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; Anil Chakravarthy, who serves as President of Customer Experience Orchestration; and Steve Day, Senior Vice President and Interim CFO. This call is being recorded, and during it we'll go over Adobe's financial results for the third quarter of fiscal year 2026. Our press release, along with a PDF of our prepared remarks and the financial results, can be found on Adobe's Investor Relations website. Everything we discuss today, including our financial targets and product plans, is current as of today, September 10, and includes forward-looking statements that carry risks, 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. During this call, we'll cover both GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates and non-GAAP growth rates, including constant currency rates. In this presentation, Adobe's executives will refer to revenue growth and constant currency rates, unless otherwise stated. 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.

Doug, thank you. Hello everyone, and I'm glad you could join us this afternoon. It was a strong third quarter for Adobe, with revenue reaching $6.76 billion — an increase of 12% from the equivalent quarter a year ago. For the quarter, GAAP earnings per share were $4.62, which is 11% higher than a year earlier, and non-GAAP earnings per share came to $6.13, a rise of 15% compared with last year. Over many decades, Adobe's mission has shifted — first it was about transforming the world via digital experiences, and today it's about giving everyone the power to create — and at its core it has always involved establishing new market categories to support an expanding customer base. Concentrating on that has let us build platforms and products that lead the industry in three areas: creativity, productivity, and customer experience. In doing so, we've set a high bar for innovation and for transforming entire categories. Adobe will put AI to work extending how far we reach, how much value we deliver, and what impact we have for customers, which will drive our growth over the coming decade. Thanks to AI, access to every creative discipline becomes democratized — for the casual creator and the most seasoned creative professional alike. AI also lets us serve the growing creativity and productivity demands of consumers and business professionals who want to stand out and communicate more effectively; and with AI, Adobe is uniquely positioned to help enterprises deliver and orchestrate personalized customer experiences. Reflecting on my 29 years with Adobe, the thing that gives me the greatest sense of pride is the groundbreaking products and platforms we've delivered to customers — among them Acrobat and PDF, Adobe Experience Manager, Adobe Experience Platform, InDesign, Photoshop, and Premiere, plus more recent additions like Express and Firefly. It's quite striking that these innovations now reach more than 1 billion monthly active users throughout all our businesses, a number that climbed by over 20% compared with a year earlier in Q3, while creative premium MAU exceeded $100 million and expanded by more than 70% year over year. We invented the Digital Marketing space and lead the market in Customer Experience Orchestration, powering more than 1 trillion experiences annually for enterprise clients; the massive AI opportunity in creativity, productivity and customer experiences is just beginning for us, as AI-first ending ARR has now passed $650 million, up over 150% year over year. Over that same span, Adobe's yearly revenue grew from under $1 billion to more than $26 billion. I'm delighted that Anil Chakravarthy will step into the role of Adobe's next President and Chief Executive Officer and join the Board of Directors on December 1. I also want to thank David Wadhwani for more than ten years of partnership, leadership and dedication to our creative community. I'll be working hand in hand with Anil to make sure the handoff goes smoothly, and I'll back Adobe's continued expansion and reinvention in my role as Executive Chair. Anil brings a wealth of experience leading transformations, holds strong values, acts with integrity, knows our business deeply, and cares passionately about creating products that address what customers need — which makes him exactly the right choice to steer Adobe's growth through this agentic era. His track record speaks for itself when it comes to building and shipping products that define categories and reach a wide spectrum of customers. And I firmly believe Adobe's brightest chapter is still to come. With that, I'll hand things over to Anil.

