ADOBE INC. — Call Transcript 2026

Good day, welcome to the Q2 FY 2026 Adobe earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Doug Clark, Vice President of Investor Relations. Please go ahead. Good afternoon, thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's Chair and CEO, David Wadhwani, President of Creativity and Productivity, Anil Chakravarthy, President of Customer Experience Orchestration, and Steve Day, Senior Vice President Corporate Finance and CFO of Customer Experience Orchestration. On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2026 financial results. You can find our press release as well as PDFs of our prepared remarks and financial results on Adobe's Investor Relations website. The information discussed on this call, including our financial targets and product plans, is as of today, June 11, and contains forward-looking statements that involve risk, uncertainty, and assumptions. Actual results may differ materially from those set forth in these statements. For more information on those risks, please review today's earnings release and Adobe's SEC filings. On this call, we will discuss GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates and non-GAAP growth rates, including constant currency rates. During this presentation, Adobe's executives will refer to revenue growth and constant currency rates unless otherwise stated. Non-GAAP reconciliations are available in our earnings release and on Adobe's investor relations website. I will now turn the call over to Shantanu. Thanks, Doug. Good afternoon, everyone, thank you for joining us. We achieved $6.62 billion in revenue in Q2, representing 11% year-over-year growth. GAAP earnings per share for the quarter was $4.25, representing 8% year-over-year growth, and non-GAAP earnings per share was $5.96, representing 18% year-over-year growth. Strong revenue growth was driven by subscription bookings to revenue conversion. We drove EPS growth through record top-line revenue and disciplined investments across the company. At Adobe, we continue to be driven by our mission to empower everyone to create and deliver innovative products to delight users based on our customer strategy. We're focused on business professionals and consumers, creators and creative professionals, and marketing professionals. For business professionals and consumers, we're delivering AI-powered, quick and easy apps to stand out through creativity and productivity. For creators and creative professionals, we're delivering power and precision to bring creative visions to life across any media type and surface. For marketing professionals, we're delivering customer experience orchestration to create, deliver, and optimize personalized digital experiences. As we reflect on the market context and our first half performance, it is clear that relative even to the beginning of fiscal 2026, AI is accelerating customer behavior at an unprecedented speed, and we need to evolve our strategy and execution to address these changing expectations. Much like how developers have embraced and expanded the AI coding market, there's a transformation underway for how consumers are discovering, experiencing, onboarding, and purchasing products across all categories, including creativity, productivity, gaming, and entertainment. As it relates to creativity and productivity, there's an unprecedented demand across additional surfaces for the combination of content consumption and content creation. Conversational interfaces and agents now orchestrate across tools to achieve outcomes faster. The proliferation of media generation models is reshaping and democratizing content workflows from ideation through delivery. AI-first applications that will serve broader audiences need to provide free, intuitive onboarding that drive usage and monetization through paywalls. Big picture, the immediate opportunity for Adobe is to accelerate new user acquisition and lifetime value through a freemium offering. As it relates to business professionals and consumers, we have dramatically increased Acrobat and Express MAU from greater than 700 million to greater than 850 million year-over-year. The opportunity is to serve billions of business professionals and consumers through a comprehensive freemium funnel, building on the success of the Acrobat Reader model. Over the last year, we've delivered tremendous innovation across AI Assistant, PDF Spaces, Express, and conversational interfaces and made these innovations available across surfaces including AI mode in Acrobat Reader, Edge, Chrome, and WhatsApp. Business professional and consumer traffic on adobe.com seeking Adobe capabilities is growing 35% year-over-year. We believe this traffic is better served through a customized, friction-free onboarding experience without immediate paywalls and will result in greater customer acquisition and deeper engagement over time. Based on the early success and MAU adoption of freemium journeys for Acrobat and Express, we're ready to expand this experience more aggressively. For next-generation creators, the opportunity is to deliver an AI production studio across web and mobile that seamlessly integrates with the power and precision capabilities of Creative Cloud. We have increased our creative freemium MAU from 50 million to 90 million year-over-year. The opportunity is to attract hundreds of millions of additional creators through a freemium funnel based on the early success of Firefly. Over the last year, we have delivered tremendous innovation across ideation through boards, generation with support for multiple media models, semantic image and video editing, and conversational interfaces that are available across surfaces, including mobile, web, and flagship Creative Cloud applications such as Photoshop, Illustrator, and Premiere. The new personalized journeys for creators drove approximately 50% increase in Firefly ARR quarter-over-quarter through Firefly apps and credit packs. Based on this early success, we are confident that we should expand the Firefly freemium experience to acquire and delight the next generation of creatives. Creative Cloud continues to perform well as the best-of-breed offering for creative and marketing professionals globally. While we focus on accelerating creator acquisition through the freemium Firefly funnel, we have made the decision to defer previously planned Creative Cloud second half line optimizations. As it relates to the Customer Experience Orchestration, agentic opportunity in the enterprise, marketing professionals are looking to automate and rapidly create, deliver, and personalize content at scale across every channel in a way that drives customer engagement and elevates their brand. Content creation designed specifically for marketing use cases is exploding. New AI coworkers and agents offer organizations the ability to deliver automation and outcomes powered by context, data, MCPs, and skills. These address the dual needs of enterprises to expand consumer centricity and cost savings in the era of AI. Business models are expanding to include consumption and outcome-based pricing along with subscriptions. The total marketing opportunity across people, software, agency, and channel spend is enormous. AI is changing enterprise behavior as they're increasingly bringing more marketing capabilities in-house through their adoption of software platforms and the creation of custom models that uniquely capture their brand intelligence. IT organizations are looking to Adobe to accelerate their provisioning, deployment, and customization to serve their consumers through the availability of headless and agentic capabilities with pricing models that address outcomes as well as AI usage. Customer Experience Orchestration, AI-first ARR grew 4x year-over-year, reflecting how Adobe is the leader in both the traditional marketing category and the emerging Customer Experience Orchestration category. The introduction of Adobe CX Enterprise and Adobe CX Enterprise Coworker at Adobe Summit expands the vision and delivery of our category-defining CXO solutions. The successful acquisition of Semrush unifies our search engine optimization, generative engine optimization, and SEM solutions to further extend our CXO offering. We will deliver this integrated offering that addresses brand visibility at the Cannes Lions Festival of Creativity later this month. This combination of creativity and marketing uniquely differentiates Adobe. No other company brings together what creatives and marketers can do across our applications and delivery platforms. Adobe GenStudio ARR grew over 25% year-over-year, reflecting enterprise demand for an end-to-end solution that spans workflow and planning, creation and production, asset management, activation and delivery, and reporting and insights. Adobe's AI innovation has driven an impressive 3x year-over-year increase in AI-first ARR to greater than $500 million. We believe now is the time to aggressively acquire the next generation of Adobe loyalists. The strategic shift to acquire more freemium customers through Adobe and Firefly lowers our second half ARR growth expectations from individual subscribers. We believe these changes do make Adobe even stronger. We continue to target double-digit total ARR growth for Adobe, which now includes the Semrush acquisition. Based on our strong first half revenue performance and the inclusion of Semrush, we are pleased to raise our fiscal year revenue and non-GAAP EPS targets. As we announced, Dan Durn has decided to pursue a new opportunity outside the software industry. I'd like to thank Dan for his contributions to Adobe and wish him well. I'm pleased that Steve Day, who has been at Adobe for 20 years serving in numerous financial leadership roles, will serve as Interim CFO upon Dan's departure. I continue to be incredibly energized by Adobe's long-term AI opportunity and the innovative products we are delivering to a broader set of customers. Given my decision to transition to Board Chair, I wanted to provide an update on the CEO search, which is progressing well. The board has been actively engaged in a comprehensive process. While we all continue to be ruthlessly focused on driving execution, our goal is to have Adobe's next CEO in place to put their stamp on planning for fiscal 2027 and beyond. I'll now turn it over to David. Thanks, Shantanu. Hello, everyone. AI is rewriting how the world creates and gets work done. The audiences for creativity and productivity tools is bigger now than at any point in our history. From social creators and students to business professionals and large enterprises, the opportunity for Adobe is massive. These customers are looking for a range of products, from easy-to-use creative tools to professional levels of power and precision, and are increasingly turning to conversational experiences to accelerate their work. Adobe is the only company that has the portfolio breadth to meet this broad range of creativity and productivity needs. We see this interest manifest in traffic growth, signaling demand for our existing products and accelerating demand for new AI-first experiences. The demand for these new AI experiences begins with LLM conversations and intent-based searches and requires immediate gratification, is best served with friction-free experiences. This shift in user behavior is playing out across business professionals and consumers and creators and creative professionals. While we continue to attract strong traffic to adobe.com, which grew over 40% year-over-year, our traditional direct-to-paid journeys may not always fulfill visitor intent, as a growing number of new users are first looking to quickly complete their intended task as they begin their relationship with Adobe. Given products like Adobe Firefly, Express, and Acrobat AI Assistant have friction-free onboarding and significant adoption, we can now rebalance our journeys to better serve this new generation of users rather than send them predominantly to direct-to-paid journeys. This shift will come at the cost of short-term ARR, will accelerate user acquisition and MAU while building the foundation for long-term growth by removing friction from user onboarding, enabling deeper user engagement, and driving stronger lifetime value. In Q2, subscription revenue for business professionals and consumers was $1.85 billion, growing 15% year-over-year. BP&C traffic grew 35% year-over-year, with MAU growing from greater than 700 million to greater than 850 million in Q2 year-over-year, with significant contributions from AI Assistant, Express Creation, and PDF Spaces sharing. This quarter, we introduced the Adobe Productivity Agent, shifting Acrobat from a static document tool to an interactive experience. The Productivity Agent is an AI experience built into Acrobat that draws on Adobe Acrobat's document intelligence and Adobe Express' AI-first creation capabilities to help business professionals understand, create, and share information. It can turn documents into rich outputs like presentations, podcasts, and social content, support conversational PDF editing, and power the new sharing capabilities in PDF Spaces. Customers get the agent through Acrobat AI plans. Users can also now share branded PDF Spaces with customizable AI assistants tailored to a specific audience, whether for sales prospecting, content marketing, or research delivery. Early adopters of PDF Spaces, including Vice Media, Kid Cudi, Jessica Yellin, and Mindy Weiss, are using PDF Spaces to move audiences from passive reading to interactive engagement. Additional business professional and consumer highlights include Acrobat AI Assistant paid MAU grew over 150% year-over-year, and lifetime AI users in Acrobat tripled year-over-year, showing both monetization traction and broad-based engagement. Express MAU grew more than 20% quarter-over-quarter, and Express users in Acrobat exported nine times more content year-over-year, demonstrating that the integration is driving creative output at scale. Acrobat Student Spaces launched this quarter to strong early adoption. The number of higher education students with access to Express Premium through their schools has grown more than 60% year-over-year. Customer wins this quarter include Accenture, DATEV, KPMG, Merck, NHL, New York State Court System, The Church of Jesus Christ of Latter-day Saints, Defense Information Systems Agency, and U.S. Department of Housing and Urban Development. In Q2, subscription revenue for creative and marketing professionals was $4.54 billion, growing 11% year-over-year. Demand for AI content creation is exploding across ideation, generation, and semantic editing, and generative creative consumption continues to show strong growth. Our strategy is to empower everyone to create, from first-time creators to seasoned professionals to large enterprises seeking to scale content production. In Q2, C&CP traffic to adobe.com grew over 50% year-over-year, with Creative freemium MAU growing from greater than 50 million to greater than 90 million. This immense volume of traffic drawn to the Adobe brand includes users seeking to purchase Creative Cloud, Photoshop, and other CC apps and an increasing number of new users who are looking for Adobe Magic to complete a creative task with a friction-free experience. Firefly freemium users who convert to our paid plans are highly engaged with early indications of significant credit consumption. Firefly ARR grew approximately 50% quarter-over-quarter through Firefly apps and credit packs. We were excited to launch the Adobe Creative Agent beta in Q2. The agent is available as part of Creative Cloud and Firefly subscriptions and provides a conversational experience to achieve complex and repetitive creative tasks. Agent usage will be monetized through our existing credit consumption model. The Adobe Creative Agent is also available in Claude, ChatGPT, and soon, Copilot and Gemini. Additional creators and creative professionals highlights include, in Premiere, we launched a brand-new color mode, a first-of-its-kind color grading experience built specifically for video editors. We continue to deepen AI capabilities across our flagship Creative Cloud applications. Photoshop added Rotate Object and Illustrator released Turntable, both enabling subscribers to turn 2D photos and illustrations into 3D renditions they can rotate and harmonize into their work. Capabilities like these drove record AI usage within our flagship applications. Firefly continues to support third-party models, now with Kling 3.0 and Kling 3.0 Omni. Firefly ending ARR across Firefly app, Firefly credit packs, and Firefly Enterprise is approaching $300 million exiting Q2. Firefly Enterprise, spanning Firefly Services, Adobe Firefly Foundry, and Brand Intelligence, is helping the world's largest brands industrialize content production with brand-safe custom models. The number of generated assets grew more than 4x year-over-year, making it an AI content engine for marketing at scale. Our announced NVIDIA partnership will bring accelerated computing to Adobe Firefly Foundry for faster, higher-performing custom models across image, video, audio, vector, and 3D, plus a cloud-native 3D digital twin built on Omniverse and OpenUSD. Enterprise wins this quarter include Merck, SAP, ServiceNow, Tesco, The Coca-Cola Company, Workday, and Xfinity. In summary, demand for creativity and productivity in the AI era is dramatically increasing, as evidenced by our record traffic on adobe.com. While we continue to fulfill demand for Acrobat and Creative Cloud, the early success of Firefly, Express, and Acrobat AI Assistant gives us conviction that this is the time to aggressively serve new users with a friction-free freemium journey. We're confident that driving MAU, which has an impact on ARR, is the right trade-off and will drive future business growth. I'll now turn it over to Anil. Thanks, David. Hello, everyone. In Q2, AI continued to be a tailwind for our enterprise business, enabling us to deliver creative and marketing professional subscription revenue of $4.54 billion, growing 11% year-over-year. These results underscore the continued explosion in content and the imperative to deliver personalized customer experiences at scale. The opportunity for AI-powered marketing automation and customer experience orchestration is large and growing, and we are continuing to gain market share and expand our leadership. We are focused on three critical AI-first solutions: Adobe Experience Platform and native apps for customer engagement, Adobe GenStudio for content supply chain, and Adobe Experience Manager agentic web apps for brand visibility. Q2 highlights included GenStudio ending ARR grew over 25% year-over-year as leading brands and agencies continue to standardize on Adobe to power their content supply chain. Subscription revenue for AEP and native apps grew over 30% year-over-year. AEP delivers over 70 billion profile activations and 35 trillion segment evaluations per day, as well as more than one trillion experiences per year. Over 80% of AEP and AEM customers are now using agentic capabilities built into our products. Over 1,500 customer trials are underway for our agentic web offerings, Adobe LLM Optimizer, Sites Optimizer, and Brand Concierge. 60% quarter-over-quarter growth for forward deployed engineering and integrated services offerings designed to co-innovate and deliver customized AI-powered CXO solutions. Q2 industry analyst recognition, being named a leader in two Gartner Magic Quadrants, including customer journey analytics and orchestration and content marketing platforms, and two Forrester Waves, including email marketing service providers and customer analytics technologies. Global enterprise customer wins in Q2 included Dentsu Merkle, Defense Information Systems Agency, Diriyah Company, Kaiser Foundation Hospitals, Merck Sharp & Dohme, NHL, SAP, ServiceNow, Stagwell, Stellantis, Tesco, and The Coca-Cola Company. In April, we closed the acquisition of Semrush, a leading provider of search engine optimization and generative engine optimization solutions. Semrush added $480 million ARR to our book of business and expands our ability to serve marketers of every scale. We are rapidly integrating Semrush into Adobe, uniting Semrush's discoverability intelligence with Adobe's agentic web apps. We look forward to unveiling a comprehensive brand visibility solution, combining Semrush with Adobe at the Cannes Lions Festival of Creativity later this month. At Adobe Summit in April, where we hosted over 14,000 in-person attendees, we launched Adobe CX Enterprise, a new end-to-end agentic AI system that simplifies how enterprises manage their entire customer life cycle, from acquiring and engaging prospects to driving conversion and lasting loyalty. Adobe CX Enterprise brings together AI agents, agent skills, and model context protocol endpoints with an intelligence and governance layer to deliver reliable and auditable agentic workflows that enable highly personalized, differentiated customer experiences. Over 20,000 global brands have built their business on Adobe, and CX Enterprise will help usher them into the era of agentic AI. As part of CX Enterprise, we announced CX Enterprise Coworker, a specialized AI agent that executes tasks based on business goals, dramatically increasing productivity and campaign execution. CX Enterprise Coworker has garnered tremendous customer interest since launch, with over 150 leading enterprises in the early adoption program prior to general availability this week. At Adobe Summit, we also introduced Adobe Brand Intelligence, a continuous learning system that helps enterprises create and validate on-brand content faster and with less effort. Adobe Brand Intelligence learns from creative and marketing team feedback, approvals, and rejections in real time. It is a headless platform exposed through APIs, so it can integrate with existing first and third-party apps rather than running as a separate app. Customer experience is one of the first areas of AI-powered transformation for enterprises. Around the world, our conversations with C-level executives reflect how they view Adobe as the trusted partner for this transformation in the era of agentic AI. In Q2, we announced native integrations with major enterprise AI platforms, including Microsoft Copilot, Anthropic, OpenAI, and Google Gemini. Our partnership with NVIDIA brings CX Enterprise Coworker capabilities into the NemoClaw Enterprise Agent platform, enabling brands to deploy Adobe's customer experience intelligence within NVIDIA's secure policy-governed OpenShell runtime. Leading global agencies including Dentsu, Havas, Omnicom, Publicis, Stagwell, and WPP are standardizing on Adobe, combining our AI-powered capabilities with their unique IP and industry expertise to co-develop innovative, differentiated solutions for joint clients. Our vision, deep expertise in creativity and marketing, track record of innovation, and broad partner ecosystem uniquely position Adobe as the partner of choice for AI-powered customer experience orchestration. Our extensive customer base, innovative CXO products, and robust pipeline give us confidence for a seasonally strong second half. I'll now pass it to Steve. Thanks, Anil. Today, I will start by summarizing Adobe's performance in Q2 FY 2026, highlighting growth drivers across our customer groups. I'll finish with our financial targets. In Q2, Adobe achieved record revenue of $6.62 billion, growing 13% year-over-year as reported, 11% in constant currency. Diluted earnings per share was $4.25 on a GAAP basis and $5.96 on a non-GAAP basis. Our GAAP results reflected a $70 million or $0.17 per share of a non-cash goodwill impairment charge related to our publishing and advertising reporting unit. Q2 financial highlights included: Total Adobe ending ARR of $27.1 billion, growing 12.5% year-over-year, including approximately $480 million from the acquisition of Semrush. Total customer group subscription revenue of $6.39 billion, growing 14% year-over-year or 12% in constant currency, including approximately $40 million from the addition of Semrush. RPO of $22.27 billion, exiting the quarter with RPO and CRPO both growing 13% year-over-year or 12% in constant currency. Cash flows from operations in the quarter were $2.17 billion. Ending cash and short-term investments exiting Q2 was $5.63 billion. Repurchasing approximately 8.5 million shares of our stock during the quarter. Exiting Q2, we have approximately $27 billion remaining under our authorizations, including the new $25 billion authorization announced in April. Customer group results and insights. Business professionals and consumers subscription revenue was $1.85 billion, increasing 16% year-over-year as reported, or 15% in constant currency. Q2 growth drivers for business professionals and consumers included sustained double-digit ending ARR year-over-year growth across all geographies. Acrobat and Express MAU surpassed 850 million, growing approximately 20% year-over-year. Acrobat AI Assistant ARR growing approximately 3x year-over-year. Strong performance in the enterprise across both commercial and government. Creative and marketing professionals subscription revenue was $4.54 billion, increasing 13% year-over-year or 11% in constant currency. Q2 growth drivers for creative and marketing professionals included: Growth in Creative Cloud driven by the CC Pro offering. Creative freemium MAU, which includes web and mobile versions of Firefly, Express, Premiere Pro, Photoshop, and Lightroom, crossed 90 million, growing over 70% year-over-year. Continued strong generative credit consumption driven by video and audio. Firefly ending ARR, including Firefly apps and credit plans and enterprise Firefly offerings approaching $300 million, with the intent to drive more traffic to Firefly freemium in H2. Ending ARR across Adobe GenStudio, AEP & Apps, and AEM & Agentic Web growing over 20% year-over-year. Enterprise customers with over $10 million in ARR growing greater than 20% year-over-year. Continued strength in retention across the enterprise customer base. Let me now turn to our financial targets, which include Semrush and assume current macroeconomic conditions. Given strong year-to-date performance, we are raising full-year revenue and non-GAAP EPS targets. For FY 2026, we are targeting total Adobe revenue of $26.5 billion-$26.6 billion. Business professionals and consumers subscription revenue of $7.44 billion-$7.48 billion. Creative and marketing professional subscription revenue of $18.21 billion-$18.27 billion, which now includes approximately $280 million from Semrush. Total Adobe ending ARR book of business growth of 10.2% year-over-year compared to our FY 2026 beginning book of business of $25.66 billion. GAAP EPS of $17.90-$18.00, and non-GAAP EPS of $24.35-$024.45. Our FY 2026 targets assume a non-GAAP operating margin of approximately 45%, a GAAP tax rate of approximately 22.5%, and a non-GAAP tax rate of approximately 18%. Our FY 2026 total Adobe ARR growth target of 10.2% now reflects both the addition of the Semrush book of business as well as the strategic choice to accelerate MAU freemium growth and defer previously planned Creative Cloud line optimizations. We believe this is the right long-term strategy to expand our customer base and strengthen the foundation for durable growth. For Q3 FY 2026, we are targeting total Adobe revenue of $6.67 billion-$6.72 billion. Business professionals and consumer subscription revenue of $1.87 billion-$1.89 billion. Creative and marketing professional subscription revenue of $4.61 billion-$4.64 billion. GAAP EPS of $4.40-$4.45, and non-GAAP EPS of $6.05-$6.10. For Q3, we assume non-GAAP operating margin of approximately 44% and a GAAP tax rate of approximately 23% and a non-GAAP tax rate of approximately 18%. We believe Adobe is well-positioned to capitalize on the expanding AI opportunity. Our focus remains on helping customers achieve better outcomes through innovation, relentless execution, and deep integration of AI across our portfolio. We are expanding our user base, deepening engagement, and investing with discipline in the opportunities that will drive Adobe's next phase of growth. Thanks, Steve. We are at a transformative moment in the industry and for the company. The convergence of AI, agentic workflows, and the explosion of content demand is creating significant opportunities that play directly to Adobe's strength. My focus continues to be driving execution against our product roadmap and successfully expanding to new monetization models that reflect how the diversity of our customers want to engage with Adobe. I'm committed to driving this as we finalize the right leader for Adobe's next chapter of growth. What gives me confidence beyond our products and groundbreaking technology is our people. Adobe remains one of the greatest places to work in the industry, and the talent and culture we have built over decades is the foundation for this transformation. Thank you. We will now take your questions. Thank you. If you would like to signal with questions, please press star one on your touch-tone telephone. