Adobe Inc. (ADBE) Earnings Call Transcript & Summary

Good afternoon, and thanks for being with us today. Joining me are Adobe's Chair and CEO, Shantanu Narayen; David Wadhwani, who serves as President of Creativity and Productivity; Anil Chakravarthy, President of Customer Experience Orchestration; and Dan Durn, Executive Vice President and CFO. This call is being recorded, and during it we'll go over Adobe's financial results for the first quarter of fiscal year 2026. Our press release is available, along with PDFs covering our prepared remarks and financial results, on Adobe's Investor Relations website. Everything we discuss today, including our financial targets and product plans, reflects information as of today, March 12, and includes forward-looking statements subject to risk, uncertainty and assumptions. Actual results could differ materially from what those statements set forth. To learn more about those risks, please review today's earnings release and Adobe's SEC filings. Today we'll cover both GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates as well as non-GAAP growth rates, constant currency rates among them. Unless otherwise stated, Adobe's executives will refer to revenue growth in constant currency rates throughout this presentation. Non-GAAP reconciliations can be found in our earnings release and on Adobe's Investor Relations website. I'll now hand the call over to Shantanu.

Thank you, Doug. Hello, everyone, and I appreciate you being here this afternoon. We shared earlier today that after more than 18 years and 100 earnings calls, I'll be moving on from the CEO position. In the months ahead, I'll collaborate with Frank Calderoni, who serves as Adobe's Lead Director, along with the Board of Directors, to find the person who will take over from me and to make sure that handover goes smoothly. In the meantime, I'll keep serving as Adobe's CEO, and I'll remain Chair of the Board to back my successor, exactly as John and Chuck did when this role became mine. The things that drew me to Adobe 28 years ago haven't changed. We lead in building new market categories, we deliver world-class products, we have an unyielding push to innovate across every functional area of the company, and we have employees who keep inventing the future. Leading this company has been the greatest honor of my career, and I'm dedicated to positioning it for its next decade of growth with the right leader and executive team alongside the board, while also advancing our fiscal 2026 strategic priorities. Our mission of empowering everyone to create holds an even bigger opportunity now in the AI era. Let me lay out what Adobe is doing to fuel our top-line growth while keeping profitability high. As a company that takes pride in building categories, our AI transformation starts with a customer-centric product strategy aimed at anticipating and meeting the varied needs of a large and expanding customer base. Here at Adobe, we're going after business professionals and consumers as well as creative and marketing professionals, using differentiated AI-infused and AI-first product offerings across multiple routes to market and various monetization models; with creativity at the center, we're broadening innovation across all our flagship applications and also investing in new offerings. Those new products include Adobe Acrobat Studio with Adobe Express, Adobe Firefly and Adobe GenStudio. ARR for our new AI-first offerings finished more than tripled compared with a year earlier, which shows progress on this opportunity among both individuals and enterprises. Adobe's ongoing success in AI will rest on our deep knowledge of creativity domains, the enormous quantity of data we can access, the delivery of complex workflows that drive business outcomes, and a strong brand spanning individuals, small and medium businesses and enterprises. Content sits at the core of every Adobe solution, which fuels educational, social, marketing, brand, entertainment and business content. Attracting new users — individual consumers, students, and business professionals — into our products, delighting them and driving adoption has always powered our growth. We're fiercely focused on monthly active users as a signal of adoption and success for Acrobat and Express, Creative Cloud applications and Adobe Firefly across different surfaces, including desktop, web, mobile, and LLM platforms. During Q1, we exceeded 850 million monthly active users of Acrobat, Creative Cloud, Express and Firefly, delivering 17% year-over-year growth, a clear sign that we have both strong usage and a foundation for monetization. Beyond wide adoption by individual users, Adobe has long been a dependable ally for large organizations, and more and more they're requesting our assistance in advancing their artificial intelligence roadmaps for orchestrating customer experiences on a global scale. Businesses want to blend human talent with automation so they can keep up with content and marketing demands at volume. As organizations seek more than mere velocity — aiming to boost creative distinctiveness, enforce brand standards, and craft tailored journeys across every channel — agentic AI will unlock workflows centered on results. Adobe's comprehensive offerings are purpose-built to satisfy those requirements at scale. The robust traction our enterprise products are seeing highlights both our market leadership and the trust customers place in Adobe's capacity to generate value powered by AI. During Q1, worldwide, we posted year-over-year expansion exceeding 30% for AEP and apps, plus Adobe GenStudio ending ARR. Our mission has consistently been to reach customers wherever they operate, across the many surfaces they engage with daily, and new platforms entering the market have consistently expanded our addressable opportunity; beyond Windows, Mac, iOS, Android, Chrome and Edge, we plan to connect with top-tier AI platforms including Anthropic, Google, Microsoft, NVIDIA and OpenAI, giving customers access, choice, and flexibility. Together with worldwide leaders like Accenture, Cognizant, Deloitte, Dentsu, EY, IBM, Infosys, Omnicom, Publicis, PwC, Stagwell, TCS, and WPP, we're co-driving enterprise reinvention at scale. With this approach in place, I'm happy with the way Adobe is shifting into an AI-powered company. Our year got off to a robust beginning, generating $6.4 billion in revenue during Q1, which equals 11% growth versus a year earlier. GAAP earnings per share came in at $4.60 for the quarter, while non-GAAP earnings per share reached $6.06, reflecting year-over-year increases of 11% and 19%, respectively. Fueling this trajectory were Acrobat and Express, Creative Cloud Pro, broad momentum in the CXO enterprise solutions, and our AI-first applications. Notably, we experienced enormous MAU gains in our newer efforts, which lowers ARR near term but positions us to perform in upcoming quarters. As we keep reshaping the company to seize the AI opportunity, our customer-centric approach, extensive product roadmap, pace of innovation, and early wins across every route to market leave us well positioned to enable everyone to create. I'll hand things over now to David.

