Adobe CEO on AI innovation, expanding AI strategy and revenue growth

I am here in Las Vegas at Adobe Summit with Adobe CEO shantu Nan shantanu thanks for sitting down with us exclusively here on overtime I appreciate you being here John well I want to start off with the news that you just posted on the investor relations site the new Total addressable Market figure for the overall business at 293 billion in 2021 you said in 2024 the T would be 205 billion so the 2027 Target is that how much of that 42% increase over this year is AI well all three uh initiatives t

hat we have focused on John are growing so when you think about what's happening with creative when you think about what's happening with documents and you know the reason we're here this week at Summit so all three of them are growing certainly We Believe to your question AI is a massive Tailwind uh in each one of those businesses both with respect to attracting a whole new set of customers as well as the ability to have additional value and therefore you know to be able to monetize that and I

think the fa meeting is going to be both about articulating in each one of those businesses where the growth's coming from as well as you know how we expect to continue to focus on Innovation shanu the thing that struck me about the product announcements today was this idea of AI at scale and AI within Enterprise workflows uh early on you guys did this demo of say a company like Coke a beverage company have a bunch of different colors and bottles that they want to put on on different backgrounds

trained on their own assets and data it generated these backgrounds generated kind of customize different colors and then resize them based on different social media sizes that would need to go out and exported that into Adobe Express for a social marketing team be able to do that and to me that's way different from saying hey draw me an elephant what's this going to do well there's so many questions in that John but you know first if you take a step back out uh it's not to when you talk about

scale realize that adobe pioneered the digital marketing business we talked about customer experience management and that business is on scale to drive over $5 billion in revenue for Adobe in 2024 so you know we have come a really long way and you know again from a scale we process something like 17 trillion customer activations this year the announcements uh to your question what we talked about was gen studio and it it doesn't matter whether you're a marketing uh professional it doesn't matter

whether you're an agency you are now bombarded with this need for a campaign to be able to conceive it quickly to be able to create the assets to be able to deploy it and to be able to activate it and to do that in a personalized way so if you have 100 million customers you want to use AI to generate 100 million variations of that if you're in 150 countries you have to localize that content and therefore you know have that content with all the variations and so the Gen Studio product enables yo

u to do that we're thrilled that coch allowed us to actually use uh you know the assets that they had done in the production okay those are actual Coke assets those are actually Coke assets and what they do is they have this campaign that they want to run but they have to run it on all the different social media platforms they have to run it in different countries and the scale at which we can now deploy that for them is where the magic is coming in and it's coming in through AI because you can

do AI on the front end as it relates to the ideation and you can do AI as it relates to understanding the personalities of every single individual and tailoring the content for them the flip side of this capability is it seems very disruptive to the creative Workforce and and operations chain because before you had agencies there generating these visual assets and maybe just a dozen of them now you got AI generating hundreds or thousands of assets it it seems to me you need an agency to AB test

those and figure out what's going to perform best in all these different settings is it a is there a skill shift that needs to happen within the creative Community because of this well you're absolutely right in that it's bringing Art and Science together and so if you're the creative professional or if you're the agency you love AI because it allows you to take something that's in your head and very very quickly translate that into a you know sometimes it's called a hero asset that you then wan

t to create the variations for uh if you're a person who's actually responsible for deploying that you also love this technology because the pace at which you can deploy this is dramatically different in the past what would happen John is if you had a campaign that you knew you were going to run around Thanksgiving time you would start the asset production perhaps in April or in May and you would say you know how many different segments do I have how do I create all of this content and you didn'

t have the ability in real time if that promotion or if that campaign was not performing to change the assets okay so by combining not just the content creation process but the delivery and the Insight we can actually in real time to your question say you know this asset's not performing so maybe we should stop running that asset and conversely this asset is off the chart so why not we have that everywhere so shantanu bring this home for me for investors uh after earnings there was some question

concerned about how quickly you're going to monetize this are you going to spend several quarters getting users used to these AI tokens and and using them before really saying okay now it's going to cost you extra when are are these Innovations going to show up for the top and then eventually bottom line you're absolutely right John and I think that's the purpose of the fa meeting today which is to actually break it up into three parts the first part is again to outline all of the Innovation th

at we've done I could not be more proud when you think of what our team has done whether it's AI assistant in acrobat and reader which is taking all the PDFs that you have and the ability to have a conversational interface across our creative we announced a new uh structure match for Firefly today which again you know social media is a buzz with all of the cool creative things that are being done as well as the document uh and experience Cloud so the first phase of it is talking about the Innova

tion I think the second phase is to actually articulate to your point the different monetization methods because in Creative we have these generative credits that people can use the generative credits will be different for Imaging as it relates to video because when you create video you're going to use a lot more comput so I think outlining in Phase 2 exactly how we are monetizing it is the second phase of it in acrobat it's different whether you're in reader you can now monetize consumption and

in experience Cloud we have these higher end AI services and the AI assistance so that's phase two and then phase three is talking about as we did with our Tam how we expected I think most people would say it's early in the monetization phase but the first phase for us was actually making sure that innovate and get our products out there and you know we're confident that it will lead to new customer acquisition as well as increased Revenue