I appreciate that, Shantanu. Greetings to all of you. Taking the helm at Adobe right now feels like a real privilege. There's so much that excites me about the chance to propel Adobe's expansion and market leadership in creativity, productivity, and customer experiences within agentic software. Adobe's demonstrated ability to help people and companies share their concepts, narrate their experiences, and create meaningful change keeps motivating us and strengthens our dedication to those we serve. Because of Shantanu's remarkable guidance in reshaping Adobe's product lineup and business approach over many years, we're strongly positioned to seize the enormous possibilities that lie in front of us. I'm eager to collaborate closely with our team members and Shantanu as we keep supporting our customers and evolve Adobe during the agentic AI period. Now to Q3 numbers. Business Professionals and Consumers subscription revenue reached $1.91 billion, up 15% compared to the prior year. Our approach for Business Professionals and Consumers centers on providing AI-driven tools that reshape the way people grasp, produce, and distribute content; we're rolling out fresh conversational and agentic interfaces within Adobe Reader, Acrobat, and Express via a unified freemium offering. What sets us apart comes from a thorough grasp of the PDF format and 3 decades of expertise in documents, which lets us evolve Acrobat from the top PDF tool worldwide into a full-fledged document productivity platform enhanced by AI. Currently, individuals open over 400 billion PDFs using Acrobat annually to read, edit, and generate content. Through embedding AI deeply within our offerings, we're assisting customers in grasping AI's benefits more swiftly, precisely, safely, and economically; we're reaching users wherever they do their work and broadening our footprint throughout the digital landscape by bringing Acrobat's features to key platforms such as ChatGPT, Chrome, Claude, Microsoft Edge, and WhatsApp. This innovation strategy puts Adobe in position to foster stronger user involvement, open up fresh enterprise possibilities, and maintain our leadership as the go-to trusted platform for digital documents in the AI era. Yesterday, we unveiled major improvements to Acrobat, driven by the Adobe Productivity Agent, which assist individuals and groups in comprehending the information within their documents more quickly, producing refined work with greater ease, and tapping into reliable knowledge on a large scale. Acrobat now transforms intricate documents into visually engaging interactive reports and summary slides, plus audio formats such as personal podcasts, allowing users to rapidly take in important insights. With tools such as Knowledge Base and Analyzer, teams can run searches over enormous collections of documents and pull structured takeaways out of thousands of files. That unlocks value from expertise organizations already possess, letting them make better and faster decisions at scale, with enterprise-grade governance, security, trust, and compliance backing it all. To win over the coming generation of business professionals, Student Spaces in Acrobat has launched globally, aimed at higher education and letting students build flashcards, quizzes, and study guides that help them understand their coursework more deeply and master it. Also, on the business professional and consumer side, some highlights: monthly active users for Business Professionals and Consumers rose more than 25% compared with a year earlier, surpassing 900 million. Acrobat AI Assistant's MAU was twice as high as the prior quarter. We're seeing robust enterprise uptake of Acrobat AI features among ETLA customers. Wins worth noting during the quarter included Amazon, Deutsche Post DHL, Honeywell, JISC, Renault, and The U.S. Department of Energy Los Alamos National Laboratory. Subscription revenue for Creative and Marketing Professionals came to $4.65 billion in Q3, up 12% versus a year ago. Regarding people who make things and those who do it professionally, the goal we have is enabling each individual to realize whatever they imagine across every kind of surface and medium. With Firefly, we are lowering barriers and boosting ease of use and speed for makers regardless of how much experience they have. Those working as Creative Professionals get our fullest suite of AI-powered strength and accuracy tools through Creative Cloud, supporting them