Adobe: Continuing to Flex Its Generative AI Muscle at Max User Conference

Wide-moat Adobe held its annual Max user conference, where it also hosted a brief investor session. The company reaffirmed its guidance for the fourth quarter but provided no immediate financial updates. We made no changes to our model and, therefore, are maintaining our fair value estimate of $635. Key takeaways from the event included a bevy of both traditional and generative artificial intelligence features, a discussion of AI monetization efforts, a new Firefly generative AI model that is now available for limited public beta, and a change to guidance measures that moves quarterly net new digital media annual recurring revenue in dollar terms to an annual growth expectation. While we do not favor fewer guidance measures, management still plans to provide the actual net new ARR figures quarterly, so the transparency impact is lessened.