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Turning to enterprise. Our customers continue to invest in Apple products to drive productivity and innovation. We see more and more enterprise customers embracing the MAC. In health care, Epic Systems, the world's largest electronic medical record provider, recently launched its native app for the Mac, making it easier for health care organizations like Emory Health to transition thousands of PCs to the Mac for clinical use.

Both transacting accounts and paid accounts reached a new all-time high, with paid accounts growing double digits year-over-year. And paid subscriptions showed strong double-digit growth. We have well over 1 billion paid subscriptions across the services on our platform, more than double the number that we had only 4 years ago. We continue to improve the breadth and quality of our current services, from creating new games on Arcade and great new shows on TV+, to launching additional countries and partners for Apple Pay.

Suhasini Chandramouli, Luca Maestri, Timothy D. Cook

And since the launch of Vision Pro last quarter, many leading enterprise customers have been investing in this amazing new product to bring spatial computing apps and experiences to life. We are seeing so many compelling use cases. From aircraft engine maintenance training at KLM Airlines to real-time team collaboration for raising a portion to immersive kitchen design at Lowe's. We couldn't be more excited about the special computing opportunity in enterprise.

Both transacting accounts and paid accounts reached a new all-time high, with paid accounts growing double digits year-over-year. And paid subscriptions showed strong double-digit growth. We have well over 1 billion paid subscriptions across the services on our platform, more than double the number that we had only 4 years ago. We continue to improve the breadth and quality of our current services, from creating new games on Arcade and great new shows on TV+, to launching additional countries and partners for Apple Pay. Turning to enterprise. Our customers continue to invest in Apple products to drive productivity and innovation. We see more and more enterprise customers embracing the MAC. In health care, Epic Systems, the world's largest electronic medical record provider, recently launched its native app for the Mac, making it easier for health care organizations like Emory Health to transition thousands of PCs to the Mac for clinical use.

Suhasini Chandramouli, Luca Maestri, Timothy D. Cook

Taking a quick step back, when we look at our performance during the first half of our fiscal year, Total company revenue was roughly flat to the prior year in spite of having 1 less week of sales during the period and some foreign exchange headwinds. We were particularly pleased with our strong momentum in emerging markets. As we said, first half revenue records in several countries and regions, including Latin America, the Middle East, India, Indonesia, the Philippines and Turkey. These results, coupled with double-digit growth in Services and strong levels of gross margin, drove a first half diluted EPS record of $3.71, up 9% from last year.

Turning to enterprise. Our customers continue to invest in Apple products to drive productivity and innovation. We see more and more enterprise customers embracing the MAC. In health care, Epic Systems, the world's largest electronic medical record provider, recently launched its native app for the Mac, making it easier for health care organizations like Emory Health to transition thousands of PCs to the Mac for clinical use. And since the launch of Vision Pro last quarter, many leading enterprise customers have been investing in this amazing new product to bring spatial computing apps and experiences to life. We are seeing so many compelling use cases. From aircraft engine maintenance training at KLM Airlines to real-time team collaboration for raising a portion to immersive kitchen design at Lowe's. We couldn't be more excited about the special computing opportunity in enterprise.

Suhasini Chandramouli, Luca Maestri, Timothy D. Cook

Let me now turn to our cash position and capital return program. We ended the quarter with $162 billion in cash and marketable securities. We repaid $3.2 billion in maturing debt, and commercial paper was unchanged sequentially, leaving us with total debt of $105 billion. As a result, net cash was $58 billion at the end of the quarter. During the quarter, we returned over $27 billion to shareholders, including $3.7 billion in dividends and equivalents and $23.5 billion through open market repurchases of 130 million Apple shares.

Taking a quick step back, when we look at our performance during the first half of our fiscal year, Total company revenue was roughly flat to the prior year in spite of having 1 less week of sales during the period and some foreign exchange headwinds. We were particularly pleased with our strong momentum in emerging markets. As we said, first half revenue records in several countries and regions, including Latin America, the Middle East, India, Indonesia, the Philippines and Turkey. These results, coupled with double-digit growth in Services and strong levels of gross margin, drove a first half diluted EPS record of $3.71, up 9% from last year.

Suhasini Chandramouli, Luca Maestri, Timothy D. Cook

Given the continued confidence we have in our business now and into the future, our Board has authorized today an additional $110 billion for share repurchases as we maintain our goal of getting to cash neutral over time. We are also raising our dividend by 4% to $0.25 per share of common stock, and we continue to plan for annual increases in the dividend going forward as we've done for the last 12 years. This cash dividend will be payable on May 16, 2024, to shareholders of record as of May 13, 2024.

Let me now turn to our cash position and capital return program. We ended the quarter with $162 billion in cash and marketable securities. We repaid $3.2 billion in maturing debt, and commercial paper was unchanged sequentially, leaving us with total debt of $105 billion. As a result, net cash was $58 billion at the end of the quarter. During the quarter, we returned over $27 billion to shareholders, including $3.7 billion in dividends and equivalents and $23.5 billion through open market repurchases of 130 million Apple shares.

Suhasini Chandramouli, Luca Maestri, Timothy D. Cook

As we move ahead into the June quarter, I'd like to review our outlook, which includes the types of forward-looking information that Suhasini referred to at the beginning of the call. The color we are providing today assumes that the macroeconomic outlook doesn't worsen from what we are projecting today for the current quarter. We expect our June quarter total company revenue to grow low single digits year-over-year in spite of a foreign exchange headwind of about 2.5 percentage points. We expect our Services business to grow double digits at a rate similar to the growth we reported for the first half of the fiscal year. And we expect iPad revenue to grow double digits.

Given the continued confidence we have in our business now and into the future, our Board has authorized today an additional $110 billion for share repurchases as we maintain our goal of getting to cash neutral over time. We are also raising our dividend by 4% to $0.25 per share of common stock, and we continue to plan for annual increases in the dividend going forward as we've done for the last 12 years. This cash dividend will be payable on May 16, 2024, to shareholders of record as of May 13, 2024.

Suhasini Chandramouli, Luca Maestri, Timothy D. Cook

We expect gross margin to be between 45.5% and 46.5%. We expect OpEx to be between $14.3 billion and $14.5 billion. We expect OI&E to be around $50 million, excluding any potential impact from the mark-to-market of minority investments and our tax rate to be around 16%. With that, let's open the call to questions.

As we move ahead into the June quarter, I'd like to review our outlook, which includes the types of forward-looking information that Suhasini referred to at the beginning of the call. The color we are providing today assumes that the macroeconomic outlook doesn't worsen from what we are projecting today for the current quarter. We expect our June quarter total company revenue to grow low single digits year-over-year in spite of a foreign exchange headwind of about 2.5 percentage points. We expect our Services business to grow double digits at a rate similar to the growth we reported for the first half of the fiscal year. And we expect iPad revenue to grow double digits.

Suhasini Chandramouli, Luca Maestri, Timothy D. Cook

As you know, on the CapEx front, we have a bit of a hybrid model where we make some of the investments ourselves. In other cases, we share them with our suppliers and partners. On the manufacturing side, we purchase some of the tools and manufacturing equipment. In some of the cases, our suppliers make the investment, and we do something similar on the data center side. We have our own data center capacity and then we use capacity from third parties. It's a model that has worked well for us historically, and we plan to continue along the same lines going forward.

Yes. We are obviously very excited about the opportunity with gen AI. We obviously are pushing very hard on innovation on every front, and we've been doing that for many, many years. Just during the last 5 years, we spent more than $100 billion in research and development.

Suhasini Chandramouli, Luca Maestri, Timothy D. Cook

And so could AI be potentially different? How could that impact replacement cycles? Is there any services angle you'd be thinking. Any color that you can share on that, and then I have a follow-up, please.

Maybe my first one, Tim. You've obviously mentioned your excitement around generative AI multiple times. I'm just curious how Apple is thinking about the different ways in which you can monetize this technology because historically, software upgrades haven't been a big factor in driving product cycles.

Operator, Michael Ng, Luca Maestri, Timothy D. Cook, Suhasini Chandramouli

Commodities go in cycles, and so there's obviously always that possibility. Keep in mind that we are starting from a very high level of gross margins. We reported 46.6%, which is something that we haven't seen in our company in decades. And so we're starting from a good point. As you know, we try to buy ahead when the cycles are favorable to us. So we would try to mitigate if there are headwinds, but in general, we feel, particularly for this cycle, we are in good shape.

Okay, very fair. And then, Luca, maybe to just follow up on Wamsi's comments or question. There's a broad concern about the headwind that rising commodity costs have on your product gross margins. Wondering if you could just clarify for us, if we take a step back and look at all of the components and commodities that go into your products kind of collectively, are you seeing these costs rising? Are they falling? What tools do you have to try to help mitigate some rising costs, if at all, rising input costs, if at all? Yes. I mean, during the last quarter, commodity costs and general component costs behaved favorably to us. On the memory front, prices are starting to go up. They've gone up slightly during the March quarter. But in general, I think it's been a period, not only this quarter, but the last several quarters where commodities have behaved well for us.

Operator, Michael Ng, Luca Maestri, Timothy D. Cook, Suhasini Chandramouli

And if you look at the top-selling smartphones, the top 2 in urban China are iPhones. And while I was there, it was a great visit, and we opened a new store in Shanghai and the reception was very warm and highly energetic. And so I left there having a fantastic trip and enjoyed being there. And so I maintain a great view of China in the long term. I don't know how each and every quarter goes and each and every week. But over the long haul, I have a very positive viewpoint.

Ben, if you look at our results in Q2 for Greater China, we were down [ 8 ] That's an acceleration from the previous quarter in Q1. And the primary driver of the acceleration was iPhone. And if you then look at iPhone within Mainland China, we grew on a reported basis, that's before any kind of normalization for the supply disruption that we mentioned earlier.

Operator, Michael Ng, Luca Maestri, Timothy D. Cook, Suhasini Chandramouli, Wamsi Mohan

Just given that's been one of the concerns that's potentially been an overhang, of course, due to a lot of the news in the media around some of the legal cases. And I was wondering if there's just a big picture color you could give that makes us kind of think about it better and your ability to sort of continue to monetize that real estate.

Okay. And then my follow-up, I want to ask this carefully, though, it's -- there's a fear out there that you may lose some traffic acquisition revenue. And I was wondering if you thought, AI from a big picture, and it doesn't have to be on a long-term basis," I mean, from a big picture, if AI is an opportunity for you to continue to monetize your mobile real estate, just how you -- how maybe investors can think about that from a big picture.

Operator, Michael Ng, Luca Maestri, Timothy D. Cook, Suhasini Chandramouli, Wamsi Mohan

We've introduced several financing solutions from installment plans to trade-in programs that reduce the affordability threshold and therefore, customers tend to buy -- want to buy at the top of the range, that is very valuable for us in developed markets but particularly in emerging markets where the affordability issues are more pronounced. But in general, over the last several years, and that is also reflected in our gross margins, over the last several years, we've seen this trend, which we think is pretty sustainable.

I'm not sure I fully understand the question. But in general, what we are seeing on the product side, we continue to see a lot of interest at the top of the range of our products. And I think it's a combination of consumers wanting to purchase the best product that we offer in the different categories and our ability to make those purchases more affordable over time.

Operator, Michael Ng, Luca Maestri, Erik William Richard Woodring, Timothy D. Cook, Suhasini Chandramouli, Wamsi Mohan

And what changes sort of the consumer demand or receptivity to new devices because we've been in this malaise for a while. Is it really this AI initiative that a lot of companies are pursuing? And do you think that changes sort of the demand drivers going forward? Or is it just really more of a timing issue in terms of the replacement cycle is a little bit long in the tooth, and we see a bit of an upgrade cycle at some point maybe later this year into next year?

