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DATE

Thursday, Sept. 10, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chair and Chief Executive Officer - Shantanu Narayen
• President of Digital Experience - Anil S. Chakravarthy
• Senior Vice President and Interim Chief Financial Officer - Steven Day
• Vice President of Investor Relations - Douglas G. Clark

TAKEAWAYS

• Revenue -- $6.76 billion, representing 13% year-over-year growth as reported and 12% in constant currency, driven by strength in AI innovation and expanding customer reach.
• Non-GAAP EPS -- $6.13, representing 15% year-over-year growth reflecting strong operating performance.
• GAAP EPS -- $4.62, representing 11% growth compared to the prior year.
• Total Ending ARR -- $27.50 billion, representing 11.2% year-over-year growth exiting the third quarter.
• AI-first Ending ARR -- Over $650 million, growing more than 150% year over year as customers adopt generative AI tools.
• Total Monthly Active Users -- Surpassing 1 billion across all business segments, representing more than 20% growth year over year.
• Creative Premium MAU -- Crossing 100 million, representing more than 70% growth compared to the previous year.
• Business Professionals & Consumers Subscription Revenue -- $1.91 billion, representing 15% growth in constant currency driven by AI-powered document tools.
• Creative & Marketing Professionals Subscription Revenue -- $4.65 billion, representing 12% growth in constant currency reflecting demand for Creative Cloud and Digital Experience solutions.
• Remaining Performance Obligations -- $22.16 billion at quarter end, representing 8% year-over-year growth.
• Operating Cash Flow -- A record $2.52 billion for the third quarter.
• Share Repurchases -- Approximately 9.5 million shares repurchased during the quarter, with $24.55 billion remaining under the current authorization.
• Firefly Ending ARR -- Grew 40% quarter over quarter across the Firefly app and credit packs, reflecting accelerating usage.
• Acrobat AI Assistant MAU -- Doubled on a quarter-over-quarter basis following expanded integration into major digital platforms.
• Business Professionals & Consumers MAU -- Surpassed 900 million users, representing more than 25% growth year over year.
• Q4 Revenue Guidance -- Targeted at $6.8 billion to $6.85 billion.
• Full-Year 2026 Revenue Target -- Raised to a range of $26.576 billion to $26.626 billion.
• Full-Year Non-GAAP EPS Target -- Increased to a range of $24.45 to $24.50.
• Non-GAAP Operating Margin -- Targeted at approximately 44% for the fourth quarter and 45% for the full year.
• Segment ARR Growth -- Exceeding 20% year over year for each of Adobe Experience Manager, Adobe Gen Studio, and Adobe Experience Platform.
• Brand Visibility Solutions -- Doubled the number of paid customers on a quarter-over-quarter basis, helping brands optimize presence across traditional and generative search.

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RISKS

• CFO Day noted that "there is a slight FX headwind that, we are having coming into Q4," which offset some of the financial benefits from the third-quarter beat in the updated full-year guidance.

SUMMARY

Adobe Inc. (ADBE +1.37%) reported record third-quarter results and announced a leadership transition, with Anil S. Chakravarthy set to succeed Shantanu Narayen as president and chief executive officer on Dec. 1. Management raised full-year financial targets following growth in monthly active users and the expansion of AI-driven annualized recurring revenue. The company detailed a strategic shift toward agentic software across its creative, productivity, and customer experience segments, integrating AI assistants and agents into flagship applications.

• The company announced a definitive agreement to acquire Topaz Labs, expected to close in the fourth quarter, which adds state-of-the-art AI enhancement models for image and video professionals.
• President Chakravarthy indicated that the company is transitioning toward agentic software, stating, "I see immense opportunity for Adobe to be the leader in Agentic software for creativity, productivity, and customer experience."
• Management reported that creative freemium MAU surpassed 100 million and grew more than 70% year over year, serving as a primary funnel for new user acquisition.
• On the call, management detailed a major expansion of Adobe Gen Studio, which includes new capabilities for retailers to attract advertising partners with self-serve creative tools.
• The company expanded its partnership in Saudi Arabia to provide Firefly and Express to 27 million residents while developing a culture-specific generative AI image model.
• CEO Narayen noted that the company uniquely empowers enterprises to orchestrate personalized customer experiences, delivering more than 1 trillion experiences per year.

INDUSTRY GLOSSARY

• Agentic Software: Software capable of executing complex workflows and coordinating between multiple AI models and applications autonomously.
• ARR: Annualized Recurring Revenue, a metric representing the value of the predictable portion of a company's revenue stream.
• MAU: Monthly Active Users, a measure of user engagement over a 30-day period.
• RPO: Remaining Performance Obligations, representing the total value of contracted revenue that has not yet been recognized.
• Firefly: Adobe's suite of creative generative AI models designed for commercially safe content creation.
• Adobe Experience Platform (AEP): A customer experience system that orchestrates data and customer journeys in real time.
• ETLA: Enterprise Term License Agreement, a multiyear software licensing contract tailored for large organizations.

Full Conference Call Transcript

Operator: Good day, and welcome to the Q3 FY 26 Adobe Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Douglas G. Clark, Vice President of Investor Relations. Please go ahead.

Douglas G. Clark: Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's chair and CEO Anil S. Chakravarthy, president of Digital Experience, and Steven Day, Senior Vice President and Interim CFO. On this call, which is being recorded, we will discuss Adobe's third quarter fiscal year 26 financial results. You can find our press release as well as PDFs of our prepared remarks and financial results on Adobe's Investor Relations website. The information discussed on this call, including our financial targets and product plans, is as of today, September 10, and contains forward looking statements that involve risk, uncertainty and assumptions. Actual results may differ materially from those set forth in these statements.

