Adobe Inc. (ADBE) Earnings Call Transcript & Summary

Okay. Well, hey, good morning, everyone. My name is Saket Kalia. I cover software here at Barclays. Very honored to have with us today the team from Adobe to share their Corporate Social Responsibility or CSR strategy. We've got about an hour together. We've got a great team assembled for you here. What we're going to start with is a little bit of an intro from my colleague, Jessica Whitt, on the Barclays ESG research team. She's going to give us a little bit of an intro on what she's hearing from ESG investors now, which obviously is very topical. And then we're going to hand it over to the Adobe team for maybe 25 or 30 minutes of some prepared remarks, which I know we're going to be great because there's a lot to talk about here. And then we're going to leave the last 20 or 25 minutes for some fireside chat with me and any Q&A that we might get from the audience. And what we're going to try to do in the fireside chat, just to set expectations, we're going to try to use Adobe's framework of Adobe For All, Creativity For All, and I want to double-click on technology to transform to go deeper into sustainability at scale, a lot of great stuff. So if anyone has any questions, feel free e-mail meeting at [email protected]. We'll try to get as many questions as we can in the time that we've got. So with maybe all that as an intro, I want to hand it over to my colleague, Jessica, to give us just a little bit of background on kind of what she's seeing from ESG investors today. Jessica, over to you.

Great. Thank you, Saket, and thank you to the Adobe team for taking the time to speak with us and investors on Adobe CSR initiatives today. I'm Jessica Whitt, and I'm part of Barclays Global ESG research team and lead our ESG research and integration efforts here in the U.S. First, I would start off by saying that there is no one single approach to ESG research in investing. At Barclays, our approach focuses on identifying and researching relevant ESG themes and working with our colleagues across Barclays research to integrate these across different sectors and different asset classes. Whether you are an ESG-focused investor or not, ESG factors are impacting a wide variety of companies and sectors today. Energy transition, extreme weather and lever activity are just a few examples of ESG considerations with broad implications for individuals and businesses across the U.S. and the world. And for these reasons, ESG continues to be a strong area of focus for our clients across all geographies, including those based here in the U.S. And this is consistent with what we're seeing in ESG fund flows on a year-to-date basis. The share of assets in equity and fixed income, ESG fences increased or stayed constant in nearly all of the categories that we track. Now given different regulatory regimes and investor requirements, regional differences in approach to ESG investing have emerged. Here in the U.S., many investors we speak with are looking at integrating ESG from both risk and opportunity perspective and are engaging with portfolio companies on material ESG issues. In short, investors are looking to ESG research and integration as a tool to complement and enhance returns. And for this reason, we are particularly excited to be joined by members of Adobe's leadership team, to better understand how Adobe's initiatives align with long-term shareholder value. So with that, I'll turn it back to Saket.

Awesome. Very helpful, Jessica. Really great context there. Maybe to start us off, I'm going to give it over to my buddy Jonathan Vaas, Head of Adobe Investor Relations, and maybe what Jon think could do is give us an intro to the dream team that we've got here on the call. Jonathan, over to you.

Thanks, Jessica. Really excited to be partnering with Barclays to share our story here in the CSR and ESG space. Jessica, I like what you said that there's no one approach to ESG. And I think what you'll hear from us in this next hour. Are there some problems that Adobe is really uniquely positioned to solve and we're excited to tell more of that story. I know these topics are important for all the investors joining as well as your clients. So I want to introduce the members of the team from Adobe who are here. We have 2 members of our executive team, Gloria Chen, our Chief People Officer; and Dana Rao, our General Counsel and Chief Trust Officer, as well as Heather Freeland, our Chief Brand Officer; and Amy White, our Global Head of CSR. Before we jump into the presentation, I do want to note that the comments you'll hear today involve forward-looking statements that are subject to risk and uncertainty. So we do recommend that folks take a look at the risk factors that are included in our periodic filings with the SEC regarding those forward-looking statements. And with that said, I'm going to hand it off to Gloria, who will start by sharing our ESG framework.

