Tag Archives: Adobes

Opinion: Adobe’s stock got slammed for spending $20 billion on Figma. But it now owns a rare company.

Adobe beat revenue and profit expectations, and on the same day announced it would acquire a smaller but faster-growing rival in online design-collaboration tools. The stock market rewarded the company by pushing down its shares
ADBE,
-3.12%
to the lowest level in almost three years. 

Investors punished the company not for its earnings report, released Thursday, but for their disdain of the Figma deal. Specifically, the deal’s price. 

Read: Nervous investors are slamming tech deals. Just look at Adobe.

In a $20 billion half-cash, half-stock transaction, Figma became the highest-multiple cloud-scale SaaS deal ever done. An estimated $400 million in revenue for all of 2022 marks this deal at around 50 times this year’s revenue in what I believe to be the second-largest software as a service deal in history. 

In this market, where growth is persona non grata, the market deemed this deal a bridge too far. However, in this case, the market may have gotten this wrong.

Figma is among the fastest-growing companies 

If you aren’t familiar with Figma, it’s a red-hot, venture-backed (before Thursday) company that makes collaboration tools used for digital experiences. While Figma was founded in 2011, the first five years were spent trying to get to product. The company printed its first dollar in revenue in 2017 and will hit $400 million in annual recurring revenue (ARR) in 2022. 

For those who aren’t familiar with SaaS economics, hitting $400 million in recurring revenue in just over 10 years is remarkable. However, doing so five years from the first dollar of revenue is even more impressive.

For reference, the average cloud-scale SaaS company books $10 million in revenue after about 4.5 years, according to Kimchi Hill. In the same study, assessing more than 72 SaaS companies that reached $100 million, only eight did so in less than five years from the first dollar — and that was precisely $100 million. Most take five to 10 years to hit $100 million, and well-known names like DocuSign
DOCU,
-6.14%,
Coupa
COUP,
-4.28%,
RingCentral
RNG,
-5.34%
and Five9
FIVN,
-4.22%
took 10 to 15 years. 

Beyond its speedy growth, the company is also performing in a way that should have been lauded by at least the savviest of investors. Its 150% net customer retention rate, 90% gross margins, high organic growth and positive operating cash flow make it more of what investors want in a company today. Adobe already grows in the double digits, plays in attractive markets, compounds ARR and, at this point, has seen its multiple come way down off its highs. 

It is also worth considering how Figma may benefit from Adobe’s strong market position, known product portfolio and defined channels, and go-to-market strategies to speed its growth in this space with a total addressable market of about $16.5 billion. 

Rare companies are still rare 

Perhaps it sounds as if I’m gushing over this deal. I want to be clear that I am not. At least not yet.

However, the hive mind of the market can be quite perplexing at times, and there is a data-driven story here that justifies Adobe’s decision to buy Figma at such a lofty price. Unfortunately, we won’t know with any certainty for five or even 10 years. Investors may not like that, but Adobe’s longevity depends on operating with the longer term in mind. 

Tough economy or not, rare companies are still rare, and Figma is traversing market conditions and delivering growth in a large market, drawing Adobe in at an unprecedented price. Perhaps higher than it should have, or could have, paid. 

However, based on its rapid revenue growth, strong net dollar retention, 100% growth rate in 2022, massive margins and apparent synergies across the Adobe portfolio, it may be Adobe that has the last laugh on this one. 

Daniel Newman is the principal analyst at Futurum Research, which provides or has provided research, analysis, advising or consulting to Adobe, Five9 and dozens of other technology companies. Neither he nor his firm holds any equity positions in companies cited. Follow him on Twitter @danielnewmanUV.



Read original article here

Here’s How Adobe’s Camera App for Serious Photographers Is Different

Adobe is working on a camera app designed to take your smartphone photography to the next level.

Within the next year or two, the company plans to release an app that marries the computing smarts of modern phones with the creative controls that serious photographers often desire, said Marc Levoy, who joined Adobe two years ago as a vice president to help spearhead the effort.

Levoy has impeccable credentials: He previously was a Stanford University researcher who coined the term computational photography and helped lead Google’s respected Pixel camera app team.

“What I did at Google was to democratize good photography,” Levoy said in an exclusive interview. “What I’d like to do at Adobe is to democratize creative photography, where there’s more of a conversation between the photographer and the camera.”

If successful, the app could extend photography’s smartphone revolution beyond the mainstream abilities that are the focus of companies like Apple, Google and Samsung. Computational photography has worked wonders in improving the image quality of small, physically limited smartphone cameras. And it’s unlocked features like panorama stitching, portrait mode to blur backgrounds and night modes for better quality at night.