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to signal with questions. The first question will come from Michael Turrin with Wells Fargo Securities. Hey, great. Thanks very much. I appreciate you taking the question. I guess just realize it wasn't planned, but with Dan leaving, I think we're going to field questions on how the company manages through this level of transition in a world where there are a lot of questions around just disruption or changes to the market across software. Maybe, you can just speak to how you maintain continuity with both the CEO search and CFO transition in motion, and maybe also touch on the profile of what you're looking towards or think the company needs in its next stage at this point. Sure, Michael, let me take that. I will first start off by saying, the leadership team that exists in the finance organization is absolutely seasoned and top-notch. I wish Dan well. It's clear that where he's going is where his background and expertise has been, but I'm confident that we won't miss a beat. I think as it relates to any other questions associated with the transition, I'm happy to answer that, but my short answer is we have an incredibly seasoned leadership team, and I will continue to work with them closely as I have in the past to make sure that we drive all our strategic objectives. Just if I may, a follow-up just on the decision to defer line optimizations on Creative Cloud. I assume we're coming up on just potential price increase there. Maybe speak to why that's the right decision for Adobe today and how you think that kind of sets the creative business up for future growth. Yeah, happy to, Michael. I think if we really look at it, we just look at what's happening with the AI opportunity for creativity as this incredible opportunity that is upon us right now. No other company is as well-positioned, given what we have across our models, across our products, and across our interfaces, to take advantage of it. This is really about saying, what we have done as it relates to capturing MAU with Acrobat and Express, what we've done with respect to Firefly, the entire creative market. Sometimes I like to also characterize this much like what's happened with the code opportunity. If you think about what's happened with the code opportunity across AI, it's just completely been turned upside down, and every company is thinking about how they can add to all of the billions that is already spent in code. The same opportunity exists, I think, in every single category, whether that's gaming, entertainment, and creativity. This is an opportunity for us, not just to focus on creative pros and communicators who've traditionally been the strength of this company, but to actually become that AI platform for all creativity across every single surface. The success that we've seen associated with what we have done on these new products, we talked about the MAU, we've talked about the ARR that's coming. We want to just have a singular focus right now to make sure that we go capture that immense opportunity with a singular focus and a clear marketing message. It also is based on a complete confidence that we have that the creative business is extremely stable. The amount of innovation that we have delivered in that space continues to make us a category of one as it relates to our focus on that particular market. That one we can defer. It's not going away. Anything that comes in the way of the company aligning and the market understanding that we're going to go after that entire creative opportunity right now, I think will detract from what is the real price for this company. Hopefully that gives you some color. I think in terms of the impact on ARR, you can think of it as maybe half of the impact of ARR is as a result of what we are doing around deferring that creative price line optimizations. The other half is about going full steam on what it takes to deliver the freemium experience. I appreciate the candor in those responses. Thanks, Shantanu. Thanks, Michael. The next question comes from Alex Zukin with Wolfe Research. Hey, guys. Appreciate you taking my question and apologize for any background noise. Maybe just at the risk of redundancy or simplification, just why now to accelerate the freemium MAU motion? I think before we were thinking that the previous messaging was that it could actually positively impact second half ARR, the freemium motion, and now it's turning into a headwind as they convert. Maybe just simplify why now is the right time, and then I've got a quick follow-up. Sure. I think you should think of it more in terms of does that early success that we're having across all of them give you confidence to actually go even more aggressively about this? That's how I think about this, Alex, in terms of why now. We all recognize that when you look at the traffic that's coming to the Adobe site, that traffic is just gushing. When we think about how we can capture that with a unique value proposition associated with delighting them and making sure we have a friction-free experience, anything that comes. When we take a step back, we have built this incredible business, but it's a balanced business. We're always trying to figure out what we send to the freemium and what we send to ARR. I think this singular clarity will enable us to capture way more people in the audience. The why now has more to do with the fact that we are seeing the success associated with what we've done, the products, whether it's Acrobat, Express, or Firefly, are there. The ability to support third-party models is there, and I'll have David also add. It's really the success that we're seeing and the incredible amount of traffic that says, if we don't take advantage of this opportunity right now, we will just unnecessarily diffuse it, and we will send people other places when they want to come have that engagement with Adobe and are looking for the Adobe brand and Adobe magic to help them solve their creativity needs. David? Maybe, Alex, I'll just add on two examples to what Shantanu was saying to demystify what we mean by user behavior changing and evolving. Let me give you one example with Acrobat and one example with creativity and Firefly to hopefully cement this a bit. What we see is a shift in, or an emergence in terms of LLM usage, and that is driving a lot more intent-based search. What is an intent-based search? Someone might type into a search engine, "Summarize this PDF." Right? What we do is we are using SEO and SEM and some of Anil's Semrush capabilities now to make sure that we're ranking high when someone types in something like, "Summarize PDF." When the user clicks on our link, we take them, instead of taking them to adobe.com and talking to them about Acrobat, we're now taking them directly into Acrobat Web with a single call to action, which is upload your PDF, and then we summarize it for them. When we summarize it for them, we then introduce them to this idea that they can use AI Assistant to even have and ask some questions. We use this process to let them build habit, before we start giving them paywall. That's an evolution. If we just took that traffic direct to a paid flow to buy Acrobat and download Acrobat, it wouldn't produce as much opportunity long term for Adobe. Similarly, in Firefly, we see things like a growth in terms like generate pixel art for social media posts. Again, we rank really high in SEO, SEM, then we take them directly into Firefly so they can upload an image of themselves, create this pixelated version, maybe introduce them to this idea that you can convert that to video. It's a very different flow, and that's where the world is going. That's how users are engaging. We want to lean into that, and we think, as Shantanu said, we have the right products for that now. This is the moment to go for it. Maybe the last thing I'll say to that, to just punctuate what David said, is not only are we seeing the MAU increase, but we're seeing the engagement increase then as a result of serving that first experience because they're looking for Adobe. I think it's the satisfaction associated with completing their task that wants them to engage with Adobe more, and it's those signals that give us confidence that now is the time. Maybe just to follow up then, if we think about the combination of that action that you described, and the postponement of the line optimizations as driving roughly, I think, by our math, about a $500 million adjustment to the organic ARR downward. What is the payback period on that? That $500 million, let's say, that you're investing in this motion, what is the payback period and multiple that you think you can get as a result of the successful strategy, or potential successful strategy that you're embarking on? Well, let me give you some color. I think on the second one first, which is the Creative Pro Line optimizations, we can introduce them as we continue to deliver value. That one is just a phase shift, and as we add that, we believe that we're going to have better offerings that are more differentiated the more these freemium offerings are successful. That one for us, we just look at it and say, we're deferring it, but not closing it. Hopefully, that gives you some color. In terms of the traffic, if the disproportionate amount of traffic is going to go to these freemium offerings, you're right about, hey, how does that sort of start to come back? We're already seeing some of it as it relates to the MAU that we have on Firefly. We shared some numbers on that as well as on Express, which are growing well, but that will play out, I think, over 2027. More important, I think it sets the company up for the right sort of really growing our customer base, which like we've done with Reader, then pays off for decades. Maybe the other thing just to give color, because I'm sure people will ask this question. As you think about it in terms of how it plays out over the second half, maybe the way to think about it is if you go back and look at our fiscal 2024 or our fiscal 2025 results, you can understand whatever our second half ARR expectations are. They probably typically pay out 40% and 60% in Q3 and Q4. Given we'll be making more of these changes in Q3 as it relates to changing the traffic patterns, and we expect our seasonal enterprise trend, the enterprise and everything we're doing around content continues to be an area of strength for us. That will be perhaps a little bit more proportionately in Q4 than it was in Q4 in the last few years. Hopefully that gives you both color on the line optimizations we can always introduce, but we wanted to be transparent with you. I think as it relates to the moving of the freemium, hopefully, we gave you a lot of indication as to why now all of the early success that we're seeing, and I just wanted to make sure you had color as to how that might play out in Q3 and Q4 as you do your modeling. Once again, if you would like to signal with questions, please press star one on your touch-tone telephone. Additionally, please limit yourself to one question. We'll take our next question from Matt Swanson with RBC Capital Markets. Great. Thank you guys so much for taking my question. Not to front run Cannes too much, if we could focus a little bit on the brand visibility solution and kind of the broader idea of what Semrush brings to the Adobe platform. Could you just kind of talk a little bit, maybe more holistically, on how that fits to your broader portfolio and kind of what the maybe compounding benefit could be over time? Thanks for the question, Matt. Brand visibility is a topic of huge interest to CMOs, as you just heard from David as well. We are seeing a lot of that play out in our own traffic patterns, every brand across the world wants to have the right placement regardless of which LLMs consumers are using. They want to have the right message, they want to have their messages show up on LLMs, on social media, and all the other new platforms that consumers are going to. We believe that the best way to do that is to take their content that they have already within their content management system, like Adobe Experience Manager, make sure it gets out there, whether it's the bots and the agents that these LLMs have, or third-party sites which have credibility with these LLMs, making sure that all the brand visibility shows up in the right places. That requires the integration of what Semrush brings, which is the outside-in knowledge of what is actually being prompted for, what's being searched for, that database that they have of all of the prompts and search queries and so on, combine it with the inside-out intelligence that we have with all the content. Marrying those two provides us the opportunity to bring the most comprehensive brand visibility solution in the market, and that's what we're introducing at Cannes later this month. We are super excited about that, and we believe that this is going to be a must-have for every CMO. Thank you. The next question will come from Brad Zelnick with Deutsche Bank. Oh, great. Thank you so much for taking the question. Maybe on a different topic, we saw the announcement on the Creativity Connector with Google Gemini. Wondering how you're thinking about relationships with companies like Google that are seemingly developing their own design tools versus making Adobe innovations available in their apps. More broadly, how are you thinking about competition partnerships and coopetition in the age of AI? Yeah, thanks for asking that question, Brad. I think we've made a lot of progress in terms of how we think about the evolution of a Creative Agent, a Productivity Agent, and Anil also introduced us, basically, Customer Experience Coworker at Adobe Summit a couple of months ago. Overall, what we've done is we've taken all of our core capabilities in our creative flagship applications, as an example, and we've used that to create a series of capabilities that are accessible to the endpoint. In other words, the Creative Agent can now really access 50 creative tools across our ecosystem. That AI Assistant is then available in Firefly and to our Creative Cloud subscribers. We've also, exactly to your point, we've also taken that AI Assistant, that Creative Agent, and made it available inside of both ChatGPT, and inside of Claude, with Copilot and Gemini coming very soon. What that lets us do is it lets us, again, similar to what we were talking about, go to where user experience and user intent actually initiate. If someone starts to want to do something with AI Assistant to create a logo, convert that logo to some merchandise, be able to post that merchandise across social media networks, you can do all of that conversationally at this point. In that context, if you have anything you want to do that goes beyond what you can do conversationally, we use that opportunity to journey them over to Firefly for a deeper, richer AI tooling experience. The whole end-to-end experience here is about getting to users where they are, letting them do a lot more conversationally, really reducing the bar to create more content, but then also leveraging the opportunity to monetize them by converting them over to Firefly, as an example. The last thing I'll say is, the monetization model for these AI agents is similar in that it's basically about credit consumption, and we think it drives a lot more credit consumption and opportunity for upsell. As it relates to your question on partnerships, maybe just add a couple more points. Firstly, you have to look at what the economic model is for a lot of these companies. Whether it's Amazon, Microsoft, or Google, we are huge users of their cloud services, which at the end of the day, is a significant revenue stream for them. We have great partnerships with all three of them. I think with Google specifically, we also partner on how we can jointly go to media and entertainment. We are a big user of their Nano Banana within our application. I think there's a lot of synergy associated with that. I think with OpenAI and with Anthropic, they are looking to say how can they become more of a sort of platform of choice and provide us. I think all of their focus right now, I would say, Brad, is on code. That's where everybody is doing a student body left on that. I think creativity is an area that we not only have a passion for, that we're uniquely qualified. This is our time and our opportunity to leverage everything that they are providing. With every one of them, we have a great partnership. I think as it relates to the consumer side of creativity, which is where this is going after, we're, I think, a company of one in terms of the focus that we can have on that particular business. Very helpful. Thank you both. The next question will come from Billy Fitzsimmons with Piper Sandler. Hey, guys. Thanks for taking the question, fitting me in. I want to go back to the discussion earlier. There's a lot of debates right now around kind of bots in software. If I think back to Summit, there's a big focus on kind of what you're doing with AI agents internally. I think there's an important emphasis on your differentiation of having 20 years of customer relationships and proprietary data around that, as well as being that governance and auditability layer for agentic workflows. Can you just talk about the importance of that in the ecosystem? Then if I could sneak another one in, and to be honest, I don't really know who this is for at this point, but you announced a $25 billion share repurchase authorization at Summit. That's a significant chunk of your cap. We're also in a much more, or it feels like a more relaxed regulatory environment. How do we think about your ability and propensity to do tuck-in M&A in this environment? Thanks, guys. Maybe I'll start with the second. Then we can all touch on the first. We are all a team of one, so you can ask anybody that question, Billy, and we'll get the same answer. As it relates to the stock buyback, you know we had a $25 billion authorization previously. We added to that with another $25 billion authorization in April. Of the first authorization, if you look at it, there's $2 billion left, and we would have completed it in less than 11 quarters or so. We're clearly showing a lot of confidence that we should be using capital allocation to buy back our stocks. Semrush was a good acquisition. We're confident about our ability to monetize that. It further differentiates our marketing solutions. I'll come to the marketing part. We are continuously looking at a whole bunch of companies. There's going to be some very interesting tuck-ins as it relates to technology because none of them have business models that are sustainable or monetizable. It is actually a good time for us to look at technology companies. As it relates to differentiation, we always talk about content and the fact that we have these behaviors, and we have the data as a huge differentiator for us. I know there's a lot of talk about what's happening in the enterprise. The number of CEOs and CFOs who are coming to us and talking about, "Hey, we have this transformation. A big component of that transformation is customer experience, and Adobe, you're the one who's going to help us with that in terms of both the content and the understanding of the customer." That's a huge differentiator. We're clearly focused on that as separated us from anybody else in the customer experience orchestration. On the creative pro, as I continue to say, our understanding of that customer base is unique. This is now about saying, how do we extend both of those into also the consumer space in the era of AI? That's how we look at it. To your point, our ability to take the depth of our technology, whether it's in audio, whether it's in video, whether it's in imaging, and bring that to Firefly, the speed and velocity by which we can bring it has to do a lot with what the technology code base is underlying and the understanding of behaviors. That's how I would describe our differentiation. Anybody who wants to create content and use it for marketing, that's Adobe. Our next question will come from Kirk Materne with Evercore ISI. Yeah, thanks for taking the question. I guess this one's maybe for David. David, when we think about this push into freemium and changing that up a little bit, I guess, how do you get comfortable on sort of the long-term economics in terms of the lifetime value? I guess, what are you seeing in terms of those customers going through sort of a gestation period, then monetizing over a certain period of time? Can you add some more color to that? Because I get the idea of adding a lot more new users to the platform, but just trying to get a sense on how you guys get comfort about sort of the stickiness of those users after a certain period of time and the ultimate monetization opportunity. Thanks. Yeah, happy to take that. Just the foundation of the press here really starts with understanding user intent and user behavior. As I mentioned in the example of that transition to increasing intent-based expression when they're searching, that just gives us an opportunity to massively open up the top of funnel, which you're starting to see with the over 40% increase in traffic to adobe.com through those activities. If you think about the journey the user goes from, they go from searching directly to using our product, which does result, and we see that in our stats, that results in higher engagement, which you then start to see in terms of monthly active user growth. What we see is on the back end of that, when they convert to a paid user, they tend to have much higher engagement and usage patterns than those that go directly into paid, which translates into lifetime value and long-term value for the company. In terms of why now, again, that question was asked earlier. Why now? Because we see all the right signals, right? The product is there. We see the traffic is up 40% year-over-year. We see the strong usage of the product. We see that MAU is up 70% year-over-year when looked at it. We even talked about how that has started to translate into ARR growth with 50%, as an example, ARR growth that you see quarter-over-quarter for Firefly. All of those early indicators are there, really what we're working to do as we bring more of that traffic over is that just needs time to play out. All of that sort of in the backdrop of this is where the world is going. The opportunity is bigger than ever. Instead of trying to balance both things, really go all in on this opportunity because it's ours to win. We have all of the foundation here. Our next question will come from Brent Thill with Jefferies. Shantanu, one of the questions we get is just the reset for this next tectonic shift, I realize you're guiding margins down a bit, I think many investors believe that you could be doing more and putting a much bigger moat and investment into protect yourself. I don't know if that view is right or wrong, I'm curious, why not be a little more severe in terms of the push and the pivot? You went through this from perpetual to subscription, you obviously nailed it and had incredible results from that pivot. Maybe it's not the right analogy, I think we're getting a lot of questions on that. I think, Brent, this is actually indication that we are really going to pivot, to use your words, into getting this acquisition and customers. Perhaps what's not as evident is under the surface, how we're increasingly moving all of the expenses that we have and spend that we have, the scrutiny on just making sure that we find the money to spend. We will not be short-term focused on this, Brent, in terms of spending money to make sure we capitalize on the opportunity. We are spending on this, we will continue to, whether it's on the models, whether it's in marketing, whether it's in the product associated with these. We do not intend to be short-term at all about. As you point out correctly, Brent, this is not about balance. This is about saying, "Hey, be clear about your strategic intent." We are saying it's about becoming that platform of choice for AI right now. It is about getting those users to engage with Adobe and partner with Adobe. Be assured that as it relates to cloud spend, what we are doing on models as well as what we are doing in marketing, we are spending the money. The good news is we get a lot of Anil's products relatively cheap in order to be able to use it. Our efficiency on that is probably better than anybody else in the industry. Thank you. Moving on to Saket Kalia with Barclays. Okay, great. Hey, guys. Thanks for taking the question here. Maybe for Shantanu and David, as I think about the original freemium business at Adobe, it's really Acrobat. I think the hope here is that some of your products like Express and Firefly can replicate that success. Maybe the question is, can you just compare and contrast maybe the next generation of freemium products in terms of what's similar, what's different than some of the really successful freemium businesses that we've built up over the years? Yeah. Thanks, Saket. Happy to share a little bit about this. For the broader context of folks that may not have been tracking us as long as you have, if you really take a step back, we've talked a lot in terms of the Acrobat funnel as part of our data-driven operating model. The level of scrutiny and detail we understand around the breakup of when we talk about the 850 million monthly active users, many of them are on Acrobat Reader. Some of them are in our Chrome extension, some of them are in Microsoft Edge extension. Some of them are on mobile devices. We're able to look at the utilization of all of that reader experience in those free experiences and understand the specifics of how users are engaging in each of those, and look for the right opportunities in those surfaces to put up paywalls and opportunities to convert. We found in that process, things like edit PDF or redact PDF inquiries are a great opportunity to take a user that's built up a habit using these products and convert them to a long-term, paid customer. A lot of that same learning, that infrastructure that we have in place for Acrobat that we've developed over the years, that same infrastructure applies to everything we're doing, as you said, with Express, with Firefly, with Acrobat AI Assistant. The foundation of how we're taking that 90 million of creative freemium MAU and converting that is identical. Maybe the difference that we see as an opportunity, this goes back to why we're investing so heavily right now in going after where we see a user behavior, is that intent no longer just starts in the product. That intent now also starts as part of their search history and the things they're doing in search. The investment in terms of driving a broader percentage of that search directly into the same flows and the same model that we've done with Acrobat over the years, I think that's really the opportunity to fundamentally change and reshape this business for decades to come. Very excited about what we've learned, there's growth that we can apply to new experiences as well. Maybe I'll just add a little bit to it, Saket, having been there for that journey. I think a lot of people may not remember that we actually tried to charge for the Acrobat Reader. Most customers told us that, "Hey, allow us to use it, you'll find different ways to monetize it." In addition to what David said, I would add that I think what's common across all of these is product first and foremost, which is, how do you get usage? In the reader case, it was distribution. In this case, the new model is freemium, that's the underlying theory behind both of those, is get the product right and get usage going, because that's the way to monetize it. I think as it relates to the two other things that are, I think, learnings from what we will continue to do, on Firefly, how we can expand from Firefly into Creative Cloud. We are doing a really great job of that, which is you try things in Firefly and you want to expand to Creative Cloud. That's pretty seamless. You want to start with Creative Cloud and have Firefly, that's also very seamless in terms of how much innovation we've delivered. It's slightly different with Acrobat Express, in that with Acrobat Express, it's a little bit more of paywalls in terms of how we are doing it. What I look at when we see what we are doing is usage is common, getting the product is common, and then making sure that at the appropriate times, we find ways to add value and find ways to monetize it. I think that's the learning that we have, but usage at the end of the day. Since I believe that's the last question, let me just, because I think the whole set of questions has really been around, "Hey, as you think about this era of AI and as you think about what's happening with creativity, what gives you confidence associated with some of the things?" I'll repeat what I said, which is, we really think this is this unique opportunity for creativity with everything that's changing with AI and user behavior and user intent and how users discover products, based on the early success to say now's the time to have the singular focus in the company, get the alignment, and go really drive. The Creative Cloud business continues to do well. That is not where tweaking it is going to allow us to get the next hundreds of millions of customers. On the marketing side, enterprises, we just continue to extend the offerings that we have and tying together content between what we are doing on the client side and the enterprise. That entire economic pool, as I think Anil talked about, in terms of how much money is being spent across content creation, marketing folks, practitioners, the agencies, as well as the channels, that is only going to increase, and that's going to go. The benefit of that and the economic pool is going to go to folks who can help automate that and provide technology and software to do that. That's why we feel really good about these changes, and we feel this is the way to continue to drive. We're also pleased with what we have done as it relates to the conversion of ARR to revenue. I should recognize that. That's why you've seen the overachievement. That speaks to, again, the stability, I think, that we see in the ARR from customers. Thank you for joining us today, and we look forward, for those of you who are going to be at Cannes, certainly stop by and see what Adobe has to offer. Otherwise, we'll see you at the next call. Thank you. Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.

