it is earned media like these LLMs or across search engines, they have one solution that helps them improve their brand visibility and make sure that they understand what customers are searching for, what prospects are actually searching for or prompting for, and they are in the right places in the right way with their brands. And we are the only ones that can offer a comprehensive solution to be able to do that across their own channels as well as all of these new channels like LLMs in addition to search engines.

Maybe the one thing I'll say is also based on the previous question that Matt had, when we think about our own spend and how we do this at Adobe as we are engaging with billions of customers, being able to provide an integrated way of spending money across search across LLMs and understanding what is the relative efficiency of that. I think most companies would say when they're seeing their business move up and to the right, it's now coming from a more diverse set of channels. And this just allows us between the search engine and the generative engine to provide this unified approach.

So I think it's a very unique, and then we can provide the analytics for folks. So I think combining both your questions, this is why the excitement around the creative and marketing and the combination of that is something that really gives us a lot of confidence.

And moving on to our next question from Keith Weiss with Morgan Stanley.

Excellent. Congratulations on a solid end of the year. Maybe a kind of longer-term focused question. You guys have been clear that the strategy is proliferation first and then kind of monetization going forward when it comes to a lot of these technologies and a lot of the innovation that you're pushing into the base. And I think some of the metrics that we're seeing in Q4 are getting us a little bit excited that we're starting to see some of that ability.

You guys talked about monthly active users up over 15%. So the user base is growing. You talked about 3x growth in the usage of the models on a quarter-on-quarter basis, so the usage is ramping up. When can we potentially see this sort of grow the totality or stabilize or accelerate the totality of growth at Adobe, meaning another -- when can we see a year where ARR growth is stable, right, on a year-on-year basis or actually improving? Because I think that's what investors really want to see to get more confident in the stock and start revisiting the stock and coming back to the shares.

Yes, Keith, I mean, from my perspective, Q4 was a really strong quarter and frankly, starting to be this inflection in terms of as we see the leading indicators, what is happening across the leading indicators, which gives us a lot of confidence. And that's why when you look at the total Adobe ARR growth target, which translates to approximately $2.6 billion, that's the highest beginning of the year guide for total net new ARR.

But unpacking your question, you're absolutely right, I mean when we think about how we've innovated in AI and transformed the business to serve the massive customer audiences that we see, what we've done a really good job of is in the business pros and consumers, you're seeing the MAU increase. You've seen the fact that we've got this technology in front of a lot of people. We've got usage. You saw the metrics that I think David provided there in terms of what's happening on the freemium usage of that. So that's the early indicator.

On the Creative Pro, what we have seen across all 3 parts of the business, which is what's happening in Creative Cloud, what's happening in Firefly as a new app and to the earlier question, Firefly Foundry, the automation associated with that. So we look at all of the 3 markets that we serve. And I think in the data as well, I'm sure you looked at the fact that when you look at what's happening on the creative business, you can see, given you have underlying visibility into the core creative subscription, that is now growing sequentially quarter-over-quarter, and that's coming. Frankly, the record Digital Media ARR is coming as a result of all 3 of them.

So I think we're pleased not just with the strong Q4, but underlying how we've actually changed the sort of underlying part of the business to be whether it's on MAU, whether it's infusing AI, whether it's on higher-value products and combining all of that, frankly, for the enterprise, which we continue to think is a differentiated strategy for us. So we have to just keep executing. But I think Q4 was an inflection in the early indicators, which we continue to track.

And our next question comes from Mark Moerdler with Bernstein.

This is Shelly calling on behalf of Mark. Congratulations on a solid quarter. Total Adobe NA ARR growth this year ended at 11.5%. And next year, you're guiding to 10.2%. Could you help us understand what is driving the difference between this year's growth and the guidance? Is it certain parts of the market that you think might behave differently next year versus this year?

Well, first, I guess there's another call that's also going on. So -- but from our perspective, when we look at it, I think you have to look at it also in terms of the absolute and the target actually shows momentum across all of these audiences. And so if you think that we've been -- we accomplished approximately $2.6 billion, this actually starts our guide for fiscal '26 at that level. So I think from our perspective, it's showing the momentum that we have.

And to your second question, as we think about the ARR across the business professionals and consumers as well as the creative and marketing professionals, this is predicated on our confidence associated with all 3 customer groups, as opposed to one of them.

Again, to the question that Keith asked earlier, it reflects the progress that we've made on Express and Acrobat, whether it's with AI Assistant, whether it's with PDF spaces, whether it's with infusing creativity into that offering, Firefly and Creative Cloud and Creative Pro, CC Pro offering, Firefly services, so across the board and AEP and apps, Anil talked about AEP and apps. He talked about GenStudio brand visibility as well as the acquisition of Semrush that will -- when that happens based on all the regulatory conditions that we need to fulfill, that also adds to our offering. So we're pleased with our performance in Q4, and we're excited about the future.

And we'll take a question from Jake Roberge with William Blair.

Good to see the partnership announcement and integration with ChatGPT. David, as you expand to these new surfaces outside of the Adobe ecosystem, how are you thinking about driving monetization of that usage or converting those users over to your platform?

Yes. Our focus has always been around sort of meeting customers where they are. And that used to predominantly be focused on search and the web, and now we're seeing this incredible growth with LLMs. And so we are taking all of our technology and making sure that it can run in these LLMs. They represent, in our mind, a great top of funnel. They let us reach new users that we typically wouldn't have reached with some of the traditional markets that we go through. And we can engage them in new ways. And it gives us the journey work that's already in there, gives us the opportunity to flow them into our full paid plan. So it's a real top-of-funnel game with a conversion opportunity on the back end of that.

And one of the -- maybe the more important elements and moments of why this is such a critical moment for us is that as LLMs start embracing these model context protocols, these MCP endpoints, it's no longer that these LLMs are about a prompt to a model and a response. It now gives us the opportunity to have the LLMs actually work with models and APIs, and that plays to a really strong strength that we have and durable differentiator given the incredible APIs we have across creativity and productivity. So it lets us reach a lot more customers. It lets us atomize the capabilities, double down on the freemium experience that we've been putting in place. As Keith mentioned, our creative freemium MAU grew over 35%, and this just continues to drive that. And we're starting to see the tail end of that turn into conversion and show up in our results.

And our next question will come from Michael Turrin with Wells Fargo.

You mentioned credit consumption up 3x this quarter. I was just hoping to hear a bit more around what you're seeing from an overall consumption perspective, how third-party models are impacting that? And if you're becoming at all more confident in monetizing or forecasting consumption?

And then secondarily, from your perspective, are there better or worse scenarios for us to be thinking about in terms of which of the larger models win mind share in the market for Adobe just given I think you've seen a lot of differing opinions of that, especially of late.

Yes, happy to take that. So just for the broader group on the call, if you take a step back, we introduced generative credits a few years ago when we introduced generative AI into our products. And customers get credits in a couple of different ways. First, all of our plans now come with some base level of credit access. And of course, higher-end plans include more credits.

The second thing is that when customers deplete their credits, they can get more credits in 1 of 2 ways. They can upgrade to a higher-end plan and/or they can purchase generative credit add-on packs. And as we think about the growth algorithm associated with this, it's really a multiplier across 4 different things. First of all, the number of apps that have these generative capabilities times the number of media types that we support, times the number of use cases and workflows that we've integrated these into times the number of models that we have that people are able to use. And we had major updates for all of these at MAX earlier this -- earlier in Q4.

From an apps perspective, we now have these generative capabilities into our Firefly app, our Creative Cloud applications, including Photoshop, Premiere, Lightroom, obviously, also in the Creative Cloud Pro offer that we have. From a media types perspective, we've been doing a lot with images, video, audio design. We've seen a huge inflection in terms of video consumption in particular. So that's been a great sort of contributor to the growth we're seeing.

In terms of use cases, we've been focused on editing use cases. We've been expanding those editing use cases, but we also introduced Firefly Boards, which is around ideation that generates hundreds of images or videos or designs and also bulk generation at the end of the process for individuals that want to do bulk actions on things.