Thanks, Jonathan. Adobe is an amazing company with an amazing track record. We've pioneered categories, built deep technology platforms and transformed industries around the world through digital experiences. And today, we're here to talk about what has fueled this enduring success. Our values, our purpose and the core belief that people are our greatest asset. At the beginning of 2023, we unveiled our refreshed values as we celebrated our 40th anniversary. And while the words are new, their impact has always run true. Adobe has always been about creating the future. We're constantly looking around the corner to see what's possible to disrupt the market through bold bets and ideas we turn into reality. We own the outcome and raise the bar by taking initiatives, aiming high and measuring our success by the success of our customers and users. And we are genuine. We embrace and respect the diversity around us, we support and challenge each other, and we act with integrity and the highest of ethics. These values are pervasive in how we operate, from our interactions with each other as colleagues to how we do business with our customers, partners and all stakeholders. And they're reflected across our corporate social responsibility agenda that we'll talk about today. Adobe For All. We believe that when people feel respected and included, they're more creative, innovative and successful. Creativity For All. We believe that everyone is creative and has the right to share their story, which creates a richer world for all of us. Technology to Transform, we're committed to advancing the responsible use of technology for the good of society across innovations in AI, security, trust and accessibility. And Sustainability at Scale, we are contributing to a more sustainable planet through our own operations and the global reach and impact of our products. It's clear the impact of our efforts are reflected in the many, many awards that we've received. The one I'm most proud of is having made Fortune's 100 Best Places to Work for the 23rd year in a row. These achievements speak to the work we are doing to transform lives and industries through our people, products and our purpose. So let me start by talking about Adobe For All, our focus on driving diversity, equity and inclusion. At Adobe, we aspire to create a workforce that reflects the diversity around us and our holistic approach across the employee experience allows us to focus on recruiting, developing and retaining the best talent globally. Our hiring at Adobe process focused on fair and consistent hiring practices, tools to mitigate bias and an emphasis on the importance of our values. We have multiple pipelines for diverse talent. This year, we welcomed over 1,200 college interns and over 600 new grads through our university talent program. And in partnerships with HBCUs and HSIs we have exposed more than 22,000 students in the U.S. to tech and creative careers through unique programs like our student athlete micro internships, our cybersecurity interim program and the Adobe Ignite HBCU scholarships. Our mid-career programs create nontraditional on-ramps that foster greater diversity in our talent pool. Programs like Welcome back for new parents, Digital Academy in the U.S. for career switchers to design and SheSparks internships in India for experienced professionals reentering the workforce after an extended break. Just as importantly, for our existing employees, we've invested in enhancing career and leadership development. To highlight a few, leadership circles, women's executive shadow program, our women and tech programs and for underrepresented minorities through our sponsorship program and the McKinsey Connected Leaders Academy. We work hard every day to create a culture of belonging at Adobe because we believe that when people feel supported and included, they're able to contribute more fully. We provide employees with world-class benefits to support them through their life stages, comprehensive medical care, support to start-up family, generous time off, including exceptional parental lead and resources for mental health. We have 8 active employee networks and action circles for allies that have been instrumental in building global communities and driving progress for underrepresented groups. We believe in the power of storytelling to create empathy, community and understanding from our employees sharing their journeys during our annual Adobe for all week, to events like inviting Human Rights Watch to speak about women, life and freedom in Iran, we are constantly seeking new ways to engage and support our employees in an increasingly complex world. Creating a great culture is a collective responsibility. Our check-in process, the quarterly conversations between employees and their managers focuses on goals performance and career development and also serves to reinforce the importance of putting our values into action. Beyond Adobe as an organization, we're committed to amplifying diversity, equity and inclusion in our communities and through our ecosystem. In 2022, we launched the equity and advancement initiatives, grounded in people, product and philanthropy, we're collaborating with 11 renowned racial and social justice groups to draw upon the best of Adobe, through foundation grants, employee giving and volunteering, access to Adobe products and Pro Bono support. We also have a supplier diversity program that ensures our purchasing strategy includes businesses that are certified as majority owned and operated by women and underrepresented minorities. In FY '22, we increased our diverse spend by 9.9%. In 2020, we shared aspirational goals to increase the percentage of women globally and underrepresented minorities in the U.S. in leadership roles because we believe that diverse leaders create a virtuous cycle for strong role models, advancement and growth. And we shared aspirational goal to increase the percentage of Black employees in the U.S. We're pleased with the progress we've made since then. In 2 years, we've increased the number of women leaders globally by 50%. In the U.S., we increased the number of underrepresented minority leaders by 49% and we increased black representation in the U.S. by 63%. While we know there's always more work to be done, we're proud of the culture of inclusion and growth that has underpinned this progress. Adobe For All is in many ways, built into our culture, but it's not something we take for granted. The impact of all of these programs reflect years of investment and dedication and a focus in reinforcing our values into everything we do. And now I'll hand it over to Heather to talk about how we are championing Creativity For All.

Thanks, Gloria, and hello, everyone. At Adobe, we believe that everyone has the right to tell their story and express themselves. Creativity has the power to create change in the world by inspiring us, by bringing us closer together and by helping us cope with the realities of life. And as the Creativity company, we're uniquely committed to helping millions of people around the world do just that. First, our products empower everyone, everywhere to imagine, create and bring any experience to life. For more than 4 decades, Adobe's products have been the tools of choice, the world's most talented creative professionals. But now as we've introduced products like Adobe Firefly and Adobe Express, we're democratizing Creativity so that anyone regardless of skill level, has the potential to bring their stories to life in beautiful, powerful ways. But Beyond Creativity being core to Adobe's DNA, we believe it is our responsibility as a company to give everyone access to tools, inspiration, and a platform to elevate their voice and celebrate their Creativity. From supporting diverse creators by amplifying their art and film in our diverse voices program to elevating diverse film makers through our Sundance and Adobe Fellowship, to financially adding hundreds of creators with our Adobe Creative Residency Community Fund, we're enabling people around the world to bring their ideas to life on a larger scale. And we're proud to partner with organizations and companies that share this vision and commitment around the world, such as the Victorian Albert Museum in London, the Museum of Modern Art in New York and the Augustia International Foundation in Bangalore and more. And as creative expression becomes an essential 21st century skill, we're working to ensure all students and teachers have access to creative opportunity and curriculum. Adobe has provided 56 million K-12 students and teachers worldwide, free access to courses, tutorials and lessons plans through Adobe Express for education. We've engaged with college students across over 50 Adobe Creative campuses and provided over $5 million in scholarships to allow students from all walks of life to begin careers in technology and creative industries. What sets Adobe apart is our approach to building long-term lasting impact, and to tell you more about how we're changing the world through technology and innovation. I'm happy to introduce our next speaker, Dana Rao. Dana?

Thanks, Heather. Thank you, everyone, for the time. So this pillar is called Analogy to Transform. And when we think about that at Adobe, we really think about trust, as you can see my title's, Chief Trust Officer. And just in transparency at the bedrock for how we deliver value through a meaningful relationship with our customers, employees and society. We have a long history of innovation at now, and we've always paired innovation with responsible innovation, making sure we can deliver world-class technologies to our customers and also do it the right way. A couple of those efforts I want to talk about today. AI is clearly at the forefront of everyone's mind, we've had AI in our [Technical Difficulty]...

Dana we lost your audio.

