Adobe Inc. (ADBE) Earnings Call Transcript & Summary

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 today, 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 for whom 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 integrated 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 semantic 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. 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 models 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 allows 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 have 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 uncomfortable 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 and it would reason over those tasks and decide what the right things to do as 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 Premiere 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 Premiere 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 culling 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 an 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 endpoints. 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 Adobe 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 the Adobe Experience platform and the apps we've built around that. And there, we 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 LLMs, we said, "How are people discovering Acrobat?" So we discovered that they had new prompts, they had 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 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 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 sentiment is 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.

We'll do our best.

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 inside Photoshop or inside 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 GenStudio is 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.

For a 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 Kash, 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, helped 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.

Maybe, Kash -- 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, Kash 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 seats 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 Firefly 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.