Hey, welcome everyone to Adobe MAX 2024 investor update. It's great to see so many friendly faces here from the investment community. Some of our board members in the back, welcome. Thanks for coming. Just curious, show of hands, how many of you were at the keynote this morning? Awesome. Okay. It's a tough act to follow when I'll go through from the stage. So with that, I'm gonna jump into the legal disclaimer. If you would go to... Joe, you might need to hard code the. Oh, there we go. So the statements we'll be making today do involve forward-looking statements that involve risk, uncertainty, and assumptions. Actual results could materially differ from those set forth in these statements, so please look at our risk factors. We'll also be including GAAP and non-GAAP financial metrics.
So please look at the reconciliation that'll be on the posted version of this deck, which you'll find on the IR website. Now, mind the distraction, but I know what you're all thinking: "Wow, Vaas, you really nailed that legal disclaimer." I didn't go to law school for the good company years ago. It was really to stick the landing on the legalese like I just did. Many of you may have heard, I have decided to go back to my roots into the legal profession. So this is the last time I get to read these words. I'm gonna go back to drafting them instead down the road. So it's been almost fourteen years at Adobe for me. This is my fifth MAX as the head of IR, and what an honor it's been.
It's not my last MAX overall, 'cause I'm convinced I'll be back as a paying customer down the road, but I did wanna quickly introduce Steve Day, who's gonna be interim head of IR. Steve will come up at the end, so you all get to hear him speak briefly. He's much more charming than I am, but thank you, Steve, I... and sorry, and then I'm gonna toss it over to the executive team again to walk through a brief presentation, and then I'll be back up here taking Q&A.
Thanks, Jonathan, and I'd be remiss if I didn't start off by thanking Jonathan for 14 incredible years. As befitting the new role that he's going to take, he actually drafted an entire document for me about his memories of his time at Adobe, and there were some very meaningful words that he said, but thank you, Jonathan, and certainly wishing you all the best. Thank you all for joining us. Yes. Thank you all for joining us as well today. As Jonathan said, I think the primary purpose of this is to you know, spend some time answering questions.
But, given as part of the feedback, you know, that we get in talking to, both, folks on the buy side and the sell side, I, I thought I'd just start off by, making a few comments. I think everybody else will, and then we'll open it up for questions. But, let me just start off by saying I'm incredibly proud of the amount of innovation that we've delivered. I know, a lot of the questions that came up when AI, first burst on the scene was, what is Adobe gonna do in terms of, harnessing the power of that, and is that, accretive, to, you know, the company's opportunity? We certainly believe that it is.
If you take a step back, I think we've talked about the fact that from our perspective, there are three layers to what we are doing as it relates to AI. We're focused on data, very, very differentiated in that, we're designing all our models to be commercially safe. Something that actually is very important to all enterprises. I know a lot of you are also working for large enterprises, and they don't want to use, you know, models that are not designed to be commercially safe. We were very clear strategically about the areas where we would have to invest in our own models, both for the flexibility that it provided as well as the controllability.
As we challenged our engineers to focus on designing these models and creating these models, you know, with data that was fully licensed and/or public domain. We said models, as it relates to imaging or video or design or vector, are certainly things that we should have under the Firefly family of models. I know David will talk a little bit more to the numbers. Fundamentally, we believe that, you know, the way people get value out of all of this is in the interface layer and ensuring that our applications embrace AI to allow people to do magical stuff. I think you saw a significant amount of that today. The term generative something is now, you know, fast becoming the way in which we talk about it, whether it's Generative Extend in Premiere, Generative Fill, Generative Recolor.
And, you know, if you look at it across all our products, whether they be AI-first products, where we are completely conceptualizing it differently in terms of how people use the products or whether it's embracing AI, I think we've done an absolutely spectacular job on that. And all of the innovation that you hear about is released almost on the same day. So that's the first thing I wanted to mention. Acrobat AI Assistant is also, you know, clearly been one of the ways in which we've embraced it and building on what we had done with Liquid Mode.
And so, and then the third thing I'd probably say is in Anil's business, as we talk about what's happened on the Adobe Experience Platform with AEM, Adobe Experience Manager, we've certainly embraced it with assistance, so you can help build web pages faster. Think about it as different conversational interfaces that we are going to champion, so the way in which any one of you experience a website in the future is going to be different, and we think we have the lead on that, certainly with the Adobe Experience Platform and being able to use it.
But I think the other benefit of what we've done in AI with products like GenStudio, and it was great to see GenStudio for Performance Marketing being released today, is really leverage all of the different solutions that we have in order to make our products be incredibly differentiated. And so when you think about how the world is producing any piece of content, we just look at what you can do with GenStudio, whether it's on the creation and production side, whether it's on the workflow, whether it's how all these assets are managed, how they are activated, and the performance and analysis associated with that. So really excited about the potential for GenStudio. We've talked about the excitement that we had for the Adobe Experience Platform, which is certainly playing out.
You know, in my mind, this one can be an even larger opportunity for Adobe, so I thought I'd just mention that. But I think we've done a great job on the innovation. I think as part of the AI innovation as well, I know one question that's top of mind for a lot of you is: How are you monetizing it? And you know, the good news is, we are monetizing it in many ways, and I think Dan will continue to touch on that. But just to give you a flavor, certainly, I think as part of the subscriptions that we have and the tiering of the subscriptions in Creative Cloud and Document Cloud, we are embedding a lot of the capabilities for AI because we want people to embrace it. We want it to be useful.
We want it to drive further retention and engagement with our customers. So at the base layer, you know, the fact is that our tiering for subscriptions have it. We've done add-ons. I mean, we certainly have add-on offerings for both Creative Cloud as well as, Document Cloud. That's the AI assistant part that I talked about, and we'll continue to see that. I know there'll be a lot of questions, perhaps, about video, so I won't answer that right now, but that you can also imagine as a additional offering. I think the third way, in addition to subscriptions and add-on offerings, is everything that we're doing in Digital Experience.
