c2e3676ef5a7a42009d35fe308e5fd1c4bb1b7eb35bfd729e87bcef2d21230bb

9065cf6b844e376aca6335087ba5d5b2890a755b07b33e63953e1f985fd7807b

Adjustments for Non-Cash Items (USD, millions)

Stock-Based Compensation (USD, millions)

Changes in Working Capital (USD, millions)

Capital Expenditures (CapEx) (USD, millions)

Proceeds from / Repayments of Debt (USD, millions)

Share Repurchases (USD, millions)

Dividend Payments (USD, millions)

Net Change in Cash (USD, millions)

50ae350cfc7175f633a4f9115c4c69e1c99910167d623e2d1da60825fa649d55

| Metric (Unit) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|---------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Creative ARR (USD Billion) | **$11.60**  **[0000796343-23-000007_adbe-20221202.htm:66]** **[0000796343-22-000225_adbeex991q422.htm:0]**  | **$11.28**  **[0000796343-23-000055_adbe-20230303.htm:23]** **[0000796343-23-000044_adbeex991q123.htm:0]**  | **$11.64**  **[0000796343-23-000133_adbeex991q223.htm:0]**  | **$11.97**  **[0000796343-23-000205_adbe-20230901.htm:25]**  | **$12.37**  **[0000796343-24-000006_adbe-20231201.htm:64]** **[0000796343-23-000252_adbeex991q423.htm:0]**  | **$12.78**  **[0000796343-24-000065_adbe-20240301.htm:24]**  | **$13.11**  **[0000796343-24-000150_adbe-20240531.htm:26]**  | **$13.45**  **[0000796343-24-000208_adbe-20240830.htm:27]** **[0000796343-24-000200_adbeex991q324.htm:0]**  |
| Document Cloud ARR (USD Billion) | **$2.37**  **[0000796343-22-000225_adbeex991q422.htm:0]**  | **$2.39**  **[0000796343-23-000055_adbe-20230303.htm:23]**  | **$2.50**  **[0000796343-23-000133_adbeex991q223.htm:0]**  | **$2.63**  **[0000796343-23-000205_adbe-20230901.htm:25]** **[0000796343-23-000198_adbeex991q323.htm:0]**  | **$2.81**  **[0000796343-24-000006_adbe-20231201.htm:64]**  | **$2.98**  **[0000796343-24-000065_adbe-20240301.htm:24]** **[0000796343-24-000057_adbeex991q124.htm:0]**  | **$3.15**  **[0000796343-24-000150_adbe-20240531.htm:26]** **[0000796343-24-000140_adbeex991q224.htm:0]**  | **$3.31**  **[0000796343-24-000208_adbe-20240830.htm:27]** **[0000796343-24-000200_adbeex991q324.htm:0]**  |

3a64a31cb6712bf3526502ef102889447aaf99f846aa42c46df35044bfd14775

Adobe Inc. is a global technology company dedicated to transforming the world through personalized digital experiences. The company specializes in software products and services that facilitate content creation, customer experience management, and advertising solutions **[0000796343-24-000006_adbe-20231201.htm:3]** **[0000796343-24-000006_adbe-20231201.htm:96]**. Adobe operates through three main segments: Digital Media, Digital Experience, and Publishing and Advertising, offering a range of tools and platforms for creative professionals and businesses **[0000796343-24-000006_adbe-20231201.htm:3]** **[0000796343-24-000006_adbe-20231201.htm:96]**.

1. **Digital Media** - Offers products and services for content creation, publishing, and promotion, centered around Adobe Creative Cloud and Adobe Document Cloud. Key tools include Photoshop, Illustrator, Lightroom, Premiere Pro, and Acrobat **[0000796343-24-000006_adbe-20231201.htm:3]** **[0000796343-24-000006_adbe-20231201.htm:96]**.
   - **Adobe Creative Cloud** - Provides a suite of applications for graphic design, video editing, web development, and photography.
   - **Adobe Document Cloud** - Offers solutions for creating, editing, and managing PDF documents.

2. **Digital Experience** - Provides an integrated platform through Adobe Experience Cloud, enabling businesses to manage customer experiences from analytics to commerce. Includes Adobe Experience Manager and Workfront **[0000796343-24-000006_adbe-20231201.htm:96]** **[ADBE_3401553_7]**.
   - **Adobe Experience Manager** - A comprehensive content management solution for building websites, mobile apps, and forms.
   - **Workfront** - A work management platform that helps teams collaborate and manage projects efficiently.

3. **Publishing and Advertising** - Includes legacy products and services such as eLearning solutions, technical document publishing, and Adobe Advertising offerings **[0000796343-24-000006_adbe-20231201.htm:96]**.
   - **eLearning Solutions** - Tools for creating and managing online learning content.
   - **Technical Document Publishing** - Solutions for publishing complex documents and technical content.
   - **Adobe Advertising** - Offers advertising solutions to optimize media spend and improve campaign performance.