I'm going to roll the 2 together so you guys have them both. So Luca, obviously, I'm trying to parse through the outlook for the June quarter. And just based on the quick math, it looks like all things being equal, given what you said, the iPhone business is going to be down mid-single digits again in the June quarter. And if that's the case, and maybe this is for Tim, obviously, how are you thinking about the competitive landscape in the context of what you just said, maybe outside of China?

Operator, Michael Ng, Benjamin Alexander Reitzes, Luca Maestri, Timothy D. Cook, Erik William Richard Woodring, Suhasini Chandramouli, Wamsi Mohan

So we feel very good about the progress that we're making in Services. As we go forward, I'll just point out that if you look at our growth rates a year ago, they improved during the course of the fiscal year last year. So the comps for the Services business become a bit more challenging as we go through the year. But in general, as I mentioned, we still expect to grow double digits in the June quarter at a rate that is very similar to what we've done in the first half.

So a number of things on Services. First of all, the overall performance was very strong. As I said earlier, all-time records in both developed and emerging markets, so we see our Services do well across the world. Records in many of our Services categories, there are some categories that are growing very fast also because they are relatively smaller in the scheme of our Services business like cloud, video, payment services, those all set all-time revenue records.

Operator, Michael Ng, Suhasini Chandramouli, Krish Sankar, Luca Maestri, Benjamin Alexander Reitzes, Timothy D. Cook, Erik William Richard Woodring, Wamsi Mohan

From a pragmatic point of view, you need to produce there to be competitive. And so yes, the 2 things are linked from that point of view. But we have both operational things going on, and we have go-to-market and initiatives going on. We just opened a couple of stores as last year, as you know, and we see enormous opportunity there. We're continuing to expand our channels and also working on the developer ecosystem as well. And we've been very pleased that there's a rapidly growing base of developers there.

Got it, got it. And for my follow-up, if I can ask you more specifically about the India market. Obviously, you continue to make new records in terms of revenue in that market. How much of the momentum you're seeing would you associate with your sort of retail strategy in that market, retail expansion relative to maybe some of the supply change or the manufacturing changes or strategy you've undergone or taken in that market itself? Any thoughts around that would be helpful. Sure. We did grow strong double digit, and so we were very, very pleased with that. It was a new March quarter revenue record for us. As I've said before, I see it as an incredibly exciting market and it's a major focus for us. In terms of the operational side or supply chain side, we are producing there.

Operator, Michael Ng, Benjamin Alexander Reitzes, Suhasini Chandramouli, Krish Sankar, Luca Maestri, Amit Jawaharlaz Daryanani, Timothy D. Cook, Erik William Richard Woodring, Wamsi Mohan

And so we're working all of the entire ecosystem from developer to the market, to operations, the whole thing. And I just -- I could not be more excited and enthusiastic about it.

From a pragmatic point of view, you need to produce there to be competitive. And so yes, the 2 things are linked from that point of view. But we have both operational things going on, and we have go-to-market and initiatives going on. We just opened a couple of stores as last year, as you know, and we see enormous opportunity there. We're continuing to expand our channels and also working on the developer ecosystem as well. And we've been very pleased that there's a rapidly growing base of developers there.

Operator, Michael Ng, Benjamin Alexander Reitzes, Suhasini Chandramouli, Krish Sankar, Luca Maestri, Amit Jawaharlaz Daryanani, Timothy D. Cook, Erik William Richard Woodring, Wamsi Mohan

The populations are large and growing, and our products are really making a lot of progress with -- in those markets. The level of excitement for the brand is very high. Tim was in Southeast Asia recently, and the level of excitement is incredibly high. So it is very good for us. And then -- and certainly, the numbers are getting larger all the time. And so the gap, as you compare it to the numbers in China, is reducing. And hopefully, that trajectory continues for a long time.

I think, Richard, you're asking a really interesting question. We were looking at something similar recently. Obviously, China is by far the largest emerging market that we have. But when we start looking at places like India, like Saudi, like Mexico, Turkey, of course, Brazil and Mexico and Indonesia, the numbers are getting large and we're very happy because -- these are markets where our market share is low.

Operator, Michael Ng, Amit Jawaharlaz Daryanani, Krish Sankar, Luca Maestri, Benjamin Alexander Reitzes, Timothy D. Cook, Suhasini Chandramouli, Erik William Richard Woodring, Wamsi Mohan

And so that is something to keep in mind as you look at our results, right? And so we are making all the investments that are needed, and Tim has talked about innovation. Obviously, we made a lot of progress with financing solutions, with trading programs and so on, and we will continue to make all those investments.

And if I can add to Tim's comments, Richard, one of the things that when you look over the long arc of time that maybe is not fully understood is that we've gone through a long period of very strong dollar. And what that means, given that our company sells more than 60% of our revenues outside the United States, the demand for our products in those markets is stronger than the results that we report just because of the translation of those local currencies into dollars, right?

David Vogt, Operator, Michael Ng, Benjamin Alexander Reitzes, Suhasini Chandramouli, Krish Sankar, Luca Maestri, Amit Jawaharlaz Daryanani, Timothy D. Cook, Erik William Richard Woodring, Wamsi Mohan

And so it commands control centers. And so it's an enormous number of different verticals. And our focus is on -- is growing that ecosystem and getting more apps and more and more enterprises engaged. And the event that we had recently, I can't overstate the enthusiasm in the room. It was extraordinary. And so we're off to a good start, I think, with enterprise.

Yes, the great thing is I'm hearing about so many of them. I wouldn't say that one has emerged as the top right now. The most impressive thing is that similar to the way people use the Mac, you use it for everything. People are using it for many different things in enterprise. And that varies from field service to training to health care-related things like preparing a doctor for pre-op surgery or advanced imaging.

David Vogt, Operator, Michael Ng, Benjamin Alexander Reitzes, Suhasini Chandramouli, Krish Sankar, Luca Maestri, Amit Jawaharlaz Daryanani, Timothy D. Cook, Erik William Richard Woodring, Wamsi Mohan

Now some of my people even say this is just stolen data, but all this public data has been amalgamated into what they call training sets. And these training sets then get turned into what we call inference, which is how the AI then is able to start to deliver its insights. But there's other things that it's providing besides insights. These AI models, well, they could be considered very confident liars, producing misinformation, hallucinations. Hallucinations are not a feature, okay? And I'm going to get to that point in a second. And I think you all understand it that already because at this point, we all have a high level of experience with AI, don't we? Everyone has had that experience.

And then we also realized there are some other things, too. Let's talk about the truth. The truth is that these AI models are all trained on amalgamated public data. You all understand that. You've all seen the New York Times lawsuit of OpenAI or others who are really going to take, hey, this is all -- this amalgamated stolen public data, much of it used without permission, unlicensed, but amalgamated into these single consolidated data stores.

On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2024 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, June 13, and contains forward-looking statements that involve risks, 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.

Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's Chair and CEO; David Wadhwani, President of Digital Media; Anil Chakravarthy, President of Digital Experience; and Dan Durn, Executive Vice President and CFO.

Jonathan Vaas, Operator

On this call, we will discuss GAAP and non-GAAP financial measures. Our reported results include GAAP growth rates as well as constant currency rates. During this presentation, Adobe's executives will refer to constant currency growth 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.

On this call, which is being recorded, we will discuss Adobe's second quarter fiscal year 2024 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, June 13, and contains forward-looking statements that involve risks, 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.

Jonathan Vaas, Operator

Adobe's highly differentiated approach to AI is rooted in the belief that creativity is a uniquely human trait and that AI has the power to assist and amplify human ingenuity and enhance productivity. We're innovating across data, models, and interfaces and natively integrating AI across all our offerings. In Creative Cloud, we've invested in training our Firefly family of creative generative AI models with a proprietary data set and delivering AI functionality within our flagship products, including Photoshop, Illustrator, Lightroom, and Premier. We're reimagining creativity for a broader set of customers by delivering Adobe Express as an AI-first application across the web and mobile surfaces. Since its debut in March 2023, Firefly has been used to generate over 9 billion images across Adobe Creative tools.

Thanks, Jonathan. Good afternoon, and thank you for joining us. Adobe had an outstanding quarter, achieving revenue of $5.31 billion, representing 11% year-over-year growth. GAAP earnings per share for the quarter was $3.49, and non-GAAP earnings per share was $4.48, representing 15% year-over-year growth. Our success is driven by growing customer value through an innovative product road map. The advances we are delivering across Creative Cloud, Document Cloud, and Experience Cloud are enabling us to attract an expanding universe of users. Everyone from creators, communicators, students, entrepreneurs, and businesses of all sizes are using our products to unleash their creativity, accelerate document productivity, and power their digital businesses.

Jonathan Vaas, Shantanu Narayen, Operator

In Document Cloud, we're revolutionizing document productivity with Acrobat AI Assistant, an AI-powered conversational engine that can easily be deployed in minutes. This enhances the value of the trillions of PDFs which hold a significant portion of the world's information. Acrobat AI Assistant features are now available through an add-on subscription to all Reader and Acrobat enterprise and individual customers across desktop, web, and mobile.

Adobe's highly differentiated approach to AI is rooted in the belief that creativity is a uniquely human trait and that AI has the power to assist and amplify human ingenuity and enhance productivity. We're innovating across data, models, and interfaces and natively integrating AI across all our offerings. In Creative Cloud, we've invested in training our Firefly family of creative generative AI models with a proprietary data set and delivering AI functionality within our flagship products, including Photoshop, Illustrator, Lightroom, and Premier. We're reimagining creativity for a broader set of customers by delivering Adobe Express as an AI-first application across the web and mobile surfaces. Since its debut in March 2023, Firefly has been used to generate over 9 billion images across Adobe Creative tools.

Jonathan Vaas, Shantanu Narayen, Operator

At the end of May, we celebrated the 5-year anniversary of Adobe Experience Platform, which we conceived and built from scratch and which is on track to be the next billion-dollar business in our Digital Experience portfolio. We released AEP AI Assistant to enhance the productivity of marketing practitioners through generative AI while expanding access to native AEP applications. With Adobe GenStudio, we're bringing together products across our clouds, including Creative Cloud, Adobe Experience Manager, Workfront, Adobe Journey Optimizer, and Customer Journey Analytics as well as Adobe Express for Business to address the massive content supply chain opportunity.

Adobe's highly differentiated approach to AI is rooted in the belief that creativity is a uniquely human trait and that AI has the power to assist and amplify human ingenuity and enhance productivity. We're innovating across data, models, and interfaces and natively integrating AI across all our offerings. In Creative Cloud, we've invested in training our Firefly family of creative generative AI models with a proprietary data set and delivering AI functionality within our flagship products, including Photoshop, Illustrator, Lightroom, and Premier. We're reimagining creativity for a broader set of customers by delivering Adobe Express as an AI-first application across the web and mobile surfaces. Since its debut in March 2023, Firefly has been used to generate over 9 billion images across Adobe Creative tools. In Document Cloud, we're revolutionizing document productivity with Acrobat AI Assistant, an AI-powered conversational engine that can easily be deployed in minutes. This enhances the value of the trillions of PDFs which hold a significant portion of the world's information. Acrobat AI Assistant features are now available through an add-on subscription to all Reader and Acrobat enterprise and individual customers across desktop, web, and mobile.

Jonathan Vaas, Shantanu Narayen, Operator

Our approach to empower marketers to quickly plan, create, manage, activate, and measure on-brand content is resonating with customers and validating our leadership across data, content, and journeys to deliver personalized experiences at scale. We're extending our applications to integrate third-party text, image, and video models and partnering strategically to create multimodal, large language models, offering customers greater choice in tools and further enhancing the value of our leading applications and solutions.