Speaker 11: Good day, welcome to the Q2 FY 2026 Adobe earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Doug Clark, Vice President of Investor Relations. Please go ahead. Good day, welcome to the Q2 FY 2026 Adobe earnings conference call. good day welcome to the q2 fy 2026 adobe earnings conference call Today's conference is being recorded. today's conference is being recorded At this time, I'd like to turn the conference over to Doug Clark, Vice President of Investor Relations. at this time i'd like to turn the conference over to doug clark vice president of investor relations Please go ahead. please go ahead

Speaker 7: Good afternoon, thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's Chair and CEO, David Wadhwani, President of Creativity and Productivity, Anil Chakravarthy, President of Customer Experience Orchestration, and Steve Day, Senior Vice President Corporate Finance and CFO of Customer Experience Orchestration. On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2026 financial results. You can find our press release as well as PDFs of our prepared remarks and financial results on Adobe's Investor Relations website. The information discussed on this call, including our financial targets and product plans, is as of today, June 11, and contains forward-looking statements that involve risk, uncertainty, and assumptions. Actual results may differ materially from those set forth in these statements. For more information on those risks, please review today's earnings release and Adobe's SEC filings. Good afternoon, thank you for joining us. good afternoon thank you for joining us With me on the call today are Shantanu Narayen, Adobe's Chair and CEO, David Wadhwani, President of Creativity and Productivity, Anil Chakravarthy, President of Customer Experience Orchestration, and Steve Day, Senior Vice President Corporate Finance and CFO of Customer Experience Orchestration. with me on the call today are shantanu narayen adobe's chair and ceo david wadhwani president of creativity and productivity anil chakravarthy president of customer experience orchestration and steve day senior vice president corporate finance and cfo of customer experience orchestration On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2026 financial results. on this call which is being recorded we will discuss adobe's second quarter fiscal year 2026 financial results You can find our press release as well as PDFs of our prepared remarks and financial results on Adobe's Investor Relations website. you can find our press release as well as pdfs of our prepared remarks and financial results on adobe's investor relations website The information discussed on this call, including our financial targets and product plans, is as of today, June 11, and contains forward-looking statements that involve risk, uncertainty, and assumptions. the information discussed on this call including our financial targets and product plans is as of today june 11 and contains forward-looking statements that involve risk uncertainty and assumptions Actual results may differ materially from those set forth in these statements. actual results may differ materially from those set forth in these statements For more information on those risks, please review today's earnings release and Adobe's SEC filings. for more information on those risks please review today's earnings release and adobe's sec filings On this call, we will discuss GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates and non-GAAP growth rates, including constant currency rates. During this presentation, Adobe's executives will refer to revenue growth and constant currency rates unless otherwise stated. Non-GAAP reconciliations are available in our earnings release and on Adobe's investor relations website. I will now turn the call over to Shantanu. On this call, we will discuss GAAP and non-GAAP financial measures. on this call we will discuss gaap and non-gaap financial measures Our reported results include GAAP growth rates and non-GAAP growth rates, including constant currency rates. our reported results include gaap growth rates and non-gaap growth rates including constant currency rates During this presentation, Adobe's executives will refer to revenue growth and constant currency rates unless otherwise stated. during this presentation adobe's executives will refer to revenue growth and constant currency rates unless otherwise stated Non-GAAP reconciliations are available in our earnings release and on Adobe's investor relations website. non-gaap reconciliations are available in our earnings release and on adobe's investor relations website I will now turn the call over to Shantanu. i will now turn the call over to shantanu

Speaker 13: Thanks, Doug. Good afternoon, everyone, thank you for joining us. We achieved $6.62 billion in revenue in Q2, representing 11% year-over-year growth. GAAP earnings per share for the quarter was $4.25, representing 8% year-over-year growth, and non-GAAP earnings per share was $5.96, representing 18% year-over-year growth. Strong revenue growth was driven by subscription bookings to revenue conversion. We drove EPS growth through record top-line revenue and disciplined investments across the company. At Adobe, we continue to be driven by our mission to empower everyone to create and deliver innovative products to delight users based on our customer strategy. We're focused on business professionals and consumers, creators and creative professionals, and marketing professionals. For business professionals and consumers, we're delivering AI-powered, quick and easy apps to stand out through creativity and productivity. Thanks, Doug. thanks doug Good afternoon, everyone, thank you for joining us. good afternoon everyone thank you for joining us We achieved $6.62 billion in revenue in Q2, representing 11% year-over-year growth. we achieved $6.62 billion in revenue in q2 representing 11% year-over-year growth GAAP earnings per share for the quarter was $4.25, representing 8% year-over-year growth, and non-GAAP earnings per share was $5.96, representing 18% year-over-year growth. gaap earnings per share for the quarter was $4.25 representing 8% year-over-year growth and non-gaap earnings per share was $5.96 representing 18% year-over-year growth Strong revenue growth was driven by subscription bookings to revenue conversion. strong revenue growth was driven by subscription bookings to revenue conversion We drove EPS growth through record top-line revenue and disciplined investments across the company. we drove eps growth through record top-line revenue and disciplined investments across the company At Adobe, we continue to be driven by our mission to empower everyone to create and deliver innovative products to delight users based on our customer strategy. at adobe we continue to be driven by our mission to empower everyone to create and deliver innovative products to delight users based on our customer strategy We're focused on business professionals and consumers, creators and creative professionals, and marketing professionals. we're focused on business professionals and consumers creators and creative professionals and marketing professionals For business professionals and consumers, we're delivering AI-powered, quick and easy apps to stand out through creativity and productivity. for business professionals and consumers we're delivering ai-powered quick and easy apps to stand out through creativity and productivity For creators and creative professionals, we're delivering power and precision to bring creative visions to life across any media type and surface. For marketing professionals, we're delivering customer experience orchestration to create, deliver, and optimize personalized digital experiences. As we reflect on the market context and our first half performance, it is clear that relative even to the beginning of fiscal 2026, AI is accelerating customer behavior at an unprecedented speed, and we need to evolve our strategy and execution to address these changing expectations. Much like how developers have embraced and expanded the AI coding market, there's a transformation underway for how consumers are discovering, experiencing, onboarding, and purchasing products across all categories, including creativity, productivity, gaming, and entertainment. As it relates to creativity and productivity, there's an unprecedented demand across additional surfaces for the combination of content consumption and content creation. For creators and creative professionals, we're delivering power and precision to bring creative visions to life across any media type and surface. for creators and creative professionals we're delivering power and precision to bring creative visions to life across any media type and surface For marketing professionals, we're delivering customer experience orchestration to create, deliver, and optimize personalized digital experiences. for marketing professionals we're delivering customer experience orchestration to create deliver and optimize personalized digital experiences As we reflect on the market context and our first half performance, it is clear that relative even to the beginning of fiscal 2026, AI is accelerating customer behavior at an unprecedented speed, and we need to evolve our strategy and execution to address these changing expectations. as we reflect on the market context and our first half performance it is clear that relative even to the beginning of fiscal 2026 ai is accelerating customer behavior at an unprecedented speed and we need to evolve our strategy and execution to address these changing expectations Much like how developers have embraced and expanded the AI coding market, there's a transformation underway for how consumers are discovering, experiencing, onboarding, and purchasing products across all categories, including creativity, productivity, gaming, and entertainment. much like how developers have embraced and expanded the ai coding market there's a transformation underway for how consumers are discovering experiencing onboarding and purchasing products across all categories including creativity productivity gaming and entertainment As it relates to creativity and productivity, there's an unprecedented demand across additional surfaces for the combination of content consumption and content creation. as it relates to creativity and productivity there's an unprecedented demand across additional surfaces for the combination of content consumption and content creation Conversational interfaces and agents now orchestrate across tools to achieve outcomes faster. The proliferation of media generation models is reshaping and democratizing content workflows from ideation through delivery. AI-first applications that will serve broader audiences need to provide free, intuitive onboarding that drive usage and monetization through paywalls. Big picture, the immediate opportunity for Adobe is to accelerate new user acquisition and lifetime value through a freemium offering. As it relates to business professionals and consumers, we have dramatically increased Acrobat and Express MAU from greater than 700 million to greater than 850 million year-over-year. The opportunity is to serve billions of business professionals and consumers through a comprehensive freemium funnel, building on the success of the Acrobat Reader model. Conversational interfaces and agents now orchestrate across tools to achieve outcomes faster. conversational interfaces and agents now orchestrate across tools to achieve outcomes faster The proliferation of media generation models is reshaping and democratizing content workflows from ideation through delivery. the proliferation of media generation models is reshaping and democratizing content workflows from ideation through delivery AI-first applications that will serve broader audiences need to provide free, intuitive onboarding that drive usage and monetization through paywalls. ai-first applications that will serve broader audiences need to provide free intuitive onboarding that drive usage and monetization through paywalls Big picture, the immediate opportunity for Adobe is to accelerate new user acquisition and lifetime value through a freemium offering. big picture the immediate opportunity for adobe is to accelerate new user acquisition and lifetime value through a freemium offering As it relates to business professionals and consumers, we have dramatically increased Acrobat and Express MAU from greater than 700 million to greater than 850 million year-over-year. as it relates to business professionals and consumers we have dramatically increased acrobat and express mau from greater than 700 million to greater than 850 million year-over-year The opportunity is to serve billions of business professionals and consumers through a comprehensive freemium funnel, building on the success of the Acrobat Reader model. the opportunity is to serve billions of business professionals and consumers through a comprehensive freemium funnel building on the success of the acrobat reader model Over the last year, we've delivered tremendous innovation across AI Assistant, PDF Spaces, Express, and conversational interfaces and made these innovations available across surfaces including AI mode in Acrobat Reader, Edge, Chrome, and WhatsApp. Business professional and consumer traffic on adobe.com seeking Adobe capabilities is growing 35% year-over-year. We believe this traffic is better served through a customized, friction-free onboarding experience without immediate paywalls and will result in greater customer acquisition and deeper engagement over time. Based on the early success and MAU adoption of freemium journeys for Acrobat and Express, we're ready to expand this experience more aggressively. For next-generation creators, the opportunity is to deliver an AI production studio across web and mobile that seamlessly integrates with the power and precision capabilities of Creative Cloud. We have increased our creative freemium MAU from 50 million to 90 million year-over-year. Over the last year, we've delivered tremendous innovation across AI Assistant, PDF Spaces, Express, and conversational interfaces and made these innovations available across surfaces including AI mode in Acrobat Reader, Edge, Chrome, and WhatsApp. over the last year we've delivered tremendous innovation across ai assistant pdf spaces express and conversational interfaces and made these innovations available across surfaces including ai mode in acrobat reader edge chrome and whatsapp Business professional and consumer traffic on adobe.com seeking Adobe capabilities is growing 35% year-over-year. business professional and consumer traffic on adobe.com seeking adobe capabilities is growing 35% year-over-year We believe this traffic is better served through a customized, friction-free onboarding experience without immediate paywalls and will result in greater customer acquisition and deeper engagement over time. we believe this traffic is better served through a customized friction-free onboarding experience without immediate paywalls and will result in greater customer acquisition and deeper engagement over time Based on the early success and MAU adoption of freemium journeys for Acrobat and Express, we're ready to expand this experience more aggressively. based on the early success and mau adoption of freemium journeys for acrobat and express we're ready to expand this experience more aggressively For next-generation creators, the opportunity is to deliver an AI production studio across web and mobile that seamlessly integrates with the power and precision capabilities of Creative Cloud. We have increased our creative freemium MAU from 50 million to 90 million year-over-year. for next-generation creators the opportunity is to deliver an ai production studio across web and mobile that seamlessly integrates with the power and precision capabilities of creative cloud. we have increased our creative freemium mau from 50 million to 90 million year-over-year The opportunity is to attract hundreds of millions of additional creators through a freemium funnel based on the early success of Firefly. Over the last year, we have delivered tremendous innovation across ideation through boards, generation with support for multiple media models, semantic image and video editing, and conversational interfaces that are available across surfaces, including mobile, web, and flagship Creative Cloud applications such as Photoshop, Illustrator, and Premiere. The new personalized journeys for creators drove approximately 50% increase in Firefly ARR quarter-over-quarter through Firefly apps and credit packs. Based on this early success, we are confident that we should expand the Firefly freemium experience to acquire and delight the next generation of creatives. Creative Cloud continues to perform well as the best-of-breed offering for creative and marketing professionals globally. The opportunity is to attract hundreds of millions of additional creators through a freemium funnel based on the early success of Firefly. the opportunity is to attract hundreds of millions of additional creators through a freemium funnel based on the early success of firefly Over the last year, we have delivered tremendous innovation across ideation through boards, generation with support for multiple media models, semantic image and video editing, and conversational interfaces that are available across surfaces, including mobile, web, and flagship Creative Cloud applications such as Photoshop, Illustrator, and Premiere. over the last year we have delivered tremendous innovation across ideation through boards generation with support for multiple media models semantic image and video editing and conversational interfaces that are available across surfaces including mobile web and flagship creative cloud applications such as photoshop illustrator and premiere The new personalized journeys for creators drove approximately 50% increase in Firefly ARR quarter-over-quarter through Firefly apps and credit packs. the new personalized journeys for creators drove approximately 50% increase in firefly arr quarter-over-quarter through firefly apps and credit packs Based on this early success, we are confident that we should expand the Firefly freemium experience to acquire and delight the next generation of creatives. based on this early success we are confident that we should expand the firefly freemium experience to acquire and delight the next generation of creatives Creative Cloud continues to perform well as the best-of-breed offering for creative and marketing professionals globally. creative cloud continues to perform well as the best-of-breed offering for creative and marketing professionals globally While we focus on accelerating creator acquisition through the freemium Firefly funnel, we have made the decision to defer previously planned Creative Cloud second half line optimizations. As it relates to the Customer Experience Orchestration, agentic opportunity in the enterprise, marketing professionals are looking to automate and rapidly create, deliver, and personalize content at scale across every channel in a way that drives customer engagement and elevates their brand. Content creation designed specifically for marketing use cases is exploding. New AI coworkers and agents offer organizations the ability to deliver automation and outcomes powered by context, data, MCPs, and skills. These address the dual needs of enterprises to expand consumer centricity and cost savings in the era of AI. Business models are expanding to include consumption and outcome-based pricing along with subscriptions. The total marketing opportunity across people, software, agency, and channel spend is enormous. While we focus on accelerating creator acquisition through the freemium Firefly funnel, we have made the decision to defer previously planned Creative Cloud second half line optimizations. while we focus on accelerating creator acquisition through the freemium firefly funnel we have made the decision to defer previously planned creative cloud second half line optimizations As it relates to the Customer Experience Orchestration, agentic opportunity in the enterprise, marketing professionals are looking to automate and rapidly create, deliver, and personalize content at scale across every channel in a way that drives customer engagement and elevates their brand. as it relates to the customer experience orchestration agentic opportunity in the enterprise marketing professionals are looking to automate and rapidly create deliver and personalize content at scale across every channel in a way that drives customer engagement and elevates their brand Content creation designed specifically for marketing use cases is exploding. content creation designed specifically for marketing use cases is exploding New AI coworkers and agents offer organizations the ability to deliver automation and outcomes powered by context, data, MCPs, and skills. new ai coworkers and agents offer organizations the ability to deliver automation and outcomes powered by context data mcps and skills These address the dual needs of enterprises to expand consumer centricity and cost savings in the era of AI. these address the dual needs of enterprises to expand consumer centricity and cost savings in the era of ai Business models are expanding to include consumption and outcome-based pricing along with subscriptions. business models are expanding to include consumption and outcome-based pricing along with subscriptions The total marketing opportunity across people, software, agency, and channel spend is enormous. the total marketing opportunity across people software agency and channel spend is enormous AI is changing enterprise behavior as they're increasingly bringing more marketing capabilities in-house through their adoption of software platforms and the creation of custom models that uniquely capture their brand intelligence. IT organizations are looking to Adobe to accelerate their provisioning, deployment, and customization to serve their consumers through the availability of headless and agentic capabilities with pricing models that address outcomes as well as AI usage. Customer Experience Orchestration, AI-first ARR grew 4x year-over-year, reflecting how Adobe is the leader in both the traditional marketing category and the emerging Customer Experience Orchestration category. The introduction of Adobe CX Enterprise and Adobe CX Enterprise Coworker at Adobe Summit expands the vision and delivery of our category-defining CXO solutions. The successful acquisition of Semrush unifies our search engine optimization, generative engine optimization, and SEM solutions to further extend our CXO offering. AI is changing enterprise behavior as they're increasingly bringing more marketing capabilities in-house through their adoption of software platforms and the creation of custom models that uniquely capture their brand intelligence. ai is changing enterprise behavior as they're increasingly bringing more marketing capabilities in-house through their adoption of software platforms and the creation of custom models that uniquely capture their brand intelligence IT organizations are looking to Adobe to accelerate their provisioning, deployment, and customization to serve their consumers through the availability of headless and agentic capabilities with pricing models that address outcomes as well as AI usage. it organizations are looking to adobe to accelerate their provisioning deployment and customization to serve their consumers through the availability of headless and agentic capabilities with pricing models that address outcomes as well as ai usage Customer Experience Orchestration, AI-first ARR grew 4x year-over-year, reflecting how Adobe is the leader in both the traditional marketing category and the emerging Customer Experience Orchestration category. customer experience orchestration ai-first arr grew 4x year-over-year reflecting how adobe is the leader in both the traditional marketing category and the emerging customer experience orchestration category The introduction of Adobe CX Enterprise and Adobe CX Enterprise Coworker at Adobe Summit expands the vision and delivery of our category-defining CXO solutions. the introduction of adobe cx enterprise and adobe cx enterprise coworker at adobe summit expands the vision and delivery of our category-defining cxo solutions The successful acquisition of Semrush unifies our search engine optimization, generative engine optimization, and SEM solutions to further extend our CXO offering. the successful acquisition of semrush unifies our search engine optimization generative engine optimization and sem solutions to further extend our cxo offering We will deliver this integrated offering that addresses brand visibility at the Cannes Lions Festival of Creativity later this month. This combination of creativity and marketing uniquely differentiates Adobe. No other company brings together what creatives and marketers can do across our applications and delivery platforms. Adobe GenStudio ARR grew over 25% year-over-year, reflecting enterprise demand for an end-to-end solution that spans workflow and planning, creation and production, asset management, activation and delivery, and reporting and insights. Adobe's AI innovation has driven an impressive 3x year-over-year increase in AI-first ARR to greater than $500 million. We believe now is the time to aggressively acquire the next generation of Adobe loyalists. The strategic shift to acquire more freemium customers through Adobe and Firefly lowers our second half ARR growth expectations from individual subscribers. We believe these changes do make Adobe even stronger. We will deliver this integrated offering that addresses brand visibility at the Cannes Lions Festival of Creativity later this month. we will deliver this integrated offering that addresses brand visibility at the cannes lions festival of creativity later this month This combination of creativity and marketing uniquely differentiates Adobe. this combination of creativity and marketing uniquely differentiates adobe No other company brings together what creatives and marketers can do across our applications and delivery platforms. no other company brings together what creatives and marketers can do across our applications and delivery platforms Adobe GenStudio ARR grew over 25% year-over-year, reflecting enterprise demand for an end-to-end solution that spans workflow and planning, creation and production, asset management, activation and delivery, and reporting and insights. adobe genstudio arr grew over 25% year-over-year reflecting enterprise demand for an end-to-end solution that spans workflow and planning creation and production asset management activation and delivery and reporting and insights Adobe's AI innovation has driven an impressive 3x year-over-year increase in AI-first ARR to greater than $500 million. adobe's ai innovation has driven an impressive 3x year-over-year increase in ai-first arr to greater than $500 million We believe now is the time to aggressively acquire the next generation of Adobe loyalists. we believe now is the time to aggressively acquire the next generation of adobe loyalists The strategic shift to acquire more freemium customers through Adobe and Firefly lowers our second half ARR growth expectations from individual subscribers. the strategic shift to acquire more freemium customers through adobe and firefly lowers our second half arr growth expectations from individual subscribers We believe these changes do make Adobe even stronger. we believe these changes do make adobe even stronger We continue to target double-digit total ARR growth for Adobe, which now includes the Semrush acquisition. Based on our strong first half revenue performance and the inclusion of Semrush, we are pleased to raise our fiscal year revenue and non-GAAP EPS targets. As we announced, Dan Durn has decided to pursue a new opportunity outside the software industry. I'd like to thank Dan for his contributions to Adobe and wish him well. I'm pleased that Steve Day, who has been at Adobe for 20 years serving in numerous financial leadership roles, will serve as Interim CFO upon Dan's departure. I continue to be incredibly energized by Adobe's long-term AI opportunity and the innovative products we are delivering to a broader set of customers. Given my decision to transition to Board Chair, I wanted to provide an update on the CEO search, which is progressing well. We continue to target double-digit total ARR growth for Adobe, which now includes the Semrush acquisition. we continue to target double-digit total arr growth for adobe which now includes the semrush acquisition Based on our strong first half revenue performance and the inclusion of Semrush, we are pleased to raise our fiscal year revenue and non-GAAP EPS targets. based on our strong first half revenue performance and the inclusion of semrush we are pleased to raise our fiscal year revenue and non-gaap eps targets As we announced, Dan Durn has decided to pursue a new opportunity outside the software industry. as we announced dan durn has decided to pursue a new opportunity outside the software industry I'd like to thank Dan for his contributions to Adobe and wish him well. i'd like to thank dan for his contributions to adobe and wish him well I'm pleased that Steve Day, who has been at Adobe for 20 years serving in numerous financial leadership roles, will serve as Interim CFO upon Dan's departure. i'm pleased that steve day who has been at adobe for 20 years serving in numerous financial leadership roles will serve as interim cfo upon dan's departure I continue to be incredibly energized by Adobe's long-term AI opportunity and the innovative products we are delivering to a broader set of customers. i continue to be incredibly energized by adobe's long-term ai opportunity and the innovative products we are delivering to a broader set of customers Given my decision to transition to Board Chair, I wanted to provide an update on the CEO search, which is progressing well. given my decision to transition to board chair i wanted to provide an update on the ceo search which is progressing well The board has been actively engaged in a comprehensive process. While we all continue to be ruthlessly focused on driving execution, our goal is to have Adobe's next CEO in place to put their stamp on planning for fiscal 2027 and beyond. I'll now turn it over to David. The board has been actively engaged in a comprehensive process. the board has been actively engaged in a comprehensive process While we all continue to be ruthlessly focused on driving execution, our goal is to have Adobe's next CEO in place to put their stamp on planning for fiscal 2027 and beyond. while we all continue to be ruthlessly focused on driving execution our goal is to have adobe's next ceo in place to put their stamp on planning for fiscal 2027 and beyond I'll now turn it over to David. i'll now turn it over to david