You know, we have a tiering of our Digital Experience solutions as well, and I think the Ultimate offer and the Prime, you know, those are ways in which the higher priced offerings are already embedding our AI functionality, and they have more value, and those are ways in which we are monetizing it. Last but not least, I mean, some of these new things that we've done, whether it's GenStudio that I touched on briefly or Firefly Services, that's again a brand new way of monetizing it. We've seen a lot of success with Firefly Services, Custom Models, and I think you're going to touch on that as well. I just wanted to touch on the AI innovation has already been accompanied by a significant amount of thought. But we're also experimenting.
As you can see, the amount of innovation that we've done today, whether it's with Neo or Concept. So we're still early in terms of thinking about how we make sure that we innovate at the pace at which we want to, and figure out how we can innovate it at that pace. So that's a little bit on the innovation. And then, as you think about it, and take a step back on what our revenue numbers are for the entire year and how we've done that, I think that's on the next slide. Just a way to look at it and say this was the fiscal twenty twenty-four recap. I wanted to highlight what we had as our FY twenty-four targets when we met with you folks in December, what we updated in June.
You know, top to bottom, you know, we're in a position to beat and exceed all of them. I feel good about how fiscally as well that has played out. Today is about MAX, and, you know, we wanted to touch a little bit more on MAX, so I'll let David touch on MAX.
Sounds great. First of all, thrilled to see how many of you were at MAX, but for those who are online and a few of you who didn't attend, really, I said it on stage, but I mean it, it really is one of my favorite, you know, times of the year. You know, put it up there with all the family holidays, because it does feel like a family and a community getting back together, right? And that's really the wonderful thing about getting all these creative, incredible creative minds together, so 10,000 people, you know, attending this year. We have over 200 sessions, over 200 speakers, and the energy is just fantastic. We've been...
You know, what's also great is we have so many of our product teams here, and so the product team and the design team get a chance to talk directly with their users and start to think about what we're going to put into the hopper throughout the next year and going into MAX. A couple other things that are, you know, amazing about the reach that we get from MAX, we expect to see hundreds of thousands of views online for MAX over the course of the next few weeks. And then on top of all that, this is really. We organize the show, and we try to put everything together so that we can atomize it and really leverage social.
We expect to see about 500 million interactions around the content on social over the course of the next few weeks or month. And what's that foundation is really around how we set the tone for where we are and where we're going. And so if you noted in the context of the keynote, we really try to evolve the conversation with creatives. Of course, what Adobe has been always known for, for many decades, is around helping you create with more productivity. And we had some great announcements. I always love the reaction from the Illustrator crew. You know, when we did Objects on Path, I think someone might have fainted.
Like, there was all kinds of, like, excitement in the, in the audience, but it was great to see because it really fundamentally changes and saves them their nights and weekends. Don't worry, no one was hurt watching the show, but, you know, beyond that, we have all the, you know, capabilities around generative AI coming into, you know, everything from Illustrator to Photoshop, Lightroom, and Premiere. And those foundations of creation made a big difference, right? The other big announcement today was obviously video generation model, and I'll talk a little bit more about that in a second, but beyond creation, we really have been, over the course of the last few years, shifting to the right, moving into collaboration.
Because when you create that content, what you do with that content is going to fundamentally change the shape of the business you're trying to support, right? And so whether it's about collaborating with other creatives and/or stakeholders around sharing and reviewing of content, when you have to generate content quickly with Frame.io, or whether it's about enabling, you know, more self-service activation, whether it's with HR or sales or marketing or comms through Express, and how creatives can enable and publish templates into Express while maintaining control and locking brand elements down. Or whether it's the things that we're working on across the Creative Cloud and the Experience Cloud around GenStudio for Performance Marketing, really enabling the monetization of someone's creative vision. That's really how we're shifting right.
But we also talked about, and this is something Scott's been saying for a long time, as he's been, you know, spending time with the creative community, is as some of these things, like the rote work and the tedious work, frees up time, we should and can expect creatives to spend more time on the visioning side, which is why we introduced Project Concept. And that's something, as we mentioned, isn't shipping today, but you can expect it to start shipping in the next few months. We're very excited about what this looks like. Go to the next slide. Then if you zoom back out, everything we announced today is part of this broader plan and vision that we've been sharing with you. You know, first, the foundation of what we're doing are these Firefly models.
As Shantanu said, it's about, you know, training them responsibly, in a way that's commercially safe. It's about, control that we give people. It's about the integration that we enable around them, and it's about making sure that Adobe has the broadest set of offerings, from imaging to vector to, design to now video. and by the way, when we talk about video, it's really video and audio. We also have capabilities around, you know, auto-dubbing and, lip syncing, and all of these capabilities now are enabled in Firefly, the model, and it's just going to continue to grow, broader and broader, and they're the most creator-friendly models in the world. The second thing then is: where do they show up?
The primary area we want to make sure that they show up effectively is within our core creative applications, Photoshop, Illustrator, Lightroom. And these capabilities showing up in there, we talked about it, 13 billion generations and counting, you know, that continues to accelerate on a monthly basis. The vast majority of are actually happening in the applications. So people are using the applications more, and they're using them more because they're more productive than they've ever been, and they can get more done. Express is also an area that we're seeing a lot of excitement. For those who were here, as you saw the Express demo, I hope you started to see how the creative pro base is actually getting excited about it. In fact, we even showed pro tips for using Express today.
But it's also, in addition to everything there, we now have support for enterprise deployments of Express. We've done some great work so these creative professionals can leverage Express and push content out. Firefly Services, we've talked a little bit about this. It's about if you're going to create these models, and you're going to give it to professionals, and you're going to give it to everyone in the organization, you also recognize that sometimes you want to automate the content assembly and process for creating these ads, and that's really what Firefly Services does. We're very excited about this. Firefly Services is now at, you know, I think we saw a 3x growth, quarter over quarter, in terms of the number of APIs being called there. So we're starting to see real deployment now in enterprises, which is very exciting.