9319507301ff254af6e8c8877015540b28a56288f0c8dd98d7a1599873d19a01

| Segment / Metric (USD Billion) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|-------------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Digital Media**             | 3.30  **[0000796343-22-000225_adbeex991q422.htm:0]**  | 3.40  **[0000796343-23-000044_adbeex991q123.htm:0]**  | 3.51  **[0000796343-23-000133_adbeex991q223.htm:0]**  | 3.59  **[0000796343-23-000198_adbeex991q323.htm:0]**  | 3.72  **[0000796343-23-000252_adbeex991q423.htm:0]**  | 3.82  **[0000796343-24-000057_adbeex991q124.htm:0]** **[ADBE_3378105_6]** **[0000796343-24-000065_adbe-20240301.htm:5]**  | 3.91  **[0000796343-24-000140_adbeex991q224.htm:0]**  | 4.00  **[0000796343-24-000200_adbeex991q324.htm:0]**  |
| - Creative Cloud              | 2.68  **[0000796343-22-000225_adbeex991q422.htm:0]**  | 2.76  **[0000796343-23-000044_adbeex991q123.htm:0]**  | 2.85  **[0000796343-23-000133_adbeex991q223.htm:0]**  | 2.91  **[0000796343-23-000198_adbeex991q323.htm:0]**  | 3.00  **[0000796343-23-000252_adbeex991q423.htm:0]**  | 3.07  **[0000796343-24-000065_adbe-20240301.htm:27]** **[0000796343-24-000065_adbe-20240301.htm:28]**  | 3.13  **[0000796343-24-000140_adbeex991q224.htm:0]**  | 3.19  **[0000796343-24-000208_adbe-20240830.htm:31]**  |
| - Document Cloud              | 0.619  **[0000796343-22-000225_adbeex991q422.htm:0]**  | 0.634  **[0000796343-23-000044_adbeex991q123.htm:0]**  | 0.659  **[0000796343-23-000133_adbeex991q223.htm:0]**  | 0.685  **[0000796343-23-000198_adbeex991q323.htm:0]**  | 0.721  **[0000796343-23-000252_adbeex991q423.htm:0]**  | 0.750  **[0000796343-24-000065_adbe-20240301.htm:27]** **[0000796343-24-000065_adbe-20240301.htm:28]**  | 0.782  **[0000796343-24-000140_adbeex991q224.htm:0]**  | 0.807  **[0000796343-24-000208_adbe-20240830.htm:31]**  |
| **Digital Experience**        | 1.15  **[0000796343-22-000225_adbeex991q422.htm:0]**  | 1.18  **[0000796343-23-000044_adbeex991q123.htm:0]**  | 1.22  **[0000796343-23-000133_adbeex991q223.htm:0]**  | 1.23  **[0000796343-23-000198_adbeex991q323.htm:0]**  | 1.27  **[0000796343-23-000252_adbeex991q423.htm:0]**  | 1.29  **[0000796343-24-000057_adbeex991q124.htm:0]** **[ADBE_3378105_6]** **[0000796343-24-000065_adbe-20240301.htm:5]**  | 1.33  **[0000796343-24-000140_adbeex991q224.htm:0]**  | 1.35  **[0000796343-24-000200_adbeex991q324.htm:0]**  |
| **Publishing and Advertising**| N/A      | 0.084  **[0000796343-23-000044_adbeex991q123.htm:0]**  | N/A      | 0.067  **[0000796343-23-000198_adbeex991q323.htm:0]**  | N/A      | 0.077  **[0000796343-24-000057_adbeex991q124.htm:0]** **[ADBE_3378105_6]** **[0000796343-24-000065_adbe-20240301.htm:5]**  | 0.074  **[0000796343-24-000140_adbeex991q224.htm:0]**  | 0.059  **[0000796343-24-000200_adbeex991q324.htm:0]**  |
| **Total Revenue**             | 4.82  **[0000796343-23-000133_adbeex991q223.htm:0]**  | 4.66  **[0000796343-23-000044_adbeex991q123.htm:0]** **[ADBE_3232254_4]** **[0000796343-23-000055_adbe-20230303.htm:23]** **[0000796343-23-000055_adbe-20230303.htm:5]**  | 4.82  **[0000796343-23-000133_adbeex991q223.htm:0]**  | 4.89  **[0000796343-23-000205_adbe-20230901.htm:29]**  | 5.05  **[0000796343-23-000252_adbeex991q423.htm:0]**  | 5.18  **[0000796343-24-000065_adbe-20240301.htm:27]** **[0000796343-24-000065_adbe-20240301.htm:28]**  | 5.31  **[0000796343-24-000140_adbeex991q224.htm:0]**  | 5.41  **[0000796343-24-000208_adbe-20240830.htm:31]**  |

07ec1fec5ff4801be89d230fc9b5a8b31584dc9fe6ad2c1c9f98e8e7e575539e

f38e64efef9874acf1a9f2b2614a4c96eb6a1b594028c40d54fee45c5ed1cea9

| Metric [Unit: USD Million] | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|----------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Americas                   | **2,779**  **[0000796343-23-000055_adbe-20230303.htm:28]**  | N/A     | **2,943**  **[0000796343-23-000205_adbe-20230901.htm:6]** **[0000796343-23-000205_adbe-20230901.htm:30]**  | N/A     | **3,110**  **[0000796343-24-000065_adbe-20240301.htm:5]**  | **3,188**  **[0000796343-24-000150_adbe-20240531.htm:7]** **[0000796343-24-000150_adbe-20240531.htm:31]**  | **3,241**  **[0000796343-24-000208_adbe-20240830.htm:7]** **[0000796343-24-000208_adbe-20240830.htm:32]**  | N/A     |
| EMEA                       | **1,173**  **[0000796343-23-000055_adbe-20230303.htm:28]**  | N/A     | **1,229**  **[0000796343-23-000205_adbe-20230901.htm:6]** **[0000796343-23-000205_adbe-20230901.htm:30]**  | N/A     | **1,319**  **[0000796343-24-000065_adbe-20240301.htm:5]**  | **1,361**  **[0000796343-24-000150_adbe-20240531.htm:7]** **[0000796343-24-000150_adbe-20240531.htm:31]**  | **1,405**  **[0000796343-24-000208_adbe-20240830.htm:7]** **[0000796343-24-000208_adbe-20240830.htm:32]**  | N/A     |
| APAC                       | **703**  **[0000796343-23-000055_adbe-20230303.htm:28]**    | N/A     | **718**  **[0000796343-23-000205_adbe-20230901.htm:6]** **[0000796343-23-000205_adbe-20230901.htm:30]**    | N/A     | **753**  **[0000796343-24-000065_adbe-20240301.htm:5]**    | **760**  **[0000796343-24-000150_adbe-20240531.htm:7]** **[0000796343-24-000150_adbe-20240531.htm:31]**    | **762**  **[0000796343-24-000208_adbe-20240830.htm:7]** **[0000796343-24-000208_adbe-20240830.htm:32]**    | N/A     |
| Total Revenue              | **4,655**  **[0000796343-23-000055_adbe-20230303.htm:28]**  | N/A     | **4,890**  **[0000796343-23-000205_adbe-20230901.htm:6]** **[0000796343-23-000205_adbe-20230901.htm:30]**  | N/A     | **5,182**  **[0000796343-24-000065_adbe-20240301.htm:5]**  | **5,309**  **[0000796343-24-000150_adbe-20240531.htm:7]** **[0000796343-24-000150_adbe-20240531.htm:31]**  | **5,408**  **[0000796343-24-000208_adbe-20240830.htm:7]** **[0000796343-24-000208_adbe-20240830.htm:32]**  | N/A     |

41b3a56073f1485a5409ddf373b1431933a807acff9001ea7dc1b78c40ea5e96

| Program Details           | Program 1          | Program 2          |
|---------------------------|--------------------|--------------------|
| Approval Date             | December 2020  **[0000796343-24-000208_adbe-20240830.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:40]**  | March 2024  **[0000796343-24-000208_adbe-20240830.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:65]** **[0000796343-24-000208_adbe-20240830.htm:40]** **[0000796343-24-000208_adbe-20240830.htm:17]**  |
| End Date/Duration         | Fully utilized during the nine months ended August 30, 2024  **[0000796343-24-000208_adbe-20240830.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:40]**  | Through March 14, 2028  **[0000796343-24-000208_adbe-20240830.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:65]** **[0000796343-24-000208_adbe-20240830.htm:40]** **[0000796343-24-000208_adbe-20240830.htm:17]**  |
| Total additional amount   | **$15 billion**  **[0000796343-24-000208_adbe-20240830.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:40]**  | **$25 billion**  **[0000796343-24-000208_adbe-20240830.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:65]** **[0000796343-24-000208_adbe-20240830.htm:40]** **[0000796343-24-000208_adbe-20240830.htm:17]**  |
| Remaining authorization amount | **$0** (fully utilized)  **[0000796343-24-000208_adbe-20240830.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:40]**  | **$17.65 billion**  **[0000796343-24-000208_adbe-20240830.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:65]** **[0000796343-24-000208_adbe-20240830.htm:40]** **[0000796343-24-000208_adbe-20240830.htm:17]**  |
| Details                   | Fully utilized  **[0000796343-24-000208_adbe-20240830.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:40]**  | To return value to stockholders and minimize dilution from stock issuances  **[0000796343-24-000150_adbe-20240531.htm:16]** **[0000796343-24-000208_adbe-20240830.htm:16]**  |