At the end of May, we celebrated the 5-year anniversary of Adobe Experience Platform, which we conceived and built from scratch and which is on track to be the next billion-dollar business in our Digital Experience portfolio. We released AEP AI Assistant to enhance the productivity of marketing practitioners through generative AI while expanding access to native AEP applications. With Adobe GenStudio, we're bringing together products across our clouds, including Creative Cloud, Adobe Experience Manager, Workfront, Adobe Journey Optimizer, and Customer Journey Analytics as well as Adobe Express for Business to address the massive content supply chain opportunity.

Jonathan Vaas, Shantanu Narayen, Operator

We're driving strong usage, value and demand for our AI solutions across all customer segments and seeing early success monetizing new AI technologies across our Digital Media and Digital Experience businesses. Given this rich product road map focused on execution and customer demand in the first half of the year, we're pleased to raise our annual Digital Media net new ARR, Digital Experience subscription revenue and EPS targets. I'll now turn it over to David to discuss the momentum in our Digital Media business.

At the end of May, we celebrated the 5-year anniversary of Adobe Experience Platform, which we conceived and built from scratch and which is on track to be the next billion-dollar business in our Digital Experience portfolio. We released AEP AI Assistant to enhance the productivity of marketing practitioners through generative AI while expanding access to native AEP applications. With Adobe GenStudio, we're bringing together products across our clouds, including Creative Cloud, Adobe Experience Manager, Workfront, Adobe Journey Optimizer, and Customer Journey Analytics as well as Adobe Express for Business to address the massive content supply chain opportunity. Our approach to empower marketers to quickly plan, create, manage, activate, and measure on-brand content is resonating with customers and validating our leadership across data, content, and journeys to deliver personalized experiences at scale. We're extending our applications to integrate third-party text, image, and video models and partnering strategically to create multimodal, large language models, offering customers greater choice in tools and further enhancing the value of our leading applications and solutions.

Jonathan Vaas, Shantanu Narayen, Operator

The introduction of Acrobat AI Assistant made generally available in April for English documents marks the beginning of a new era of innovation and efficiency for the approximately 3 trillion PDFs in the world. Acrobat AI Assistant is empowering everyone to shift from reading documents to having conversations with them in order to summarize documents, extract insights, compose presentations, and share learnings. AI Assistant is available as a stand-alone offer for use in reader and as an add-on to Acrobat Standard and Pro. We're seeing early success driving adoption of AI Assistant as part of our commerce flows and remain optimistic about the long-term opportunities.

Thanks, Shantanu. Hello, everyone. In Q2, we achieved net new Digital Media ARR of $487 million and revenue of $3.91 billion, which grew 12% year-over-year. On the Document Cloud side, PDF has become a global standard for automating business and consumer workflows, and Acrobat is the platform of choice to view, edit, share, and collaborate with these documents. We continue to see steady growth in monthly active users of our Document Cloud solutions, including Acrobat Reader, Acrobat Standard and Pro, and our signature share and review workflows across mobile, web, and desktop.

Jonathan Vaas, Shantanu Narayen, Operator

In Q2, we achieved Document Cloud revenue of $782 million, growing 19% year-over-year. We added $165 million of net new Document Cloud ARR, which was a Q2 record with year-over-year ending ARR growth of 24% in constant currency. Other business highlights include: general availability of Acrobat AI Assistant support for document types beyond PDF, meeting transcripts and enterprise requirements; Acrobat Link Sharing for PDF-based collaboration continues to grow rapidly, more than doubling year-over-year and driving viral new user adoption; free monthly active users of Acrobat Web grew over 60% year-over-year as a result of link sharing and our Microsoft Edge and Google Chrome extensions; continued strength with free-to-pay digital conversion as a result of product-led growth optimizations; strong growth in the SMB segment for our Teams offering, driven by a combination of seat expansion and new account wins; key enterprise customer wins with AstraZeneca, Chevron, state government of Florida, state of Illinois, United Healthcare Services, and Wells Fargo.

The introduction of Acrobat AI Assistant made generally available in April for English documents marks the beginning of a new era of innovation and efficiency for the approximately 3 trillion PDFs in the world. Acrobat AI Assistant is empowering everyone to shift from reading documents to having conversations with them in order to summarize documents, extract insights, compose presentations, and share learnings. AI Assistant is available as a stand-alone offer for use in reader and as an add-on to Acrobat Standard and Pro. We're seeing early success driving adoption of AI Assistant as part of our commerce flows and remain optimistic about the long-term opportunities.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani

Turning to Creative Cloud. Creative professionals are leading the global charge to meet the ever-increasing demand for engaging content across a variety of platforms and channels. Enterprises rely on creative professionals to produce differentiated content to drive increasingly personalized marketing campaigns. Solopreneurs and small businesses need to stand out in a crowded digital landscape with engaging videos and designs. Educators are passionate about providing students with the visual communication skills needed to thrive in the decades ahead. Consumers are increasingly looking for ways to share their stories digitally.

In Q2, we achieved Document Cloud revenue of $782 million, growing 19% year-over-year. We added $165 million of net new Document Cloud ARR, which was a Q2 record with year-over-year ending ARR growth of 24% in constant currency. Other business highlights include: general availability of Acrobat AI Assistant support for document types beyond PDF, meeting transcripts and enterprise requirements; Acrobat Link Sharing for PDF-based collaboration continues to grow rapidly, more than doubling year-over-year and driving viral new user adoption; free monthly active users of Acrobat Web grew over 60% year-over-year as a result of link sharing and our Microsoft Edge and Google Chrome extensions; continued strength with free-to-pay digital conversion as a result of product-led growth optimizations; strong growth in the SMB segment for our Teams offering, driven by a combination of seat expansion and new account wins; key enterprise customer wins with AstraZeneca, Chevron, state government of Florida, state of Illinois, United Healthcare Services, and Wells Fargo.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani

Creative Cloud, Express, and Firefly services are uniquely positioned to catalyze this opportunity for everyone by leveraging the promise of generative AI. Our Creative Cloud flagship applications continue to release new features that are significantly improving user onboarding while simultaneously delivering an unprecedented level of power and precision. Generative Fill and Generative Expand are already 2 of the top 3 features used by customers on the latest version of Photoshop. Text-to-vector support is off to a great start in Illustrator. Remove Object is the fastest-growing feature in Lightroom Mobile. Our preview of generative AI capabilities in Premier won Production Hub Award of Excellence at NAB, the largest video show in North America. We are integrating our leading applications with Firefly and third-party generative AI models to deliver the richest, most engaging content.

Turning to Creative Cloud. Creative professionals are leading the global charge to meet the ever-increasing demand for engaging content across a variety of platforms and channels. Enterprises rely on creative professionals to produce differentiated content to drive increasingly personalized marketing campaigns. Solopreneurs and small businesses need to stand out in a crowded digital landscape with engaging videos and designs. Educators are passionate about providing students with the visual communication skills needed to thrive in the decades ahead. Consumers are increasingly looking for ways to share their stories digitally.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani

Our vision for Adobe Express is to provide a breakthrough application to make design easy for communicators worldwide, leveraging generative AI and decades of Adobe technology across web and mobile. Our launch of the all-new Express application on iOS and Android earlier this quarter is off to a strong start with monthly active users doubling quarter-over-quarter. This week's Design Made Easy event, which focused on Express for business, was another big step forward for us. Companies of all sizes are excited about the integrated power and commercial safety of Firefly, the seamless workflows with Photoshop, Illustrator, and Adobe Experience Cloud, and enterprise-grade Brand Controls that are now part of Express for Business, making it the optimal product for marketing, sales and HR teams to quickly and easily create visual content to share.

Creative Cloud, Express, and Firefly services are uniquely positioned to catalyze this opportunity for everyone by leveraging the promise of generative AI. Our Creative Cloud flagship applications continue to release new features that are significantly improving user onboarding while simultaneously delivering an unprecedented level of power and precision. Generative Fill and Generative Expand are already 2 of the top 3 features used by customers on the latest version of Photoshop. Text-to-vector support is off to a great start in Illustrator. Remove Object is the fastest-growing feature in Lightroom Mobile. Our preview of generative AI capabilities in Premier won Production Hub Award of Excellence at NAB, the largest video show in North America. We are integrating our leading applications with Firefly and third-party generative AI models to deliver the richest, most engaging content.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani

We also announced the general availability of Firefly services and custom models at Summit. The platform makes API calls and model customization available to developers, accessible through low-code, no-code tools and integrates with our Experience Cloud products. Firefly services can power the creation of thousands of asset variations in minutes instead of months and at a fraction of the cost. This allows us to monetize the volume of content being created through automation service. The increasing availability of Firefly in Creative Cloud, Express, Firefly services and the web app is giving us opportunities to access more new users, provide more value to existing users, and monetize content automation. These integrations are driving the acceleration of Firefly generations with May seeing the most generations of any month to date.

Our vision for Adobe Express is to provide a breakthrough application to make design easy for communicators worldwide, leveraging generative AI and decades of Adobe technology across web and mobile. Our launch of the all-new Express application on iOS and Android earlier this quarter is off to a strong start with monthly active users doubling quarter-over-quarter. This week's Design Made Easy event, which focused on Express for business, was another big step forward for us. Companies of all sizes are excited about the integrated power and commercial safety of Firefly, the seamless workflows with Photoshop, Illustrator, and Adobe Experience Cloud, and enterprise-grade Brand Controls that are now part of Express for Business, making it the optimal product for marketing, sales and HR teams to quickly and easily create visual content to share.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani

In Q2, we achieved $3.13 billion in revenue, which grew 11% year-over-year. Net new Creative Cloud ARR was $322 million. Other business highlights include: the launch of Express for Business, including support for brand controls and template locking, Firefly custom models, bulk creation and generation of variations, presentation and print capabilities and Workflows with Photoshop, Illustrator, and Experience Cloud; the release of Firefly Image 3 Foundation Model with high-quality image generation and more control with structure and style reference; the release of the Photoshop Beta with reference image and advances in Generative Fill; the debut of Generative Remove in Adobe Lightroom, enabling anyone to remove unwanted objects from any photograph non-destructively with stunning high-quality photorealistic results; the release of the Premier Beta with new audio workflows driving strong usage; the deep integration of Firefly in Substance 3D, which provides an easy way to create textures and materials from reference images; the introduction of an all-new Frame.io streamlining workflows across content types on a flexible and intuitive collaboration platform. Key enterprise customer wins include Credit Agricole, FedEx, Infosys, Rakuten, Ralph Lauren, Samsung, Schneider Electric, and Volvo.

We also announced the general availability of Firefly services and custom models at Summit. The platform makes API calls and model customization available to developers, accessible through low-code, no-code tools and integrates with our Experience Cloud products. Firefly services can power the creation of thousands of asset variations in minutes instead of months and at a fraction of the cost. This allows us to monetize the volume of content being created through automation service. The increasing availability of Firefly in Creative Cloud, Express, Firefly services and the web app is giving us opportunities to access more new users, provide more value to existing users, and monetize content automation. These integrations are driving the acceleration of Firefly generations with May seeing the most generations of any month to date.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani

We're excited about the accelerating pace of innovation across the Digital Media business and pleased with the adoption of AI functionality as well as its early monetization across Document Cloud and Creative Cloud, including our flagship applications, Firefly services and Express. We're pleased to raise our annual net new ARR target to $1.95 billion and excited to deliver on our rich product road map in the second half. I'll now pass it to Anil.