And then last, it's the models continue to get better with Firefly and our partner models, we're seeing higher resolution outputs. We're seeing higher density and quality. All of those things also increase the number of credits that are getting consumed. And so in addition to all that, we announced a big amplifier to onboarding, which was we have a very attractively priced plan with our Firefly apps. It's really an all-in-one offer. You can get the world's best models from Adobe and third parties, and they're fully integrated into these amazing workflows at a very attractive onboarding price.

So all of that led to the 3x quarter-over-quarter growth in generation. And as a result of that, as we touched on, we're starting to see increasing user upgrades to higher-priced plans and including credit pack add-ons. So we're excited, and you saw that in some of the numbers. And our vision here is we'll work with all the great model providers, of course, including the work we're doing internally. And we will increasingly be the single destination that everyone comes to access those models.

And that question comes from Keith Bachman with BMO.

Yes. David, I'd like to direct this to you, if I could, and just ask you how you're thinking about the components of the construct of growth over the course of FY '26. And if I break it into 2 parts, just wondering if you could comment specifically on seats within the creator and marketing professionals, not looking for specific numbers, but is seat growth remain steady within that category? It looks like you're filling the top of the funnel across the board. But really, what I'm asking about is paid seat growth. Would you anticipate that, that remains steady in FY '26?

And then the second part of the question is, in the prepared remarks, Digital Media more broadly, it was 75% was upsell and price and then the balance was basically price. And what I'm asking the spirit of the question is, despite growing competition, do you think pricing is still a lever that you can draw on to support growth in '26 and beyond?

Yes. Happy to take that. A few things. One is I know we've spent a number of time -- a number of -- a couple of years with all of you explaining the evolution of the product lineup. A few years ago, we used to have -- in the creative ecosystem, we used to have Creative Cloud, all apps and Creative Cloud Single apps. And one of the most important things we've done over that period of time is to really look at where and how consumers or business professionals want to engage with creativity. And we found that it's very different.

So when it comes to our lineup, we now have an increasing number of freemium offers with business professionals, with the introduction of Express, but also the introduction of Acrobat Studio, which has -- is off to a great start. We have a specific offer for creators with everything we're doing with the Firefly application. And again, that's another freemium offer, but also has a nice sort of tiered pricing associated with it.

We have a strong momentum with Creative Pros and those using the Creative Cloud applications. We've mentioned in the past, and we continue to see very strong migration over to the Creative Cloud Pro plan, the higher-value plan that has more generative capabilities embedded in it. And we have -- at the very tail end of that process, we have the ability to do all of this automation work that we have associated with Firefly Services and Firefly Foundry integrated into GenStudio.

So as we look at creativity and how it's seeped into all of these different flows, we feel really good in the first 2, as we said, with the freemium MAU increasing over 35% year-over-year and our ability to start converting some of that MAU with the plans that we have in place now with both Express and Acrobat Studio and with everything we're doing with Firefly. And we're continuing to see strong usage, that 3x growth we talked about. You see a lot of creative professionals actually using that and starting to see more and more and more reliance and value from that in addition to what we're seeing in the enterprise.

So overall, we're seeing strong seat growth. We continue to believe that we have a lot of user acquisition ahead of us. We continue to see a lot of value to pricing opportunity with creative professionals, and I think there's a lot more ahead of us on that. And as we mentioned in that case with media -- the media company and enterprises at the highest end, we think that automation is going to be a really good addition and sort of additional rocket engine to what we do.

Thanks, David, and thank you all for joining us since that was the last question. What I wanted to again just summarize was not only was the Q4 a good strong end to the year, I would say fiscal '25, we just continue to execute. And in particular, I'm pleased with 3 aspects of what we are focused on. The first is certainly our customer groupings as we provide these tailored offerings for business professionals and consumers and creative and marketing professionals, how we've embraced AI and infused AI into all of those offerings, demonstrating that, that's the value that people look as they increasingly adopt our solutions, and something that we probably talked a little less about, but the execution that we have across all routes to market.

And so whether that's what we are doing on digital online in terms of engaging with our customers, what's happening both through the channel as well as our phone in terms of selling to small and medium businesses and certainly, at the higher end, the strategic partnerships and the relationships that we're creating at the enterprise across our combined offerings. So thank you for joining us. Happy holidays, and we look forward to continuing to execute against our strategy and sharing more with you in the future. Thank you.

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

Okay. Welcome, everyone. Thank you all for joining. This is the investor session at Adobe MAX 2025. That was just a small glimpse of all the incredible innovation that we have been showing here today at the keynote, and you'll see a lot more of tomorrow as well.

I'm Doug Clark, Head of Investor Relations. I want to thank you all for joining us in the room, members of our executive team. We also have a number of our board members here joining us today. Very excited to have all of you and then everybody globally on the webcast as well.

Quickly before we start, traditional housekeeping items. The statements that we make today involve forward-looking statements that involve risks, uncertainties and assumptions as of October 28. Our actual results could differ materially from those set forth in these statements. Please refer to the presentation and our risk factors with the SEC filings for additional information.

Today's slides including non-GAAP disclosures, reconciliations and additional information are posted on the Investor Relations website. So we'll keep this efficient. We're going to start with Shantanu to discuss Adobe's strategy, then turn it over to David and Anil to discuss our growth initiatives and the highlights here at MAX, and then we'll have Dan follow up with our financial strategy. We'll leave plenty of time for questions at the end. So don't worry, we will get to as many as we possibly can.

And with that, it is my pleasure to welcome Shantanu Narayen to the stage.

Okay. Thank you. This is the first. Normally, at FA meetings, nobody has applause or claps. But let me -- in addition to Doug actually add my welcome to everyone joining us here at MAX as well as those on the live stream. Hopefully, you were able to attend this morning's keynote. Somebody was telling me earlier correctly, Keith, that it is our largest keynote. And trust me when I said the amount of stuff that we weren't able to show because of the amount of innovation that we had probably exceeded the amount of stuff that we were able to show. And I'd really encourage those who weren't able to watch it, to please watch it because I think it reflects all of the innovation that we're doing, and I'll certainly touch on that as it relates to all of our strategic priorities.

So if you think about Acrobat plus Express, what we are doing certainly around Creative Cloud, Firefly, GenStudio, AEM and the Agentic Web and AEP and apps, I think we just showed a really good sort of smattering of all of the innovation that was happening in there.

Before we get going, we did want to make sure that we also said that we were, given the strong performance that we are seeing in Q4, reaffirming our targets for Q4 and as a result for FY '25. Today is really more about the future, but I thought I'd just get that across.

For a while now, we have really been talking about, if you think about Adobe's real reason for being, it's always been about creativity, which is in our DNA, and making sure that as every industry thinks about creative expression in a more fundamental way that we look at the evolution of the growth opportunity associated with Adobe and really targeting these customer groups with more tailored offerings, different go-to-market models, different partnerships, we believe is really going to be fundamental to continuing to drive growth for the company. And so as we think about creativity and how pervasive it's become across every industry, we have done, I think, an absolutely spectacular job of making sure that we tailor our offerings, our routes to market, to anticipate the growing needs of our customers. The reality is the amount of content that's being created, the amount of content that's being consumed is greater than it's ever been before.

And I think as we show on the left side, all of the different industries home creative expression and content creation is fundamental is just absolutely exploding. And I think we'll continue to explode. So as we think about what we are trying to do with the customer-focused strategy, we're really focused on business professionals and consumers, creators and creative professionals and marketing professionals. The creative professionals will always be the core because they have the most exacting standards for Adobe and making sure that we deliver an absolutely comprehensive set of offerings across every media type with the power and precision that people want will continue to be the focus. And that then bleeds out into all of the different segments that we serve.

Today, we demonstrated not just all of the incredible innovation that's happening in our Creative Cloud products, but also -- and David also will touch a little bit more on that, what we are doing as it relates to supporting third-party models, our own extension of the Firefly model we released Firefly Image Model 5 as well as what we are doing with the Agentic AI interfaces. So creators and creative professionals continues to be a growth opportunity for us. More people are entering the creative community than ever before. And the focus for Adobe is to make sure that we deliver the most comprehensive offering with the power and precision.