Okay. Yes, starting back to mute for some reason. So just for years, you have been able to take one click and change the gray sky to blue in photo shop. But we saw 4 years ago with the advent of more powerful AI, and we were going to do something special because AI is quite a different computing paradigm than the previous way we have been developing our products. So we set up an AI ethics committee. And that's a cross-functional group of people at Adobe, we thought long and hard about how we are going to deliver our products both, again, to make sure we have that innovation coming directly to our customers, but also doing it in accordance with our values. And that group created 3 principles: accountability, responsibility and transparency and again, transparency is just a key principle to how we do business. And those principles set forth how we decided to have our AI developed as a company. And specifically, we have an AI engineering team that reports through my organization, and they oversee how all the AI technologies get developed, all of those AI features come through this process to make sure that they are being tested the right way. And so we have this AI impact assessment. And what that does is allows the engineers to quickly fill out a form, say what they're doing and have it reviewed to see if there's going to be an impact on the community employees or our customers. And because we're a technology company, we want to ship that technology fast. So there's a short form and a faster view process that we think is going to be a low impact so that innovation gets out into the hands of our customers as fast as possible. But we think there could possibly be an issue then we have a longer process, and we make sure the teams have a really broad and diverse data set that training their AI against, and we have a lot of testing on the prompts that you might use to generate AI, you see with that distribution. Because the key with AI is you don't always know what you're going to get. So the testing has to be quite comprehensive. When you look at Adobe Firefly, for example. And we thought about how to build that Generative AI product, which allows you to take in a few words and create a beautiful image. We talk about that in 2 ways. First, from a classic AI ethics perspective, we put in all of the prompts to make sure that the content of AI that Firefly was generating is safe for commercial use, but also safe for children and enterprises, just from a workplace contact perspective. But we also thought about the copyright issues that were going into the Generative AI. And we knew that out there in the world, Generative AI was causing a lot of concern with the way it was being trained. And so we decided to design it to be commercially safe by designing the Adobe Firefly or Generative AI technology on a data set that is comprised of data that is primarily licensed from our own Adobe stock content, which is licensed by us. And so we have the rights to have that content. Now that's been great for 2 reasons. One, it makes our Creative customers happy because they know that we're not out there scrapping away have been using their content to develop this technology. But also our enterprise customers love this approach because now they know they can deploy this and feel very good about the solution they're providing it won't embroil them in a bunch of litigation. So that's a great example of how doing the right thing with our technology is also doing the right thing for our bottom line. Another place where we saw AI come up is in this issue of deep fix. So 4 years ago, when we thought about the problem of Generative AI. We saw that people could misuse AI generative tools to create content to deceive people. And we knew once that was happening, once all that content out there could be suspect because people are misusing AI, no one is going to have a way to trust what they see and hear. And so we formed a coalition, we're proud to say now over 1,500 members have joined to develop a new technology that allows you to authenticate the content you're creating. So if you have something important to say something that is true, you have a way to prove that what you're saying actually happen and that's a technology called Content Credentials. I'm very happy to see the progress that is out there now, Content Credentials or in Adobe Firefly or in Adobe Photoshop in the hands of, as I mentioned, over 1,500 partners, very excited to the next step to see this technology everywhere because it would help you to restore trust in the content in this digital age. The last thing I want to talk about a non-AI topic is accessibility. So that's also something that we've really thought about here at Adobe, almost in the same way we talk about AI ethics, which is we want to make sure that our product teams are thinking about accessibility when they're designing their products because when we have new exciting products like Adobe Express, which we expect to reach billions of people, we know we want to maximize the reach of that audience, and we have many people who have special needs in the way they consume our technology. And we need to make sure our products reflect that. So we have an engineering board that reviews our testing processes for our accessibility features in our product. And we also have testing that goes into our products to make sure they meet our standards and our values. So making sure we lead on accessibility again is also the right thing to do, but it's also the right thing to do for our business. So I'm very proud to work at a company that prioritizes both of those things, and I want to thank you for your time. Next up, we have Amy talking about sustainability at scale.

