A：Adobe had another strong quarter in its Q3 FY 25, achieving record revenue of $5.99 billion, representing 10% year over year growth. GAAP earnings per share for the quarter was $4.18 cents and non GAAP earnings per share was $5.31, showing 14% year over year growth.

A：Adobe's strategy to harness AI is focused on integrating it across its applications to provide more value, with a particular focus on offering greater value to creative and marketing professionals and business professionals and consumers. This includes accelerating innovation and infusing AI into flagship Creative Cloud applications like Photoshop, Illustrator, Premiere Pro, and After Effects, as well as introducing new offerings for next-generation creators with Adobe Firefly.

A：The recent Acrobat and Express offerings include Acrobat Studio, which combines Acrobat and Express, providing insights, and enabling users to create standout content. PDF spaces, a new foundation for content consumption and creation, was also introduced, transforming static files into dynamic, collaborative knowledge hubs. These offerings are part of the new premium Acrobat lineup and have received strong early reception with encouraging adoption and usage trends.

A：Adobe is leading the AI creative applications category, with its AI influenced ARR having surpassed $5 billion, up from over $3.5 billion at the end of the fiscal year 2024. The company is well on its way to surpassing its full-year AI-first ARR target, bolstered by its customer-focused growth strategy, product innovation, and strong go-to-market execution.

A：Adobe Express is being used by organizations to scale content creation while maintaining brand consistency and quality. A key example is Dentsu, which has integrated Adobe Express into its global marketing strategy. The company signed partnerships with the State of California to provide access to Express for students, and others with AEGIS Group, DSV, FedEx, Intuit, KKR, Lloyd's Bank, Lockheed Martin, the Ontario provincial government, the Virginia state government, and Vivendi. End user units of Acrobat AI Assistant grew more than 40% quarter over quarter, with AI assistant engagement increasing nearly 50% quarter over quarter. Additionally, Acrobat Mobile ARR grew over 30% year over year, and over 14000 organizations added Express in Q3 alone, leading to nearly double the usage of the Express feature within Acrobat compared to the previous quarter.

A：Adobe is making creativity more accessible, intelligent, and impactful by deeply integrating AI into its flagship applications, expanding creativity through new apps like Firefly, and providing powerful automation tools to help customers scale their work. This approach is designed to help customers create with greater speed, efficiency, and imagination, ultimately transforming how ideas move from inspiration to execution.

A：In Q3, the Firefly app added a range of new capabilities including avatar generation, sound effects generation, and updates to the list of integrated generative models.

A：Key enterprise wins for Firefly services include Disney, FedEx, Home Depot, Meta, MetLife, Stagwell Alta, and Volkswagen.

A：The main theme of the upcoming Adobe Max event is showcasing innovations that highlight amazing productivity features in flagship Creative Cloud applications, breakthrough AI capabilities leveraging Firefly and third-party models, new generative AI experiences for conversational editing, and significant strides in content production automation for enterprises.

A：The Digital Experience segment achieved revenue of $1.48 billion in Q3, representing 9% year-over-year growth as reported and in constant currency.

A：Consumer behavior is changing in the era of AI with brand discovery shifting to include llds and consumers increasingly expecting to interact with brands through single interfaces. This necessitates hyper personalization and immersive experiences on owned channels to enable brands to drive deeper customer engagement and loyalty.

A：Adobe is uniquely positioned to help businesses with customer experience orchestration by fusing creativity, marketing, and AI. The company's AI-first solutions, such as Gen Studio for content creation, AEP for customer engagement and loyalty, and Adobe Experience Manager and AEM Optimizer for brand visibility and discovery, enable businesses to power customer experience orchestration in the era of AI.

A：Adobe's latest innovation is Adobe Illum Optimizer, which is designed to help shape how brands appear in results and is available in Early Access to assist with brand discovery through generative AI search and assistance.

A：Highlights of the Q3 business performance and partnerships for Adobe include strong demand for AEP and native apps leading to over 40% year-over-year growth in subscription revenue, continued adoption of AI Assistant with 70% usage among eligible AEP customers, expanded partnership announcements, recognition as a leader in multiple Forrester Wave reports, and strong cross-cloud deal growth demonstrating the value of the Adobe integrated platform.

A：Adobe's financial performance in Q3 was strong, exceeding targets with double-digit top line and EPS growth. Revenue was $5.99 billion, representing 11% year-over-year growth as reported or 10% in constant currency. GAAP diluted earnings per share was $4.18, and non-GAAP diluted earnings per share was $5.31, reflecting 11% and 14% year-over-year growth, respectively. Adobe AI influenced ARR surpassed $5 billion and the company drove demand by infusing AI into category-leading solutions.

A：For Q3, Adobe's effective tax rate was 19.0% on a GAAP basis and 18.5% on a non-GAAP basis. The cash flow from operations was a Q3 record of $2.20 billion, and the ending cash and short-term investment position was $5.94 billion.

A：The ARR for Adobe's enterprise solutions, specifically the Gen Studio products, has exceeded $1 billion and is growing over 25% year over year.