We talked about, you know, I think Pepsi on stage. Pepsi was a great example of a campaign they ran on Firefly Services, but we have a growing list of customers around that. GenStudio for Performance Marketing, this is something that, you know, from the creative side, this is one of those wonderful handshakes between, you know, Anil and me on the product level. This is where on the creative side, creatives want to create the content. They want it to make sure that it's going and getting utilized, but they also want the feedback to know if the content they're creating is actually having the right impact so they can continue to iterate. I'll let Anil share more about that, but that's really that closed-loop system that frankly, we've been talking about for a long time.
It is shipping today, and it's really sort of connected in the creative flows. And then last, but I can't not talk about everything with Acrobat. You're seeing how well Acrobat's doing. One of the things that, you know, I do want to share is, like, Acrobat monthly active users is still growing. We just crossed 600 million monthly active users for Acrobat and Reader, which is amazing to see, you know, given how far we are. But you start looking at the utilization and the value of Acrobat, all the work we've done with partners like Microsoft and Google and others to get the proliferation going, and you see the value we're adding with AI Assistant. So just excited about all these things, and all of this wraps up into, you know, the point in time that you saw this morning.
Thanks, David. And Digital Experience, I mean, it's been a great year in terms of innovation for us. Digital Experience, as you all know, we're all about helping enterprise customers power their digital businesses, and we do that by helping them deliver personalized experiences at scale to their customers across the customer journey, whether it's customer acquisition, engagement, retention, or then customer expansion. And the way we bring that together is, you have to bring together the right content, like we've been talking about, with the right customer data, and make the journeys happen in any channel that your customers are at. And that's what we help do across a common platform.
So we're uniquely positioned across what we do with the Experience Cloud and the Creative Cloud, to bring together all of the elements of the content, the data, and the journeys that are required, whether it's a B2C customer or a B2B customer, to deliver these kinds of personalized experiences at scale in real time. If you're a B2C customer, it's hundreds of millions of consumers. If it's a B2B customers, you have buying groups, and you have to do it on an account-based basis, across hundreds of thousands of B2B customers. And we're able to do both of those very well across our portfolio. What we have done with innovation is, across each of those elements, whether it's content, data, and journeys, we've had a great year in terms of innovation.
Just to call out a few things, for example, on the content side, let me pick up on the GenStudio for Performance Marketing that, as David mentioned, is a great handshake between the Creative Cloud and the Experience Cloud. There we see brands around the world really moving a lot of their marketing dollars from traditional channels to new channels, like paid social, digital media, connected TV, retail media networks. These are the kinds of channels where they can actually measure the performance of their marketing investments and tie it much better to the actual performance of what is working and not, and do that on a real-time basis. And GenStudio, by cutting across both the Creative Cloud and the Experience Cloud, really brings that together and taps into a very, very large market opportunity.
We're really proud that it's going GA, and as Shantanu mentioned, we have big ambitions for that. On the content side, again, our flagship is the Adobe Experience Manager, and we've had a tremendous number of innovations, including the incorporation of generative AI to be able to deliver content through websites and other channels through the Adobe Experience Manager on a personalized basis. In addition, we've also been helping to improve the end-user experience through innovations like Edge Delivery Services, which really makes sure that every single user you can get 100 on your Google Lighthouse score, which would be the pinnacle of the right website experience for every brand out there.
On the data side, the Adobe Experience Platform is continuing to perform extremely well, and we're on track with the Adobe Experience Platform and our native apps built on it to be a billion-dollar book of business by the end of the year. The Adobe Experience Platform, we incorporated generative AI, but we did that with the same framework that Shantanu talked about, the apps, the models, and the data, so that it is co-designed to be commercially safe, and enterprises can deploy that in the context of these customer data and journeys and get their use cases going much faster in a well-governed, trusted manner, and that launched earlier this year.
We've also introduced the Adobe Experience Platform Federated Audience Composition, which is when you have data in enterprise cloud data warehouses, like many of our customers do, to be able to take advantage of that data for customer activation, to be able to have the right data available to personalize customer experiences without making a copy of the data. And that really, obviously, is way more efficient and effective as well. That was another major one that we launched this year. And in terms of journeys, our flagship product is the Adobe Journey Optimizer, which is built on top of the Experience Platform. And the Adobe Journey Optimizer, we released this year, the B2B Edition, so that it can take advantage of the knowledge that we have in our applications like Marketo for B2B customers, and bring them into the Adobe Experience Platform.
Again, provide personalized customer experiences to B2B customers as well. So I wanted to give you a sense of some of the highlights of this year's innovation.
So thanks, Anil. As you know, we've got a great track record at the company of executing, and we consistently execute well relative to the targets that we set. Q3, no different, and we exited Q3 with strong momentum. We're seeing that momentum carry into Q4. Quarter's off to a good start, so we're reaffirming the Q4 targets, remain confident in our ability to deliver another strong quarter at the company. So given the massive technology inflection that's happening right now, spent a lot of time being thoughtful about the framework we're using to drive our growth agenda at the company and the altitude with which we want to talk about it with investors. Our strategy, it hasn't changed. We continue to be focused on delivering AI innovation across the entire AI stack, from data, to models, to interfaces.
And now we're going to provide clarity on how we're going to monetize that strategy. So we're going to monetize AI in four distinct ways at the company. First, through new value in our subscription plans. Two, through add-ons to our offerings. Three, tiered offerings in the enterprise. And four, through new AI-first standalone offerings. And we continue to invest to win at the company. We've got a pervasive footprint with our customers, and we're going to leverage that pervasiveness to natively and deeply integrate these proprietary AI capabilities throughout our entire suite of product offerings. Secondly, as we bring our clouds closer together to solve those higher-order customer problems, it creates significant and lasting differentiation for us in the market. And lastly, our scaled go-to-market motion; it's ideally set up for those cross-cloud engagements with our customers.