b579b16f1c3cec8779708e56b86e142ad2a732271d9636a819f5b32d1135dad4

1. In Q3, Document Cloud revenue grew 18% year-over-year with $163 million in net new ARR  **[ADBE_3401553_2]** **[ADBE_3401553_7]** . Considering your plans to actively promote subscription plans over legacy perpetual plans that don't include generative AI capabilities, how do you expect this transition to affect your revenue growth and customer retention?  **[ADBE_3401553_7]** 

2. You mentioned significant investments in AI model training and inferencing capacity while continuing to deliver world-class margins  **[ADBE_3401553_8]** . How are these AI-related expenses impacting your operating margins, and what measures are you taking to maintain profitability amidst these increased costs?  **[ADBE_3401553_8]** 

3. With the introduction of Firefly-powered features across products like Photoshop, Illustrator, and Adobe Express targeting a wide range of users  **[ADBE_3401553_7]** **[ADBE_3401553_1]** , how are you addressing the challenge of serving such a diverse customer base without diluting the focus on your core professional users?  **[ADBE_3401553_7]** 

4. In the Digital Experience segment, you achieved 12% year-over-year growth in subscription revenue  **[ADBE_3401553_5]** **[ADBE_3401553_2]** , yet enterprises are seeking to maximize ROI on their marketing investments amidst macroeconomic conditions  **[ADBE_3401553_5]** . Are you observing any signs of budget constraints among your enterprise customers, and how are you ensuring sustained growth in this segment?  **[ADBE_3401553_5]** 

5. Given that total API calls for Firefly Services tripled quarter-over-quarter due to strong demand  **[ADBE_3401553_4]** , what challenges do you anticipate in scaling these services, and how do you plan to manage infrastructure costs while ensuring service reliability and performance?  **[ADBE_3401553_4]** 

8c9a85ebb6de3c9a86547f0124065c63405976a9ea83327edb449b6ce51de3db

| Name               | Position                                                                 | Start Date       | Short Bio                                                                                                                                                                                                 |
|--------------------|--------------------------------------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Shantanu Narayen   | Chair and Chief Executive Officer                                        | January 1998     | Shantanu Narayen joined Adobe in January 1998 and became CEO in December 2007. He was named Chair of the Board in January 2017  **[0000796343-24-000051_adbe-20240301.htm:35]** **[0000796343-24-000006_adbe-20231201.htm:28]** .                                                                  |
| Daniel Durn        | Chief Financial Officer and Executive Vice President, Finance, Technology Services and Operations | October 2021     | Daniel Durn joined Adobe in October 2021. He previously held CFO roles at Applied Materials, Inc., NXP Semiconductors N.V., and GlobalFoundries  **[0000796343-24-000006_adbe-20231201.htm:28]** .                                                     |
| Anil Chakravarthy  | President, Digital Experience                                            | January 2020     | Anil Chakravarthy joined Adobe in January 2020 and was appointed Executive Vice President and General Manager, Digital Experience Business and Worldwide Field Operations in July 2020  **[0000796343-24-000006_adbe-20231201.htm:28]** **[0000796343-23-000007_adbe-20221202.htm:28]** .            |
| David Wadhwani     | President, Digital Media                                                 | June 2021        | David Wadhwani rejoined Adobe in June 2021. He previously served as CEO of AppDynamics and held senior roles at Adobe and Greylock Partners  **[0000796343-24-000006_adbe-20231201.htm:30]** **[0000796343-23-000007_adbe-20221202.htm:29]** .                                                      |
| Scott Belsky       | Chief Strategy Officer and Executive Vice President, Design and Emerging Products | March 2023       | Scott Belsky was named Chief Strategy Officer in March 2023. He joined Adobe in December 2017 through the acquisition of Behance  **[0000796343-24-000006_adbe-20231201.htm:30]** **[0000796343-24-000051_adbe-20240301.htm:42]** .                                                                  |
| Gloria Chen        | Chief People Officer and Executive Vice President, Employee Experience   | 1997             | Gloria Chen joined Adobe in 1997 and has held various leadership roles. She became Chief People Officer in January 2020  **[0000796343-24-000006_adbe-20231201.htm:30]** **[0000796343-23-000007_adbe-20221202.htm:29]** .                                                                          |
| Dana Rao           | Executive Vice President, General Counsel & Chief Trust Officer and Corporate Secretary | April 2012       | Dana Rao joined Adobe in April 2012 and initially served as Vice President, Intellectual Property and Litigation  **[0000796343-24-000006_adbe-20231201.htm:30]** **[0000796343-23-000007_adbe-20221202.htm:29]** .                                                                                  |
| Mark Garfield      | Senior Vice President and Chief Accounting Officer                       | December 2018    | Mark Garfield joined Adobe in December 2018. He previously held senior finance roles at Cloudflare, Symantec, and Brightstar  **[0000796343-24-000006_adbe-20231201.htm:31]** **[0000796343-23-000007_adbe-20221202.htm:30]** .                                                                     |
| Jillian Forusz     | Senior Vice President and Chief Accounting Officer                        | August 9, 2024   | Jillian Forusz will serve as SVP and CAO effective August 9, 2024  **[0000796343-24-000194_xslF345X02/wk-form3_1723493735.xml:0]** .                                                                                                                                   |

3bf39d930cda822adb9e8f6b0a114cabd8fd8f219ed7ba7fb58fe10d2575f0bb

Creative ARR (USD billions)

Document Cloud ARR (USD billions)

Total Digital Media ARR (USD billions)

Remaining performance obligations (USD billions)

c11062c0424306fa74dcaacc29420384fe1c2cb81f66183de8cc8fd2429bb795

Creative ARR (USD Billion)

Document Cloud ARR (USD Billion)