In Q2, we achieved $3.13 billion in revenue, which grew 11% year-over-year. Net new Creative Cloud ARR was $322 million. Other business highlights include: the launch of Express for Business, including support for brand controls and template locking, Firefly custom models, bulk creation and generation of variations, presentation and print capabilities and Workflows with Photoshop, Illustrator, and Experience Cloud; the release of Firefly Image 3 Foundation Model with high-quality image generation and more control with structure and style reference; the release of the Photoshop Beta with reference image and advances in Generative Fill; the debut of Generative Remove in Adobe Lightroom, enabling anyone to remove unwanted objects from any photograph non-destructively with stunning high-quality photorealistic results; the release of the Premier Beta with new audio workflows driving strong usage; the deep integration of Firefly in Substance 3D, which provides an easy way to create textures and materials from reference images; the introduction of an all-new Frame.io streamlining workflows across content types on a flexible and intuitive collaboration platform. Key enterprise customer wins include Credit Agricole, FedEx, Infosys, Rakuten, Ralph Lauren, Samsung, Schneider Electric, and Volvo.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani

We're now transforming the content supply chain for enterprises with Adobe GenStudio, enabling them to produce content at scale, leveraging generative AI through native integrations with Firefly services and Adobe Express for Business. Enterprise customers, both B2C and B2B, view customer experience management and personalization at scale as key areas of differentiation, making it a priority investment for Chief Marketing Officers, Chief Information Officers and Chief Digital Officers.

Thanks, David. Hello, everyone. In Q2, we achieved Experience Cloud revenue of $1.33 billion. Subscription revenue was $1.2 billion, representing 13% year-over-year growth. We are the industry leader in helping enterprises deliver personalized experiences at scale to their customers by combining the right content, customer data and journeys in real time. When we introduced Adobe Experience Platform 5 years ago, it was a revolutionary approach to address customer data and journeys. Today, we're the #1 digital experience platform, and AEP with native apps is well on its way to becoming a billion-dollar business.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani

We are excited by the customer interest and adoption of our latest innovations, including AEP AI Assistant, a generative AI-powered conversational interface that empowers practitioners to automate tasks, simulate outcomes, and generate new audiences and journeys. For example, customers like General Motors and Hanes brands have been working with AEP AI Assistant to boost productivity and accelerate time to value while democratizing access to AEP and apps across their organizations.

Thanks, David. Hello, everyone. In Q2, we achieved Experience Cloud revenue of $1.33 billion. Subscription revenue was $1.2 billion, representing 13% year-over-year growth. We are the industry leader in helping enterprises deliver personalized experiences at scale to their customers by combining the right content, customer data and journeys in real time. When we introduced Adobe Experience Platform 5 years ago, it was a revolutionary approach to address customer data and journeys. Today, we're the #1 digital experience platform, and AEP with native apps is well on its way to becoming a billion-dollar business. We're now transforming the content supply chain for enterprises with Adobe GenStudio, enabling them to produce content at scale, leveraging generative AI through native integrations with Firefly services and Adobe Express for Business. Enterprise customers, both B2C and B2B, view customer experience management and personalization at scale as key areas of differentiation, making it a priority investment for Chief Marketing Officers, Chief Information Officers and Chief Digital Officers.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

Marriott International is a great example of a customer that's expanded its decade-long relationship with Adobe and turned to Adobe Experience Cloud to orchestrate highly personalized guest experiences across online reservations and the Marriott Bonvoy mobile app. Adobe Real-time CDP and Adobe Journey Optimizer enabled Marriott to connect data from disparate sources and activate relevant experiences in moments that matter, helping the company match individuals with the best options across its portfolio of more than 30 brands and nearly 9,000 properties.

We're now transforming the content supply chain for enterprises with Adobe GenStudio, enabling them to produce content at scale, leveraging generative AI through native integrations with Firefly services and Adobe Express for Business. Enterprise customers, both B2C and B2B, view customer experience management and personalization at scale as key areas of differentiation, making it a priority investment for Chief Marketing Officers, Chief Information Officers and Chief Digital Officers. We are excited by the customer interest and adoption of our latest innovations, including AEP AI Assistant, a generative AI-powered conversational interface that empowers practitioners to automate tasks, simulate outcomes, and generate new audiences and journeys. For example, customers like General Motors and Hanes brands have been working with AEP AI Assistant to boost productivity and accelerate time to value while democratizing access to AEP and apps across their organizations.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

Other business highlights include: continued momentum with AEP and native applications, growing subscription revenue 60% year-over-year in Q2; AEP innovations announced at Summit include Adobe Journey Optimizer B2B addition, a new application for B2B customers built on AEP to orchestrate account-specific buying group journeys; federated audience composition, which enables enterprises to minimize data copy and generate audiences directly from their enterprise data warehouses; and real-time CDP collaboration, a new clean room application for brands and publishers to collaborate in a privacy safe way to discover, reach, and measure their high-value audiences in a world without third-party cookies.

Marriott International is a great example of a customer that's expanded its decade-long relationship with Adobe and turned to Adobe Experience Cloud to orchestrate highly personalized guest experiences across online reservations and the Marriott Bonvoy mobile app. Adobe Real-time CDP and Adobe Journey Optimizer enabled Marriott to connect data from disparate sources and activate relevant experiences in moments that matter, helping the company match individuals with the best options across its portfolio of more than 30 brands and nearly 9,000 properties.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

GenStudio innovations to address enterprise content supply chain needs across workflow and planning, creation and production, asset management, delivery and activation, and reporting and insights. Recent advancements include contextual search in Adobe Experience Manager assets, which enables users to find the right asset and variation in their growing digital libraries. Adobe Workfront Planning, which provides every user with a unified view of all activities across the marketing life cycle through highly visual marketing campaign calendars and dynamic briefs. And AEM Generate Variations, which accelerates the creation of audience-specific content variations to drive personalized web experiences.

Other business highlights include: continued momentum with AEP and native applications, growing subscription revenue 60% year-over-year in Q2; AEP innovations announced at Summit include Adobe Journey Optimizer B2B addition, a new application for B2B customers built on AEP to orchestrate account-specific buying group journeys; federated audience composition, which enables enterprises to minimize data copy and generate audiences directly from their enterprise data warehouses; and real-time CDP collaboration, a new clean room application for brands and publishers to collaborate in a privacy safe way to discover, reach, and measure their high-value audiences in a world without third-party cookies.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

Strong industry analyst recognition including Gartner's Magic Quadrant for Content Marketing Platforms and leadership for both IDC's B2C and B2B MarketScapes for digital commerce applications. Key customer wins include Amazon, British Telecom, Comcast, Mercedes-Benz, Maruti Suzuki, Nationwide Building Society, Novo Nordisk, ServiceNow, Stellantis, Ulta Beauty, and U.S. Department of the Treasury.

GenStudio innovations to address enterprise content supply chain needs across workflow and planning, creation and production, asset management, delivery and activation, and reporting and insights. Recent advancements include contextual search in Adobe Experience Manager assets, which enables users to find the right asset and variation in their growing digital libraries. Adobe Workfront Planning, which provides every user with a unified view of all activities across the marketing life cycle through highly visual marketing campaign calendars and dynamic briefs. And AEM Generate Variations, which accelerates the creation of audience-specific content variations to drive personalized web experiences.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

We have enabled our vibrant partner ecosystem of system integrators and agencies to deliver advisory and implementation services across our product portfolio. We look forward to engaging with customers and major agencies at the Cannes Lions Festival later this month. Our category-leading solutions, robust pipeline, and tremendous scale position us to drive strong growth in the second half, and we are raising our subscription revenue target for the year. I will now pass it to Dan.

GenStudio innovations to address enterprise content supply chain needs across workflow and planning, creation and production, asset management, delivery and activation, and reporting and insights. Recent advancements include contextual search in Adobe Experience Manager assets, which enables users to find the right asset and variation in their growing digital libraries. Adobe Workfront Planning, which provides every user with a unified view of all activities across the marketing life cycle through highly visual marketing campaign calendars and dynamic briefs. And AEM Generate Variations, which accelerates the creation of audience-specific content variations to drive personalized web experiences. Strong industry analyst recognition including Gartner's Magic Quadrant for Content Marketing Platforms and leadership for both IDC's B2C and B2B MarketScapes for digital commerce applications. Key customer wins include Amazon, British Telecom, Comcast, Mercedes-Benz, Maruti Suzuki, Nationwide Building Society, Novo Nordisk, ServiceNow, Stellantis, Ulta Beauty, and U.S. Department of the Treasury.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

This performance stems from the diversification of Adobe's business across our market-leading products, business models, customer segments, and geographies. When combined with our talented employees, strong execution and world-class financial discipline, you have the ingredients that make this company incredibly resilient.

Thanks, Anil. Today, I'll start by summarizing Adobe's performance in Q2 fiscal 2024, highlighting growth drivers across our businesses, and I'll finish with financial targets. In Q2, Adobe delivered strong top line growth and industry-leading profitability while accelerating the pace of innovations we're delivering to market across Document Cloud, Creative Cloud, and Experience Cloud. In the quarter, Adobe achieved record revenue of $5.31 billion, which represents 10% year-over-year growth or 11% in constant currency, with strength across all 3 clouds.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

Second quarter business and financial highlights included: GAAP diluted earnings per share of $3.49 and non-GAAP diluted earnings per share of $4.48; Digital Media revenue of $3.91 billion; net new Digital Media ARR of $487 million; Digital Experience revenue of $1.33 billion; cash flows from operations of $1.94 billion; and RPO of $17.86 billion exiting the quarter.

Thanks, Anil. Today, I'll start by summarizing Adobe's performance in Q2 fiscal 2024, highlighting growth drivers across our businesses, and I'll finish with financial targets. In Q2, Adobe delivered strong top line growth and industry-leading profitability while accelerating the pace of innovations we're delivering to market across Document Cloud, Creative Cloud, and Experience Cloud. In the quarter, Adobe achieved record revenue of $5.31 billion, which represents 10% year-over-year growth or 11% in constant currency, with strength across all 3 clouds. This performance stems from the diversification of Adobe's business across our market-leading products, business models, customer segments, and geographies. When combined with our talented employees, strong execution and world-class financial discipline, you have the ingredients that make this company incredibly resilient.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

In our Digital Media segment, we achieved Q2 revenue of $3.91 billion, which represents 11% year-over-year growth or 12% in constant currency. We exited the quarter with $16.25 billion of Digital Media ARR, up 13% year-over-year in constant currency. Adobe achieved Document Cloud revenue of $782 million, which represents 19% year-over-year growth as reported and in constant currency. We added $165 million of net new Document Cloud ARR, which was a record for Q2.

This performance stems from the diversification of Adobe's business across our market-leading products, business models, customer segments, and geographies. When combined with our talented employees, strong execution and world-class financial discipline, you have the ingredients that make this company incredibly resilient. Second quarter business and financial highlights included: GAAP diluted earnings per share of $3.49 and non-GAAP diluted earnings per share of $4.48; Digital Media revenue of $3.91 billion; net new Digital Media ARR of $487 million; Digital Experience revenue of $1.33 billion; cash flows from operations of $1.94 billion; and RPO of $17.86 billion exiting the quarter.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

Q2 Document Cloud growth drivers included: demand for Acrobat subscriptions across all customer segments and geographies; new user acquisition resulting from increasing Reader MAU; a great start monetizing AI Assistant through our digital channel; strong usage and engagement from Acrobat Web as well as through our Chrome and Edge partnerships, which are driving free-to-paid conversion; growing team subscription units sold to SMBs, both through adobe.com and our research channel; and strength in our enterprise solutions, demonstrating the importance of PDF as a source of unstructured data in business workflows.