For more information on those risks, please review today's earnings release and Adobe's SEC filings. On this call, we will discuss GAAP and non GAAP financial measures. Our reported results include GAAP growth rates and non GAAP growth rates including constant currency rates. During this presentation, Adobe's executives will refer to revenue growth in constant currency rates unless otherwise stated. Non GAAP reconciliations are available in our earnings release and on Adobe's Investor Relations website. I will now turn the call over to Shantanu.

Shantanu Narayen: Thanks, Douglas. Good afternoon, everyone, and thank you for joining us. Adobe reported a strong third quarter achieving $6.76 billion in revenue, representing 12% year over year growth. GAAP earnings per share for the quarter was $4.62 representing 11% year over year growth. And non GAAP earnings per share were $6.13 representing 15% year over year growth. Over the decades, Adobe's evolving mission from changing the world through digital experiences to now empowering everyone to create has always focused on creating new market categories to serve an expanding set of customers. It has enabled us to build industry leading platforms and products in the areas of creativity, productivity, and customer experience setting a high bar for innovation, and category transformation.

Adobe will leverage AI to increase the reach, value and impact we will deliver to customers to drive our next decade of growth. AI enables us to democratize access to every creative discipline For everyone from the casual creator to the most seasoned, creative professional. It enables us to meet the growing creativity and productivity needs of consumers and business professionals who are looking to stand out and communicate more effectively. With AI, Adobe uniquely empowers enterprises to deliver and orchestrate personalized customer experiences.

As I reflect on 29 years at Adobe, I am most proud of the innovative products and platforms we have delivered, including Acrobat and PDF, Adobe Experience Manager, Adobe Experience Platform, InDesign, Photoshop, and Premiere, and more recently, Express and Firefly. it is incredible that these innovations are now used by over 1 billion monthly active users across all businesses a number that grew >20% year over year in Q3 With the creative premium MAU, crossing 100 million and growing >70% year over year. We created the digital marketing category and are the leading provider of customer experience orchestration solutions delivering over 1 trillion experiences per year for enterprise customers.

We are just beginning to capitalize on the massive AI opportunity across creativity, productivity, and customer experiences, with AI first ending ARR. Now exceeding $650 million and growing >150% year over year. During this time, Adobe's annual revenue has grown from less than $1 billion to over $26 billion I am delighted that Anil S. Chakravarthy will become Adobe's next president and chief executive officer and join the board of directors. Effective December 1st. I would also like to thank David Wadhwani for over a decade of partnership, leadership, and passion for our creative community. I am committed to working closely with Anil to ensure a smooth transition and support Adobe's ongoing growth and transformation as Executive Chair.

As an experienced transformation leader with strong values, integrity, deep knowledge of our business, and passion for products to solve customer needs, Anil is the right person to chart Adobe's growth in this agentic era. He has a proven record of building and delivering category defining products that serve our broad range of customers and I have every confidence that Adobe's best days are ahead of us. I will now turn it over to Anil.

Anil S. Chakravarthy: Thank you, Shantanu. Hello, everyone. I am deeply honored to lead Adobe at this pivotal moment. I am excited by the opportunity to drive Adobe's growth and leadership across creativity, productivity, and customer experiences in the era of Agentic software. Adobe's proven track record of empowering individuals and organizations to express their ideas, tell their stories, and make an impact continues to inspire us and fuel our commitment to customers. Thanks to Shantanu's exceptional leadership in transforming Adobe product portfolio and business model over the decades, we are well positioned to capitalize on the massive opportunities ahead.

I look forward to working closely with our employees and Shantanu to continue serving our customers and transforming Adobe in the era of agentic AI. Turning to Q3 results, Subscription revenue for business professionals and consumers was $1.91 billion, growing 15% year over year. Our strategy for business professionals and consumers is to deliver AI powered applications that transform how users comprehend, create, and share content. We are delivering new conversational and agentic interfaces Adobe Reader, Acrobat, and Express through an integrated freemium experience. Our differentiation is grounded in a deep understanding of the PDF format. And 3 decades of document expertise to transform Acrobat from the world's leading PDF tool into a comprehensive document productivity platform powered by AI.

Today, people open more than 400 billion PDFs with Acrobat every year to read, edit, and create content. By integrating AI deeply into our products, we are helping customers realize the value of AI faster, more accurately, securely, and cost efficiently. We are meeting users wherever they work. And expanding our reach across the digital ecosystem by extending Acrobat's capabilities to major platforms including ChatGPT, Chrome, Cloud, Microsoft Edge, and WhatsApp. This approach to innovation positions Adobe to drive deeper user engagement, unlock new enterprise opportunities, and sustain our leadership as the trusted platform for digital documents in the age of AI. Yesterday, we announced significant advances in powered by the Adobe productivity agent.

That help people and teams understand the information in their documents faster, create polished work more easily, and access trusted knowledge at scale. Acrobat now turns complex documents into visually rich interactive reports and summary slides. As well as audio formats like personal podcast, enabling users to quickly absorb key insights. New features like knowledge base and analyzer empower teams to ask questions across massive document collections and surface structured insights from thousands of files. This unlocks the value of existing organizational knowledge driving smarter, faster decision making at scale. All with enterprise grade governance, security, trust, compliance. With a focus on winning the next generation of business professionals, student spaces in Acrobat is now available globally.

Targeting the higher education market and empowering students to generate flashcards, quizzes, and study guides to help them better understand and master their curriculum. Additional business professional and consumer highlights include, business professionals and consumers, MAU, grew >25% year-over-year to over 900 million. Acrobat AI assistant MAU doubled quarter over quarter. Strong enterprise adoption of Acrobat AI capabilities among ETLA customers Notable customer wins this quarter include Amazon, Deutsche Post DHL, Honeywell,T-Mobile, Renault, and the US Department of Energy Los Alamos National Laboratory. In Q3, subscription revenue for creative and marketing professionals was $4.65 billion, growing 12% year over year.