Thank you, Shantanu. Hi, everyone. The way people make things and get work done is being fundamentally transformed by AI. As interactions grow more conversational and centered on results, an ever-larger number of individuals will gain from our tools for creativity and productivity. Our strategy involves broadening AI access among the audiences we already serve through offerings such as Creative Cloud and Acrobat, attracting fresh audiences via offerings such as Firefly and Express, and assisting with the automation of content production in large organizations through Firefly Enterprise. As we carry out our strategic initiatives, we feel good about the headway we're making on three growth drivers. To start, momentum is building in acquiring new users, and we're bringing in more of them than at any prior point, as tracked by growth in monthly active users. In particular, Creative Premium MAU surpassed 80 million, up 50% year-over-year, and it encompasses web and mobile editions of Firefly, Express, Premiere, Photoshop and Lightroom. Next, AI usage keeps expanding rapidly, as tracked by record amounts of generative credit consumption. Third, our content automation offerings keep enjoying robust enterprise uptake, as tracked by record volumes of API calls. These metrics make clear that we're carrying out our strategy of enabling individuals and businesses to produce content in fresh ways during the AI era. In Q1, revenue from subscriptions among business professionals and consumers reached $1.78 billion, representing a 15% increase compared with the same period last year. When it comes to business professionals and consumers, our aim is delivering AI-driven applications that reshape the way people comprehend, create, and share content. With PDF Spaces, collections of files and links become dynamic knowledge hubs where collaboration happens without friction. Through Acrobat AI Assistant, users gain conversational interactions that help them absorb information faster and with greater accuracy, whether working with one PDF or multiple documents inside a PDF Space. Thanks to our Acrobat and Express integrations, whatever someone is reading can be turned into generated presentations, infographics, audio summaries, and other formats. It's obvious that users are embracing these AI-driven tools — monthly active users for AI Assistant have grown twofold compared to a year ago, while Express MAU has seen a threefold increase over the same period. Today, Express is utilized by 99% of U.S. Fortune 500 organizations. In Q3, we launched Adobe Acrobat Studio, a single bundle that brings together all of these AI-powered creative capabilities together with the PDF tools that users are already familiar with and rely on. Subscription migrations to bundles that include Acrobat Studio value are getting off to a strong start across various channels, including adobe.com and enterprise license renewals; we're also embedding Adobe's functionality directly into emerging conversational platforms. Back in Q1, we brought Acrobat and Express to ChatGPT, significantly expanding how far our creativity and productivity workflows can reach. Once Copilot, Claude, and Gemini start supporting integrated application experiences, you can count on seeing similar integrations roll out there. We've added new Express partnerships — Airtel in India is one example — which shows how our distribution approach continues to accelerate bringing on new users at scale. These kinds of partnerships are building momentum across both our business professional and consumer offerings, spanning individuals and companies alike. For creative and marketing professionals, subscription revenue hit $4.39 billion in Q1, an 11% increase compared with the same period last year. As for creators and creative professionals, what we're focused on is empowering everyone to create — no matter whether you're a beginner, a longtime pro, or a large enterprise looking to expand content production. Firefly serves as the ideal solution for tomorrow's creators and creative professionals, functioning as a comprehensive creative AI studio. When it comes to powerful, precise creation, Creative Cloud — which has AI woven deeply into every part of it — is still the preferred platform. Increasingly, businesses are adopting