DATE

Thursday, June 12, 2025 at 5 p.m. ET

CALL PARTICIPANTS

Chairman, President, and Chief Government Officer — Shantanu Narayen

President, Digital Media Enterprise — David Wadhwani

President, Digital Expertise Enterprise and Worldwide Subject Operations — Anil Chakravarthy

Government Vice President and Chief Monetary Officer — Dan Durn

Want a quote from one in all our analysts? E mail [email protected]

TAKEAWAYS

Complete Income: $5.87 billion in income for Q2 FY2025, up 11% year-over-year, as reported and in fixed foreign money.

GAAP EPS: $3.94 GAAP earnings per share for Q2 FY2025; Non-GAAP EPS: $5.06 non-GAAP earnings per share for Q2 FY2025, representing 13% year-over-year progress.

Digital Media Income: $4.35 billion for Q2 FY2025, Digital Media income grew 11% year-over-year as reported.

Digital Media Ending ARR: $18.09 billion Digital Media ARR for Q2 FY2025, up 12.1% year-over-year for Digital Media ending ARR.

Digital Expertise Income: $1.46 billion income for Q2 FY2025

Digital Expertise Subscription Income: $1.33 billion subscription income for Q2 FY2025, up 11% year-over-year.

Money Move from Operations: $2.19 billion in money flows from operations for Q2 FY2025, a file for the second quarter.

Remaining Efficiency Obligations: $19.69 billion for Q2 FY2025

Month-to-month Energetic Customers (MAU): Over 700 million month-to-month lively customers throughout product classes as of the top of the quarter, with over 25% year-over-year MAU progress for Acrobat and Categorical mixed.

Categorical Capabilities Adoption in Acrobat: Categorical capabilities adoption in Acrobat grew roughly 3x quarter over quarter and ~11x year-over-year.

Subscription Income by Group: Enterprise Professionals and Shoppers — $1.6 billion in subscription income for the enterprise professionals and shoppers group in Q2 FY2025, 15% year-over-year progress for the enterprise professionals and shoppers group subscription income. Artistic and Advertising and marketing Professionals — $4.02 billion in subscription income for the artistic and advertising and marketing professionals group in Q2 FY2025, 10% year-over-year progress.

Generative AI Utilization: Complete generations throughout Firefly and Artistic Cloud topped 24 billion as of quarter finish.

Firefly App: paid subscriptions almost doubled sequentially.

Accomplice Integrations: Categorical add-ons with companions (Google Advertisements, Vimeo, Bitly) grew over 25% quarter-over-quarter.

Q3 Steerage: Complete income anticipated at $5.875 billion–$5.925 billion for Q3 FY2025; GAAP EPS $4–$4.5 for Q3 FY2025; non-GAAP EPS $5.01–$5.2 for Q3 FY2025; Digital Media income $4.37 billion–$4.4 billion.

Full-12 months FY2025 Outlook Raised: Complete income now $23.5 billion–$23.6 billion for FY2025; Digital Media income $17.45 billion–$17.5 billion for FY2025; Digital Media ending ARR progress focused at 11% for FY2025.

AI Guide of Enterprise: Administration reported AI-influenced ARR within the billions, and monitoring above $250 million goal for AI Direct ARR by finish of FY2025.

SUMMARY

Adobe (ADBE 0.30%) delivered file income within the reported interval and raised full-year steering on key metrics, citing ongoing sturdy adoption of AI-powered and artistic options. Administration detailed rising demand and accelerated monetization throughout key segments, emphasizing progress in person progress, product integration, and enterprise adoption. Expanded choices, heightened companion exercise, and notable momentum in each buyer acquisition and retention.

Wadhwani said, “Traffic to the Firefly app grew over 30% quarter over quarter.”

Firefly’s paid subscription base almost doubled quarter over quarter, whereas time Adobe subscribers to Firefly grew over 30% quarter over quarter.

Chakravarthy highlighted that “Gen Studio for performance marketing” posted over 45% sequential progress.

A number of executives reported sturdy demand for AI-powered options, with Firefly companies and customized fashions skilled 4x year-over-year ARR progress.

Administration confirmed rollout of Artistic Cloud Professional and Firefly app subscriptions, pricing new Firefly tiers at $10, $20, and $200 monthly, respectively, to drive phase enlargement.

Current world buyer wins cited included Cisco, County of Los Angeles, the Nationwide Soccer League, and the Premier League.

Business partnerships expanded, with main platforms together with Meta, Google, and extra advert channels integrating Adobe’s Gen Studio.

Durn confirmed a $3.5 billion share repurchase in Q2 FY2025, with $10.9 billion of buyback authorization remaining as of quarter finish.

Subscription income for mixed artistic and advertising and marketing professionals accelerated to a ten.1% year-over-year progress price.

INDUSTRY GLOSSARY

ARR (Annualized Recurring Income): The annualized worth of lively subscription contracts on the finish of a reporting interval, reflecting the corporate’s subscription enterprise momentum.

MAU (Month-to-month Energetic Customers): The variety of distinctive customers participating with a services or products in a given month, a key metric for person adoption and engagement.

PLG (Product-Led Progress): A go-to-market strategy that drives buyer acquisition, enlargement, and retention by means of direct product utilization quite than conventional sales-led techniques.

CRPO (Present Remaining Efficiency Obligations): The portion of remaining efficiency obligations anticipated to be acknowledged as income inside the subsequent 12 months.

Firefly: Adobe’s AI-powered utility and foundational fashions for artistic ideation, picture/video technology, and content material manufacturing throughout design workflows.

Gen Studio: An built-in platform enabling content material planning, creation, administration, and marketing campaign activation utilizing generative AI for advertising and marketing and artistic groups.

Artistic Cloud Professional: Adobe’s higher-value subscription bundle providing expanded AI and artistic options, together with entry to Firefly, positioned above normal Artistic Cloud packages.

Categorical: Adobe’s net and cell utility that includes AI-assisted design instruments aimed toward enterprise professionals and content material creators for fast design and publishing.

AEP (Adobe Expertise Platform): Adobe’s information and buyer journey orchestration spine for expertise administration, segmentation, and marketing campaign optimization at scale.

Full Convention Name Transcript

Shantanu Narayen: Thanks, Steve. Good afternoon, and thanks for becoming a member of us. Adobe delivered one other sturdy quarter reaching file income of $5.87 billion, representing 11% year-over-year progress. GAAP earnings per share for the quarter was $3.94 and non-GAAP earnings per share was $5.06, representing 13% year-over-year progress. At our Investor Assembly in March, we outlined our progress technique for the corporate centered on delivering transformative innovation for various buyer audiences, enterprise professionals, shoppers, creators, artistic professionals, and advertising and marketing professionals. The artistic alternative is increasing throughout audiences with AI as an accelerant. It’s opening the content material floodgates, tapping into everybody’s creativeness, and massively increasing the variety of artistic belongings being created, edited, built-in, and delivered.

There are billions of enterprise professionals and shoppers on this planet who wish to be each artistic and environment friendly to perform their targets. They see AI and conversational interfaces as a extra productive approach to speed up artistic storytelling and to shortly synthesize data throughout a number of paperwork. They’re on the lookout for fast and straightforward instruments which can be obtainable on each computing floor and a simple on-ramp that enables them to trial merchandise and subscribe based mostly on the worth derived. As the necessity for artistic expression continues to develop exponentially, creativity and productiveness are merging. AI could make them extra artistic and productive of their enterprise context.