A：Adobe's Q3 performance reflects strong execution in an AI-first world, emphasizing the effectiveness of the company's focus on product leadership and customer-centric innovation, positioning Adobe to deliver durable and profitable growth.

A：Adobe plans to showcase innovations across creativity, marketing, and AI at Adobe Max, including hosting an investor and Q&A session, which are part of the event.

A：The response to the demonstration of Adobe's AI capabilities using Nano Banana has been positive, with a focus on the integration of AI models within Adobe's applications and workflows, emphasizing the enhanced capabilities that arise from such integrations.

A：Adobe's strategy for differentiating its products in the market focuses on choice and integrations, ensuring that third-party models are available and that integrations allow for a seamless experience, especially in workflows that combine precision with generative capabilities.

A：Adobe plans to integrate AI into its existing products and workflows by embedding AI across its applications, such as Firefly, integrating models within the interface, and ensuring a nontrivial task of seamless integration that leverages the company's expertise in creative applications.

A：The anticipated impact of Adobe's AI integration on its enterprise customers is to enable them to create campaigns, run them across multiple channels, see attribution, and conduct analysis, thus supporting the enterprise's ability to manage their advertising and campaign strategies effectively.

A：AI-first revenue is contributing to Adobe's total revenue by reaching over the $255 million mark, with the overarching goal of having AI infused in every dollar of revenue that Adobe provides.

A：The strategy is to provide choice by ensuring any model is available in one place, and to achieve deeper integration that becomes the core foundation of the company's offerings in the market.

A：The development of the Adobe Lucid Optimizer was prompted by the observation that Adobe's search traffic included questions related to ChatGPT and perplexity, indicating a need for a tool that could help customers and prospects with these types of inquiries.

A：The Adobe Lucid Optimizer was created to leverage the availability of content through the right channels to increase visibility for the Acrobat brand via the llum search engine. Chief marketing officers were identified as early adopters of this top-of-mind topic.

A：The Adobe Lucid Optimizer will be generally available later in the current quarter.

A：The quarter with line item optimization was significant as it showed strength across the board in the creative business, including the migration to Creative Cloud Pro, the Firefly subscription for new users, and the monetization of the AI-first offerings.

A：The business performed strongly across all segments. The migration to Creative Cloud Pro was successful, the Firefly subscription drove growth in new users, and Firefly services in the enterprise, as part of Gen Studios, contributed to the overall strength.

A：The company feels confident about the large creative opportunity and the differentiation of its solutions. While not providing specific targets for next year, it has strong aspirations for the digital creative business and continues to execute with increasing confidence.

A：The signs of continued growth and monetization in the creative business include the strong performance across the board in the creative professional segment, the robust take-up of AI-first products, and the increasing use of integrated workflows and third-party models.

A：The focus on the bottom end of the market and creative usage reflects strong demand for Adobe's solutions, with year-over-year growth of 25% in creative usage as part of the combination of Creative, Acrobat, and the related Ma growth.

A：Adobe is positioned to help CMOS adapt by providing tools and services around AI-driven content creation, personalization, and marketing. The company's offerings around AP and apps, as well as Gen Studio, are well-suited to capture these changes.

A：Adobe will play a role in providing personalization at scale by enabling brands to maintain and strengthen direct consumer relationships. The company's focus is on delivering personalized answers to user prompts, which will increase the demand for Gen Studio and content creation.

A：The business performed well in terms of subscription revenue and double-digit growth. Customer retention and demand for the solutions are high, indicating a successful amount of innovation and a strong position in the market.

A：There is a thesis suggesting that AI is a headwind to the sales of seeds and that consumption revenue could potentially surpass seed revenue. The relationship between seeds and consumption in the Creative Cloud is seen as complex, with both expansion opportunities and challenges.

A：Adobe is addressing seat expansion and marketing automation by viewing AI as a tool for growth. They are targeting creative and marketing professionals, offering a unified offering that supports studio teams within enterprises in creating campaigns and also providing solutions for scaling through automation.

A：AI contributes to Adobe's productivity and margin delivery by optimizing the use of GPUs for training and model construction, as well as managing the cost structure for compute power through the tuning of algorithms and balancing of reserve instances with on-demand pricing.

A：The vision for agents in AEP is to democratize the use of applications for a wide variety of marketing customer experience practitioners, thereby driving greater value for customers. This is achieved through the use of agents with core domain knowledge, allowing for the creation of audience and journey agents without requiring specialized expertise.

A：There is a direct correlation between increased use of AI and retention, which is a reason for excitement. As AI adoption grows, retention trends are showing positive results. Additionally, the ability to provide commercially safe models, customizations for specific needs, and integration into workflows is enhancing the value proposition for customers.

A：Key components of Adobe's strategy for commercial safety include creating commercially safe models, allowing for customizations, integrating those models into workflows, and supporting the entire company through Adobe Express. This approach is designed to give customers confidence in the legal and ethical use of AI.