Firefly Enterprise to open up a fresh chapter in content automation. Content generation, ideation, and assembly are quickly making Firefly the primary choice. Over 30 top-tier models are available — including ones from Adobe, Google, and OpenAI — enabling users to generate. Within Adobe Firefly boards, they can brainstorm alongside stakeholders; through prompt-driven editing features in Firefly, combined with Photoshop and Express web experiences, they're able to modify and put together images, video, and audio. Firefly has a lot of momentum right now — generative credit consumption jumped more than 45% from the prior quarter. The increase shows up across the board, but usage is tilting toward higher-value modalities: video-generative actions grew over 8x compared with a year earlier, while audio-generative actions were twice what they were year-over-year. That tells us customers are going further into AI-assisted creation throughout the entire creative process. As a result, ending ARR for Firefly subscriptions and credit packs climbed 75% quarter-over-quarter. We keep adding new AI capabilities into Creative Cloud apps, which makes users significantly more productive. In Photoshop, we brought in new partner models plus support for generating and editing images at higher resolution. Illustrator broadened its generative design features by adding models from OpenAI, Ideogram, and Google, which helps with the vector workflows people use all the time. Within Premiere, AI object masks were introduced and soon turned into one of the app's most heavily used AI capabilities. As those using Creative Cloud ramp up their reliance on AI, sales of Firefly credit packs are climbing at a healthy pace. By bringing together Firefly Services and Firefly Foundry, Firefly Enterprise enables the biggest brands on earth to expand content output at levels never seen before. Through Firefly Services, enterprise-grade APIs are offered, handing companies over 30 capabilities for producing content that can operate inside automated workflows. Among these are 3D digital twin workflows that display physical products, resizing of images and video for all social and digital channels, and the generation and assembly of campaign variants for personalized marketing content. With Firefly Foundry, the biggest marketing departments and media organizations worldwide can create proprietary, highly customized AI models built from their very own intellectual property. While generic AI offerings exist, Firefly Foundry provides companies with a model that is commercially secure and capable of comprehending and precisely producing assets reflecting their brand. These offerings collectively produce measurable commercial results through larger production volume, faster speed, and lower expenses. New customer acquisition for Firefly Enterprise rose 50% compared to the prior year. Among other Q1 highlights for creators and creative professionals, Photoshop introduced a conversational editing capability within ChatGPT. Tools from Adobe Creative Cloud were used to make 85% of the films that had their premieres at the 2026 Sundance Film Festival. Frame.io has become the go-to hub across media types for tracking work in progress, helping customers handle the fast-growing amount of content they produce, and its assets under management grew twofold compared with a year earlier. Over in media and entertainment, Firefly Foundry continues to build momentum thanks to partnerships with B5 Studios, Cantina Creative, Creative Artists Agency, United Talent Agency, and WME. We saw many encouraging developments during Q1, though our legacy stock business shrank by more than we had expected. That shift is happening more quickly than we had planned in our budget, and we remain committed to giving customers genuine choice between stock and generative AI as they build out their creative and marketing workflows. Q1 only strengthened our confidence in the strategy and in the opportunity that spans creativity and productivity. We're delighted by new user acquisition and usage growth across creative freemium offerings. It's exciting to watch that momentum carry forward, with workflow and automation capabilities producing remarkable efficiencies inside enterprises. I'll hand things over now to Anil.