Second quarter business and financial highlights included: GAAP diluted earnings per share of $3.49 and non-GAAP diluted earnings per share of $4.48; Digital Media revenue of $3.91 billion; net new Digital Media ARR of $487 million; Digital Experience revenue of $1.33 billion; cash flows from operations of $1.94 billion; and RPO of $17.86 billion exiting the quarter. In our Digital Media segment, we achieved Q2 revenue of $3.91 billion, which represents 11% year-over-year growth or 12% in constant currency. We exited the quarter with $16.25 billion of Digital Media ARR, up 13% year-over-year in constant currency. Adobe achieved Document Cloud revenue of $782 million, which represents 19% year-over-year growth as reported and in constant currency. We added $165 million of net new Document Cloud ARR, which was a record for Q2.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

We achieved Creative revenue of $3.13 billion, which represents 10% year-over-year growth or 11% in constant currency. We added $322 million of net new Creative ARR in the quarter. Q2 Creative growth drivers included: new subscriptions for Creative Cloud All Apps with particular strength in digital acquisition on adobe.com, with multiple product releases during the quarter driving customer engagement and demand; strong growth of single apps, including in imaging, photography, design, and stock; accelerating customer interest and usage for our new Express Mobile and Express for Business offerings; strong renewals as customers migrate to higher-value, higher ARPU Creative Cloud plans that include Firefly entitlements; continued subscription unit growth, with particular strength in emerging markets; and strength from SMBs adopting our team offering as well as in the enterprise segment with ETLA adoption.

Q2 Document Cloud growth drivers included: demand for Acrobat subscriptions across all customer segments and geographies; new user acquisition resulting from increasing Reader MAU; a great start monetizing AI Assistant through our digital channel; strong usage and engagement from Acrobat Web as well as through our Chrome and Edge partnerships, which are driving free-to-paid conversion; growing team subscription units sold to SMBs, both through adobe.com and our research channel; and strength in our enterprise solutions, demonstrating the importance of PDF as a source of unstructured data in business workflows.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

We're pleased with the performance of the Creative business in the first half of the year, fueled by strong commercial subscriptions in both Q1 and Q2. As we look at the momentum we're carrying into the back half, we expect to deliver year-over-year growth of Creative net new ARR in Q3 and Q4 and are raising our Digital Media net new ARR target for the fiscal year.

We achieved Creative revenue of $3.13 billion, which represents 10% year-over-year growth or 11% in constant currency. We added $322 million of net new Creative ARR in the quarter. Q2 Creative growth drivers included: new subscriptions for Creative Cloud All Apps with particular strength in digital acquisition on adobe.com, with multiple product releases during the quarter driving customer engagement and demand; strong growth of single apps, including in imaging, photography, design, and stock; accelerating customer interest and usage for our new Express Mobile and Express for Business offerings; strong renewals as customers migrate to higher-value, higher ARPU Creative Cloud plans that include Firefly entitlements; continued subscription unit growth, with particular strength in emerging markets; and strength from SMBs adopting our team offering as well as in the enterprise segment with ETLA adoption.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

Turning to our Digital Experience segment. In Q2, we achieved revenue of $1.33 billion, which represents 9% year-over-year growth as reported and in constant currency. Digital Experience subscription revenue was $1.20 billion, growing 13% year-over-year as reported and in constant currency. Q2 Digital Experience growth drivers included: subscription revenue strength from transformational accounts; market leadership with AEP and native applications, with subscription revenue growing 60% year-over-year; additional subscription revenue strength across the data insights and audiences and customer journey categories; and accelerated adoption of our AEM and Workfront solutions from businesses looking to solve their content supply chain challenges.

We achieved Creative revenue of $3.13 billion, which represents 10% year-over-year growth or 11% in constant currency. We added $322 million of net new Creative ARR in the quarter. Q2 Creative growth drivers included: new subscriptions for Creative Cloud All Apps with particular strength in digital acquisition on adobe.com, with multiple product releases during the quarter driving customer engagement and demand; strong growth of single apps, including in imaging, photography, design, and stock; accelerating customer interest and usage for our new Express Mobile and Express for Business offerings; strong renewals as customers migrate to higher-value, higher ARPU Creative Cloud plans that include Firefly entitlements; continued subscription unit growth, with particular strength in emerging markets; and strength from SMBs adopting our team offering as well as in the enterprise segment with ETLA adoption. We're pleased with the performance of the Creative business in the first half of the year, fueled by strong commercial subscriptions in both Q1 and Q2. As we look at the momentum we're carrying into the back half, we expect to deliver year-over-year growth of Creative net new ARR in Q3 and Q4 and are raising our Digital Media net new ARR target for the fiscal year.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

Turning to the income statement and balance sheet. In Q2, Adobe delivered year-over-year EPS growth of 24% on a GAAP basis and 15% on a non-GAAP basis. This was driven by revenue growth and disciplined prioritization of our investments, which resulted in non-GAAP operating margin strength in Q2. The company continues to deliver world-class gross margins while investing in groundbreaking AI capabilities. Adobe's effective tax rate in Q2 was 18.5% on a GAAP and non-GAAP basis, in line with our expectations for the quarter. RPO exiting the quarter was $17.86 billion, growing 17% year-over-year as reported or 18% when factoring in a 1-point currency headwind. Current RPO grew 12% exiting the quarter.

Turning to our Digital Experience segment. In Q2, we achieved revenue of $1.33 billion, which represents 9% year-over-year growth as reported and in constant currency. Digital Experience subscription revenue was $1.20 billion, growing 13% year-over-year as reported and in constant currency. Q2 Digital Experience growth drivers included: subscription revenue strength from transformational accounts; market leadership with AEP and native applications, with subscription revenue growing 60% year-over-year; additional subscription revenue strength across the data insights and audiences and customer journey categories; and accelerated adoption of our AEM and Workfront solutions from businesses looking to solve their content supply chain challenges.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

Our ending cash and short-term investment position at the end of Q2 was $8.07 billion, and cash flows from operations in the quarter were $1.94 billion. In Q2, we entered into a $2.5 billion share repurchase agreement, and we currently have $22.7 billion remaining of the $25 billion authorization granted in March 2024. We will now provide Q3 targets as well as updated fiscal 2024 annual targets, factoring in current macroeconomic conditions as well as strong momentum across our business, our current FX outlook into the back half of the year with the U.S. dollar remaining stronger as compared to our original expectations when we set our FY '24 targets in December, and an expected strong seasonal finish to the year in Q4.

Turning to the income statement and balance sheet. In Q2, Adobe delivered year-over-year EPS growth of 24% on a GAAP basis and 15% on a non-GAAP basis. This was driven by revenue growth and disciplined prioritization of our investments, which resulted in non-GAAP operating margin strength in Q2. The company continues to deliver world-class gross margins while investing in groundbreaking AI capabilities. Adobe's effective tax rate in Q2 was 18.5% on a GAAP and non-GAAP basis, in line with our expectations for the quarter. RPO exiting the quarter was $17.86 billion, growing 17% year-over-year as reported or 18% when factoring in a 1-point currency headwind. Current RPO grew 12% exiting the quarter.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

For Q3, we're targeting: total Adobe revenue of $5.33 billion to $5.38 billion; Digital Media net new ARR of approximately $460 million; Digital Media segment revenue of $3.95 billion to $3.98 billion; Digital Experience segment revenue of $1.325 billion to $1.345 billion; Digital Experience subscription revenue of $1.20 billion to $1.22 billion; tax rate of approximately 18% on a GAAP basis and 18.5% on a non-GAAP basis; GAAP earnings per share of $3.45 to $3.50; and non-GAAP earnings per share of $4.50 to $4.55.

Our ending cash and short-term investment position at the end of Q2 was $8.07 billion, and cash flows from operations in the quarter were $1.94 billion. In Q2, we entered into a $2.5 billion share repurchase agreement, and we currently have $22.7 billion remaining of the $25 billion authorization granted in March 2024. We will now provide Q3 targets as well as updated fiscal 2024 annual targets, factoring in current macroeconomic conditions as well as strong momentum across our business, our current FX outlook into the back half of the year with the U.S. dollar remaining stronger as compared to our original expectations when we set our FY '24 targets in December, and an expected strong seasonal finish to the year in Q4.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

For fiscal 2024, given our first half performance, we are now targeting: total Adobe revenue of $21.40 billion to $21.50 billion; Digital Media net new ARR of approximately $1.95 billion; Digital Media segment revenue of $15.80 billion to $15.85 billion; Digital Experience segment revenue of $5.325 billion to $5.375 billion; Digital Experience subscription revenue of $4.775 billion to $4.825 billion; tax rate of approximately 20.5% on a GAAP basis and 18.5% on a non-GAAP basis; GAAP earnings per share of $11.80 to $12; and non-GAAP earnings per share of $18 to $18.20.

For Q3, we're targeting: total Adobe revenue of $5.33 billion to $5.38 billion; Digital Media net new ARR of approximately $460 million; Digital Media segment revenue of $3.95 billion to $3.98 billion; Digital Experience segment revenue of $1.325 billion to $1.345 billion; Digital Experience subscription revenue of $1.20 billion to $1.22 billion; tax rate of approximately 18% on a GAAP basis and 18.5% on a non-GAAP basis; GAAP earnings per share of $3.45 to $3.50; and non-GAAP earnings per share of $4.50 to $4.55.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

In summary, I'm extremely pleased with the company's performance in the first half of the year and the momentum we see in our business. Adobe's product leadership, velocity of innovation, diversity of our business, and financial discipline make us unique, enabling us to deliver strong top and bottom line results through dynamic market conditions. I'm confident in our ability to catalyze transformative long-term trends that will position us to win over the next decade. Shantanu, back to you.

For fiscal 2024, given our first half performance, we are now targeting: total Adobe revenue of $21.40 billion to $21.50 billion; Digital Media net new ARR of approximately $1.95 billion; Digital Media segment revenue of $15.80 billion to $15.85 billion; Digital Experience segment revenue of $5.325 billion to $5.375 billion; Digital Experience subscription revenue of $4.775 billion to $4.825 billion; tax rate of approximately 20.5% on a GAAP basis and 18.5% on a non-GAAP basis; GAAP earnings per share of $11.80 to $12; and non-GAAP earnings per share of $18 to $18.20.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

This quarter, Adobe was recognized among Fortune's 100 Best Companies to Work For, Glassdoor's Best-led Companies and the Civic 50 List of the Most Community-minded Companies in the U.S. Demand for our category-defining products and services continues to grow. Our business fundamentals and market tailwinds are strong, and we look forward to building on our momentum in the second half and beyond. Thank you, and we will now take questions.

Thanks, Dan. Adobe remains one of the greatest places to work in the industry, and I want to thank our employees for their relentless dedication to supporting our customers and communities. We continue to invest in hiring, including new college grads and interns to bring the best and brightest talent to Adobe.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

New users are still a big driver of the growth that we continue to see in the business. On the Document Cloud side, a lot of that has to do with the introduction of AI Assistant and the fact that people are migrating to the higher-value products. And on Creative Cloud, I would say the things that we're doing on imaging with Firefly and what we've seen both in Photoshop and Lightroom. I think in the prepared remarks, Dan certainly talked about what's happening with also each of the different segments. So the SMB segment actually had a strong quarter. Enterprise continues to have a strong quarter. So across the board, Mark, we actually saw strength in the business.