Adobe pioneered artistic storytelling by means of groundbreaking functions like Photoshop and Illustrator and digital doc sharing with the introduction of PDF and Acrobat. Our technique is to carry productiveness and creativity to life for billions of customers throughout a wide range of surfaces. Acrobat AI Assistant is redefining how folks extract worth from digital paperwork, unlocking new ranges of productiveness by slicing time to insights by means of conversational interfaces. Adobe Categorical is utilizing AI to allow shoppers to shortly design and publish participating content material by means of conversational AI in an easy-to-use, all-in-one utility. Our distinctive worth proposition is integrating these options to facilitate a smoother creation-to-consumption course of by means of cell apps, net browsers, and desktop choices.

Adobe’s month-to-month lively customers throughout these classes now exceed over 700 million customers. Within the Artistic and Advertising and marketing Professionals group, artistic professionals want best-of-breed functions that allow them to carry their concepts to life throughout media varieties, together with imaging, design, video, pictures, illustration, animation, 3D, and extra. These choices want to increase throughout all surfaces and facilitate seamless collaboration with a number of stakeholders. The subsequent technology of creators is on the lookout for highly effective on-ramps by means of net and cell platforms. Ideation by means of AI is an rising class that will probably be made extra highly effective by means of assist for a number of artistic fashions.

Adobe is delivering a complete artistic platform that extends from ideation by means of creation to mass manufacturing and supply to handle this content material provide chain alternative. On the coronary heart of this artistic AI revolution is Adobe Firefly, an on-ramp to artistic expression that augments the ability of Artistic Cloud desktop functions. The Firefly app is a brand new vacation spot for AI-assisted content material ideation, creation, and manufacturing with Adobe’s complete household of commercially secure Firefly artistic fashions and an expansive ecosystem of third-party fashions. Firefly empowers artistic professionals to generate photographs, video, audio, and vectors from a single place, with unmatched artistic management, iterate on their creations by means of Adobe’s artistic apps, and seamlessly ship them into manufacturing.

Our assist for third-party fashions, together with from Google, OpenAI, and Black Forest Labs, provides creators the pliability to decide on the AI that works greatest for them, with Firefly upholding our requirements for IP security and transparency. We rolled out new Firefly choices globally, and we’ll be delivering extra innovation over the subsequent few months. Paired with Artistic Cloud apps, the Firefly app empowers artistic professionals with enhanced precision and efficiency, able to assist them at any time when and wherever inspiration strikes. The Firefly app is attracting new customers to the Adobe franchise, with time subscribers rising 30% quarter over quarter.

Our Digital Expertise enterprise was impressed by our imaginative and prescient to allow this artistic output to be delivered at scale by enterprises as a part of their digital market transformation. We’ve got a singular benefit and alternative to combine creativity, advertising and marketing, and AI to ship buyer expertise orchestration. Advertising and marketing professionals must create an unprecedented quantity of compelling content material and optimize it to ship personalised digital experiences throughout channels, together with cell apps, e-mail, web sites, social media, and promoting platforms. They’re on the lookout for agility and self-service, in addition to built-in workflows with their artistic groups and businesses. To realize this, enterprises require customized, commercially secure fashions and purpose-built brokers tailor-made to handle the inefficiencies of the content material provide chain.

Advertising and marketing practitioners, chief advertising and marketing officers, and Chief Digital Officers want options that allow them to amass, have interaction, and delight prospects throughout a wide range of channels and geographies. Adobe’s technique is to ship a complete advertising and marketing know-how platform leveraging AI to supply vertical options that combine content material, buyer information, and profiles throughout journeys in each B2B and B2C industries. Adobe Gen Studio and Firefly Providers are revolutionizing the content material provide chain throughout enterprises, empowering entrepreneurs to activate personalised on-brand content material throughout hundreds of thousands of touchpoints. For advertising and marketing professionals, Adobe Expertise Platform and apps and purpose-built brokers are redefining the way forward for buyer connection by enabling real-time orchestration of content material, information, and journeys.

Adobe’s differentiation lies in our best-of-breed industry-leading functions throughout net content material administration, analytics, buyer information platforms, commerce, journey orchestration, and workflow administration. We’re infusing AI in every of those options and mixing creativity and advertising and marketing in GenStudio by bringing collectively artistic ideation and manufacturing workflow, asset administration, content material supply, and content material analytics in a seamlessly built-in providing. Whereas our AI-influenced ARR is already contributing billions of {dollars}, our AI e book of enterprise from AI merchandise, reminiscent of Acrobat AI Assistant, Firefly app and companies, and Gen Studio for efficiency advertising and marketing, is monitoring forward of the $250 million ending ARR goal by the top of fiscal 2025.

I will now flip it over to David and Anil to debate the momentum in our companies.

David Wadhwani: Thanks, Shantanu. Hey, everybody. In Q2, Digital Media achieved income of $4.35 billion, which grew 12% yr over yr. We exited the quarter with $18.09 billion of Digital Media ARR, rising ending ARR 12.1% yr over yr. We proceed to see sturdy efficiency throughout our Enterprise Professionals and Shoppers group, the place customers are more and more turning to Adobe for merchandise that mix creativity and productiveness. Just about each enterprise skilled and shopper stands to learn from AI-assisted consumption, visually wealthy creation, and natively built-in collaboration. Our investments in conversational experiences in Acrobat and generative AI fashions in Categorical permit customers to mix the 2 merchandise in novel methods, empowering customers to speed up their time to perception and skill to create compelling displays.

Gross sales professionals can collect {industry} studies on a prospect, use AI assistant to shortly establish efficient gross sales conversations, and routinely generate a pitch deck. With Categorical, a social media marketer can ask AI assistant for assist figuring out shopping for behaviors in market analysis paperwork and use that data to create higher TikTok movies in Categorical. The mix of Acrobat and Categorical may also help anybody transfer from consumption to creation sooner with extra impactful content material than ever earlier than.

Because of this, we’re seeing regular progress throughout our household of Acrobat and Categorical merchandise, with mixed month-to-month lively person progress accelerating to over 25% yr over yr and crossing 700 million month-to-month lively customers, as Acrobat customers more and more depend on Acrobat AI Assistant to boost content material consumption and Categorical to create richer PDFs, custom-made displays, and animated designs. As a consequence of growing buyer demand for artistic performance by means of Acrobat, we noticed an roughly 3x quarter over quarter and roughly 11x yr over yr enhance within the adoption of Categorical capabilities inside Acrobat. Subscription income for the Enterprise Professionals and Shoppers group grew 15% yr over yr.

We’re quickly buying the subsequent technology enterprise professionals and shoppers throughout people, small and medium companies, and enterprises. With college students, we’re driving over 75% yr over yr enhance in college students having access to Acrobat AI assistant and/or Categorical premium plans. These merchandise are additionally seeing sturdy adoption by Categorical alone added round 8,000 new companies this quarter. Companies with over 35,000 new companies added in Q2. Roughly 6x progress yr over yr, together with corporations reminiscent of Microsoft, ServiceNow, Workday, Intuit, and high sports activities leagues like MLB, the NFL, and Premier League. Different highlights embody Acrobat PDF hyperlink sharing MAU grew over 20% yr over yr, serving to to drive viral adoption.