Thanks, Dana. Hi, everyone. Thank you for joining today, and Barclays, thank you for hosting. I'm very honored to be here to talk about how we think about sustainability. As Dana just mentioned, we think about Technology to Transform and Technology to Transform and Sustainability and Scale for us go hand in hand. We believe that our products are one of the greatest unlocks as it comes to the -- to climate action and taking action on sustainability across the globe. But we've also been doing great work for several decades now around managing our own operational sustainability. So we take a 3-pronged approach to our strategy, which is product sustainability, which we'll talk in depth about, operational sustainability and policy advocacy and thought leadership. And as you've heard from Gloria to Dana to Heather is this ecosystem idea in that last bucket is really what we're talking about is that we believe we're growing in the right directions, and we believe that with our customers, our partners, our brand tees, our investors that if we do that together in conjunction with great policy and partnerships, we can get a lot further. So obviously, product sustainability is how we enable more sustainable design, business and marketing processes for our customers. How do we make our products enable outcomes for sustainability for you. Operational sustainability will be the next slide I want to cover because I think knowing those critical goals that we're aiming at and how much progress we've made is really important, but also how we're looking ahead to the future with both the net 0 target and some ambitious science-based targets. And then there are some guiding principles there on the right that just we center our customers with where we are and being aggressive in how we engage in our workplace and our people as well as how we think about operational costs and increased productivity, while we also consider sustainability initiatives. On this next slide, hopefully, some of you are familiar because as you know, climate targets are not something that changed year-over-year. But we are very proud that in 2023, we did declare a net 0 target. We felt like we were in a position now with an eye on the prize and a pathway to get to that by 2050. But along the way, we do have a 100% renewable electricity target that is aimed at 2025. And actually, last year, in 2022, we pulled that roll forward. Originally, it was set for 2035. And we knew and we set our sights on being more ambitious and really pushing ourselves to get there. I'm very pleased that we are well on that pathway. We have a 25% reduction in global water usage per FTE by 2025, a 55% supplier spend with science-based targets. Those of you that work in this space know that the supplier community is where the bulk of our emissions are coming from. So anything we can do in coalition with one another to bring our suppliers along and make sure they have credible target set, help Adobe but helps the broader ecosystem. And then, of course, 90% maintaining a global waste diversion rate. And then coming to Adobe, a handful of years ago, I've never seen a company more aggressive in how they're thinking about their workplace. And you can see that on the far right, you can see that our buildings by square foot are lead in green building certified and we've reduced business travel, which was a goal we set for 2025, in our Scope 3 emissions and then also the reduction of Scope 1 and 2 emissions by 2025 has also been achieved. So the work ahead for this year is really thinking about what are those next steps ahead. As we think about scaling our environmental effects, there's a couple of ways that we really want to talk about it. And that's why this -- it's not just sustainability, it's not just environmental sustainability, it's sustainability at scale, is that the global climate crisis is one that is going to take everybody and it's going to take innovation. And we believe that our core that we have some of the best and most innovative products that can help in that solution making. So you can see, hopefully, even today, you've had an opportunity to interact with the Adobe products. But in our product innovation, we think about both how we create products. So how are we thinking about reducing the amount of energy it takes to engineer and get along the process of creating great things, but then also in what our products do. So you can see in the center there, the Adobe Document Cloud each year in the U.S. alone, Document Cloud transforms what would have been 30 billion paper documents into digital workflows. That is a mind-blowing statistic by itself. But what it does for sustainability is astronomical. So saving the equivalent of 2.7 billion pounds of GHG emissions and 3.2 billion gallons of water. And so we are taking that same rigor that we have in Document Cloud and starting to apply across our entire product set, but being able to calculate and track what customers are able to do with our products is something that we are really, really focused on in the coming years. So on the far right side, you can see we're looking at the resource saver calculator in Document Cloud, which is live and out there with our customers, a carbon footprint calculator for e-signatures, which as you all know, if you've signed the document. Well, in the last 5 years, certainly, those digital workflows have enabled efficiency, but also the reduction in not just the paper, but also you don't have a courier flying around or driving around to get you the paper products that you need. And then, of course, as we go further into our products, we can see as we work with Adobe Substance 3D, this is where we're thinking about how do we disrupt manufacturing, specifically in these 2 examples is how do we take, what is historically a very resource-intensive idea of a photo shoot of a shoe or a garment or a sofa and how do we take the products capability and take that into a 3D setting so that we can reduce the need to shift products around the globe and really reduce the time it takes for products to get to market. So helping our customers both be more efficient in their business, but also reducing the greenhouse gas emissions through that. So we have that calculator available also for 3D lendering. And you can see on the right there, 95% reduction in environmental impact is in Document Cloud compared to the paper-based process. So again, a pretty astronomical number. And then 98% reduction in carbon emissions driven by virtual photo shoots through Adobe substance 3D compared to physical photo shoots. And that concludes the portion of our call that is a bit about what we want you to know. And we're going to turn it back to our Barclays partners and go ahead and head into some Q&A. So looking forward to hearing from each of you.

That would be great. Thanks a ton, Amy. And team just so much fun stuff that was talked about and definitely want to hit on a few of them. Dana, let's start with you. So much stuff in your presentation to talk about with AI and Content Credentials and such, but I really want to start much more foundational around governance and oversight. And so maybe just to start us off here, Dana, how are your corporate social responsibility or CSR efforts overseen by the Board on Adobe. Does that makes sense?

Yes, absolutely. Yes. So I have 18 titles, one of them is Corporate Secretary. So I am responsible for managing the Board and so, we -- yes, the Board is very involved in oversight of these issues. So we used to have one of the 3 committee, one of our committees was called the Nomination & Governance Committee and 2 years ago, we actually even changed the name of that committee to the Governance and Sustainability Committee because we wanted to make sure that they were focused on these issues and have annual review of sustainability issues and also some of the others, as you've heard us talk about today. We also made sure at the same time that our executive compensation committee has direct oversight of the D&I issue. So when Gloria is talking about the issues that she's managing, she reports that directly to that committee. So they get regular updates on all the initiatives Gloria was mentioning. And then our Audit Committee has a director oversees security and AI and they hear about how we develop both of those. And so we feel very good about how the Board has engaged on the topic. And we also regularly talk to the shareholders, directly about D&I, responsible innovation, sustainability to make sure we hear their concerns and make -- and let them know what we are doing to address them.

Got it. That makes sense, and I think we're going to have some questions about just some of the stuff that was discussed here from that investor base. So maybe shifting gears a little bit here to you, Heather, I want to talk about Creativity For All, some really, really compelling things that you talked about there. Both socially and economically with some of the things that you mentioned, particularly around Adobe Express, right? Really, the idea of kind of democratizing Creativity. Can you just talk about how Adobe is democratizing Creativity and why that's important to Adobe?