Our strategy for creators and creative professionals is to empower everyone to bring their creative visions to life across any media type and surface. With Firefly, we are making creativity more accessible intuitive, and efficient for creators of every experience level. For creative professionals, we are delivering the most comprehensive AI driven power and precision applications through Creative Cloud, across every stage of the creative process. Our differentiation is rooted in our deep domain expertise across media types, including imaging, design, video, photography, illustration, animation, and 3D. And complemented by our depth of intelligence across creative workflows. With Firefly and Creative Cloud, Adobe is reinventing creative software with the genetic AI to deliver immediate personalized value.

Meeting users where they are with tools and agents that adapt their needs. Adobe remains committed. Delivering intuitive context aware experiences that honor creative craft, accelerate creative velocity, and ensure that the next generation of creators can thrive in an ever changing world. Adobe's strategy is to offer customers choice as well as intelligent routing to use the best models for their needs. fully integrated in Adobe applications, eliminating the friction of switching between workflows and platforms. The Adobe Creative Agent empowers customers by handling the orchestration of complex, repetitive, creative workflows. We expanded the Adobe Creative Agent to additional Creative Cloud flagship apps including Photoshop and Premiere. Extending conversational agentic workflows deeper into our professional applications.

We also introduced several innovations in Photoshop giving professionals more choice and control at every stage of the creative process. This includes a new AI assisted editor, now in beta, offering customers the option of using a dedicated interface and natural language bar alongside our generative tools powered by leading AI models. Adobe Firefly is the all in 1 creative AI studio for the next generation of creators. In Q3, we added native generation of music, speech, and sound effects bringing commercially safe AI audio to creative workflows. We released new creative skills and tools, like create storyboard and create brand kit.

Purpose built for social creators and solopreneurs along with additional enhancements that help make Firefly AI assistant more personalized and context aware over time. We announced our agreement to acquire Topaz Labs, which adds state of the art AI enhancement models in Adobe Firefly services, and Creative Cloud app. Providing creators designers, video professionals, photographers, and enterprises the tools to achieve exceptional quality across every format and workflow. With over 1 million users, Topaz Labs and its Emmy award winning AI technology will be integrated across Adobe's creative AI portfolio, enabling customers to enhance footage restore and remaster archival content, and blend AI generated and traditionally captured content into seamless final productions.

We expect the transaction to close in Q4, subject to regulatory approvals and other customary closing conditions. Firefly Enterprise, spanning Firefly services, Adobe Firefly Foundry, and Adobe Brand Intelligence, helps the world's largest brands industrialize content production. With brand safe custom models. In July, we expanded Firefly Enterprise with Adobe Firefly Graph Enterprise Edition and Firefly Creative Production Enterprise Edition giving businesses reusable, node based creative workflows and mass scale production capabilities alongside a new simulate feature in Adobe brand intelligence that predicts campaign performance before content goes live. We announced the Disney Imagineering is integrating Firefly Foundry into its theme park design toolkit bringing Disney stories, characters, and experiences to life. In parks faster than ever.

We are aggressively executing our global strategy to attract millions of next generation creators to Adobe. In conjunction with Saudi Arabia's emphasis on digital literacy and AI, we expanded our partnership with the Ministry of Communications and Information Technology and Humane to enable the nation's 27 million citizens and residents with Adobe Firefly and Express while supporting the development of a new image generation model tuned to Saudi culture. Additional creators and creative professionals highlights include creative freemium MAU now surpassing 100 million and growing >70% year-over-year. Intensity of AI usage continues with credit consumption accelerating quarter on quarter, across Creative Cloud and the Firefly app. Firefly ending ARR across Firefly app and Firefly credit packs.

Grew 40% quarter over quarter. Enterprise wins this quarter include Academy Sports, Disney, Jet 2, Perficient, Premier League, Publicis, Tennis Australia, and T Mobile. I am excited to host Adobe MAX, the world's largest creativity conference in November in Miami Beach, where we will welcome >10 thousand members of our global community and engage with hundreds of thousands more online. This year, we will showcase breakthrough innovations across Creative Cloud, new capabilities in Firefly, and connected workflows for Firefly Enterprise. All powered by Agentic AI. Max is always a celebration of the community's creativity and we look forward to sharing how Adobe magic is transforming creative workflows and unlocking new possibilities. Turning to marketing professionals.

Our strategy is to deliver Adobe CX Enterprise, the agentic system of record for customer experience orchestration. Serving the entire customer life cycle, from identifying and engaging prospects to driving conversion and developing lasting loyalty. Adobe CX Enterprise is focused on 3 critical solutions, Adobe Experience Platform and native apps for customer engagement, Adobe Gen Studio for content supply chain, and Adobe Experience Manager and Agentic web apps for brand visibility. Over 20 thousand global enterprises rely on Adobe. And we are helping them transform their customer experience for the era of Agentic AI. Through Adobe CX Enterprise, we uniquely bring together creativity, marketing, and a genetic AI simplifying and transforming how enterprises manage the customer life cycle.

We deliver this value through proprietary CX intelligence agentic orchestration, governed workflow execution, open ecosystem connectivity, and enterprise grade test. All of which we have built over several years providing our customers a practical path from the apps they use today to an end to end agentic AI system. In Q3, we delivered the first unified brand visibility solution, bringing together Semrush's AI visibility intelligence. With Adobe's agentic content optimization capabilities. Grounded in a deep understanding of business and brand context. Adobe brand visibility is a comprehensive solution for generative engine optimization that combines the industry leading capabilities of Adobe LLM optimizer with Semrush's AI optimization.

