We all set? All right. Thanks everyone for joining us. My name is Sterling Auty. I'm a software analyst here at SVB MoffettNathanson. Very happy to have with us Scott Belsky, who is the Chief Strategy Officer, Head of Design and Emerging Products. As Scott's gonna be making his way up to the podium, as he does that, he actually brought a video to share with us to give just some highlights. Why don't we go ahead and run the video. Love it.
A little preview of what's to come.
Scott, thanks for joining us, really appreciate it.
Yeah, of course. As always, we try to, like, show, not tell, but that was a quick, like, myriad of assets representing some of the stuff we're doing across the company.
Well, it's great 'cause a number of the companies that I cover, it's infrastructure software. You can't do anything like that to show a video, so it's great to see, you know, some of the products in action. Maybe for those that are in the audience and joining us live on the webcast, you have a new role over the last several months. Maybe just give people a little bit about who you are, your new role within, you know, within the company and where you're focused.
Sure. I came into Adobe through the acquisition of Behance back in 2012. Behance is now a network of around 40 million creatives around the world showcasing their work and their portfolios. Came in and was at Adobe for about three years in my first stint, helping develop some of the services behind Creative Cloud, Creative Cloud Libraries, bringing Creative Cloud to mobile, that sort of thing.
Left, 'cause it had been like a 10-year journey as an entrepreneur through my three years at Adobe. Had the opportunity to come back in a chief product officer role, overseeing design, engineering, and product for the Creative Cloud business. That was about five and a half years ago, and the objective there was to really build a set of services that enabled people to work across products, bring our products to the cloud, so you could start to use them on mobile and web, that sort of thing.
Build a 3D and immersive franchise, which is now one of the fastest-growing businesses in the company. Also start to develop new approaches, whether it's through Adobe Express, whether it's through Firefly, AI-generated capabilities to, you know, fulfill our mission of creativity for all. In January, I took on a new role, chief of overseeing strategy and M&A, design for the entire company, as well as emerging products.
The objective here is really just to focus on some of these fast-changing and quickly emerging products that are really, you know, changing the company, making sure that we're aligned across every pixel that we ship across all the products in the company. Also, I think it's a moment where a lot of the different parts of our business are really connecting.
Yeah.
In some ways, you know, as a lot of you know, we've talked about the clouds kind of coming together and marketers working more closely with creatives. We've always found, like, little ways, little bridges here and there to make these workflows better and much more productive for our customers. In some ways, AI is, like, the thread that was always missing in, like, the stitching of a lot of this stuff. Now you think about how a marketer works in the Adobe Experience Manager platform or personalizing assets for customers and that sort of thing. It's very clear how the creative products and tools and creators in an organization will be a part of that. Those are the types of things I'm focusing on.
That's awesome. Before we get too far in, I just wanna remind for those in the audience, if you do wanna submit a question, just scan the QR code, type in a question, it'll pop up on the iPad, and we'll work it into the discussion. Just going back to the video that you showed, there was a lot of things that were there. What are some of the things that jump out at you that have you excited?
Yeah. Well, let me answer it this way. If we look a few years into the future, you know, and in many cases, much sooner than that, what sorts of experience would you expect, you know, made possible by Adobe?
Yeah.
You should expect that in any of our flagship products, the ability to generate other variations or parts of your work, and also explore, you know, far more surface area of possibility as you're trying to solve a problem for a customer or make a movie or make an image or whatever the case may be, do brand development. Generative actions will be fully baked into the workflows of these products. They will just be a native part of creation. You're going to be making something, and there's gonna be a generate button in all kinds of places and different moments, and it's just going to generate various variations. You can take bits and pieces from different ones, stitch them together, and make new generations based on that.
It's a very kind of empowering-For the creative world moment where 'cause every creative has always said, "If I just had more time, I could explore more possibility and come up with better solutions." It's always been a function of time. This is technology that sort of turbochargers possibility in that regard. I think you'll see that in our flagships. I think you'll see far more people in the world gaining creative confidence. You know, I feel like creative confidence kind of peaked for many of us when we were six years old, and it kind of went down from there as people stopped putting our work on their refrigerators.
I think that we're entering an era now where any of us with ideas can kind of come in and prompt and get pieces of video and imagery and whatever else. Of course, when you do that, what is the next thing you wanna do? You wanna make a change. You wanna add text. You wanna add a logo. You wanna make it on brand. You wanna add a little tint. You wanna take someone else's style and add it so you can augment it in some way, shape, or form. That's like part of the human desire we all have.
I think we're very squarely positioned for that, so people are going to come in with Adobe Express and some of our Firefly standalone capabilities, and I hope that, you know, we show them wanting to get more serious and take on additional tooling and, you know, and become better customers of ours. Final thing I think you should expect is the whole world of marketing to change.