8a27985e33b7a272757516df1ec9c10ef6c46ff82fa488f57cf75b450bb75d14

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2025 and Q1 2025
- **Guidance**:
  - **FY 2025**:
    - Total Adobe Revenue: **$23.30 billion to $23.55 billion**  **[ADBE_3411396_7]** .
    - Digital Media Segment Revenue: **$17.25 billion to $17.40 billion**  **[ADBE_3411396_7]** .
    - Digital Media Ending ARR Book of Business Growth: **11.0% year-over-year**  **[ADBE_3411396_7]** .
    - Digital Experience Segment Revenue: **$5.80 billion to $5.90 billion**  **[ADBE_3411396_7]** .
    - Digital Experience Subscription Revenue: **$5.375 billion to $5.425 billion**  **[ADBE_3411396_7]** .
    - GAAP EPS: **$15.80 to $16.10**  **[ADBE_3411396_7]** .
    - Non-GAAP EPS: **$20.20 to $20.50**  **[ADBE_3411396_7]** .
    - Non-GAAP Operating Margin: **Approximately 46%**  **[ADBE_3411396_7]** .
    - Non-GAAP Tax Rate: **Approximately 18.5%**  **[ADBE_3411396_7]** .
  - **Q1 2025**:
    - Total Adobe Revenue: **$5.63 billion to $5.68 billion**  **[ADBE_3411396_7]** .
    - Digital Media Segment Revenue: **$4.17 billion to $4.20 billion**  **[ADBE_3411396_7]** .
    - Digital Experience Segment Revenue: **$1.38 billion to $1.40 billion**  **[ADBE_3411396_7]** .
    - Digital Experience Subscription Revenue: **$1.27 billion to $1.29 billion**  **[ADBE_3411396_7]** .
    - GAAP EPS: **$3.85 to $3.90**  **[ADBE_3411396_7]** .
    - Non-GAAP EPS: **$4.95 to $5.00**  **[ADBE_3411396_7]** .
    - Non-GAAP Operating Margin: **Approximately 47%**  **[ADBE_3411396_7]** .
    - Non-GAAP Tax Rate: **Approximately 18.5%**  **[ADBE_3411396_7]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: Q4 2024
- **Guidance**:
  - Total Adobe Revenue: **$5.50 billion to $5.55 billion**  **[ADBE_3401553_8]** .
  - Digital Media Net New ARR: **Approximately $550 million**  **[ADBE_3401553_8]** .
  - Digital Media Segment Revenue: **$4.09 billion to $4.12 billion**  **[ADBE_3401553_8]** .
  - Digital Experience Segment Revenue: **$1.36 billion to $1.38 billion**  **[ADBE_3401553_8]** .
  - Digital Experience Subscription Revenue: **$1.23 billion to $1.25 billion**  **[ADBE_3401553_8]** .
  - Tax Rate: **Approximately 16% on a GAAP basis and 18.5% on a non-GAAP basis**  **[ADBE_3401553_8]** .
  - GAAP EPS: **$3.58 to $3.63**  **[ADBE_3401553_8]** .
  - Non-GAAP EPS: **$4.63 to $4.68**  **[ADBE_3401553_8]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: Q3 2024 and FY 2024
- **Guidance**:
  - **Q3 2024**:
    - Total Adobe Revenue: **$5.33 billion to $5.38 billion**  **[ADBE_3392501_7]** .
    - Digital Media Net New ARR: **Approximately $460 million**  **[ADBE_3392501_7]** .
    - Digital Media Segment Revenue: **$3.95 billion to $3.98 billion**  **[ADBE_3392501_7]** .
    - Digital Experience Segment Revenue: **$1.325 billion to $1.345 billion**  **[ADBE_3392501_7]** .
    - Digital Experience Subscription Revenue: **$1.20 billion to $1.22 billion**  **[ADBE_3392501_7]** .
    - Tax Rate: **Approximately 18% on a GAAP basis and 18.5% on a non-GAAP basis**  **[ADBE_3392501_7]** .
    - GAAP EPS: **$3.45 to $3.50**  **[ADBE_3392501_7]** .
    - Non-GAAP EPS: **$4.50 to $4.55**  **[ADBE_3392501_7]** .
  - **FY 2024**:
    - Total Adobe Revenue: **$21.40 billion to $21.50 billion**  **[ADBE_3392501_7]** .
    - Digital Media Net New ARR: **Approximately $1.95 billion**  **[ADBE_3392501_7]** .
    - Digital Media Segment Revenue: **$15.80 billion to $15.85 billion**  **[ADBE_3392501_7]** .
    - Digital Experience Segment Revenue: **$5.325 billion to $5.375 billion**  **[ADBE_3392501_7]** .
    - Digital Experience Subscription Revenue: **$4.775 billion to $4.825 billion**  **[ADBE_3392501_7]** .
    - Tax Rate: **Approximately 20.5% on a GAAP basis and 18.5% on a non-GAAP basis**  **[ADBE_3392501_7]** .
    - GAAP EPS: **$11.80 to $12**  **[ADBE_3392501_7]** .
    - Non-GAAP EPS: **$18 to $18.20**  **[ADBE_3392501_7]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: Q2 2024 and FY 2024
- **Guidance**:
  - **Q2 2024**:
    - Total Adobe Revenue: **$5.25 billion to $5.30 billion**  **[ADBE_3378105_7]** .
    - Digital Media Net New ARR: **Approximately $440 million**  **[ADBE_3378105_7]** .
    - Digital Media Segment Revenue: **$3.87 billion to $3.90 billion**  **[ADBE_3378105_7]** .
    - Digital Experience Segment Revenue: **$1.31 billion to $1.33 billion**  **[ADBE_3378105_7]** .
    - Digital Experience Subscription Revenue: **$1.165 billion to $1.185 billion**  **[ADBE_3378105_7]** .
    - Tax Rate: **Approximately 18.5% on a GAAP and non-GAAP basis**  **[ADBE_3378105_7]** .
    - GAAP EPS: **$3.35 to $3.40**  **[ADBE_3378105_7]** .
    - Non-GAAP EPS: **$4.35 to $4.40**  **[ADBE_3378105_7]** .

e875c9b01c12a8485c5f9405e9e267c4f7cdbf604128984f20d0b829815d7c1d

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

**Quarterly guidance for Q1 2025:**
- **Total Adobe Revenue**: $5.63B to $5.68B  **[ADBE_3411396_7]**  (raised from $5.50B to $5.55B  **[ADBE_3401553_8]** )  
- **Digital Media Segment Revenue**: $4.17B to $4.20B  **[ADBE_3411396_7]**  (raised from $4.09B to $4.12B  **[ADBE_3401553_8]** )  
- **Digital Experience Segment Revenue**: $1.38B to $1.40B  **[ADBE_3411396_7]**  (raised from $1.36B to $1.38B  **[ADBE_3401553_8]** )  
- **Digital Experience Subscription Revenue**: $1.27B to $1.29B  **[ADBE_3411396_7]**  (raised from $1.23B to $1.25B  **[ADBE_3401553_8]** )  
- **GAAP EPS**: $3.85 to $3.90  **[ADBE_3411396_7]**  (raised from $3.58 to $3.63  **[ADBE_3401553_8]** )  
- **Non-GAAP EPS**: $4.95 to $5.00  **[ADBE_3411396_7]**  (raised from $4.63 to $4.68  **[ADBE_3401553_8]** )  
- **Non-GAAP Operating Margin**: Approximately 47%  **[ADBE_3411396_7]**  (no prior guidance)  
- **Non-GAAP Tax Rate**: Approximately 18.5%  **[ADBE_3411396_7]**  (no change from 18.5%  **[ADBE_3401553_8]** )  

