Adobe Summit highlights personalization at scale with generative AI

Adobe Summit 2024 put individualized digital experiences on full display.

Personalization at scale is exceedingly difficult. By applying artificial intelligence, Adobe Systems Inc. showed off its ability to bring custom experiences to the masses and achieve this with trusted, enterprise-grade content. Furthermore, Adobe highlighted an expanded total available marketplace for its three major business segments and is now pursuing a TAM approaching $300 billion.

We consider Adobe represents a number one example of AI monetization beyond the 2 mostly discussed segments: 1) The picks and shovels of silicon, large language models and core AI infrastructure; and a couple of) Microsoft copilots. Its vision is to turn into a $30 billion revenue player, however the timeframe for such an achievement stays aspirational with no specific timeframe committed by Adobe.

On this Breaking Evaluation, we welcome our friend and theCUBE contributor, Andy Thurai, vp and principal analyst at Constellation Research, to review the motion from Adobe Summit and provides our perspective on the prospects for the corporate.

Financial snapshot

Let’s take a have a look at Adobe’s stock performance lately.

Adobe is a roughly $20 billion revenue company with nearly $8 billion in money and equivalents on the balance sheet, no net debt and a greater than 10X revenue multiple. Two months prior to the launch of ChatGPT, Adobe announced its intent to amass Figma for $20 billion, split almost evenly between money and stock.

You possibly can see the outstanding performance of Adobe coming out of 2022’s tech downturn. The Figma deal made some sense because Adobe was unable to compete with Figma with its own product. Whether $20 billion post-ChatGPT was a superb price was all the time an issue, nevertheless it didn’t matter, since the U.K. competition committee essentially killed the deal.

In a way, this was a blessing in disguise. We asked Thurai for his thoughts on the lack of Figma which we summarize as follows.

Thurai noted that Wall Street liked the deal and it will have been a superb marriage when it comes to the worth Figma could’ve added to Adobe. Figma has strong collaborative tools and browser-based interfaces popular with creators, making it a helpful asset in any tech merger. Despite his initial shock on the $20 billion valuation, which seemed exorbitant to Thurai, the next rise in stock price suggested the market saw things in another way.

Survey data shows portfolio momentum

Let’s take a have a look at the Enterprise Technology Research data to see how the spending momentum looks for Adobe across its portfolio.

That is data from ETR’s TSIS survey and it shows the spending momentum or Net Rating in three time periods – April 2023, October 2023 and January 2024 within the gray, blue and yellow bars respectively. It is a survey of around 1,700 technology buyers and in the info set there are 872 Adobe customers, a major N.

You possibly can clearly see the breadth of the portfolio across Adobe Sign, which competes with DocuSign, its marketing platform, content management, Marketo, which Adobe acquired for nearly $5 billion from private equity firm Vista, Fintech and Workfront, Adobe’s workflow management software. Remember, this data maps to the ETR taxonomy, to not how Adobe views its business. But the purpose is there are a lot of areas within the yellow which might be showing accelerating momentum or are holding regular.

Most firms in the info set show softer momentum from the macro headwinds.

Thurai’s comments on this data are summarized as follows:

Thurai shared insights from Adobe Summit, where the main focus was on Adobe’s position within the creators market. In keeping with Thurai, Adobe demonstrated a powerful foothold with creators and marketers. Even though it took a while to get traction with Firefly, Adobe’s gen AI model, the conference celebrated Firefly’s one-year anniversary and the product has significant momentum. The arrival of OpenAI and other LLMs posed a major challenge to Adobe and the corporate has responded.

• He emphasized that recent announcements from Adobe on the summit weren’t only for show; these developments are either already integrated into their products, will probably be soon or can be found for early adopters.
• This approach by Adobe signifies a shift toward immediate availability and utility of latest features, contrasting with firms that announce future plans without immediate implementation.

Thurai highlighted the importance of Adobe’s strategy from an investment perspective. By ensuring that latest features and tools are available or soon to be, Adobe not only retains its current user base but additionally attracts latest users, thereby enhancing its monetization potential.

