Good morning. Adobe is betting big on generative AI, announcing last week in Las Vegas new features for products tied to content creation and training models, including some that allow firms to leverage their IP and branding and offer an AI assistant.
But what is Adobe’s overall AI strategy? Dan Durn, CFO and EVP of finance, technology services, and operations, said it all comes down to adding value for customers, democratizing access, and expanding opportunities for modernization.
Adobe, no. 233 on the Fortune 500, said at last week’s conference that in 2024 it has a total addressable market of $205 billion, and that it will reach a TAM of approximately $293 billion by 2027 largely because of AI.
For fiscal year 2024, Adobe has a total revenue target of $21.3 billion to $21.5 billion. That forecast includes $15.75 billion to $15.85 billion in digital media segment revenue plus digital experience subscription revenue from $4.75 billion to $4.8 billion.
New subscriptions for cloud services continue to be the predominant driver of growth—as a percentage of revenue, they’re now responsible for close to 95%, compared with just 28% in 2013, according to Durn. Adobe shifted from offering priority licenses in a software-as-a-service model for its software suite to monthly subscriptions more than a decade ago.
“How many companies have SKUs that they sell to consumers for a few dollars a month, all the way up to large, transformative enterprise deals, with total contract values that can be more than $100 million in size?” Durn said.
But that doesn’t mean Adobe is without competition. For example, Canva, an Australian design-software developer just acquired the design platform Affinity, which is geared toward professional users.
So how can Adobe stand out among peers? “We have a pervasive footprint in terms of how work gets done within enterprises, by individuals, within the creativity process, and within the marketing departments, and how the content is generated and delivered,” Durn told me. “We cover that entire surface area.”
Adobe’s approach to generative AI is natively embedding features into products and workflows, Durn said. “The data we use to train our models is data that we have the IP rights to,” he explained. “We’re not scraping the internet. We’re not taking IP from others, and then trying to monetize it. So that’s differentiated.”
Given Adobe’s overall vision and approach, Durn added, “I feel really good about our position competitively.”
Sheryl Estrada
sheryl.estrada@fortune.com
María Soledad Davila Calero curated the Leaderboard and Overheard sections of today’s newsletter.
Leaderboard
Robin Harries was appointed CFO of Trivago (Nasdaq: TRVG), the hotel booking platform. Harris previously worked at Trivago from 2012 to 2018, where he was part of the team that handled Expedia acquiring a stake of the company and later entering the public markets.
Jacob Sayer will take over as CFO on April 8 for Cambium Networks (Nasdaq: CMBM), a wireless infrastructure provider. Since 2012, Sayer has worked at Sensata Technologies Holding in several roles, including vice president of finance and investor relations. John Becerril, who has served as interim CFO since January, will remain in his role as global controller and principal accounting officer.
Big deal
Pew Research Center has been tracking three potential reasons Americans might use ChatGPT: for work, to learn something new, or for entertainment. Pew's latest report indicates that the percentage of employees who have used ChatGPT on the job increased from 8% in March 2023 to 20% in February 2024, including an 8-point increase since July.
For U.S. adults overall, about one-in-five or 17% have used ChatGPT to learn something new or for entertainment (17%). These shares have increased from about one-in-10 in March 2023, according to the report. Regarding age demographics, 31% of employed adults under 30 say they have used ChatGPT for tasks at work—up 19 points from a year ago. Much of that increase happened since July, the research found.
Going deeper
Reinventing M&A with Generative AI, a new report by Accenture Strategy explores the latest research around how M&A executives are investing in, and anticipating the impact of, generative AI in the dealmaking process. The data is based on a survey of 750 C-suite executives with M&A decision-making responsibilities.
A key finding is 70% of M&A executives believe generative AI can boost expected returns. However, just a third say they are investing heavily in the technology.
More than half (59%) reported their own data and technology maturity as a major barrier to adopting generative AI in their deal processes. There's also a lack of clarity on how to use generative AI throughout the deal lifecycle from pre-deal to post-close. Accenture offers five imperatives geared toward helping dealmakers define and implement the best strategy.
Overheard
“What you want is a single, fully personalized application that can help you solve any problem. People have been thinking about this for decades or even centuries. With generative AI, this finally becomes possible.”
—Former computer scientist and senior director of engineering at Meta, Erik Meijer, told Fortune. Meijer recently left the company to build his own startup.
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