And we're scaling our partner ecosystems so that we can serve and support our customers even better. So taking a step back, we've been thinking a lot about the agenda for driving growth and aligning it with how we guide the business. And as you can imagine, as part of that ongoing process, we've had a lot of thoughtful discussions, both internally and with investors over the past year. So netting it out, no changes to how we guide revenue and EPS. ARR. ARR remains the best lead indicator of the performance of our Digital Media business. However, ending ARR year-over-year growth, as opposed to quarterly net new ARR, provides better visibility into the true underlying, longer term trajectory of the business. Each quarter, we're gonna continue to report ending ARR.
You're gonna get the same visibility that you do today on, when we report the business, and we're gonna break that ending ARR out by both the creative and the Document Cloud businesses. And in addition to those formalized set of targets for the company, we're gonna provide additional information to help model the trends of the business. Things like operating margin, tax rate, share count, et cetera. In December, at our earnings, in addition to the annual exercise we go through today, where we take that ending ARR book of business and we revalue it at next year's currency rates, we're gonna go through the additional disclosure, the additional work of taking that same approach each and every quarter of FY 2024, so you get that good baseline of FY 2024, compare performance in FY 2025. Lastly, at Summit.
Summit this year, we talked about giving more product-level disclosures that represent how we're leaning into the technological inflection that's shaping the end market. More work to be done on that, but we're definitely thinking more about how we give more of that product-level disclosure to give that view visibility on the performance of the business. So with that, Shantanu, any final comments before we jump to Q&A?
Q&A? Yeah.
All right, let's do Q&A. I'm gonna, we're gonna take the first one from Jay Vleeschhouwer here, my, the other JV in the room, because I know he's gonna role model a single part question, you know, but, oh, being as concise as always. Go for it, Jay.
Thank you, JV. So David referred to your closed-loop system, which is manifesting something you started talking about three or four years ago, when you referred to the evolution of the creative stack to become more deeply collaborative and so forth. So you've done a lot of that within DME and across the DX. The question that brings to mind, though, is: What is your vision or intent for go-to-market? In the last few months and quarters, there've been some very interesting internal indications of where you're investing strategy, mid-market, SMB, Firefly, of course, Workfront and so forth. Dan mentioned partners. So for all that you're doing now, expanding the portfolio and the reach of the portfolio, how are you thinking about the composition and capacities of go-to-market?
Yeah, I mean, first of all, one of the things I think we have the privilege of having built over the last forty years is maybe one of the most diverse and, I guess, geographically distributed go-to-markets I think you can possibly have, and that serves as a really powerful, you know, foundation and machine.
So whether it's, you know, what we do on Adobe.com and everything we've done in terms of our digital Data-Driven Operating Model in DDOM, whether it's our at-scale inside sales team and what they're doing globally, both in terms of taking inbound orders and also going after outbound orders, whether it's our channel and the foundation that they provide, or on top of that, we have a corporate sales organization that's focused on what you typically call mid-market companies, and then you have our enterprise sales organization that's speaking to, you know, everyone from, you know, the creative directors and to the CMOs in the world. So that breadth of foundation of how we go to market continues to stay.
Now, a few areas because of what we've done and how we've approached the market, that we have an opportunity to make outsized investments in. First is now we do have a very broad set of offerings that are. That's, you know, compared to a couple years ago, around web and mobile. If you think about Lightroom web and mobile, you think about Express web and mobile, you look at, you know, where we are with Photoshop and also the things we have now on Photoshop with iPad support.
You know, all of these capabilities now give us or Acrobat web and mobile, they give us this ability to actually invest a lot more in social, which is why we are so obsessive about the 500 million, you know, social interactions that we want to see come out of this, and actually journey people to our applications in the App Store. That foundation of what we've done, I think, is an area of outsized investment. Then in addition to that, we have the ability now with Express, even in small businesses, to reach outside of the creative teams, right? So our phone teams are calling into organizations and doing attach motions when they're selling something like Creative Cloud, or Acrobat.
They're actually now saying: "Hey, let's also talk to your marketing or HR or comms teams or sales organizations," and we're reaching more broadly, beyond that, but certainly, you know, the second to last part I want to talk about is enterprise. We're seeing a lot of joint deals now, and certainly we'll let Anil also share, or maybe a salesperson number one, Shantanu, you know, share a little bit here, too, but there's such an opportunity when we go to these large-scale organizations, and they recognize the demand for content and the need for personalization is through the roof, and as we do that, it's really about these two clouds coming together.
And the last thing I will just say, which I think is really important because it is a muscle that we've developed in some areas, but we're expanding more broadly, is in product surfaces, right? We talked about Acrobat now has 600 million monthly active users, right? We are, and other applications also have very large bases of monthly active users, both free and paid. These surfaces are now also available to us to do more cross products we've ever had before. Because, again, like I said, Express is a knowledge worker tool as much as it is a creative tool. And so we are starting to leverage those things. In fact, if you have Acrobat, open it up, go to export, and you'll see that you can now export directly to Express documents as well.
Maybe I'll just add a couple things to that, Jay, which is, just some terminology so that everybody has... As David said, we have digital, right? Digital reports all to David, and it allows anybody who wants to buy Creative Cloud, Express, or Document Cloud to transact on Adobe.com, which is, you know, is becoming increasingly the part of the business. David runs Field, what's called Field, which again, as he described, it's the channel partners who are selling our stuff. It's, phones, and it's everything, to do, with what we are doing for corporate, which is a set of, enterprise accounts at a certain size. So channel, phones and, the corporate accounts.
I think if your question is all around primarily the large enterprise and how we're going for the large enterprise, that's what Anil runs, and that is all with GenStudio. Whatever's in the bill of materials, whether it's a Creative Cloud, whether it's Express, whether it's AEM Assets, or whether it's AEP, we have now the ability to, you know, transact all of that. In fact, a number of us, once we finish this, are all the customer events, and so that's a big advantage because whether it's Firefly Services or whether it's Creative Cloud, whether it's Express, whether it's Acrobat site licensing, you know, that all happens under Anil in a unified way, including, you know, the same segmentation that Anil has talked to you in the past about transformational accounts versus non-enterprise accounts.
So, you know, I think that's working actually, as David said, incredibly well.