Bottom line, Thurai views Adobe’s recent moves as a powerful response to the gen AI opportunity. By swiftly integrating latest, competitive features into its offerings and making them available to users, Adobe is just not only addressing past criticisms but can be positioning itself for continued success within the highly competitive creative software market.

Highlights from Adobe Summit 2024

Let’s have a look at the takeaways from Adobe Summit. Below are the important thing points we discussed and a curation of the conversation follows.

Adobe Summit insights and Firefly’s impact

The Adobe Summit was attended by greater than 11,000 people. Throughout the event, a major focus was placed on Adobe’s AI initiatives, particularly Firefly. Management indicated during its financial analyst meeting that Firefly was a key contributor to Adobe’s growth. The corporate claims it saw a 30% increase in latest subscribers because of Firefly, which bolsters Adobe’s business model.

This sort of subscriber growth underscores a shift toward AI-driven value relatively than its legacy credit-based model. Our evaluation delves into several key facets of Adobe’s strategy and product offerings based on the discussions from the summit:

• Adobe’s emphasis on responsible AI innovation, with Firefly comprising a set of image generation models that prioritize ethical data use and customer-centric innovations.
• The differentiation Adobe creates through its licensed image repository, avoiding the legal exposures related to data scraping and copyright issues which have plagued other firms.
• The deal with aligning technology innovation with customer needs, shown by Firefly’s ability to map and cling to brand guidelines and company edicts, supporting stronger enterprise adoption.

Bottom line: We consider that Adobe’s strategic positioning of Firefly, together with its commitment to responsible AI and customer-centric innovation, has not only contributed significantly to its subscriber growth but additionally sets a powerful example within the industry for ethical AI development.

Content provenance and personalization strategies

Adobe’s efforts in promoting content authenticity and combating misinformation were also a serious theme, highlighted by its lead within the Coalition for Content Provenance and Authenticity, or C2PA. This initiative, aimed toward establishing content provenance, is pivotal within the era of deep fakes and misinformation. Moreover, Adobe’s advancements in AI have enabled unprecedented levels of personalization at scale, through initiatives like GenStudio, which democratizes marketing across various channels.

• The importance of the C2PA coalition in establishing a standardized approach to content authenticity.
• Adobe’s push towards personalization at scale, allowing for marketing campaigns which might be highly tailored to individual preferences and behaviors.
• Federated Audience Composition and advanced analytics enable a deeper understanding of customer preferences without compromising data privacy.

Bottom line: Our opinion is that Adobe’s leadership in content provenance and personalization strategies not only enhances its product offerings but additionally elevates its role in setting industry standards for responsible and effective AI use.

Ecosystem partnerships and future monetization

A critical component of Adobe’s strategy involves ecosystem partnerships and latest avenues for monetization. Adobe’s collaborations with technology giants and types, akin to IBM, Microsoft, Delta, Pfizer, Coca Cola, Disney and others were on display on the summit, underscoring an integrated approach to AI.

Specifically, Adobe’s tools have gotten deeply embedded within the operational workflows of its partners and customers. We see significant AI monetization opportunities for Adobe within the near-to-midterm, including mobile applications, AI assistants and advancements in video, audio and 3D content creation.

• The importance of ecosystem partnerships in extending Adobe’s technological capabilities and market reach.
• It’s use of a wide range of industry AI tools from IBM Corp. with watsxonx, Google LLC, Nvidia Corp., Microsoft Corp.’s copilots and its own customer tooling.
• Adobe’s deal with latest monetization strategies that leverage AI for content creation, personalization and workflow optimization.
• The projected expansion of Adobe’s total addressable market, driven by its diversified product portfolio and AI integration.

Bottom line: In our view, the failure of the Figma deal has forced Adobe’s hand to step up its organic innovation. Generative AI presented a timely opportunity for Adobe to double down on key strategic partnerships and focused innovation initiatives in AI. These in our view will probably be key drivers for its future growth and expansion within the digital experience sector. The corporate’s ability to monetize AI technologies and integrate them right into a broad range of services positions it favorably for sustained monetization and leadership.