I think it's gonna become far more personalized than we can even imagine. I think that e-commerce websites will welcome us by name and have assets that are catered to our own, our own interests and our own, you know, the stuff that we like and that customer data profile is gonna be at the core of personalizing these experiences.
The connection with all the source of truth assets is gonna be a key part of enabling every digital experience to be hyper-personalized.
There's a lot to unpack there. First of all, thank you for Photoshop on the iPad. I you know, just that was a big step. The work that you did there, really appreciate it personally. Wanna hit AI head-on. You know, there's definitely two big camps. There's a group of, you know, investors that think, you know, Adobe's gonna be a winner, and there's another camp that think you're gonna be negatively disrupted. Obviously, we expect you to believe that you're gonna be a winner, but, you know, what gives you confidence that Adobe's gonna be a winner in generative AI?
Yeah. I think that there are three core convictions I have deep in my soul, which is why I'm here. Number one is that I think far more people will want to express their ideas and stand out creatively. I think that making tools like Firefly, as well as Adobe Express, as well as making all of our products easier to use, which AI helps us do and we can get to in a minute, you know, that's gonna be great for our business, you know? I think that we should have 100x more customers at the top of our funnel playing and paying, you know, to be able to express themselves creatively and stand out, whether it's at school or on social or with their PowerPoint presentations or whatever it might be.
That's a core conviction. You know, number two is that creatives don't ever sit stagnant. You know? If something gets easier for them to do, they don't say, "Oh, great, I'll quit earlier today." They use that time to make something better. You know, just like it's part of how creativity works. Creatives are always advancing their segment, just like every athlete is always advancing their sport. You know, the tennis players of today are far better than they were 10 years ago.
Yeah.
That's how it's gonna roll out and continue to roll out for creative professionals. We're seeing that because we're testing our features and our products with our customers. What we're seeing is that they're exploring so many more possibilities at every stage of their journey now, that's just enticing them to wanna push further and do more and make it better. Yeah, I mean, you could argue, if you have a team of five designers, right? Suddenly you've freed up 30% of each of their capacity using some of this new technology, does that mean you want to hire now fewer designers, or does that mean you wanna design more things?
Yeah.
I think, and better things. I'm on the camp, and by the way, the history, for example, of, you know, engineering. Engineers become more productive every year for decades, yet people keep hiring more engineers 'cause they wanna create more products, and they wanna create better products, with the newfound productivity. I believe that creative professionals will continue to advance their segment, and AI is going to enable them to do that.
One of the areas that's kinda come up in my investor conversations is around the consumer segment in particular. You know, how does AI impact or benefit that segment of the business?
Which segment?
Just the consumer user.
Yeah, the consumer user.
prosumer-
Yeah
...you know.
Yeah. We also see this with Express, which I think is very similar.
Yeah.
I mean, generative AI is just a source of ingredient assets. You could start and find ingredient assets from sorting through templates. You could find them through stock assets. You could find them through prompts now with generative AI. Once you find an asset that you like, you need to do something with it. Usually you have to add text to it, you have to edit it, you have to make it yours, you have to put your product in it, whatever those cases may be.
You know, that's why I believe that tools need to be natively integrated into the ingredients, and where you're prompting for the ingredients. I think the other thing that people forget, especially on the prosumer and consumer side of things, is that we need ideas. You know? We need ideas. That's why people like to browse.
People like to sort through stock photography. People like to get suggestions for prompts as opposed to have to think of them themselves. That's how these tools need to evolve in order to be successful. We're obviously squarely positioned with what we're doing with Firefly and Express, but that's our approach to it.
Let's dive into Firefly. What exactly is Firefly?
Firefly is our family of generative AI models that is starting with use cases around text to image. text-to-text effect, which is a really cool... You actually saw an example in that video of a word, and then you, like, type in and you make it like nylon letters or balloons or whatever, and then it instantly creates, you know, turns those letters into that prompt. As well as vector creation and, you know, under development, you know, so many more things like 3D and video and many other generative AI capabilities. Firefly is our family.
Is that gonna manifest itself as standalone product or is that being done inside of like Photoshop?
Yep. It will come to market in three ways. It will come to market as both the standalone Firefly product and is really baked into Express, and I think that's really where we're monetizing through either people getting more credits to generate more stuff, or they're just converting to Express and getting some credits associated with that subscription and then hopefully getting even more credits as they generate more stuff. That's, you know, number one. I think it comes to market through our flagships and generative capabilities will be baked into every single part of the workflows across these flagships over time.
People will be paying for the plan for these flagships, and they'll be getting a lot more value now as a result of some of these AI capabilities which we hope to capture in the pricing of the plans, as well as we hope that they get more generative credits. If we do a good job of making it so much easier and more exciting to create using generative capabilities, we should be having people add on more credits to their flagship plans.