Thank you, David. Greetings, everyone. For creative and marketing professionals, Adobe delivers top-tier AI-driven tools so they can provide tailored customer interactions at scale. For our enterprise segment, AI continues to act as a favorable force, letting us post creative and marketing professional subscription revenue of $4.39 billion in Q1, up 11% compared with the same period last year. The customer experience management category was created by Adobe. Businesses across the globe depend on our software to spot prospects, win new buyers, keep them engaged and delighted through personalized experiences, and boost customer lifetime value. When it comes to content management systems for websites and mobile apps, we hold the leading position, and the same goes for the leading customer data platform that acts as the backbone for digital customer engagement inside enterprises. 99 of the Fortune 100 work with us, and we are the digital platform that chief marketing officers and chief digital officers choose for their continuous campaigns and for big marketing moments such as the Olympics and Super Bowl. Across the 2026 Super Bowl, experiences powered by Adobe reached peaks of over 8 billion analytic server hits, 21 million concurrent viewers, 34 million page views, 1.5 million video requests per minute, and 216 million emails delivered. In the age of AI, each enterprise has to run its existing operations while also leveraging AI to respond to fresh shifts in what consumers do and expect. Brands must stay front and center for companies, even while consumers increasingly find new information, interact with businesses, and purchase products via LLMs and agents. These shifts differ greatly depending on geography and consumer segment, which creates added complexity for multinational companies that must offer personalized experiences through established channels such as websites, email, and mobile apps while simultaneously scaling up newer channels like LLMs. Through our thought leadership, swift innovation, and omni-channel capabilities, Adobe has earned the role of trusted partner for AI-powered customer experience orchestration, all while supplying the security, reliability, data governance, global scale, and partner ecosystem that enterprises demand. Solutions for brand visibility, content supply chain, and customer engagement come from Adobe's unified CXO platform. A leading platform for digital customer engagement is Adobe Experience Platform, which unites new AI-powered apps and agents to reshape the way businesses build, deliver, and optimize marketing campaigns and customer experiences, and also cut costs. In Q1, we rolled out new AEP agents plus broader agent orchestrator capabilities, which are now offered to every AEP customer through a try and buy program. Our platform's scale has expanded to beyond 35 trillion segment evaluations and over 70 billion profile activations each day. Subscription revenue for AEP and native apps climbed more than 30% year-over-year, showing sustained momentum and value realization. As consumers increasingly turn to LLMs and agents to find brands and buy products, brand visibility has turned into a make-or-break factor in the agentic web. Per Adobe Digital Insights, throughout the 2025 holiday season, traffic to retail sites originating from LLMs rose nearly 7x, delivering qualified referrals that convert 31% higher and produce 254% more revenue per visit. Adobe’s offering for brand visibility—spanning Adobe Experience Manager, Adobe LLM Optimizer, and Adobe Brand Concierge—gives brands the ability to connect with consumers on their own sites, in search, on social platforms, within LLMs, and through agentic channels. With Adobe LLM Optimizer, enterprises can improve how easily LLMs find their websites and achieve a substantial lift in organic traffic. Adobe Brand Concierge is an AI-first app that lets businesses set up and oversee agentic AI experiences on their sites and mobile apps, leading consumers from browsing to buying through rich, conversational interactions; our planned purchase of Semrush is expected to broaden what we offer, giving marketers a full solution for influencing how their brands show up on their own websites, in LLMs, in traditional search, and across the broader web. Content sits at the center of delivering personalized customer experiences, and appetite for high-quality, on-brand content has surged. GenStudio is our end-to-end content supply chain product, covering ideation, creation, production, and activation. What sets GenStudio apart is how it brings together best-in-class tools from across Adobe’s creativity and marketing apps, such as Creative Cloud, Firefly Enterprise, Frame.io, Adobe Experience Manager, and Workfront. During Q1, we introduced breakthrough innovations that let assets made in GenStudio move straight into activation workflows throughout the Adobe stack and a wide set of advertising platforms, among them Amazon Ads, Google, LinkedIn, and Meta. Ending ARR for the Adobe GenStudio product family climbed more than 30% year-over-year, as top brands and agencies around the world increasingly rely on Adobe for their content supply chain. Q1 achievements and business highlights include robust customer interest in our agentic web offerings, with more than 650 customer trials in progress for Adobe LLM Optimizer, Sites Optimizer, and Brand Concierge. AEP AI Assistant continues to gain adoption and momentum, with 70% of all AEP customers leveraging the agentic capabilities. We are partnering in the OpenAI initiative so brands can create ads for ChatGPT. Momentum is accelerating for Firefly Services and custom models within the GenStudio solution, with more than 2,500 custom models since launch. Q1 also brought industry analyst recognition, including being named a leader in two Forrester Waves—for digital asset management solutions and for revenue marketing platforms for B2B—plus the Gartner Magic Quadrant for personalization engines. Adobe’s distinctive value lies in helping enterprises address their full customer experience and content supply chain requirements while balancing creativity, automation, and costs. Global enterprise customer wins in Q1 featured Centene, Danske Bank, Deutsche Bank, Heineken, HP, MongoDB, Nordstrom, Paramount, Pilot Travel Centers, RACQ, Revlon, Sherwin-Williams, Southwest Airlines, Stagwell, Target, TUI Group, and WPP. Orchestrating customer experience is a vital priority for every business seeking growth on both the top and bottom lines. Our distinctive vision, broad portfolio, fast innovation cadence, large partner ecosystem, and sharp focus on business value make Adobe the partner of choice for AI-powered customer experience orchestration. We’re eager to reveal major innovations and partnerships that will extend our leadership at Adobe Summit in April. I’ll now hand things over to Dan.