**Annual guidance for FY 2025:**
- **Total Adobe Revenue**: $23.30B to $23.55B  **[ADBE_3411396_7]**  (no prior guidance)  
- **Digital Media Segment Revenue**: $17.25B to $17.40B  **[ADBE_3411396_7]**  (no prior guidance)  
- **Digital Media Ending ARR Book of Business Growth**: 11.0% year-over-year  **[ADBE_3411396_7]**  (no prior guidance)  
- **Digital Experience Segment Revenue**: $5.80B to $5.90B  **[ADBE_3411396_7]**  (no prior guidance)  
- **Digital Experience Subscription Revenue**: $5.375B to $5.425B  **[ADBE_3411396_7]**  (no prior guidance)  
- **GAAP EPS**: $15.80 to $16.10  **[ADBE_3411396_7]**  (no prior guidance)  
- **Non-GAAP EPS**: $20.20 to $20.50  **[ADBE_3411396_7]**  (no prior guidance)  
- **Non-GAAP Operating Margin**: Approximately 46%  **[ADBE_3411396_7]**  (no prior guidance)  
- **Non-GAAP Tax Rate**: Approximately 18.5%  **[ADBE_3411396_7]**  (no prior guidance)  

d963dff71a4e725581dba85ee946720f98b09ca22aa87e19d39d0e7c78157023

Americas

- United States

- Other Americas

EMEA

- United Kingdom

- Other EMEA

APAC

- Japan

- Other APAC

Total Revenue

e9acd8bf980e8dd7e8542e0066d3c8143874c985ef634b6a643743aa4b7b2adb

70f8807532517ac57dd17005c53cee419162f96cce529b8eab14bd3cd33ebe24

| Name       | Start Date | End Date | Reason for Change |
|------------|------------|----------|-------------------|
| KPMG LLP   | 1983  **[0000796343-25-000004_adbe-20241129.htm:131]**    | Present  | Current auditor   |

834ffc63b9f82360d43ce13f57e85a648af69949162999dc6e9507fd21d1d128

a9b60f495b1ee920228d52eaaddd557bc9887f3ab5a31fb7f19217bd0151e626

1. **Growth Amid AI Innovation**  
   **Q:** Why isn't growth accelerating despite AI innovations?  
   **A:** Shantanu Narayen acknowledged that while Adobe exceeded its targets for the year, investors might not see acceleration due to the business mix shifting. The core Creative business is performing in line with expectations, and significant adoption of AI offerings like Firefly Services and GenStudio is driving value. Adobe balances proliferation at the lower end with products like Express and Acrobat, and delivers significant value at the high end with Creative Pro and enterprise solutions. The company remains confident in its growth strategy and innovation pipeline.  **[ADBE_3411396_13]** 

2. **AI Growth Drivers and ARR Impact**  
   **Q:** How will Firefly and GenStudio drive growth in ARR?  
   **A:** David Wadhwani explained that Firefly and GenStudio are key to Adobe's growth strategy. By introducing new value through AI integrations, Adobe can create more segmentation and tiering of Creative products, aligning value with pricing. This approach is expected to bring in new users and offer higher-value tiers, particularly with upcoming video models and enterprise solutions like GenStudio. New users, new products, and value-based pricing will be significant contributors to ARR growth in FY '25.  **[ADBE_3411396_10]** 

3. **Document Cloud Durability**  
   **Q:** How durable is Document Cloud's growth, and what drives it?  
   **A:** David Wadhwani stated that Document Cloud's strong growth is rooted in PDF being the de facto standard for unstructured data. Monthly active users continue to grow due to effective conversion of free users to paid across desktop, mobile, and web platforms. The introduction of AI Assistant enhances Acrobat's value, transforming it into a general-purpose productivity platform. This, along with expansions into new languages and vertical use cases, drives durable growth in the Document Cloud segment.  **[ADBE_3411396_14]** 

4. **Pricing Strategy and Sensitivity**  
   **Q:** Is there pricing sensitivity limiting price increases?  
   **A:** David Wadhwani explained that while there is price sensitivity, especially at the lower end of the market, Adobe sees significant opportunity to deliver new value and adjust pricing accordingly. The company focuses on introducing new features and creating more segmentation and tiering in its offerings, ensuring users are in the right plans for their needs. This strategy balances proliferation with monetization and is expected to drive growth.  **[ADBE_3411396_11]** 

5. **Firefly Integration and Conversion**  
   **Q:** How will integrating Firefly into core apps affect conversion?  
   **A:** David Wadhwani highlighted that integrating Firefly across products like Photoshop and Lightroom enhances user onboarding and retention. The inclusion of generative AI capabilities leads to faster success for new users and increased retention for existing ones. By offering unique, commercially safe AI models deeply integrated into workflows, Adobe drives top-of-funnel growth and improves conversion rates.  **[ADBE_3411396_16]** 

6. **Consumption Models and ARR Growth**  
   **Q:** Will consumption contribute to ARR growth in FY '25?  
   **A:** Shantanu Narayen indicated that consumption will contribute more to ARR growth in FY '25 through offerings like video, which will have consumption-based pricing. Enterprise solutions like GenStudio and Firefly Services are seeing significant momentum and are consumption-based. Additionally, the introduction of more premium-priced offerings provides users with more value without requiring them to monitor individual usage, contributing to ARR growth.  **[ADBE_3411396_15]** 

7. **Current RPO Growth Expectations**  
   **Q:** Will current RPO growth remain at current levels?  
   **A:** Daniel Durn expressed confidence in Adobe's ability to drive business growth, citing strong enterprise bookings and momentum in premium products. While he did not provide specific guidance on current RPO, he is encouraged by the innovation and opportunities in both the Digital Media and Digital Experience segments, expecting continued growth driven by large transformational deals and cross-cloud opportunities.  **[ADBE_3411396_18]** 