Increasingly, if you're a business professional or a consumer, you also want to produce the best content. And so making sure that we have this AI-powered quick and easy apps, Adobe Express and now increasingly integrated with an Adobe Acrobat, a single product that enables you to be both creative and productive is a huge market opportunity for us. We look at the opportunity there and saying, how do we ensure that AI can be used effectively to have a conversational interface to describe exactly what you want to do and really leapfrog the template era where everybody started off with the template, which was a leap forward. But we think this AI conversational interface, and we'll talk about that as well as all of the different platforms in which we are supporting it is a big opportunity for Adobe. What we've done with Acrobat Studio and integrate now PDF as well as Express because the reality is most people start with existing content when they want to create more. So we'll touch a lot more on business professionals and consumers.

And we are the company that provides more marketing technology. And if you look at the content that's being created, increasingly, all of that's being created in order to create ads in order to have personalized customer engagement with customers. So for marketing professionals, people who need this customer experience orchestration to create, deliver and optimize the personalized digital experience, it represents a massive opportunity. And that's where GenStudio is so exciting because GenStudio really represents a way in which for every enterprise as a combination of what they want in seats for creators and creative professionals as well as what they want across the automation of all of that content with what we are doing around our customer experience orchestration solutions, I think we're the only company that can provide that in a really seamless way.

I'm also particularly proud of the fact that while we have all of these different initiatives that I'll talk about, we have done an absolutely great job at ensuring that the integration of Acrobat and Express with Creative Cloud or Firefly with GenStudio is something that we will continue to focus on because that's where we deliver great value. So if I think about the 6 initiatives that are priority for us as a company, Acrobat and Express, as I said, we have this vision of bringing together creativity and productivity for empowering billions of people the new Acrobat Studio and the innovation that we're doing around Acrobat Studio, what we've done with PDF spaces, in order to allow people to have a conversational interface with PDF as well as collaborate with other people. So it transforms collections of PDFs, web pages into a knowledge hub on which you can behave. So we continue to see great momentum with what we are seeing around Acrobat AI Assistant. So a huge initiative for us as a company.

Firefly. Firefly is really the opportunity for us to deliver this single end-to-end ideation solution. For those, again, at the MAX, you saw so much functionality, whether it was the ability to support third-party models; whether it was text to image, text to video, audio capabilities; whether what we were doing around a new functionality with Boards what we are doing with providing video editors, new Symantec image editors and making sure that all of that is an on-ramp to Creative Cloud. Very excited about Firefly as a strategic product initiative, will be available as a separate new subscription. We can talk about that as well. But in addition to that, really represents a big value for those of our customers who are already using Creative Cloud. So Creative Cloud Pro, which combines the best of Firefly and Express and Creative Cloud continues to be the preeminent creative solution.

Creative Cloud. I can spend all day talking about Creative Cloud, but the amount of innovation that we're doing in that as well with imaging, video, 3D after effects and video production, we'll always continue to be sort of the core zen of the company and the ability for us to attract that next generation of creators.

AEP and apps for customer experience orchestration. We talked about our vision that the future of customer engagement will depend on our platform. We talked about the fact that we wanted AEP and apps to be a $1 billion business. We are the leading provider of a real-time customer data platform. The new apps that are built on it, whether it's Customer Journey Analytics or Adobe Journey Optimizer, and Anil will touch on that, continue to do exceedingly well. And this is an imperative for every enterprise in the world, including Adobe, whether you're a B2C company or a B2B company. So continue to be excited about AEP and apps and the potential for that.

And AEM and the agentic web, just like search, revolutionized how people discovered services and offerings on the web. Clearly, everybody recognizes that LLM will be the next on-ramp for discovery, for new business models for monetization and what we are doing with AEM and Agentic Web. Anil will touch on this thing that we call brand concierge, which is how do you transform every single enterprise's own site to being able to create an experience for a customer where they can have a conversational interface if you go to business.adobe.com or adobe.com now in order to select Creative Cloud and the right offering for you, we are using our own brand concierge technology in order to make that happen.

So -- And GenStudio, as I said, as a single solution in order to do ideation, creation and production, activation of all of that content and delivery asset management as well as analytics and insights. GenStudio, again, represents for us a really comprehensive way to address every need that exists for a CMO or a CRO in the enterprise.

I'll touch a little bit on the AI platform as well and what we are doing as it relates to the AI platform. So if we can go to that slide, yes. I think today was really also very significant in how we showed not just all of the advancements that we're doing in Adobe Firefly generation and editing models. As I said, we released Image Model 5, but equally important, what we were doing with all the partner model and the ability for Adobe to have the single stop shop for every single creative person to say, "Adobe, you best understand the visual characteristics and the aesthetic style of all these models, just make sure you select the right model for us." And so we will offer all our customers the ability to access, whether it's Google Nano Banana, whether it's OpenAI, whether it's LUMA, Runway, Black Forest Labs, all in a seamless way. And the fact that you can mix and match really allows every creative professional or business professional to say, I'm going to just stick to my interface.

Behind the scenes, you're picking the right AI platform for me. And we also now have an ability to actually create a model where they pay Adobe for it and then we pass the appropriate revenue onto the other partners. So I think the single stop shop allows people to say, "I don't have to worry about any of the AI models, pick the right model for me. And if I have a choice that I want to make, I can make that model." So I think some really great progress that we've made this year on both the Firefly generation and editing models as well as the partner models.

The other thing I really wanted to just touch on here is we now have Firefly custom models. People are going to ask us, how does this evolve? And we think every single individual and every single enterprise will, at the end of the day, just want their own model. And so we now have the ability through Firefly custom models as well as Firefly Foundry allow people to say, whatever level of sophistication you want Adobe can provide that for you. And whether that's a combination of your assets that you have, whether it's a combination of Firefly plus your assets, or Firefly plus your assets plus third-party models. We have the ability, we have the expertise and we have the science in order to enable you to do that with Firefly Foundry.

And so I'm really, really excited about what we've done to ensure that we infuse AI into all of our products as well as abstract, the complexity that's happening. Because at the end of the day, we certainly believe that integrating AI across the industry-leading product portfolio that we have, is the way to allow every customer to access all of this incredible technology without worrying about friction of which interface they're using or to go from application to application. So I think today was a really important milestone for us. to show how good we become with our AI platform to infuse all of that within our applications.

I could spend hours on all of these strategic accomplishments. I think what's really important is across each one of these. If you look at the accomplishments and I think David and Anil are going to touch on this a little bit, we're executing well on both the product front and on the go-to-market. I think last year, if a lot of you were here, you were, I think, pleased with the amount of innovation, but you had a lot of questions perhaps about how we're partnering and/or competing with other third parties.

I'm really pleased because every single model provider wants Adobe's support because they recognize that whether it's a creative or a business professional, they want to use our tools. So I think this slide does a good job of just showing all of the accomplishments that we've had over the last year in terms of product as well as go-to-market. So really proud again of all the stuff that our team has done and how we are partnering, whether it's with OpenAI, Microsoft, Amazon, Google as well as a whole host of other companies.

And so I'll hand it over soon to David, but let me just say that the innovation that we believe we are delivering allows us to both anticipate as well as meet the evolving needs of a much, much larger expanding set of customer base. We do believe that DNA of creativity is at our core and the fact that we have all the offerings that we have the right business models, we have the right technology in order to be able to deliver that for our customers. gives me a lot of confidence that the best days of Adobe are ahead, and I am more excited about the momentum in the business. today than I have ever been before.

So with that, let me hand it over to David to talk about what we are doing on the creative side.

As Shantanu mentioned, this isn't comfortable you guys are clapping. This is a -- keep it going. This is incredible. So just really quickly talk a little bit about MAX. How many of you were at MAX. I know there are a lot of people that are in line. Okay. So about half the people -- more than half the people in the room were there. MAX is really a fun event for us. It's obviously we do a lot of work here, but it's also a great opportunity for us to connect with our customers in a really intimate setting where we get feedback. We actually start putting a lot of that feedback to work. That eventually leads to the work we do throughout the year, and it culminates in next year's MAX.

Again, over 10,000 attendees. We'll have hundreds of thousands of people with millions of video views online in the coming days and weeks as well. So it's a huge amplifier for everything we're doing.