Thank you, Anil. I'll begin today by walking through how Adobe performed during the first quarter of fiscal 2026, calling out the drivers of growth within each of our customer groups, and then wrap up with the financial targets we're aiming for. During Q1, Adobe brought in $6.40 billion in revenue, which represents 12% growth compared with a year earlier on a reported basis, and 11% when measured in constant currency. GAAP earnings per share came to $4.60, while non-GAAP earnings per share reached $6.06, up 11% and 19% respectively versus the same period a year ago. Our GAAP operating margin stood at 37.8%, and the non-GAAP operating margin came in at 47.4%. Among the Q1 financial highlights: total Adobe ending ARR was $26.06 billion, an increase of 10.9% from a year earlier. Subscription revenue for our total customer group reached $6.17 billion, up 13% compared with last year, or 12% in constant currency. We exited the quarter with RPO of $22.22 billion, which grew 13% year-over-year, or 12% in constant currency. CRPO rose 12% as reported, or 11% in constant currency. Cash flows from operations during the quarter hit a Q1 record of $2.96 billion, our ending cash and short-term investment positions as we came out of Q1 totaled $6.89 billion, and we bought back roughly 8.1 million shares of our stock over the quarter. As we exit Q1, $3.89 billion is left available under the $25 billion authorization that was granted in March 2024. Subscription revenue from business professionals and consumers was $1.78 billion, which climbed 16% versus a year ago as reported, or 15% in constant currency. The Q1 growth drivers for business professionals and consumers included sustained double-digit ending ARR growth across every geography. Acrobat and Express MAU expanded by roughly 20% year-over-year. Acrobat AI Assistant ARR rose approximately 3x compared with a year earlier, alongside strong upgrades to Acrobat Studio that came as part of enterprise license renewals. Subscription revenue from creative and marketing professionals was $4.39 billion, up 12% from a year ago, or 11% in constant currency. Q1 growth drivers for creative and marketing professionals included growth in Creative Cloud, powered by the CC Pro offering. Creative freemium MAU surpassed 80 million, up more than 50% year-over-year, and covers web and mobile versions of Firefly, Express, Premiere, Photoshop, and Lightroom. Generative credit consumption rose by more than 45% from the prior quarter. Firefly ending ARR across the Firefly app, Firefly credit packs, and Firefly Enterprise surpassed $250 million. Ending ARR for GenStudio and for AEP and Apps each climbed over 30% year-over-year. We see strong pipeline momentum for new AI offerings spanning LLM Optimizer, Sites Optimizer, and Brand Concierge. Retention remains solid and we continue to see strength across our enterprise customer base, and we keep succeeding in the enterprise, as total customers with ARR above 10 million grew greater than 20% year-over-year. As we transform our business, we keep delivering double-digit total Adobe ARR growth at scale, powered by innovative technology, the breadth of our solutions, and strong go-to-market motions. Looking at things from a product standpoint, Q1 ARR growth came from Acrobat and Express, Creative Cloud Pro, and AEP and Apps in GenStudio in the Enterprise, along with building momentum in our expanding portfolio of AI-first applications, which includes Firefly App and Firefly Enterprise. All together, ARR from AI-first applications more than tripled versus a year earlier. During Q1, we generated significant MAU growth for our new creative web and mobile freemium offerings, among them Express, Firefly, Photoshop, and Premiere. This freemium model was deliberately built to cater to the upcoming wave of creators, strengthen the Adobe name, and lay groundwork for faster expansion down the road — yet in the short term, these free offerings weigh on ARR. On top of that, we keep watching how AI features get used across our portfolio and pushing that usage upward. During Q1, those AI capabilities produced much higher credit usage compared with the prior quarter. That said, Q1 also brought a steeper drop than we had forecast in our classic standalone stock book of business. It's occurring more quickly than we anticipated, but our approach is to let customers pick between stock content and generative AI tools for their creative and marketing workflows. We anticipate that momentum will build throughout the year, fueled by robust performance from our flagship Acrobat and CC products, enterprise appetite for our CXO offerings, fresh MAU gains for Firefly and Express, plus rising AI adoption and monetization. Our outlook for total Adobe ARR expansion in FY 2026 stays at 10.2%. Now I'll move on to our financial targets, which factor in today's macroeconomic backdrop and exclude any contribution from Semrush — we still anticipate that deal closing in Q2, pending regulatory clearances and customary closing terms; for Q2 of fiscal 2026, our goals are total Adobe revenue between $6.43 billion and $6.48 billion, with subscription revenue from business professionals and consumers of $1.80 billion to $1.82 billion. Subscription revenue from creative and marketing professionals of $4.41 billion to $4.44 billion. GAAP EPS of $4.35 to $4.40. non-GAAP EPS of $5.80 to $5.85. For Q2, we anticipate a non-GAAP operating margin of roughly 44.5% along with a non-GAAP tax rate of roughly 18%. Beyond that, we're restating our FY 2026 goals. Adobe stays committed to carrying out our growth plan amid a time of dramatic technological transformation. As customer habits shift, the power of our platforms and the swift tempo of our AI-fueled breakthroughs in creativity, productivity, and customer experience orchestration workflows put us in position to deliver profitable growth and capture the opportunities that lie ahead. Shantanu, over to you.