Overall evaluation

Adobe’s strategies, as demonstrated during its conference, highlight a winning posture that embraces AI across its product lineup and operational philosophy. The corporate’s emphasis on responsible AI, content provenance, personalization at scale, ecosystem partnerships, and modern monetization approaches are key indicators of its commitment to maintaining a powerful position within the creative and marketing technology sectors. We consider that Adobe is well-positioned to capitalize on the opportunities presented by AI, driving each market growth and operational efficiency for itself and its partners.

Future outlook for Adobe post-summit

Let’s close by taking a look at how you can take into consideration Adobe going forward. The next summarizes the evaluation we produced with Thurai.

The Adobe Summit provided a transparent illustration of Adobe’s market momentum with a differentiated strategy led by AI innovation. This wasn’t just concerning the technology itself but how Adobe embeds AI into applications to drive tangible return on investment. A broad spectrum of consumption models, from freemium to paid services and layered tiers, highlights Adobe’s adaptability and its effort to cater to varied customer types. This flexibility is crucial as Adobe goals for a major revenue milestone of $30 billion.

• The summit revealed Adobe’s deal with AI beyond traditional applications, showcasing real-world ROI from AI integration.
• Adobe’s diverse business model, including freemium and paid options, allows for flexible AI consumption.
• The corporate’s broad portfolio, trusted AI and significant total addressable market underscore its industry leadership and momentum.

Bottom line: We foresee Adobe’s continued leadership in integrating AI into its offerings, bolstered by diverse monetization strategies and a broad portfolio. These aspects are pivotal in Adobe’s pursuit of $30 billion in revenue, marking a major growth trajectory influenced by AI’s monetization potential. We’d note that no timeframe is being given to succeed in $30 billion and we’d wish to see more clarity on this front.

Monetization strategies and AI innovation

Adobe’s path to increased monetization is potentially more significant than previously appreciated. The corporate emphasized this point at its financial analyst event. The summit demonstrated Adobe’s unique position to capitalize on content creation and authenticity which is able to drive additional revenue streams through a wide range of content verification services.

Furthermore, Adobe’s confidence in its AI models is underscored by its offer of full indemnity to customers using its models, a powerful indication of its commitment to responsible AI use. We haven’t read the fantastic print and can, but this can be a step in the appropriate direction.

• Potential for Adobe to introduce latest revenue streams through content verification and authenticity services.
• Full indemnity offered by Adobe to its customers reflects supreme confidence in its AI models and responsible AI practices.
• The complexity of customizing user experiences through AI at scale is a serious differentiator for Adobe in our view.

Bottom line: The potential for brand new monetization vectors, coupled with Adobe’s strong stance on responsible AI and user support, suggests Adobe is just not only innovating inside its product lines but additionally exploring broader market opportunities enabled by AI.

Adobe’s innovation and market expansion post-Figma deal

We discussed Adobe’s need for continued innovation, especially within the wake of the failed Figma acquisition. The lack of Figma has seemingly catalyzed a more focused Adobe with an aggressive innovation strategy, using AI to differentiate itself and meet aspirational revenue targets. The summit was stuffed with buzz and featured high-profile personalities like Shaq O’Neal.

• Adobe’s aggressive pursuit of AI innovation and application integration demonstrates its resilience and adaptableness within the face of market challenges.
• The failed Figma acquisition and subsequent push for innovation underscore Adobe’s commitment to achieving a $30 billion revenue goal through enhanced AI capabilities and market expansion.
• The thrill and positive reception from customers and stakeholders on the summit highlight Adobe’s strong market position and promising future prospects.

Bottom line: In our evaluation, Adobe’s strategic pivot towards deeper AI integration and innovation signifies a sturdy pathway to achieving its ambitious growth targets. This strategic direction, amplified by market enthusiasm and Adobe’s commitment to expanding its AI capabilities, positions the corporate well for future success and market leadership. While Adobe provided no specific timeframe for its $30 billion revenue milestone, we consider it’s achievable before the top of the last decade.