8. **Black Friday Impact on ARR**  
   **Q:** Did Black Friday affect Creative Cloud ARR?  
   **A:** Daniel Durn noted that Black Friday and Cyber Monday performed as expected, with consumer activity spreading over a larger window of time. Online shopping was up **8.4%** this year compared to **4.8%** last year. While Cyber Monday growth was **7.3%**, down from **9.6%** last year, this reflects a flattening profile in consumer behavior rather than a decline in demand.  **[ADBE_3411396_12]** 

eff19fd069a24ad15011c58d3e7148da75f8127f9327d8b5bf647d34e012c856

- Total Revenue: $5.606 billion (**+11% YoY**)  **[0000796343-25-000004_adbe-20241129.htm:84]** **[0000796343-24-000006_adbe-20231201.htm:82]** **[0000796343-24-000006_adbe-20231201.htm:96]**   
- SG&A: $1.992 billion (+14% YoY)  **[0000796343-25-000004_adbe-20241129.htm:84]** **[0000796343-24-000006_adbe-20231201.htm:82]**   
- R&D: $999 million (+12% YoY)  **[0000796343-25-000004_adbe-20241129.htm:84]** **[0000796343-24-000006_adbe-20231201.htm:82]**   
- Operating Income: $1.957 billion (+12% YoY)  **[0000796343-25-000004_adbe-20241129.htm:84]** **[0000796343-24-000006_adbe-20231201.htm:82]**   
- Net Income: $1.683 billion (+13% YoY)  **[0000796343-25-000004_adbe-20241129.htm:84]** **[0000796343-24-000006_adbe-20231201.htm:82]**   
- EPS (Diluted): $3.78 (**+17% YoY**)  **[0000796343-25-000004_adbe-20241129.htm:84]** **[0000796343-24-000006_adbe-20231201.htm:82]**   

c6c4124e68ca809539712309c037de743e27665ac122b96fee2f6decadf4e4dc

75b457e16d55513bba0fe25f28e9c90f26bfb64b7cfdf1bd37228d5bc8708668

| Year | Amount Due (in billions) | Debt Type          | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|-------------------------|-----------------------|------------------------------------------------------------------------------------|
| 2025     | 1.5                          | 1.90% Notes, 3.25% Notes | 1.90, 3.25           | 26.5% = (1.5 / 5.65) * 100 **[0000796343-25-000004_adbe-20241129.htm:125]** **[0000796343-25-000004_adbe-20241129.htm:126]**                                       |
| 2027     | 1.35                         | 2.15% Notes, 4.85% Notes | 2.15, 4.85           | 23.9% = (1.35 / 5.65) * 100 **[0000796343-25-000004_adbe-20241129.htm:125]**                                              |
| 2029     | 0.75                         | 4.80% Notes             | 4.80                 | 13.3% = (0.75 / 5.65) * 100 **[0000796343-25-000004_adbe-20241129.htm:125]**                                              |
| 2030     | 1.3                          | 2.30% Notes             | 2.30                 | 23.0% = (1.3 / 5.65) * 100 **[0000796343-25-000004_adbe-20241129.htm:125]**                                              |
| 2034     | 0.75                         | 4.95% Notes             | 4.95                 | 13.3% = (0.75 / 5.65) * 100 **[0000796343-25-000004_adbe-20241129.htm:125]**                                              |

dd3fc2b57614834997771c0e9e476a8e30b97a7531d3e7db5c4a9b646ed4f4ea

- Adobe plans to **"pour more gas"** on investments in marketing and go-to-market strategies for Adobe Express, indicating ongoing **high expenses** without immediate margin expansion.  **[ADBE_3401553_15]**
- The company's focus on reaching a **"net new audience"** requires significant spending on **traditional and social media campaigns**, which may not yield immediate returns.  **[ADBE_3401553_15]**
- Despite existing substantial investments, Adobe acknowledges the need to **"continue to make those trade-offs in terms of growth and profitability"**, potentially **pressuring margins** in the future.  **[ADBE_3401553_15]**

b5ebd5919196d7916499d24bfcdb6edf3edbab53ff395be5eb50a4578c958bf0

- **Decreased magnitude of earnings beat and lower guidance raise concerns about potential AI headwinds, macroeconomic factors, or execution issues.**  **[ADBE_3378105_10]**
- **Uncertainty about Adobe's ability to meet its $1.9 billion net new ARR target, particularly regarding the second half ramp and monetization of new products.**  **[ADBE_3378105_18]** ,  **[ADBE_3378105_14]** ,  **[ADBE_3378105_10]** ,  **[ADBE_3378105_9]** ,  **[ADBE_3378105_15]**
- **Negative impact expected from the roll-off of prior period pricing actions on ARR growth, with doubts whether new pricing actions will offset this.**  **[ADBE_3378105_14]** ,  **[ADBE_3378105_9]** ,  **[ADBE_3378105_15]**

f5cd5f728bf9ad6f2ffdd0f1314c120e14d6d2d06dcb8e9fcf7c3dda7a053bdb

- **Adobe is confident that AI will expand the market for their products, leading to increased demand for creative tools and interfaces.**  **[ADBE_3378105_18]** ,  **[ADBE_3378105_17]**
- **The company is ahead of their Q1 targets, with strong enterprise performance and acceleration in cash flow and RPO, indicating robust business momentum.**  **[ADBE_3378105_18]** ,  **[ADBE_3378105_10]** ,  **[ADBE_3378105_17]** ,  **[ADBE_3378105_15]**
- **Adobe's Document Cloud and Creative Cloud are showing strong growth, with significant increases in monthly active users, and expected acceleration in the second half due to new product innovations like AI Assistant and Express Mobile.**  **[ADBE_3378105_9]** ,  **[ADBE_3378105_12]** ,  **[ADBE_3378105_2]**

cae3274918553b50f5946aa5580f8a4eacbe73de95f71eea6af3c577f1554f9b

1. **Generative AI Impact**

   **Q:** Will generative AI hurt Adobe's creative business?

   **A:** Shantanu Narayen believes that generative AI will expand Adobe's market by making creative tools more accessible, affordable, and productive. He predicts that in five years, more people will use creative tools, and AI will accelerate content creation rather than replace creative professionals.  **[ADBE_3392501_19]** 

2. **Firefly Monetization**

   **Q:** How is Adobe monetizing Firefly and AI features?

   **A:** Adobe integrates Firefly into its products, encouraging users to migrate to higher-priced plans that include AI capabilities. Customers are moving to higher-value products due to Firefly features, leading to increased ARR. In Acrobat, users are upselling to the AI Assistant, with many adopting the highest-value products.  **[ADBE_3392501_14]** **[ADBE_3392501_15]** 

3. **Creative Cloud ARR Growth**

   **Q:** Do you expect Creative Cloud ARR growth to improve?

   **A:** David Wadhwani is confident that year-over-year complexities are behind them and expects momentum in the second half. Strong performance in Q2, with **$487 million** in net new ARR, positions them well. Growth drivers include new user acquisition, migration of existing customers to higher-priced plans due to Firefly, and new offerings like Firefly services.  **[ADBE_3392501_16]** 

4. **New User Acquisition**

   **Q:** Will strong new user growth continue?

   **A:** Adobe expects strong new user growth to continue, driven by AI features like Firefly and AI Assistant, and increased adoption of Adobe Express. Emerging markets show significant strength, with AI functionality driving increased adoption due to cloud access requirements.  **[ADBE_3392501_14]** **[ADBE_3392501_15]** 

5. **Adobe Express Growth**

   **Q:** How is Adobe Express performing?

   **A:** Adobe Express is experiencing significant growth. Mobile MAUs have **more than doubled quarter-over-quarter**, and cumulative exports have grown by over **80% year-over-year**. The new platform lays the groundwork for the AI era, and Adobe plans to accelerate go-to-market efforts globally.  **[ADBE_3392501_13]** 