Sure. Thank you, Saket. So as I mentioned before, our core philosophy behind Creativity For All, actually starts with our products. But what's even more amazing is actually what they enable our communities to create. And it's one of my favorite parts of the job when I get to see the impact that our tools can have on communities and the world more broadly. So I think the best way to actually answer your question is to really showcase some of those examples and see exactly how our products are helping to address important social issues as well as drive innovation and economic growth. So a few of my favorite examples are, there's a group called large photos project, and they help children experience that, aha moment, with our tools like Photoshop and Lightroom when they try out photography and think to themselves, "I'm talented, I can do this". And it's an incredible empowering moment for children in their development. Another example is someone named Ayushi Chhabra, who's the host and producer of Showbiz India, who uses tools like Premier Pro and Frame.io, to advocate for mental health in the South Asian communities. And nonprofits like Cornerstone, if you use Express to further their mission of providing housing and support for women and need. And then there's amazing examples around the world of small business owners like Britney Wang, who's the Chef and creator of Cheesecake Bao, who knew there were Cheesecake Bao, sounds amazing, who uses Adobe Express to bring her small business and her creation to life on social media throughout to thousands of people around the country. So I think what this is meant to illustrate is really that democratizing Creativity is important to us because it's more than just good business, it can actually help transform people's lives, have an impact far beyond our products and really help lift up communities around the world.

That's great. That's great. And I mean, especially with tools like Adobe Express, now I think we're going to get access to Firefly as part of that as well. So really democratizing not just Creativity, but AI as well. So a lot of great things, looking for a lot of great things from that product. Dana maybe -- sorry, go ahead.

I was just going to say the tools are getting easier by the day and that is the magic of Firefly and Generative AI. So it's fun to watch that evolution and what's going to be possible even in the coming weeks and months.

Absolutely. Absolutely. Dana, I want to come back to you, just maybe on that topic, just really on the principle of technology to transform, you hit the topic of AI head on. And actually, this idea content of authenticity is really interesting. I guess why do you think content authenticity is an important problem for Adobe to solve specifically? And what does the road map to your sort of look like for getting Content Credentials to be really ubiquitous across kind of digital media files?

Yes. Thanks for the question. So I think it made sense to ask 4 years ago when we were thinking about the problem because we were -- we've been in this space of developing image editing for Photoshop been around for 30 years. So the very first time we introduced Photoshop on , I think, was on today's show. People are asking us questions about can't you use this to create fakes and deceive people, right? So it's been part of the pull and the push of this technology, right? It's really been designed. And as everyone knows, it's enabled millions of the creators to unleash their imagination and be creative and do marketing and advertising and art, but there's always that potential to misuse tools like digital editing to deceive people. And we saw the Generative AI. That was going to be a problem. And again, the place that we thought we could help and say, well, what are the ways we can improve -- help people prove what the authenticity of the solution is. So again, not trying to get out there. This is definitely a problem for someone else sounds like it's solvable. Catching all the deep gigs, right? And saying all of these things are bad. They've got teams unsolvable. People are going to miss use tools and create bad things, and that's just what's going to happen with every kind of new technology. But we said in that world where people are no longer able to trust they see in here. How are you going to communicate important things? Like how is the President of United States is going to get up and deliver your message? And are you going to believe that, that video you saw on YouTube wherever is actually happens, right? Was it really that President? So we felt like that was the imperative. It was how do we help create the tools so that when you have something important to say, you know it actually happened. And so we knew it wasn't an Adobe problem. This is a societal problem, and that's why we created the initiative with all those companies we mentioned. And really what's really great about it is the kind of companies have joined -- they have camera companies like Canon and Nikon, and Leica, because they want to capture that trusted metadata that Content Credential right the time you take the picture, so you can trust it all the way through the chain. And then we have many companies like the Walls Street Journal, Associated Press, Reuters, New York Times, who want to publish those images with those credentials. So the readers can look at it and say, "oh, I see that this actually happened". This event has actually happened this digital image really was true. So how they have road map is really important. But as you can see, it's going to take some time. We've been in it for 4 years. We're really excited to technologies out. It's an open standard. Anyone can develop it, and it's IC version of 1.3. So rapid progress being made in the technology because it covers images, video, audio and we're even introducing documents to it. But everyone needs to implement it. And so while we have so many people, there's still a lot to go. And once we see all the adoption from all the different constituencies, including government, we'll really feel like we've made the progress we need, but we feel great about the progress that's happened is an important problem, and there's a lot of enthusiasm to solve it.

Yes. Yes, absolutely. Really spearheading. I think, an important thing that will evolve, right, as Generative AI evolves as well. Maybe we could stay with you, Dana, just on this topic and go a little bit deeper, right? I guess when it comes to Generative AI, a lot of questions just around data and AI training and what that means for creators you hit on some interesting topics in your prepared remarks there. I guess the question is, how does Adobe think about balancing access to data to train AI models with sort of the creators concerns around things like copyrighting and how their data is being used?