We are seeing tremendous customer interest in tapping our database of nearly 300 million real world AI search prompts to understand how their brands are showing up across leading platforms such as ChatGPT, Google AI Mode, Microsoft Copilot, and Perplexity AI. At the Cannes Lions International Festival of Creativity in June, we introduced a major expansion of Adobe Gen Studio, to help brands meet customers wherever they are in the moment of purchase, in a stream, or in a scroll. GenStudio for Commerce Media Networks gives retailers a way to attract advertising partners with self serve on brand creative. Built directly from product listings and category context.

We also expanded Adobe brand intelligence capabilities so marketing teams can preview how content will resonate audiences before it ever goes live. This is what an agentic content supply chain demands at the speed our customers need. We are seeing tremendous customer interest in CX Enterprise CoWorker the specialized AI agent in CX Enterprise that autonomously executes complex marketing and customer engagement workflows. CX Enterprise CoWorker, which became generally available in June, meets marketers where they are. Embedding agentic intelligence directly into the engagement life cycle. Offering choice and control while enabling teams to act faster, scale personalization, and continuously optimize outcomes.

CX Enterprise CoWorker synthesizes insights Adobe and third party applications while coordinating 1.7 thousand customers and early adopters of CX Enterprise coworker. Additional marketing professionals highlights included. Ending ARR growth of over 20% year over year for each of AEM and Agentic web apps, Adobe Gen Studio, and AEP and apps. Continued strength in subscription services driven by forward deployed engineering and strategic value realization engagements with customers. Q3 industry analyst recognition being named the top leader in 2 Forrester Waves, including customer data platforms with b to c, and experience optimization solutions. As well as 2 IDC market scapes for worldwide AI enabled customer data platforms for b to b users and b to c users.

Global enterprise customer wins in Q3, included Academy Sports, Alpine Racing, BNP Paribas, Humana, IKEA, Jet 2, Marriott, MSC Cruises, Publicis, Royal Bank of Canada, Vanguard, and Wells Fargo. Looking ahead, Adobe is well positioned to be the global leader in agentic software for creativity, productivity, and customer experience. We are building on tremendous assets deep domain expertise, proven track record of product innovation, broad community of customers spanning individuals to small businesses to the largest enterprises in the world. Diversified global routes to market. Values driven culture, highly motivated employees, a trusted and well recognized brand, and the financial strength to invest for the future.

I am incredibly excited with the opportunity in front of us and I look forward to sharing more updates. I will now pass it to Steven.

Steven Day: Thanks, Anil. Today, I will start by summarizing Adobe's performance. In Q3 FY 26 highlighting growth drivers across our customer groups and I will finish with our financial targets. In Q3, Adobe achieved record revenue of 6.76 billion growing 13% year over year as reported and 12% in constant currency. Diluted earnings per share were $4.62 on a GAAP basis and $6.13 on a non GAAP basis. Q3 financial highlights included total Adobe ending ARR of $27.5 billion growing 11.2% year over year, total customer group subscription revenue of $6.56 billion growing 14% year over year or 13% in constant currency. RPO of $22.16 billion exiting the quarter growing 8% year over year and CRPO growing 9% year over year.

Both as reported and in constant currency. Cash flows from operations were a Q3 record at $2.52 billion and ending cash and short term investments exiting Q3 were $5.64 billion And repurchasing approximately 9.5 million shares of our stock during the quarter. Exiting Q3, we have fully utilized our March 2024 authorization and have approximately $24.55 billion remaining under our April 2026 authorization. Business professionals and consumer subscription revenue was 1.91 billion increasing 16% year over year as reported or 15% in constant currency. Q3 growth drivers for business professionals and consumers included double digit ending ARR year over year growth across all geographies, Acrobat Plus Express MAU surpassed 900 million.

Growing more than 25% year over year Acrobat AI assistant MAU doubled quarter over quarter and strong performance in SMB across inside sales and the reseller channel. Creative and Marketing Professional subscription revenue was $4.65 billion increasing 13% year over year or 12% in constant currency. Q3 growth drivers for creative and marketing professionals included continued strength in Creative Cloud across our teams and enterprise offerings, Creative Freemium MAU which includes Firefly and Express and web and mobile versions of Premiere, Photoshop, and Lightroom crossed 100 million growing >70% year-over-year. FIREFLY ending ARR across Firefly apps and Firefly credit packs grew 40% quarter over quarter. Customer growth in Firefly Enterprise with accelerating usage, quarter over quarter.

Ending ARR growth of >20% year over year for each of Adobe Experience Manager and Agentic web apps, Adobe Gen Studio, and Adobe Experience Platform and App. Doubled the number of paid customers quarter on quarter for brand visibility solutions helping brands optimize visibility across traditional and generative search. And continued strength in retention. Across the enterprise customer base. Now, let me turn to our financial targets. Which assume current macroeconomic conditions.

For Q4 FY 26, we are targeting Total Adobe revenue of $6.8 billion to $6.85 billion Business professionals and consumer subscription revenue of $1.93 billion to $1.95 billion Creative and Marketing Professional subscription revenue of $4.665 billion to $4.695 billion GAAP EPS of $4.65 to $4.70 and non GAAP EPS of $6.30 to $6.35 For Q4, we assume non GAAP operating margin of approximately 44% and GAAP tax rate of approximately 2% and a non GAAP tax rate of approximately 18%. Given strong year to date performance, we are raising full year revenue and EPS targets.

For FY 2026, we are targeting total Adobe revenue of $26.576 billion to $26.626 billion Business Professionals and Consumer subscription revenue of $7.47 billion to $7.49 billion Creative and Marketing Professional subscription revenue $18.242 billion to $18.272 billion total Adobe ending ARR, book of business growth of 10.2% year over year compared to our FY 2026 beginning book of business of $25.66 billion GAAP EPS of $18.12 to $18.17 and non GAAP EPS of $24.45 to $24.50 Our FY 2026 targets assume non GAAP operating margin approximately 45%, a GAAP tax rate of approximately 22.5%, and a non GAAP tax rate of approximately 18%.