The third area is on the enterprise side. One of the things I'm most excited about, and this, you know, goes into that third like sort of belief and conviction I have around personalization, I believe that every brand in the world will have their own proprietary model that is trained on their own assets.
If you're Nike, for example, what are you going to want your teams to use? You're gonna want them to use a commercially viable model that was trained in the right way, which we can talk about, Firefly, plus all the assets that Nike has, right? That hopefully are stored in Creative Cloud or in our AEM system. What we believe that brands will have their own proprietary versions of Firefly that they're using, and that will of course be a service they're paying for.
There's a number of investors that are brand new to just the world of AI. When you talk about credits and buying more credits, what is this credit idea?
Yeah.
What's the monetization model?
The monetization model, you know, it's simple in the sense that every customer that is a customer of ours today, as their plans get enhanced with generative AI capabilities, I do believe again that they're getting more value and we should get more value, you know, in the traditional business model as it is today as a start, right? Alongside that, there's the idea of every generation you do. I want to generate 17 versions of this one thing I made for Instagram to be able to fit across every other format of every other social platform. Some of those will require text to be reimagined, some of them will require pixels to be added and for generative AI to guess what would actually fill the frame.
There's all kinds of stuff going on behind the scenes to generate those 17 variations that any social media marketer would want. They used to have to spend days to create, now they can just generate it. Those are 17 generations, right? If they have a credits for generations that is, I don't know, I'm making up a number now, but 1,000 or 2,000, they just start to eat into that as they make more of these requests.
Imagine a marketer who is taking a final asset that was delivered to them, and they're sending that asset through our Adobe Campaign system to customers around the world, they wanna actually generate 140 versions of this email because they have different geos and different languages and also different images will be more performant based on the data they've captured previously with us.
Those are all generative credits that are being leveraged to generate these various assets that they're gonna then use for their marketing. We need to bake the generation capability into our products. We need to kind of make sure everyone has some so they get the taste of this, then we wanna make sure they just start using it.
In essence, it's a consumption-based model.
It is.
You know, sounds great. You show the video, but when is this actually gonna get in users' hands?
Yeah. Firefly, we've been rolling out invites into the private beta every single week, and now we have, you know, certainly a lot of users. We've announced there's over 70 million generations that have been done using Firefly by these early customers. We've announced that we've had over 1 million people request access. Also we've shared that a lot of those 1 million are actually net new Adobe IDs, which is also a trend we see in Express, a lot of net new Adobe IDs coming into the funnel.
Imminently we are going to take off the, you know, sort of open the floodgates, as we say internally, for Firefly because we have the capacity now ready, and the, you know, and we have the mechanisms to like deliver high quality service, you know, sort of battle tested. Once that happens, then it all becomes the go to market game.
A couple questions came in from the audience I wanna work in here as well. One is, how will Firefly really connect? We talked a little bit with the rest of Creative Cloud or Creative Suite, but also potentially with Figma. What's the longer term view of the kind of connectivity?
Yeah. Well, the connection between generative AI and our existing flagships and the marketing tools, I think I just made, you know, relatively clear, and I'm happy to answer more questions on that. You know, we're in the asset creation business across all of these different segments. People use our products to make video and images and logos and illustrations and everything else. I'm talking about the Creative Cloud side, of course, of the business.
Yeah.
With Figma, people are stitching all these assets together, putting them into an interactive product experience that is then handed off to developers. Of course, you know, around half of Figma users are developers, which are not currently in our ecosystem, and we hope they are soon. The idea of, you know, initially the idea of having all these assets be linked assets is really enticing, and our customers are very excited about the prospect of when they're stitching these...
When they're making those assets, and they're handing them off to product designers they're working with or developers they're working with, having those assets be linked and live, such that if you update the video or update the image or change the slogan for the Christmas campaign or whatever other things you do, in real time, the product designers and developers you work with, they can, like, update their assets and make sure that these prototypes and the actual interactive product experiences are up to date.
Yeah.
That's kind of one of the major synergy cases we're excited about, and, you know, aside from getting us into this new market of product design and development, but also, with generative AI, you know, there's all kinds of situations where you're designing a prototype, and you need to generate, you know, 50 fake people, you know, just to kind of show how a directory would look. Or you are trying to, you're trying to generate some, various versions, you know, of a design. I think that Firefly would be a, you know, really, you know, exciting integration on the Figma side.
You talked about Express a couple of times. Help people understand what is Express and where does it fit in the product portfolio?
Sure. Express is a mixed media, widely accessible creative product across web and mobile, that really touches the needs of a lot of the people who don't have the skills or the endurance for a learning curve, you know, on how to create with some of the Pro products. The, you know, part of the insight around Express also, is really around organizations, teams, and the enterprise. If you have a company these days, you have folks that design the products and design the actual branding and all this stuff, which is hopefully stored in our Creative Cloud Library service or in cloud documents that you're using.