Speaker 6: Thanks, Shantanu. Hello, everyone. AI is rewriting how the world creates and gets work done. The audiences for creativity and productivity tools is bigger now than at any point in our history. From social creators and students to business professionals and large enterprises, the opportunity for Adobe is massive. These customers are looking for a range of products, from easy-to-use creative tools to professional levels of power and precision, and are increasingly turning to conversational experiences to accelerate their work. Adobe is the only company that has the portfolio breadth to meet this broad range of creativity and productivity needs. We see this interest manifest in traffic growth, signaling demand for our existing products and accelerating demand for new AI-first experiences. The demand for these new AI experiences begins with LLM conversations and intent-based searches and requires immediate gratification, is best served with friction-free experiences. Thanks, Shantanu. thanks shantanu Hello, everyone. hello everyone AI is rewriting how the world creates and gets work done. ai is rewriting how the world creates and gets work done The audiences for creativity and productivity tools is bigger now than at any point in our history. From social creators and students to business professionals and large enterprises, the opportunity for Adobe is massive. the audiences for creativity and productivity tools is bigger now than at any point in our history. from social creators and students to business professionals and large enterprises the opportunity for adobe is massive These customers are looking for a range of products, from easy-to-use creative tools to professional levels of power and precision, and are increasingly turning to conversational experiences to accelerate their work. these customers are looking for a range of products from easy-to-use creative tools to professional levels of power and precision and are increasingly turning to conversational experiences to accelerate their work Adobe is the only company that has the portfolio breadth to meet this broad range of creativity and productivity needs. adobe is the only company that has the portfolio breadth to meet this broad range of creativity and productivity needs We see this interest manifest in traffic growth, signaling demand for our existing products and accelerating demand for new AI-first experiences. we see this interest manifest in traffic growth signaling demand for our existing products and accelerating demand for new ai-first experiences The demand for these new AI experiences begins with LLM conversations and intent-based searches and requires immediate gratification, is best served with friction-free experiences. the demand for these new ai experiences begins with llm conversations and intent-based searches and requires immediate gratification is best served with friction-free experiences This shift in user behavior is playing out across business professionals and consumers and creators and creative professionals. While we continue to attract strong traffic to adobe.com, which grew over 40% year-over-year, our traditional direct-to-paid journeys may not always fulfill visitor intent, as a growing number of new users are first looking to quickly complete their intended task as they begin their relationship with Adobe. Given products like Adobe Firefly, Express, and Acrobat AI Assistant have friction-free onboarding and significant adoption, we can now rebalance our journeys to better serve this new generation of users rather than send them predominantly to direct-to-paid journeys. This shift will come at the cost of short-term ARR, will accelerate user acquisition and MAU while building the foundation for long-term growth by removing friction from user onboarding, enabling deeper user engagement, and driving stronger lifetime value. This shift in user behavior is playing out across business professionals and consumers and creators and creative professionals. this shift in user behavior is playing out across business professionals and consumers and creators and creative professionals While we continue to attract strong traffic to adobe.com, which grew over 40% year-over-year, our traditional direct-to-paid journeys may not always fulfill visitor intent, as a growing number of new users are first looking to quickly complete their intended task as they begin their relationship with Adobe. while we continue to attract strong traffic to adobe.com which grew over 40% year-over-year our traditional direct-to-paid journeys may not always fulfill visitor intent as a growing number of new users are first looking to quickly complete their intended task as they begin their relationship with adobe Given products like Adobe Firefly, Express, and Acrobat AI Assistant have friction-free onboarding and significant adoption, we can now rebalance our journeys to better serve this new generation of users rather than send them predominantly to direct-to-paid journeys. given products like adobe firefly express and acrobat ai assistant have friction-free onboarding and significant adoption we can now rebalance our journeys to better serve this new generation of users rather than send them predominantly to direct-to-paid journeys This shift will come at the cost of short-term ARR, will accelerate user acquisition and MAU while building the foundation for long-term growth by removing friction from user onboarding, enabling deeper user engagement, and driving stronger lifetime value. this shift will come at the cost of short-term arr will accelerate user acquisition and mau while building the foundation for long-term growth by removing friction from user onboarding enabling deeper user engagement and driving stronger lifetime value In Q2, subscription revenue for business professionals and consumers was $1.85 billion, growing 15% year-over-year. BP&C traffic grew 35% year-over-year, with MAU growing from greater than 700 million to greater than 850 million in Q2 year-over-year, with significant contributions from AI Assistant, Express Creation, and PDF Spaces sharing. This quarter, we introduced the Adobe Productivity Agent, shifting Acrobat from a static document tool to an interactive experience. The Productivity Agent is an AI experience built into Acrobat that draws on Adobe Acrobat's document intelligence and Adobe Express' AI-first creation capabilities to help business professionals understand, create, and share information. It can turn documents into rich outputs like presentations, podcasts, and social content, support conversational PDF editing, and power the new sharing capabilities in PDF Spaces. Customers get the agent through Acrobat AI plans. In Q2, subscription revenue for business professionals and consumers was $1.85 billion, growing 15% year-over-year. in q2 subscription revenue for business professionals and consumers was $1.85 billion growing 15% year-over-year BP&C traffic grew 35% year-over-year, with MAU growing from greater than 700 million to greater than 850 million in Q2 year-over-year, with significant contributions from AI Assistant, Express Creation, and PDF Spaces sharing. bp&c traffic grew 35% year-over-year with mau growing from greater than 700 million to greater than 850 million in q2 year-over-year with significant contributions from ai assistant express creation and pdf spaces sharing This quarter, we introduced the Adobe Productivity Agent, shifting Acrobat from a static document tool to an interactive experience. this quarter we introduced the adobe productivity agent shifting acrobat from a static document tool to an interactive experience The Productivity Agent is an AI experience built into Acrobat that draws on Adobe Acrobat's document intelligence and Adobe Express' AI-first creation capabilities to help business professionals understand, create, and share information. the productivity agent is an ai experience built into acrobat that draws on adobe acrobat's document intelligence and adobe express' ai-first creation capabilities to help business professionals understand create and share information It can turn documents into rich outputs like presentations, podcasts, and social content, support conversational PDF editing, and power the new sharing capabilities in PDF Spaces. it can turn documents into rich outputs like presentations podcasts and social content support conversational pdf editing and power the new sharing capabilities in pdf spaces Customers get the agent through Acrobat AI plans. customers get the agent through acrobat ai plans Users can also now share branded PDF Spaces with customizable AI assistants tailored to a specific audience, whether for sales prospecting, content marketing, or research delivery. Early adopters of PDF Spaces, including Vice Media, Kid Cudi, Jessica Yellin, and Mindy Weiss, are using PDF Spaces to move audiences from passive reading to interactive engagement. Additional business professional and consumer highlights include Acrobat AI Assistant paid MAU grew over 150% year-over-year, and lifetime AI users in Acrobat tripled year-over-year, showing both monetization traction and broad-based engagement. Express MAU grew more than 20% quarter-over-quarter, and Express users in Acrobat exported nine times more content year-over-year, demonstrating that the integration is driving creative output at scale. Acrobat Student Spaces launched this quarter to strong early adoption. Users can also now share branded PDF Spaces with customizable AI assistants tailored to a specific audience, whether for sales prospecting, content marketing, or research delivery. users can also now share branded pdf spaces with customizable ai assistants tailored to a specific audience whether for sales prospecting content marketing or research delivery Early adopters of PDF Spaces, including Vice Media, Kid Cudi, Jessica Yellin, and Mindy Weiss, are using PDF Spaces to move audiences from passive reading to interactive engagement. early adopters of pdf spaces including vice media kid cudi jessica yellin and mindy weiss are using pdf spaces to move audiences from passive reading to interactive engagement Additional business professional and consumer highlights include Acrobat AI Assistant paid MAU grew over 150% year-over-year, and lifetime AI users in Acrobat tripled year-over-year, showing both monetization traction and broad-based engagement. additional business professional and consumer highlights include acrobat ai assistant paid mau grew over 150% year-over-year and lifetime ai users in acrobat tripled year-over-year showing both monetization traction and broad-based engagement Express MAU grew more than 20% quarter-over-quarter, and Express users in Acrobat exported nine times more content year-over-year, demonstrating that the integration is driving creative output at scale. express mau grew more than 20% quarter-over-quarter and express users in acrobat exported nine times more content year-over-year demonstrating that the integration is driving creative output at scale Acrobat Student Spaces launched this quarter to strong early adoption. acrobat student spaces launched this quarter to strong early adoption The number of higher education students with access to Express Premium through their schools has grown more than 60% year-over-year. Customer wins this quarter include Accenture, DATEV, KPMG, Merck, NHL, New York State Court System, The Church of Jesus Christ of Latter-day Saints, Defense Information Systems Agency, and U.S. Department of Housing and Urban Development. In Q2, subscription revenue for creative and marketing professionals was $4.54 billion, growing 11% year-over-year. Demand for AI content creation is exploding across ideation, generation, and semantic editing, and generative creative consumption continues to show strong growth. Our strategy is to empower everyone to create, from first-time creators to seasoned professionals to large enterprises seeking to scale content production. In Q2, C&CP traffic to adobe.com grew over 50% year-over-year, with Creative freemium MAU growing from greater than 50 million to greater than 90 million. The number of higher education students with access to Express Premium through their schools has grown more than 60% year-over-year. the number of higher education students with access to express premium through their schools has grown more than 60% year-over-year Customer wins this quarter include Accenture, DATEV, KPMG, Merck, NHL, New York State Court System, The Church of Jesus Christ of Latter-day Saints, Defense Information Systems Agency, and U.S. customer wins this quarter include accenture datev kpmg merck nhl new york state court system the church of jesus christ of latter-day saints defense information systems agency and u.s Department of Housing and Urban Development. department of housing and urban development In Q2, subscription revenue for creative and marketing professionals was $4.54 billion, growing 11% year-over-year. in q2 subscription revenue for creative and marketing professionals was $4.54 billion growing 11% year-over-year Demand for AI content creation is exploding across ideation, generation, and semantic editing, and generative creative consumption continues to show strong growth. demand for ai content creation is exploding across ideation generation and semantic editing and generative creative consumption continues to show strong growth Our strategy is to empower everyone to create, from first-time creators to seasoned professionals to large enterprises seeking to scale content production. our strategy is to empower everyone to create from first-time creators to seasoned professionals to large enterprises seeking to scale content production In Q2, C&CP traffic to adobe.com grew over 50% year-over-year, with Creative freemium MAU growing from greater than 50 million to greater than 90 million. in q2 c&cp traffic to adobe.com grew over 50% year-over-year with creative freemium mau growing from greater than 50 million to greater than 90 million This immense volume of traffic drawn to the Adobe brand includes users seeking to purchase Creative Cloud, Photoshop, and other CC apps and an increasing number of new users who are looking for Adobe Magic to complete a creative task with a friction-free experience. Firefly freemium users who convert to our paid plans are highly engaged with early indications of significant credit consumption. Firefly ARR grew approximately 50% quarter-over-quarter through Firefly apps and credit packs. We were excited to launch the Adobe Creative Agent beta in Q2. The agent is available as part of Creative Cloud and Firefly subscriptions and provides a conversational experience to achieve complex and repetitive creative tasks. Agent usage will be monetized through our existing credit consumption model. The Adobe Creative Agent is also available in Claude, ChatGPT, and soon, Copilot and Gemini. This immense volume of traffic drawn to the Adobe brand includes users seeking to purchase Creative Cloud, Photoshop, and other CC apps and an increasing number of new users who are looking for Adobe Magic to complete a creative task with a friction-free experience. this immense volume of traffic drawn to the adobe brand includes users seeking to purchase creative cloud photoshop and other cc apps and an increasing number of new users who are looking for adobe magic to complete a creative task with a friction-free experience Firefly freemium users who convert to our paid plans are highly engaged with early indications of significant credit consumption. firefly freemium users who convert to our paid plans are highly engaged with early indications of significant credit consumption Firefly ARR grew approximately 50% quarter-over-quarter through Firefly apps and credit packs. firefly arr grew approximately 50% quarter-over-quarter through firefly apps and credit packs We were excited to launch the Adobe Creative Agent beta in Q2. we were excited to launch the adobe creative agent beta in q2 The agent is available as part of Creative Cloud and Firefly subscriptions and provides a conversational experience to achieve complex and repetitive creative tasks. the agent is available as part of creative cloud and firefly subscriptions and provides a conversational experience to achieve complex and repetitive creative tasks Agent usage will be monetized through our existing credit consumption model. agent usage will be monetized through our existing credit consumption model The Adobe Creative Agent is also available in Claude, ChatGPT, and soon, Copilot and Gemini. the adobe creative agent is also available in claude chatgpt and soon copilot and gemini Additional creators and creative professionals highlights include, in Premiere, we launched a brand-new color mode, a first-of-its-kind color grading experience built specifically for video editors. We continue to deepen AI capabilities across our flagship Creative Cloud applications. Photoshop added Rotate Object and Illustrator released Turntable, both enabling subscribers to turn 2D photos and illustrations into 3D renditions they can rotate and harmonize into their work. Capabilities like these drove record AI usage within our flagship applications. Firefly continues to support third-party models, now with Kling 3.0 and Kling 3.0 Omni. Firefly ending ARR across Firefly app, Firefly credit packs, and Firefly Enterprise is approaching $300 million exiting Q2. Firefly Enterprise, spanning Firefly Services, Adobe Firefly Foundry, and Brand Intelligence, is helping the world's largest brands industrialize content production with brand-safe custom models. Additional creators and creative professionals highlights include, in Premiere, we launched a brand-new color mode, a first-of-its-kind color grading experience built specifically for video editors. We continue to deepen AI capabilities across our flagship Creative Cloud applications. additional creators and creative professionals highlights include in premiere we launched a brand-new color mode a first-of-its-kind color grading experience built specifically for video editors. we continue to deepen ai capabilities across our flagship creative cloud applications Photoshop added Rotate Object and Illustrator released Turntable, both enabling subscribers to turn 2D photos and illustrations into 3D renditions they can rotate and harmonize into their work. photoshop added rotate object and illustrator released turntable both enabling subscribers to turn 2d photos and illustrations into 3d renditions they can rotate and harmonize into their work Capabilities like these drove record AI usage within our flagship applications. capabilities like these drove record ai usage within our flagship applications Firefly continues to support third-party models, now with Kling 3.0 and Kling 3.0 Omni. firefly continues to support third-party models now with kling 3.0 and kling 3.0 omni Firefly ending ARR across Firefly app, Firefly credit packs, and Firefly Enterprise is approaching $300 million exiting Q2. firefly ending arr across firefly app firefly credit packs and firefly enterprise is approaching $300 million exiting q2 Firefly Enterprise, spanning Firefly Services, Adobe Firefly Foundry, and Brand Intelligence, is helping the world's largest brands industrialize content production with brand-safe custom models. firefly enterprise spanning firefly services adobe firefly foundry and brand intelligence is helping the world's largest brands industrialize content production with brand-safe custom models The number of generated assets grew more than 4x year-over-year, making it an AI content engine for marketing at scale. Our announced NVIDIA partnership will bring accelerated computing to Adobe Firefly Foundry for faster, higher-performing custom models across image, video, audio, vector, and 3D, plus a cloud-native 3D digital twin built on Omniverse and OpenUSD. Enterprise wins this quarter include Merck, SAP, ServiceNow, Tesco, The Coca-Cola Company, Workday, and Xfinity. In summary, demand for creativity and productivity in the AI era is dramatically increasing, as evidenced by our record traffic on adobe.com. While we continue to fulfill demand for Acrobat and Creative Cloud, the early success of Firefly, Express, and Acrobat AI Assistant gives us conviction that this is the time to aggressively serve new users with a friction-free freemium journey. The number of generated assets grew more than 4 x year-over-year, making it an AI content engine for marketing at scale. the number of generated assets grew more than 4 x year-over-year making it an ai content engine for marketing at scale Our announced NVIDIA partnership will bring accelerated computing to Adobe Firefly Foundry for faster, higher-performing custom models across image, video, audio, vector, and 3D, plus a cloud-native 3D digital twin built on Omniverse and OpenUSD. our announced nvidia partnership will bring accelerated computing to adobe firefly foundry for faster higher-performing custom models across image video audio vector and 3d plus a cloud-native 3d digital twin built on omniverse and openusd Enterprise wins this quarter include Merck, SAP, ServiceNow, Tesco, The Coca-Cola Company, Workday, and Xfinity. enterprise wins this quarter include merck sap servicenow tesco the coca-cola company workday and xfinity In summary, demand for creativity and productivity in the AI era is dramatically increasing, as evidenced by our record traffic on adobe.com. in summary demand for creativity and productivity in the ai era is dramatically increasing as evidenced by our record traffic on adobe.com While we continue to fulfill demand for Acrobat and Creative Cloud, the early success of Firefly, Express, and Acrobat AI Assistant gives us conviction that this is the time to aggressively serve new users with a friction-free freemium journey. while we continue to fulfill demand for acrobat and creative cloud the early success of firefly express and acrobat ai assistant gives us conviction that this is the time to aggressively serve new users with a friction-free freemium journey We're confident that driving MAU, which has an impact on ARR, is the right trade-off and will drive future business growth. I'll now turn it over to Anil. We're confident that driving MAU, which has an impact on ARR, is the right trade-off and will drive future business growth. we're confident that driving mau which has an impact on arr is the right trade-off and will drive future business growth I'll now turn it over to Anil. i'll now turn it over to anil