Use of generative AI options continues to develop shortly, with AI Assistant MAU in Acrobat and generative AI MAU in Categorical rising over 3x yr over yr. Acrobat AI assistant engagement continues to speed up, with the variety of questions requested almost doubling quarter over quarter. The Categorical ecosystem continues to develop, with companion add-ons rising greater than 25% quarter over quarter, with new integrations from Google Advertisements, Vimeo, and Bitly. Choose key world buyer wins embody Cisco, County of Los Angeles, the Protection Info Techniques Company, Macy’s, Ulta Magnificence. We’re additionally seeing the rising significance of artistic content material throughout artistic and advertising and marketing professionals.

Demand for artistic capabilities throughout mediums, together with imaging, design, pictures, video, illustration, and 3D, is on the rise as people and companies want visually compelling content material to face out in a crowded media panorama. Many people and organizations are turning to AI to develop high-quality content material with extra agility and effectivity. Because of this, the Firefly app is turning into the Artistic AI vacation spot for Artistic Cloud prospects and new customers alike to discover, ideate, create, and collaborate with AI workflows throughout media varieties. The Firefly app empowers anybody, from seasoned professionals to time creators, to generate a number of media codecs in a single product with unmatched artistic management and iterate on their creations throughout Adobe’s artistic apps.

The Firefly app advantages from our personal commercially secure Firefly Basis fashions throughout imaging, video, audio, vector, and design. Earlier this quarter, we launched the brand new Firefly Picture Mannequin 4 for lifelike photographs and the Firefly Picture Mannequin 4 Extremely for impeccable element and complicated visuals. We additionally made the Firefly video mannequin typically obtainable for the primary time, empowering creators to generate 4K footage from textual content prompts and pictures with unprecedented artistic management and prolong video clips in our instruments like Premiere Professional. Along with supporting our personal Firefly fashions, the Firefly app now helps a rising household of third-party fashions for artistic ideation.

Firefly gives the pliability to discover the varied aesthetic kinds of Google’s Think about and VO fashions, OpenAI’s GPT picture mannequin, and Black Forest Labs’ flux picture mannequin with runway, ideogram, fall AI, Luma, and PICA coming quickly. With the discharge of the Firefly board’s public beta earlier this quarter, creators can now ideate and collaborate when producing content material with Firefly and our third-party fashions. To monetize this unbelievable innovation, we now have launched a complete set of aimed toward new and present creators and artistic professionals throughout all routes to market. The brand new Firefly app subscription plans are perfect for creators beginning their artistic journey and are actually globally obtainable.

Artistic Cloud Professional, which mixes Artistic Cloud All apps and the Firefly app, represents the perfect worth for content material creation and is now obtainable in North America. Artistic Cloud Professional will probably be launched in different geographies over the subsequent few months. Different highlights embody the launch of the brand new Firefly capabilities in February continues to drive pleasure. Visitors to the Firefly app grew over 30% quarter over quarter, and paid subscriptions almost doubled in the identical interval. Firefly continues to drive new person acquisition, with time Adobe subscribers rising greater than 30% quarter over quarter.

We launched Photoshop Cell and launched main updates to our flagship Artistic Cloud apps, together with Photoshop, Illustrator, Premiere Professional, After Results, and Substance at Max London, garnering over 350 million video views throughout social media. Pleasure for and adoption of generative AI innovation reminiscent of generative fill in Photoshop, generative take away in Lightroom, generative develop in Illustrator, Generative Prolong in Premiere Professional, video technology within the Firefly app, and manufacturing workflows in Providers continues to speed up with over 24 billion cumulative generations exiting Q2. Key buyer wins embody Cisco, County of San Diego, DEBT Holding, Fanatics, Infosys, Schwartz World Sourcing, and Wells Fargo.

Creativity fuels the worldwide economic system and is the inspiration of how entrepreneurs have interaction with their prospects successfully throughout channels. Because of this, we’re seeing excessive enterprise demand for and adoption of Firefly companies and customized fashions to automate and scale on-brand content material manufacturing for advertising and marketing use circumstances. Adobe is uniquely positioned to paved the way in making use of AI to amplify creativity throughout the total continuum of content material creation. We’re excited in regards to the momentum we’re seeing in each flagship apps and new choices throughout our enterprise professionals and shoppers and artistic and advertising and marketing professionals teams.

Our rising base of month-to-month lively customers, accelerating use of generative AI, regular inflow of recent prospects, inclusion of companion fashions, and accelerating adoption of automation companies drove a powerful quarter with digital media income of $4.35 billion, and we’re happy to lift our income goal for the yr. I will now flip it over to Anil to speak about how this innovation is amplifying our momentum with advertising and marketing professionals.

Anil Chakravarthy: Thanks, David. Hey, everybody. Expertise Cloud had a powerful Q2, reaching income of $1.46 billion for the quarter. Subscription income within the quarter was $1.33 billion, representing 11% year-over-year progress and making us the biggest supplier in our class. Content material creation is the gasoline driving personalised experiences at scale. Adobe is the one firm unifying the complete workflow from creation and manufacturing, workflow and planning, asset administration, supply and activation, by means of to reporting and insights. Our buyer expertise orchestration technique allows enterprises to mix creativity, advertising and marketing, and agentic AI to ship personalised conversational digital experiences in actual time at world scale. With Adobe Gen Studio, we’re amplifying the worth of cutting-edge Gen AI capabilities throughout the end-to-end content material provide chain.

GenStudio optimizes the method of planning, creating, managing, activating, measuring content material for advertising and marketing campaigns and personalised buyer experiences. We launched GenStudio Basis, a unified interface to carry collectively from our full suite of content material provide chain functions offering visibility and actionable insights into marketing campaign plans, tasks, and belongings. Gen Studio for efficiency advertising and marketing empowers groups to create their very own on-brand content material, supporting advert creation and activation on Google, LinkedIn, Meta, Microsoft, Snap, and TikTok. We’re constructing on the momentum behind Firefly companies and customized fashions, addressing extra extremely desired options, together with video reframe and assist of third-party fashions for automation and price effectivity.

With The Coca-Cola Firm, we co-developed a brand new AI-powered design intelligence system referred to as Challenge Imaginative and prescient, constructed on Firefly companies and customized fashions. Challenge Imaginative and prescient is designed to scale artistic output as much as 10 instances sooner in AI-powered content material whereas tackling the frequent problem of misinterpreting model pointers. Adobe Expertise Platform and native functions are central to delivering unified personalised buyer experiences. With the introduction of AEP AI assistant, we have prolonged the platform’s worth by enabling groups throughout the enterprise to work together with information by means of pure language, streamlining ingestion, perception technology, viewers segmentation, and expertise supply. Constructing on this momentum, we are actually increasing AEP with native AI brokers that intelligently orchestrate buyer journeys in actual time.

These improvements empower our prospects to leverage their third-party buyer information and ship extra related, high-impact promoting experiences rooted in direct buyer relationships. The Nationwide Soccer League expanded our world partnership, combining content material information and journeys to ship a brand new degree of AI-powered fan experiences. Adobe will allow all 32 golf equipment to scale personalised fan touchpoints throughout NFL channels by means of mission administration, viewers and marketing campaign improvement, artistic manufacturing, and efficiency optimization. Adobe Summit in March, we launched the Adobe AI platform with an agentic layer to scale buyer expertise orchestration. We unveiled 10 brokers purpose-built for artistic advertising and marketing know-how groups that leverage Adobe Expertise Platform to behave intelligently and in alignment with enterprise objectives.