Appreciate that, Dan. The first quarter got us off to a solid beginning this year — across the platforms we already have, where AI has become part of how we operate, and also on the new strategic efforts meant to fuel growth ahead. Adobe stays firmly dedicated to innovating and to bringing value to our customers, our partners, and our shareholders. We have every confidence that putting customers at the center, releasing pioneering products, our deeply committed team, and relentless follow-through will keep propelling growth and building lasting value. Thanks very much, and at this point we'll open the line for your questions. Operator.

Thanks. Evening, everyone. Shantanu, before anything else, I want to tell you how deeply I've valued the 30 years we've worked together, and I really have to praise you — though praise may not capture it strongly enough — for the many transformations this company has undergone across that entire span. I felt I should say that on both a personal and a professional level before getting to my question, which tonight actually goes to Dan, and it isn't about a product. In my view, one of your key metrics is — and will continue to be — how your current RPO moves forward. CRPO's constant currency growth was roughly a point stronger than what we saw in Q4. Beyond that, across the past several years, CRPO has held fairly steadily at approximately 51% to 52% of the revenue you estimate for the coming twelve months, measured on a rolling quarterly basis. Should we expect that your visibility into revenue through CRPO coverage could rise proportionally in the years ahead? Perhaps you could address that — any structural shift you might anticipate in your CRPO, if such a shift exists.

Yes. Thank you, Jay. I appreciate you asking; we feel good about the momentum we carried out of last year, 2025. Solid gains across each of our three customer audiences. The business did well. As we look ahead into this year, you can see the strength in our enterprise business and how we're bringing together solutions spanning creativity through marketing to build those content automation offerings and help brands advance their business in this climate. We're happy with the progress, the performance, the strategy, and how we're executing against it. I can't identify any reason the trends we've historically observed in the business would turn and create a different dynamic when it comes to RPO, CRPO, and conversion into revenue.

Jay, I really appreciate those warm remarks. I would be leaving something out if I failed to mention that my enthusiasm is even greater regarding what we have been achieving when it comes to the AI transformation, along with the chance that lies before us. As you know, we are going to remain very concentrated on making the most of that chance.

Thank you.