throughout each phase of making something. Our distinct advantage comes from extensive specialized knowledge covering areas like imaging, design, video, photography, illustration, animation and 3D, along with how deeply intelligent we are when it comes to the flows creatives work through. On this call, we want to explain how Adobe — using Firefly and Creative Cloud — is rebuilding creative tools around agentic AI, so people get personalized benefits right away and are supported wherever they happen to be, with tools and agents that shift to fit what they need. Adobe also stays focused on providing experiences that are intuitive and aware of context, which respect the craft of creating, help creative work move faster, and make sure the coming generation of creators can succeed in a world that keeps changing. When it comes to models, Adobe's approach gives customers a choice, along with smart routing, so they can rely on whichever models suit their requirements best, all deeply embedded within Adobe's applications, which removes the hassle of jumping among different workflows and platforms. With the Adobe Creative Agent, customers gain the ability to have complicated, repetitive creative processes orchestrated and carried out on their behalf. On the call, we said the Adobe Creative Agent now reaches more Creative Cloud flagship apps, Photoshop and Premiere among them, which pushes conversational, agentic workflows further into our professional offerings. Several Photoshop innovations also arrived, handing professionals greater choice and control throughout every creative stage. One example is a new AI-assisted editor, currently in beta, which lets customers pick a dedicated interface plus a natural language prompt bar next to our generative tools built on leading AI models. Adobe Firefly serves as the all-in-one creative AI studio aimed at the next generation of creators. During Q3, we brought in native generation for music, speech and sound effects, delivering commercially safe AI audio into creative workflows. We rolled out fresh creative capabilities and resources, including Create Storyboard and Create Brand Kit, designed specifically with social creators and solopreneurs in mind, plus further upgrades that allow Firefly AI Assistant to become increasingly tailored and attuned to context as time goes on. We reached an agreement to purchase Topaz Labs, bringing cutting-edge AI enhancement models into Adobe Firefly, Firefly Services and Creative Cloud apps, so that creators, designers, video professionals, photographers and enterprises gain the tools needed for outstanding quality in any format or workflow; with more than 1 million users, Topaz Labs and its Emmy Award-winning AI technology are set to be folded into Adobe's Creative AI portfolio, letting customers improve footage, restore and remaster archival content, and merge AI generated material with traditionally captured material into seamless final productions. The deal should close in Q4, pending regulatory approvals and other customary closing conditions. Firefly Enterprise — the umbrella covering Firefly Services, Adobe Firefly Foundry, and Adobe Brand Intelligence — helps the biggest brands on the planet industrialize how they make content, using custom models that stay on-brand. This past July, we expanded that offering by rolling out Adobe Firefly Graph Enterprise Edition along with Firefly Creative Production Enterprise Edition, which give companies reusable, node-based workflows for creative work and the ability to produce at massive scale. We also introduced a fresh Simulate capability within Adobe Brand Intelligence that lets you predict how a campaign will perform ahead of publishing the content. In addition, we announced that Disney Imagineering is incorporating Firefly Foundry into the toolkit it uses for theme park design, which lets Disney stories, characters, and experiences come to life in the parks faster than they ever could before. And we're pushing hard on our worldwide plan to bring millions of next-generation creators into the Adobe ecosystem. Collaborating with Saudi Arabia as it prioritizes AI and digital literacy, we expanded our alliance with HUMAIN and the Ministry of Communications and Information Technology. The goal is to provide Adobe Firefly and Express to all 27 million citizens and residents of the country, and to support building a fresh image generation model customized for Saudi culture.