These brokers coordinate throughout techniques to speed up the supply of remarkable experiences. We just lately launched a product assist agent to assist enterprises anticipate, troubleshoot, and resolve operational points. Clients like Wegmans Meals Markets, Dentsu Merkel are already utilizing it to streamline onboarding and have deployment and drive sooner resolutions and better effectivity. Different highlights embody sturdy demand for AEP and native apps, with Q2 subscription income rising over 40% yr over yr. Momentum for Gen Studio for efficiency advertising and marketing with progress of over 45% quarter over quarter. Continued demand for Firefly companies and customized fashions as a part of the GenStudio answer leading to 4x yr over yr ARR progress.

The discharge of AEM Websites Optimizer garnered super curiosity from prospects like Qualcomm desperate to faucet its agentic capabilities, usability, and safety for helpful insights and proposals to enhance their web site’s efficiency. Business analyst recognition, together with being named a pacesetter within the Forrester Wave for collaborative work administration for the consecutive time, IDC MarketScape for worldwide related TV promoting platforms, and the Gartner Magic Quadrant for content material advertising and marketing platforms with Gen Studio options, together with Workfront, Adobe Gen Studio for efficiency advertising and marketing, Artistic Cloud, Firefly, and Categorical. Key world buyer wins, Aviva, Australia Publish, Dyson, Fiserv, Infosys, Main League Baseball, Manulife, Navy Federal Credit score Union, O’Reilly Auto Components, Premier League, SAP, UBS, Ulta Magnificence, and Wyndham.

We’re executing on our expanded imaginative and prescient of buyer orchestration to empower enterprises to ship personalization at scale within the period of AI. Enterprises are on the lookout for a know-how companion and platform to unify fragmented options and unlock better effectivity and worth. Main enterprise gamers, together with AWS, Microsoft, SAP, and ServiceNow, have endorsed Adobe as their companion for buyer expertise orchestration. We’ve got activated our world companion ecosystem, spanning top-tier know-how and media corporations, system integrators, and main businesses to speed up buyer expertise orchestration. Subsequent week on the Cannes Lions Competition, we’ll unveil a number of thrilling bulletins that underscore the ability of our category-defining options and partnerships. We stay up for participating immediately with prospects and company companions on the occasion.

With unmatched scale and a transparent innovation agenda, we’re well-positioned to proceed our progress. I will now move it to Dan.

Dan Durn: Thanks, Anil. At present, I will begin by summarizing Adobe’s efficiency in Q2 fiscal 2025, highlighting progress drivers throughout our companies, and I will end with monetary targets. In Q2, Adobe achieved income of $5.87 billion, which represents 11% year-over-year progress as reported and in fixed foreign money. GAAP diluted earnings per share in Q2 was $3.94 and non-GAAP diluted earnings per share was $5.06, representing 13% year-over-year progress. Second quarter enterprise and monetary highlights included Digital Media income of $4.35 billion, digital media ending ARR of $18.09 billion rising 12.1% yr over yr. Digital expertise income of $1.46 billion, money flows from operations of $2.19 billion, which is a file for Q2.

And exiting the quarter, remaining efficiency obligations have been $19.9 billion, rising 10% yr over yr, 11% in fixed foreign money. And CRPO rising 10% as reported and in fixed foreign money. In our Digital Media phase, we achieved Q2 income of $4.35 billion, which represents 11% year-over-year progress or 12% in fixed foreign money. We exited the quarter with $18.09 billion of digital media ARR, rising our ending ARR e book of enterprise 12.1% yr over yr in fixed foreign money. Inside digital media, second quarter progress drivers for enterprise professionals and shoppers included better than 25% year-over-year progress in month-to-month lively customers pushed by PLG optimization of the mixed Acrobat and Categorical premium funnel.

Robust acquisition, utilization, and monetization of our AI choices, Acrobat AI Assistant, Acrobat Premium, and Categorical. Accelerating adoption of Categorical artistic performance by means of Acrobat driving roughly 11 instances year-over-year progress of month-to-month lively customers attributable to growing buyer demand. File cell app retailer efficiency for Acrobat and Categorical mixed, rising ending ARR better than 40% yr over yr. And powerful adoption of Acrobat and Categorical by people, SMBs, and enterprises throughout geographies. Inside digital media, second quarter progress drivers for artistic and advertising and marketing professionals included progress of Artistic Cloud flagship choices pushed by CC All Apps, Photoshop, and Lightroom with explicit energy in rising markets pushed by Latin America, India, and Japanese Europe.

Rising traction of the newly launched Firefly app net subscription and Photoshop cell choices. Important utilization of Firefly and our Artistic Cloud and Firefly apps with complete generations crossing 24 billion exiting the quarter. And fast acceleration of artistic and advertising and marketing automation with Firefly service built-in with GenStudio within the enterprise. Turning to our digital expertise phase. In Q2, we achieved income of $1.46 billion, which represents 10% year-over-year progress as reported and in fixed foreign money. Digital Expertise subscription income was $1.33 billion, rising 11% yr over yr as reported and in fixed foreign money. Inside Digital Expertise, second quarter progress drivers for advertising and marketing professionals included {industry} demand for buyer expertise orchestration options, requiring built-in choices throughout content material, information, and journeys.

Driving larger worth from AI-infused prime and supreme tiered choices with present and new prospects. AEP and app subscription income rising better than 40% yr over yr, sturdy adoption of GenStudio with better than 25% year-over-year progress in ARR, and growing buyer worth making certain sturdy buyer retention. Adobe’s success is being pushed by innovation and repair of each enterprise professionals and shoppers, and artistic and advertising and marketing professionals. For the enterprise professionals and shoppers group, subscription income was $1.6 billion, which represents 15% year-over-year progress as reported and in fixed foreign money. For the artistic and advertising and marketing professionals group, subscription income was $4.02 billion, which represents 10% year-over-year progress, or 11% in fixed foreign money.

Moreover, historic subscription income for these buyer teams is now obtainable within the Adobe Investor Relations information sheet below supplementary buyer group information relationship again to FY 2023. Turning to the revenue assertion and stability sheet. Adobe’s efficient tax price in Q2 was 19.5% on a GAAP foundation, and 18.5% on a non-GAAP foundation. RPO exiting the quarter was $19.69 billion, rising 10% yr over yr or 11% in fixed foreign money. And CRPO rising 10% yr over yr as reported and in fixed foreign money. Our money flows from operations within the quarter have been Q2 of $2.19 billion, and ending money and short-term investments exiting Q2 was $5.71 billion.

In Q2, we entered right into a share repurchase settlement totaling $3.5 billion, and we at present have $10.9 billion remaining of our $25 billion authorization granted in March 2024. Let me now flip to our monetary targets, which assume present macroeconomic situations. For Q3 FY ’25, we’re focusing on complete Adobe income of $5.875 to $5.925 billion, Digital Media phase income of $4.37 to $4.4 billion, Digital Expertise phase income of $1.45 to $1.47 billion, Digital Expertise subscription income of $1.35 to $1.36 billion, GAAP earnings per share of $4 to $4.5, and non-GAAP earnings per share of $5.01 to $5.2. For Q3, we count on non-GAAP working margin of roughly 45.5% and a non-GAAP tax price of roughly 18.5%.