We are encouraged by the progress we are making against our We are expanding our user base and deepening engagement with existing customers through agentic experiences, with focused execution and disciplined investments, we are driving long term durable growth. Now, I will turn it back to Shantanu.

Shantanu Narayen: Thanks, Steven. I want to express my deep appreciation to all our employees, customers, partners, and investors for the support that they have provided to Adobe. During my tenure. Thank you. We will now take your questions.

Operator: Thank you. Again, that is *1 if you would like to signal with questions. First question comes from Matt Swanson with RBC Capital Markets.

Matt Swanson: Brent. Thank you for taking my questions. Anil, in your early comments in the prepared remarks as well as the press releases since the announcement, it feels like Agentic has been a very pervasive theme across all of us. Could you just talk about how big of a factor this is going to be in your strategy going forward? And just kind of expand a little bit what that long term path looks like for Agentic and what the end state could end up being?

Anil S. Chakravarthy: Thanks, Matt. Yeah. You know, as I talked about in my remarks, you know, I see immense opportunity for Adobe to be the leader in Agentic software. For creativity, productivity, and customer experience. Just like we have been the leader in SaaS for those categories. Overall, across the industry, I do believe that every SaaS company will be going through the transformation to a agentic software just like software companies went from on-prem to SaaS many years ago and Adobe executed very successfully. So when I talk to customers across all categories, what I hear is, you know, when they look for agentic software, what they mean by that is they are looking for 1, the product architecture.

The product architecture evolving so that people can use the user interface of their choice, whether it is conversational or a traditional interface that could be ChatGPT or a cloud or a Copilot. Along with the functionality they get from, Adobe. Making that possible, as you have seen our announcements across creativity, across productivity, as well as the CX announcements like the Adobe marketing agent, We are making that possible through other interfaces as well as our own. Like we are doing with our apps as well. Second, they are looking for model flexibility.

They are looking to make sure that they can have access to the best models available And that we, as the provider of the Agentic software, are matching the best model available to the best task and making it easy for users. And that is something that, that we are doing extremely well the Adobe Creative Agent we talked about, and the Adobe Productivity Agent as well. And then they are looking to make sure that the, apps are using their enterprise data and context so that there is no hallucination, that they get usable results, and they get predictability out of the use of AI.

And that is something that we are doing really well with, for example, the CX Enterprise CoWorker we talked about because that is built on top of the Adobe Experience platform where we serve over trillion experiences, every year. And then they are looking for value. They are looking to make sure that the provider of Agentic software is helping them realize the full value of this software, bringing it all together across all of the complexity of AI and software And that is what we are doing with the growth we are seeing across our forward deployed engineering and our value realization teams. So that is how I see it evolving.

And, you know, I think we see I see a massive opportunity for us. To be the leader, the agentic software leader in, creativity, productivity, and customer experience. Thank you.

Operator: And the next question comes from Saket Kalia with Barclays.

Saket Kalia: Okay, great. Guys. Thanks for taking my questions here. Congrats, Anil. Shantanu, Just want to tip my cap to you on 29 years of leadership at Adobe. Anil, maybe the maybe the question here is for you. You know, I think 1 of the questions that was asked, when the announcement was made on your CEO transition was whether your background in digital experience is a statement on where the board thinks about the future of Adobe's growth opportunity. I just wanted to give you an opportunity to respond to that and tell us how you think about that.

Shantanu Narayen: I will let him add Saket, but let me just say a couple of things, you know, on behalf of the board. I mean, the first is, you know, I am really thrilled that we were able to have somebody internal who understood the company. We had 2 great internal candidates. So, you know, that was, I think, important for the board. Certainly, Anil is gonna own the entire company strategy and you know, put his stamp on it. But I think it is important to remember, that, you know, when we were looking for the next leader, that it was somebody who would embrace you know, everything that the company had in terms of the opportunity.

And then figure out how, you know, they wanted to transform it moving forward. But with that as sort of context, I will let Anil add specifically, you know, as it relates to the enterprise. And maybe the 1 last thing I will say is, I think we both agree, Anil and I, that as it relates to, you know, how software will be sold, the individuals and making sure that we delight individuals is gonna be even more important moving forward. Anil?

Anil S. Chakravarthy: Yeah. Well, thanks, Saket. Appreciate it. And, you know, the first thing I was gonna say is, you know, look, when I joined in January 2020, and by the end of that year, Shantanu asked me to take on actually our enterprise field operation across the company. In that, you know, starting with that, I me and my team, represented all of Adobe with our customers. So when you look at an example we show, like Disney, for example, they think of us as 1 Adobe. And that is been important. And we will I have had the opportunity to really represent all of Adobe across creativity, productivity, and customer experience. With all of our enterprise customers.

And I see that opportunity exactly as Shantanu said, across the 3 product categories, and across the entire range of customers from individuals to hundreds of thousands of small businesses that we have, to the 20 thousand-plus enterprise customers. I see massive opportunity across all of our base. Brent to hear. Congrats to both of you.

Operator: And the next question comes from Jay Vleeschhouwer with Griffin Securities.

Jay Vleeschhouwer: Thank you. Good evening. Anil, let me follow-up a bit on Saket's question. When you look at over the next number of years, what do you think are Adobe's most consequential strategic, technical, financial, or competitive challenges or executables And that is a very broad question, but I would very much like to get your thinking on that. Then a quick 1 for Steven. I am a little concerned about your RPO number. The single digit growth year over year was the first single digit growth since fiscal 2023, early fiscal 2023 and down sequentially. Was there anything unusual about the consumption of RPO coming out of Q2? Or maybe just talk about some of the details there.