You also have all these social media marketers and everyone else internally that's making presentations and anyone else that wants to be on brand and have the source of truth brand assets at their fingertips.
The idea of outfitting all of these social media marketers and other people that you work with in agencies and everything else with the ability to use templates and be able to share in real time, you know, is an important need these days in the world of marketing. You know, one of those moments where I'll realize this, everyone remember the Super Bowl where the lights went out.
Yeah.
for a few seconds, and within 30 seconds, Oreo did this campaign, "You can still dunk in the dark." You know, if you think about what has to happen behind the scenes for a marketing team to think and act in real-time, they need to have access to those assets. They can't rely on the design and the branding team. They can't rely on approval processes. They have to have templates they can use.
Like, all this stuff needs to be at their fingertips. That's kind of this new think and act in real-time world that we're in these days as marketing budgets shift towards social, that we need to outfit brands, companies, teams to work in. Express is, like, really you know, squarely focused on some of that on the enterprise side as well.
One final thing I'll just say is that the content that shows up in social media and, you know, increasing other places these days is mixed media.
You don't come into Instagram sometimes thinking it's gonna be an image versus a video versus animation versus text or whatever. It's actually an amalgamation of all those things. Express is natively a mixed media tool, and the next generation of Express, in my opinion, brings that to an entirely different level, and that's launching imminently.
Oh, excellent. You also talked about the separation between Express and Pro. How does AI then, outside of Firefly, manifest itself within the Pro products, within the Creative Cloud, Photoshop, et cetera?
Yep. Yes, of course, Firefly deeply embedded in Express. We talked about that. With Express, you can also always open up things in the Pro products. That's another feature that's coming, and that's an important part of our, of our funnel and the connective, you know, tissue of all these products. On the flagship side, what the teams are now doing is, with customer empathy, knowing what their, what challenges their customers face and how their customers work every day and what these workflows look like, they know what Firefly is capable of, they're taking these APIs we have internally, they're just baking them into all these workflows. What you'll see, I think I showed a little glimpse of it, we're gonna be launching soon a feature in Photoshop called Generative Fill.
It actually, literally just anything you select, it can fill it with anything you can imagine. It makes it completely integrated into the asset you're working with, but it's also a non-destructive asset, which what that means is that you can save it as a layer, and you can manipulate that layer without changing the whole thing. Any other prompt-based fun tool out there these days is a destructive asset. It just spits it out-
it's, you know, then you take it into Photoshop and you have to work with it. What if you didn't have to do that? What if you actually could prompt in Photoshop, get something, but it's a non-destructive asset with layers, and you can further edit and, you know, make it something that you would use commercially.
That's been my personal frustration with some of the tools that are out there, is that change process. What about the possibility of, you know, a copilot type of element within something like Photoshop?
Yeah. This is another major focus for us right now, is. This is where our Firefly is our foundational models, and those are all built internally, and that's built on our data sets and everything else. We are also gonna be partnering on the LLM side.
to power natural language capabilities across our products. You can imagine, you know, I'll make up a name called the Adobe AI Assistant that is a box on the side of all of our products across products. That greets you know, asks you what you're trying to accomplish, and functions in three ways. Number one is it certainly trains you and helps you. It's a much better natural language way of navigating.
The second thing it does for you is it gives you ideas. As you're doing something, it might say, "Hey, try this color variation," you know, "it performs better." Or, you know, "Try this font, it might be a better fit." So it's actually suggesting things to you. The third thing it's doing is it's actually doing things for you.
You can actually use it as a command center. You can say, "Hey, here's an image, crop it." "Oh, here's video, cut it. Please add in this audio." If you think about what that does to our flagship products that I'm really excited about, is it boosts success in those products for new customers.
Yeah.
'Cause you can come in, and you don't have to now be daunted with this learning curve of Premiere Pro, which is a Hollywood-grade video editor. You can actually upload a family video, you can use it through the copilot capability, and then you can see the cursors moving around, and hopefully, at some point, you decide to take control of that cursor. In that case, you're a successful customer.
One of the things I've been passionate about for almost the last six years, you know, in these two roles I've had, is the opportunity for retention being a growth driver. There are some people who just can't figure out some of these products, every time we make a incremental improvement in retention and success of the customer, that's like a material impact to growth of our business, of our core.
These technologies can really, you know, improve that funnel, you know, as well as meet the needs of all the other things we discussed.
To me, that's where I think another vector for the TAM expansion. I'm a Photoshop user, but I don't use it every single day. Whenever my wife says, "Oh, I need this image to do this," you know, up on the screen is Photoshop on the left and YouTube on the right.
Right.
Right?
Yeah.