Yes, it's a great question. So the way we think about AI, I mean, first, you have to understand how AI works. And AI is only as good or as powerful as the data on which is trained, right. So the more data AI has the more accurate it will be because there's more things to learn from. It's just like a human brain. And the more data it has, the less bias will have and so for example, if you're trying to search for an image or create an image in Adobe Firefly you want to create a layer, you might get people of just one gender or one race because it only learned in a data set that those are the kinds of people that could be that role, right, a nurse, doctor or whatever. But if you train it on a broad data set that is representative of all the kinds of people who could do those kinds of jobs, you're going to get a diverse representation of that. And that's the important part is that the more data you have, the less bias you have. So the most important thing is you do need access to data for AI to be competitive, to be accurate to be unbiased, these are important principles governments need to think about when you think about the rights that are involved to regulate AI. On the other hand, right? When we talk to our creators, is the real issue that they feel like an AI tool could be used to create work that competes directly with them. And that's a problem for them because they feel like they're going to be economically displaced by the output of the AI. And is there something that we should do there. And so when we look at the issues out there, there's a lot of copyright issues. That's right now how people are trying to negotiate this by saying, there's a copyright in all the work on the web. You can't train on the work on the web. And that's where the creators are pursuing. They're suing the people who train on the web because they're saying it's a copyright issue. Now we looked at all the issues out there. And we said, well, there are a couple of things you wanted to do. One is you want to avoid the copyright issues because we know that's uncertain. It's going to be uncertain for some period of time, that litigation is going to play out and how exactly copra law is going to address these creator concerns to be determined. And so we trained a Adobe Firefly on Adobe Stock, our stock photography service, there's hundreds of millions of images that we already have the license to use to train on AI. It's already in the license. And then we supplemented that with a few other places work in the public domain. And that's an important step because now we can offer this product, Adobe Firefly and our creators could feel good that it wasn't trained on them, and our enterprise customers, as I mentioned in my opening remarks, feel good that they are using a tool that's going to help them minimize their risk to litigation. And that's proven to be quite popular as a strategy with our enterprise customers and made Adobe Firefly very successful. On the creator side, one of the things we think we want to give them, and we've drafted a lot to help this issue. It's something we refer to as Federal Anti Personation Act. And what this does, it gives the -- it would give this past, and we've introduced this to Senate. Creators the right to enforce against people who are using AI to directly impersonate their work intentionally. So if you are using AI and say, "I'm going to make art in a stylo socket", then you have a right to go see that person who misuse the tool to personate you and get damages like statutory damages if you wouldn't copyright. Now this right doesn't exist today, right? There's something like it like whether it's a right of publicity, some states have that. It's sort of like that. But this will protect both your likeness and your style. We think this is an important right for the creators to have to make sure that their economic livelihood is preserved when AI becomes more popular, but still allows you to go out and get access to data because now the real economic problem that they're having is at their livelihood is being disturbed by impersonation. We hopefully we can address that through a new statute, but we can still have that principle of access to data because we're going to need data in order for AI to thrive.

So interesting, Dana, I mean 1 of the appealing things about Firefly to your point is that it's very commercially safe, right, which to your point, I think, would appeal to the enterprises, but then also didn't realize that other point of really, really introducing legislation right, for content creators to also enforce their content. So very interesting kind of approach to Generative AI. Very, very helpful. Amy, for you, I'd love to wrap up with, I think, a very interesting principle as well but I think is near and dear to a lot of folks on the call, which is sustainability at scale, right? I think the first thing that comes to mind is the impact that Acrobat and the PDF standard has had on reducing the amount of paper out there, certainly has in my office for what it's worth. And I guess I'm wondering how Adobe is limiting the environmental impact of technology while also maximizing its benefits. Does that make sense?

Yes. Yes. Absolutely, and I appreciate the question. And of course, good to hear your digital workflows are working for you. So as I mentioned in my opening comments, we think about our technology equipment from 2 perspectives. One is making technology that's sustainable and looking at how we develop and deliver solutions for our customers. So that is an upstream action. And then enabling sustainability of technology and innovation. And so it definitely goes beyond the single product, and it's built into the DNA of how our products are created from the beginning. So to limit the environmental impact of our technology. We're committed to efficient engineering, optimizing workloads, prioritizing renewables that run our data centers and thinking about across the life cycle and the build of a product, how do we reduce the amount of energy as well as water and waste that comes from that. And so for example, we recognize that running our products sustainably doesn't mean looking at our software and hardware separately, they're integrative experience. Instead understanding how those 2 entities work hand on hand and rightsizing them together to consume the least amount of energy. So this means that our teams are looking at optimizing the workloads across our infrastructure footprint, considering where we're locating servers, what times of day, particularly with the onset of Firefly, when we're running the workload so we can optimize for each market and then decreasing our carbon footprint and only using what we need. So it's really Sustainability at Scale is not just a concept that is built in across the way that we have imagined and are innovating our products at every level. And then we're able to produce something for customers that says, from the beginning, we thought about your Scope 3 emissions and the build of this product. And then as you deliver it up to the market as you're using it in your workplace or you are designing or doing your photo shoots, you also have the added benefit of reducing your emissions on that front end. So it's really a flow-through that we think is critical to how we, as a company, can address the climate crisis, but also how we enable that ecosystem that I mentioned before.

Got it. Got it. I've got one more question for Amy, but just to give the investors on the call just a quick heads up, we've got about 12 or 13 minutes left. I have got a few questions from folks my hand box and we're going to make sure we ask. Any one that's -- else that got a question feel free email me at [email protected]. Amy, maybe last question for you. In terms of Adobe's own emissions is a really interesting saw that you have just in terms of commitments. But can you just maybe provide some background and a progress update on Adobe's net 0 target? And maybe just talk about the strategic rationale for making those movements. I think even one of the comitments you pulled forward, correct me if I'm wrong, but maybe just talk about the key elements of the road map to achieve them as well.