What was interesting about this year's MAX was that we continue to have the traditional creative pros attending. We also have -- every year, we have more and more enterprises and agencies coming because they see the work that Anil and my team are doing together to bring more production and automation into enterprise workflows. So we continue to increase the number of enterprise customers here as well, not just at Summit. And this year, in particular, I think we had the highest number of creators and influencers come because as we started infusing more AI in our tools, as we brought in tools like Express, as we brought in tools like Firefly, the application, we're seeing more and more people saying, "Hey, this is the way I want to create in the future." And the entire flow of MAX was really around enabling that to happen.

Shantanu already talked about the investment we're making in models, whether it's Adobe's models and the innovation we have going on there the long set of partner models that we announced and also increasing customization of those models. We talked about it both in the context of me as an individual creator, but also for large brands wanting to create proprietary models for their content trained on hundreds of thousands or millions of their assets, we can do Adobe Firefly Foundry models for them as well. So that foundation of being the one-stop shop, whether you're an individual or a large organization to say, "I'm going to go to Adobe for media content creation", I think is a really profound moment that we're getting across here.

On top of that, we also talked about the importance of agentic and how agents are coming into the flows for Creative Pros. We talked about it in 2 contexts. The first was around in our application. So we showed what I think is a first of its kind with Adobe Express having an AI assistant in there, you could ask some very complicated things and prompt. It would update multiple parts of the design I would reason over those tasks and decide what the right things to do is it has a good world knowledge. But just as easily, while you're having those conversations, you can actually just go and directly manipulate things. And we think for creativity, that blend of conversational and direct manipulation is going to be important.

We also showed you how we're taking that capability, not just in our tools, but we're bringing it to third-party LLMs and we showed how that looks and works in ChatGPT. So very excited about that flow.

And then last but certainly not least, it was great to have Google on stage. We had Eli Collins from Google DeepMind on stage talking about the partnership that we have that we think between Google and Adobe, we can transform the creative industry and the kind of things people should expect to be able to imagine and create. We went from those capabilities, those foundational capabilities that we talked about what we're doing for creators, specifically in Firefly with Adobe Firefly, the all-in-one creation from ideation to creation all the way to some production capabilities. As part of that, we also had YouTube come up on stage and talk about the partnership there. We have Premier Mobile that's released recently off to a great start. It's a beautiful application. People love using it. And we have a great connection that's going to come in with YouTube in a few weeks that think of it as a fully integrated experience for YouTube creators and what we're doing with Premium on mobile.

Of course, the bread and butter of the show is the creative application. So Photoshop harmonize was obviously a huge win for the creative community. We did see intelligent vector -- sorry, layer renaming. You never know what people are going to get excited about. The fact that they don't have to keep updating their layer name seems to be a huge winner for the show. Some of the other things like assisted calling when you have lots of images come in. But one of the things I think is going to have the biggest impact was an Illustrator, huge base of users. When you illustrate something and you want to change the angle of it, it's a lot of -- you really have to literally start illustrating from scratch, but the ability to actually convert that to a 3D object and be able to spatially reposition it is going to be a huge time saver. So we had literally dozens of those kinds of capabilities in those applications.

And then not last -- sorry, last but not least, is everything we're doing with Anil and team around GenStudio. So Firefly Foundry, Shantanu touched on that. That's another big announcement. We've been using custom models -- and now we're extending to Foundry, which allows you to train on all your assets in an enterprise. That, of course, built on top of Firefly services, and we showed the next version of that, which is allowing you to actually visually orchestrate the kind of production flows you want, and then you can accelerate that and extend that through the entire production process in GenStudio.

All of this, of course, there's a lot that we announced, but just to put it in the context of our core strategy, from the digital media perspective, it's really about business professionals and consumers, creators and creative professionals and then we work with Anil when it comes to marketing pros. On the business professionals and consumers, that connection between Acrobat and Express has been working incredibly well for us because, as Shantanu talked about, when you consume content, you often consume it -- and I think this is probably true for all of you as well, you consume it with the intention of synthesizing it and creating something on the back end of that. And that's really the power of what we're going after and what we think we can enable there with the hundreds of millions of monthly active users we have in that cohort.

Creators with Firefly, this continues to be an area that we want to all-in-one AI studio so that you can find all your models, you can ideate with those models. We showed you boards and everything we're doing with Boards directly flow into a video or an image editing workflow. And that whole package is something that we think is going to be a fantastic offer for the next generation of creators and influencers which we see a lot of momentum around.

And then last, certainly around creative professionals and everything we're doing there. So as you look at how that then translates into the next set of deliverables that I think we are -- are we moving forward with it, that we are trying to move into with the innovation that's coming to market with Acrobat and Express, I'm sure you guys have seen, and I know many of you have used AI assistant. We have now expanded that to include PDF Spaces. So you can have multiple documents and links in any content in a single space. you can share that with other people and have shared knowledge hubs. But you can also, as you have a conversation, you can say, actually generate something from -- generate a presentation or create a Firefly or an infographic or audio track out of this. And that idea of being able to consume to create and publish, I think, is a really profound one for literally everyone in the world. We see that as billions of users.

When it comes to creators, Firefly boards went GA a few weeks ago. The response has been fantastic. You saw it plastered all over the demos today. We continue to do a lot of investment there. The Firefly models work we talked about. I think we have the richest set of orchestration across these models, even things that are integrated in small ways, but incredibly profound ways into the tools. We integrate things like Topaz, as an example, into Firefly, every creator wants to bring in images and uprise them. The ability to sort of make that part of their workflow in addition to all the things we showed you on stage is very powerful.

And then as you look at further and further refinement being able to do that work directly and iteratively in Firefly. The space, whether you're doing video editing or image editing connecting it all to Photoshop and Express. That offer for creators, I think, is a very strong new offer for us that, frankly, really launched for the first time in February of this year. So very excited about what that can mean for us. And then, of course, as we talk about Creative Cloud, you saw all the innovation that's into -- in the core tools there that we've released.

I do want to spend just a minute on generative AI and the agents. On the generative models, you saw the number of announcements that we had today. That's just the beginning. We are constantly -- we have a long list of partners that we're talking about bringing on to the platform. I think as everyone recognizes, the complexity of how to use these models is getting extreme. Sometimes, if you want to generate a landscape versus generate a crowded city street the model might be different or if you're doing ideation, you might want to model that has a lot of style. And if you're doing production work, you may want to model that has less style so that you can then do the work you want on top of it.

So the ability for us to build a layer on top of all these models that knows the action you're taking and intelligently selects the model you want to use, I think is a profound transformation for people in the creative space and -- that are looking to take action. We want them to focus on creating and we want them to stay in the flow. All the details of which model and how they use it, that's something that shouldn't get in their way. And we're just getting started with agents.

What I do want to sort of make sure you understand is we have the broadest set of capabilities and actions around images and video and illustration and 3D and audio and documents with PDF. We have decades of work that we've done to build this infrastructure and the surface of capabilities that we have. Now as we move to the agentic layer, we've taken all of these, we've turned them into what's called MCP end points. And now it's really about enabling these -- the LLM to reason over how to use these things. So what you saw on stage today is just the beginning and you're going to see that accelerate to more and more and more capabilities as we go forward.

So very excited to talk more about this, but I'm going to turn it over to Anil to talk about how all of this stuff gets into the enterprise as well.

Thank you, David. Awesome. Thanks, David. I'll focus on what we do in the enterprise with marketing professionals and creative professionals. As Shantanu mentioned, as the largest provider of marketing technology in the world. We have great mind share with CMOs and their creative teams as well as with other C-level executives focused on customer experience like the Chief Commercial Officer, CIOs and CROs as well. .

We are uniquely positioned across to serve these audiences for 3 reasons. One, we bring together the integrated AI-powered platform with best-in-class solutions for 3 important use cases: content supply chain, customer engagement and brand visibility. And I'll talk more about all 3 of them. As you heard from Shantanu as you'll see when you go into the Creative Park, we've built a strategic partner ecosystem including the leading AI and LLM providers, all the major cloud platforms, ad networks, enterprise SaaS companies, SIs and agencies. And that's what the enterprises need for them to be successful.

And what we are doing is this rapid pace of innovation, just like David talked about and I'll show case, the rapid pace of innovation to take all of this AI and to enable our 20,000-plus enterprise customers to turn this AI promise into true ROI for them, both in their marketing investments and their customer experience investments.