Anil S. Chakravarthy: Well, Jay, looking across our categories, if you look at, for example, our business professionals and consumers, we are obviously building on a lot of assets. So, you know, we just crossed over a billion, in monthly active users. We have the decades of domain expertise in the in PDF. So we are building on a lot of different assets that we have built over time. And so when you look at the future, obviously, that focus now is on how do we bring all of those assets and build the new capabilities required for the world of agentic software.

We see that same thing playing out across all 3 of our, major category areas, whether it is the productivity area that I just talked about, and the creative world, for example, bringing together the power of these new models. Making sure that we deliver the value of AI to the user as fast as we can, securely, accurately, and cost efficiently, making that, how that is what our users and customers are looking for. And so being able to bring all of that together is really where our focus is, across all of our categories.

Steven Day: Yeah, Jay. And as it relates to the RPO, you are right. Yes. RPO growth percent year on year, the CRPO 9%. And that reflects the continued execution against our strategic initiatives. The growth is consistent with our AIR trends, I would say. It does reflect our focus to accelerate new user acquisition through the freemium business model. But if you take a step back and look at these trends over the course of a typical year, both RPO and CRPO step up in our fourth quarter, and then remain fairly flat over the next 3 quarters. And this year is no different to prior years in that shape. Okay. Thank you.

Operator: And we will go to Samik Chatterjee with JPMorgan.

Samik: This is Brian Healy on for Samik. Your Q4 guidance implies only modest sequential revenue growth in creative and marketing professionals, Could you walk us through the assumptions driving that outlook? Thanks.

Anil S. Chakravarthy: On Q4, if you start turning to Q4, if you look at let me go unpack that Q4 for you. First of all, wanted to say that we reiterated our full year guide of 10.2% growth for the full year in terms of ending ARR. Now if I unpack that across the different audiences, so in terms of, our the business professionals, consumers, we are excited by the innovations that we just announced yesterday in Acrobat and Express, and that is going to give us a tailwind for, for our, growth in Q4. And that ultimately, obviously, translate into revenue going into future quarters.

With Firefly and Creative Cloud, we have a incredible innovation breakthrough releases, planned in the run up to max. Whether it is with creators or with creative professionals. And so we will, we are, you know, we are we are gonna see that, we are gonna see that gives us confidence for creative professionals and our and the for our creative professionals and creators category. And then in customer experience, you know, we will have the we are starting with a strong pipeline. We are gonna we will get the benefit of seasonality, as I mentioned, and the innovations we made. So that is what gives us the confidence for Q4.

And then and, you know, I do not need to wanted to add on to that, Steven, in terms of the specific revenue comment.

Steven Day: Yeah. I mean, I think in terms of the revenue guide that we have put out there, I think you will you will see that it is it is a raise that we have put forward for the Q4 rolling out through against the first 3 quarters of the year. And press that against the June guide that we that we put out. it is it is a raise across, you know, CMP subs, BP&C subs, as well as the overall company raising around 50 million at the midpoint. So, yep, we take our guide seriously, and we are we are pleased to put forth a raise in this. Quarter.

Operator: And our next question will come from brand Zelnick with Deutsche Bank.

Brad Zelnick: Brent. Thank you so much. And I will echo my congrats to Shantanu on an epic run and Anil on the exciting journey ahead. For my question, Anil, it is great to hear Firefly and Credit Pack ARR continues to grow well. And that credit consumption is accelerating. Can you talk about what is driving the acceleration there? Is there broad usage or certain types of generations that are really behind it? And how do you think that evolves from here?

Anil S. Chakravarthy: Yeah. I think if we just going back to what we talked about in how we are driving our freemium strategy for growth. We are first focused on, making sure that we are acquiring new users, and then as we talked about that has performed very well. We talked about it on the June earnings call. And, you know, creative freemium now we saw is, has grown to over 100 million. Growing >70% year-over-year. that is so that is bringing people into the funnel. that is then we still focus on, increasing their intensity of AI usage, and increasing, their engagement with the products. And that is that engagement is what is starting to translate into ARR. Right?

With the Firefly ending ARR, the apps, the credit packs, showing the 40% quarter over quarter growth. it is really that intensity of usage. that is leading to that growth.

Shantanu Narayen: The other thing maybe I will add is, I mean, as it relates to specifically what is driving it, if you look at the amount of innovation that is going into Firefly, it is you know, magical. And video in particular, you are seeing a lot of usage of video. That certainly helps, you know, across that. And, within Creative Cloud as well, I know we talk a lot about the AI first revenue. Think about the AI influence revenue and what is being driven by Creative Cloud, all of the core desktop applications, The credit consumption there also is very robust, which, you know, just reflects how fundamental AI has become to the usage of those products.

So those are 2 other things I would add. Brent. Thank you so much, guys.

Operator: And we will go to Alex Zukin with Wolfe Research.

Alex Zukin: Hey, guys. This is Ivan on the line for Alex. Thank you for taking my question. First of all, Anil, congrats on the role and Shantanu, of course, on the amazing run. Maybe going back to the last quarter, when you guys guided, you called out that you expect headwinds from doubling down on the freemium strategy and then deferring the pricing initiatives. So to the extent you can, can you provide a little more color in terms of you know, how much of the headwind came from each of these 2? And then as a quick follow-up, like, are there any updated thoughts in terms of when those deferred creative cloud pricing optimizations will resume? Thank you.

Shantanu Narayen: Yeah. I think the 2 things we said, and then I will have Anil add mean, the 2 things that we said that were really important for us was 1, within the company, let's make sure we have an absolutely singular focus and align the company on what was important. And I always like to say, you know, I like to be impatient for something. And we are incredibly impatient to, you know, drive a whole bunch of users. Which is what you saw in the MAU. I mean, the MAU growth and how we are inspecting MAU and driving MAU growth, we believe, is gonna be fundamental to the future growth of the company.