Absolutely. I mean, this is a topic that we spent a lot of energy on in the last -- maybe a poor choice of words. Mental energy on. Over the last year, 1.5 years, Dana's chuckling, because he's been in some of those conversations is that this is a global crisis that we are addressing and that each player has a role to play, both individuals, corporations. And so we, like all of our decisions from our people, our products, how we show up in communities want to do the right thing, but also do it in a way that is authentic and real. That we know that we can create that strategic road map that you're asking about and sort of where are the receipts for what you're going to deliver against. And so we have a long-standing commitment to climate action that I mentioned before. So we've been working at this, and we set our first renewable energy -- renewable electricity target in 2015 and quickly after 2017, set our science-based targets. And at the time we were not first in the industry, but we were definitely at that leading edge of saying, we want the most credible standard based on the science that we know out in the world to have these targets in place. And so when you set targets early, you learn a lot along the way, and that's what's enabled our renewable electricity to go faster. As we said something that we felt in 2017 was ambitious, and we realized we should go faster. We could have more ambition if we focus and really deliver against that. And so when setting those targets, we adopted the most credible standard in methodology. And then, of course, in our CSR reports and other places, we've achieved year-over-year reduction that we've been able to showcase in our Scope 1 and Scope 2. And so that steady progress and that, in some ways, unrelenting focus from our operational side has enabled us to be able to be comfortable with the idea of setting a science-based net 0 standard. And those of you on the call that follow this, the rollout of SBTi's net 0 standard is going to push the -- in this all of our industries to think about how we are going to get there, not just declaring a goal that kind of is a little bit fuzzy for those of us who don't spend much time on climate science, but really having to show the science and the facts behind how we're going to get there. So the changing landscape has made it so that our commitment to that credibility is reinforced by what we're seeing from regulators and also the SBTI, and sort of standard. So our strategy for achieving absolute emissions reduction has been focused on investments in efficiencies and additive renewable energies that we've talked about, and we're taking the same approach to net-zero. So that same rigor around how we design products, how we're thinking about our data centers, how we think about our operations taking that same approach. And so some things along the road map, which is sort of the core part of your question is that following the opening of Founders Tower, our first all-electric building in Silicon Valley. And we've made a decision that will be powered by 100% solar and wind power energy. We're also concurrently exploring the electric -- electrification of 4 more large U.S.-based sites. So really taking some of our learnings out of Valley and putting them in some of our other spaces. We've completed several large renewable energy projects just this year. Two of them went live, one in Oregon and one in Lehi, Utah, powering our Hillsboro data center and Lehi facility with renewable energy, which was a big win. And then we're bringing in new solar product online later this year that will address approximately half of our remaining nonrenewable energy usage. So that is a very significant capital outlet to make sure that we have the right infrastructure to meet that renewable energy target, but it also, which, again, back to that ecosystem, we are helping build an industry demand for solar and wind energy with our own purchasing, which then also drives down prices of that purchasing for other customers and really it's a fortuitous cycle that we're trying to build. So those are some of the things we're doing just this year.

Absolutely. Just so interesting, can't wait to see them and to use your pun earlier, it's great to be spending energy and creating even more. So, great, great to see. So we've got about 8 or 9 minutes left here. But if it's okay, I'm going to jump into some Q&A here because we've got a few questions from the line. Maybe the first one I'm going to direct to Gloria. Gloria, for you. The question is, can you comment in general terms on sort of your -- their human capital policy and capacity to attract and retain talent and really, I think some of the quantitative or qualitative things that this investor is looking to explore are feedback from internal employee surveys, the percent of internal promotion versus external promotions, the importance of employee shareholder, shareholder schemes. So that's the question, Gloria, I'll direct it to you.

All right. Well, thank you, Saket. I'll start by saying that we often talk about how people are our greatest asset. And what we mean by that is that we -- it isn't about machines and manufacturing plans. It really is the human capital that loves out every day, and we want to come back the next day. And that means we really are focused from hiring through the entire employee journey, engagement retention, these are all areas that we focus on because that's what's required for us to continue to innovate and create the way we need to in this market. When we look at -- and many of the programs that I talked about earlier, reflect on that. But in terms of how we measure, one of the things that we're doing, we're constantly looking to raise the bar, and that means we're regularly pulsing with employees through annual engagement surveys, through roundtable conversations, through one-on-one conversations to understand how things are going and what we need to do across our programs and initiatives to ensure that we continue to remain a top employer of choice. One of the key areas that we're focused on, promotion and growth is really important. And in fact, when we look at even the diversity figures that we were able to achieve and report on today that comes not only from hiring, but clearly comes from internal -- continued internal engagement and promotion. So we're very focused on internal promotion and growth. For example, one of the things that we do, we ensure that any open position is posted first for internal consideration, so that gives anyone internally an opportunity to pursue a new growth, whether it's horizontal or upward mobility. And in fact, over the past couple of years, we've seen a tremendous growth in the percentage of leaders who come from internal promotions, which is fantastic, not only for growth and retention, but also for the continued reinforcement of our values and our culture. And a large part of what we -- our total rewards is not only about cash compensation and our benefits but also about equity, because we do believe that when employees or shareholders, they truly are able to own the outcome. Note, we put Adobe first in the performance of the company first, and that is a critical part of every employee being a shareholder.

Got it. Got it. Gloria, maybe another question for you, on a similar topic. But the question is, as Adobe has increased hiring of women and minorities can you maybe talk about the attrition rates within those cohorts? Clearly, a lot of success within hiring. Maybe talk about the retention part of it and how do you track it? I mean do you benchmark your success against other software companies? Talk to us a little bit about those couple of things.

Yes. Well, we didn't achieve those kinds of growth figures without really focusing on retention, right? So it isn't just about hiring. And it is about -- when we are able to grow the percentage of women and minorities and leadership roles, while the company is growing at a very fast rate. That means we are actually able to retain at a greater rate than the overall population. What I would say is we don't report specific numbers, so I won't speak to the specific numbers, but we do regularly review engagement, retention, promotion and mobility rates across our entire employee population. And we do work with our leaders and managers to focus on career growth and development, especially for high potential talent, providing opportunities for internal candidates. And the programs that I mentioned like our leadership circles for women, our sponsorship programs for minorities. These are just a few of the ways -- the targeted ways that we support career growth as well.

Absolutely, absolutely. Dana, very active Q&A session here, actually, I've got another one here. Maybe to move over to you, Dana, for you, the question is, thinking about potential AI regulation and the European Union AI Act, what regulatory frameworks would have the most meaningful impact on Adobe's business, both positive and negative? And why? Sorry, there's a lot there. Does that make sense?