Okay, next question. Let's go with, Michael, back here, second row.
It's Michael Turrin, Wells Fargo. Thank you for hosting. Great keynote, great event. Appreciate the slides. Dan, the move to ARR on an annual versus quarterly basis at this scale makes sense. The question we're going to get is just on the thought stream that you teased in terms of newer metrics, and so maybe you can spend some time just on, if not those metrics today, what the key attributes you're seeing that the market might be missing, and just kind of tie back to the thought process, at least for now, because I think it's very important. Thanks.
Yeah. So as you think about the amazing amount of innovation that we've got on display, Firefly is a little older than one year. And then you think about the product integrations, and then you think about the innovation that we're bringing to market, different versions of the model, different points of integration, bringing our clouds together to solve those cross-cloud problem statements for our customers. There's a lot of innovation, a lot of experimentation that's ongoing right now. When we take the step of putting that metric framework out, that's more product driven. We want it to be the things that stand the test of time, so there's a real consistency with the framework that we put forward. Right now, there's just a ton of innovation that's coming out. We're engaging with customers in new ways.
You know, we're building out the freemium part of the funnel, engaging with customers in different ways, and again, more of those cross-cloud selling in the enterprise. We just want to make sure that what we lock on is really reflective from a broader set of metrics that stands the test of time and reflects really where the company's going, so they become the true lead indicators that investors can lock on.
You know, I appreciate you stating that people really want the big picture. Just wanted to clarify, as Dan said as well. First, there's going to be complete transparency about reporting, you know, what the book of business ARR is, both in Document Cloud and Creative Cloud. So I wanted to clarify that that definitely existed. And as you point out, we're hoping that people will really look at the trajectory of the business and the scale of the business on an annual basis. So I think in terms of your other question about how we're thinking about it, one that comes up is AI monetization, right? That one is one where, again, that's why we try to give you color, that it's embedded in every part of the business. You know, I mean, it's embedded in subscriptions.
Much like we did with AEP and give you a, you know, sort of insight into the magnitude of the business and how successful that is, I think we've thought about GenStudio and how do we give you success on that, as well as the second one is Express, and people are saying, "Hey, give us some indication." Hopefully, that's on the right track as it relates. I think at Summit, that's why we teed it up, and, you know, when we do our FA meeting, those are the two other areas where, you know, our perception is, and continuing to give you, you know, like, monthly average user statistics, as David did on Acrobat. Hopefully, that gives you a little bit more color on how we're thinking about it. Okay.
Let's go with Saket here.
... Thanks, Saket from Barclays. Echo my thank you for the event. Shantanu and Dave, I think we've touched on sort of the idea of Firefly Video being priced differently, maybe more as a subscription, as opposed to being more credit-driven. Maybe the question is, what was the thought process on that? What are the other examples that you looked at internally? I mean, like stock comes to mind, maybe the AI assistant for Acrobat. There's so many examples, but what are some of the examples that you looked at as you thought about those two pricing paths, as well as trying to maximize value for both Adobe and for customers?
I'll start, and then maybe, David, you could go. I mean, first, I think even when we introduced imaging and vector and design, we were like, we want people to embrace it, and we thought there was way more value that would accrue to both customers and to Adobe, as you said, by having that as part of the subscription base and by increasing acquisition and retention. Because we're still in the game of how do we attract more and more people to our platform, whether it's through Express, Creative Cloud, you know, or our other products. So that was very clear. Video is different because of the cost associated with it as well. So with that, why don't I hand it over to you, David, to describe how we'll monetize that?
Yeah. Sounds great. And, and again, I, I think Dan also said this earlier, and Shantanu mentioned, we're early in understanding all the dynamics for monetizing this. And I think something we've, we've told you multiple times in the past is that our primary focus has and continues to be around proliferation and monetization. These are things we're continuing to, to test. So as you, as you mentioned, with, with imaging and vectors, we baked it into the core capability of the, of the products, and we're making sure everyone's using it. You saw the value, and as part of the growth driver is, you know, we put more value, we were able to do some price associated with that value, and it's the usage drives better retention. It's the, it's the whole growth driver.
And because the usage is so good, onboarding is easier, so conversion rates are better. So it gives us, you know, the growth driver to bring in new customers as well. Now, Acrobat, we obviously did a very different playbook, which was to basically say, "Hey, look, this is a specialized capability on top of this, and we wanna charge for that out of the gate, and we see the dynamics there." Both are working in very different ways. We look at video, and we say that it's closer, frankly, to the Acrobat model, in the context of it's a more specialized task, where people get more direct value out of it in the medium term that can be more easily measured, and it costs us more.
And so that whole calculus went into looking and saying, "Really, this is probably a plan or maybe a tier of plans that we can introduce that's closer to the Acrobat side than the other." And I don't want to forget Firefly Services, right? Firefly Services, I mentioned three times growth, quarter over quarter, in terms of API calls. That's based on, you know, some subscription basis based on tiered consumption models. So we're gonna try all of these things, and we start. We're all learning a lot as we go, and we're getting more and more confident in terms of how we roll these out.
I would just under-
Maybe-
Oh, go ahead. I was gonna underscore one thing, which is it's funny, I mean, a couple of years ago, we were in this prompt era of AI, where it was almost like, oh, yeah, it would just be generative credits, and it'll be simple. But now, I mean, you saw an example of a product today, Project Concept, where it's literally, you know, hundreds of generations happening behind the scenes for people to explore all sorts of nooks and crannies of their own mind. And so I'm happy that we're also, you know, to David's point, learning, and we're waiting for a very durable approach, you know, based on what we're realizing works for the customer, because we're in the early days, right, of this transformation.
What's clear, though, is the customers are getting a lot of value, and we're starting to, you know, get closer and closer to exactly how this is gonna manifest across our products.
The last thing I would just say is, even with video, though, the reducing of friction so that there will be an allocation for people to come in and, you know, try it out and experience the magic is definitely part of the strategy. 'Cause we'd be crazy not to allow people to try, you know, one, Generative Extend and say, "Oh, my God, I'm not gonna be able to live without it right?