So when you look at the 3 key areas, we're focused on content supply chain, customer engagement and brand visibility. And just to give you a sense of what we do in each of these areas. In the content supply chain, David mentioned in the keynote that the demand for content in the enterprise has never been higher than it has been before. And we provide that end-to-end content supply chain to optimize the process, the entire process of going from ideating, planning, creating, managing, activating and analyzing that content across the enterprise. And being able to do so both effectively in terms of providing it in the right time through all the right channels and efficiently.

In terms of customer engagement, that's where we provide our solution around that robe Experience platform and the native applications we've built on that. And it is now the industry-leading platform and set of applications to orchestrate and deliver personalized customer experiences. And brand visibility increasingly is top of mind for CMOs as they figure out how to make their brands visible through ChatGPT, through Perplexity, through Gemini, all these other new platforms. And we have the industry-leading content management system as well as the agentic apps to make sure that we are driving brand visibility across all of these new channels as well as the performance of their websites. And we do that across a common integrated AI-powered platform.

To dive into each one of these a little bit on the innovation we have been delivering. On the content supply chain, our solution is GenStudio. And we've done a phenomenal job of bringing all of the power of the Firefly and the Creative Cloud together with GenStudio. One of the things that GenStudio really allows brands around the world to do is to build their own brand brain that reflects the essence of their brand, what is important to their enterprise as well as their customers and make sure that, that brand brain is reflected across all the content that they produce, whether it's content for their TV advertisements, whether it's content for what they're producing for their social media, their ad networks, their own properties like websites, all of that will reflect the essence of their brand and their specific messages. And that's unique to how we have integrated GenStudio with Firefly, all aspects of Firefly, Firefly app, Firefly services and some of these new capabilities like Firefly Foundry.

In terms of customer engagement, our solution there is that be experience platform and the apps were built around that. And there will really help enterprises bring together all the key aspects of what they need to drive these kinds of agile marketing campaigns across all channels. That means bringing the right content together with the right customer data that they have as well as the enriched data they get from their partners and putting it into the right customer journeys so that they can activate those in real time across any channel to hundreds of millions of consumers or if they're a B2B company, to hundreds of thousands of B2B customers.

And the third key use case is brand visibility. And here, we've announced a bunch of new capabilities. Just last week, we went GA with, generally available with our Adobe LLM optimizer, which is really a unique product that helps brands make sure that their brands are visible across ChatGPT, Gemini, all these new LLM platforms. That really started as a use case for Adobe. When we looked at our own Acrobat traffic, and we saw a lot of new traffic coming from these LLM, we said, "How are people discovering Acrobat?" So we discovered that they had new prompts, they are new ways of searching and looking for information related to PDFs and what they wanted to do with the PDF capability. And so we built LLM optimizer for our own use, and now we have made it generally available.

We also have a bunch of other capabilities that we have launched. We announced at Summit about 6 months ago and all of them generally available now, Sites Optimizer being one of them. as websites become even more important. Once you have qualified traffic coming from your LLMs, you want to make sure there's a brand that you are delivering the best possible experience through your website and making sure that every page on your website has the best lighthouse scores, has the best web vitals has relevant information and making sure all of that is available to the LLMs to optimize their own references is super critical for brands. So we are the leader in all 3 of these critical use cases that have top of mind -- that are top of mind for Chief Marketing Officers. And we're doing it across AI common platform that cuts across Adobe.

One capability I would like to highlight is the Agent Orchestrator, which again, we announced at Summit and we've -- which is now generally available. We are not a general purpose agent provider, but we make sure that all of our capabilities are available as agentic capabilities, both within our own portfolio, and like David highlighted, through MCP and A2A protocols to whatever our enterprise customers want to do.

So overall, we're in a really good place to serve these creative and marketing professionals, and we look forward to continuing this momentum.

So with that, let me bring up Dan.

Thanks, Anil. Welcome, everyone. Thanks for joining us. Adobe Magic, it's on full display at MAX this week down in L.A. The innovation, it's absolutely incredible. The innovation, it's stunning. And I want to thank all of you here today as well as those on the webcast for your continued engagement and support.

Adobe, we're powering the future of creativity with AI for everyone. And I couldn't be more excited about the incredible opportunities that we see on the horizon. Today, today is about MAX. That said, I didn't want to leave any questions unanswered as it relates to Q4 and the end of the year.

Performance for the first 3 quarters has been strong and that continues into Q4. We're executing well against our growth initiatives. As a result, we're pleased to reaffirm our Q4 and FY '25 targets. And we look forward to sharing our results and FY '26 outlook in our earnings call in December.

The strategic growth initiatives that Shantanu shared, they're addressing the critical needs of our customer groups, and they're fueling our business momentum. For business professionals and consumers, we deliver creativity and productivity for all, and we do it with unparalleled scale distribution and creative power growth drivers, Acrobat and Express, key growth drivers: user growth, engagement, MAU and scaling a freemium business model with a robust product-led growth motion. For creative and marketing professionals, we deliver content production with marketing automation solutions, and we redefine the end-to-end content life cycle and there's multiple growth drivers for this customer group.

In the Firefly app, it's now user growth, engagement that's across both web and mobile. In Creative Cloud, it's value expansion that's tightly connected, tightly coupled to the innovation that we're delivering as we continue to more deeply infuse AI across the product portfolio. GenStudio, AEP and apps, AEM. It's about deeper value-based selling, and it's focused on serving the content supply chain end-to-end. And we're enabling enterprises to automate personalization at scale and do it in real time.

So taking a step back, you can clearly see the success, the strong execution that we're driving. You can see the FY '25 highlights that we've called out on the right side of this slide. More MAU, more value, more won Adobe deals. More MAU through product-led growth, more value through AI innovation and more won Adobe deals in the enterprise.

With our AI-influenced revenue that's already exceeding $5 billion, you can clearly see the momentum that we're driving with our AI strategy. Over time, we expect AI-influenced ARR to grow to 100% of our business. And we're going to measure the success of our growth initiatives through the lens of customer group subscription revenue. And as a leading indicator of overall company growth, we're going to look to total Adobe ARR that represents annualized recurring revenue across both customer groups, business professionals and consumers and creative and marketing professionals customer group.

And together, these metrics, they connect the product momentum that we're driving directly to the financial performance we're delivering. And it better aligns with solutions like GenStudio, Express, Firefly Services and the newly released Adobe Firefly Foundry, all of which help automate the content supply chain across creativity and marketing like never before. And it's a clear continuation of our customer-focused strategy. Our customer-focused innovation, our customer-focused go-to-market strategy that we at Adobe are driving.

So now taking a step back, we have corporate targets, revenue and EPS. Then we're going to provide business insights into the customer groups as well as subscription revenue. We'll provide total Adobe ARR as the lead indicator of overall company growth. We're going to provide historical total Adobe ARR to help with modeling. But we're also going to continue to provide digital media and digital experience subscription revenues during FY '26. We to provide additional visibility and continuity during the transition.

Now here's a detailed visual of how we expect to report and guide next year. We're going to continue to provide visibility into the business through our reporting, our guidance and our disclosures. Guidance cadence remains unchanged. Our targets, they're going to be centered around our customer group subscription revenue and total Adobe ARR growth.

And to end where Shantanu began, Adobe. Adobe is igniting creativity across all our audiences. As we engage here at MAX with creators, creative professionals, marketing professionals, our ecosystem partners. That sentiment, that sentiments alive and well and shared by everyone. Consistent execution and financial discipline, it underpins our ability to deliver durable growth, while investing in groundbreaking innovation. We continue to operate with a world-class financial profile, and we do it at scale.

Double-digit growth of our customer group subscription revenue, combined with our non-GAAP operating margin of greater than 46% over the last 12 months. And remember, that 46% operating margin, it includes more than $3 billion of R&D investments over that time period. We've generated nearly $10 billion of operating cash, repurchased more than 28 million shares. And we've reduced our ending share count by more than 5%. Our priority is to continue to drive consistent execution to deliver profitable growth, invest in the business generate shareholder value.

Adobe, we're leading the AI-driven creative and marketing transformation. I couldn't be more excited about the opportunities we see on the horizon as a company.