'Cause you're searching YouTube like, "How do I blah, blah in Photoshop?
Yes.
Being able to do that, I think is.
I think that's a great point. You know, I think that the next generation will be like, "Why did they have to do that?
Yeah.
You know, like, the idea of YouTube, you know, in parallel, they should never have to do that. That's why I would say AI is this platform shift.
Yeah.
It really changes the nature of how we use all of these products. For us, it's value expansion in the sense that people are going to get more value out of the tools we're giving them. They're gonna be able to explore more possibilities, try more things, convert to more formats and more languages, and they're gonna be able to pay for that. It's also market expansion because not only is it, you know, the net new Adobe IDs we talked about in Firefly and Express, but it's also the increased, you know, success that customers have in our flagship products. That's also market expansion, if you think about it, 'cause we lose some of those people today.
Absolutely. One of the other questions that came in kind of along those lines, as the marginal cost of the creative process kind of drives towards zero, how does that really just change the competitive landscape? Meaning that you're not the only ones that are gonna want to pursue this path. Obviously have a massive head start, but how does it really just change the competitive dynamics out there?
Well, it's an interesting question, which I don't 'cause there's a premise in there I don't fully agree with, which is this notion of the creative process becoming free. Like, we're gonna continue to charge for our products. Again, like, you can always source an asset out there. Then what do you wanna do with it, is the question. You know, and one thing we haven't really covered is the way that we've approached Firefly was informed by our customers saying to us that they're not willing to use generative AI trained on stuff that was copyrighted and IP protected. They don't see it as commercially viable.
Yeah.
When I talk to the Omnicoms and Publicis of the world, you know, some of these big brands that are excited about these capabilities, they're asking me questions like, "How exactly how is your training data sourced? I need to attest to my clients that there's absolutely no risk." If you think about it, you know, it makes sense. In order to have an asset in stock, you need to have model releases and building releases and all this sort of stuff.
There is a desire, you know, amongst customers to have commercially viable models, and there's going to always be a creative process around what you do once you get something from those models. The final thing I would just say is that creative professionals always push further. If you give them more time or you make the marginal costs of discovering a solution lower, they will just consider more solutions.
They will just find something better. Unless we think that digital experiences have gotten as good as they'll ever get, and now it's just a matter of reducing the cost to get there, you know, that's one way of looking at the world. I don't look at it that way. I think digital experiences keep getting better. We're gonna live in an immersive world.
I mean, right now there's no assets around us, but in a few years, we're all gonna have devices, and there's gonna be all kinds of content around us, and there's gonna be an Adobe brand over my head, and there's gonna be all this information that is stimulating and helping me explain what I'm even saying in real time probably. That's content, and that's digital experience getting to another level.
As a company, we believe, you know, the future of digital experiences will improve.
closed captions on steroids.
I think we are gonna be boggled by what's coming.
Along the competitive idea, and what you were talking about, how big is the Adobe content database, and is there really competitive risk stemming from open source models, you know, the Midjourneys, et cetera, being trained on commercially viable content?
Yeah. I think that, Yeah, I think if I were to play this out a little bit, so we have a really strong set of models with Firefly. When we launched Firefly, you know, of course there were snarky bloggers who went in and typed in "Spider-Man doing something in Firefly" and "Spider-Man doing something in other," you know, sort of openly scraped models.
Yeah.
They said, "Wait a second, Firefly doesn't know who Spider-Man is," you know. "It's a spider that looks like a man. What's going on here?" You know, my response is, "That's a feature, not a bug." That's based on what our customers needed in order to feel like they could confidently use this for commercial purposes.
Yeah.
I also was thinking, you know, obviously in the planning for this, what an opportunity to go to Marvel and have them license the use of their IP for people to use on an end level, to have the real Spider-Man, you know? You know, that's kind of the Spotify model here, right? That's, like, a big debate here, right? Is this like a Napster moment? Does the value of music just go to zero and, you know, music's free from now on?
Are there better solutions like Spotify and Apple Music and others? Yeah, maybe the recording artists make a little less money than they did in the old CD world, but, like, that becomes the new kind of mainstream way that industry works. I happen to believe that we're going to use licensed content in models for all signs of creative purposes going forward.
I believe that the 40-plus million profiles in Behance of artists around the world that all have styles that are currently stored and represented as assets in our database, I think those people are gonna wanna license their style to people in Express, to people in Photoshop and other places in a commercially viable fashion, and that we have the opportunity to be the Spotify, if you will, you know, in between some of that. By the way, I also think it's easier for the consumer.
Yeah.
In our case, the person who's creating something to do it that way, as opposed to have some of the risks and sort of the messiness of doing it the Napster way.
Is that almost, like, finally getting to, if I think about, like stock photography, the Getty Images and the way you monetize, because I think about Behance, but I also think about DeviantArt and others that have tried to build that marketplace, but it just never seemed to really break through?
