00:00Anil, so great to have you back with us. A lot of announcements being made. You know, it's an interesting
00:05time. We have tons of AI headlines coming at us, coming at you every day. I want to talk about
00:11these collaborations, these partnerships, and really, you know, the shift that you guys are doing to agents, agentic AI. We're
00:18talking about it so much. How is that going to change or how will that change Adobe's business model and
00:24how important is it going forward?
00:26Well, thanks for having me on. It's great to be here from Adobe Summit. Over 14,000 people are the
00:31world's largest digital marketing and customer experience conference, and the energy is off the charts. Regarding the partnerships you talked
00:38about, it's a massive ecosystem that we are a part of and that we are helping drive towards the agentic
00:44world. All SaaS companies are becoming agentic software companies.
00:47And in our space of customer experience, it's traditionally been a mix of tools, automation, manual processes in an area
00:56where enterprise customers, CEOs, CMOs, chief information officers have been looking for a solution that can really help them automate
01:06the end-to-end customer lifecycle and provide those kinds of personalized customer experiences to every single customer.
01:13And that's been hard to do before agentic AI. And so now with agentic technology, we announced what we call
01:20Adobe CX Enterprise, which is an end-to-end agentic system. That's exactly what you can do is that one
01:26-on-one personalization at scale to every customer across the world.
01:30So how does it change the business model? How is it going to the financial picture going forward for the
01:35company?
01:37It's actually growing our time dramatically. I mean, we talk about how our total addressable market is now going to
01:45be north of $250 billion. It's a vast market because every company in the world, whether it's a B2C company
01:51or a B2B company, cares about providing a superior customer experience.
01:55And now they can have the technology to be able to do that. And that helps them with their growth.
02:00It helps them with their customer satisfaction and loyalty and also helps them take out costs in terms of the
02:06manual processes and tools that they have.
02:08And what we see happening over time is that our business model aligns with that of our customers. It'll align
02:15with the business outcomes that they are trying to achieve. It'll align with the business metrics that they care about.
02:20And we see a lot of our business model moving in that direction and aligning with their business outcomes and
02:26their business metrics.
02:27Anil, investors are trying to understand how the rise of agentic AI changes the SaaS business model. So from Adobe's
02:35perspective and for Adobe clients, will they still continue to need a subscription to Adobe products and services?
02:43Or will they be paying or looking to pay for projects or outcomes just based on outcome, just based on
02:51deliverable?
02:53It'll definitely be a mix of both. We see a lot of customers here. Many of them are happy with
03:00the current model because it's very predictable for them.
03:02They know what exactly they're getting out of it and they're getting business results from it.
03:06There are other customers who are saying as they look at these new technologies and the pace of AI innovation,
03:11they look to Adobe to be able to bring that in into the software that they already know how to
03:17use,
03:17whether it's Photoshop or whether it is Adobe Experience Manager. These are all great tools that they know how to
03:22use.
03:23They're saying bring it in your own models, but also bring in, you know, we announced over 30 partnerships with
03:29AI companies like Google Nano Banana and others that we can provide through our solutions.
03:35And that's what they're looking for. They're looking for a mix of both, depending on what they're actually doing with
03:40the software.
03:40One of the narratives that has emerged over the last year, at least when it comes to risks for SaaS
03:45companies, and you're all too familiar with this, having followed this closely,
03:49is that the rise of AI will somehow, you know, make it difficult or, you know, make it so these
03:59companies no longer need to pay for subscriptions or at least seat-based models
04:03because maybe they can get Claude to create exactly what they're looking for without paying an ongoing subscription for that.
04:10How do you manage the risk to seat-based model?
04:14Yeah, you know, lots of customers here, we've been in a lot of conversations, and the view that you just
04:19expressed is not what we hear from customers.
04:22A lot of customers think that that's way too simplistic to think that they would actually just use an AI
04:27coding tool to replace software.
04:28If anything, what they're looking at is saying, look, traditionally for software, we had to take software, we had to
04:35customize it to our own needs, and that involved a lot of work.
04:39And that work can actually be done a lot more efficiently with the AI coding tools.
04:44So they're looking at sort of the last mile of using the software, making it perfectly tailored to their needs,
04:50and that's where they use a lot of the AI coding tools, and that's where their attention is.
04:54What is actually being done by the software companies, that actually has a network effect, that has the economies of
05:01scale, because we have over 20,000 enterprise customers,
05:04and we are taking the expertise we have from those customers and making that available.
05:10Any single company is not going to have that expertise, and they're not looking to replicate it.
05:14If you're a consumer products company or a bank or a healthcare company, you're not looking to become experts in
05:21digital marketing or digital customer experience.
05:24You want to get the best of both worlds.
05:26You want to get the expertise that you get from software companies, but you want the flexibility that AI offers
05:34to personalize it at scale to your customers,
05:37so they're getting the best of both worlds through agentic software.
05:40And, you know, legacy customers might get it, but, you know, I think about a new creative person.
05:46What is the reason to buy Adobe products when they can use free LLMs to create videos and pictures?
05:52What's the argument here?
05:54Yeah, I mean, if you are anybody who is doing it for, let's say you are a creative professional or
06:00a freelancer or you're even doing it as a gig, for example,
06:03you want to be able to get the benefit of not just the AI models, which obviously anybody can get,
06:08then how do you differentiate yourself?
06:10That's where if you can bring the power of the AI models and then combine it with the capabilities that
06:18we provide, you know, built over time.
06:20So if you can say, hey, through Photoshop, I'm able to access 30 different models, I can use that as
06:25the starting point, then I can add my own unique touch to it.
06:29That, again, you're getting the best of both worlds, and we believe that that's how you produce content that stands
06:34out.
06:35Otherwise, if you're doing the same thing out of the AI models, then all content is going to look the
06:40same.
06:40How are you going to stand out?
06:42And if you don't stand out, just putting content in front of customers, they're not going to click on it
06:47or they're not going to take it to the next step.
06:49It's not going to be effective.
06:51So we believe that for content to stand out, you need both.
06:54You need the AI models, and then you need to add your own unique touch, your own brand to it
06:59to make it stand out.
Comments