Sure, Mark, let me start and then certainly, David and Dan can add. To your point, we had a strong quarter. And I think what's really driving the quarter, big picture, continues to be the innovation that we're delivering. And the way AI is actually making our applications both more affordable, easy to onboard as well as, frankly, higher-value users.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

I think the biggest opportunity for us and why we're really excited about gen AI is in the interfaces because that's the way people derive value, whether it's in being able to complete their tasks faster, whether it's being able to do new workflows. And I would say in that particular space, Acrobat has really seen a significant amount of usage as it relates to AI Assistant.

Sure, Alex. Again maybe I'll start with that. And just taking a step back, I think we've talked about the platform that we have for gen AI that constitutes data as well as models and finally, interfaces. On the models, we released Firefly services. We've started to see some customer wins in Firefly services. So they're using it for variations, and these are the custom models that we're creating as well as access to APIs. I would say that's early in terms of the adoption, but the interest as customers say how they can ingest their data into our models as well as custom models, that's really ahead of us, and we expect that to continue to grow in Q3 and Q4.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And Photoshop, I'll have David again add, but Generative Fill and what we are doing there, what we are doing in Illustrator. And that both for existing customers as well as for prospects who now come in and say, the products are becoming increasingly more productive for us, that's what's really driving the value there. And last but not least, the AI-first applications. When we think of an application like Express, Express is all about reimagining what we can do for creatives by sort of leapfrogging existing technologies and providing an AI-first application. And so that's also off to a good start.

Sure, Alex. Again maybe I'll start with that. And just taking a step back, I think we've talked about the platform that we have for gen AI that constitutes data as well as models and finally, interfaces. On the models, we released Firefly services. We've started to see some customer wins in Firefly services. So they're using it for variations, and these are the custom models that we're creating as well as access to APIs. I would say that's early in terms of the adoption, but the interest as customers say how they can ingest their data into our models as well as custom models, that's really ahead of us, and we expect that to continue to grow in Q3 and Q4. I think the biggest opportunity for us and why we're really excited about gen AI is in the interfaces because that's the way people derive value, whether it's in being able to complete their tasks faster, whether it's being able to do new workflows. And I would say in that particular space, Acrobat has really seen a significant amount of usage as it relates to AI Assistant.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

So as you can see, there was a ton of innovation of our core -- in our core applications around generative AI. You put that together with some of the activations that we've done at Summit, and we did at Max London and we're getting our word out very broadly. It starts to create this ability to not just look at and play with AI but actually use it as part of your workflow. So that's been deeply integrated into everything we do. And that's the key point, the interfaces that people work out if we bring AI there, everyone becomes more productive.

Yes. And just to add to a little bit of what Shantanu said, Alex, we've talked a lot about how FY '23 was the year that AI was in the playground, and this is the year we need to bring it into production. And a lot of that is industry-wide but we're in a pretty special position as it relates to that. So to Shantanu's point, a lot of active releases this quarter, right, Acrobat AI Assistant, Firefly updates in Photoshop. Firefly was introduced for the first time into Lightroom. Express Mobile launched, Express for Business launched. We launched Firefly services for enterprises to produce content at scale.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And the business cycles will come and go, Alex, but we're actually continuing to focus on execution and converting the pipeline and the interest and the awareness of AI into monetization. And so we just will be ruthlessly focused on continuing to execute against that. So nothing really to report different on the macroeconomic environment from our perspective.

I think from a macro perspective, what I think differentiates Adobe more than any other company is how differentiated and how diverse the set of products that we have. And again, from individual consumers all the way to enterprises, our products are mission-critical. And so at this scale, it's all about execution.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

An example there would be like Generative Fill for Photoshop. And you've clearly started expanding that to other flagships like Premier and Illustrator. Maybe to go 1 level deeper, is there a way that you think about the potential opportunity from things like higher retention rates? Or any other way that -- I know it's really tough to size, but how have you sort of thought about it even qualitatively?

And echo the congrats on the quarter. Maybe for both of you, Shantanu and David. There are clearly just so many layers to the Firefly monetization story. But I think 1 theme that's coming out a little bit in this call and particularly interesting route to monetize is just the increased engagement that Firefly helps drive in your flagship products, right, or I think we call it sort of the interfaces, right?

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And to your point, there are many different ways that we can monetize this. First is as you think about the growth algorithms that we always have in our head, it always starts with, as Shantanu said, new users, right? And then it's about getting more value to existing users at higher ARPU, right? So in the context of new users, first and foremost, we want to make sure that everything we're doing generative AI is embedded in our tools, starting with Express, right? So we have Express in the market. We're seeing a lot of adoption and usage of Express in the market.

Yes, it's a great question. And yes, the core has been -- from the very beginning, we've talked to you guys about our primary focus for generative AI is about user adoption and proliferation, right? And that has continued to be the primary thing on our mind. And it's the primary thing on our mind for multiple reasons.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

As that's happening, we're infusing generative AI more and more into Express in a whole host of ways. And that's really helping, everything from our marketing message for the completeness of the AI offering in there all the way through to user engagement and success in onboarding and retention. Similarly, though, this is having the same effect in our core Creative products as well, right? The introduction of Firefly combined with some of the product-led growth work we've been doing, in particular, something called the Context Bar makes it easy for new users coming in to just be more successful out of the gate which then, of course, helps with both conversion and retention.

And to your point, there are many different ways that we can monetize this. First is as you think about the growth algorithms that we always have in our head, it always starts with, as Shantanu said, new users, right? And then it's about getting more value to existing users at higher ARPU, right? So in the context of new users, first and foremost, we want to make sure that everything we're doing generative AI is embedded in our tools, starting with Express, right? So we have Express in the market. We're seeing a lot of adoption and usage of Express in the market.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And then with AI Assistant, the ability to sort of embed that into the purchase flow for Acrobat and get a high attach rate, we always talk about that as a would you like fries with it moment at Adobe when someone's going through the checkout flow, it's just a great way for people to say, look, this is value I want. I want to add it and buy up to the higher plans. So there are a lot of different mechanisms that we see. But by far, the strongest is going to be the fact that we are seeing people like in Creative Cloud migrating to the higher-priced plans because they include Firefly. And so we just want to get more value to these users as well.

As that's happening, we're infusing generative AI more and more into Express in a whole host of ways. And that's really helping, everything from our marketing message for the completeness of the AI offering in there all the way through to user engagement and success in onboarding and retention. Similarly, though, this is having the same effect in our core Creative products as well, right? The introduction of Firefly combined with some of the product-led growth work we've been doing, in particular, something called the Context Bar makes it easy for new users coming in to just be more successful out of the gate which then, of course, helps with both conversion and retention.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And in terms of the generation, Saket, I think we talked about it. We did a great job at MAX in London talking about some of the new functionality and releasing. Photoshop, I think we're up to 9 billion generations, and actually, I think the greatest amount of generations was in May. So the momentum clearly is the more we integrate this functionality into our interfaces, the more that usage is really driving adoption as well as retention.

And then with AI Assistant, the ability to sort of embed that into the purchase flow for Acrobat and get a high attach rate, we always talk about that as a would you like fries with it moment at Adobe when someone's going through the checkout flow, it's just a great way for people to say, look, this is value I want. I want to add it and buy up to the higher plans. So there are a lot of different mechanisms that we see. But by far, the strongest is going to be the fact that we are seeing people like in Creative Cloud migrating to the higher-priced plans because they include Firefly. And so we just want to get more value to these users as well.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And that combination has led to an incredible set of metrics over the last quarter, in particular, but building throughout the year. Express MAU is growing very quickly. We talked about in the script earlier that MAU on mobile has more than doubled quarter-over-quarter, which is fantastic to see. And cumulative exports, if you look at year-over-year, has grown by over 80%. So really feeling good about sort of the momentum we're seeing.

Yes. For starters, there's a lot of buzz of Express here at Adobe coming off the event we just had earlier this week, but it's really based on the fact that the innovation in Express is on a tear, right? A few months ago, we introduced an all-new Express for the web. This quarter, we introduced an all-new Express for mobile. We introduced Express for Business. We also now have, as we've just talked about, been more deeply integrating AI features, whether it's for imaging generation or generative fill or text effects, character animation, design generations more deeply into the flow for Express.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

But if you take a step back, I think it is important to take a step back and understand our vision. Express that is now in market is built on a brand-new platform, right? And that brand-new platform lays the groundwork for the AI era. And this will be -- Express will be the place that anyone can come and create through a combination of conversational and standard inputs. That's the vision that we have. And I think it's an opportunity for us to really leap forward in terms of what we can do on the web and mobile at Adobe.

Yes. For starters, there's a lot of buzz of Express here at Adobe coming off the event we just had earlier this week, but it's really based on the fact that the innovation in Express is on a tear, right? A few months ago, we introduced an all-new Express for the web. This quarter, we introduced an all-new Express for mobile. We introduced Express for Business. We also now have, as we've just talked about, been more deeply integrating AI features, whether it's for imaging generation or generative fill or text effects, character animation, design generations more deeply into the flow for Express. And that combination has led to an incredible set of metrics over the last quarter, in particular, but building throughout the year. Express MAU is growing very quickly. We talked about in the script earlier that MAU on mobile has more than doubled quarter-over-quarter, which is fantastic to see. And cumulative exports, if you look at year-over-year, has grown by over 80%. So really feeling good about sort of the momentum we're seeing.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And it's taken us a little time to get here. It hasn't happened overnight. But now that we are here, we are going to pour the gas on go-to-market, right? You know what we can do with our data-driven operating model. We've been ramping up what we're doing in Digital and Adobe.com journeys. We now can do the same thing and unleash all of that expertise in the mobile app store. You know what we're capable in terms of our product-led growth motions.

But if you take a step back, I think it is important to take a step back and understand our vision. Express that is now in market is built on a brand-new platform, right? And that brand-new platform lays the groundwork for the AI era. And this will be -- Express will be the place that anyone can come and create through a combination of conversational and standard inputs. That's the vision that we have. And I think it's an opportunity for us to really leap forward in terms of what we can do on the web and mobile at Adobe.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

We've now embedded Express Workflows into Acrobat Editor. We obviously have been embedding it into Creative Cloud workflows. And also, as we showed at Summit with Anil, we've embedded it into our Experience Cloud workflows as well. In addition to all of that, we're now unleashing our inside sales force to target the small/medium businesses. Our education teams are really gearing up for the back-to-school launch for K-12 and higher ed. And our field and enterprise sales now have Express for Business. And we're doing all this globally, right? It's a massive market, and we're ramping up and we're ready to go.

And it's taken us a little time to get here. It hasn't happened overnight. But now that we are here, we are going to pour the gas on go-to-market, right? You know what we can do with our data-driven operating model. We've been ramping up what we're doing in Digital and Adobe.com journeys. We now can do the same thing and unleash all of that expertise in the mobile app store. You know what we're capable in terms of our product-led growth motions.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And then as we talked about, the more they use these AI features, the more they retain. And we feel really good about really that whole workflow. So yes, the new user growth continues to be our primary focus. And when you add in everything we're doing with Express, we're -- again, like I said, we're off to the races and we feel very good about the momentum on new user acquisition and existing member retention.

Yes. I mean, again, I think what -- it is this mix of product innovation that we've been putting out there and the steady drumbeat of that. A lot of it getting attention because of the quality and the hooks of AI and being able to sort of bring people, onboarding them quickly and successfully into the product.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And the traditional sort of understanding where search terms are, I think we're getting better and better at that, which leads to way more digital traffic for us. So I think it's across the board. But I'd also highlight, I mean, the commerce team that we have at Adobe that understands what the segments are and how for those particular segments we can attract people, that's great. I mean, I think in the prepared remarks, Dan also talked about the strength in emerging markets. And I think the beautiful part about AI is that since they need access to the cloud to get all of the AI functionality, emerging market growth has been really strong for us.

