Dont get distracted by the near-term noise, Dan Durn, CFO and EVP of finance, technology services and operations at Adobe, tells me.
Thats advice Durn offers to his peers during times when theres a high rate of change like the pandemic, economic cycles going up and down, and even Silicon Valley Banks collapse, he says. I sat down with Durn to talk about Adobes 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 companys innovations that are supporting customers to meet digitalization trends, Durn says.
We dont 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, Were not going to do company-wide layoffs at Adobe, Durn tells me. We dont need to do that, and we dont 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 didnt get out over our skis in terms of hiring an unusual amount of people, he says. So, in this now true demand environment, Adobe doesnt 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 Adobes 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 platformand an Adobe competitorfor 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 weve 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
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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 MITs Initiative on the Digital Economy and principal research scientist at MIT Sloan School of Management. Click here to learn more and register.
Big deal
An analysis by S&P Global Market Intelligence found that in February, information technology companies in North America had 146 M&A transactions, with a total value of $4.56 billion. The February 2023 deal volume represents a 28.43% drop from the 204 deals at the same time last year, with an aggregate value of $8.08 billion, according to the report. Last month's 146 transactions are also a decrease from January when 185 transactions were announced.
Going deeper
"How the Banking Crisis Could Hurt Real Estate Lending," details a discussion on the Wharton Business Daily podcast with Susan M. Wachter, Wharton professor of real estate and finance, on why banks may cut their exposure to real estate in the wake of the collapse of Silicon Valley Bank and Signature Bank.
Leaderboard
Terry Murphy was named CFO at LastPass, a password manager. He brings more than 20 years of experience in financial leadership roles at public and private companies. Before joining LastPass, Murphy served as CFO at Qualio, a SaaS B2B life sciences provider. Hes also previously served as CFO at Kenna Security and Whitehat Security.
Christopher R. Riley was named CFO at Nymox Pharmaceutical Corporation (Nasdaq: NYMX). Riley is a globally experienced executive. He was previously CFO for Frito-Lay Australia, where he was in charge of the snack food division. He also served as CEO of PepsiCo Australia.
Overheard
"The Federal Reserve should pause on Wednesday. We have had a number of major shocks to the system. Three U.S. bank closures in a week wiping out equity and bondholders. The demise of Credit Suisse and the zeroing of its junior bondholders. Notably, bondholders bearing losses is a new phenomenon as they were protected in the [Global Financial Crisis]."
Bill Ackman, a billionaire investor and founder and CEO of Pershing Square Capital Management, tweeted on Monday about whether the Fed will approve the ninth consecutive interest rate increase during the Federal Open Market Committee meeting this week.
