Adobe Inc.

and welcome to the Q2 FY25 Adobe earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Steve Day, SVP, DX, CFO, and Corporate Finance, Interim Head of IR. Please go ahead.

Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayan, Adobe's Chair and CEO, David Wadwani, President of Digital Media, Anil Chakravarti, President of Digital Experience, and Dan Dern, Executive Vice President and CFO. On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2025 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 12, 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 gap growth rates as well as constant currency rates. During this presentation, Adobe's executives will refer to constant currency growth rates unless otherwise stated. Non-gap reconciliations are available in our earnings release and on Adobe's investor relations website. I will now turn the call over to Shantanu.

Thanks, Steve. Good afternoon and thank you for joining us. Adobe delivered another strong quarter achieving record revenue of $5.87 billion, representing 11% year-over-year growth. Gap earnings per share for the quarter was $3.94, and non-gap earnings per share was $5.06, representing 13% year-over-year growth. At our investor meeting in March, we outlined our growth strategy for the company centered on delivering transformative innovation for diverse customer audiences, business professionals, consumers, creators, creative professionals, and marketing professionals. The creative opportunity is expanding across audiences with AI as an accelerant. It is opening the content floodgates, tapping into everyone's imagination, and massively expanding the number of creative assets being created, edited, integrated, and delivered. There are billions of business professionals and consumers in the world who want to be both creative and efficient to accomplish their objectives. They see AI and conversational interfaces as a more productive way to accelerate creative storytelling and to quickly synthesize information across multiple documents. They're looking for quick and easy tools that are available on every computing surface and an easy on-ramp that allows them to trial products and subscribe based on the value derived. As the need for creative expression continues to grow exponentially, creativity and productivity are merging. AI can make them more creative and productive in their business context. Adobe pioneered creative storytelling through groundbreaking applications like Photoshop and Illustrator, and digital document sharing with the introduction of PDF and Acrobat. Our strategy is to bring productivity and creativity to life for billions of users across a variety of surfaces. Acrobat AI Assistant is redefining how people extract value from digital documents, unlocking new levels of productivity by cutting time to insights through conversational interfaces. Adobe Express is using AI to enable consumers to quickly design and publish engaging content through conversational AI in an easy to use, all-in-one application. Our unique value proposition is integrating these solutions to facilitate a smoother creation to consumption process through mobile apps, web browsers, and desktop offerings. Adobe's monthly active users across these categories now exceed over 700 million users. In the creative and marketing professionals group, creative professionals need best of breed applications that enable them to bring their ideas to life across media types, including imaging, design, video, photography, illustration, animation, 3D, and more. These offerings need to extend across all surfaces and facilitate seamless collaboration with multiple stakeholders. The next generation of creators are looking for powerful on-ramps through web and mobile platforms. Ideation through AI is an emerging category that will be made more powerful through support for multiple creative models. Adobe is delivering a comprehensive creative platform that extends from ideation through creation to mass production and delivery to address this content supply chain opportunity. At the heart of this creative AI revolution is Adobe Firefly, an on-ramp to creative expression that augments the power of creative cloud desktop applications. The Firefly app is a new destination for AI-assisted content ideation, creation, and production with Adobe's comprehensive family of commercially safe Firefly creative models and an expansive ecosystem of third-party models. Firefly empowers creative professionals to generate images, video, audio, and vectors from a single place with unmatched creative control, iterate on their creations through Adobe's creative apps, and seamlessly deliver them into production. Our support for third-party models, including from Google, OpenAI, and Black Forest Labs, gives creators the flexibility to choose the AI that works best for them. with Firefly upholding our standards for IP safety and transparency. We rolled out new Firefly offerings globally and will be delivering more innovation over the next few months. Paired with Creative Cloud apps, the Firefly app empowers creative professionals with enhanced precision and performance, ready to support them whenever and wherever inspiration strikes. The Firefly app is attracting new users to the Adobe franchise with first-time subscribers growing 30% quarter over quarter. Our digital experience business was inspired by our vision to enable this creative output to be delivered at scale by enterprises as part of their digital marketing transformation. We have a unique advantage and opportunity to integrate creativity, marketing, and AI to deliver customer experience orchestration. Marketing professionals need to create an unprecedented volume of compelling content and optimize it to deliver personalized digital experiences across channels including mobile apps, email, websites, social media, and advertising platforms. They're looking for agility and self-service as well as integrated workflows with their creative teams and agencies. To achieve this, enterprises require custom, commercially safe models and purpose-built agents tailored to address the inefficiencies of the content supply chain. Marketing practitioners, chief marketing officers, and chief digital officers need solutions that enable them to acquire, engage, and delight customers across a variety of channels and geographies. Adobe's strategy is to deliver a comprehensive marketing technology platform leveraging AI to offer vertical solutions that integrate content, customer data, and profiles across journeys in both B2B and B2C industries. Adobe Gen Studio and Firefly Services are revolutionizing the content supply chain across enterprises, empowering marketers to activate personalized on-brand content across millions of touchpoints. For marketing professionals, Adobe Experience Platform and Apps and purpose-built agents are redefining the future of customer connection by enabling real-time orchestration of content, data, and journeys. Adobe's differentiation lies in our best-of-breed industry-leading applications across web content management, analytics, customer data platforms, commerce, journey orchestration, and workflow management. We're infusing AI in each of these solutions and combining creativity and marketing in Gen Studio by bringing together creative ideation and production, workflow, asset management, content delivery, and content analytics in a seamlessly integrated offering. While our AI-influenced ARR is already contributing billions of dollars, our AI book of business from AI-first products, such as Acrobat AI Assistant, Firefly App and Services, and GenStudio for Performance Marketing, is tracking ahead of the $250 million ending ARR target by the end of fiscal 2025. I'll now turn it over to David and Anil to discuss the momentum in our businesses.