6. **Macro Environment Impact**

   **Q:** Any macroeconomic weaknesses affecting demand?

   **A:** Shantanu Narayen reports no significant macroeconomic impact on Adobe's diverse and mission-critical products. The company remains focused on execution and converting AI interest into monetization, with no areas of weakness to report.  **[ADBE_3392501_11]** **[ADBE_3392501_12]** 

7. **Firefly Services Adoption**

   **Q:** What's the feedback on Firefly services and GenStudio?

   **A:** Customers use Firefly services for ideation, creating multiple variations, and accelerating content creation. Media companies and agencies are adopting GenStudio, and Adobe sees this driving increased content production. Key differentiators include indemnification and integration into workflows.  **[ADBE_3392501_20]** 

8. **Emerging Markets Growth**

   **Q:** How is growth in emerging markets?

   **A:** Adobe is seeing strong growth in emerging markets, with AI functionality driving increased adoption. Cloud access requirements for AI features like Firefly are contributing to this growth, leading to more new users.  **[ADBE_3392501_15]** 

9. **Adobe Experience Platform (AEP)**

   **Q:** How will AEP become a billion-dollar business?

   **A:** Anil Chakravarthy explains that AEP AI Assistant simplifies deploying use cases, increasing usage and driving consumption. This leads to growth in the number of profiles and users, helping AEP reach a **billion-dollar** business by enabling personalization at scale for customers.  **[ADBE_3392501_18]** 

10. **Customer Behavior with AI**

    **Q:** How is AI influencing customer behavior?

    **A:** AI integration is leading to higher retention rates and increased value for users across Adobe's products. Customers are migrating to higher-priced plans that include AI features like Firefly and AI Assistant. AI capabilities are also attracting new users and enhancing engagement.  **[ADBE_3392501_13]** **[ADBE_3392501_14]** **[ADBE_3392501_15]** 

dcb2facb834ca91a753996d02c9bf29fb5b43dd05e7a38eaa9ff9ca8b6946b0b

- **Adobe is accelerating innovation with Adobe Express, integrating AI functionality natively into the platform, leading to rapid addition of capabilities at "breakneck speed".**  **[ADBE_3401553_15]**
- **The company is significantly ramping up its go-to-market efforts, expanding its audience with Express for Teams, Enterprise, and Education, resulting in strong usage growth of 70% year-over-year, over 1,500 businesses sold, and their best back-to-school season ever with millions of students enabled.**  **[ADBE_3401553_15]**
- **Adobe continues to invest in long-term growth initiatives like training AI models, Adobe Express, and GenStudio while delivering "phenomenal margins", effectively balancing growth and profitability.**  **[ADBE_3401553_15]**

9b249aa89092154e2b46e235b9c60af7e7e4ad924ed49106eb2e0792e160761f

- **Adobe is experiencing strong momentum in its enterprise segment**, winning large transformational deals and achieving the largest bookings quarter ever.  **[ADBE_3411396_18]**
- **Adobe's AI innovations, including Firefly models and AI Assistant, are seeing significant customer adoption**, driving financial performance and positioning the company for strong growth ahead.  **[ADBE_3411396_9]**
- **Adobe's Document Cloud continues to show strong growth and durability**, with increased monthly active users and new AI features like AI Assistant driving adoption and expanding the product's value proposition.  **[ADBE_3411396_14]**

735f647aac92222738ba7b2ff17cd5f3b6866b9f87fa4f46262f1a8ebf85e9ad

1. **Second-Half ARR Guidance**

   **Q:** Do you still expect $1.9B net new ARR this year?

   **A:** **Shantanu Narayen** reaffirmed confidence in achieving at least **$1.9 billion** in net new ARR for the year. He stated they are ahead of Q1 targets and expect product monetization to accelerate in the second half as planned. The financial targets are playing out as expected, and they remain confident in their ability to execute.  **[ADBE_3378105_18]** 

2. **Reiterating Digital Media ARR Guidance**

   **Q:** Can you reaffirm the Digital Media ARR guide?

   **A:** **Daniel Durn** confirmed they are confident in meeting their targets, including the **$1.9 billion** in Digital Media ARR for the year. He emphasized that Q1 played out as expected, they are ahead in Q1, and see momentum building into the second half with product innovation and monetization.  **[ADBE_3378105_14]** 

3. **ARR Impact from Prior Pricing Actions**

   **Q:** Help us understand pricing impacts on second-half ARR.

   **A:** **Daniel Durn** explained that prior pricing actions from May and October 2022 will roll off after their one-year anniversaries, affecting Q3 and Q4 comparisons. New pricing and product actions will become more apparent in the back half, leading to acceleration in ARR.  **[ADBE_3378105_15]** 

4. **AI Threat to Adobe's Tools**

   **Q:** Is AI-generated content an existential threat to Adobe?

   **A:** **David Wadhwani** argued that AI will increase the need for Adobe's tools rather than replace them. As content creation explodes due to AI, more editing and toolability are required. Adobe's models offer controllability and integration into their tools, positioning them advantageously in the expanding market.  **[ADBE_3378105_17]** 

5. **Creative ARR Growth and Pricing Impact**

   **Q:** How will pricing increases affect Creative ARR growth?

   **A:** **David Wadhwani** noted that prior pricing actions benefited FY’23 but are rolling off. The new pricing with Firefly is less significant than the prior increases. They expect ARR growth to ramp up in the second half as new products and capabilities are monetized starting in Q3.  **[ADBE_3378105_9]** 

6. **Magnitude of the Beat**

   **Q:** Is the lower beat due to AI headwinds or macro factors?

   **A:** **Shantanu Narayen** said they are on track with their targets, and the quarter played out as expected. He highlighted strong product delivery and monetization aligning with expectations, attributing any differences to timing of product rollouts and expressing optimism about their performance and outlook.  **[ADBE_3378105_10]** 

7. **Generative AI in Video Editing**

   **Q:** How will generative AI impact video editing and Adobe's role?

   **A:** **Shantanu Narayen** believes AI advances in video will accelerate the need for editing applications. Adobe's tools like Premiere and After Effects will remain essential as AI-generated content requires editing. **David Wadhwani** added they will introduce text-to-video capabilities and see partnerships with others like OpenAI benefiting Adobe.  **[ADBE_3378105_13]** 

8. **Document Cloud Growth**

   **Q:** Will Document Cloud growth continue trending upward?

   **A:** **David Wadhwani** expressed strong performance in Document Cloud, citing over **100 million** monthly active users and **70%** year-over-year growth in web usage. Innovations like AI Assistant in Acrobat are driving engagement, and he expects continued momentum with product innovation and go-to-market efforts.  **[ADBE_3378105_12]** 