Okay, next question. Let's go with Karl back here in the middle row.
Okay, Karl Keirstead at UBS. First of all, I want to say that for me, the star of the show this morning was not Firefly, it was the what's up, homie guy. If you can, have him back next year, 'cause, love that guy.
He's hosting the party later. We'll tell you where it is.
Okay. Okay, good, so maybe my follow-up to Michael's question to Dan around the ARR change is really more the why.
Mm-hmm.
Did you and the team just feel like Adobe's at a level of maturity where you didn't need to be giving that metric to that level of detail? Are you reacting then to the Stock volatility that comes from giving that on a quarterly basis, or is something changing in the business that makes it harder for you to guide to that metric, and that's what's motivating you to give it on an annual basis? Just hoping you could unpack your rationale.
Yeah. So we'll never react to Stock price volatility. We'll always take a substantive approach to how we wanna drive the growth agenda at the company, and then we wanna be able to provide a set of metrics around how we're driving and managing the business that best reflect the trajectory, the go-forward trajectory. At the core of it is just transparency and trajectory. As Shantanu said, we're still gonna have all of the information on the business that you currently get today as part of actual results, so it's all going to be there. But I do think the longer term growth trajectory of the business is better reflected by that year-over-year growth than maybe a precision around whether $10 million flows into one quarter or another. The trajectory of the business is unchanged by that dynamic.
... And so we really want to elevate the investor focus on what the best indicator of that true long-term growth trajectory of the business is. And we think ARR. ARR is a great indicator of that future performance. Just looking at it on an annual year-over-year basis, we think elevates the focus to the right metric. And I had a couple conversations throughout the year, frankly, where investors who know the story a little less well, have lost the plot. They're like: "Why is your creative business down?" I'm like, "Our creative business isn't down. It's growing double digits." And the perplexed look on their face, not understanding, they've lost the plot.
This is about understanding how we're going to grow and drive the business, what we think the best metrics are to underpin that growth trajectory, and elevate the conversation so that we don't lose sight of the fact that this is a large business growing nicely, double digits, with a lot of innovation and tailwinds behind it.
I felt really-
We also are very clear that, you know, as part of every quarter, your first question is going to be, how are you doing relative to the annual targets? And we're going to give you color associated with that business as well. So again, I...
I just wanted to say I also felt inspired to say to call all of you, "What's up, homies?" And then I lost the nerve. I didn't think I... So I stuck with the legal joke, but I agree. Okay, next question. Let's go with Mark, right over here.
Maybe you could do mic drop, homies, at the end.
I'll leave it to Steve.
Thank you. Mark Murphy with JP Morgan. You know, Jonathan, you're leaving right when you have the opportunity to take that safe harbor statement and animate it and creatively...
I even thought of that.
You'd be the first company to do this. I wanted to ask you, Shantanu and David, you know, the video demos were pretty amazing in there this morning, and I'm curious, outside of the IP, you know, protection, where do you see the limitations or Achilles heels of some of those competing products or Runway? Is it more the fact that they can't keep the content on brand, or, you know, they can't handle vectors, they can't handle different camera angles? Is it the collaborative side of it? And just at a higher level, do you see more of a competitive mode for Adobe in video than what we've seen so far with images, or could you compare and contrast the two?
You know, I both David, David, Scott, Anil, and I spent so much time with our research people just trying to understand, you know, the state-of-the-art of all of the stuff, Mark. And I mean, it just first, let me take my hats off to our teams and what they've been able to accomplish. I think the way you define the problem statement, I think in many ways determines what technology comes out. I think what everybody has looked at is text to image or text to video or text to whatever, you know, and that's where sort of most of the models have focused.
Our focus, really, and, you know, the person who heads up all of this stuff is also in the room, is all about how do you control it to accomplish something in a feature that makes that feature magical? So I think if you ask us where our technology is really differentiated from everything that's out there, and all these models, you know, we use this term in the company, they're all going to have a certain personality. And we have the benefit of actually taking advantage of all those personality in our applications. At IBC, we actually showed you in Premiere, "Hey, you want to use Runway? We're partnering with Runway." Great!
It may do something really well, but I think it's in the aggregate, looking at what people want to do with video workflow, what they want to do with imaging, what they want to do with artwork, animation, I could go on and on, 3D. That's where I think our secret sauce has really been. The other one is this data angle. It's a much, much, much harder problem to solve when you're not allowing people to scrape the internet to, you know, build the kinds of models that we have, and our teams have done that. But if I go to an enterprise today, and I say, "Hey, you can give us all your assets, and we will help you create a custom model," that's the other part of the business.
That's the interest in that one and the way people are using that is also very unique because they all come to us, great. We're using our products. You know, we can create a model for just our company, and now that stuff works also within GenStudio. So within GenStudio, you can actually say when somebody is creating a web page or somebody is creating a campaign, "Use my model." So, you know, so much of that. I, again, I keep saying this, all the interest appropriately from the investor community is in the training of the models and the models right now. Unless that switches to inference and usage and workflows, people aren't going to get value out of it. And I would say that's where, you know, we focus so much right from the beginning, and, you know, that's where we keep differentiating ourselves.
But if somebody else has a great model, great! We will, you know, integrate that within our applications and make that stuff available as well. I mean, in fact, in the concepting stuff that you've shown, we have the ability to take a lot of models. So I don't know if that helps answer the question, but I think on each of those levels, we've thought about it deeply. We've thought about how we can help, you know, both monetize and really differentiate ourselves.
If you take a step back, I mean, the way we, I think you can think a little bit about this to just sort of make it a little bit more sound bite is, you know, a picture is worth a thousand words, and a video is worth a thousand pictures, right? Which basically tells you that prompting and text and language is a very inefficient way to communicate what's in your mind's eye onto the screen. It's beautiful, it's magical.