On the Additional Creators and Creative Professionals side, some highlights: our creative freemium MAU has now crossed 100 million, up more than 70% year-over-year. AI usage intensity keeps climbing, with credit consumption rising quarter-over-quarter across both Creative Cloud and the Firefly app. Firefly ending ARR, combining the Firefly app and Firefly credit packs, was up 40% quarter-over-quarter. Enterprise deals closed this quarter include Academy Sports, Disney, Jet2, Perficient, Premier League, Publicis, Tennis Australia and T-Mobile. I'm thrilled that in November we'll host Adobe MAX in Miami Beach — the largest creativity conference anywhere — welcoming over 10,000 people from our worldwide community and connecting with hundreds of thousands more virtually. This year's event will highlight breakthrough innovations spanning Creative Cloud, fresh Firefly capabilities and connected workflows for Firefly Enterprise, all driven by agentic AI. MAX is always a moment to celebrate what the community creates, and we can't wait to show how Adobe magic is reshaping creative workflows and opening up new possibilities. Now to Marketing Professionals. Our approach centers on delivering Adobe CX Enterprise, the agentic system of record for Customer Experience Orchestration, covering the whole customer life cycle — from finding and engaging prospects through driving conversion and building lasting loyalty. Adobe CX Enterprise zeroes in on 3 critical solutions. There's the experienced platform plus native apps for customer engagement, Adobe GenStudio for the content supply chain, and Adobe Experience Manager along with agentic web apps for brand visibility. More than 20,000 global enterprises depend on Adobe, and we're helping them reimagine their customer experience for the agentic AI era. With Adobe CX Enterprise, we're unique in uniting creativity, marketing and agentic AI, making it simpler to transform how enterprises handle the customer life cycle. This value reaches customers via proprietary CX intelligence, agentic orchestration, governed workflow execution, open ecosystem connectivity and enterprise-grade trust — all built by us over several years — giving customers a practical route from the apps they rely on today to a full end-to-end agentic AI system; during Q3, we shipped the first unified brand visibility solution, uniting Semrush AI visibility intelligence with Adobe's agentic content optimization capabilities, anchored in a deep grasp of business and brand context. Adobe brand visibility is a complete solution for generative engine optimization, merging the industry-leading capabilities of Adobe LLM Optimizer with Semrush AI optimization. Customer interest is tremendous in tapping our database of almost 300 million real-world AI search prompts to see how their brands appear across leading platforms like ChatGPT, Google AI Mode, Microsoft Copilot and Perplexity AI. At the Cannes Lions International Festival of Creativity in June, we rolled out a major expansion of Adobe GenStudio to help brands reach customers wherever they are at the moment of purchase — whether in a stream or in a scroll. GenStudio for Commerce Media Networks lets retailers attract advertising partners through self-serve, on-brand creative built straight from product listings and category context. We’ve additionally broadened the Adobe Brand Intelligence feature set, letting marketing organizations see in advance how creative material is likely to land with target audiences prior to publication. That’s exactly what an agentic content supply chain requires, delivered at the pace our clients expect. Customer enthusiasm has been enormous for CX Enterprise Coworker — the purpose-built AI agent within CX Enterprise that carries out sophisticated marketing and customer engagement processes on its own. Launched for general availability during June, CX Enterprise Coworker engages marketers on their own terms, weaving agentic intelligence straight into the engagement life cycle, delivering options and oversight while helping teams move more quickly, expand personalization and keep refining results. CX Enterprise Coworker pulls together insights from Adobe as well as outside applications, all while orchestrating AI agents and processes spanning analytics, content production and journey coordination. Early response from customers is robust, with more than 1,700 clients and early adopters using CX Enterprise Coworker. Further Marketing Professionals takeaways were: closing ARR growth above 20% year-over-year for AEM and agentic web apps individually, plus Adobe GenStudio and AEP and apps; ongoing momentum in subscription services, fueled by forward deployed engineering and strategic value realization work alongside customers. In Q3, industry analysts recognized us as the top leader in 2 Forrester Waves — covering customer data platforms for B2C and experience optimization solutions — along with 2 IDC MarketScapes for Worldwide AI-Enabled Customer Data Platforms serving B2B users and B2C users. Q3 global enterprise customer wins featured Academy Sports, Alpine Racing, BNP Paribas, Humana, IKEA, Jet2, Marriott, MSC Cruises, Publicis, Royal Bank of Canada, Vanguard and Wells Fargo. Going forward, Adobe is positioned strongly to lead globally in agentic software across creativity, productivity and customer experience; we’re drawing on remarkable assets, deep domain expertise, a demonstrated history of product innovation, a vast customer community ranging from individuals to small businesses to the world’s biggest enterprises, varied worldwide routes to market, a values-driven culture, highly motivated staff, a trusted and widely recognized brand and the financial capacity to keep investing for what’s ahead. The opportunity before us excites me enormously, and I can’t wait to share further updates. I’ll hand things over now to Steve.

