Adobe's Transition to Freemium Model Brings Uncertainty

Adobe has come to dominate content creation software with its iconic Photoshop and Illustrator solutions, both now part of the broader Creative Cloud. Over the years, the firm has added new products and features to the suite through organic development and bolt-on acquisitions to drive the most comprehensive portfolio of tools used in print, digital, and video content creation. The 2021 launch of Adobe Express broadened the company’s funnel, as it incorporates popular features of the full Creative Cloud but comes in lower-cost and free versions. The 2023 introduction of Firefly marks an important artificial intelligence solution that should maintain the competitiveness of Adobe’s creativity platform. We think Adobe is properly focusing on product-led user growth, and we believe that upselling these users will become more important over time.