All right, wonderful. Hi, everyone. I appreciate you giving me the chance to ask something. Shantanu, I'd like to begin by repeating what Jay said. Obviously, this area has been changing quickly, but across the years you've played a role in creating one of the biggest SaaS companies globally. First, let me offer my congratulations. On that note, I had a somewhat general question in mind: what qualities is the board seeking in the person who will be Adobe's next CEO?

Okay, thank you once more, Saket. I believe that deep down, we will always remain a company built around products. I think seizing the advantage and peering around the bend when it comes to the enormous chance that AI presents throughout creativity and marketing is the genuine opportunity not only for the CEO but for the organization too. From where I sit, this is a business operating at massive scale at present. It's simply about maintaining a growth-oriented agenda, and we are entirely focused on our people along with the principles tied to that. I genuinely have a lot of confidence that the board and the special committee are going to do an excellent job guiding that search.

Very helpful. Thank you.

Excellent. Thanks a lot. First off, Shantanu, congratulations on an amazing tenure. I'm aware your influence at Adobe and across the broader industry will last for many decades ahead. My question goes to David. David, it's wonderful to learn that generative credit usage is growing so significantly, rising 45% quarter over quarter, and a great deal of that growth has been leaning toward video and audio. I'd love to grasp which use cases you're observing that consume credits so substantially in video and audio. Are we still at a stage that's more about exploration? Or, to put it another way, what use cases are you seeing among leading-edge customers that are fueling this kind of consumption? Thanks.

Right. I believe that's a genuinely significant question marker regarding the direction we're headed. If you pull back for a moment, as you examine how AI has developed, it's clearly shifted from being an amusing toy into something that's maturing and getting woven into workflows that already exist. At this point, I'd say people depend heavily on AI being a component of how they create; for anyone who hasn't kept up, picture generative credits as being like tokens for our creative apps. Naturally, we produce a great many generations throughout the whole company, but that's basically what it amounts to. What all of this adds up to is that the number of people generating has never been higher. As one illustration, you noticed that monthly active users for our premium creative software has reached beyond 80 million, 50% year-over-year; more individuals are generating. They're producing at greater resolution since it isn't merely an amusing toy anymore. It genuinely forms part of the workflows they already have; they're producing across higher modalities, such as video, audio, design. All of that is driving generative credits upward. Then there's the fact that they're generating in additional places, correct? We definitely began by getting them to create and use generative AI within our core flagship applications, and that keeps expanding well. Firefly is increasingly turning into a destination in its own right. We mentioned that this business expanded 75% sequentially quarter-over-quarter. Express boards for, as you know, wide-ranging ideation and stakeholder value. Plenty of grounds to view this as the correct leading indicator. One final point I'd make is that we're beginning to observe, you know, a solid ramp in existing creative professionals, you know, purchasing extra creative packs because of this.

It's really helpful. Thank you so much.

Thanks. Shantanu, congratulations on a tenure as CEO that ranks among the greatest and longest, and on expanding Adobe to $26 billion in revenue. I'd like to pose this to you as well as to the others: seeing 13% subscription revenue growth is really notable. That's something we haven't witnessed in a good while. What's fascinating is that total revenue growth sped up in constant currency to 11%, or perhaps I should say it ticked upward. Could you address that acceleration in revenue? We hadn't anticipated revenue speeding up just yet. I'm simply attempting to figure out whether we should take it that the stock business is fairly small and, as you know, consequently any slight setback you encountered is merely being more than outweighed by AI revenue tripling and the increase in credit consumption Brad inquired about; is that possibly the sort of netting out that produced this acceleration in the top line for the quarter?