Thanks, Anil. To kick things off, I'll take you through our Q3 FY '26 results at Adobe, highlight what fueled growth in each customer segment, and finish with the financial goals we're putting forward. In Q3, Adobe achieved all-time-high revenue of $6.76 billion, up 13% compared with a year earlier on a reported basis and 12% in constant currency. GAAP diluted earnings per share were $4.62, while non-GAAP diluted EPS reached $6.13. Here's what Q3 delivered on the numbers side. Adobe's total ending ARR came in at $27.5 billion, which is 11.2% higher than the same period last year. Subscription revenue across all customer groups was $6.56 billion, a 14% year-over-year gain, and 13% if you strip out currency effects. When we closed the quarter, RPO was sitting at $22.16 billion, up 8% from a year earlier, and cRPO climbed 9% year-over-year — those figures hold whether you look at reported numbers or constant currency. Operating cash flow set a Q3 record at $2.52 billion, and we finished Q3 with $5.64 billion in cash plus short-term investments. We also repurchased about 9.5 million shares during the quarter. One more note on capital return: the March 2024 authorization was completely used up by the time Q3 ended, and roughly $24.55 billion is still left under the April 2026 authorization. For Business Professionals and Consumers, subscription revenue came in at $1.91 billion. That's a 16% increase compared with a year earlier as reported, or 15% when measured in constant currency. During Q3, the growth drivers for Business Professionals and Consumers included double-digit ending ARR growth versus the prior year in every geography; Acrobat+ Express MAU surpassed 900 million, rising over 25% year-over-year; Acrobat AI Assistant MAU was up twofold from the previous quarter; and solid SMB results through inside sales as well as the reseller channel. Subscription revenue for Creative and Marketing Professionals reached $4.65 billion, a 13% year-over-year gain, or 12% in constant currency. During the third quarter, several factors fueled expansion among Creative and Marketing Professionals. First, we saw ongoing momentum for Creative Cloud in both team and enterprise products. Second, monthly active users in our creative freemium tier—which includes Firefly Express plus the web and mobile editions of Premiere, Photoshop, and Lightroom—crossed the 100 million mark, representing year-over-year growth above 70%. Third, Firefly's ending annualized recurring revenue, spanning both Firefly applications and credit packs, rose 40% compared with the prior quarter. Fourth, Firefly Enterprise gained more customers, with usage speeding up quarter-over-quarter. Fifth, ending ARR for Adobe Experience Manager and agentic web apps, Adobe GenStudio, and Adobe Experience Platform and apps each grew by more than 20% versus a year earlier. Sixth, the number of paying customers for brand visibility solutions was twice as high as the previous quarter, which helped brands improve how visible they are in both traditional and generative search. And seventh, we maintained solid retention throughout our enterprise client base. With that, let me turn to our financial goals, which are based on the macroeconomic environment as it stands today. For the fourth quarter of fiscal 2026, our guidance for Adobe's overall revenue is a range of $6.8 billion to $6.85 billion. Within that, we expect Business Professionals and Consumer subscription revenue to come in between $1.93 billion and $1.95 billion, while Creative and Marketing Professionals subscription revenue should land in the range of $4.665 billion to $4.695 billion. On the earnings side, we're projecting GAAP EPS of $4.65 to $4.70, along with non-GAAP EPS of $6.30 to $6.35. Our fourth-quarter assumptions also include a non-GAAP operating margin of roughly 44%, a GAAP tax rate of about 22%, and a non-GAAP tax rate of approximately 18%. Because our performance so far this year has been strong, we're increasing our full-year revenue and EPS targets. As we look forward to fiscal 2026, one of our objectives is total Adobe revenue in the range of $26.576 billion to $26.626 billion. For the Business Professionals and Consumers subscription segment, we're aiming for $7.47 billion to $7.49 billion. In the Creative and Marketing Professionals subscription area, the target sits at $18.242 billion to $18.272 billion. We expect the total Adobe ending ARR book of business to grow 10.2% year-over-year, measured against the $25.66 billion figure where our FY '26 book of business starts. GAAP EPS should land between $18.12 and $18.17, while non-GAAP EPS is projected at $24.45 to $24.50. Assumptions behind these FY '26 targets include a non-GAAP operating margin near 45%, a GAAP tax rate around 22.5%, and a non-GAAP tax rate of roughly 18%. The strides we're making with our strategy give us encouragement. Through agentic experiences, we're growing our user base and strengthening engagement among current customers; by executing with focus and investing with discipline, we're fueling durable growth over the long term. At this point, I'll hand things back over to Shantanu.