Because of us driving sturdy efficiency within the first half of the yr, we’re happy to lift our targets for FY 2025 complete income, Digital Media phase income, and EPS. In addition to reaffirm digital expertise subscription and phase income and Digital Media ending ARR progress for the yr. Moreover, we’re on tempo to surpass $250 million in AI Direct ARR e book of enterprise exiting the yr. For FY 2025, we are actually focusing on complete Adobe income of $23.5 to $23.6 billion, Digital Media phase income of $17.45 to $17.5 billion, Digital Media ending ARR e book of enterprise progress of 11% yr over yr.

Digital Expertise phase income of $5.8 to $5.9 billion, Digital Expertise subscription income of $5.375 to $5.425 billion, GAAP earnings per share of $16.3 to $16.5, and non-GAAP earnings per share of $20.5 to $20.7. In abstract, Adobe’s Q2 efficiency and revised FY ’25 targets replicate wonderful execution and the momentum we’re constructing throughout our portfolio in a dynamic macroeconomic surroundings. With a disciplined strategy to funding and deal with driving buyer innovation, we stay assured in our potential to ship sturdy shareholder worth. Shantanu? Again to you.

Shantanu Narayen: Thanks, Dan. Our sturdy Q2 efficiency highlights our momentum and the way we’re leveraging AI to drive exponential worth within the artistic economic system. Because of our technique and execution, we’re assured in our potential to ship worth to present prospects and appeal to new customers. I am extremely pleased with how our groups around the globe proceed to create the longer term, increase the bar, and convey our function to life. Adobe continues to draw nice expertise, and we’re excited to welcome new school graduates and interns to assist us change the world by means of personalised digital experiences. Thanks, and we are going to now take questions. Operator,

Operator: Thanks. If you need to sign with questions, please press 1 in your touch-tone phone. In the event you’re becoming a member of us right now utilizing a speakerphone, please be certain your mute perform is turned off to permit your sign to achieve our gear. Once more, that’s 1 if you want. The query comes from Saket Kalia with Barclays.

Saket Kalia: Okay, nice. Hey, guys. Thanks for taking my query right here. David, possibly David and Shantanu, possibly for each of you, you realize, the merging of creativity and productiveness positively appeared thematic. And possibly round that, it is fascinating to see the rising adoption of Categorical inside Acrobat. And will are you able to simply possibly speak about why that combo works and the way does the pricing work there? Does the shopper subscribe to each or only one? Thanks.

David Wadhwani: Nice. Thanks, Saket. Sure. As you as we have talked about for fairly some time, seeing an absolute explosion within the demand for, you realize, content material creation and increasingly visually content material creation. The rationale this works and why Acrobat and Categorical are actually, you realize, successfully a part of the identical worth proposition to enterprise professionals and shoppers, is that there is been a big quantity of labor that we have executed, analysis we have seen the place content material consumption for many individuals is absolutely the start of a content material creation course of.

As I’ve talked about previously, once we launched AI assistant, a few yr in the past now, what we began noticing is that as folks have been having conversations with the paperwork they have been utilizing, the very subsequent step or one of many final steps they did was principally ask the AI assistant to jot down a abstract for an e-mail or write a top level view for a presentation. Or give it stats for an infographic. Proper? And so what we have executed right here is we have introduced these merchandise collectively. And, in case you are utilizing Acrobat, you’ll be able to get entry to the entire capabilities of Categorical and what you get as a part of freemium there.

However what you’ll count on to see is increasingly deeper integration of the 2 going ahead, and we now have plenty of thrilling issues to share within the again half of this yr round that.

Saket Kalia: Very useful. Thanks. And the subsequent query will come from Mark Murphy with JPMorgan.

Mark Murphy: Thanks a lot and congratulations on the beat and lift efficiency. I observed on the Adobe Inventory web site that the amount of video content material actually took off throughout Q2. Positively. And I am thinking about simply what you see taking place there to drive the contributor uploaded content material larger, then additionally simply having seen the information with the Disney and NBCUniversal, you realize, submitting a copyright lawsuit that associated to among the AI-generated imagery. I am simply curious in case you have any view which may validate the Adobe technique of being commercially secure. And, you realize, having the content material and when you assume there’s any ramifications of that.

David Wadhwani: Yeah. Thanks for the query. , one of many issues I feel when you mixture the query, the way in which you are asking it, I imply, I feel one of many core rules for Adobe has and continues to be that we now have a substantial amount of respect for content material creators. We wish to be certain and assist them monetize content material, the content material they create in any means attainable, as a result of we predict it is simply good for the {industry}.

One of many issues that we have been doing over the past a few years is taking Adobe Inventory from being this unbiased functionality and simply integrating it all through so extra customers get extra worth and the demand for content material it continues to develop is absolutely at their fingertips. And because of this, if somebody’s utilizing Categorical or if somebody’s utilizing Artistic Cloud, or if somebody’s utilizing Firefly boards, they’re capable of entry this unbelievable, you realize, set of content material that is being developed by the group.

Extra just lately, to your level, we expanded that set to put money into plenty of what we name artistic missions so folks can submit extra video content material and video content material of all types for all totally different sorts of outputs, whether or not it is vertically oriented or horizontally oriented. And as that corpus of video content material has been increase, we’re seeing much more pull-through. And so the entire economic system round that’s working.

After which secondly, you realize, to the purpose you have been making round, you realize, the coaching information set and the way we prepare and compensate creators, this has been one of many core issues that we imagine, you realize, from the very starting, is that the proper clear and actually the one commercially secure approach to construct these fashions is to do it on a set of content material the place the contributors are themselves, you realize, excited and prepared members within the course of. And so we now have skilled our Firefly fashions, as lots of you realize, on inventory and different content material that we now have entry to. We do have a contributor fund that pays out to these people.

And because of this, we really feel like we’re in a really advantaged place on the subject of folks selecting Mannequin Well being, particularly in enterprises. We see plenty of corporations choosing Firefly partially due to the standard, partially due to the controllability of it, but in addition very, very strongly due to the protection of it. And we imagine that it is simply the proper approach to strategy it, and we imagine it is a secure wager for the long run on this {industry}.

Shantanu Narayen: And Mark, possibly if I have been to only add. I feel on the because it pertains to the opposite companies, they’ve all simply actually centered on the tip of the iceberg when it comes to ideation. And I feel Firefly with the for all of these fashions, would be the final artistic vacation spot and to you realize, I feel punctuate what David mentioned. Within the enterprise, the worth proposition that we now have resonates. As a result of even when you use it for ideation, you are not gonna use one thing that is not been designed to be intellectually, yeah, the mental property being right. For manufacturing. And so I feel that is why you are gonna proceed to see our stuff getting used for scale manufacturing.

As a result of it is so distinctive.

Mark Murphy: Wonderful. Thanks a lot. And the subsequent query will come from Kirk Materne with Evercore ISI.

Kirk Materne: David, I used to be questioning when you may stroll by means of kind of the preliminary response to the change on, you realize, the Artistic Cloud Professional. , what you are seeing on that entrance, after which kind of what you may be anticipating when it comes to these adjustments within the half of the yr from a income perspective? Thanks.

David Wadhwani: Yeah. If we take a step again and that is one which we now have been, I feel, pretty constant over the previous couple of years when it comes to our core technique. And we reiterated it at Summit just a few months in the past, is that, once more, the demand for content material has been, you realize, virtually insatiable. The variety of, you realize, folks desirous to create richer content material has been very sturdy. And one of many issues that we have talked about is that, traditionally, you realize, Artistic Cloud was, you realize, a single provide, whether or not it is Artistic Cloud All apps or Artistic Cloud Professional, actually doing double responsibility or triple responsibility throughout the complete ecosystem of individuals desirous to create content material.