... We all love it, right? And in fact, one of the best reasons it's so good for concepting is that sometimes it doesn't tell you what's in your mind's eye, and in fact, you get inspired by what it does produce. But when you have something you wanna create, these models have to be connected to the tools that we're using, and the APIs we build, the way we integrate in the tool, is purpose-built for that. It's not. There's no off-the-shelf model that could do what we do in Photoshop and Illustrator and Premiere and these kinds of things.
And on the enterprise side, just picking up on what Shantanu and David said, the clear advantage for us is to be able to integrate this into the context of what marketers want. In any marketing department or any brand, the marketers are working closely with the creative teams, and they wanna produce assets and content that is on brand, that follows all the guidelines that the team has, and take advantage of the creative output of the creative teams. Being able to bring that together, whether the creative teams are doing it in-house or they're doing it with agencies and other partners, being able to bring all of that together at the speed at which you wanna have social marketing, performance marketing, that's the unique ability of what we have.
Maybe I'll just spend five more minutes, a few more minutes on GenStudio. I mean, the power of GenStudio, we have hundreds of people already using GenStudio within the company. So somebody creates one template for what they wanna do with the campaign. If you go and you wanna put it on Meta, they will tell you, "Give us, you know, more and more assets," because you have no idea which of those assets are gonna perform quicker. So again, that's where this AI, we have your model, we have your brand guidelines, we can create as many variations as you want. We can immediately activate it, you know, by... That's why we showed integrations already with, what? TikTok, Snap, Google, Microsoft, Meta, and expect to see a lot more.
So suddenly, it's become this, you know, incredible channel for all of them in terms of actually taking every piece of content that they want and understanding the efficacy of it. So, you know, that's again, the excitement on GenStudio and the beta customers who are like, "We want that, and we want that across every single thing that we do," at that pace, as well as with agencies. 'Cause agencies can now say, "I can offer every one of my customers a custom model for them, and help us with the content creation process between the agency and the enterprise." So I think a lot of it is really bringing this stuff together in a very, creative way.
Okay, next question. Let's go to Gregg back here.
Hi, it's Gregg Moskowitz from Mizuho. Thanks very much for the presentation and great keynote as well. A couple of quick ones. So I know, and maybe this is for Scott or for David, I know there's a real cost attached to video, but are five-second video clips the right length, or are you working on extending that in the future? Some customers do seem to think that having upwards of ten seconds, for example, would be more additive to their creations. Secondly, I think the interplay that exists between Firefly Video Model and Premiere Pro is really interesting, and I'm wondering if you think that once it's GA, that the Firefly Video Model could catalyze additional sales of Premiere Pro for those customers who are not on an all-apps plan. Thanks.
Mm-hmm. Yep.
One thing I would just say, and I think it relates to the previous question as well, is when we're going to customers now, like, their laundry list for us is really around controllability. I mean, of course, they want better and better models, but they're really saying is: I wanna be able to make a personalized video for my million customers, and I wanna send it through GenStudio, and I wanna do this, and I want it to be translated. And so the, as the laundry list, controllability gets longer and longer, you know, that's exciting for us because it's not just about the next best video model, it's about what you can actually do with it. So, you know, that's one comment. You'd asked about the time of the actual generations.
I mean, listen, of course, you're gonna be able to generate longer and longer clips. When you look at animation and sort of rough cut, B-roll type exploration, it's certainly easier to do longer pieces than high fidelity, you know, sort of final, final footage. I'm sure that will come. You know, one of the things, though, that, you know, we're looking at with our customer base is they're saying, "Hey, listen, like, I wanna be able to, you know, really have immaculate level of precision and control," and I think that they're looking oftentimes to fill little clips or, you know, remove objects from video, you know, do special effects, all that sort of stuff, which can be done, like, layered over the video that you have or in smaller clips, but you could certainly expect it to get longer.
Yeah.
Yeah. I think, length of video, absolutely.
Yeah.
Up-res of video, absolutely. Deeper integration of tools, absolutely. And so the teams are working through all three of those vectors. Maybe a couple of quick things. Do we believe that people are gonna be using these inline to create B-roll? Yes, and we're gonna enable that to happen on the Firefly website, people can do it. But I think the real magic is the integration, as you were getting at, into Premiere and After Effects and Express. Because as we integrate these into the tools that people are using, we do see a fundamental increase in productivity, just like we saw in Photoshop, just like we've seen in Illustrator, just like we're seeing in Lightroom.
These features pop to the top in terms of usage in our apps, like nothing we've ever seen before. Integrating this into Premiere, I think, will be another great example of that. The last thing I'll say is, you saw the concept demo today predominantly around imaging. You can imagine. In fact, we've shown some folks this as well today. You can imagine pushing that a little further into video and storyboarding and things like that. So there's a really broad list of things that we can take to video producers, and it is a really important point that that is an industry that you remove a little bit of friction of, it's high measurable value to them.
Mm-hmm. Okay, we'll go with a question here in the front row with Jackson, and then I'm going to pass the torch over to Steve to maybe take one more before we wrap up.
Great. Hey, guys, Jackson Ader at KeyBanc Capital Markets. Thanks for taking the questions. You mentioned the data-driven operating model, and as I think about DDOM, for Firefly, less than a year old, whereas the DDOM is many years old, right? So what are some of the inputs that, that go into some of the decisions you're making on, you know, credit limits or pouring on the marketing expense for, for some of these new product launches, within the framework of a DDOM for a, a new use case that's pretty new to, to Adobe?
You want to take that as CMO, or do you want me to take? So one of the, first of all, you know, a lot of what we do resides around DDOM. And because of these new capabilities, Firefly, for sure, but then also the web and mobile introductions that we've been talking about. Two things have happened with DDOM as we look at it. One is we've broadened it in terms of the top of funnel. So we used to very much focus on, you know, marketing and awareness, and then we would capture lower funnel interest, like someone searching for Photoshop or someone searching for Lightroom, and bring them into our applications.
But because of the way we're doing it, because we have so many different points of value that we can bring people into, we've broadened it to now go after category volume. So if someone just says, you know, generative video editing, or if someone just, you know, does these non-branded searches, it's an opportunity for us to really look and be much more aggressive across the surface area that we're grabbing and sort of educating the market on at any given time. The second thing is, if you're going to do that, then you have to really go deeper into the product-led growth motions in the products themselves.