Appreciate that, Steve. I'd like to convey my sincere gratitude to each of our staff members, clients, partners, and shareholders for the backing they have given Adobe throughout the time I have served here. Thank you; at this point we'll open the floor to your questions.

Anil, based on what you said at the start of your prepared remarks, plus the press releases that have come out since the announcement, agentic really seems to run through everything here. Could you speak to how significant a role this will play in where you're taking the strategy? And maybe go a bit deeper on what that longer-term trajectory for agentic looks like and where things might ultimately land?

Thanks, Matt. Yeah, as I mentioned during my remarks, I see a huge opportunity for Adobe to lead when it comes to agentic software for creativity, productivity and customer experience. That's exactly the position we've held in SaaS for those same categories. Broadly speaking, throughout the industry, my belief is that each SaaS company is going to undergo this shift toward agentic software, the same way software companies moved from on-prem to SaaS a number of years back and Adobe pulled that off quite successfully. So when I speak with customers in our categories, what I hear is that when they're searching for agentic software, what they're really after is a single product architecture — one that keeps evolving so that people can pick whatever interface they prefer, be it conversational or something more traditional such as ChatGPT or Claude or Copilot, together with the capabilities they get from Adobe; and we're enabling that, as you've seen in what we've announced across creativity, across productivity and also the CX announcement like Adobe marketing agent; we're enabling it through other interfaces and through our own as well, the way we're doing with our apps too. Next, they want flexibility around models; they want to be certain they can reach the best models out there; and we, as the one providing the agentic software, pair the best available model with the best task and make things simple for users; and that's something we do extremely well. There will be a creativity agent, which we discussed, and a productivity agent too. And beyond that, they want to be certain the apps draw on their enterprise data and context, so there's no hallucination, so they get results they can actually use and can count on predictability when using AI. And that's something we handle really well with, say, the CX Enterprise Coworker we discussed, since it's built on top of the Adobe Experience platform, where we deliver over a trillion experiences each year. And then there's value. They want to be certain that whoever provides the agentic software helps them capture the full value of it, pulling everything together through all the complexity that comes with AI and software. And that's exactly what we're accomplishing with the growth we're seeing across our forward deployed engineering and our value realization teams. That's my view on how this will develop, and I believe there's a huge chance for us to take the top spot — to lead in agentic software across creativity, productivity and customer experience.

Congratulations, Anil and Shantanu. I want to give you both credit for 29 years of leadership here at Adobe. Anil, this question might be directed at you. When the news came out about your transition into the CEO role, one thing people wondered was whether your experience in digital experience signals where the Board sees Adobe's future growth potential. I'd like to hear your thoughts on that and how you approach it.

I'll let him respond, Saket, but allow me to share a few points on the Board's behalf. First, I'm genuinely delighted that we found someone from within who grasped the company. We had 2 excellent internal candidates. That mattered to the Board, I believe. Of course, Anil will take charge of the whole company strategy and make it his own. Still, it's worth remembering that in searching for our next leader, we wanted someone who would fully embrace all the opportunity the company possessed. And then determine how they wished to reshape it going forward. With that as background, I'll let Anil speak specifically about the enterprise side; and perhaps the final thing I'll mention is that Anil and I both agree that regarding how software gets sold, individuals and ensuring we delight individuals will matter even more going forward. Anil?