And so we have been very methodically over the past couple of years extending the providing lineup. Proper, in order that we will meet the wants of enterprise professionals and shoppers with Acrobat and Categorical. We will meet the wants of creators with the brand new Firefly plans that we have launched just lately, whether or not it is Firefly Commonplace for in The US, $10, Firefly Professional for $20, or Firefly Premium, which has limitless entry to video technology as properly, for $200 a month. And for Artistic Professionals, we have been including very steadily, we have been including increasingly of those capabilities immediately within the instruments, the desktop instruments they know and love and use each single day.

The worth they’re getting out of it’s monumental. We talked about the truth that we have crossed 24 billion generations so far. And because of this, we have been capable of introduce the Artistic Cloud Professional plan, which is a higher-priced plan, however has much more worth built-in into the ecosystem of the desktop functions. But it surely additionally comes with the Firefly utility as properly. Then within the context of enterprises, we’re seeing an enormous progress of Firefly companies and GenStudio for automation of that content material. That basically matches into what we have been speaking about as our monetization structure p instances q plus v. Proper? The place amount progress comes from the enterprise professional and shopper.

We talked about how Acrobat and Categorical is seeing sturdy MAU progress at 25% yr over yr, crossing 700 million. Amount additionally comes from the Firefly app. We talked about site visitors being up 30% quarter over quarter. We talked about 2x subs progress there. 30% progress when it comes to new customers to Adobe quarter over quarter, for Firefly. When it comes to the pricing a part of that equation, we, you realize, we’re in regards to the elevated worth that we now have in Artistic Cloud Professional. That offers us some alternative to match the worth we’re offering the pricing. After which when it comes to the worth is round Firefly companies and GenStudio. In order that’s actually the expansion algorithm.

The factor to notice is that, you realize, as we go down this path, a few of this can take a while to play out as a result of we now have, you realize, for the amount facet, we now have freemium and cheaper price gives, however we’re beginning to see the early indicators of that. And when you do the maths and know, possibly flip it over to Dan, when you do the maths, our core artistic enterprise, subscription income has been accelerating over the previous few quarters.

Dan Durn: Yeah. And simply to construct on that, David, you realize, when you check out the supplemental disclosure that we offered, between the subscription income for artistic and advertising and marketing professionals, the subscription income for DX, you may fairly shortly derive what the subscription income is for the artistic and Artistic Professional viewers that we serve. And when you concentrate on the acceleration over the past I feel what you will see is within the present quarter, it rising 10.1% yr over yr, which is up from 10% in Q1. 4 or 5 quarters, you realize, within the yr in the past, interval, that very same 10.1% would have been about 7.9%. So simply over 2% acceleration over the past 4 quarters.

So we be ok with the way in which the technique is unfolding and our potential to execute towards that progress technique.

David Wadhwani: Kirk, to your different query about how this rolls out, simply to be clear, it is you realize, all this occurs on renewal and so, you realize, the excellent news is it is all forward of us. When it comes to the place that occurs, and we’ll roll it out in enterprise. We’ll roll it out in areas. And so, you realize, the excellent news is that the preliminary suggestions has been good, nevertheless it’s early because it pertains to, you realize, the rollout. In order that simply speaks to the natural energy.

Kirk Materne: Thanks all.

Operator: And the subsequent query will come from Tyler Radke with Citi.

Tyler Radke: Thanks very a lot for taking the query. I wished to ask about the way you’re fascinated about, you realize, total Gen AI utilization versus monetization. Within the quarter, it regarded such as you noticed one other quarter of about 4 billion Firefly generations, which is a large quantity, however I feel that is, you realize, been fairly in step with what you have seen within the final two quarters. So, you realize, two questions. Are you happy with that degree? , are there issues that you simply’re doing to extend the generations of that? After which of that 4 billion, like, how far by means of the monetization are you?

I imply, it looks as if seeing plenty of good success when it comes to new customers to the Firefly standalone apps and you realize, on observe on among the standalone AI targets for the yr. So simply assist us, you realize, assume by means of the monetization and type of that utilization incentivization, dynamics right here.

Shantanu Narayen: Yeah, Tyler. I feel underlying, you realize, the numbers, there’s been a good quantity of rearchitecture to guarantee that AI is absolutely driving it. I imply, even on the monetary analyst assembly, we talked in regards to the AI-influenced income and the AI direct income. The AI-influenced income is already within the billions as a result of that speaks to the worth that persons are getting throughout each, you realize, our DX merchandise, Acrobat merchandise, in addition to, you realize, the artistic merchandise. So throughout the board, there is not any query that AI is being a pleasant tailwind because it pertains to adoption. And we additionally mentioned we’re monitoring forward of the $250 million. The immense alternative is all forward of us.

And as we get this complete providing that we maintain speaking about, which is Acrobat, Categorical, Firefly Single App, Artistic Cloud Professional, which incorporates Firefly, Gen Studio, and, you realize, the AEP and apps. Every one in all them, we predict, has super alternative forward of us. So it’s extremely early when it comes to the AI monetization, however we’re very superior when it comes to how a lot innovation we have delivered. And so, you realize, it feels actually good proper now.

Tyler Radke: Thanks. And the subsequent query will come from Alex Zukin with Wolfe Analysis.

Alex Zukin: Sure. Hey, guys. Perhaps only one two-part query for me, and that is on the subject of competitors. It appears not less than by our math, it appears like Categorical is now at 50 million MAUs. So possibly simply touch upon the aggressive surroundings that you simply’re seeing down market with among the disruptors. After which with respect to outdoors of your conventional aggressive surroundings, possibly simply coopetition with distributors like Meta the place it not less than it is somewhat more durable for some traders to know given their growing utilization of AI to automate, you realize, type of advert creation and marketing campaign optimization. To what extent does that overlap versus companion with among the GenStudio choices?

Assume or not it’s useful to only go into that somewhat bit.

David Wadhwani: Nice. Yeah. Perhaps I will begin, and I will hand it over to Shantanu and Anil to handle the half. In the case of the expansion of our new net and cell choices, you realize, when you have a look at every part we have been doing with Categorical, every part we have been doing with the launch of Photoshop on cell. After all, Firefly is on the internet, and we have mentioned that it is coming to cell quickly as properly. We’ve got a Lightroom, after all, additionally being a really important a part of that.

, what we have been doing over the previous couple of years is taking that data-driven working mannequin that we have perfected when it comes to the online journeys and actually reallocating it, you realize, the entire at a big a part of what we have realized there from high of funnel technology to, you realize, efficiency advertising and marketing to conversion and retention, to virality, you realize, that complete ecosystem has been flowing very properly. Quite a lot of that we realized with what we have been doing with Acrobat, and now we’re making use of it to the opposite areas. , the opposite factor that has been enjoying in our profit, particularly with one thing like Categorical, is the broader ecosystem.

One of many issues that has been most fun to see is that Categorical adoption inside companies. We talked about how 8,000 onboarded into 8,000 new companies within the quarter with Categorical. We talked about quite a few actually nice logos clearly, with Intuit and Cisco and the NFL and Premier League coming into these items. And what’s actually nice about that’s it is actually a part of an enterprise-wide content material provide chain. Sale the place Categorical is built-in with AEM, Categorical is built-in with Workfront, and it is a means of taking all of the work that we’re doing on the DX facet of the enterprise, and empowering extra folks to take part in that and create content material that is on model.

