Good morning,
“Don't get distracted by the near-term noise," Dan Durn, CFO and EVP of finance, technology services and operations at Adobe, tells me.
That's advice Durn offers to his peers during times when there’s a high rate of change like “the pandemic, economic cycles going up and down,” and even Silicon Valley Bank’s collapse, he says. I sat down with Durn to talk about Adobe's growth, preventing mass layoffs, and generative A.I.
In changing times, tech companies, in particular, should focus on “being able to see around corners, understanding where those market inflections are, and then deliver innovation into those inflections so the company grows profitably,” Durn says. He also recommends solid capital allocation, and getting granular with data. “I play a role in fostering opposing views, getting them on the table, and constantly asking, 'What are we missing?'" Durn says.
Adobe earned revenue of $4.66 billion in the quarter that ended March 3, which represents 9% year-over-year growth or 13% in constant currency, beating estimates. The earnings report was released on March 15. In the past five days, ADBE stock gained about 13% to $374.22 at the end of market close on Tuesday. Creative Cloud, Document Cloud, and Experience Cloud are among the company's innovations that are supporting customers to meet digitalization trends, Durn says.
'We don't want our employees worried'
Major tech companies have been leading the pack when it comes to mass layoffs. For example, Meta laid off around 11,000 employees in November and announced last week it will terminate about 10,000 jobs, and halt hiring for 5,000 open positions.
Adobe eliminated about 100 jobs in sales in December to reduce expenses, Bloomberg reported. However, “We're not going to do company-wide layoffs at Adobe,” Durn tells me. “We don't need to do that, and we don't want our employees worried about when the next shoe is going to drop.”
So, how did Adobe avoid mass layoffs? A pivot to remote and hybrid work environments during the pandemic created a “robust demand” for technology solutions and digital capabilities, Durn explains. “But we didn't get out over our skis in terms of hiring an unusual amount of people,” he says. So, in this now “true demand environment,” Adobe doesn’t have more talent than it ultimately needs, he says.
That puts Adobe in a good position to “execute against the things we see in the market to continue to catalyze this pivot to all things digital,” Durn says.
The company announced on Tuesday Adobe Firefly, a new family of creative generative A.I. models, first focused on the generation of images and text effects. Users will be able to use their own words to generate content from images, audio, vectors, videos, and 3D to creative ingredients, like color gradients. Adobe Firefly will be part of a series of new Adobe Sensei generative A.I. services across Adobe’s clouds. "When I think about generative A.I., particularly in the creative world, I think it enhances not replaces human creativity," Durn says.
In September, the company entered into a definitive merger agreement to acquire Figma, a web-first collaborative design platform—and an Adobe competitor—for approximately $20 billion. Last month, it was reported that the Justice Department is preparing an antitrust lawsuit seeking to block the acquisition. Durn says that Adobe has gotten feedback from customers who welcome the combination of having Adobe tools to create content and Figma applications that allows real-time sharing on the same file.
Adobe turned 40 in December. "We are not only capitalizing on these trends towards digitization, but we've been a part of catalyzing those trends for a very long time," Durn says. And to do so takes top-notch talent, he says. "The types of people we attract at this company are the most creative people on the planet," Durn says.
A creativity that will continue to evolve with the times.
Sheryl Estrada
sheryl.estrada@fortune.com
The next Fortune Emerging CFO virtual event, “Addressing the Talent Gap with Advanced Technologies,” presented in partnership with Workday (a CFO Daily sponsor), will take place from 11 a.m.-12 p.m. EST on April 12. Matt Heimer, executive editor of features at Fortune, and I will be joined by Katie Rooney, CFO at Alight Solutions; and Andrew McAfee, cofounder and codirector of MIT’s Initiative on the Digital Economy and principal research scientist at MIT Sloan School of Management. Click here to learn more and register.