And so you know, the 2 things that we had said at that point was, let's get a singular focus The other thing I would say is that we are actually in a incredibly fortunate position now. If you look at the segmentation of our products, you know, we certainly have tremendous value that we deliver depending on which segment of the population is using it. I think to your point, within the Creative Cloud, we can continue to always you know, find ways to deliver more value. But, you know, I really think the company has performed really well in the singular focus of let's deliver a lot of innovation around Firefly and the platform for Firefly.

Let's make sure we focus on MAU. And so that was really, the driver of it. If you look at BPNC, we had growth on BP and C. And so this is within the creative, you know, establishing I would say. And, you know, I am actually really happy that we did not you know, focus on the pricing actions because that while it may have provided some short term relief, would not be as critical as continuing to drive new user adoption. So that is how I would answer that question.

Operator: And our next question will come from Kirk Materne with Evercore ISI.

Kirk Materne: Hi. This is Vinod Bodeti on for Kirk. Thanks for taking my question. So net new ARR was down 36% to 37% year over year. And I just wanted to get a sense of some of the drivers. Is it really more about seat volume softness? Lapping pricing, or is it really just the premium funnel? That you have talked about and you are doing intentionally that is kind of impacting that? Thank you.

Anil S. Chakravarthy: Yeah. I mean, just as we Shantanu just described and we talked about in June, it is our strategy is to drive both and balance across acquiring these new customers as well as growing ARR. 1 of the things we have obviously done is, for example, taken a portion of our traffic to make sure that we are sending them to the right place so we can acquire customers for, through the freemium funnel. And then we engage them and then increase the intensity of their use. And, obviously, at the right time, we will, calibrate where we convert them into ARR.

So that is the approach we have taken to make sure that we are really tapping into this large base of next generation creators. We can bring into the, Adobe family. And that is what is driving the performance that you see. Okay. Thank you.

Steven Day: And did you guys, quantify the SEMrush contribution this quarter? Yeah.

Shantanu Narayen: I mean, I think when we, we gave you a, a view of that back in the in the call last quarter. The rough size of how much SEMrush was adding to the book of business. I think you really have to think about it as directionally what we have done with Semrush Is to really integrate that into our combined offerings. And so I think you understood what the book of business was. We did it. But I think moving forward, the real selling motion is all around do we combine SEO and GEO with all of our web content management as well as those solutions.

So I think increasingly, and Anil can certainly add, the sales motion is all around, you know, the combined new offerings as it relates to know, what we are doing around brand visibility, what we are doing around content supply, because those are the ones. And I think we talked about how all of those are growing north of 20%, the must wins. And so that is how we are going to market with those solutions.

Anil S. Chakravarthy: Yeah. Exact I think the real focus is bringing the we have already brought it together as we announced with the Cannes Lions Conference. Of what had with the in their AI optimization technology with what Adobe already had. that is what we released as Adobe brand visibility. Has had a great reception from customers. In fact, as, Steven pointed out, doubled the number of paying customers, and that will be brand visibility quarter over quarter. So we have seen terrific customer interest there. Thank you.

Operator: And we will take a question from Billy Fitzsimmons with Piper Sandler.

Billy Fitzsimmons: Perfect. Thank you for taking the question. I guess 1 question we get a lot is you kind of meet customers where they are with how they want to consume in terms of how you monetize AI across either Creative Cloud, Acrobat, your enterprise products, and that is through bundled credits. Credit packs, premium tiers, per seat pricing, there is also usage based contracts. Over time, which pricing model do you expect to become the primary driver of AI revenue? Yeah. Our first focus exactly is to make sure that cost we get, we are bringing in as many customers as, as we can into our funnel and into the Ruby family.

What you are seeing with the premium strategy and all the focus on customer acquisition. After that, it really depends on what exactly they are doing. What are they trying to get done? What is their skill level? What they are doing it in the context of? So that can vary based on whether they are individuals or enterprise customers and so on. It really then starts to focus on what they are actually doing with it and so we are happy to work with, say, for example, something like Microsoft Copilot in the enterprise, to ChatGPT, for consumers and so on, making sure that they are getting value.

Driving up that intensity of usage and the engagement And then beyond that, depending on the product area, it will once we have the value, we can map it to the monetization that, that Shantanu talked about, which helps us with better segmentation, understanding what the segments are, and how they are getting value. And so we have a wide variety of ways, as you pointed out, to monetize that. And we are gonna be applying that both based on the context of the customer and the context of what they are doing. And then a quick follow-up if I can get in.

On the Topaz Labs deal, what strategic gaps does Topaz help fill in the product portfolio that maybe have been addressed with internal development or partnerships. And understanding the deal has not closed yet, how should we just think about how those Topaz capabilities could be folded into existing solutions?

Anil S. Chakravarthy: Yeah. Topaz really was the state-of-the-art, state of the art, you know, technology for us in terms of AI enhancements, cross imaging, video, so we have actually-- a number of our customers have our technology along with Topaz. We had a lot of great feedback from on them from our customers. So we believe that they will bring a great natural adjacency fit right into what we have with, with Creative Cloud, with Firefly, with Firefly Enterprise, And so we see you know, we are excited about closing that in Q4. that is what we are anticipating.

And I think we will it will fit right in into what we are doing, and we are excited to talk more about it at max. Coming up soon.

Operator: And we will take a question from Brent Thill with Jefferies.

Brent Thill: Thanks. Anil, congrats on the role and Shantanu. Been great. Being part of part of the story and watching it for as long as we have. On the success you have had. And, Neil, just as you think about I know it is gonna take time to formulate probably your strategies and your top priorities. But maybe if you have you know, a couple top priorities as you make this transition, how would you just characterize the 2 most important things for you over the next year?