Speaker 2: Thanks, David. Hello, everyone. In Q2, AI continued to be a tailwind for our enterprise business, enabling us to deliver creative and marketing professional subscription revenue of $4.54 billion, growing 11% year-over-year. These results underscore the continued explosion in content and the imperative to deliver personalized customer experiences at scale. The opportunity for AI-powered marketing automation and customer experience orchestration is large and growing, and we are continuing to gain market share and expand our leadership. We are focused on three critical AI-first solutions: Adobe Experience Platform and native apps for customer engagement, Adobe GenStudio for content supply chain, and Adobe Experience Manager agentic web apps for brand visibility. Q2 highlights included GenStudio ending ARR grew over 25% year-over-year as leading brands and agencies continue to standardize on Adobe to power their content supply chain. Thanks, David. thanks david Hello, everyone. hello everyone In Q2, AI continued to be a tailwind for our enterprise business, enabling us to deliver creative and marketing professional subscription revenue of $4.54 billion, growing 11% year-over-year. in q2 ai continued to be a tailwind for our enterprise business enabling us to deliver creative and marketing professional subscription revenue of $4.54 billion growing 11% year-over-year These results underscore the continued explosion in content and the imperative to deliver personalized customer experiences at scale. these results underscore the continued explosion in content and the imperative to deliver personalized customer experiences at scale The opportunity for AI-powered marketing automation and customer experience orchestration is large and growing, and we are continuing to gain market share and expand our leadership. the opportunity for ai-powered marketing automation and customer experience orchestration is large and growing and we are continuing to gain market share and expand our leadership We are focused on three critical AI-first solutions: Adobe Experience Platform and native apps for customer engagement, Adobe GenStudio for content supply chain, and Adobe Experience Manager agentic web apps for brand visibility. we are focused on three critical ai-first solutions adobe experience platform and native apps for customer engagement adobe genstudio for content supply chain and adobe experience manager agentic web apps for brand visibility Q2 highlights included GenStudio ending ARR grew over 25% year-over-year as leading brands and agencies continue to standardize on Adobe to power their content supply chain. q2 highlights included genstudio ending arr grew over 25% year-over-year as leading brands and agencies continue to standardize on adobe to power their content supply chain Subscription revenue for AEP and native apps grew over 30% year-over-year. AEP delivers over 70 billion profile activations and 35 trillion segment evaluations per day, as well as more than one trillion experiences per year. Over 80% of AEP and AEM customers are now using agentic capabilities built into our products. Over 1,500 customer trials are underway for our agentic web offerings, Adobe LLM Optimizer, Sites Optimizer, and Brand Concierge. 60% quarter-over-quarter growth for forward deployed engineering and integrated services offerings designed to co-innovate and deliver customized AI-powered CXO solutions. Q2 industry analyst recognition, being named a leader in two Gartner Magic Quadrants, including customer journey analytics and orchestration and content marketing platforms, and two Forrester Waves, including email marketing service providers and customer analytics technologies. Subscription revenue for AEP and native apps grew over 30% year-over-year. subscription revenue for aep and native apps grew over 30% year-over-year AEP delivers over 70 billion profile activations and 35 trillion segment evaluations per day, as well as more than one trillion experiences per year. aep delivers over 70 billion profile activations and 35 trillion segment evaluations per day as well as more than one trillion experiences per year Over 80% of AEP and AEM customers are now using agentic capabilities built into our products. over 80% of aep and aem customers are now using agentic capabilities built into our products Over 1,500 customer trials are underway for our agentic web offerings, Adobe LLM Optimizer, Sites Optimizer, and Brand Concierge. 60% quarter-over-quarter growth for forward deployed engineering and integrated services offerings designed to co-innovate and deliver customized AI-powered CXO solutions. over 1,500 customer trials are underway for our agentic web offerings adobe llm optimizer sites optimizer and brand concierge 60% quarter-over-quarter growth for forward deployed engineering and integrated services offerings designed to co-innovate and deliver customized ai-powered cxo solutions Q2 industry analyst recognition, being named a leader in two Gartner Magic Quadrants, including customer journey analytics and orchestration and content marketing platforms, and two Forrester Waves, including email marketing service providers and customer analytics technologies. q2 industry analyst recognition being named a leader in two gartner magic quadrants including customer journey analytics and orchestration and content marketing platforms and two forrester waves including email marketing service providers and customer analytics technologies Global enterprise customer wins in Q2 included Dentsu Merkle, Defense Information Systems Agency, Diriyah Company, Kaiser Foundation Hospitals, Merck Sharp & Dohme, NHL, SAP, ServiceNow, Stagwell, Stellantis, Tesco, and The Coca-Cola Company. In April, we closed the acquisition of Semrush, a leading provider of search engine optimization and generative engine optimization solutions. Semrush added $480 million ARR to our book of business and expands our ability to serve marketers of every scale. We are rapidly integrating Semrush into Adobe, uniting Semrush's discoverability intelligence with Adobe's agentic web apps. We look forward to unveiling a comprehensive brand visibility solution, combining Semrush with Adobe at the Cannes Lions Festival of Creativity later this month. Global enterprise customer wins in Q2 included Dentsu Merkle, Defense Information Systems Agency, Diriyah Company, Kaiser Foundation Hospitals, Merck Sharp & Dohme, NHL, SAP, ServiceNow, Stagwell, Stellantis, Tesco, and The Coca-Cola Company. global enterprise customer wins in q2 included dentsu merkle defense information systems agency diriyah company kaiser foundation hospitals merck sharp & dohme nhl sap servicenow stagwell stellantis tesco and the coca-cola company In April, we closed the acquisition of Semrush, a leading provider of search engine optimization and generative engine optimization solutions. in april we closed the acquisition of semrush a leading provider of search engine optimization and generative engine optimization solutions Semrush added $480 million ARR to our book of business and expands our ability to serve marketers of every scale. semrush added $480 million arr to our book of business and expands our ability to serve marketers of every scale We are rapidly integrating Semrush into Adobe, uniting Semrush's discoverability intelligence with Adobe's agentic web apps. we are rapidly integrating semrush into adobe uniting semrush's discoverability intelligence with adobe's agentic web apps We look forward to unveiling a comprehensive brand visibility solution, combining Semrush with Adobe at the Cannes Lions Festival of Creativity later this month. we look forward to unveiling a comprehensive brand visibility solution combining semrush with adobe at the cannes lions festival of creativity later this month At Adobe Summit in April, where we hosted over 14,000 in-person attendees, we launched Adobe CX Enterprise, a new end-to-end agentic AI system that simplifies how enterprises manage their entire customer life cycle, from acquiring and engaging prospects to driving conversion and lasting loyalty. Adobe CX Enterprise brings together AI agents, agent skills, and model context protocol endpoints with an intelligence and governance layer to deliver reliable and auditable agentic workflows that enable highly personalized, differentiated customer experiences. Over 20,000 global brands have built their business on Adobe, and CX Enterprise will help usher them into the era of agentic AI. As part of CX Enterprise, we announced CX Enterprise Coworker, a specialized AI agent that executes tasks based on business goals, dramatically increasing productivity and campaign execution. At Adobe Summit in April, where we hosted over 14,000 in-person attendees, we launched Adobe CX Enterprise, a new end-to-end agentic AI system that simplifies how enterprises manage their entire customer life cycle, from acquiring and engaging prospects to driving conversion and lasting loyalty. at adobe summit in april where we hosted over 14,000 in-person attendees we launched adobe cx enterprise a new end-to-end agentic ai system that simplifies how enterprises manage their entire customer life cycle from acquiring and engaging prospects to driving conversion and lasting loyalty Adobe CX Enterprise brings together AI agents, agent skills, and model context protocol endpoints with an intelligence and governance layer to deliver reliable and auditable agentic workflows that enable highly personalized, differentiated customer experiences. adobe cx enterprise brings together ai agents agent skills and model context protocol endpoints with an intelligence and governance layer to deliver reliable and auditable agentic workflows that enable highly personalized differentiated customer experiences Over 20,000 global brands have built their business on Adobe, and CX Enterprise will help usher them into the era of agentic AI. As part of CX Enterprise, we announced CX Enterprise Coworker, a specialized AI agent that executes tasks based on business goals, dramatically increasing productivity and campaign execution. over 20,000 global brands have built their business on adobe and cx enterprise will help usher them into the era of agentic ai. as part of cx enterprise we announced cx enterprise coworker a specialized ai agent that executes tasks based on business goals dramatically increasing productivity and campaign execution CX Enterprise Coworker has garnered tremendous customer interest since launch, with over 150 leading enterprises in the early adoption program prior to general availability this week. At Adobe Summit, we also introduced Adobe Brand Intelligence, a continuous learning system that helps enterprises create and validate on-brand content faster and with less effort. Adobe Brand Intelligence learns from creative and marketing team feedback, approvals, and rejections in real time. It is a headless platform exposed through APIs, so it can integrate with existing first and third-party apps rather than running as a separate app. Customer experience is one of the first areas of AI-powered transformation for enterprises. Around the world, our conversations with C-level executives reflect how they view Adobe as the trusted partner for this transformation in the era of agentic AI. CX Enterprise Coworker has garnered tremendous customer interest since launch, with over 150 leading enterprises in the early adoption program prior to general availability this week. cx enterprise coworker has garnered tremendous customer interest since launch with over 150 leading enterprises in the early adoption program prior to general availability this week At Adobe Summit, we also introduced Adobe Brand Intelligence, a continuous learning system that helps enterprises create and validate on-brand content faster and with less effort. at adobe summit we also introduced adobe brand intelligence a continuous learning system that helps enterprises create and validate on-brand content faster and with less effort Adobe Brand Intelligence learns from creative and marketing team feedback, approvals, and rejections in real time. adobe brand intelligence learns from creative and marketing team feedback approvals and rejections in real time It is a headless platform exposed through APIs, so it can integrate with existing first and third-party apps rather than running as a separate app. it is a headless platform exposed through apis so it can integrate with existing first and third-party apps rather than running as a separate app Customer experience is one of the first areas of AI-powered transformation for enterprises. customer experience is one of the first areas of ai-powered transformation for enterprises Around the world, our conversations with C-level executives reflect how they view Adobe as the trusted partner for this transformation in the era of agentic AI. around the world our conversations with c-level executives reflect how they view adobe as the trusted partner for this transformation in the era of agentic ai In Q2, we announced native integrations with major enterprise AI platforms, including Microsoft Copilot, Anthropic, OpenAI, and Google Gemini. Our partnership with NVIDIA brings CX Enterprise Coworker capabilities into the NemoClaw Enterprise Agent platform, enabling brands to deploy Adobe's customer experience intelligence within NVIDIA's secure policy-governed OpenShell runtime. Leading global agencies including Dentsu, Havas, Omnicom, Publicis, Stagwell, and WPP are standardizing on Adobe, combining our AI-powered capabilities with their unique IP and industry expertise to co-develop innovative, differentiated solutions for joint clients. Our vision, deep expertise in creativity and marketing, track record of innovation, and broad partner ecosystem uniquely position Adobe as the partner of choice for AI-powered customer experience orchestration. Our extensive customer base, innovative CXO products, and robust pipeline give us confidence for a seasonally strong second half. I'll now pass it to Steve. In Q2, we announced native integrations with major enterprise AI platforms, including Microsoft Copilot, Anthropic, OpenAI, and Google Gemini. in q2 we announced native integrations with major enterprise ai platforms including microsoft copilot anthropic openai and google gemini Our partnership with NVIDIA brings CX Enterprise Coworker capabilities into the NemoClaw Enterprise Agent platform, enabling brands to deploy Adobe's customer experience intelligence within NVIDIA's secure policy-governed OpenShell runtime. our partnership with nvidia brings cx enterprise coworker capabilities into the nemoclaw enterprise agent platform enabling brands to deploy adobe's customer experience intelligence within nvidia's secure policy-governed openshell runtime Leading global agencies including Dentsu, Havas, Omnicom, Publicis, Stagwell, and WPP are standardizing on Adobe, combining our AI-powered capabilities with their unique IP and industry expertise to co-develop innovative, differentiated solutions for joint clients. leading global agencies including dentsu havas omnicom publicis stagwell and wpp are standardizing on adobe combining our ai-powered capabilities with their unique ip and industry expertise to co-develop innovative differentiated solutions for joint clients Our vision, deep expertise in creativity and marketing, track record of innovation, and broad partner ecosystem uniquely position Adobe as the partner of choice for AI-powered customer experience orchestration. our vision deep expertise in creativity and marketing track record of innovation and broad partner ecosystem uniquely position adobe as the partner of choice for ai-powered customer experience orchestration Our extensive customer base, innovative CXO products, and robust pipeline give us confidence for a seasonally strong second half. our extensive customer base innovative cxo products and robust pipeline give us confidence for a seasonally strong second half I'll now pass it to Steve. i'll now pass it to steve

Speaker 14: Thanks, Anil. Today, I will start by summarizing Adobe's performance in Q2 FY 2026, highlighting growth drivers across our customer groups. I'll finish with our financial targets. In Q2, Adobe achieved record revenue of $6.62 billion, growing 13% year-over-year as reported, 11% in constant currency. Diluted earnings per share was $4.25 on a GAAP basis and $5.96 on a non-GAAP basis. Our GAAP results reflected a $70 million or $0.17 per share of a non-cash goodwill impairment charge related to our publishing and advertising reporting unit. Q2 financial highlights included: Total Adobe ending ARR of $27.1 billion, growing 12.5% year-over-year, including approximately $480 million from the acquisition of Semrush. Total customer group subscription revenue of $6.39 billion, growing 14% year-over-year or 12% in constant currency, including approximately $40 million from the addition of Semrush. Thanks, Anil. thanks anil Today, I will start by summarizing Adobe's performance in Q2 FY 2026, highlighting growth drivers across our customer groups. today i will start by summarizing adobe's performance in q2 fy 2026 highlighting growth drivers across our customer groups I'll finish with our financial targets. i'll finish with our financial targets In Q2, Adobe achieved record revenue of $6.62 billion, growing 13% year-over-year as reported, 11% in constant currency. in q2 adobe achieved record revenue of $6.62 billion growing 13% year-over-year as reported 11% in constant currency Diluted earnings per share was $4.25 on a GAAP basis and $5.96 on a non-GAAP basis. diluted earnings per share was $4.25 on a gaap basis and $5.96 on a non-gaap basis Our GAAP results reflected a $70 million or $0.17 per share of a non-cash goodwill impairment charge related to our publishing and advertising reporting unit. our gaap results reflected a $70 million or $0.17 per share of a non-cash goodwill impairment charge related to our publishing and advertising reporting unit Q2 financial highlights included: Total Adobe ending ARR of $27.1 billion, growing 12.5% year-over-year, including approximately $480 million from the acquisition of Semrush. q2 financial highlights included total adobe ending arr of $27.1 billion growing 12.5% year-over-year including approximately $480 million from the acquisition of semrush Total customer group subscription revenue of $6.39 billion, growing 14% year-over-year or 12% in constant currency, including approximately $40 million from the addition of Semrush. total customer group subscription revenue of $6.39 billion growing 14% year-over-year or 12% in constant currency including approximately $40 million from the addition of semrush RPO of $22.27 billion, exiting the quarter with RPO and CRPO both growing 13% year-over-year or 12% in constant currency. Cash flows from operations in the quarter were $2.17 billion. Ending cash and short-term investments exiting Q2 was $5.63 billion. Repurchasing approximately 8.5 million shares of our stock during the quarter. Exiting Q2, we have approximately $27 billion remaining under our authorizations, including the new $25 billion authorization announced in April. Customer group results and insights. Business professionals and consumers subscription revenue was $1.85 billion, increasing 16% year-over-year as reported, or 15% in constant currency. Q2 growth drivers for business professionals and consumers included sustained double-digit ending ARR year-over-year growth across all geographies. Acrobat and Express MAU surpassed 850 million, growing approximately 20% year-over-year. RPO of $22.27 billion, exiting the quarter with RPO and CRPO both growing 13% year-over-year or 12% in constant currency. rpo of $22.27 billion exiting the quarter with rpo and crpo both growing 13% year-over-year or 12% in constant currency Cash flows from operations in the quarter were $2.17 billion. cash flows from operations in the quarter were $2.17 billion Ending cash and short-term investments exiting Q2 was $5.63 billion. ending cash and short-term investments exiting q2 was $5.63 billion Repurchasing approximately 8.5 million shares of our stock during the quarter. repurchasing approximately 8.5 million shares of our stock during the quarter Exiting Q2, we have approximately $27 billion remaining under our authorizations, including the new $25 billion authorization announced in April. exiting q2 we have approximately $27 billion remaining under our authorizations including the new $25 billion authorization announced in april Customer group results and insights. customer group results and insights Business professionals and consumers subscription revenue was $1.85 billion, increasing 16% year-over-year as reported, or 15% in constant currency. business professionals and consumers subscription revenue was $1.85 billion increasing 16% year-over-year as reported or 15% in constant currency Q2 growth drivers for business professionals and consumers included sustained double-digit ending ARR year-over-year growth across all geographies. q2 growth drivers for business professionals and consumers included sustained double-digit ending arr year-over-year growth across all geographies Acrobat and Express MAU surpassed 850 million, growing approximately 20% year-over-year. acrobat and express mau surpassed 850 million growing approximately 20% year-over-year Acrobat AI Assistant ARR growing approximately 3x year-over-year. Strong performance in the enterprise across both commercial and government. Creative and marketing professionals subscription revenue was $4.54 billion, increasing 13% year-over-year or 11% in constant currency. Q2 growth drivers for creative and marketing professionals included: Growth in Creative Cloud driven by the CC Pro offering. Creative freemium MAU, which includes web and mobile versions of Firefly, Express, Premiere Pro, Photoshop, and Lightroom, crossed 90 million, growing over 70% year-over-year. Continued strong generative credit consumption driven by video and audio. Firefly ending ARR, including Firefly apps and credit plans and enterprise Firefly offerings approaching $300 million, with the intent to drive more traffic to Firefly freemium in H2. Ending ARR across Adobe GenStudio, AEP & Apps, and AEM & Agentic Web growing over 20% year-over-year. Acrobat AI Assistant ARR growing approximately 3x year-over-year. acrobat ai assistant arr growing approximately 3x year-over-year Strong performance in the enterprise across both commercial and government. strong performance in the enterprise across both commercial and government Creative and marketing professionals subscription revenue was $4.54 billion, increasing 13% year-over-year or 11% in constant currency. creative and marketing professionals subscription revenue was $4.54 billion increasing 13% year-over-year or 11% in constant currency Q2 growth drivers for creative and marketing professionals included: Growth in Creative Cloud driven by the CC Pro offering. q2 growth drivers for creative and marketing professionals included growth in creative cloud driven by the cc pro offering Creative freemium MAU, which includes web and mobile versions of Firefly, Express, Premiere Pro, Photoshop, and Lightroom, crossed 90 million, growing over 70% year-over-year. creative freemium mau which includes web and mobile versions of firefly express premiere pro photoshop and lightroom crossed 90 million growing over 70% year-over-year Continued strong generative credit consumption driven by video and audio. continued strong generative credit consumption driven by video and audio Firefly ending ARR, including Firefly apps and credit plans and enterprise Firefly offerings approaching $300 million, with the intent to drive more traffic to Firefly freemium in H2. firefly ending arr including firefly apps and credit plans and enterprise firefly offerings approaching $300 million with the intent to drive more traffic to firefly freemium in h2 Ending ARR across Adobe GenStudio, AEP & Apps, and AEM & Agentic Web growing over 20% year-over-year. ending arr across adobe genstudio aep & apps and aem & agentic web growing over 20% year-over-year Enterprise customers with over $10 million in ARR growing greater than 20% year-over-year. Continued strength in retention across the enterprise customer base. Let me now turn to our financial targets, which include Semrush and assume current macroeconomic conditions. Given strong year-to-date performance, we are raising full-year revenue and non-GAAP EPS targets. For FY 2026, we are targeting total Adobe revenue of $26.5 billion-$26.6 billion. Business professionals and consumers subscription revenue of $7.44 billion-$7.48 billion. Creative and marketing professional subscription revenue of $18.21 billion-$18.27 billion, which now includes approximately $280 million from Semrush. Total Adobe ending ARR book of business growth of 10.2% year-over-year compared to our FY 2026 beginning book of business of $25.66 billion. GAAP EPS of $17.90-$18.00, and non-GAAP EPS of $24.35-$024.45. Enterprise customers with over $10 million in ARR growing greater than 20% year-over-year. enterprise customers with over $10 million in arr growing greater than 20% year-over-year Continued strength in retention across the enterprise customer base. continued strength in retention across the enterprise customer base Let me now turn to our financial targets, which include Semrush and assume current macroeconomic conditions. let me now turn to our financial targets which include semrush and assume current macroeconomic conditions Given strong year-to-date performance, we are raising full-year revenue and non-GAAP EPS targets. given strong year-to-date performance we are raising full-year revenue and non-gaap eps targets For FY 2026, we are targeting total Adobe revenue of $26.5 billion-$26.6 billion. for fy 2026 we are targeting total adobe revenue of $26.5 billion-$26.6 billion Business professionals and consumers subscription revenue of $7.44 billion-$7.48 billion. business professionals and consumers subscription revenue of $7.44 billion-$7.48 billion Creative and marketing professional subscription revenue of $18.21 billion-$18.27 billion, which now includes approximately $280 million from Semrush. creative and marketing professional subscription revenue of $18.21 billion-$18.27 billion which now includes approximately $280 million from semrush Total Adobe ending ARR book of business growth of 10.2% year-over-year compared to our FY 2026 beginning book of business of $25.66 billion. total adobe ending arr book of business growth of 10.2% year-over-year compared to our fy 2026 beginning book of business of $25.66 billion GAAP EPS of $17.90-$18.00, and non-GAAP EPS of $24.35-$024.45. gaap eps of $17.90-$18.00 and non-gaap eps of $24.35-$024.45 Our FY 2026 targets assume a non-GAAP operating margin of approximately 45%, a GAAP tax rate of approximately 22.5%, and a non-GAAP tax rate of approximately 18%. Our FY 2026 total Adobe ARR growth target of 10.2% now reflects both the addition of the Semrush book of business as well as the strategic choice to accelerate MAU freemium growth and defer previously planned Creative Cloud line optimizations. We believe this is the right long-term strategy to expand our customer base and strengthen the foundation for durable growth. For Q3 FY 2026, we are targeting total Adobe revenue of $6.67 billion-$6.72 billion. Business professionals and consumer subscription revenue of $1.87 billion-$1.89 billion. Creative and marketing professional subscription revenue of $4.61 billion-$4.64 billion. GAAP EPS of $4.40-$4.45, and non-GAAP EPS of $6.05-$6.10. Our FY 2026 targets assume a non-GAAP operating margin of approximately 45%, a GAAP tax rate of approximately 22.5%, and a non-GAAP tax rate of approximately 18%. our fy 2026 targets assume a non-gaap operating margin of approximately 45% a gaap tax rate of approximately 22.5% and a non-gaap tax rate of approximately 18% Our FY 2026 total Adobe ARR growth target of 10.2% now reflects both the addition of the Semrush book of business as well as the strategic choice to accelerate MAU freemium growth and defer previously planned Creative Cloud line optimizations. our fy 2026 total adobe arr growth target of 10.2% now reflects both the addition of the semrush book of business as well as the strategic choice to accelerate mau freemium growth and defer previously planned creative cloud line optimizations We believe this is the right long-term strategy to expand our customer base and strengthen the foundation for durable growth. we believe this is the right long-term strategy to expand our customer base and strengthen the foundation for durable growth For Q3 FY 2026, we are targeting total Adobe revenue of $6.67 billion-$6.72 billion. for q3 fy 2026 we are targeting total adobe revenue of $6.67 billion-$6.72 billion Business professionals and consumer subscription revenue of $1.87 billion-$1.89 billion. business professionals and consumer subscription revenue of $1.87 billion-$1.89 billion Creative and marketing professional subscription revenue of $4.61 billion-$4.64 billion. creative and marketing professional subscription revenue of $4.61 billion-$4.64 billion GAAP EPS of $4.40-$4.45, and non-GAAP EPS of $6.05-$6.10. gaap eps of $4.40-$4.45 and non-gaap eps of $6.05-$6.10 For Q3, we assume non-GAAP operating margin of approximately 44% and a GAAP tax rate of approximately 23% and a non-GAAP tax rate of approximately 18%. We believe Adobe is well-positioned to capitalize on the expanding AI opportunity. Our focus remains on helping customers achieve better outcomes through innovation, relentless execution, and deep integration of AI across our portfolio. We are expanding our user base, deepening engagement, and investing with discipline in the opportunities that will drive Adobe's next phase of growth. For Q3, we assume non-GAAP operating margin of approximately 44% and a GAAP tax rate of approximately 23% and a non-GAAP tax rate of approximately 18%. for q3 we assume non-gaap operating margin of approximately 44% and a gaap tax rate of approximately 23% and a non-gaap tax rate of approximately 18% We believe Adobe is well-positioned to capitalize on the expanding AI opportunity. we believe adobe is well-positioned to capitalize on the expanding ai opportunity Our focus remains on helping customers achieve better outcomes through innovation, relentless execution, and deep integration of AI across our portfolio. our focus remains on helping customers achieve better outcomes through innovation relentless execution and deep integration of ai across our portfolio We are expanding our user base, deepening engagement, and investing with discipline in the opportunities that will drive Adobe's next phase of growth. we are expanding our user base deepening engagement and investing with discipline in the opportunities that will drive adobe's next phase of growth