Okay, thank you, Saket. I appreciate that. The first point I wanted to make is this: I came on board in January 2020. Then, before that year was over, Shantanu requested that I assume responsibility for our enterprise feed operations company-wide. From that starting point onward, my team and I served as representatives of the whole of Adobe in front of our customers. So, take an illustration we presented — Disney, for instance — they regard us as a single Adobe; that has mattered a great deal. And I've been given the chance to genuinely stand for all of Adobe in creativity, productivity, and customer experience with every one of our enterprise clients. I view that chance precisely the way Shantanu described it — spanning the 3 product categories and spanning the full spectrum of customers, from individuals to the hundreds of thousands of small businesses we serve to the 20,000-plus enterprise customers — I see enormous opportunity throughout our entire base.

That's wonderful to hear. Congratulations to the two of you.

I'd like to build a little on what Saket asked. As you think about the coming stretch of years, which strategic, technical, financial, or competitive hurdles or initiatives do you consider the most consequential for Adobe? That's quite a wide-ranging question, but I'd really value hearing your perspective on it; and then one brief item for Steve. Your RPO figure has me somewhat worried. Growth in the single digits versus a year ago was the first time in single digits since fiscal '23 — early fiscal '23 — and it declined quarter over quarter. Was there anything out of the ordinary regarding how RPO was consumed as it came out of Q2? Or perhaps you could walk through a few of the specifics there.

Well, I appreciate that, Jay. To start, if we survey our categories, take for instance our Business Professionals and Consumers, we're clearly standing on a great many assets. We've just passed 1 billion in monthly active users. We possess the decades of domain expertise in PDF; so we're building atop lots of different assets accumulated over time. So as you consider what lies ahead, clearly the emphasis right now is on how we take all those assets and create the new capabilities the world of agentic software demands. And we observe the identical pattern unfolding across all 3 of our major category areas, be it the productivity space I just mentioned or the creative world, for instance, uniting the strength of these new models, and ensuring we deliver AI's value to the user as quickly as possible, securely, accurately and cost efficiently, making that — that's what our users and customers want. So being able to pull all of that together is truly where we're focused across each of our categories.

Sure, Jay. Regarding RPO, you're correct — it was up 8% compared with a year earlier, while CRPO rose 9%, which shows we keep carrying out our strategic initiatives. I'd describe that growth as in line with how our ARR has been trending. It also mirrors our determination to speed up adding new users via the freemium model. That said, when you zoom out and examine how things move across a normal year, RPO and CRPO both rise in Q4 and then stay roughly level through the following 3 quarters. In terms of that pattern, this year matches what we've seen before.

Brian Hyska here, on behalf of Samik. Your Q4 guidance suggests just a slight increase in sequential revenue for Creative and Marketing Professionals. Would you mind taking us through the assumptions behind that view?

Regarding Q4 — I believe if you begin looking toward Q4, if you consider — allow me to break down Q4 for you. To start, I want to note that we restated our full-year guidance of 10.2% growth for the entire year when it comes to closing ARR. Now, if I break that down by audience. So for our Business Professionals and Consumers, we're thrilled about the innovation we announced just yesterday in Acrobat and Express, and that will provide a boost to our growth in Q4, and that will clearly flow through to revenue in quarters ahead. With Firefly and Creative Cloud, we have amazing innovation, breakthrough releases lined up leading into MAX, whether that's with creators or with creative professionals. And so we will — we're going to see — that gives us confidence for our creative professionals and the creative professionals and creators category. And then in customer experience, we'll have the — we're beginning with a robust pipeline, and we're going to — we'll gain the advantage of seasonality, as I noted, plus the innovations we introduced. So that's what provides our confidence for Q4. And if — I'm not sure whether you'd like to add to that, Steve, regarding the specific revenue remark.