Anil S. Chakravarthy: Well, thanks, brand. Appreciate it. You know, it is it is great that, you know, I have until December 1st to work closely with Shantanu for the transition. First focus is obviously on Q4. We remain focused on executing our FY 2026 strategic initiatives and closing out the year strong. that is, that is going, that is gonna be critical. Max is a big deal for us. We have had we have had tremendous innovation in the company. Really breakthrough innovations across what we are doing with creators, what we are doing with creative professionals, then for the enterprise in terms of workflow and automation. For the entire creative process.

So we are really looking forward, and this will be my first Max, and I am looking forward to hosting that. And then, you know, I am spending a lot of time with our community, with customers, with our Adobe employees, and, building the leadership team and putting all of that in place. So it is gonna be a busy fall. So I am really looking forward to making all of that happen between now and the New Year. Thanks.

Operator: And we will take the next question from Tyler Radke with Citi.

Tyler Radke: Brent. Thanks for taking the question. This is Andrew Gerard on for Tyler. Echoing again all the congrats to Anil and Shantanu. So Anil, it is good to see the kind of 1 point sequential uptick in creative and marketing professional growth in constant currency here. Anil, was just hoping to kind of, like, understand your perspective on creative positioning. You know? Where you believe the kind of largest opportunities lie there and kind of any new strategies you are thinking of bringing into creative as you take on the helm here?

Anil S. Chakravarthy: Yeah. First of all, thank you. And, you know, in terms of creativity, we believe that the market is larger than ever in terms of people across the whether they are individuals or whether they are in small businesses or enterprises around the world, where they are really using the creativity to express themselves and their ideas And it is getting more and more important for people to just stand out. Using creativity. So we think the market is extremely large. I think in terms of, you know, my own personal view, I do believe that there is real opportunity as the world goes from this world of SaaS to agentic software.

With all the new innovation around AI, with all the innovation around models, I think there is opportunity across all of these categories. So 1 of the things that I, I believe in is that the innovation that we have already, done, we are gonna showcase at max. And the innovation you are gonna see from us over the over the next year will really show how what we are doing, really brings together everything that is the that has the AI has and brings that power of AI across all of our customer segments and across all the categories we are in. Okay. Yeah. that is that is great.

And just another quick 1 on kind of the revenue guidance.

Steven Day: So I see that the kind of the guidance raise on the full year was slightly short of kind of the beat in Q3. So just want to kind of understand any dynamics in Q4 that are baked into the model now that might have been incremental to kind of what you all last quarter, kind of a maybe greater amount of prudence or greater expected pressure stemming from the premium push, any changes in macro, any anything like that? Yeah. Yeah. Yeah. No. Yeah. Nothing changing in the business at all. Yep.

So we as you said, we pushed through the beat that we saw in Q3, but there is a slight FX headwind that, we are having coming into Q4. And so it is just netting that off. So, otherwise, you know, we feel pretty good about you know, sort of the full year guide as we said, or the implied guide based on this Q4 guide. And, you know, sort of demonstrating a slight raise on the year. So other than that, that affects nothing from business perspective.

Operator: And we have a question from Michael Turrin with Wells Fargo Securities.

Michael Turrin: Thanks very much. Appreciate you taking the questions. And Shantanu, our congrats as well. For Anil, I know it is early, but just relative to last quarter, it seems you are seeing the user growth on the premium side. I would be curious just to hear more on how you plan to evaluate the trade-offs there. Contemplate when you attempt to capture more of the value via price versus letting the freemium strategy continue to run. Thanks, Michael.

Anil S. Chakravarthy: So in terms of looking at the entire funnel, obviously, that is 1 of the things that we have over a decade of experience with what we call the data driven operating model, as you know. And we are optimizing that for freemium as we attract this next generation of creators and business professionals. So goal is, of course, to prove value first. And once they get value, we get a lot of signals. About the engagement, about the intensity of AI usage. About, about, you know, whether they are ready. To move to, you know, to for us to convert them into ARR. And so we are constantly calibrating that.

What is the best conversion point? kind of paywall tuning, for example, would we do? So there is a number of things that we could do, and, obviously, we have done that now for, for well over a decade. And we are gonna continue optimizing that. Across our customer segments that Shantanu referenced.

Michael Turrin: And just as a small follow-up, I know you are you are holding on to the ARR guide, but if we could just revisit the uptick and just any seasonal assumptions from a net new perspective. Just maybe remind us what you are expecting and how to think about the uptick in implied net new ARR for Q4 relative to what we saw in Q3? Thank you.

Steven Day: Yeah. I mean, if you remember back on the Q2, call that we, we gave some shape towards the second half ARR guide. When we reiterated the 10.2, and we said that the Q4 will be larger than the Q3 number, and that is exactly how it is playing out. So Q4 is our seasonally strong quarter. A very strong enterprise quarter for us. So those things are still in effect. We are very pleased with the performance of the businesses. So far, we expect to see good contributions across each of the segments that Anil has referenced and deliver that 10.2 guide? Thank you.

Shantanu Narayen: Maybe if I were to give a little bit more color on that, I mean, the way I would look at that is again, on the creative side, just making sure we focus on the combination of MAU and ARR. On the BP&C side, we our traditionally strong Q4. there is a lot of great new innovation that we have delivered. that is a business that continues to perform. And so making sure that we monetize all of the BP&C Is an expectation in Q4. And perhaps the most important is the traditional enterprise finish that we have with the big pipeline as it relates to both the CXO business as well as what the worldwide field operation is selling.

Into both the creativity as well as the productivity segments. Within the enterprise. So that factors into, how I think you know, we are guiding Q4 and how you should think about it. Traditional strong, good pipeline, great innovation in BP&C driving, and continued focus on driving both revenue, but more importantly, MAU as it relates to the creative segment. So that is how I would think about it. Given that is the last question, I was really pleased to, you know, see so many questions about the go forward. And you know, we look forward to sharing more updates. Thank you for joining us.

Operator: Well, thank you. And that does conclude today's conference We do thank you for your participation, and have an excellent day.