With that, I'd like to invite the rest of the team up. We look forward to taking your questions. Thank you.

Just give us a quick second to get set up here. [Operator Instructions] Clearly, the focus has been on the product innovation, the strategy, the new technologies and capabilities that we're focused on here today.

We'll have a couple of mics running around the room. We'll start on this side, and I'll go to both sides. Let's start with Jay in the front here.

It is Doug's first meeting when he said he is expecting one question from everyone.

Yes, good luck with that. Jay Vleeschhouwer. The one question then is at MAX 2022, the company, David specifically alluded to your forthcoming implementation of new branding, pricing, packaging techniques. You may remember that conversation. And certainly, over the last 3 years, you've progressively been doing that, and we saw more of it today. The general purpose portfolio management question is how do you think about balancing on the one hand, segmentation and granular toolability that you need for your various markets versus, on the other hand, the needs of scalability and commonality, which is often a very tricky thing to do for a large software company to get right and you have a lot of products. So how do you think about that balance?

Yes. Happy to jump in. You have a very good memory. And you only went back 3 years. Typically, you go back 15 or 20 years. So -- Yes. So what Jay is referring to is that about 3 years ago or so, we were talking about the evolution of the market where really, if you stop and think about it, we had 2 basic offers when it came to creativity. We had Creative Cloud all apps, and we had Creative Cloud single apps. And for a creative professional, there was an incredible amount of value oriented in those tools for hobbyist, it was less. So we were trying to do double duty with pricing and value and these things. So we've been stretching the lineup in effect, right?

So if you think about it, we have introduced Express. We've introduced Firefly now, the application, which is lower priced SKUs, freemium model web and mobile. We've taken some of those things like Express and integrated it into Acrobat for broad value and distribution for consumption to creation workflows that we see and we've moved upmarket, right? We moved upmarket by introducing more generative capabilities into our core flagship applications and done price to value there as well as more consumption capabilities associated with the number of generative credits you have. And we've stretched all the way into the enterprise, too, with things like Firefly services for automated content workflows and foundry and the things that we've been talking about there.

So that stretching of the lineup was possible because of the years of work that we had been doing, taking the technology that we had that was insight Photoshop or Insight Illustrator and creating basically an API layer that can get very easily reconstituted into those specialized use cases for those specialized audiences, which is how and the evolution we've made to business professionals and consumers creators, creative professionals and enterprise and marketing professionals. So all of that was part of the strategy. We have that underlying infrastructure. We've layered in the AI platform. And now we have these solution areas that are very specific to an audience.

Maybe the 30 seconds, I'll add to that, David, is it's actually, Jay, become easier for us on the go-to-market because if you think about it on the go-to-market for any enterprise of any size, we go in and we're like GenStudios the solution, and we will help you with whatever you want, what's the studio team, what's -- how many business professionals do you have? How many consumers and how much automation that you have? And so I think in the enterprise, it's a very good, unified solution that we can sell.

For Creative Pros, that's their core DNA, Creative Cloud Pro, without a doubt, that's the hero offer in terms of what we sell. And that's what everybody will continue to aspire for. I think for creators, starting with Firefly, a very simple, easy-to-use app that's well integrated with creative floor. Creative Cloud and for business professionals and consumers starting with Acrobat Studio.

So you're right in that the product has evolved. But I think the ability to target the customer with the right offering has actually become simpler on adobe.com because we know what you want and how you want to use it and the on-ramp associated with it. And so Creative Cloud Pro, as David mentioned, it's all about the value. They want power and precision and they want the value. So actually, the segmentation has clarified how we get people on the on-ramp and how they go to whatever solution that they want.

Okay. Perfect. Let's go to Kash.

Change, I don't have questions because it's my last MAX and last Analyst Day. So Shantanu, I wanted to just thank you for everything. And I have fond recollections of -- I keep telling you this. You must be thinking cash enough. I've heard it a million times. But November 2011 Radio City Music Hall, you pivoted the business model. And you told me over drinks, "Kash, you like the Salesforce recurring revenue model. That's what we're going to look like. So don't worry, everything is going to be okay." So thank you for giving me that confidence.

And that night, I had dinner with -- I don't know if Brad Zelnick is here. Brad, you're not here, Brad, help me build confidence in this new business model. So thank you, Brad, you're not here. But I wanted to call on a couple of others who may or may not be here. Brent Thill, are you missing? How is it possible Brent Thill is missing? So he's the guy that I've known the longest, and I'm going to -- he looks very young, but we've known each other 30-plus years as sell-side analysts. So thank you, Brent, for that journey.

Who's next? Mark Murphy. Most amazing channel checks, and we've been friendly to each other, nothing but an awesome friend all through these years. Keith Weiss, are you missing really? Love that intensity in the opening questions on all conference calls. Alex, you can -- I will absolutely miss your intensity of the multipart questions. And last but not the least, Jay Vleeschhouwer, you're millionth MAX, and he keeps returning over and over again. I don't know how you do it, Buddy, but congratulations. And congrats to team Adobe for putting up such an amazing MAX. I thought the integration of AI into your core product family was a lot more seamless and the blending of the 2 consumer -- the perception of consumer power of AI and how it can have an impact on the enterprise was very evident today. So keep it up, congrats. Thank you so much.

Doug, sorry, 30 seconds. I'd like to say thank you as well. I'd like to say thank you as well for all of the incredible insight that you've provided to, frankly, the buy side, who look to people like you on understanding Adobe. And so I know you've covered us through multiple companies, and we appreciate that, and wish you all the best. So thank you.

Okay. Let's go to Saket.

Excellent. And echo the congrats cash as well. David, maybe for you. It's obviously still very early, right, in the AI adoption curve. But one of the fears over time has been whether generative AI could be dilutive to seats. We've talked about it for probably the last 3 MAXs, right? And of course, the counterpoint to that has always been that demand for content will explode. And that will only offset the seed productivity that hopefully your customers will get. I'm curious, as we're sort of on the second, third MAX of talking about this topic, even anecdotally, how is that all playing out? Is that seat dilution happening? I know you got -- everybody on the stage spends a lot of time with customers. Is that seat dilution happening? Is that content explosion happening, Curious your thoughts.

Content explosion is definitely happening. We continue -- every year, we do a survey to ask businesses and creators. Are they -- what kind of expectation they have for content. It continues to be growing at a disproportionate rate, especially as people are consuming different types of content. What we're seeing is continued growth in terms of ceased with Creative Cloud, when you look at Express MAU, when you look at Firefly growth and Firefly MAU, we're seeing more users coming into the franchise, and we're seeing that increase happening.

We are also seeing a growth in automation, right? We've talked a little bit about this in terms of some of the guidance for Firefly services and firefight creative production and how we do all of that assembly and they're rich. So we're seeing both seat growth increasingly also new customers coming in at the low end and the freemium side of the business, and we're seeing real opportunity to monetize the -- monetize automation and production in these enterprises.

So the good news for us is that we are literally playing across that ecosystem. And however things evolve we're there to catch it. But we think there are going to be a lot more people creating. This is why we have Express inside of Acrobat. This is why we have Firefly targeting creators. We believe that the value and the kind of content that creative professionals are going to have to do is going to go up, which is why we're embedding so much AI in there. And we believe automation is going to play a much bigger role in terms of personalization. So we're investing in all of that. And as those dynamics play out, we'll all see, but we benefit wherever the market goes.

I'll just punctuate what David said by. It's unambiguous that seat explosion is happening. It's your definition, perhaps, Saket, of what is that offering that's there. But there's no reason why you won't have 5 billion people a few years from now, all wanting some part of creative tools or 7 billion. So seat explosion is absolutely happening, and that's the way we look at it. And David did a great job of describing it. it's the different offerings that people will be using. But across the board, seat explosion for creativity, absolutely no ifs, ands or buts, it's exploding.

Perfect. Let's go to Alex next.

Kash, you will be missed. So in true multipart one question form. If you think about the ability, I think the partnerships with Google were really, really interesting and exciting specifically the ability to kind of really embed and remove the anxiety for customers when they're making a choice around kind of where they're going to standardize their content creation strategy with all the model innovations continuing to come down the pike. How do you monetize the ability to use third-party models within Firefly specifically? And what is the CapEx intensity required for foundry and custom model development?