I would sort of modesty say, we've been world-class at sort of driving that for a long time now. But the team, I think, continues to do an amazing job. And I would say David referred to the DDOM. Adobe Home is now sort of increasingly the way that we're driving a lot of people to get aware of our new products. And so I would say the mobile part as well and the mobile journeys, as we've got these mobile products, whether it's Lightroom or whether it's certainly, Express, that's an area of increasing focus for us.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

So what are the particular drivers and maybe some detail on those drivers that give you guys the confidence that, that trend line that has been actually heading in the wrong direction is going to head in the right direction now? We're actually going to see growth in those metrics in Q3 and Q4?

And again, congratulations on a really solid set of results in an environment where not very many software companies have been able to beat and raise in this type of uneven environment. I wanted to maybe focus in a little bit on the question that Mark Moerdler asked, in particular on what gives you guys the confidence to see a return to year-on-year growth and Creative Cloud net new ARR. It declined in Q2, it declined in Q1. And if I'm not mistaken, the decline in Q2 was a little bit steeper than what we saw in Q1.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

Sorry, just to be clear, the $487 million that we printed this time is obviously strong performance, and it implies that both CC and DC came in over what the growth -- the guide would have implied otherwise, right? So it's giving us a lot of good momentum going into the back half.

Yes. Thanks, Keith. This is one of the areas that I think we've shared with you the complexity of the year-over-year comparisons in the first half based on prior pricing marks that we had. But more importantly, to your point, the year-over-year complexities are now behind us. And we're very excited about the momentum of the first half and how it sets us up for the second half, frankly, across both Document Cloud and Creative Cloud. Both are really momentum stories.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

Now the momentum is really driven by 3 things, and just I'll try to share a little bit more context here and hopefully gives you. First is new user acquisition, right? We're seeing Express starting to perform well in terms of bringing a lot of new users into the franchise across mobile and web. AI Assistant in Reader has been a really nice start for us, and we've been very pleased with how the uptake on that's going. And then Firefly itself, as I mentioned, has been increasingly more productive in terms of bringing in onboarding users and then retaining users because of the growth.

Yes. Thanks, Keith. This is one of the areas that I think we've shared with you the complexity of the year-over-year comparisons in the first half based on prior pricing marks that we had. But more importantly, to your point, the year-over-year complexities are now behind us. And we're very excited about the momentum of the first half and how it sets us up for the second half, frankly, across both Document Cloud and Creative Cloud. Both are really momentum stories. Sorry, just to be clear, the $487 million that we printed this time is obviously strong performance, and it implies that both CC and DC came in over what the growth -- the guide would have implied otherwise, right? So it's giving us a lot of good momentum going into the back half.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

We continue -- as we drive that more holistically throughout the product set, we start to see more people using it, including, as Shantanu mentioned earlier, in emerging markets. So we are seeing very good strength and usage in emerging markets, and that has certainly been a bright spot for us, which is something that obviously represents a lot of potential and upside for us.

Now the momentum is really driven by 3 things, and just I'll try to share a little bit more context here and hopefully gives you. First is new user acquisition, right? We're seeing Express starting to perform well in terms of bringing a lot of new users into the franchise across mobile and web. AI Assistant in Reader has been a really nice start for us, and we've been very pleased with how the uptake on that's going. And then Firefly itself, as I mentioned, has been increasingly more productive in terms of bringing in onboarding users and then retaining users because of the growth.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

In terms of existing customers, the migration has been going very well for us as well. So more people are moving to the higher-priced, higher-value plans because of the Firefly capabilities. We're even seeing this in enterprises where people are moving up to the highest versions of Creative Cloud, which is what we call it, Creative Cloud Enterprise [ 4 ] because they get more access to features beyond just generation. They have more collaborative capabilities beyond just kind of sharing via e-mail. And we're starting to see that create a nice momentum in upgrade cycles in the enterprise segment as well.

Now the momentum is really driven by 3 things, and just I'll try to share a little bit more context here and hopefully gives you. First is new user acquisition, right? We're seeing Express starting to perform well in terms of bringing a lot of new users into the franchise across mobile and web. AI Assistant in Reader has been a really nice start for us, and we've been very pleased with how the uptake on that's going. And then Firefly itself, as I mentioned, has been increasingly more productive in terms of bringing in onboarding users and then retaining users because of the growth. We continue -- as we drive that more holistically throughout the product set, we start to see more people using it, including, as Shantanu mentioned earlier, in emerging markets. So we are seeing very good strength and usage in emerging markets, and that has certainly been a bright spot for us, which is something that obviously represents a lot of potential and upside for us.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

But for the people who actually have imaging and vector needs, that they're not constantly thinking about generative, I think we actually got it right. To your point, as we move to video, expect to see different plans because those plans will, by necessity, take into account the amount of work that's required to do video generation. So you're absolutely right as a sort of framework for you to think about it.

I think you're right, Brad. When we think about what we've done with imaging and video, we've done the right thing by making sure the higher-value paid plans that people don't have to think about the amount of generative capability. And so there, the balance between for free and trialist users, they're going to run into the generative capability limits and, therefore, have to subscribe.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

The 2 other things that I would say is, I mean, clearly, Express is really being driven by sort of the need for AI and how people are able to describe what they want and get the final output. When David talked about exports, just to clarify what that means is people who have successfully got what they want to get done, done. And that's a key measure of how we are doing it, and AI is certainly facilitating and accelerating that.

I think you're right, Brad. When we think about what we've done with imaging and video, we've done the right thing by making sure the higher-value paid plans that people don't have to think about the amount of generative capability. And so there, the balance between for free and trialist users, they're going to run into the generative capability limits and, therefore, have to subscribe. But for the people who actually have imaging and vector needs, that they're not constantly thinking about generative, I think we actually got it right. To your point, as we move to video, expect to see different plans because those plans will, by necessity, take into account the amount of work that's required to do video generation. So you're absolutely right as a sort of framework for you to think about it.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And last thing I would say, Brad is, as you know, on the Acrobat side, it's a slightly different model which we like, which is anybody who has Reader and is looking at a document, they can have an upsell to their AI Assistant. If you have Acrobat Pro, you can upsell to the AI Assistant. And if you're a brand-new acquisition of a user when you're coming in, the adoption of the highest-value products, so between Standard Pro and Pro Plus Assistant, we've been pleased to see how many people are migrating to the Pro Plus Assistant. So hopefully, that gives you some color of how we think about it differently by product.

The 2 other things that I would say is, I mean, clearly, Express is really being driven by sort of the need for AI and how people are able to describe what they want and get the final output. When David talked about exports, just to clarify what that means is people who have successfully got what they want to get done, done. And that's a key measure of how we are doing it, and AI is certainly facilitating and accelerating that.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

When you think about the AEP AI Assistant, it's doing a couple of things. One, it's really making it easier for customers to deploy use cases. When you think of use cases that they have around, for example, generating audiences and running campaigns around those audiences, these are things today that require some data engineering. They require the ability to put these audiences together. So they require marketing and IT teams to work together. The AEP AI Assistant is making it much easier for marketers to be able to do it themselves and be able to deploy a lot more use cases.

Thank you, Brad. Appreciate it. As you know, I mean, customer experience management and especially it's been a hugely important priority area for Chief Marketing Officers and with CIOs and Chief Digital Officers as well. And for us, we are focused on personalization scale, which is really built around the AEP platform. We're the largest provider in this space. We're growing faster than any of our peers, and we're the #1 Digital Experience platform as a result. And that has really helped us keep the momentum.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

So as there's more usage, it will help drive more consumption and help drive the growth in terms of number of profiles, number of users, and we help -- we see it helping us grow towards that billion-dollar business.

When you think about the AEP AI Assistant, it's doing a couple of things. One, it's really making it easier for customers to deploy use cases. When you think of use cases that they have around, for example, generating audiences and running campaigns around those audiences, these are things today that require some data engineering. They require the ability to put these audiences together. So they require marketing and IT teams to work together. The AEP AI Assistant is making it much easier for marketers to be able to do it themselves and be able to deploy a lot more use cases.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

Generative AI, it seems to swing back and forth. Just so early in its evolution, the possibilities seem magical sometimes, endless sometimes, sometimes it feels very disappointing. But with every quarter that Adobe is executing on this path, where do you stand with the question that we do get from investors? Will generative AI be so good that it's the end of the creative process? So we don't need creative folks, that software will do everything? That sounds a little far-fetched, but I'm just throwing it out there to see how you would react that proposition.

You guys could have 3 separate earnings calls because you have 3 different businesses that even the smallest 1 is very large. So yes, sorry, Anil, Dave, and Shantanu, I may not be able to ask all the questions that I want. I'm sure we have plenty. But I'll just keep it super high level, Shantanu.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

Same in Experience Cloud as well. Could generative AI create its own marketing campaign, put marketing people out of business? Or maybe it doesn't. I'm sure you have strong views. Maybe flipped on the other side, it does create category growth on the other hand, not category compression. So sorry for that super high-level question, but that seems to be a big debate on the stock here, at least from the long-term perspective.

Generative AI, it seems to swing back and forth. Just so early in its evolution, the possibilities seem magical sometimes, endless sometimes, sometimes it feels very disappointing. But with every quarter that Adobe is executing on this path, where do you stand with the question that we do get from investors? Will generative AI be so good that it's the end of the creative process? So we don't need creative folks, that software will do everything? That sounds a little far-fetched, but I'm just throwing it out there to see how you would react that proposition.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

If the value of AI doesn't turn to inference and how people are going to use it, then I would say all of that investment would not really reap the benefit in terms of where people are spending the money. And so we're always convinced that when you have this kind of disruptive technology, the real benefits come when people use interfaces to do whatever task they want to do quicker, faster, and when it's embedded into the workflows that they're accustomed to because then there isn't an inertia associated with using it.

Yes, Kash. I think there are 2 things when we talk to investors that are perhaps on their mind. I mean, I think the first is it's fair to say that the interest that exists right now from investors as it relates to AI is all associated with the infrastructure and chips and perhaps rightly so because that's where everybody is creating these models. They're all trying to train them. And there's a lot of, I think, deserved excitement associated with that part of where we are in the evolution of generative AI.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

So with that sort of as a broad segment, I am a big believer that generative AI is going to, for all the categories that we're in, it's actually going to dramatically expand the market because it's going to make our products more accessible, more affordable, more productive in terms of what you -- what we can do. I'm still acting CMO at the company, and I see the excitement around how we can, with agility, create way more content, create variations.

If the value of AI doesn't turn to inference and how people are going to use it, then I would say all of that investment would not really reap the benefit in terms of where people are spending the money. And so we're always convinced that when you have this kind of disruptive technology, the real benefits come when people use interfaces to do whatever task they want to do quicker, faster, and when it's embedded into the workflows that they're accustomed to because then there isn't an inertia associated with using it.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

When Anil talked about personalization at scale, I think there are 2 aspects to it, right? I mean, the first was always data, and Anil and the team have done a great job with sort of the real-time customer data platform to get that. And that's [ hydrated ] with users. But the real value is when you infuse that with the right content to make that personalized experience. So I think the demand is there for way more content than people can do, and generative AI is going to be an accelerant in that as well.