Camera app ‘dialogue’ with the photographer

Adobe isn’t making an app for everyone, but instead for people willing to put in a bit more effort up front to get the photo they want, something matched to the enthusiasts and pros who often already are customers of Adobe’s Photoshop and Lightroom photography software. Such photographers are more likely to have experience fiddling with traditional camera settings like autofocus, shutter speed, color, focal length and aperture.

Several camera apps, like Open Camera for Android and Halide for iPhones, offer manual controls similar to those on traditional cameras. Adobe itself has some of those in its own camera app, built into its Lightroom mobile app. But with its new camera app, Adobe is headed in a different direction — more of a “dialogue” between the photographer and the camera app when taking a photo to get the desired shot.

Adobe is aiming for “photographers who want to think a little bit more intently about the photograph that they’re taking and are willing to interact a bit more with the camera while they’re taking it,” Levoy said. “That just opens up a lot of possibilities. That’s something I’ve always wanted to do and something that I can do at Adobe.”

In contrast, Google and its smartphone competitors don’t want to confuse their more mainstream audience. “Every time I would propose a feature that would require more than a single button press, they would say, ‘Let’s focus on the consumer and the single button press,'” Levoy said.

Adobe camera app features and ideas

Levoy won’t yet be pinned down on his app’s features, though he did say Adobe is working on a feature to remove distracting reflections from photos taken through windows. Adobe’s approach adds new artificial intelligence methods to the challenge, he said.

“I would love to be able to remove window reflections,” Levoy said. “I would like to ship that, because it ruins a lot of my photographs.”

But there are plenty of areas where Levoy expects improvements:

  • “Relighting” an image to get rid of problems like harsh shadows on faces. The iPhone’s lidar sensor or other ways of building a 3D “depth map” of the scene can help inform the app where to make such scene illumination decisions.
  • A new approach to “superresolution,” the computational generation of new pixels to try to offer higher-resolution photos or more detail when digitally zooming. Google’s Super Res Zoom combines multiple shots to this end, as does Adobe’s AI-based image enhancement tool, but both the multiframe and AI approaches could be melded, Levoy said. “Adobe is working on improving it, and I’m working with the people who wrote that,” he said.
  • Merging several shots into one digital photo montage with the best elements of each photo, for example, making sure everybody is smiling and nobody is blinking in a group shot. It’s difficult technology to get working reliably: “Google launched it in Google Photos a long time ago. Of course we de-launched it after people started posting all kinds of horrible creations,” Levoy said.
  • New camera sensors. Photographers have long appreciated polarizing filters for their ability to cut glare and reflections, and Sony makes a polarized light sensor that could be useful in phones, Levoy said. It wouldn’t filter the whole image, but instead provide scene detail to make for smarter processing, like reducing reflections from a person’s sweaty face.
  • The methods of computational video — applying the same tricks to video as are now common with photos — “has barely been scratched,” Levoy said. For example, he’d like to see an equivalent of the Google Pixel Magic Eraser feature to remove distractions from videos, too. Video is only getting more important, as the rise of TikTok illustrates, he said.
  • Photos that adapt to the screens where people see them. People naturally prefer more contrast and richer colors when seeing photos on small phone screens, but that same photo on a laptop or TV can look garish. Adobe’s DNG file format could allow viewer-based tweaks to dial such adjustments up or down to suit their presentation, Levoy said.
  • A mixture of real images and synthetic images like those generated by OpenAI’s DALL-E AI system, a technology Levoy calls “amazing.” Adobe has a strong interest in creativity, and AI-generated images could be prompted not just with text but with your own photos, he said.
  • Multispectral image sensors, which gather ultraviolet and infrared light beyond human vision, could provide data to improve the colors we can see, for example figuring out whether an object is blue or whether it’s actually white but looks blue because it’s shadowed.

Pro photographers can be picky

Adobe’s success isn’t guaranteed. A more discriminating market of serious photographers are less likely to be forgiving about computational photography glitches that can show up when performing actions like merging multiple frames into one or artificially blurring backgrounds, for example.

At the same time, mainstream camera apps that ship with phones have steadily improved, adding features like computational raw image formats for more editing flexibility. And Adobe doesn’t get quite the deep level of access to camera hardware that a phone maker does, raising performance challenges.

Another concern: Smartphone cameras and processing capabilities vary widely. Plenty of computational photography tricks only work on the most powerful new phones, and it’s hard to write software that copes with the bewilderingly broad range of hardware options.

But Levoy, who’s seen what computational photography already has delivered despite those challenges, clearly is enthralled.

“It’s just getting exciting,” Levoy said. “We haven’t come anywhere near the end of this road.”

Read original article here