So if you're bringing someone in that was, you know, just doing a broad-based search, and you bring them into a product that doesn't give them exactly what they're looking for in that given moment, like, make a flyer, take them into Express and open it up into an environment where they can just make the flyer and go. Or similarly, if someone's looking for image generation, take them directly into Firefly and let them use it. And then, of course, all the closed loop marketing to bring them back and engage them on an ongoing basis. So DDOM has expanded, yes, because of Firefly, but also because of our focus on web and mobile more recently.
I would say, I mean, the reason DDOM is a gift that keeps giving for us, is that it represents two fundamental things in the company. The first is the customer, you know, sort of, funnel, correct? As David said. And second, a vocabulary, where we can, for everything that we're talking about, have the data associated with it to tell us where the data is. And so within the context of Creative Cloud and Document Cloud, it was everything around how are they discovering, try, buy, use, and renew, that we've talked to you about a lot. And as David said, it's the same on Firefly. Which is on Firefly, who's the customer? Is it a developer who wants to try it out and embed it in the products?
Is it the head of, you know, content for a major enterprise who wants to know, you know, what's the message associated with: If I use Firefly, how am I being differentiated? What's the usage? What are they seeing in... So, you know, again, fundamentally, it's a way of representing the customers with a narrative and data in a company that's, you know, allows us to have the rich conversations that we have. And that's why, from my perspective, it's the gift that keeps on giving, and from my perspective, the level of sophistication that's gone into DDOM in every part, because each country could be different in terms of how this is working, but it allows us to scale the business in a very predictable way.
And I think we'd be remiss not to mention that it's all Anil's technology that's powering all of this. Everything we're doing with, you know, the segmentation to the journey work, you know, all the way into some of the real-time decisioning we're making in the products and the marketing.
Anil's only issue is you're not paying for it.
I know.
You're getting it also free. So apart from that, he knows the magic that it's, you know, creating.
All right, I'm going to pass it over to Steve to take one last question and then wrap up. Steve, with great power, well, you know how it goes.
Responsibility is huge. All right, any hands? I'll take this, handsome devil in the front here. You can get this mic.
That's great. Thank you very much. An honor to have the first question from you, Steve. So, I'm Stefan Slowinski from BNP Paribas. Just wondering if we could get an update on Adobe Express. Anything you can talk about there in terms of number of users, and also what you're seeing in terms of customer journeys. You're starting to see any customers move up into the suite or, conversely, any single app customers coming down into Express? Thank you.
Yep, happy to take that. A few things. I mean, as we look at Express, the way we think about the go-to-market is around how do you target solopreneurs and small businesses? How do you really go after education? And how do you go after businesses, you know, larger businesses, you know, and enterprises? So all of our go-to-market motions and activities are around that. For solopreneurs and small businesses, it really is around the Data-Driven Operating Model, and how do we reach them in broad ways. This is also an area, though, that we're able to deploy our phone sales teams, right? And our channel. So, you know, leveraging that, we're starting to see really nice uptake and broad proliferation there.
Education, we had an amazing back to school, just now. We've got, I think it's something like 25% of the U.K., with, as an example, now entitled university students entitled to have access to the premium version of Express through their schools. We're doing similar things to drive proliferation in the... And, you know, all the way down in K -12 ... schools are being very aggressive there. And then in enterprises, too, you know, when this is an area that, as we talked about on stage, Express is a great way of creating content, but it's also a great way of collaborating around content. And we have a lot of great examples and case studies that we're posting in terms of large organizations that are adopting this.
Everything from very large agencies working internally and with their customers, to, you know, some of the largest brands in the world. So we've been actually very pleased with the growth there. Just to give you a little bit of, you know, how we're thinking about broadening the go-to-market, even beyond our core walls. I mentioned already integration into Acrobat, because we think every knowledge worker should be using Express. Everyone should be deploying and, you know, a rich digital content. So we're integrating it more and more deeply into Express. It's already integrated deeply into GenStudio for Performance Marketing, where we're looking at ways of pulling it into AEM and pulling AEM data into Express. So all of these internal capabilities, but we're also. We've announced partnership with Box. We've announced partnership with Wix.
We have a whole host of of third parties that we've announced with, and if you look at all of the surfaces that Express is now embedded in, those surfaces represent a reach of about 1.3 billion users that we can then start to now, again, apply a very different type of data-driven operating model about optimizing their ability to discover, understand, and onboard into into Express. So we have, you know, we're taking all of the foundation capabilities that we have, and we're putting that in there, but partnerships is also a key part of how we do it.
I'll let Steve have the last word, but I just wanted to again say thank you. Thank you for those who, you know, made the trek to come. There's nothing that describes, I think, you know, what Adobe does and the response as being at one of these places and hearing, you know, what the excitement is from, on behalf of the customers. So really appreciate all of you taking the time to be here with us. And, you know, we certainly look forward to sharing more at the December, you know, earnings call. But with that, you know, again, I will say thank you, Jonathan, for all your contributions.
Steve is a very experienced and senior hand, has been with the company for many years, does all of our Digital Experience, FP&A. But, you know, why don't you describe a little bit about yourself, Steve, as well, and-
Yes. So what I was gonna say was, well, firstly, thank you, everybody, for coming. We do appreciate the questions and the continued dialogue after an amazing keynote that we had this morning. Yeah, I'm, you know, sad to see JV go. It puts more work on my plate, but that's okay. I, yes, I've been with the company for just over eighteen years now. I've been in numerous different financial leadership positions both here and abroad, if you couldn't tell from the accent, and yes, currently, I'm CFO of the Digital Experience business unit, as well as I run the corporate finance organization. So I am looking forward to the conversations that we'll have over the coming weeks and months.
As Shantanu said, look forward to speaking with you again at the earnings call in December and also at our Investor Day at Summit coming next year. Thank you.
Thank you for joining us.