Shantanu Narayen: I feel the 2 issues that I’d simply possibly add to that’s, because it pertains to even, I feel what you are calling the low finish when you think about, you realize, the enterprise professionals and shoppers. The quantity of mannequin that we now have, you realize, could be very important. So I simply wished to just remember to perceive that as a result of all of them use plenty of the merchandise which can be maybe, you realize, referred to inside the artistic professionals. However I feel to your different level, because it pertains to, you realize, the quantity of content material that is being created digital promoting, and the third-party assist, already introduced a complete bunch of third-party assist.

You are gonna see a complete bunch extra introduced. And each, you realize, kind of promoting platform, if that is what I can name it, desires the Adobe partnership because it pertains to GenStudio for efficiency advertising and marketing. I feel initially, you will most likely see SMEs, you realize, go together with maybe a extra proprietary channel. However I feel throughout every one in all these channels, we’re gonna be the one firm that folks have a look at to guarantee that in a seamless collaboration, they will put up. It is to Microsoft, whether or not it is to Google, whether or not it is to, you realize, Snap, TikTok, Meta, you title all of them, Amazon. All of those come on-line, they are going to be utilizing our Gen Studio for efficiency market.

However I will have Anil additionally speak about among the different issues, and hopefully, you realize, you will observe what we’re doing at Cannes as properly.

Anil Chakravarthy: Thanks, Shantanu. Yeah. As Shantanu talked about, you realize, when it comes to the advert platforms, clearly, the first purpose is to develop the advert income. The easiest way to do this is to guarantee that the artistic is optimized and the ROI from the advertiser’s perspective is obvious to the advertisers, which is the place our advertising and marketing stack, every part that we’re doing round GenStudio for efficiency advertising and marketing comes collectively very well. And so, you realize, we already introduced at Summit, together with Meta, and quite a few others, together with Google and so forth, and subsequent week at Cannes. Be asserting all the opposite main platforms as properly.

Alex Zukin: Would love to hitch you guys and may, however thanks for answering the query, guys. And we’ll take a query from Keith Weiss with Morgan Stanley.

Keith Weiss: Wonderful. Thanks guys for becoming me in, and congratulations on a stable quarter. Dan, identical to two clarification questions on the steering for the yr. You guys talked in regards to the adjustments within the all apps Artistic Cloud pricing, already being mirrored in steering. That is the time or that is or an instance of you guys stratifying that pricing and there is a capability for folks to kind of upsell or to the professional or kind of get a lower-priced version with the usual. How did you guys take into consideration that blend? Any steering you might give us on kind of your assumptions on the place prospects go primary.

And quantity two, any change within the FX assumptions on the income facet of the equation for the information for the total yr?

Shantanu Narayen: Sure. Keith, possibly I will begin off by saying that. I imply, I feel because it pertains to a artistic skilled, we would like CC Professional to be the candy spot. For, you realize, the place nearly all of customers will go. It is not dissimilar to what we have executed the place, let’s get extra Firefly app adoption. Let’s get extra adoption of the AI options inside the desktop functions. And transfer them to CC Professional being the perfect product as additionally they expertise what we’re doing with ideation and a number of merchandise. So, you realize, the purpose there may be clear. , the entire AI and generative functionality will more and more be greatest obtainable for our prospects by means of the CCPro utility.

Alternatively, that takes some time because it involves renewal if they’ve annual cycles. In order that’s the opposite factor that it’s a must to take into consideration. And as we roll that out in several areas. However from our perspective, we would like CC Professional and Firefly app to be, you realize, the candy spot of how this emerges. However we additionally imagine that CC, you realize, normal in addition to Firefly single app will proceed to be significant components of the enterprise after which on-ramp to the others. So hopefully, solutions your query on combine.

Keith Weiss: And on the FX facet of the equation?

Dan Durn: Yeah. I feel on the FX, I will go after which actually we will add. I imply, as you concentrate on, you realize, what we have executed with our DME income, there are two issues which can be, you realize, impacting the energy within the income. There’s some FX. I imply, consider that as possibly a small a part of the place you are seeing the profit. The overwhelming majority of the profit is absolutely taking place because of how we’re driving ARR and the income conversion for the enterprise. So, you realize, hopefully, that helps when it comes to how you concentrate on, you realize, what function FX has performed in our enterprise.

However the overwhelming majority of, you realize, the increase has to do with, you realize, ARR efficiency because it pertains to the income conversion of that into income.

Keith Weiss: Wonderful. Thanks for the clarification.

Operator: And we’ll go to Brent Thill with Jefferies.

Brent Thill: Thanks. Shantanu, you used double-digit progress as your true north for rising the corporate. Assume everybody’s curious with AI. Are you much less or extra bullish on that 10% true north that you have been speaking by means of?

Shantanu Narayen: Properly, Brent, I imply, let’s take a look at among the info. And possibly, you realize, as we take into consideration, you realize, what’s occurred within the enterprise, you realize, I feel on the FA assembly, we tried to speak about, hey. Whereas the expansion on progress, and that is what you of us have been speaking about for internet new ARR, has been comparatively constant. I imply, we now have reaffirmed DME ARR for the quarter, and that is 11%.

Whenever you have a look at it additionally within the new mannequin that we’re offering by buyer segments, and you concentrate on what’s taking place between the enterprise skilled and shopper and what’s taking place on artistic and advertising and marketing professionals, you noticed, I feel, the income progress was 15%, and 10 or 11 relying on whether or not you are taking as reported or fixed foreign money. And I feel Dan alluded to this. What has actually been gratifying for us to see is whenever you have a look at the artistic subscription income progress, now that you’ve got these extra disclosures. You will note relative to Q2 of 2024 versus 2023, and then you definately have a look at it as Q2 of 2025 versus 2024, it is also at 10% progress.

So, you realize, what we have been speaking about, which is retooling the enterprise, is going on. And so, sure, the chance is there. We wanna, you realize, guarantee that we put money into AI. To allow extra folks to make use of the platform. And, sure, that is actually been the main focus. After which on the opposite facet, the enterprise and shopper facet, that is been rising round 15%. In order I take into consideration the expansion initiatives, Brent, to reply your query, on the enterprise skilled and the issues that it’s a must to take into consideration is AI. An AI assistant with a single doc with a number of paperwork. Growing, you realize, the relevance and utilization of Acrobat.

Assume because it pertains to Categorical, when you have a look at it Categorical standalone, the truth that within the post-template period, AI will even additional the flexibility for folks to take the story that they’ve of their head and guarantee that’s obtainable. You are seeing the momentum in that enterprise. However, once more, actually, there, the North Star is the mix of creativity and product driving. , progress for us. We by no means speak sufficient, I feel, in regards to the advertising and marketing. And, you realize, what sort of a energy that’s. In the event you have a look at our advertising and marketing efficiency, we have a look at what others are additionally at this scale reporting. It is clear that we’re, you realize, rising our enterprise sooner than them.