Yes, absolutely. We've -- the good news is we've been working with the European Union for the last 4 years on the AI Act to make sure our views are on AR. And we're pretty happy we're working through our trade associations that the main way they're thinking about regulating AI is to divide up AI into a high impact and low impact, which should sound familiar because that's actually how we're dividing it up internally as well. So they've adopted this concept of having high risk, low risk and having different sets of rules for lower risk AI and different sets of rules for higher-risk AI. And we think that's the right approach, right? Because again, there's a lot of AI out there that should have little or no impact. And frankly, most of what Adobe does doesn't impact a substantial human rate. For example, employment AI does or loans that may be given out based on an AI recommendation, policing, self-driving cars. So there's places where you can see the AI regulation is important and you have to be very thoughtful about how you create it. But there's other places where you're talking about, whether it's in the DX product or in Acrobat and even in Firefly, but really substantial human rights are not involved in the regulation should be lower. So we're pleased that the European Union is taking a high-risk low-risk framework as our bedrock. We think that -- we'd love to see that here in the United States as well, and we're actively talking to the United States Senate and who's leading on this effort right now in the White House about how to regulate here. So that framework, we think, is the right thing to do. On the transparency side, we've been very active talking about the importance of having transparency in the content that is being distributed across the ecosystem using technologies like the Content Credentials I mentioned before the content initiative is proposing.

Got it. Got it. Well, team, we have just a minute or two left here. We've got plenty more questions in queue here, but I want to wrap up with sort of a lightning round style question here, right, because we've been talking about ESG, a lot of great things. I want to bring this back to the business, right? And maybe the question I'm going to ask each of you to sort of spend, I don't know, 30 seconds on it, if possible, is how do you feel like these principles have helped Adobe ultimately drive shareholder return in which clearly has, right? But curious, from each of your own perspectives, maybe each of you can just spend again, a quick lightning round on how you think about that. Maybe we'll go back and Amy, maybe we could start with you.

Sure, absolutely. I think that we've tried to integrate the business imperative across this, but we can't deny that there's -- there has been and will continue to be easy about sustainability and specifically climate action. And so we recognize that the evolving regulatory environment here with growing global stakeholder demands present an opportunity for Adobe to meet these demands and lead with innovation, which is core to who we are, but really thinking and centering sustainability of the focus of that. And so focusing on investments and a robust sustainability and climate program, mitigates risk, protects our assets and employees and then churns an uninterrupted delivery of our services and great product experience. So that's really critical to who we are.

Absolutely. Heather, maybe you could be next.

Sure. So as I talked about, it all starts with our products. And by kind of lowering the barrier to develop creative, we're enabling all sorts of new communities around the world from students, small businesses, nonprofits, entrepreneurs, enterprises to engage in Creativity in a way that they've never been able to before. And that ultimately creates the inclusive and vibrant ecosystem and fuels economies. But what that translates to for our business is that it enables us to expand our customer base the number of people we serve reach new and emerging markets and ultimately cultivate that long-term growth. I mean one great example of this is we launched a new version of Adobe Express this morning, again, lowering the bar to entry for new communities to develop creative and announced that we'll be doing that on our mobile services as well. And again, opening up a huge opportunity for people to develop creative around the world. So we feel like it's a great -- it's great for the world, great for our business, and we're really pleased with the trajectory we're on with our products.

That's awesome. Gloria, how about you?

Yes. I will say that Adobe for all is core to our ability to innovate as a company that's focused on innovation, diversity of perspectives, backgrounds and ideas, generate new thinking and a culture of inclusion, encourages healthy debate across those diverse perspectives and helps us prevent biased blind spots and really ultimately allows us to drive better strategies and outcomes. But I will say that our value of being genuine really matters. As Dana had talked about before, today's rapidly changing world of AI, trust in Adobe, our people, our technology, our brand is absolutely vital to our business. And so our ethics and integrity, our culture of inclusion actually creates an environment where we're able to uphold our values while we're creating this future.

Absolutely. Dana, maybe with that you can bring us home.

Yes, absolutely. Let me just echo that. I think that the trust element is really important in terms of delivering value because everyone's housing their data with us. They're using our tools to base their livelihood to offer us, and they want to trust that we're doing things both responsibly, but we're also delivering the best technology that they -- that is out there to do their jobs. And so that balance of innovation, responsible innovation, I think, has been critical to who we are as a company. And if you just, again, look at examples like Adobe Firefly where we decided to design it to be commercially safe and you see how that's been embraced by the community, and when you look at content authenticity where we bring together a group of people who are thinking about this problem of like, let's make sure AI -- we know that AI is great and is helping people change their lives and democratize Creativity as Heather said, but it could be used or misuse, well, let's also address that too with this group of other like-minded companies. These are the things that we can do because we're thoughtful about how we go to market and how we engage with our employees and our customers and our community. I think doing both is the right thing, and it's also by I think we're all here and are proud to be at Adobe.

Absolutely. Well, I couldn't think of a better way to end there. Guys, thank you so much for the time here. It was a really interesting session. A lot of substance, right, to ESG here, right, is kind of the way that I would summarize it, right? These 4 principles, there's a lot of meat on the bone here is the way that I would characterize it. So the investors in the line, I'd encourage you to read the CSR report that Adobe puts out every year. I read it. Again, I think it really reinforces the road map around these 4 principles. So just on behalf of Barclays and the ESG team, just really wanted to thank the Adobe team for joining us. Jonathan Vaas, maybe before we close up. Anything you want to close out with any data, any last message you want to leave this investor base with before we adjourn?

Yes. First of all, I just wanted to say thank you for all the speakers and as well as to the audience for all the engagement and the questions. Really, really excited about this. Right around the corner, we'll have Q3 earnings. I hope to see some of you folks there that's on September 15. And then at MAX, October 10, we'll have an Investor Day that we're excited to share more about our innovation road map. So thanks so much, everyone.

Thank you. Have a good day, everyone.