9. **Firefly Investments and Talent Acquisition**

   **Q:** Can you support Firefly's development capacity needs?

   **A:** **David Wadhwani** affirmed they are attracting top talent due to their responsible AI approach. Investments in research and managing GPU access are enabling them to expand capabilities effectively. **Anil Chakravarthy** added they are bringing in excellent sales talent to support growth.  **[ADBE_3378105_16]** 

10. **Generative Credit Limits Enforcement**

    **Q:** Why delay enforcing generative credit limits?

    **A:** **David Wadhwani** explained they are focusing on user acquisition and encouraging usage. They plan to monetize new features and more expensive capabilities starting in Q3 as they bring more users into the ecosystem.  **[ADBE_3378105_11]** 

e81b06e98a4e628f8e0d6ce46c00b01637648e763b0c70f6c4067ba0216314cb

- Despite significant innovation, **Adobe's Creative Cloud growth was only 2%**, and guidance indicates further deceleration, raising concerns about the company's ability to accelerate growth.  **[ADBE_3411396_13]**
- **Investors are concerned** about the lack of acceleration in Adobe's numbers, with the stock being a major underperformer on a year-to-date basis and down again in after-hours trading.  **[ADBE_3411396_13]**
- Potential **pricing sensitivity** is hindering Adobe's ability to leverage pricing as a growth driver, despite delivering significant value, which may impact profitability.  **[ADBE_3411396_11]**

005931b5474ba6240918717f57451dcb1c756546ffbfb800d0ea11e649f910e0

- **Adobe experienced a decline in net new ARR for Creative Cloud in Q1 and Q2 2024**, raising concerns about sustained growth in this core segment.  **[ADBE_3392501_16]**
- **The rise of generative AI could potentially reduce the need for creative professionals**, threatening Adobe's traditional customer base and business model.  **[ADBE_3392501_19]**
- **Macro demand environment remains uncertain**, with management not reporting significant improvements, which could impact Adobe's future performance.  **[ADBE_3392501_11]**

86f3cb7b9b2645229932c31d54e3314498c32ab1928c026d458ba19cad834002

1. **Digital Media ARR and Q4 Guidance**  
   **Q:** What drove the unseasonable strength in Digital Media ARR, and why is Q4 guidance the lowest sequentially?  
   **A:** The unseasonable strength in Digital Media ARR was driven by strong performance in Document Cloud, with **Acrobat and AI Assistant** performing well.  **[ADBE_3401553_10]**  Creative Cloud also showed growth due to higher-value offers and **AI innovation**.  **[ADBE_3401553_10]** **[ADBE_3401553_11]**  The Q4 guidance is the highest target we've ever issued for a Q4, but the sequential guide appears lower because a few deals that historically closed in Q4 closed earlier in Q3.  **[ADBE_3401553_11]** **[ADBE_3401553_12]**  Additionally, **Cyber Monday** falls into Q1 this year, affecting seasonality.  **[ADBE_3401553_12]** 

2. **ARR Growth and Competition Impact**  
   **Q:** Will consumption contribute to ARR growth in FY '25 considering competition's impact on monetization?  
   **A:** We believe our unique combination of apps and AI models, including **Firefly Services**, will drive ARR growth through increased consumption.  **[ADBE_3401553_12]**  Our offerings are differentiated by **commercial safety** and integration with our tools.  **[ADBE_3401553_12]** **[ADBE_3401553_13]**  We see real traction in enterprise adoption and are confident in our ability to monetize AI features despite competition.  **[ADBE_3401553_12]** 

3. **AI Monetization: Image vs Video Models**  
   **Q:** How does the AI monetization opportunity in image models compare to future potential in audio and video models?  
   **A:** We have developed a broad set of models for the creative community, differentiated by quality and integration.  **[ADBE_3401553_11]**  With each new capability, total **generative credits consumed** increase.  **[ADBE_3401553_11]**  Video models will be monetized differently, potentially through **premium AI plans**, and we are excited about innovations in video, which are a **game changer**.  **[ADBE_3401553_11]** 

4. **Document Cloud Pricing and Subscription Transition**  
   **Q:** Are there pricing headwinds or tailwinds in Document Cloud, and how is the transition to subscription progressing?  
   **A:** Document Cloud continues to perform well, with the rise of **PDF becoming the de facto standard** increasing its value.  **[ADBE_3401553_13]**  We have focused on consumption with **AI Assistant** and are adding new features like support for **multidocs** and multiple formats.  **[ADBE_3401553_13]**  Document Cloud is substantially a subscription business, and with AI Assistant available to subscribers, we expect the transition to continue.  **[ADBE_3401553_13]** 

5. **Go-to-Market Investments and Margins**  
   **Q:** Will you continue to accelerate go-to-market investments, or will you begin to taper off to leverage revenue growth and margin expansion?  
   **A:** We are ramping up go-to-market investments for **Adobe Express**, focusing on awareness campaigns and leveraging social media.  **[ADBE_3401553_14]**  We have seen strong usage growth of **70% year-over-year** and plan to pour more resources into marketing to reach new audiences.  **[ADBE_3401553_14]**  We believe this investment is balanced with delivering strong margins.  **[ADBE_3401553_14]** **[ADBE_3401553_15]** 

6. **Digital Experience Business and Q4 Outlook**  
   **Q:** What is the strength and underlying dynamics in the Digital Experience business heading into Q4?  
   **A:** We are pleased with the execution in Digital Experience, with opportunities in **personalization at scale** for both B2C and B2B companies.  **[ADBE_3401553_15]**  Enterprises are scrutinizing deals but see value in our offerings for growth and **efficiency gains**.  **[ADBE_3401553_15]**  Our focus is on the subscription business, which continues to grow strongly.  **[ADBE_3401553_15]** 

7. **Guidance Factors and End Demand**  
   **Q:** Is there anything else you're seeing different in end demand affecting guidance?  
   **A:** We continue to see strong momentum in the business with **no changes in business dynamics**.  **[ADBE_3401553_16]**  The last few weeks of Q3 showed traditional strength, and we are excited about upcoming innovations to be announced at **MAX**.  **[ADBE_3401553_16]** 

a540fdf0294c186fcd102c104b8bdec85f7de427adcae1c4befabc5ecb5b0a26

- **Strong momentum in user acquisition and existing customer migration to higher-value plans**, driven by AI features like **Firefly** and **AI Assistant**, gives Adobe confidence in returning to **year-over-year growth in Creative Cloud net new ARR** in the second half of the year.  **[ADBE_3392501_16]**
- Adobe views **generative AI as an opportunity to expand the market**, making products more accessible and productive, leading to increased demand for creative tools and content creation, rather than replacing creative professionals.  **[ADBE_3392501_19]**
- **Adobe Express** is experiencing significant growth, with **mobile monthly active users doubling quarter-over-quarter** and **cumulative exports growing over 80% year-over-year**. Adobe is integrating AI features into Express and plans to **accelerate go-to-market efforts globally**, positioning Express as a key platform for content creation in the AI era.  **[ADBE_3392501_13]**

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Adobe Inc (ADBE)

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