Speaker 13: Thanks, Steve. We are at a transformative moment in the industry and for the company. The convergence of AI, agentic workflows, and the explosion of content demand is creating significant opportunities that play directly to Adobe's strength. My focus continues to be driving execution against our product roadmap and successfully expanding to new monetization models that reflect how the diversity of our customers want to engage with Adobe. I'm committed to driving this as we finalize the right leader for Adobe's next chapter of growth. What gives me confidence beyond our products and groundbreaking technology is our people. Adobe remains one of the greatest places to work in the industry, and the talent and culture we have built over decades is the foundation for this transformation. Thank you. We will now take your questions. Thanks, Steve. thanks steve We are at a transformative moment in the industry and for the company. we are at a transformative moment in the industry and for the company The convergence of AI, agentic workflows, and the explosion of content demand is creating significant opportunities that play directly to Adobe's strength. the convergence of ai agentic workflows and the explosion of content demand is creating significant opportunities that play directly to adobe's strength My focus continues to be driving execution against our product roadmap and successfully expanding to new monetization models that reflect how the diversity of our customers want to engage with Adobe. my focus continues to be driving execution against our product roadmap and successfully expanding to new monetization models that reflect how the diversity of our customers want to engage with adobe I'm committed to driving this as we finalize the right leader for Adobe's next chapter of growth. i'm committed to driving this as we finalize the right leader for adobe's next chapter of growth What gives me confidence beyond our products and groundbreaking technology is our people. what gives me confidence beyond our products and groundbreaking technology is our people Adobe remains one of the greatest places to work in the industry, and the talent and culture we have built over decades is the foundation for this transformation. adobe remains one of the greatest places to work in the industry and the talent and culture we have built over decades is the foundation for this transformation Thank you. thank you We will now take your questions. we will now take your questions

Speaker 11: Thank you. If you would like to signal with questions, please press star one on your touch-tone telephone. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to signal with questions. The first question will come from Michael Turrin with Wells Fargo Securities. Thank you. thank you If you would like to signal with questions, please press star one on your touch-tone telephone. if you would like to signal with questions please press star one on your touch-tone telephone If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. if you're joining us today using a speakerphone please make sure your mute function is turned off to allow your signal to reach our equipment Again, that is star one if you would like to signal with questions. again that is star one if you would like to signal with questions The first question will come from Michael Turrin with Wells Fargo Securities. the first question will come from michael turrin with wells fargo securities

Speaker 10: Hey, great. Thanks very much. I appreciate you taking the question. I guess just realize it wasn't planned, but with Dan leaving, I think we're going to field questions on how the company manages through this level of transition in a world where there are a lot of questions around just disruption or changes to the market across software. Maybe, you can just speak to how you maintain continuity with both the CEO search and CFO transition in motion, and maybe also touch on the profile of what you're looking towards or think the company needs in its next stage at this point. Hey, great. hey great Thanks very much. thanks very much I appreciate you taking the question. i appreciate you taking the question I guess just realize it wasn't planned, but with Dan leaving, I think we're going to field questions on how the company manages through this level of transition in a world where there are a lot of questions around just disruption or changes to the market across software. i guess just realize it wasn't planned but with dan leaving i think we're going to field questions on how the company manages through this level of transition in a world where there are a lot of questions around just disruption or changes to the market across software Maybe, you can just speak to how you maintain continuity with both the CEO search and CFO transition in motion, and maybe also touch on the profile of what you're looking towards or think the company needs in its next stage at this point. maybe you can just speak to how you maintain continuity with both the ceo search and cfo transition in motion and maybe also touch on the profile of what you're looking towards or think the company needs in its next stage at this point

Speaker 13: Sure, Michael, let me take that. I will first start off by saying, the leadership team that exists in the finance organization is absolutely seasoned and top-notch. I wish Dan well. It's clear that where he's going is where his background and expertise has been, but I'm confident that we won't miss a beat. I think as it relates to any other questions associated with the transition, I'm happy to answer that, but my short answer is we have an incredibly seasoned leadership team, and I will continue to work with them closely as I have in the past to make sure that we drive all our strategic objectives. Sure, Michael, let me take that. sure michael let me take that I will first start off by saying, the leadership team that exists in the finance organization is absolutely seasoned and top-notch. i will first start off by saying the leadership team that exists in the finance organization is absolutely seasoned and top-notch I wish Dan well. i wish dan well It's clear that where he's going is where his background and expertise has been, but I'm confident that we won't miss a beat. it's clear that where he's going is where his background and expertise has been but i'm confident that we won't miss a beat I think as it relates to any other questions associated with the transition, I'm happy to answer that, but my short answer is we have an incredibly seasoned leadership team, and I will continue to work with them closely as I have in the past to make sure that we drive all our strategic objectives. i think as it relates to any other questions associated with the transition i'm happy to answer that but my short answer is we have an incredibly seasoned leadership team and i will continue to work with them closely as i have in the past to make sure that we drive all our strategic objectives

Speaker 10: Just if I may, a follow-up just on the decision to defer line optimizations on Creative Cloud. I assume we're coming up on just potential price increase there. Maybe speak to why that's the right decision for Adobe today and how you think that kind of sets the creative business up for future growth. Just if I may, a follow-up just on the decision to defer line optimizations on Creative Cloud. just if i may a follow-up just on the decision to defer line optimizations on creative cloud I assume we're coming up on just potential price increase there. i assume we're coming up on just potential price increase there Maybe speak to why that's the right decision for Adobe today and how you think that kind of sets the creative business up for future growth. maybe speak to why that's the right decision for adobe today and how you think that kind of sets the creative business up for future growth

Speaker 13: Yeah, happy to, Michael. I think if we really look at it, we just look at what's happening with the AI opportunity for creativity as this incredible opportunity that is upon us right now. No other company is as well-positioned, given what we have across our models, across our products, and across our interfaces, to take advantage of it. This is really about saying, what we have done as it relates to capturing MAU with Acrobat and Express, what we've done with respect to Firefly, the entire creative market. Sometimes I like to also characterize this much like what's happened with the code opportunity. If you think about what's happened with the code opportunity across AI, it's just completely been turned upside down, and every company is thinking about how they can add to all of the billions that is already spent in code. Yeah, happy to, Michael. yeah happy to michael I think if we really look at it, we just look at what's happening with the AI opportunity for creativity as this incredible opportunity that is upon us right now. i think if we really look at it we just look at what's happening with the ai opportunity for creativity as this incredible opportunity that is upon us right now No other company is as well-positioned, given what we have across our models, across our products, and across our interfaces, to take advantage of it. no other company is as well-positioned given what we have across our models across our products and across our interfaces to take advantage of it This is really about saying, what we have done as it relates to capturing MAU with Acrobat and Express, what we've done with respect to Firefly, the entire creative market. this is really about saying what we have done as it relates to capturing mau with acrobat and express what we've done with respect to firefly the entire creative market Sometimes I like to also characterize this much like what's happened with the code opportunity. sometimes i like to also characterize this much like what's happened with the code opportunity If you think about what's happened with the code opportunity across AI, it's just completely been turned upside down, and every company is thinking about how they can add to all of the billions that is already spent in code. if you think about what's happened with the code opportunity across ai it's just completely been turned upside down and every company is thinking about how they can add to all of the billions that is already spent in code The same opportunity exists, I think, in every single category, whether that's gaming, entertainment, and creativity. This is an opportunity for us, not just to focus on creative pros and communicators who've traditionally been the strength of this company, but to actually become that AI platform for all creativity across every single surface. The success that we've seen associated with what we have done on these new products, we talked about the MAU, we've talked about the ARR that's coming. We want to just have a singular focus right now to make sure that we go capture that immense opportunity with a singular focus and a clear marketing message. It also is based on a complete confidence that we have that the creative business is extremely stable. The same opportunity exists, I think, in every single category, whether that's gaming, entertainment, and creativity. the same opportunity exists i think in every single category whether that's gaming entertainment and creativity This is an opportunity for us, not just to focus on creative pros and communicators who've traditionally been the strength of this company, but to actually become that AI platform for all creativity across every single surface. this is an opportunity for us not just to focus on creative pros and communicators who've traditionally been the strength of this company but to actually become that ai platform for all creativity across every single surface The success that we've seen associated with what we have done on these new products, we talked about the MAU, we've talked about the ARR that's coming. the success that we've seen associated with what we have done on these new products we talked about the mau we've talked about the arr that's coming We want to just have a singular focus right now to make sure that we go capture that immense opportunity with a singular focus and a clear marketing message. we want to just have a singular focus right now to make sure that we go capture that immense opportunity with a singular focus and a clear marketing message It also is based on a complete confidence that we have that the creative business is extremely stable. it also is based on a complete confidence that we have that the creative business is extremely stable The amount of innovation that we have delivered in that space continues to make us a category of one as it relates to our focus on that particular market. That one we can defer. It's not going away. Anything that comes in the way of the company aligning and the market understanding that we're going to go after that entire creative opportunity right now, I think will detract from what is the real price for this company. Hopefully that gives you some color. I think in terms of the impact on ARR, you can think of it as maybe half of the impact of ARR is as a result of what we are doing around deferring that creative price line optimizations. The other half is about going full steam on what it takes to deliver the freemium experience. The amount of innovation that we have delivered in that space continues to make us a category of one as it relates to our focus on that particular market. the amount of innovation that we have delivered in that space continues to make us a category of one as it relates to our focus on that particular market That one we can defer. that one we can defer It's not going away. it's not going away Anything that comes in the way of the company aligning and the market understanding that we're going to go after that entire creative opportunity right now, I think will detract from what is the real price for this company. anything that comes in the way of the company aligning and the market understanding that we're going to go after that entire creative opportunity right now i think will detract from what is the real price for this company Hopefully that gives you some color. hopefully that gives you some color I think in terms of the impact on ARR, you can think of it as maybe half of the impact of ARR is as a result of what we are doing around deferring that creative price line optimizations. i think in terms of the impact on arr you can think of it as maybe half of the impact of arr is as a result of what we are doing around deferring that creative price line optimizations The other half is about going full steam on what it takes to deliver the freemium experience. the other half is about going full steam on what it takes to deliver the freemium experience

Speaker 10: I appreciate the candor in those responses. Thanks, Shantanu. I appreciate the candor in those responses. i appreciate the candor in those responses Thanks, Shantanu. thanks shantanu

Speaker 13: Thanks, Michael. Thanks, Michael. thanks michael

Speaker 11: The next question comes from Alex Zukin with Wolfe Research. The next question comes from Alex Zukin with Wolfe Research. the next question comes from alex zukin with wolfe research

Speaker 1: Hey, guys. Appreciate you taking my question and apologize for any background noise. Maybe just at the risk of redundancy or simplification, just why now to accelerate the freemium MAU motion? I think before we were thinking that the previous messaging was that it could actually positively impact second half ARR, the freemium motion, and now it's turning into a headwind as they convert. Maybe just simplify why now is the right time, and then I've got a quick follow-up. Hey, guys. hey guys Appreciate you taking my question and apologize for any background noise. appreciate you taking my question and apologize for any background noise Maybe just at the risk of redundancy or simplification, just why now to accelerate the freemium MAU motion? maybe just at the risk of redundancy or simplification just why now to accelerate the freemium mau motion I think before we were thinking that the previous messaging was that it could actually positively impact second half ARR, the freemium motion, and now it's turning into a headwind as they convert. i think before we were thinking that the previous messaging was that it could actually positively impact second half arr the freemium motion and now it's turning into a headwind as they convert Maybe just simplify why now is the right time, and then I've got a quick follow-up. maybe just simplify why now is the right time and then i've got a quick follow-up

Speaker 13: Sure. I think you should think of it more in terms of does that early success that we're having across all of them give you confidence to actually go even more aggressively about this? That's how I think about this, Alex, in terms of why now. We all recognize that when you look at the traffic that's coming to the Adobe site, that traffic is just gushing. When we think about how we can capture that with a unique value proposition associated with delighting them and making sure we have a friction-free experience, anything that comes. When we take a step back, we have built this incredible business, but it's a balanced business. We're always trying to figure out what we send to the freemium and what we send to ARR. I think this singular clarity will enable us to capture way more people in the audience. Sure. sure I think you should think of it more in terms of does that early success that we're having across all of them give you confidence to actually go even more aggressively about this? i think you should think of it more in terms of does that early success that we're having across all of them give you confidence to actually go even more aggressively about this That's how I think about this, Alex, in terms of why now. that's how i think about this alex in terms of why now We all recognize that when you look at the traffic that's coming to the Adobe site, that traffic is just gushing. we all recognize that when you look at the traffic that's coming to the adobe site that traffic is just gushing When we think about how we can capture that with a unique value proposition associated with delighting them and making sure we have a friction-free experience, anything that comes. when we think about how we can capture that with a unique value proposition associated with delighting them and making sure we have a friction-free experience anything that comes When we take a step back, we have built this incredible business, but it's a balanced business. when we take a step back we have built this incredible business but it's a balanced business We're always trying to figure out what we send to the freemium and what we send to ARR. we're always trying to figure out what we send to the freemium and what we send to arr I think this singular clarity will enable us to capture way more people in the audience. i think this singular clarity will enable us to capture way more people in the audience The why now has more to do with the fact that we are seeing the success associated with what we've done, the products, whether it's Acrobat, Express, or Firefly, are there. The ability to support third-party models is there, and I'll have David also add. It's really the success that we're seeing and the incredible amount of traffic that says, if we don't take advantage of this opportunity right now, we will just unnecessarily diffuse it, and we will send people other places when they want to come have that engagement with Adobe and are looking for the Adobe brand and Adobe magic to help them solve their creativity needs. David? The why now has more to do with the fact that we are seeing the success associated with what we've done, the products, whether it's Acrobat, Express, or Firefly, are there. the why now has more to do with the fact that we are seeing the success associated with what we've done the products whether it's acrobat express or firefly are there The ability to support third-party models is there, and I'll have David also add. the ability to support third-party models is there and i'll have david also add It's really the success that we're seeing and the incredible amount of traffic that says, if we don't take advantage of this opportunity right now, we will just unnecessarily diffuse it, and we will send people other places when they want to come have that engagement with Adobe and are looking for the Adobe brand and Adobe magic to help them solve their creativity needs. it's really the success that we're seeing and the incredible amount of traffic that says if we don't take advantage of this opportunity right now we will just unnecessarily diffuse it and we will send people other places when they want to come have that engagement with adobe and are looking for the adobe brand and adobe magic to help them solve their creativity needs David? david

Speaker 6: Maybe, Alex, I'll just add on two examples to what Shantanu was saying to demystify what we mean by user behavior changing and evolving. Let me give you one example with Acrobat and one example with creativity and Firefly to hopefully cement this a bit. What we see is a shift in, or an emergence in terms of LLM usage, and that is driving a lot more intent-based search. What is an intent-based search? Someone might type into a search engine, "Summarize this PDF." Right? Maybe, Alex, I'll just add on two examples to what Shantanu was saying to demystify what we mean by user behavior changing and evolving. maybe alex i'll just add on two examples to what shantanu was saying to demystify what we mean by user behavior changing and evolving Let me give you one example with Acrobat and one example with creativity and Firefly to hopefully cement this a bit. let me give you one example with acrobat and one example with creativity and firefly to hopefully cement this a bit What we see is a shift in, or an emergence in terms of LLM usage, and that is driving a lot more intent-based search. what we see is a shift in or an emergence in terms of llm usage and that is driving a lot more intent-based search What is an intent-based search? what is an intent-based search Someone might type into a search engine, "Summarize this PDF." Right? someone might type into a search engine "summarize this pdf." right What we do is we are using SEO and SEM and some of Anil's Semrush capabilities now to make sure that we're ranking high when someone types in something like, "Summarize PDF." When the user clicks on our link, we take them, instead of taking them to adobe.com and talking to them about Acrobat, we're now taking them directly into Acrobat Web with a single call to action, which is upload your PDF, and then we summarize it for them. When we summarize it for them, we then introduce them to this idea that they can use AI Assistant to even have and ask some questions. We use this process to let them build habit, before we start giving them paywall. That's an evolution. What we do is we are using SEO and SEM and some of Anil's Semrush capabilities now to make sure that we're ranking high when someone types in something like, "Summarize PDF." When the user clicks on our link, we take them, instead of taking them to adobe.com and talking to them about Acrobat, we're now taking them directly into Acrobat Web with a single call to action, which is upload your PDF, and then we summarize it for them. what we do is we are using seo and sem and some of anil's semrush capabilities now to make sure that we're ranking high when someone types in something like "summarize pdf." when the user clicks on our link we take them instead of taking them to adobe.com and talking to them about acrobat we're now taking them directly into acrobat web with a single call to action which is upload your pdf and then we summarize it for them When we summarize it for them, we then introduce them to this idea that they can use AI Assistant to even have and ask some questions. when we summarize it for them we then introduce them to this idea that they can use ai assistant to even have and ask some questions We use this process to let them build habit, before we start giving them paywall. we use this process to let them build habit before we start giving them paywall That's an evolution. that's an evolution If we just took that traffic direct to a paid flow to buy Acrobat and download Acrobat, it wouldn't produce as much opportunity long term for Adobe. Similarly, in Firefly, we see things like a growth in terms like generate pixel art for social media posts. Again, we rank really high in SEO, SEM, then we take them directly into Firefly so they can upload an image of themselves, create this pixelated version, maybe introduce them to this idea that you can convert that to video. It's a very different flow, and that's where the world is going. That's how users are engaging. We want to lean into that, and we think, as Shantanu said, we have the right products for that now. This is the moment to go for it. If we just took that traffic direct to a paid flow to buy Acrobat and download Acrobat, it wouldn't produce as much opportunity long term for Adobe. if we just took that traffic direct to a paid flow to buy acrobat and download acrobat it wouldn't produce as much opportunity long term for adobe Similarly, in Firefly, we see things like a growth in terms like generate pixel art for social media posts. similarly in firefly we see things like a growth in terms like generate pixel art for social media posts Again, we rank really high in SEO, SEM, then we take them directly into Firefly so they can upload an image of themselves, create this pixelated version, maybe introduce them to this idea that you can convert that to video. again we rank really high in seo sem then we take them directly into firefly so they can upload an image of themselves create this pixelated version maybe introduce them to this idea that you can convert that to video It's a very different flow, and that's where the world is going. it's a very different flow and that's where the world is going That's how users are engaging. that's how users are engaging We want to lean into that, and we think, as Shantanu said, we have the right products for that now. we want to lean into that and we think as shantanu said we have the right products for that now This is the moment to go for it. this is the moment to go for it

Speaker 13: Maybe the last thing I'll say to that, to just punctuate what David said, is not only are we seeing the MAU increase, but we're seeing the engagement increase then as a result of serving that first experience because they're looking for Adobe. I think it's the satisfaction associated with completing their task that wants them to engage with Adobe more, and it's those signals that give us confidence that now is the time. Maybe the last thing I'll say to that, to just punctuate what David said, is not only are we seeing the MAU increase, but we're seeing the engagement increase then as a result of serving that first experience because they're looking for Adobe. maybe the last thing i'll say to that to just punctuate what david said is not only are we seeing the mau increase but we're seeing the engagement increase then as a result of serving that first experience because they're looking for adobe I think it's the satisfaction associated with completing their task that wants them to engage with Adobe more, and it's those signals that give us confidence that now is the time. i think it's the satisfaction associated with completing their task that wants them to engage with adobe more and it's those signals that give us confidence that now is the time

Speaker 1: Maybe just to follow up then, if we think about the combination of that action that you described, and the postponement of the line optimizations as driving roughly, I think, by our math, about a $500 million adjustment to the organic ARR downward. What is the payback period on that? That $500 million, let's say, that you're investing in this motion, what is the payback period and multiple that you think you can get as a result of the successful strategy, or potential successful strategy that you're embarking on? Maybe just to follow up then, if we think about the combination of that action that you described, and the postponement of the line optimizations as driving roughly, I think, by our math, about a $500 million adjustment to the organic ARR downward. maybe just to follow up then if we think about the combination of that action that you described and the postponement of the line optimizations as driving roughly i think by our math about a $500 million adjustment to the organic arr downward What is the payback period on that? what is the payback period on that That $500 million, let's say, that you're investing in this motion, what is the payback period and multiple that you think you can get as a result of the successful strategy, or potential successful strategy that you're embarking on? that $500 million let's say that you're investing in this motion what is the payback period and multiple that you think you can get as a result of the successful strategy or potential successful strategy that you're embarking on

