David Wadhwani
President of Digital Media at Adobe
Thanks, Shantanu. And hello everyone. Adobe has long had a mission to unleash creativity for all, and today this is more possible than ever through the power of AI. The introduction of the new Adobe Express and Firefly will go down as a seminal moment in our creative history. These innovative products and our generative AI co-pilot in our flagship applications will extend our leadership in core creative categories such as imaging, design, video, illustration, animation and 3D, as well as attract an increasingly expansive global audience.
In Q2, we achieved net new Creative ARR of $354 million and revenue of $2.85 billion, which grew 14% year over year. We could not be more excited about our generative AI roadmap that will make Adobe products more accessible to an even larger universe of people, while dramatically enhancing productivity for existing customers. Firefly is attracting tremendous customer interest and is highly differentiated in the market. It is being directly integrated into our product workflows as a co-pilot to accelerate ideation, exploration and the end-to-end production process.
Business and innovation highlights include:
The beta release of Firefly, Adobe's pioneering family of creative generative AI models, and adobe.com/firefly, a destination that allows users to generate and refine content; Firefly's first model is trained on Adobe Stock images and other openly licensed content, designed to generate commercially viable, professional quality content.
Firefly-powered capabilities seamlessly integrated into Photoshop are catalyzing a new era of creative power and precision. The viral response to Photoshop's new Generative Fill co-pilot has been extraordinary across social media platforms. Users have now generated over half a billion assets on the Firefly website and in Photoshop, making these two of our most successful beta releases in company history.
Building on this innovation, earlier this week we announced Generative Recolor in Illustrator, which will similarly serve as a generative AI co-pilot to millions of designers to iterate and transform vector art.
We also released an all-new Adobe Express with Firefly generative AI capabilities that revolutionizes how everyone, from students to small business owners to marketers in large organizations, creates and shares standout content. Adobe Express brings the magic of our technology from Photoshop, Illustrator, Premiere and Acrobat to combine power and precision with speed and ease. The response to the public beta, in particular the groundbreaking video-editing capabilities, has been overwhelmingly positive.
The Enterprise version of Adobe Express and Firefly will empower every employee in an organization to participate in the creation of content, campaigns and websites in conjunction with Experience Cloud.
New AI-powered text-based editing and automatic tone mapping in Premiere Pro makes video editors more productive.
An expanded Frame.io platform that now supports collaboration across PDFs and images, in addition to video, increases the value of Adobe's cross-cloud content supply chain solution.
A major Lightroom mobile update that instantly allows you to access photos from Apple iCloud and Android Gallery empowers our growing base of mobile-first and mobile-only users.
Continued momentum with our ecosystem of strategic partners drives awareness of our products and top-of-funnel for Adobe. Google announced that Adobe Firefly will be a premier generative AI partner for Bard, powering text-to-image capabilities. NVIDIA and Adobe announced that we will collaborate on Generative AI optimizations across hardware and software. Apple highlighted how Lightroom will empower users to edit photos on the Vision Pro VR headset at WWDC.
Momentum across routes to market and customer segments, including key enterprise customer wins: EY, Government of the Philippines, NVIDIA, Omnicom, TAFE New South Wales and WPP.
Our generative AI offerings represent additional customer value as well as multiple new monetization opportunities. First, Firefly will be available both as a standalone freemium offering for consumers as well as an enterprise offering, announced last week. Second, co-pilot generative AI functionality within our flagship applications will drive higher ARPUs and retention. Third, subscription credit-packs will be made available for customers who need to generate greater amounts of content. Fourth, we will offer developer communities access to Firefly APIs and allow enterprises the ability to create exclusive custom models with their proprietary content. And finally, the industry partnerships, as well as Firefly, represent exciting new top-of-funnel acquisition opportunities for Express, Creative Cloud and Document Cloud. Our priority for now is to get Firefly broadly adopted, and we will introduce specific pricing later this year.
Now turning to the Document Cloud business, PDF has become the de facto standard for the world's unstructured data and businesses of all sizes are turning to Adobe to help streamline and automate document-based workflows. Adobe Document Cloud offers a comprehensive set of ubiquitous products to accelerate document productivity across every device, by seamlessly integrating PDF services into Acrobat.
In Q2, we achieved Document Cloud revenue of $659 million, growing 14% year over year. We added $116 million of net new Document Cloud ARR, with ending ARR growing 22% year over year in constant currency.
Business and innovation highlights include:
Significant growth in Acrobat web monthly active users, driven by searches for Acrobat verbs and further accelerated by an explosion of PDF consumption through our Chrome and Edge extensions.
Viral adoption of PDF collaboration services, which are both increasing active use among existing users and creating a growth loop to bring new users into the Acrobat ecosystem.
Mobile momentum across both app store downloads as well as documents consumed in Liquid Mode.
New workflows between Acrobat and Express allow users to integrate documents seamlessly into their creative process. Express now has full fidelity PDF import and editing, which allows users to make documents visually stunning.
Momentum across routes to market and customer segments, including key enterprise customer wins: Boston Consulting Group, Cushman & Wakefield, Novartis, T-Mobile and WPP.
Today marks the 30th anniversary of Acrobat, a significant milestone that is both inspiring and humbling. PDF and Acrobat are more relevant today than ever before. We are incredibly proud of how PDF continues to transform the world of digital documents, powering communication and productivity for billions of people every day, and we know that the best is yet to come.
The pending acquisition of Figma will further expand our addressable market, and we have been delighted to hear from customers, partners and industry analysts who are excited about the benefits that the combination will unlock. We continue to engage in conversations with the Competition and Markets Authority in the U.K., the European Commission and the U.S. Department of Justice as they conduct their regulatory reviews and given the merits of the case, we believe the transaction should close by the end of 2023.
Adobe's Digital Media business is on a roll. We're rapidly delivering groundbreaking innovations across Creative Cloud and Document Cloud. Our increasing breadth of offerings is reaching a broader universe of customers, and our incredible go-to-market strength and proven data-driven operating model are propelling the growth of both our emerging and established businesses. Given the momentum, we are raising our net new Digital Media ARR and revenue targets for fiscal '23.
I'll now pass it to Anil.