So with that sort of as a broad segment, I am a big believer that generative AI is going to, for all the categories that we're in, it's actually going to dramatically expand the market because it's going to make our products more accessible, more affordable, more productive in terms of what you -- what we can do. I'm still acting CMO at the company, and I see the excitement around how we can, with agility, create way more content, create variations.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And so net-net, I am absolutely betting on the fact that 5 years from now, there will be more people saying, "I'm using creative tools to accomplish what I want," and there'll be more marketers saying, "I can now, with the agility that I need, truly deliver a marketing campaign and an audience that's incredibly more specific than I could in the past." And that's Adobe's job to demonstrate how we are both leading in both those categories and to continue to innovate. But I recognize and I understand the question that exists in the industry associated with AI. If the value doesn't accrue to interfaces, I'll leave you with that. I think the investment would not be as beneficial as I believe it can be.

When Anil talked about personalization at scale, I think there are 2 aspects to it, right? I mean, the first was always data, and Anil and the team have done a great job with sort of the real-time customer data platform to get that. And that's [ hydrated ] with users. But the real value is when you infuse that with the right content to make that personalized experience. So I think the demand is there for way more content than people can do, and generative AI is going to be an accelerant in that as well.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And the reason for this is that this is not a game where there's going to be 1 model. Each model is going to have its own personality, what it generates, what it looks like, how fast it generates, how much it costs when it generates that, and to have some interface layer to help synthesize all of this is important. And so just sort of to note, we've said this before but I'll say it again here, you will see us building our products and tools and services leveraging Firefly for sure, but you'll also see us leveraging best-of-breed personalities from different models and integrate them all together.

And maybe 1 thing to add to that, Kash, just to build on what Shantanu was talking about. I think the other thing we get asked a fair amount is about the comparison between different models, right? So Firefly might be better at something. Midjourney might be something at something else. DALL-E might do something else. And the key thing here is that around this table, we get excited when models innovate. We get excited when Firefly does something amazing. We get excited when third-party models do something because our view, to Shantanu's point, is that the more content that gets generated out of these models, the more content that needs to be edited, whether it's color correction, tone matching, transitions, assembling clips, or masking composite images.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And that is one of those things that we've been doing more and more around our DDOM, which has actually been very productive for us, as you can see this quarter, and what we're pitching to other customers. So we've been working with -- we listed some of the customers earlier, but we've been working with a long list of customers on everything from accelerating the content creation for social, accelerating content creation for regional, and then increasing the number of amount of content that's created for increased personalization, which then, of course, flows through all of the Experience Cloud products that Anil is working on to get targeted better.

Maybe I'll start with customer 0. Right before this meeting, I was in a meeting with our CMO. And well, sometimes it's hard to tell, he's running the CMO or CEO head but CMO this time. And we were reviewing a full-funnel campaign that we're planning on launching later this year. And exactly as Shantanu mentioned earlier, we saw benefits in terms of cost of the campaign, faster time to market for the campaign, and the amount of content that we can create to personalize that campaign.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And Jake, maybe in terms of what I would say we're seeing usage of, I think the initial usage of Firefly services in most companies was all around ideation. How can they create multiple variations of them and in the ideation process really just accelerate that ideation process? Most companies are then starting with as they're putting it into production, how can they, with the brand assets and the brand guidelines that they have, do this in terms of the variations, whether they be geographic variations or they be just variations?

And that is one of those things that we've been doing more and more around our DDOM, which has actually been very productive for us, as you can see this quarter, and what we're pitching to other customers. So we've been working with -- we listed some of the customers earlier, but we've been working with a long list of customers on everything from accelerating the content creation for social, accelerating content creation for regional, and then increasing the number of amount of content that's created for increased personalization, which then, of course, flows through all of the Experience Cloud products that Anil is working on to get targeted better.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

But even the large media companies, because the media companies are certainly interested in understanding how all of this gen AI could be used to automate as well as accelerate the amount of content that they can produce. So hopefully, that gives you some color of it. If there's been sort of the questions that they ask along the way, which hopefully and actually, luckily, we have great answers, it's all around the indemnification and how they can use it. And I would say that continues to be a really key differentiator for us.

The other 1 that we see a fair amount of is engaging with their communities. So when they want their communities to have assets that they have blessed for usage within community campaigns, that's the other place where Firefly services are being used. And a company has a community portal where the community can come in, take something and then post whether it's on whatever social media site that you want. So I think that's the initial one. All of the agency companies are companies that have actually even publicly said how GenStudio is something that they have embraced.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

But since that is the last question, let me just say I'm proud of how we executed in Q2, both across the product innovation, delivery as well as the go-to-market because clearly, a number of you asked how we were able to put together these numbers where others have perhaps talked about the macroeconomic environment. We certainly remain focused on leveraging technology to light a broader set of customers. And at the end of the day, to the questions that we were asked, we believe that the real value of AI will be in the interfaces that individuals, enterprises use to accomplish their tasks and workflows. And we think we're incredibly well positioned. So thank you for joining us.

But even the large media companies, because the media companies are certainly interested in understanding how all of this gen AI could be used to automate as well as accelerate the amount of content that they can produce. So hopefully, that gives you some color of it. If there's been sort of the questions that they ask along the way, which hopefully and actually, luckily, we have great answers, it's all around the indemnification and how they can use it. And I would say that continues to be a really key differentiator for us.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

And I think I have to ask you as well like everybody else. I guess, I'm going to go back to the China question. I guess at a high level, the simple question is, when we look at the data points that have been repeatedly reported throughout the course of this quarter, I'm curious, Tim, what are we missing? Like where do you think people are missing Apple's iPhone traction within the China market? Just at a high level, given the data points that were reported throughout this course of last quarter.

Our next question is from Aaron Rakers with Wells Fargo.

Operator, Michael Ng, Benjamin Alexander Reitzes, Suhasini Chandramouli, Krish Sankar, Luca Maestri, Amit Jawaharlaz Daryanani, Timothy D. Cook, Erik William Richard Woodring, Wamsi Mohan

Aaron Rakers

Congratulations on just an incredible result. I wanted to ask kind of just similar to Mark's question, just how much gen AI demand did you see in the quarter in terms of sort of both the Creative Cloud portfolio and Digital Media, in Creative Studio as well as in GenStudio? And how does it kind of help to pick up more on the enterprise side of the business, on the SMB side of the business? Help us understand that progression and maybe how you're planning for it in the back half of the [indiscernible] guide.

And our next question will come from Alex Zukin with Wolfe Research.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

Alex Zukin

That's super helpful. And then maybe just 1 on the macro. Just given your guys' purview, like what is the story that you're seeing in terms of the macro on the demand environment? Clearly again, you're commenting on solid performance in the SMB and in the enterprise. Is there any areas that you're seeing pockets of weaknesses that's really vertical-dependent? Just maybe give a comment on kind of how we should think about it as we look to the rest of the year.

And maybe 1 last thing, Alex. Sequentially, if you look at it from a route to market, Digital had a very strong quarter as it relates to what we did on adobe.com. We had talked about enterprise doing well in Q1 as well, that continued. And SMB also, the interest in our teams product also continued to do really well. So I think sequentially, I would point to SMB and Digital's strength as driving the further growth.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy, Alex Zukin

Alex Zukin

I have 2 as well. I guess first off on capital allocation, you folks have about $58 billion of net cash right now. As you think about eventually getting to this net cash neutral target, do you think at some point, Apple would be open to taking on leverage on the balance sheet and continuing the buyback program? Or is it more like once you get to this neutral position, it's going to be about returning free cash flow back to shareholders? I'm just wondering, how do you think about leverage on your balance sheet over time? And what sort of leverage do you think you'd be comfortable taking on?

Our next question is from Amit Daryanani with Evercore.

Operator, Michael Ng, Luca Maestri, Erik William Richard Woodring, Timothy D. Cook, Suhasini Chandramouli, Wamsi Mohan

Amit Daryanani

Thanks, Dave. Today, we're reporting $170 billion in revenue, up 13% year-over-year, excluding the impact from foreign exchange rates, $13.2 billion in operating income, up 383% year-over-year or $10.5 billion and $35.5 billion in trailing 12-month free cash flow adjusted for equipment finance leases, up $48.3 billion year-over-year. While we've made meaningful progress in our financial measures, what we're most pleased about is the continued customer experience improvements across our businesses. These results represent a lot of invention, collaboration, discipline, execution, adjusting and reimagining from teams across Amazon.

During this call, we may discuss certain non-GAAP financial measures. In our press release, slides accompanying this webcast and our filings with the SEC, each of which is posted on our IR website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Our guidance incorporates the order trends that we've seen to date and what we believe today to be appropriate assumptions. Our results are inherently unpredictable and may be materially affected by many factors, including fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions, and customer demand and spending, including the impact of recessionary fears, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the Internet, online commerce, cloud services and new and emerging technologies and the various factors detailed in our filings with the SEC. Our guidance assumes, among other things, that we don't conclude any additional business acquisitions, restructurings or legal settlements. It's not possible to accurately predict demand for our goods and services, and therefore, our actual results could differ materially from our guidance. And now I'll turn the call over to Andy.

Dave Fildes, Operator, Andy Jassy

Andy Jassy

Thanks, David. Hello, everyone. In Q2, we achieved Experience Cloud revenue of $1.33 billion. Subscription revenue was $1.2 billion, representing 13% year-over-year growth. We are the industry leader in helping enterprises deliver personalized experiences at scale to their customers by combining the right content, customer data and journeys in real time. When we introduced Adobe Experience Platform 5 years ago, it was a revolutionary approach to address customer data and journeys. Today, we're the #1 digital experience platform, and AEP with native apps is well on its way to becoming a billion-dollar business.

In Q2, we achieved $3.13 billion in revenue, which grew 11% year-over-year. Net new Creative Cloud ARR was $322 million. Other business highlights include: the launch of Express for Business, including support for brand controls and template locking, Firefly custom models, bulk creation and generation of variations, presentation and print capabilities and Workflows with Photoshop, Illustrator, and Experience Cloud; the release of Firefly Image 3 Foundation Model with high-quality image generation and more control with structure and style reference; the release of the Photoshop Beta with reference image and advances in Generative Fill; the debut of Generative Remove in Adobe Lightroom, enabling anyone to remove unwanted objects from any photograph non-destructively with stunning high-quality photorealistic results; the release of the Premier Beta with new audio workflows driving strong usage; the deep integration of Firefly in Substance 3D, which provides an easy way to create textures and materials from reference images; the introduction of an all-new Frame.io streamlining workflows across content types on a flexible and intuitive collaboration platform. Key enterprise customer wins include Credit Agricole, FedEx, Infosys, Rakuten, Ralph Lauren, Samsung, Schneider Electric, and Volvo. We're excited about the accelerating pace of innovation across the Digital Media business and pleased with the adoption of AI functionality as well as its early monetization across Document Cloud and Creative Cloud, including our flagship applications, Firefly services and Express. We're pleased to raise our annual net new ARR target to $1.95 billion and excited to deliver on our rich product road map in the second half. I'll now pass it to Anil.

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Anil S. Chakravarthy

Anil S. Chakravarthy

Thank you, Brad. Appreciate it. As you know, I mean, customer experience management and especially it's been a hugely important priority area for Chief Marketing Officers and with CIOs and Chief Digital Officers as well. And for us, we are focused on personalization scale, which is really built around the AEP platform. We're the largest provider in this space. We're growing faster than any of our peers, and we're the #1 Digital Experience platform as a result. And that has really helped us keep the momentum.

Congrats to all of you. I don't want Anil to feel left out so I'm going to ask a DX question. Anil, it's good to hear AEP is on track to become the next billion-dollar business for Adobe. Can you expand on the journey and drivers that get you there? And in particular, how important are cloud migrations? And how do you see AEP AI Assistant perhaps accelerating the journey to $1 billion?

Jonathan Vaas, Shantanu Narayen, Operator, David Wadhwani, Daniel J. Durn, Anil S. Chakravarthy

Anil S. Chakravarthy