Speaker 13: Well, let me give you some color. I think on the second one first, which is the Creative Pro Line optimizations, we can introduce them as we continue to deliver value. That one is just a phase shift, and as we add that, we believe that we're going to have better offerings that are more differentiated the more these freemium offerings are successful. That one for us, we just look at it and say, we're deferring it, but not closing it. Hopefully, that gives you some color. In terms of the traffic, if the disproportionate amount of traffic is going to go to these freemium offerings, you're right about, hey, how does that sort of start to come back? We're already seeing some of it as it relates to the MAU that we have on Firefly. Well, let me give you some color. well let me give you some color I think on the second one first, which is the Creative Pro Line optimizations, we can introduce them as we continue to deliver value. i think on the second one first which is the creative pro line optimizations we can introduce them as we continue to deliver value That one is just a phase shift, and as we add that, we believe that we're going to have better offerings that are more differentiated the more these freemium offerings are successful. that one is just a phase shift and as we add that we believe that we're going to have better offerings that are more differentiated the more these freemium offerings are successful That one for us, we just look at it and say, we're deferring it, but not closing it. that one for us we just look at it and say we're deferring it but not closing it Hopefully, that gives you some color. hopefully that gives you some color In terms of the traffic, if the disproportionate amount of traffic is going to go to these freemium offerings, you're right about, hey, how does that sort of start to come back? in terms of the traffic if the disproportionate amount of traffic is going to go to these freemium offerings you're right about hey how does that sort of start to come back We're already seeing some of it as it relates to the MAU that we have on Firefly. we're already seeing some of it as it relates to the mau that we have on firefly We shared some numbers on that as well as on Express, which are growing well, but that will play out, I think, over 2027. More important, I think it sets the company up for the right sort of really growing our customer base, which like we've done with Reader, then pays off for decades. Maybe the other thing just to give color, because I'm sure people will ask this question. As you think about it in terms of how it plays out over the second half, maybe the way to think about it is if you go back and look at our fiscal 2024 or our fiscal 2025 results, you can understand whatever our second half ARR expectations are. They probably typically pay out 40% and 60% in Q3 and Q4. We shared some numbers on that as well as on Express, which are growing well, but that will play out, I think, over 2027. we shared some numbers on that as well as on express which are growing well but that will play out i think over 2027 More important, I think it sets the company up for the right sort of really growing our customer base, which like we've done with Reader, then pays off for decades. more important i think it sets the company up for the right sort of really growing our customer base which like we've done with reader then pays off for decades Maybe the other thing just to give color, because I'm sure people will ask this question. maybe the other thing just to give color because i'm sure people will ask this question As you think about it in terms of how it plays out over the second half, maybe the way to think about it is if you go back and look at our fiscal 2024 or our fiscal 2025 results, you can understand whatever our second half ARR expectations are. as you think about it in terms of how it plays out over the second half maybe the way to think about it is if you go back and look at our fiscal 2024 or our fiscal 2025 results you can understand whatever our second half arr expectations are They probably typically pay out 40% and 60% in Q3 and Q4. they probably typically pay out 40% and 60% in q3 and q4 Given we'll be making more of these changes in Q3 as it relates to changing the traffic patterns, and we expect our seasonal enterprise trend, the enterprise and everything we're doing around content continues to be an area of strength for us. That will be perhaps a little bit more proportionately in Q4 than it was in Q4 in the last few years. Hopefully that gives you both color on the line optimizations we can always introduce, but we wanted to be transparent with you. I think as it relates to the moving of the freemium, hopefully, we gave you a lot of indication as to why now all of the early success that we're seeing, and I just wanted to make sure you had color as to how that might play out in Q3 and Q4 as you do your modeling. Given we'll be making more of these changes in Q3 as it relates to changing the traffic patterns, and we expect our seasonal enterprise trend, the enterprise and everything we're doing around content continues to be an area of strength for us. given we'll be making more of these changes in q3 as it relates to changing the traffic patterns and we expect our seasonal enterprise trend the enterprise and everything we're doing around content continues to be an area of strength for us That will be perhaps a little bit more proportionately in Q4 than it was in Q4 in the last few years. that will be perhaps a little bit more proportionately in q4 than it was in q4 in the last few years Hopefully that gives you both color on the line optimizations we can always introduce, but we wanted to be transparent with you. hopefully that gives you both color on the line optimizations we can always introduce but we wanted to be transparent with you I think as it relates to the moving of the freemium, hopefully, we gave you a lot of indication as to why now all of the early success that we're seeing, and I just wanted to make sure you had color as to how that might play out in Q3 and Q4 as you do your modeling. i think as it relates to the moving of the freemium hopefully we gave you a lot of indication as to why now all of the early success that we're seeing and i just wanted to make sure you had color as to how that might play out in q3 and q4 as you do your modeling

Speaker 11: Once again, if you would like to signal with questions, please press star one on your touch-tone telephone. Additionally, please limit yourself to one question. We'll take our next question from Matt Swanson with RBC Capital Markets. Once again, if you would like to signal with questions, please press star one on your touch-tone telephone. once again if you would like to signal with questions please press star one on your touch-tone telephone Additionally, please limit yourself to one question. additionally please limit yourself to one question We'll take our next question from Matt Swanson with RBC Capital Markets. we'll take our next question from matt swanson with rbc capital markets

Speaker 9: Great. Thank you guys so much for taking my question. Not to front run Cannes too much, if we could focus a little bit on the brand visibility solution and kind of the broader idea of what Semrush brings to the Adobe platform. Could you just kind of talk a little bit, maybe more holistically, on how that fits to your broader portfolio and kind of what the maybe compounding benefit could be over time? Great. great Thank you guys so much for taking my question. thank you guys so much for taking my question Not to front run Cannes too much, if we could focus a little bit on the brand visibility solution and kind of the broader idea of what Semrush brings to the Adobe platform. not to front run cannes too much if we could focus a little bit on the brand visibility solution and kind of the broader idea of what semrush brings to the adobe platform Could you just kind of talk a little bit, maybe more holistically, on how that fits to your broader portfolio and kind of what the maybe compounding benefit could be over time? could you just kind of talk a little bit maybe more holistically on how that fits to your broader portfolio and kind of what the maybe compounding benefit could be over time

Speaker 2: Thanks for the question, Matt. Brand visibility is a topic of huge interest to CMOs, as you just heard from David as well. We are seeing a lot of that play out in our own traffic patterns, every brand across the world wants to have the right placement regardless of which LLMs consumers are using. They want to have the right message, they want to have their messages show up on LLMs, on social media, and all the other new platforms that consumers are going to. Thanks for the question, Matt. thanks for the question matt Brand visibility is a topic of huge interest to CMOs, as you just heard from David as well. brand visibility is a topic of huge interest to cmos as you just heard from david as well We are seeing a lot of that play out in our own traffic patterns, every brand across the world wants to have the right placement regardless of which LLMs consumers are using. we are seeing a lot of that play out in our own traffic patterns every brand across the world wants to have the right placement regardless of which llms consumers are using They want to have the right message, they want to have their messages show up on LLMs, on social media, and all the other new platforms that consumers are going to. they want to have the right message they want to have their messages show up on llms on social media and all the other new platforms that consumers are going to We believe that the best way to do that is to take their content that they have already within their content management system, like Adobe Experience Manager, make sure it gets out there, whether it's the bots and the agents that these LLMs have, or third-party sites which have credibility with these LLMs, making sure that all the brand visibility shows up in the right places. That requires the integration of what Semrush brings, which is the outside-in knowledge of what is actually being prompted for, what's being searched for, that database that they have of all of the prompts and search queries and so on, combine it with the inside-out intelligence that we have with all the content. We believe that the best way to do that is to take their content that they have already within their content management system, like Adobe Experience Manager, make sure it gets out there, whether it's the bots and the agents that these LLMs have, or third-party sites which have credibility with these LLMs, making sure that all the brand visibility shows up in the right places. we believe that the best way to do that is to take their content that they have already within their content management system like adobe experience manager make sure it gets out there whether it's the bots and the agents that these llms have or third-party sites which have credibility with these llms making sure that all the brand visibility shows up in the right places That requires the integration of what Semrush brings, which is the outside-in knowledge of what is actually being prompted for, what's being searched for, that database that they have of all of the prompts and search queries and so on, combine it with the inside-out intelligence that we have with all the content. that requires the integration of what semrush brings which is the outside-in knowledge of what is actually being prompted for what's being searched for that database that they have of all of the prompts and search queries and so on combine it with the inside-out intelligence that we have with all the content Marrying those two provides us the opportunity to bring the most comprehensive brand visibility solution in the market, and that's what we're introducing at Cannes later this month. We are super excited about that, and we believe that this is going to be a must-have for every CMO. Marrying those two provides us the opportunity to bring the most comprehensive brand visibility solution in the market, and that's what we're introducing at Cannes later this month. marrying those two provides us the opportunity to bring the most comprehensive brand visibility solution in the market and that's what we're introducing at cannes later this month We are super excited about that, and we believe that this is going to be a must-have for every CMO. we are super excited about that and we believe that this is going to be a must-have for every cmo

Speaker 9: Thank you. Thank you. thank you

Speaker 11: The next question will come from Brad Zelnick with Deutsche Bank. The next question will come from Brad Zelnick with Deutsche Bank. the next question will come from brad zelnick with deutsche bank

Speaker 4: Oh, great. Thank you so much for taking the question. Maybe on a different topic, we saw the announcement on the Creativity Connector with Google Gemini. Wondering how you're thinking about relationships with companies like Google that are seemingly developing their own design tools versus making Adobe innovations available in their apps. More broadly, how are you thinking about competition partnerships and coopetition in the age of AI? Oh, great. oh great Thank you so much for taking the question. thank you so much for taking the question Maybe on a different topic, we saw the announcement on the Creativity Connector with Google Gemini. maybe on a different topic we saw the announcement on the creativity connector with google gemini Wondering how you're thinking about relationships with companies like Google that are seemingly developing their own design tools versus making Adobe innovations available in their apps. wondering how you're thinking about relationships with companies like google that are seemingly developing their own design tools versus making adobe innovations available in their apps More broadly, how are you thinking about competition partnerships and coopetition in the age of AI? more broadly how are you thinking about competition partnerships and coopetition in the age of ai

Speaker 6: Yeah, thanks for asking that question, Brad. I think we've made a lot of progress in terms of how we think about the evolution of a Creative Agent, a Productivity Agent, and Anil also introduced us, basically, Customer Experience Coworker at Adobe Summit a couple of months ago. Overall, what we've done is we've taken all of our core capabilities in our creative flagship applications, as an example, and we've used that to create a series of capabilities that are accessible to the endpoint. In other words, the Creative Agent can now really access 50 creative tools across our ecosystem. That AI Assistant is then available in Firefly and to our Creative Cloud subscribers. We've also, exactly to your point, we've also taken that AI Assistant, that Creative Agent, and made it available inside of both ChatGPT, and inside of Claude, with Copilot and Gemini coming very soon. Yeah, thanks for asking that question, Brad. yeah thanks for asking that question brad I think we've made a lot of progress in terms of how we think about the evolution of a Creative Agent, a Productivity Agent, and Anil also introduced us, basically, Customer Experience Coworker at Adobe Summit a couple of months ago. i think we've made a lot of progress in terms of how we think about the evolution of a creative agent a productivity agent and anil also introduced us basically customer experience coworker at adobe summit a couple of months ago Overall, what we've done is we've taken all of our core capabilities in our creative flagship applications, as an example, and we've used that to create a series of capabilities that are accessible to the endpoint. overall what we've done is we've taken all of our core capabilities in our creative flagship applications as an example and we've used that to create a series of capabilities that are accessible to the endpoint In other words, the Creative Agent can now really access 50 creative tools across our ecosystem. in other words the creative agent can now really access 50 creative tools across our ecosystem That AI Assistant is then available in Firefly and to our Creative Cloud subscribers. that ai assistant is then available in firefly and to our creative cloud subscribers We've also, exactly to your point, we've also taken that AI Assistant, that Creative Agent, and made it available inside of both ChatGPT, and inside of Claude, with Copilot and Gemini coming very soon. we've also exactly to your point we've also taken that ai assistant that creative agent and made it available inside of both chatgpt and inside of claude with copilot and gemini coming very soon What that lets us do is it lets us, again, similar to what we were talking about, go to where user experience and user intent actually initiate. If someone starts to want to do something with AI Assistant to create a logo, convert that logo to some merchandise, be able to post that merchandise across social media networks, you can do all of that conversationally at this point. In that context, if you have anything you want to do that goes beyond what you can do conversationally, we use that opportunity to journey them over to Firefly for a deeper, richer AI tooling experience. What that lets us do is it lets us, again, similar to what we were talking about, go to where user experience and user intent actually initiate. what that lets us do is it lets us again similar to what we were talking about go to where user experience and user intent actually initiate If someone starts to want to do something with AI Assistant to create a logo, convert that logo to some merchandise, be able to post that merchandise across social media networks, you can do all of that conversationally at this point. if someone starts to want to do something with ai assistant to create a logo convert that logo to some merchandise be able to post that merchandise across social media networks you can do all of that conversationally at this point In that context, if you have anything you want to do that goes beyond what you can do conversationally, we use that opportunity to journey them over to Firefly for a deeper, richer AI tooling experience. in that context if you have anything you want to do that goes beyond what you can do conversationally we use that opportunity to journey them over to firefly for a deeper richer ai tooling experience The whole end-to-end experience here is about getting to users where they are, letting them do a lot more conversationally, really reducing the bar to create more content, but then also leveraging the opportunity to monetize them by converting them over to Firefly, as an example. The last thing I'll say is, the monetization model for these AI agents is similar in that it's basically about credit consumption, and we think it drives a lot more credit consumption and opportunity for upsell. The whole end-to-end experience here is about getting to users where they are, letting them do a lot more conversationally, really reducing the bar to create more content, but then also leveraging the opportunity to monetize them by converting them over to Firefly, as an example. the whole end-to-end experience here is about getting to users where they are letting them do a lot more conversationally really reducing the bar to create more content but then also leveraging the opportunity to monetize them by converting them over to firefly as an example The last thing I'll say is, the monetization model for these AI agents is similar in that it's basically about credit consumption, and we think it drives a lot more credit consumption and opportunity for upsell. the last thing i'll say is the monetization model for these ai agents is similar in that it's basically about credit consumption and we think it drives a lot more credit consumption and opportunity for upsell

Speaker 13: As it relates to your question on partnerships, maybe just add a couple more points. Firstly, you have to look at what the economic model is for a lot of these companies. Whether it's Amazon, Microsoft, or Google, we are huge users of their cloud services, which at the end of the day, is a significant revenue stream for them. As it relates to your question on partnerships, maybe just add a couple more points. as it relates to your question on partnerships maybe just add a couple more points Firstly, you have to look at what the economic model is for a lot of these companies. firstly you have to look at what the economic model is for a lot of these companies Whether it's Amazon, Microsoft, or Google, we are huge users of their cloud services, which at the end of the day, is a significant revenue stream for them. whether it's amazon microsoft or google we are huge users of their cloud services which at the end of the day is a significant revenue stream for them We have great partnerships with all three of them. I think with Google specifically, we also partner on how we can jointly go to media and entertainment. We are a big user of their Nano Banana within our application. I think there's a lot of synergy associated with that. I think with OpenAI and with Anthropic, they are looking to say how can they become more of a sort of platform of choice and provide us. I think all of their focus right now, I would say, Brad, is on code. That's where everybody is doing a student body left on that. I think creativity is an area that we not only have a passion for, that we're uniquely qualified. This is our time and our opportunity to leverage everything that they are providing. We have great partnerships with all three of them. we have great partnerships with all three of them I think with Google specifically, we also partner on how we can jointly go to media and entertainment. i think with google specifically we also partner on how we can jointly go to media and entertainment We are a big user of their Nano Banana within our application. we are a big user of their nano banana within our application I think there's a lot of synergy associated with that. i think there's a lot of synergy associated with that I think with OpenAI and with Anthropic, they are looking to say how can they become more of a sort of platform of choice and provide us. i think with openai and with anthropic they are looking to say how can they become more of a sort of platform of choice and provide us I think all of their focus right now, I would say, Brad, is on code. i think all of their focus right now i would say brad is on code That's where everybody is doing a student body left on that. that's where everybody is doing a student body left on that I think creativity is an area that we not only have a passion for, that we're uniquely qualified. i think creativity is an area that we not only have a passion for that we're uniquely qualified This is our time and our opportunity to leverage everything that they are providing. this is our time and our opportunity to leverage everything that they are providing With every one of them, we have a great partnership. I think as it relates to the consumer side of creativity, which is where this is going after, we're, I think, a company of one in terms of the focus that we can have on that particular business. With every one of them, we have a great partnership. with every one of them we have a great partnership I think as it relates to the consumer side of creativity, which is where this is going after, we're, I think, a company of one in terms of the focus that we can have on that particular business. i think as it relates to the consumer side of creativity which is where this is going after we're i think a company of one in terms of the focus that we can have on that particular business

Speaker 4: Very helpful. Thank you both. Very helpful. very helpful Thank you both. thank you both

Speaker 11: The next question will come from Billy Fitzsimmons with Piper Sandler. The next question will come from Billy Fitzsimmons with Piper Sandler. the next question will come from billy fitzsimmons with piper sandler

Speaker 3: Hey, guys. Thanks for taking the question, fitting me in. I want to go back to the discussion earlier. There's a lot of debates right now around kind of bots in software. If I think back to Summit, there's a big focus on kind of what you're doing with AI agents internally. I think there's an important emphasis on your differentiation of having 20 years of customer relationships and proprietary data around that, as well as being that governance and auditability layer for agentic workflows. Can you just talk about the importance of that in the ecosystem? Hey, guys. hey guys Thanks for taking the question, fitting me in. thanks for taking the question fitting me in I want to go back to the discussion earlier. i want to go back to the discussion earlier There's a lot of debates right now around kind of bots in software. there's a lot of debates right now around kind of bots in software If I think back to Summit, there's a big focus on kind of what you're doing with AI agents internally. if i think back to summit there's a big focus on kind of what you're doing with ai agents internally I think there's an important emphasis on your differentiation of having 20 years of customer relationships and proprietary data around that, as well as being that governance and auditability layer for agentic workflows. i think there's an important emphasis on your differentiation of having 20 years of customer relationships and proprietary data around that as well as being that governance and auditability layer for agentic workflows Can you just talk about the importance of that in the ecosystem? can you just talk about the importance of that in the ecosystem Then if I could sneak another one in, and to be honest, I don't really know who this is for at this point, but you announced a $25 billion share repurchase authorization at Summit. That's a significant chunk of your cap. We're also in a much more, or it feels like a more relaxed regulatory environment. How do we think about your ability and propensity to do tuck-in M&A in this environment? Thanks, guys. Then if I could sneak another one in, and to be honest, I don't really know who this is for at this point, but y ou announced a $25 billion share repurchase authorization at Summit. then if i could sneak another one in and to be honest i don't really know who this is for at this point but y ou announced a $25 billion share repurchase authorization at summit That's a significant chunk of your cap. that's a significant chunk of your cap We're also in a much more, or it feels like a more relaxed regulatory environment. we're also in a much more or it feels like a more relaxed regulatory environment How do we think about your ability and propensity to do tuck-in M&A in this environment? how do we think about your ability and propensity to do tuck-in m&a in this environment Thanks, guys. thanks guys

Speaker 13: Maybe I'll start with the second. Then we can all touch on the first. We are all a team of one, so you can ask anybody that question, Billy, and we'll get the same answer. As it relates to the stock buyback, you know we had a $25 billion authorization previously. We added to that with another $25 billion authorization in April. Of the first authorization, if you look at it, there's $2 billion left, and we would have completed it in less than 11 quarters or so. We're clearly showing a lot of confidence that we should be using capital allocation to buy back our stocks. Semrush was a good acquisition. We're confident about our ability to monetize that. It further differentiates our marketing solutions. I'll come to the marketing part. Maybe I'll start with the second. maybe i'll start with the second Then we can all touch on the first. then we can all touch on the first We are all a team of one, so you can ask anybody that question, Billy, and we'll get the same answer. we are all a team of one so you can ask anybody that question billy and we'll get the same answer As it relates to the stock buyback, you know we had a $25 billion authorization previously. as it relates to the stock buyback you know we had a $25 billion authorization previously We added to that with another $25 billion authorization in April. we added to that with another $25 billion authorization in april Of the first authorization, if you look at it, there's $2 billion left, and we would have completed it in less than 11 quarters or so. of the first authorization if you look at it there's $2 billion left and we would have completed it in less than 11 quarters or so We're clearly showing a lot of confidence that we should be using capital allocation to buy back our stocks. we're clearly showing a lot of confidence that we should be using capital allocation to buy back our stocks Semrush was a good acquisition. semrush was a good acquisition We're confident about our ability to monetize that. we're confident about our ability to monetize that It further differentiates our marketing solutions. it further differentiates our marketing solutions I'll come to the marketing part. i'll come to the marketing part We are continuously looking at a whole bunch of companies. There's going to be some very interesting tuck-ins as it relates to technology because none of them have business models that are sustainable or monetizable. It is actually a good time for us to look at technology companies. As it relates to differentiation, we always talk about content and the fact that we have these behaviors, and we have the data as a huge differentiator for us. I know there's a lot of talk about what's happening in the enterprise. The number of CEOs and CFOs who are coming to us and talking about, "Hey, we have this transformation. A big component of that transformation is customer experience, and Adobe, you're the one who's going to help us with that in terms of both the content and the understanding of the customer." That's a huge differentiator. We are continuously looking at a whole bunch of companies. we are continuously looking at a whole bunch of companies There's going to be some very interesting tuck-ins as it relates to technology because none of them have business models that are sustainable or monetizable. there's going to be some very interesting tuck-ins as it relates to technology because none of them have business models that are sustainable or monetizable It is actually a good time for us to look at technology companies. it is actually a good time for us to look at technology companies As it relates to differentiation, we always talk about content and the fact that we have these behaviors, and we have the data as a huge differentiator for us. as it relates to differentiation we always talk about content and the fact that we have these behaviors and we have the data as a huge differentiator for us I know there's a lot of talk about what's happening in the enterprise. i know there's a lot of talk about what's happening in the enterprise The number of CEOs and CFOs who are coming to us and talking about, "Hey, we have this transformation. the number of ceos and cfos who are coming to us and talking about "hey we have this transformation A big component of that transformation is customer experience, and Adobe, you're the one who's going to help us with that in terms of both the content and the understanding of the customer." That's a huge differentiator. a big component of that transformation is customer experience and adobe you're the one who's going to help us with that in terms of both the content and the understanding of the customer." that's a huge differentiator We're clearly focused on that as separated us from anybody else in the customer experience orchestration. On the creative pro, as I continue to say, our understanding of that customer base is unique. This is now about saying, how do we extend both of those into also the consumer space in the era of AI? That's how we look at it. To your point, our ability to take the depth of our technology, whether it's in audio, whether it's in video, whether it's in imaging, and bring that to Firefly, the speed and velocity by which we can bring it has to do a lot with what the technology code base is underlying and the understanding of behaviors. That's how I would describe our differentiation. Anybody who wants to create content and use it for marketing, that's Adobe. We're clearly focused on that as separated us from anybody else in the customer experience orchestration. we're clearly focused on that as separated us from anybody else in the customer experience orchestration On the creative pro, as I continue to say, our understanding of that customer base is unique. on the creative pro as i continue to say our understanding of that customer base is unique This is now about saying, how do we extend both of those into also the consumer space in the era of AI? this is now about saying how do we extend both of those into also the consumer space in the era of ai That's how we look at it. that's how we look at it To your point, our ability to take the depth of our technology, whether it's in audio, whether it's in video, whether it's in imaging, and bring that to Firefly, the speed and velocity by which we can bring it has to do a lot with what the technology code base is underlying and the understanding of behaviors. to your point our ability to take the depth of our technology whether it's in audio whether it's in video whether it's in imaging and bring that to firefly the speed and velocity by which we can bring it has to do a lot with what the technology code base is underlying and the understanding of behaviors That's how I would describe our differentiation. that's how i would describe our differentiation Anybody who wants to create content and use it for marketing, that's Adobe. anybody who wants to create content and use it for marketing that's adobe