The impression of the content material and the advertising and marketing enterprise, you realize, we proceed to be actually bullish about it. And for individuals who typically say, wow, your seats will not be rising, and automation will take over. Guess what? We are the chief in automation. However we predict it is actually a mix of each of that additionally make us actually distinctive. I do know the query that got here up earlier. I will simply contact on that once more. I do imagine the truth that Firefly has been designed to be, you realize, protect mental attributes of individuals, that’s going to turn into an more and more necessary factor within the enterprise. Everyone is experimenting with it. It turns into mainstream, that is gonna be.

So, sure, Brent, the brief reply is I am extra bullish about it, and I am what I am actually happy about is underlying 2025 how we have re-architected the enterprise to be this AI-driven progress.

Brent Thill: Thanks, Shantanu.

Operator: And our subsequent query will come from Jay Vleeschhouwer with Griffin Securities.

Jay Vleeschhouwer: Thanks. Good night. Shantanu, because you alluded earlier to headcount, possibly we will deal with the everlasting a part of your headcount, not simply the summer time interns. And there is some very fascinating developments there with regard to the place you are wanting so as to add when it comes to open positions. And in the previous couple of months, together with very just lately, there are 4 particular areas the place there’s some prevalence of features, and I might wish to ask you about these. And go to market, primary. Quantity two, product administration, Quantity three, technique. And quantity 4, advertising and marketing, each throughout DME and DX.

So possibly speak about among the rationales or wants that you’ve got internally with regard to the place you are wanting so as to add in these respects.

Shantanu Narayen: Certain, Jay. I imply, I feel if Dan have been answering the query, he would say as you have a look at the Q1 versus Q2 versus Q1 expense, you will see that we’re investing in the proper areas. Given the innovation roadmap, having the ability to be sure that we, you realize, along side the launches, market the product. Categorical, you realize, we nonetheless must get extra consciousness of it. The product’s nice. We actually centered on going huge in just a few nations. We’re seeing dramatic enchancment because of that focus.

So the advertising and marketing funding is clearly because of ensuring that we make investments much more to make sure that the launches that we now have and the product roadmap that we now have the notice is excessive. I feel on product administration, the kind of theme that David and Anil would most likely speak about is PLG. How PLG is absolutely serving to it. The refinements that persons are making and, you realize, the standard means of releasing merchandise, Jay, was that you realize, you design a product and then you definately’d launch it. Now it is the continued iteration. And, you realize, we measure each single morning.

And so I feel the product administration has to do quite a bit with, you realize, how we put money into the proper PLG motions? To guarantee that’s taking place. Technique, I imply, once more, I feel AI will provide of us much more. We have talked about, you realize, on information fashions, brokers, and interfaces, you realize, how we proceed to be well-positioned. And so I feel on technique, it is the interfaces and the agentic stuff that we’re centered on. However I must also make clear. At massive, we’re probably not seeking to develop our headcount very dramatically. We’re discovering much more effectivity. Individuals are, you realize, utilizing AI to be extra environment friendly inside the enterprise.

So that you’re proper in regards to the focus areas. However the actual enhance this quarter, I feel, needed to do extra with interns. And we love hiring extra interns as a result of it is a strive before you purchase each methods. Proper? And the truth that we’re such a beautiful place for folks to return, you realize, I am actually excited in regards to the quantity of people that wish to come to Adobe, you realize, on that facet.

Operator: We’ve got time for yet one more query.

Operator: Thanks. And that query will come from Kash Rangan with Goldman Sachs.

Kash Rangan: Hello, Shantanu and staff. Goldman Sachs loves your shares, your love for interns. Our interns additionally simply began. So the query for your online business is, clearly, there’s plenty of innovation taking place in AI. And whenever you have a look at the targets for AI, you bought the $125 million e book of enterprise projected to go to $250 million. Is there any proof in any respect that you would be able to level to together with your DDOM or possibly different sources that the push in direction of AI, be it by means of Firefly or Gen Studio, is definitely visibly, tangibly, quantifiably shifting the tempo of artistic adoption and driving enterprise to a bigger diploma than what’s attainable with out AI.

So in different phrases, you may have an AI bucket of income, which is what it’s. And the core. Any proof to counsel that the core is tangibly being energized and is poised for some progress curve forward. It is easy to extrapolate the ten, 11% like Brent was speaking about. Proper? However the place may we be unsuitable in not seeing that change of that curve and the adoption that you simply may be seeing and might not be manifest in monetary metrics, however possibly you see issues below the hood.

That provide the conviction that we’re in the beginning of that curve of adoption that might lead the corporate to a part of progress that we kinda noticed within the 04/1418 timeframe when folks, like, strongly extrapolated the flattish developments within the on-prem enterprise after which the cloud actually simply took off. Proper? Is there any proof?

Shantanu Narayen: Yeah. Kash. I feel what I’d level to is possibly three issues from the DDOM as you seek advice from it. On the brand new e book of enterprise. , when you construct a brand new e book of enterprise that is going from 0 to $250 million, I feel most individuals would say, you realize, that is fairly phenomenal as a result of these are merchandise, whether or not it is Acrobat AI assistant, the brand new Firefly app, Firefly companies, you realize, which is, you realize, continues to rock frankly and Gen Studio for efficiency advertising and marketing. These are fairly good. In order that, you realize, on one vector, you have a look at it and say, we’re driving new companies, and the dimensions is sweet.

Clearly, you realize, at our scale, the larger metric that we observe is in DX. Let’s speak about DX. And in DX, how a lot of this know-how that we now have been delivering is being adopted? What’s the scale at which, you realize, we’re driving, whether or not it is campaigns, whether or not it is engagement by means of e-mail or SMS, the quantity of transactions which can be going by means of AEP and apps. And all of that’s as a result of the agility of selling, the flexibility to personalize these experiences with prospects is dramatically growing. In order that’s one underlying pattern that we clearly see. And the demand for that’s solely growing and never reducing.

I feel in David’s enterprise, whether or not it is in Acrobat or whether or not it is within the artistic merchandise, is generations, which suggests our folks utilizing AI to be extra productive. And the output. , I feel final quarter, we had talked about, hey. Even Categorical, it is gone over a billion exports. So these are kind of the 2 underlying. That, as we now have at all times mentioned, is kind of this affect income. However, you realize, the affect income and the underlying utilization level to the truth that adoption is sweet. So, hopefully, that offers you, you realize, some perception into how we’re taking a look at it, which is the core merchandise that we now have which can be driving this $20 billion.

Are we ensuring that utilization and retention and adoption of the brand new options, you realize, implies that persons are seeing worth in it. After which on the brand new ones, hey, are we constructing these new companies that permit us to create new choices like CC Professional? Like Acrobat with, you realize, AI assistant, and Acrobat and AI assistant and Categorical. And I feel these are kind of among the underlying developments that we see. The final word tier, which is that is the brand new AI tiers or prime tiers inside the enterprise. So these are among the underlying early indicators to your level. And, Mark, and MAU simply implies that, hey.

This premium mannequin is attracting a brand new set of shoppers. That enables us to really feel assured about go-forward prospects for the corporate. However since that is the final query, and I feel we’re out of time, you realize, possibly I will simply kind of summarize. We’re actually happy with the primary half efficiency. The truth that we proceed to, you realize, drive each high line and backside line. Is one thing that is significant to us. And, you realize, we’re centered on driving continued success for this within the second half and past. We stay up for sharing extra at our subsequent earnings name. And with that, I will flip it again over to Steve.

Steve Day: Okay. That ends the decision. Thanks.

Operator: Thanks. That does conclude right now’s convention. We do thanks on your participation. Have a wonderful day.