Adobe

One thing I keep coming back to with Adobe is how deeply embedded Creative Suite is in design education. Students learn Photoshop and Premiere in school, then carry those skills into their careers and advocate for Adobe licenses at their employers. That flywheel is incredibly hard to break and no competitor has really cracked it.

Adobe's net revenue retention in Creative Cloud has historically been a strength, but with AI image generators like Midjourney and newer tools from startups, the question is whether casual and prosumer subscribers start churning. Enterprise is probably safe but the long tail of individual creators is more vulnerable than the bulls acknowledge.

Adobe announced Firefly Services, a set of APIs allowing enterprise developers to integrate Adobe's generative AI directly into their own workflows and applications. This is a direct B2B play that goes beyond selling Creative Cloud seats and could open up a new revenue stream for the company.

Adobe Experience Cloud is the segment that doesn't get enough credit. They're competing directly with Salesforce Marketing Cloud and SAP in the enterprise martech stack and winning deals. At scale this segment alone could be worth more than the entire current market cap in 10 years.

Adobe's Q4 guidance disappointed the market with revenue guidance of roughly $5.5-5.6 billion, below what analysts were expecting, and the stock dropped hard. When a company with this much AI hype can't beat top-line estimates, it tells you the narrative is running ahead of the fundamentals.

Adobe officially terminated its $20 billion acquisition of Figma after the deal was blocked by EU and UK regulators on competition grounds. The company paid the $1 billion termination fee to Figma and is now back to competing independently in the collaborative design space.

Canva now has over 170 million users and is pushing hard into enterprise with Canva for Teams and integrations with Google Workspace and Microsoft 365. Adobe has brand prestige but Canva's simplicity and pricing are eating the bottom of the market fast, and that bottom eventually becomes the middle.

Firefly has processed over 12 billion generations since launch and Adobe is actually monetizing it through Firefly credits tied to Creative Cloud subscriptions rather than just giving it away. The generative AI upsell story is real and the attach rate to premium tiers is growing.

Does anyone have a real read on how much Document Cloud is contributing to growth versus Creative Cloud right now? I know they don't always break it out cleanly but Acrobat AI Assistant feels like an underrated product in the enterprise PDF workflow space.

How are people thinking about Adobe's valuation here at roughly 25-30x forward earnings? For a company growing revenue in the high single to low double digits, is that multiple justified by the AI optionality or does it still look stretched?