Adobe Inc. (NASDAQ:ADBE) Q3 2023 Earnings Call Transcript - Page 5 of 5 - InvestingChannel

Adobe Inc. (NASDAQ:ADBE) Q3 2023 Earnings Call Transcript

And then, last but certainly not least, we’ll give them some core workflows that will work with our existing products, whether it’s Express or whether it’s Creative Cloud or GenStudio as well, so that they can then integrate everything they’re doing onto our core platform. And then, from a monetization perspective, you can imagine the metering concepts that we have for Generative Credits, extending to API calls as well. And of course, those will all be custom negotiated deals with partners and enterprises.

Brad Zelnick: Great. Thanks very much for taking the questions. Congrats.

Jonathan Vaas: Hey, operator, we’re getting close to the top of the hour. We’ll take one more question, please.

Operator: Thank you. Our next question will come from Jay Vleeschhouwer with Griffin Securities.

Jay Vleeschhouwer: Great. Thank you very much. Shantanu, over the last decade or more, one of the most important attributes of how you’ve managed your product portfolio have been the intra-segment and inter-segment integrations, particularly between Digital Media and DX. There is, as you know, a famous acronym for that. Now when we think about the current generation of integrations that you just announced, including yesterday, aside from the Firefly-ing of the product line and the proliferation of Firefly, what are some of the internal developmental changes that you yourselves have had to make in order to support the development of new integrations, new packaging? What are you doing differently internally? And then, externally, particularly to support the new generation of products, what are you having to invest in, in terms of customer support and enabling their adoption?

Shantanu Narayen: Yeah, Jay, I mean, certainly I think at MAX also you’ll see a bunch more of the innovation. I think first internally, I’d be remiss if I didn’t start off by saying how really thrilled I am with how quickly the company has embraced the possibilities of AI, how we’ve run all of these betas out there at a scale that, as we have said, is unprecedented, dealing with the differentiation that we can provide, whether that’s how we deal with the data, understanding the indemnification, how we embed all of this AI stuff in the interfaces, and we’ve already shown that in Photoshop, Illustrator, Express, as well as create the new offering. So, I think the pace of innovation internally of what we have done is actually truly amazing.

I mean, relative to a lot of the companies that are out there and the fact that we’ve gone from talking about this to very, very quickly making it commercially available, I don’t want to take for granted the amount of work that went into that. I think internally it is really galvanized, because we are our own biggest user of these technologies. What we are doing associated with the campaigns and the GenStudio that we are using, as David alluded to it, our Photoshop Everyone Can campaign, or the Acrobat’s Got It campaign, or how we will be further delivering campaigns for Express as well as for Firefly, all of this is built on this technology. And we use Express every day, much like we use Acrobat every day. So, I think it’s really enabled us to say, are we really embracing all of this technology within the company?

And that’s been a big change, because I think the creative products, we’ve certainly had phenomenal usage within the company, but the extent to which the 30,000 employees can now use our combined offering, that is very, very different internally. So, very pleased associated with that. And I think one way in which that manifests is that all of our product reviews right now include all three groups. So, there’s very little product sort of reviews that happen without people from Creative and Document and the Experience Cloud being part of it. So that’s one of them. I think the work that we have already put in on the digital excellence as part of D-DOM, that also gives us a lot of confidence of, “Now that we have this breadth of offering, how do we make sure that we can personalize the offerings?” Part of the success that was driven in this quarter, Jay, was to do with the fact that the Stock and these value-added services, I think the digital excellence team in terms of the D-DOM have really got very good at segmenting our customers and understanding how we can make sure that they have the right offering.

And now think of that with all of the breadth of offerings that we have across mobile and desktop and web. So, I think internally and externally, this has been again a real sort of drinking from the fire hose of how we embrace AI. And so, I think those are really two examples of how we’ve done it. And the third thing I would say is that in parallel, internally we’ve had to really change. Where prior to this, Jay, we may have said, okay, we’re really going to make all of this magic happen in one of our applications. Today, that has to happen not just within the application, which we’ve certainly done, but it has to happen as an API so that everybody else can use it. It has to happen as a web-only playground, which is what Firefly and Express both are.

So, the simultaneous release of not just investing in the model, but making sure that’s available across all the surfaces, I would say that’s another thing. And the last thing I’ll leave you with is you’ve seen this for imaging. Make no mistake, those same investments, whether it’s in vector or animation or 3D or — all of those video certainly are underway. And so, I think the parallelism associated with saying how do we embrace this opportunity, I think that’s also been another big change. But I think it’s clear given this was the last question before I hand it over to Jonathan that a lot of the questions have been focused on understanding right now all of our announcements and the monetization associated with it. But I did want to again sort of acknowledge that we have delivered all of this innovation at a breakthrough pace.

And so, we’ll certainly share more as it relates to how we see this play out. At MAX, you’ll see us have more information on the products. And certainly with the 2024 targets, you’ll start to get more visibility into how and why we believe this is both a growth opportunity as well as embracing new customers. So, thank you for joining us. And with that, I will turn it back over to Jonathan.

Jonathan Vaas: Thanks, Shantanu, and thanks everyone for joining us today. Looking ahead, we have an exciting lineup planned for MAX starting on October 10, and we hope you’ll be able to attend the entire conference. At the Investor Meeting after the day one keynote, we plan to focus on the impact of AI across our customer offerings with previews into our technology roadmap and how these innovations expand Adobe’s reach. Given that, fiscal 2024 targets will be provided at our December earnings call. In addition, we’re planning another investor event at Adobe Summit in March to give more insight into our addressable markets and financial performance. We hope to see you there. Thanks, everyone, and this concludes the call.

Operator: Thank you. That does conclude today’s conference. We do thank you for your participation. Have an excellent day.

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