M+E Connections

Adobe’s recent acquisition of cloud video collaboration platform Frame.io stands to help Adobe reach new customers, according to Shantanu Narayen, Adobe CEO, chairman and president.

“The addition of Frame.io creates an opportunity for Adobe, in conjunction with the partner ecosystem, to expand beyond video editors to a broader set of customers, teams and enterprises,” he said Sept. 21 during an earnings call for Adobe’s third quarter and fiscal year (ended Sept. 3).

The transaction was announced in August and “we hope to close the Frame.io transaction in Q4 and look forward to welcoming the team to Adobe,” he said.

“Video editing is rarely a solo activity and it’s traditionally been highly inefficient,” he noted. But “Frame.io streamlines the video production process by enabling editors and key project stakeholders to seamlessly collaborate using cloud-first workflows,” he explained.

The combination of Adobe’s video editing offerings —including Photoshop, Premiere Pro and After Effects — with Frame.io’s cloud-based review and approval functionality “will radically accelerate the creative process and deliver an end-to-end video platform,” he predicted.

Adobe, meanwhile, reported stronger results for Q3 than it did a year ago, with total revenue growing 22% to $3.94 billion from $3.23 billion and net income increasing to $1.21 billion ($2.52 a share) from $955 million ($1.97). Subscription revenue grew to $3.66 billion from $2.95 billion, while product revenue inched up to $119 million from $109 million.

“In Q3, we drove record performance in our Digital Media business, achieving $2.87 billion in revenue, representing 23 percent year-over-year growth,” Narayen told analysts on the call.

The company “achieved Creative revenue of $2.37 billion with strong new user acquisition, engagement and renewal across all Creative products and geographies, with particular strength in our Creative Cloud for Teams offering,” he said.

Q3 Creative Cloud highlights included: enhancements to Adobe’s photography offerings, including new services and artificial intelligence-driven capabilities in Lightroom; Creative Cloud applications now running natively on Apple’s new Silicon M1 chip, “delivering a boost in performance”; the release of Adobe Substance 3D Collection, a suite of interoperable tools and services that support 3D creativity; and key customer wins at the Department of Education of the Philippines, Facebook, Nike, Rutgers University and the U.S. Department of the Interior, he said.

In Q3, Document Cloud achieved record revenue of $493 million, increasing 31% from a year ago. That was driven by “increased unit demand for Acrobat subscriptions globally and strength in the SMB segment,” he said. There were key customer wins at Daimler AG, FujiFilm, Micron and PwC, he added.

Experience Cloud revenue reached $985 million, “driven by strong performance across both subscription and professional services,” he said, noting Q3 subscription revenue jumped 29% from a year ago to $864 million. “As businesses reopen around the world, interest in Adobe CXM solutions as an enterprise priority is resulting in increasing spend in both software and services,” he added.

Q3 Experience Cloud highlights included key partnerships in commerce with Walmart to integrate their omni-channel fulfillment technologies and with PayPal to offer a robust, secure and integrated payment solution for companies of all sizes, he said.

There was also “strong customer adoption of Adobe Sensei-powered capabilities in Adobe Experience Cloud as over 80 percent of customers now rely on our AI-powered capabilities to drive data insights and optimization,” he pointed out. There were also key customer wins at Accor, the Australian Government, Bertelsmann, Capital One, CVS Pharmacy, Daimler AG, Facebook, Ford Motor Company, Fidelity Brokerage Services, Honeywell, Real Madrid and The Gap.

Adobe’s offices, meanwhile, are “slowly reopening to fully vaccinated employees on a voluntary basis,” he said. “As we look ahead to the future of work at Adobe, we will remain hybrid and flexible and continue to do what’s best for our employees and our business.”

The company last week held its Adobe for All virtual conference that he said was “designed to bring employees together around our shared values of diversity, equity and inclusion.”

As part of that event, Adobe “reaffirmed pay parity,” he noted. Adobe continues to “pioneer Opportunity Parity to ensure that employees are offered equal career development and growth across all demographic groups,” he said.

As part of Adobe’s ongoing efforts to attract more diverse talent, the company established partnerships with Historically Black Colleges and Universities (HBCUs) and Hispanic-serving Institutions (HSIs), he told analysts. That new program offers a $1 million donation to schools, scholarships, internships and career readiness programs, he said, adding: “Our goal with these deep, focused partnerships is to provide opportunities for students to learn technology and creative skills.”

Next month, the company will host its annual Adobe MAX conference. Speakers will include Oscar-winning writer/director/producer Chloé Zhao, actress Tilda Swinton and Saturday Night Live star and executive producer Kenan Thompson, Narayen also noted. The event will be virtual-only, he said, noting the “fully digital experience allows us to expand our reach and engage with more people across our global creative community than ever before.” MAX will be hosted on Adobe’s custom digital event platform, built on Adobe Experience Cloud, he added.