So we have embedded, as you mentioned, Alex, we've embedded Nano Banana and Veo. We also have flux and runway and LUMA. We have a whole host of models. And we have a rate card associated with that. And so the more content that gets consumed or generative capabilities that get consumed frankly, the more conversational experiences that users have, they will consume those credits. And we have -- I know a big question for you guys for a long time was when are you going to start metering and actually enforcing the limits, we've started doing that. So we see that as one of the many growth algorithms.

The other thing we're doing is we're differentiating on the value that we provide in the base plan. So we launched Creative Cloud Pro recently. Creative Cloud Pro is a higher-priced plan, and we have Creative Cloud Standard as well, which is a lower price plan. And the number of creators selecting Pro as their default has been fantastic to see as well. So it's the combination of those 2 things.

And then when it comes to foundry, this is where just to spend a few minutes on this or a few seconds on this. When we go and we talk to large enterprises, think of it as large media and entertainment companies or think of it as large brands, they have franchise model needs, right? So if you're producing a Hollywood movie you want a model that's trained specifically on the movie and the hours and hours and hours of videos and the characters and the styles and the scenes in the settings associated with that. We can do that on top of it. We do that on top of Firefly and the announcement with Google is we'll also do that on top of Veo or Gemini image. And so now we have this growing set of things that we can do these foundry models on. And that one, we, of course, we charge a premium based on the training and the value to these organizations is enormous there.

Yes. And just to build on that a little bit. So if we go back in time, we landed the degenerative credit model. And we talked about a consumption-based economy alongside the subscription economy. And the reason for doing that was as we bring people more deeply into the products enabled by these capabilities, it allows us to better align economics with the deep value that they're deriving from those products. And so as you think about generative credits, they're a currency in our products. And then that currency gets adjusted based on a rate card, which is connected to unit economics associated with the action they're taking.

And our ability to adjust credits and our ability to adjust to the rate card, bring those 2 in line with each other to preserve a set of economics based on the deep usage patterns of customers. Casual users will operate within the base credit envelope. Power users will have to start augmenting their base credit allocation with additional credits to make the economics work. We drive from a first-party model standpoint, fantastic unit cost economics on compute. We partner with the partner models to buy in a bulk way that allows us to drive an attractive set of economics through the rate card and deliver those capabilities on an attractive set of economics for the customers.

So the unique approach that we're taking to bring these -- all of these models deeply into the workflows that define our customers' day-to-day and the attractive set of economics that we can provide those capabilities at, makes this a really interesting strategy to deepen the monetization of the power users over time.

Okay. Great. Let's go down the line.

Mark Murphy with JPMorgan. I wanted to double-click on a comment, and I'll pass it right back to you, Michael. There was a comment today and this comment was we believe Image Model 5 is the best in the industry. at making precisely the changes you want in only the changes that you want. And it looks like that in the demos. And I wanted to get your take on this because, I think, frankly, all these third-party image generators they really struggle with that.

And David, you had said something about using MCP endpoints. Can you talk about the work that you've done there? And kind of economically, what is that going to unlock for you, if Adobe becomes -- it looks like you're going to become this one-stop shop. And frankly, what you're doing, architecturally, it's very reminiscent of what Microsoft is doing with Azure and the model foundries. All the developers go there, all the creatives end up in Adobe. Can you maybe speak to that work that you're doing?

Yes. So first of all, I don't know if some of the work that we -- with everything we had, as Shantanu said, we have so much that we couldn't put on stage, but the amount of work that the Firefly models team has been doing is off the charts. We talked about Soundtrack. We've talked about audio. We talked about Avatar generation. We have so much that's coming. And the big announcement today was Image Model 5. And exactly to your point, first of all, a huge step forward in terms of quality, huge step forward in terms of the density of the pixels that we're generating and sort of the resolution that we generate.

But the biggest news today was we did -- we talked about 2 things. One was we talked about image preservation. When you want to change something, you really don't want drift in the other pixels. Otherwise, it stops being productive for multi-turn edits because at the end, you end up with something that looks like a pretty bad approximation of what you had before. And we believe we're in the best in the industry around that preservation, which is great for creative expression and toolability.

The second thing which we didn't even have time to put on stage, but we announced was the ability to sort of edit layers. And so when we generate an image 5 now, and this is they're going to be rolling out in the course of the next few weeks, we'll actually generate with layer. So you can actually just click on an object and move it and they'll reharmonize and resynthesize there. That's another point of controllability that we're talking about.

We also, as we talked with Google today on stage, you heard Eli, the VP from DeepMind talking about the focus that they have in terms of working with us on controllability of the model, right? So we believe that at the end of the day, the plethora of models that are out there. These training runs that we do, they're a little non-deterministic. So you get these emergent behaviors that you get excited about. Sometimes you end up changing those, which is why you need that layer on top, which is Adobe, to work across these models and automatically pick the best outcome and the best model for the action you're taking.

And so I think all of this plays into where we are. At the beginning, it was a prompting in an image out. Everyone was amazed. But when you get down to the work of creating, you need that next level of creativity and every model provider realizes that, that's really best done surfaced in Adobe tools.

Maybe, Mark, I'll just add one quick thing to that. But again, the state-of-the-art in both generation and hallucination and editing -- and I think what Ely, Adobe Ely was -- Ely Greenfield was talking about was the ability to do the semantic editing in that our applications, that's really the magic. So our ability to control it and control it across every single model that's out there. that is groundbreaking. That's groundbreaking because you can take whatever visual characteristic.

The one thing I think both David and I will again reemphasize the north star of this is actually every single one of you, whether you're an individual or you're an enterprise, you'll have your Adobe model. So it will be the mark model and maybe there's a JPMorgan model. And I think that magic we can make happen for customers. So that's the way we look at it.

And Alex, to your question, I think Dan said that. For us, on the third-party models, it's not our CapEx. I think Dan said that, it's subsumed in whatever consumption-based model we charge for a subscription, but we control the ability to have that customer interface with us.

It's Michael Turrin with Wells Fargo. And looking back at Q3 results and preparing for this, our takeaway seem to be that the trend line on some of the key growth metrics that Adobe is providing are improving. I think it would be useful to hear the team opine on what's driving that, the durability of those drivers as we look at some of the new product offerings that you're announcing today at MAX? And then secondarily, if that is the case, shifting some of the metrics into next year. Can you just give us a bit more in terms of what went into that thought process because we're actually going to get questions? And I know the shifts might be subtle, but just kind of help bridge some of that for us as well.

Maybe I'll start and you can certainly add. I mean first, in terms of the metrics, and this is more future looking, more so than just Q3 and Q4 because we're talking about it. I think the metrics that we look to as early indicators for the success that we are having is MAU usage, generations on the Acrobat plus Express. How many people are using AI assistant? Is that going up into the right? How many people are using PDF Spaces? How many people are doing conversational interfaces and express the amount of exports, the amount of content that's being created in PDF that then is now going into Express in order to create content? So using those trillions of PDFs out there. So on that metric, that is a big early indicator for us on Acrobat plus Express momentum. So I wanted to make sure that, that was clear.

Firefly as a stand-alone subscription offering, I mean, today, you saw Firefly has so many parts to it, right? But the core Firefly app as somebody coming in, wanting a subscription for Firefly, either stand-alone or within Creative Cloud Pro. And if you're a creator, how that's your on-ramp to Adobe and being able to use all of these third-party models whether it's for ideation with what we call boards, whether it's for editing with the video editing, semantic image editing, that's another metric, and we look at every single day. How many people understand Firefly? What is coming for that? How is it being distinguished as a result of it being commercially safe. So that's another metric that we look at and saying, "Hey, the underlying growth associated with that."

I think today, we David and I also quickly saw the results that we were having today, and we may have a capacity problem which is a while because there's a lot of excitement around people wanting to try this out. We'll take care of it. I don't want anybody to think that we don't have enough in any way, shape or form. So I think Firefly is a big one.

On Creative Cloud, it's the number of generations. I mean, we've been talking about the -- the fact that in Photoshop beta, 2 out of 3 people are using generative stuff every day. I don't know what better way to talk about how we've infused AI into our creative tools. and it's seamless, right, whether you're doing generative fill. So that Creative Cloud will continue to be who are the new people attracting to the platform. If they came, as David said earlier, from single apps, now they're increasingly coming from Firefly or Express and how does that on-ramp comes. So that's an indicator that we look at.