Okay, so a few points on that, Mark. If you pull back and take a broader view, as we've moved through this transition, the main thing we've kept our eyes on is whether we're pushing the right product innovation while keeping strong new customer segments in view. On the user side, the way I usually frame it is this: as we've said repeatedly, generating a tremendous volume of fresh user adoption and engagement is our leading signal that we're succeeding with the upcoming wave of creators, business professionals, and consumers, since our footing with creative professionals remains solid. With Firefly, Acrobat, and Express, I believe we've performed quite well at sustaining innovation in those specific spaces. On the flip side, we've consistently noted that what we deliver in the enterprise is one of our durable points of differentiation. The enterprise pipeline matters, and so does making certain we keep delivering. You saw GenStudio along with AEP and apps expanding 30%. When it comes to revenue, we're improving at ensuring that converting ARR into revenue gets our real attention. That remains a dual focus: safeguarding retention, plus simply watching linearity. The linearity tied to the business also tends to support that. We're happy with revenue and EPS alike. Stepping back further, we look at it and note that spreading AI through both the individual user segment and the enterprise made for a very strong quarter. Regarding your question about stock, or the order of magnitude, it comes to roughly a $450 million book of business. And perhaps I can say a bit more about that. Were you to exclude the stock business on a like-for-like basis, rather than 10.9% growth, you'd get approximately 11.2% growth. So that's just to give you a sense of it. We continue to view that whole business as an opportunity, because starting any creation or marketing workflow with a piece of content is something people enjoy. Increasingly, that content has turned generative. That explains the scale you saw, I think, in how we're handling generations. Hopefully that gives you a sense of how we regard that business. We want to be sure we provide a combined offering — royalty-free stock plus generative AI — so we can seize that opportunity.

Wonderful. Thank you so much.

Great. Thanks, everyone, for letting me ask. Shantanu, it feels wrong to kick things off without saying congratulations on such an incredible career. It's probably fair to say you've served as a guiding light for leadership across the professional lives of likely the majority of folks listening in. Your stewardship of Adobe has simply been the stuff of legend. You will be deeply missed. Working alongside you has been a joy, so thank you for everything, and I wish you the very best going forward. Perhaps, as a small plug for whoever takes over next, you might. You spoke at length about establishing a base for growth ahead. You mentioned certain efforts in the short run that hold back near-term ARR while positioning us to win over a longer horizon. Could you expand a bit more on those efforts and those foundations, and on how you see that playing out? Perhaps the timeline from when something today is a foundation-building effort to when it turns into more of an ARR-generating effort, when it becomes more of the acceleration narrative at Adobe. Thanks.

Yes, of course, Keith, and once more, thank you everyone for those generous words. I'm not finished yet. You know, I just want to be clear. Let there be no doubt, I will stay laser-focused on continuing to steer this company until, you know, a new CEO is in place, and on making certain that person succeeds. You know, the items that, you know, we aim to set out as strategic priorities — I mean, to begin, creativity sits at the heart of the DNA. When it comes to, you know, the business professional and consumers, we simply hold the view that pairing creativity with marketing, and creativity with productivity through Acrobat plus Express, is, you know, what will fuel both usage and ARR. I think regarding how we view that specific business, it's producing, you know, solid mid-teens growth. We want to, you know, as we keep pushing applicability of Express within that, speed that business up. You know, the bright spot is the early signals, namely MAU, are truly climbing. The same holds for the freemium. I think during our prepared remarks, we mentioned, you know, the 80 million figure we're observing when it comes to the creative freemium MAU. I think even that is fueling the business. You know, the small distinction, Keith, is that those businesses tend to be — in the traditional business, when someone showed up and purchased it, you know, you would instantly convert that into ARR. And here they need to encounter a bit of the paywall, and they need to get, you know; it's somewhat phase shifted, is how I think of it. For that specific group of customers, the fact that we're increasing MAU is the correct early signal for us to concentrate on, just like we did with Reader across many years — you gain adoption, and you gain usage. Reader's ubiquity, even in new settings such as Chrome and Edge, is genuinely what pushes the revenue. That's kind of the early signal behind it. For the core creative professional, I believe ARR will keep being powered by delivering additional value in the products. Creative Pro, the offering in that space, it's nice to see the success tied to it. On the enterprise side, I think, hopefully, from both our prepared remarks and from the responses to your question, that's genuinely an area where we're strong, since people are examining it, and with AI, everyone wants to understand how you transform your business. Each CEO I speak with wants to make sure they engage the next generation of consumers and draw them in, and what they then want to do is ask, "How do I make sure that for my marketing spend, I'm getting as much breadth as possible, plus how much automation and productivity when it comes to revenue?" I think the fact that we have all these new offerings, particularly Firefly. Dan, I believe, mentioned a $250 million book of business for Firefly; that didn't exist a few years back. As we discuss what's happening with GenStudio, 30% growth, AEP and Apps. I would venture to say, Keith, that we should hopefully see what we had identified as the AI first, sort of, book of business, that tripled. That ought to be our next billion-dollar business. That's what we're ruthlessly focused on, all of those. Hopefully that gives you some color on why we're excited about the performance that we put up.