Yeah. I think that the. It's interesting. Like, Behance is a marketplace of talent. We're not doing the LinkedIn model. We're also not a headhunter. You know, we've done these polls where we say, you know, "Have you been hired through Behance, how much have you been paid?" We've realized hundreds of millions of dollars of transactions go through that platform on a quarterly basis, except we're not trying to be in the middle of that. In this new world, where people's styles can then be used to train models that can be delivered at the fingertips of people wherever they're creating, I think there's an opportunity for us to explore that.
How would you kinda characterize what is best in class when it comes to these generative AI models for this use case, and where does Adobe fit versus what else is out there?
Right.
Are you already a leader? Are you catching up? Where does things stand?
I think we have the best UI for prompt-based creativity with Firefly in the world right now. You know, you could argue one of our biggest competitors is in a Discord channel. Maybe that's a low bar. We've developed an interface that is really a playground for people to come in and play. You know, we corely believe that novelty precedes utility oftentimes, and people need to be able to discover some of these capabilities and play with them before they understand how it can be used in their kinda commercial workflows. It's, like, a great progression here to launch Firefly, you know, see how customers use it. In the same time and parallel, we're building the capabilities into our flagship. We...
We have the signal from our customers of how they want to use this stuff.
Yeah.
Now it's interesting, though, if you watch people use these prompt-based creative tools, the first thing they do is they're like, "Let me think of a creative prompt. Like, what am I gonna prompt? Like, what do I say?" You know? "Do I ask for an ad for a tennis racket? That won't work. Like, I have to be descriptive, and I have to a ctually you realize pretty quickly they need ideas.
Yeah.
We're surfacing ideas as well, and that's where I think the styles can come in to play, to give people ideas of styles for what they might wanna get for some creative project they're doing. Then, by the way, as soon as they get something, what do they wanna do? They wanna edit it. They wanna add text, they wanna make it theirs, et cetera, et cetera. They can bring it into Express, or they can bring it into some of our flagship products. That's why we think it's such a powerful new top-of-funnel, because it's a very frictionless way to start creating, and then to wanna take it further.
A question came in just following up on an earlier one. Maybe you're in a position to answer it, maybe Jonathan can weigh in, but just the idea, have you guys ever or recently commented in terms of what portion of the ARR or what portion of the business is consumer/prosumer? I know it's been years ago Adobe did, is there anything more recent that's been out there? No? Okay. We'll jump ahead then on it. What is the tech stack that's actually underneath Firefly? Was this built upon the existing kinda Creative Cloud stack?
Yeah. the services.
Sensei?
It is part of the Sensei organization, which is our overall AI effort. As you all know, I think, like, we've been shipping AI features for almost a decade. I mean, Neural Filters in Photoshop, Content-Aware Fill in Photoshop and in After Effects, you know, Liquid Mode in the Acrobat business. I mean, we have a pretty robust AI organization.
The cool thing about being at Adobe, though, is that the talent we recruit and attract across the marketplace for AI are people who have deep desires to be in, say, imaging or video or 3D. The general purpose AI talent, you know, might be attracted by some of the sorta other sorta AI-centric players that are just doing AI. We get the people who, like, wanna go deep in verticals, and that's allowed us to have an advantage in building these imaging models and video models over the years.
When we started a lot of this work building our generative models, again, which all were done in-house using, you know, hundreds of PhDs and folks who think about this all day, every day, we were also able to start to future think, like, how do we make this fit in s o the asset can be leveraged in these products? You know, Make this in a way that can feed the marketing pipeline of the future. We've been kind of plotting and planting the seeds of a lot of this for years and building the core foundational models.
In the last few months, it's just become like a whip up, like, everyone's asking all these questions, and you know, internally, we're like, "Yeah, I mean, we've been working on this for quite some time." The good news is that Firefly, I think, came to the market at the right time, and we're launching it in the right way, like, with progressions of people giving us feedback, and I, you know, now we're pretty ready to open up the floodgates.
I also want to spend a few minutes kind of, you know, on the broader Creative Cloud and specifically a lot of discussion and interest in the acquisition of Figma. Maybe just to kick off for those that are newer to where does Figma kind of fit within the overall Adobe portfolio? What's kind of the core technology that they're bringing to the table?
Sure. Well, Figma is a product design and development platform, that is a segment we have never really played in at scale for sure. It's, you know, Figma has talked about the fact that almost 50% of their users are developers. You know, we don't really have developers as customers. On the Creative Cloud side, you know, we are in the asset creation business, as I was saying earlier, having the idea of connecting the assets and the creation of assets with the process of developing interactive product experiences and shipping them through the use of through partnership with developers, you know, that's a, that's like the, that's one of the biggest synergies.