And in Anil's business, GenStudio. And this was the question that I think Saket asked and others keep asking, which is what are you seeing around seats? And what are you seeing around automation? And I can tell you, every single enterprise wants to do more in marketing. I haven't met a single person. It's the same with code, ironically. I mean we're a software factory. And when we use Cursor, we use Claude Codecs or when we -- I mean, Claude Code. Everybody is like, how can I do more and how can I do it faster? And so Lara is all about I want to create more campaigns. I want to drive accelerated growth. I want to drive it in an automated way. And so GenStudio adoption, how is it going into all of the various channels.

So for you folks, as investors, that's why we try to outline Acrobat plus Express, Firefly, Creative Cloud, Pro as an offering and then GenStudio and AEP and apps. Those are the metrics. And across all of them, infusing AI, getting that message across and demonstrating that we have innovation on that, that's what we feel excited about. So that's the way we look at it. And then maybe the second...

Yes. And just to build on that, if you take a look at the momentum we're seeing in the business, it all starts with the success of our customer-driven growth strategy. That's what drives our innovation road map. That's what drives our go-to-market. That's what drives the way we deliver cross-cloud solutions to solve the customers' highest-value problems, and that's how they're buying from us. Framing the dialogue through the lens of that customer-centric growth strategy, it's what's delivering the momentum that we're seeing in the market. We're going to continue to execute against that. We're going to continue to drive success with customers. We're going to do it through the lens of our customer groups. And that's the right framing of the dialogue so that we can highlight the business insights that are derived from that growth strategy, the innovation road maps we're pursuing, the way we go to market, the way our customers engage and buy from us. It's the right metrics to bring to life the best business insights about how we're running and how we're engaging with customers.

Maybe just double-clicking on that because you asked the question of sort of -- again, we are more transparent about more data right now. And hopefully, that's the takeaway. I think we went into a lot of detail because when you look at the business professional and consumer and you look at subscription revenue growth, I consider that a proxy for ARR. So we're giving you the subscription revenue around business professionals and consumers. Marketing and creative professionals, we're giving you the subscription revenue growth associated with it. That's increasingly the go-to market.

Giving you total ARR to say, "Hey, is Adobe going to increase the amount of ARR that they're growing year-over-year." That's why Dan also said we'll go back and give you historical data for '24 so that you can actually see the ARR and the growth associated with net new ARR. For transition, and this is sort of déjà vu for me because we did all of this when we went to the cloud. We said we'll give you digital marketing and digital experience and digital media subscription revenue growth for fiscal '26, so you can look at it. But we want investors to get as excited as we are about these 2 different customer groups. The subscription revenue growth associated with that, the total ARR, so you're looking at it and saying, "Hey, cumulatively across the portfolio is the company growing and help you transition along the way, which is why those numbers are there."

So we look at it as we're giving you more data I think last year, if you were to go back and look at it, when we first said we'd give you this business professional and consumers as well as what we were doing around creative and marketing. We gave 1 year then you said, "Hey, can you give us a little historical data?" So we provided that historical data. So it's a simple spreadsheet exercise. Maybe I can also answer that in terms of actually unpacking all of the data.

So hopefully, you look at it as our desire to be transparent, but our desire to also show you what are the forward-looking growth indicators that we want you to get excited about because we're really excited about it.

Okay. I promise to give this side a chance. Keith, let's start with you. And we may have time for one more question. We'll see.

Guys, as you know, they all want to after this, then gather David and Anil and say, what's get more questions.

Keith Bachman from BMO in the lonely side of the room. I wanted to ask an for you. There's a few, I think, reasons why the stock multiple has been under addressed. One is seats a socket. -- identified. I think the other is just broader dislocation associated with AI and the impact to Adobe. And one of the ways I think about is the conversation you and I were having prior to this meeting, where you're introducing a lot of partners into your value chain and that historically hadn't been the case, and I know you felt Microsoft and Apple maybe, but you had Google on stage talking about the value proposition within the broader ecosystem of Adobe.

And so the way to think about it is we'll -- does that drive the same longer-term growth potential? And the way that I break that down a little bit is you have your own leading engine Firefly. Within that, users can apply other engines, Google or what have you. And so you want to remain as part of your value proposition, the workflow and editing tool. And does that drive the same value on a longer-term basis, whereas a user can use a third-party LLM. And then where I'm going with it is one of the risks associated with it is those same third-party tools could introduce editing and workflow capabilities that would create dislocation opportunities associated with, what we call, I think Shantanu these were your word, "single-stop shop."

And so maybe you could just address what you see as perhaps ongoing competition from your partners that users may apply, and I think about it in different segments. The higher end probably going to need perfect and you're always going to use Adobe editing tools. But maybe the middle and lower tiers might use third-party adding tools that would put some pressure on your longer-term growth rates.

Yes. I mean, Keith, I think if I were to take a step back, I think there have been sort of three questions that people want to know what's Adobe's point of view around AI and innovating around AI. So let me cover it maybe from that perspective. The first is, as you point out there's a plethora of models is the plethora of models that are being created a good thing or a bad thing, correct?

I think you answered your own question in a certain way, which is just having a model without the interface and without being in front of a customer to do a workflow, that has limited value. We believe that we have the best offerings across all of these models to deliver the value that customers really want. And so I think the support of third-party models for us was a very strategic aspect, but it was second phase of delivering our own models because unless you understand the models, you cannot truly do the magic of controlling those models to do the kind of semantic editing that we've done.

I think people look at it and say, "Wow, you can select 6 models in Photoshop." To be able to do that magic across all layers in the way in which we can, that's truly magic. And that's not something that's built on this decade. Acrobat and AI assistant in Express, it's the same thing. People have shown how I can do a simple one conversational interface editing. We've shown how we can do that across 6 different sequences of steps. So models are going to be an enabler. Models is not a business model, and it has to move to inference. And so we think we're very uniquely positioned across all of that.

Now it feels like you said, "Hey, for creative pros, I get that." For individuals and consumers and business professionals, that is going to move way past the template era into becoming this conversational interface. And we believe that the combination of Acrobat and Express gives us this unique technology platform as well as distribution vehicle to deliver the value that customers want. So we're very excited at the low end, what you're calling the low end of this ability to completely transfer. And if you believe like we do that there are trillions of PDFs that are being out there, and that's a big basis also for new creation. The number of people who look at a PDF and say, "Hey, create a presentation for me." I think we're uniquely suited to solve that problem.

And in the enterprise. So we continue to get really excited where there will be models I frankly think half the model companies that you're looking at today may not exist a year from now, and you're going to see that because they're all going to desperately try and say, where is the value associated and accruing to that to customers. And that's with us. And so I think the work that we've done, the fact that we can offer all those models, it's a unique differentiation for us. We have to keep executing. I could not be more proud of the product innovation that people saw today.

I mean you saw that spread across every product on the creative side. You saw that spread across Acrobat and Express. You saw that in custom models. You saw that as a Firefly Foundry. You've seen that in generative in GenStudio. And so that's what I think for people who want to know Adobe's future, you have to say, "Is creativity going to expand or not?" We think that's an unambiguous it's going to expand.

Are interface is going to be across these different customer segments? And are all of them growth opportunities or not? We certainly believe all of them are. And this enterprise offering and any company if you're using all of this content for marketing, have the depth of offering that Adobe does. And so that's why we're excited. All these partners are coming to us because they also look at it and say, the way to accelerate their consumption of model inference is through applications. And that is going to happen.

I mean, again, you look at what OpenAI has also announced. OpenAI wants to create this AP interface because they realize that is how they will also be able to monetize it with an app interface. CoPilot, what Microsoft will do, they want these new interfaces. So the battle will happen, I think where those people will say, we just want the ability to initiate these applications and who is the trusted party for creation for financial services for health care. And we want to be the company, and we think we will be the company for creative across all of those different new environments. So that's why we're excited.

I think that is a terrific place to wrap it. Thank you, team. Thank you, everyone, for joining. We really appreciate it, and we'll talk to you again soon.