Speaker 11: Our next question will come from Kirk Materne with Evercore ISI. Our next question will come from Kirk Materne with Evercore ISI. our next question will come from kirk materne with evercore isi

Speaker 8: Yeah, thanks for taking the question. I guess this one's maybe for David. David, when we think about this push into freemium and changing that up a little bit, I guess, how do you get comfortable on sort of the long-term economics in terms of the lifetime value? I guess, what are you seeing in terms of those customers going through sort of a gestation period, then monetizing over a certain period of time? Can you add some more color to that? Because I get the idea of adding a lot more new users to the platform, but just trying to get a sense on how you guys get comfort about sort of the stickiness of those users after a certain period of time and the ultimate monetization opportunity. Thanks. Yeah, thanks for taking the question. yeah thanks for taking the question I guess this one's maybe for David. i guess this one's maybe for david David, when we think about this push into freemium and changing that up a little bit, I guess, how do you get comfortable on sort of the long-term economics in terms of the lifetime value? david when we think about this push into freemium and changing that up a little bit i guess how do you get comfortable on sort of the long-term economics in terms of the lifetime value I guess, what are you seeing in terms of those customers going through sort of a gestation period, then monetizing over a certain period of time? i guess what are you seeing in terms of those customers going through sort of a gestation period then monetizing over a certain period of time Can you add some more color to that? can you add some more color to that Because I get the idea of adding a lot more new users to the platform, but just trying to get a sense on how you guys get comfort about sort of the stickiness of those users after a certain period of time and the ultimate monetization opportunity. because i get the idea of adding a lot more new users to the platform but just trying to get a sense on how you guys get comfort about sort of the stickiness of those users after a certain period of time and the ultimate monetization opportunity Thanks. thanks

Speaker 6: Yeah, happy to take that. Just the foundation of the press here really starts with understanding user intent and user behavior. As I mentioned in the example of that transition to increasing intent-based expression when they're searching, that just gives us an opportunity to massively open up the top of funnel, which you're starting to see with the over 40% increase in traffic to adobe.com through those activities. If you think about the journey the user goes from, they go from searching directly to using our product, which does result, and we see that in our stats, that results in higher engagement, which you then start to see in terms of monthly active user growth. Yeah, happy to take that. yeah happy to take that Just the foundation of the press here really starts with understanding user intent and user behavior. just the foundation of the press here really starts with understanding user intent and user behavior As I mentioned in the example of that transition to increasing intent-based expression when they're searching, that just gives us an opportunity to massively open up the top of funnel, which you're starting to see with the over 40% increase in traffic to adobe.com through those activities. as i mentioned in the example of that transition to increasing intent-based expression when they're searching that just gives us an opportunity to massively open up the top of funnel which you're starting to see with the over 40% increase in traffic to adobe.com through those activities If you think about the journey the user goes from, they go from searching directly to using our product, which does result, and we see that in our stats, that results in higher engagement, which you then start to see in terms of monthly active user growth. if you think about the journey the user goes from they go from searching directly to using our product which does result and we see that in our stats that results in higher engagement which you then start to see in terms of monthly active user growth What we see is on the back end of that, when they convert to a paid user, they tend to have much higher engagement and usage patterns than those that go directly into paid, which translates into lifetime value and long-term value for the company. In terms of why now, again, that question was asked earlier. Why now? Because we see all the right signals, right? The product is there. We see the traffic is up 40% year-over-year. We see the strong usage of the product. We see that MAU is up 70% year-over-year when looked at it. We even talked about how that has started to translate into ARR growth with 50%, as an example, ARR growth that you see quarter-over-quarter for Firefly. What we see is on the back end of that, when they convert to a paid user, they tend to have much higher engagement and usage patterns than those that go directly into paid, which translates into lifetime value and long-term value for the company. what we see is on the back end of that when they convert to a paid user they tend to have much higher engagement and usage patterns than those that go directly into paid which translates into lifetime value and long-term value for the company In terms of why now, again, that question was asked earlier. in terms of why now again that question was asked earlier Why now? why now Because we see all the right signals, right? because we see all the right signals right The product is there. the product is there We see the traffic is up 40% year-over-year. we see the traffic is up 40% year-over-year We see the strong usage of the product. we see the strong usage of the product We see that MAU is up 70% year-over-year when looked at it. we see that mau is up 70% year-over-year when looked at it We even talked about how that has started to translate into ARR growth with 50%, as an example, ARR growth that you see quarter-over-quarter for Firefly. we even talked about how that has started to translate into arr growth with 50% as an example arr growth that you see quarter-over-quarter for firefly All of those early indicators are there, really what we're working to do as we bring more of that traffic over is that just needs time to play out. All of that sort of in the backdrop of this is where the world is going. The opportunity is bigger than ever. Instead of trying to balance both things, really go all in on this opportunity because it's ours to win. We have all of the foundation here. All of those early indicators are there, really what we're working to do as we bring more of that traffic over is that just needs time to play out. all of those early indicators are there really what we're working to do as we bring more of that traffic over is that just needs time to play out All of that sort of in the backdrop of this is where the world is going. all of that sort of in the backdrop of this is where the world is going The opportunity is bigger than ever. the opportunity is bigger than ever Instead of trying to balance both things, really go all in on this opportunity because it's ours to win. instead of trying to balance both things really go all in on this opportunity because it's ours to win We have all of the foundation here. we have all of the foundation here

Speaker 11: Our next question will come from Brent Thill with Jefferies. Our next question will come from Brent Thill with Jefferies. our next question will come from brent thill with jefferies

Speaker 5: Shantanu, one of the questions we get is just the reset for this next tectonic shift, I realize you're guiding margins down a bit, I think many investors believe that you could be doing more and putting a much bigger moat and investment into protect yourself. I don't know if that view is right or wrong, I'm curious, why not be a little more severe in terms of the push and the pivot? You went through this from perpetual to subscription, you obviously nailed it and had incredible results from that pivot. Maybe it's not the right analogy, I think we're getting a lot of questions on that. Shantanu, one of the questions we get is just the reset for this next tectonic shift, I realize you're guiding margins down a bit, I think many investors believe that you could be doing more and putting a much bigger moat and investment into protect yourself. shantanu one of the questions we get is just the reset for this next tectonic shift i realize you're guiding margins down a bit i think many investors believe that you could be doing more and putting a much bigger moat and investment into protect yourself I don't know if that view is right or wrong, I'm curious, why not be a little more severe in terms of the push and the pivot? i don't know if that view is right or wrong i'm curious why not be a little more severe in terms of the push and the pivot You went through this from perpetual to subscription, you obviously nailed it and had incredible results from that pivot. you went through this from perpetual to subscription you obviously nailed it and had incredible results from that pivot Maybe it's not the right analogy, I think we're getting a lot of questions on that. maybe it's not the right analogy i think we're getting a lot of questions on that

Speaker 13: I think, Brent, this is actually indication that we are really going to pivot, to use your words, into getting this acquisition and customers. Perhaps what's not as evident is under the surface, how we're increasingly moving all of the expenses that we have and spend that we have, the scrutiny on just making sure that we find the money to spend. We will not be short-term focused on this, Brent, in terms of spending money to make sure we capitalize on the opportunity. We are spending on this, we will continue to, whether it's on the models, whether it's in marketing, whether it's in the product associated with these. We do not intend to be short-term at all about. As you point out correctly, Brent, this is not about balance. I think, Brent, this is actually indication that we are really going to pivot, to use your words, into getting this acquisition and customers. i think brent this is actually indication that we are really going to pivot to use your words into getting this acquisition and customers Perhaps what's not as evident is under the surface, how we're increasingly moving all of the expenses that we have and spend that we have, the scrutiny on just making sure that we find the money to spend. perhaps what's not as evident is under the surface how we're increasingly moving all of the expenses that we have and spend that we have the scrutiny on just making sure that we find the money to spend We will not be short-term focused on this, Brent, in terms of spending money to make sure we capitalize on the opportunity. we will not be short-term focused on this brent in terms of spending money to make sure we capitalize on the opportunity We are spending on this, we will continue to, whether it's on the models, whether it's in marketing, whether it's in the product associated with these. we are spending on this we will continue to whether it's on the models whether it's in marketing whether it's in the product associated with these We do not intend to be short-term at all about. we do not intend to be short-term at all about As you point out correctly, Brent, this is not about balance. as you point out correctly brent this is not about balance This is about saying, "Hey, be clear about your strategic intent." We are saying it's about becoming that platform of choice for AI right now. It is about getting those users to engage with Adobe and partner with Adobe. Be assured that as it relates to cloud spend, what we are doing on models as well as what we are doing in marketing, we are spending the money. The good news is we get a lot of Anil's products relatively cheap in order to be able to use it. Our efficiency on that is probably better than anybody else in the industry. This is about saying, "Hey, be clear about your strategic intent." We are saying it's about becoming that platform of choice for AI right now. this is about saying "hey be clear about your strategic intent." we are saying it's about becoming that platform of choice for ai right now It is about getting those users to engage with Adobe and partner with Adobe. it is about getting those users to engage with adobe and partner with adobe Be assured that as it relates to cloud spend, what we are doing on models as well as what we are doing in marketing, we are spending the money. be assured that as it relates to cloud spend what we are doing on models as well as what we are doing in marketing we are spending the money The good news is we get a lot of Anil's products relatively cheap in order to be able to use it. the good news is we get a lot of anil's products relatively cheap in order to be able to use it Our efficiency on that is probably better than anybody else in the industry. our efficiency on that is probably better than anybody else in the industry

Speaker 5: Thank you. Thank you. thank you

Speaker 11: Moving on to Saket Kalia with Barclays. Moving on to Saket Kalia with Barclays. moving on to saket kalia with barclays

Speaker 12: Okay, great. Hey, guys. Thanks for taking the question here. Maybe for Shantanu and David, as I think about the original freemium business at Adobe, it's really Acrobat. I think the hope here is that some of your products like Express and Firefly can replicate that success. Maybe the question is, can you just compare and contrast maybe the next generation of freemium products in terms of what's similar, what's different than some of the really successful freemium businesses that we've built up over the years? Okay, great. okay great Hey, guys. hey guys Thanks for taking the question here. thanks for taking the question here Maybe for Shantanu and David, as I think about the original freemium business at Adobe, it's really Acrobat. maybe for shantanu and david as i think about the original freemium business at adobe it's really acrobat I think the hope here is that some of your products like Express and Firefly can replicate that success. i think the hope here is that some of your products like express and firefly can replicate that success Maybe the question is, can you just compare and contrast maybe the next generation of freemium products in terms of what's similar, what's different than some of the really successful freemium businesses that we've built up over the years? maybe the question is can you just compare and contrast maybe the next generation of freemium products in terms of what's similar what's different than some of the really successful freemium businesses that we've built up over the years

Speaker 6: Yeah. Thanks, Saket. Happy to share a little bit about this. For the broader context of folks that may not have been tracking us as long as you have, if you really take a step back, we've talked a lot in terms of the Acrobat funnel as part of our data-driven operating model. The level of scrutiny and detail we understand around the breakup of when we talk about the 850 million monthly active users, many of them are on Acrobat Reader. Some of them are in our Chrome extension, some of them are in Microsoft Edge extension. Some of them are on mobile devices. Yeah. yeah Thanks, Saket. thanks saket Happy to share a little bit about this. happy to share a little bit about this For the broader context of folks that may not have been tracking us as long as you have, if you really take a step back, we've talked a lot in terms of the Acrobat funnel as part of our data-driven operating model. for the broader context of folks that may not have been tracking us as long as you have if you really take a step back we've talked a lot in terms of the acrobat funnel as part of our data-driven operating model The level of scrutiny and detail we understand around the breakup of when we talk about the 850 million monthly active users, many of them are on Acrobat Reader. the level of scrutiny and detail we understand around the breakup of when we talk about the 850 million monthly active users many of them are on acrobat reader Some of them are in our Chrome extension, some of them are in Microsoft Edge extension. some of them are in our chrome extension some of them are in microsoft edge extension Some of them are on mobile devices. some of them are on mobile devices We're able to look at the utilization of all of that reader experience in those free experiences and understand the specifics of how users are engaging in each of those, and look for the right opportunities in those surfaces to put up paywalls and opportunities to convert. We found in that process, things like edit PDF or redact PDF inquiries are a great opportunity to take a user that's built up a habit using these products and convert them to a long-term, paid customer. A lot of that same learning, that infrastructure that we have in place for Acrobat that we've developed over the years, that same infrastructure applies to everything we're doing, as you said, with Express, with Firefly, with Acrobat AI Assistant. The foundation of how we're taking that 90 million of creative freemium MAU and converting that is identical. We're able to look at the utilization of all of that reader experience in those free experiences and understand the specifics of how users are engaging in each of those, and look for the right opportunities in those surfaces to put up paywalls and opportunities to convert. we're able to look at the utilization of all of that reader experience in those free experiences and understand the specifics of how users are engaging in each of those and look for the right opportunities in those surfaces to put up paywalls and opportunities to convert We found in that process, things like edit PDF or redact PDF inquiries are a great opportunity to take a user that's built up a habit using these products and convert them to a long-term, paid customer. we found in that process things like edit pdf or redact pdf inquiries are a great opportunity to take a user that's built up a habit using these products and convert them to a long-term paid customer A lot of that same learning, that infrastructure that we have in place for Acrobat that we've developed over the years, that same infrastructure applies to everything we're doing, as you said, with Express, with Firefly, with Acrobat AI Assistant. a lot of that same learning that infrastructure that we have in place for acrobat that we've developed over the years that same infrastructure applies to everything we're doing as you said with express with firefly with acrobat ai assistant The foundation of how we're taking that 90 million of creative freemium MAU and converting that is identical. the foundation of how we're taking that 90 million of creative freemium mau and converting that is identical Maybe the difference that we see as an opportunity, this goes back to why we're investing so heavily right now in going after where we see a user behavior, is that intent no longer just starts in the product. That intent now also starts as part of their search history and the things they're doing in search. The investment in terms of driving a broader percentage of that search directly into the same flows and the same model that we've done with Acrobat over the years, I think that's really the opportunity to fundamentally change and reshape this business for decades to come. Very excited about what we've learned, there's growth that we can apply to new experiences as well. Maybe the difference that we see as an opportunity, this goes back to why we're investing so heavily right now in going after where we see a user behavior, is that intent no longer just starts in the product. maybe the difference that we see as an opportunity this goes back to why we're investing so heavily right now in going after where we see a user behavior is that intent no longer just starts in the product That intent now also starts as part of their search history and the things they're doing in search. that intent now also starts as part of their search history and the things they're doing in search The investment in terms of driving a broader percentage of that search directly into the same flows and the same model that we've done with Acrobat over the years, I think that's really the opportunity to fundamentally change and reshape this business for decades to come. the investment in terms of driving a broader percentage of that search directly into the same flows and the same model that we've done with acrobat over the years i think that's really the opportunity to fundamentally change and reshape this business for decades to come Very excited about what we've learned, there's growth that we can apply to new experiences as well. very excited about what we've learned there's growth that we can apply to new experiences as well

Speaker 13: Maybe I'll just add a little bit to it, Saket, having been there for that journey. I think a lot of people may not remember that we actually tried to charge for the Acrobat Reader. Most customers told us that, "Hey, allow us to use it, you'll find different ways to monetize it." In addition to what David said, I would add that I think what's common across all of these is product first and foremost, which is, how do you get usage? In the reader case, it was distribution. In this case, the new model is freemium, that's the underlying theory behind both of those, is get the product right and get usage going, because that's the way to monetize it. Maybe I'll just add a little bit to it, Saket, having been there for that journey. maybe i'll just add a little bit to it saket having been there for that journey I think a lot of people may not remember that we actually tried to charge for the Acrobat Reader. i think a lot of people may not remember that we actually tried to charge for the acrobat reader Most customers told us that, "Hey, allow us to use it, you'll find different ways to monetize it." In addition to what David said, I would add that I think what's common across all of these is product first and foremost, which is, how do you get usage? most customers told us that "hey allow us to use it you'll find different ways to monetize it." in addition to what david said i would add that i think what's common across all of these is product first and foremost which is how do you get usage In the reader case, it was distribution. in the reader case it was distribution In this case, the new model is freemium, that's the underlying theory behind both of those, is get the product right and get usage going, because that's the way to monetize it. in this case the new model is freemium that's the underlying theory behind both of those is get the product right and get usage going because that's the way to monetize it I think as it relates to the two other things that are, I think, learnings from what we will continue to do, on Firefly, how we can expand from Firefly into Creative Cloud. We are doing a really great job of that, which is you try things in Firefly and you want to expand to Creative Cloud. That's pretty seamless. You want to start with Creative Cloud and have Firefly, that's also very seamless in terms of how much innovation we've delivered. It's slightly different with Acrobat Express, in that with Acrobat Express, it's a little bit more of paywalls in terms of how we are doing it. What I look at when we see what we are doing is usage is common, getting the product is common, and then making sure that at the appropriate times, we find ways to add value and find ways to monetize it. I think as it relates to the two other things that are, I think, learnings from what we will continue to do, on Firefly, how we can expand from Firefly into Creative Cloud. i think as it relates to the two other things that are i think learnings from what we will continue to do on firefly how we can expand from firefly into creative cloud We are doing a really great job of that, which is you try things in Firefly and you want to expand to Creative Cloud. That's pretty seamless. we are doing a really great job of that which is you try things in firefly and you want to expand to creative cloud. that's pretty seamless You want to start with Creative Cloud and have Firefly, that's also very seamless in terms of how much innovation we've delivered. you want to start with creative cloud and have firefly that's also very seamless in terms of how much innovation we've delivered It's slightly different with Acrobat Express, in that with Acrobat Express, it's a little bit more of paywalls in terms of how we are doing it. it's slightly different with acrobat express in that with acrobat express it's a little bit more of paywalls in terms of how we are doing it What I look at when we see what we are doing is usage is common, getting the product is common, and then making sure that at the appropriate times, we find ways to add value and find ways to monetize it. what i look at when we see what we are doing is usage is common getting the product is common and then making sure that at the appropriate times we find ways to add value and find ways to monetize it I think that's the learning that we have, but usage at the end of the day. Since I believe that's the last question, let me just, because I think the whole set of questions has really been around, "Hey, as you think about this era of AI and as you think about what's happening with creativity, what gives you confidence associated with some of the things?" I'll repeat what I said, which is, we really think this is this unique opportunity for creativity with everything that's changing with AI and user behavior and user intent and how users discover products, based on the early success to say now's the time to have the singular focus in the company, get the alignment, and go really drive. The Creative Cloud business continues to do well. I think that's the learning that we have, but usage at the end of the day. i think that's the learning that we have but usage at the end of the day Since I believe that's the last question, let me just, because I think the whole set of questions has really been around, "Hey, as you think about this era of AI and as you think about what's happening with creativity, what gives you confidence associated with some of the things?" I'll repeat what I said, which is, we really think this is this unique opportunity for creativity with everything that's changing with AI and user behavior and user intent and how users discover products, based on the early success to say now's the time to have the singular focus in the company, get the alignment, and go really drive. since i believe that's the last question let me just because i think the whole set of questions has really been around "hey as you think about this era of ai and as you think about what's happening with creativity what gives you confidence associated with some of the things?" i'll repeat what i said which is we really think this is this unique opportunity for creativity with everything that's changing with ai and user behavior and user intent and how users discover products based on the early success to say now's the time to have the singular focus in the company get the alignment and go really drive The Creative Cloud business continues to do well. the creative cloud business continues to do well That is not where tweaking it is going to allow us to get the next hundreds of millions of customers. On the marketing side, enterprises, we just continue to extend the offerings that we have and tying together content between what we are doing on the client side and the enterprise. That entire economic pool, as I think Anil talked about, in terms of how much money is being spent across content creation, marketing folks, practitioners, the agencies, as well as the channels, that is only going to increase, and that's going to go. The benefit of that and the economic pool is going to go to folks who can help automate that and provide technology and software to do that. That's why we feel really good about these changes, and we feel this is the way to continue to drive. That is not where tweaking it is going to allow us to get the next hundreds of millions of customers. that is not where tweaking it is going to allow us to get the next hundreds of millions of customers On the marketing side, enterprises, we just continue to extend the offerings that we have and tying together content between what we are doing on the client side and the enterprise. on the marketing side enterprises we just continue to extend the offerings that we have and tying together content between what we are doing on the client side and the enterprise That entire economic pool, as I think Anil talked about, in terms of how much money is being spent across content creation, marketing folks, practitioners, the agencies, as well as the channels, that is only going to increase, and that's going to go. that entire economic pool as i think anil talked about in terms of how much money is being spent across content creation marketing folks practitioners the agencies as well as the channels that is only going to increase and that's going to go The benefit of that and the economic pool is going to go to folks who can help automate that and provide technology and software to do that. the benefit of that and the economic pool is going to go to folks who can help automate that and provide technology and software to do that That's why we feel really good about these changes, and we feel this is the way to continue to drive. that's why we feel really good about these changes and we feel this is the way to continue to drive We're also pleased with what we have done as it relates to the conversion of ARR to revenue. I should recognize that. That's why you've seen the overachievement. That speaks to, again, the stability, I think, that we see in the ARR from customers. Thank you for joining us today, and we look forward, for those of you who are going to be at Cannes, certainly stop by and see what Adobe has to offer. Otherwise, we'll see you at the next call. Thank you. We're also pleased with what we have done as it relates to the conversion of ARR to revenue. we're also pleased with what we have done as it relates to the conversion of arr to revenue I should recognize that. i should recognize that That's why you've seen the overachievement. that's why you've seen the overachievement That speaks to, again, the stability, I think, that we see in the ARR from customers. that speaks to again the stability i think that we see in the arr from customers Thank you for joining us today, and we look forward, for those of you who are going to be at Cannes, certainly stop by and see what Adobe has to offer. thank you for joining us today and we look forward for those of you who are going to be at cannes certainly stop by and see what adobe has to offer Otherwise, we'll see you at the next call. otherwise we'll see you at the next call Thank you. thank you

Speaker 11: Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day. Thank you. thank you That does conclude today's conference. that does conclude today's conference We do thank you for your participation. we do thank you for your participation Have an excellent day. have an excellent day