I would say the second synergy that we're really excited about is Figma's FigJam product, which is a great kind of collaborative tool that we think could very much, you know, augment Express and, you know, and also work for some of our Acrobat customers, et cetera. In terms of the, in terms of, you know, the product design and development segment, I mean, clearly it's big.
One of the things that's interesting is that when you deliver these interactive product experiences, you know, the idea of, you know, that ends up. You know, there's a lot of synergies with our Experience Cloud as well, and how you, like, sort of serve these sites and how you know, optimize and personalize the experiences, that sort of stuff.
You know, there's a number of synergies that we're excited about.
Is there any part of the Adobe product portfolio kind of overlaps with what they did or what they're doing, I should say?
No. I mean, I think one of the things that I, you know, I get asked is around the collaborative nature of their products. I think that what I try to do to clarify for people is there's a difference in the way that developers and product designers and other stakeholders collaborate, which Figma, like, serves really well.
The collaboration needs in our other products, which are actually not only distinct from that, but actually pretty well served right now. I mean, if you think about it, Photoshop and Illustrator now on the web as well. We have Share for Review across all of our products, which is a way for you to share with any stakeholders. What we don't actually believe our customers on, you know, in Photoshop, for example, want is hundreds of people in the same file at once.
Yeah.
You know, if you go and you talk to people in the segment of product design and development, they need that. You know, that's kind of the way that works. However, if you ask a Photoshop customer, do they want three other people in their file at once, let alone 300, they'd, like, freak out and say, like, "What do you mean? I'm making an image," you know? Like, "I would never want that. By the way, actually, please don't do that." So we've really focused our collaborative roadmap on all of our creative asset creation products on making sure that it's seamless sharing for feedback and that you can seamlessly share a cloud document so people can pick up where you left off without relying on a Dropbox or something like that.
Yeah.
It's a very different sort of collaboration agenda than what, you know, Figma has tackled for product designers and developers.
Is there anything in the core Figma architecture that comes over that benefits? You mentioned Photoshop and the, and the web, et cetera. We think about Figma and Canva being that, I don't know if cloud native is even the right discussion of, but what their user environment looks like. Are there pieces that you will actually be able to benefit from, you know, in terms of taking that next step with Creative Cloud?
I think one of the things that I'm excited to explore and we've talked about is bringing some of the Creative Cloud capabilities into the product design and development environment. In some instances, you shouldn't have to go to Photoshop from Figma to make an edit to an image. You know, there are certain things we can do in line.
We have this incredible library of photo editing capabilities in Lightroom that we've packaged up beautifully and can come to the surface in other products. It's exciting to bring some of those capabilities to the Figma platform, and I'm sure we have a lot to teach one another as well, you know, across all forms of web development. At the same time, we, you know, we've actually brought our products to the cloud and added collaborative capabilities that are required across our segments now already on the flagship side. I'm more focused on the synergies and bringing some of the capabilities to Figma.
Let's switch over to digital experience as well. That's a newer area for, I think in terms of your responsibility. I think for over a decade, Adobe's talked about, you know, trying to, and you mentioned this early in your first answers, connecting the content creation tools to data analytics, et cetera, to optimize workflows. Where are we in this in this journey?
On the digital experience side?
Yeah.
Yeah. Well, I think the core conviction we talk about a lot these days is that the future of digital experiences will be hyper-personalized. What that requires is that every company really understands their first-party data, has customer data profiles for all their customers, and can do something with it. One of the things I think about a lot these days is, I'm calling it the digital experience flywheel, you know. You have all the creative tools and capabilities we've discussed. You have all the data that companies have on their customers, their language preferences, their, you know, their fashion preferences, like any preferences that they have about their customers that they obviously collect and, you know, ensure that they can deliver a personalized service.
That data is now also driving AI around what types of digital experiences you should deliver your customers, and also with generative AI, you can actually create assets, you know, to deliver those experiences, which augments the creative side of the equation. You have the delivery of them, which is the DX business, it's the campaigns, it's the websites, you know, it's AEM, it's everything else, it's analytics that then feeds more data. There's actually a flywheel going on here, where the creative side with data and AI feeds the marketing side, which creates more data, which then improves the AI, which feeds the creative side, and it's just like this amazing-
Virtuous cycle.
Yeah, cycle. I think we have to build our products and our roadmap taking that into account. The, the big bet here is that the future of digital experiences will be personalized, and that's how the next generation of companies will better engage, retain, and monetize their own customers, right? That in order to do that, the data, the AI, and the, and the creative, like, need to be intrinsically connected with the system. You know, it seems obvious to me, right?