Yeah. So when you look at the revenue guidance we released, what you'll notice is that for Q4 we've moved it upward, carried that across the first 3 quarters of the year, and then measured it against the June guidance we'd issued. The increase touches CMP subs, BP&C subs, and the whole company, coming to roughly $50 million at the midpoint. So yes, we treat our guidance as something we take seriously, and we're happy to be delivering an increase this quarter.

Great. And I'll add my congratulations to Shantanu for an epic run, and to Anil for the exciting journey ahead. As for my question, Anil, it's wonderful to hear that Firefly and credit pack ARR keeps growing nicely, and that credit consumption is speeding up. Could you discuss what's fueling that acceleration? Is it broad usage, or are specific kinds of generations really behind it? And how do you see that developing going forward?

Yes. I think if — just returning to what we discussed regarding how we're driving our freemium strategy for growth; we're initially focused on making sure we're acquiring new users. So as we mentioned, that's been doing really well — we went over it during the June earnings call. On the creative freemium side, monthly active users have now passed $100 million, which is up more than 70% compared to a year ago. That's how we're pulling people into the funnel. From there, our focus stays on getting them to use AI more intensely and to engage more deeply with the products. And that engagement is beginning to show up in ARR — you can see it in the Firefly ending ARR, the apps, and the credit packs, which together posted 40% growth quarter-over-quarter. It's that intensity of usage that's really driving the growth.

One more point I might mention — specifically about what’s behind this — when you consider how much innovation is being poured into Firefly, it’s magical; and with video especially, you’re seeing a great deal of video usage. So that definitely helps on that front; and inside Creative Cloud too. I know we discuss AI first revenue quite a bit. If you think about AI influence revenue and what Creative Cloud is driving, across all the core desktop applications, the credit consumption there is also very robust, which simply shows how essential AI has become to how those products are used; so those are 2 additional things I would mention.

Ivan here, speaking on behalf of Alex. To begin with, Anil, congratulations on your new position, and Shantanu, naturally, on the incredible foundation. Perhaps returning to the quarter just past, at the time you provided guidance, you pointed out that you anticipated headwinds stemming from intensifying the premium approach and subsequently postponing the pricing efforts. So as much as you're able, could you give us a bit more detail regarding what portion of the headwind originated from each of these two? Then, as a brief second question, are there any fresh perspectives on when those postponed Creative Cloud pricing optimizations will pick back up?

Right. I believe the two items we mentioned — and then I'll let Anil chime in. What I mean is, the two items we brought up that mattered greatly to us were, first, inside the organization, let's ensure we possess a truly unified concentration and bring the company into alignment regarding what mattered; and I've always enjoyed saying that I prefer to feel impatient about something, and we are extraordinarily impatient to bring in a large number of users, which is exactly what the MAU showed. That is, the MAU expansion and the way we're examining MAU and fueling MAU growth, we feel will be essential to the company's future expansion. So the two items we had stated back then were, let's achieve a unified concentration. The other item I'd mention is that we're truly in an exceptionally lucky situation at present. When you examine how our products are segmented, we absolutely possess enormous value that we provide based on which portion of the population is utilizing it. Regarding your point, inside the Creative Cloud, we can keep constantly discovering methods to provide additional value. However, I genuinely feel the company has done extremely well in that unified concentration of, let's provide plenty of innovation surrounding Firefly and the platform for Firefly, let's ensure we concentrate on MAU. And that was genuinely what propelled it. When you look at BP&C, we achieved solid growth on BP&C. So this falls within the creative side of establishing Firefly, I'd say; and I'm genuinely quite pleased that we didn't concentrate on the pricing actions, because that — though it might have offered some near-term relief, would not be as essential as persisting in fueling new user adoption; so that's my response to that question.