I don't think there's another company that I can think of that's in a better position to deliver that, because we have Adobe Analytics, and we're also sending the campaigns, and we're also the source of truth for brand assets for some of the biggest companies in the world, and they're using our creative products, and with generative AI now, we can build these finely tuned models based on their data to better serve their needs. We have the building blocks, and it's a lot more, like, sort of clear now how it all comes together. As AI, as that thread I was referring to earlier, you know, we have to deliver that.
It seems like this has been the one area that's been the most fragmented of all the different areas that Adobe, not fragmented, you know, the competitive landscape.
Yep.
There are thousands of companies that do these individual little-
Right.
niche items. Is this finally the precipice where we can get consolidation in a move to a quote unquote "platform"?
You know, a few things, you know, from the field. I know that right now, as a lot of companies are facing, "How do we increase our efficiency? How do we prepare for this AI world? How do we reduce our costs by having all these, like, vendors all over the place? How do we consolidate?" This is helping our conversations right now, because all of our customers want to have a better digital experience they deliver to customers. They want a less fractured stack. They wanna make sure that they're future-proofing themselves for the world of AI, and that's, like, feeding directly into the conversations we're having right now with our customers.
A couple more questions in from the audience I wanna make sure we squeeze in. First one is, how do you avoid generative AI just cannibalizing the consumer, prosumer Creative Cloud users with good enough editing? You know, stuff that can all happen in AI with no need for a mouse, for example.
Sure. Listen, I mean, Adobe Express is a template-based tool. You can find a template and start with it, or you can just use it and not edit it, right? Similarly, generative AI is another source of ingredients at the top of the funnel. If people wanna come in and just buy a credit pack and use it, and then be done, and take it as if it was a stock image or whatever else, that's a new business for us.
Especially if they want it to be a commercially viable asset, that has, you know, we have Content Credentials that can show that it can be used if they wanna sell it, or if they wanna put it on and have it be an ad on Instagram or whatever else. There's signals in the market that the commercial viability of assets is gonna matter. Just like you can't use a copyrighted image on Google, necessarily on Instagram. I mean, I think some of those flavors will follow through. Regardless, it's a source of generated assets. Our job is to make you wanna do something with it. If you generate an asset and you wanna add a title, you wanna use your brand kit and make it yours, you wanna change something, you wanna add a different person in it, you wanna make it a more diverse image, whatever the case might be that you have, you're gonna wanna use tools to do it.
That's why with the Bard integration, for example, we're gonna use the integration of Firefly powering Google's image generation to bring people, once they get that asset, into Express to edit it further. We think that's a tremendous top-of-funnel opportunity for us, and it's not an exclusive deal. We wanna make sure that API access to Firefly is a real business for us, and it's proliferated through any source of generation around, because we're so convinced that people are gonna wanna do something with this asset. Even if it's just scheduling it to post on a social platform, that. Express does that for you. It's just a widening of the top of funnel, and it's our job to entice people to add text, to edit, to further be creative with it, tap into their own, like, humanity, to become a customer.
I just think about it this way. It just raised the bar in terms of what you can do.
Yeah.
You know, this is gonna sound simplistic and maybe a little bit silly, but when red eye reduction became something you could do on your phone, it's not like it killed Photoshop, right? You just focused on what's the next elevation of what you can actually do with the tools.
I mean, when I talk to a lot of young photographers today, and you know, I'm like, "Why do you use Lightroom?" It's because they want to go further. It turns out the ubiquity of cameras and photo editing capabilities actually makes people want to develop their craft and become better. That's, you know, that's a fundamental belief I just have about creativity, is that when you give people tools to do things, they just wanna go further, and AI is no doubt, you know, one of those tailwinds that should make, you know, far more people wanna be creative, you know, get engaged with these products and, you know, and certainly take the digital experiences people create to another level.
Last question, is have the biggest technological jumps in generative AI for text to image actually already been made and now it's just about Adobe executing? In other words, what inning are we in terms of just the innovation in terms of text to image?
No, I mean, we're in the early innings still.
That's what I think too.
We're in the early innings, and there's so many... I mean, there's practical gaps to fill in these models, like making hands be perfect, you know, allowing you to prompt with crowds of people. I mean, there's so many fascinating, you know, puzzles that our teams are cracking right now. They're doing it in such imaginative ways, making sure that you can prompt and get amazing three-dimensional images that you can then further edit in certain parametric ways, just, like, make that couch bigger and stuff like that.
I mean, we're in the early innings, and it's just, we're in that novelty phase still. It's great because more people come in, more people start tinkering. It's the companies that have the deeply specialized talent, the ability to tune into the customer needs and leverage the resources to bring that UI to the surface, allow customers to go further and, you know, also in my mind, like, can connect it to, like, the desire to deliver personalized digital experiences. You know, that's, like, the playbook we're most excited about.
Love it. With that, Scott, thank you so much for joining.
Yeah. Thank you.
Really appreciate it.
Yeah, pleasure.