Adobe set to acquire Figma for $20bn, brand merger on the way

Eberechukwu Etike
This is Adobe’s largest acquisition in its 40-year history…
Adobe set to acquire one of its biggest rival, Figma in a $20 billion deal
Adobe set to acquire one of its biggest rival, Figma in a $20 billion deal

Software giant, Adobe Inc has announced the acquisition of Figma leading web-first collaborative design platform for $20 billion. The deal is expected to close in 2023 and is valued at $20 billion in cash and stock.

This is Adobe’s largest acquisition in its 40-year history. According to the company, the acquisition of Figma is in line with Adobe’s mission of changing the world through digital experiences.

In the announcement post made by the Official Adobe blog, the acquisition of Figma is intended to usher in a new era of collaborative creativity and expand tools for creative professionals as both companies are passionate about empowering people to be more creative and productive.

Commenting on the acquisition, Shantanu Narayen, Chairman and CEO, Adobe said,

Adobe’s greatness has been rooted in our ability to create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions. The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.

Shantanu Narayen, Chairman and CEO, Adobe

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Is Adobe able?

Seeking Alpha estimates that Adobe Inc., formed in 1982, brings in around $16 billion in sales annually. Although, TechCrunch reports that the company’s third-quarter results were $3.40 in non-GAAP earnings per share and $4.43 billion in revenues, which were both above and below analysts’ expectations.

The firm admitted that it might need to borrow money to finance this deal even though it issued a cautious view for the upcoming quarter, with revenues forecast to be $4.52 billion and EPS forecast to be $3.50.

The value of Adobe has been on the fall recently. Its shares have tumbled by 13% in a few weeks, the most in the past two years. However, the purchase of a rival like Figma might strengthen its finances.

What is in for Figma?

Figma has long been the go-to tool for creative professionals all over the world for assisting in the development of cloud-based design software that allows teams to collaborate in real-time. The design platform, founded in 2012 by Dylan Field and Evan Wallace, has been in fierce competition with AdobeXD.

Adobe set to acquire one of its biggest rival, Figma in a $20 billion deal
Adobe set to acquire Figma in a $20 billion deal

Figma, which was valued at $10 billion in its most recent funding round in 2021 and has a total addressable market of $16.5 billion by 2025, has also demonstrated its ability to scale quickly.

The company is expected to add approximately $200 million in net new annual recurring revenue (ARR) this year and exceed $400 million in total ARR by the end of 2022, with best-in-class net dollar retention of more than 150%.

Furthermore, the acquisition will not result in a sole proprietorship scenario, as Figma will continue to exist as a separate entity. Field, one of the co-founders, will continue to run the Figma business but will report to David Wadhwani, president of Adobe’s Digital Media business.

The acquisition will also include 6 million additional restricted stock units granted to Figma’s CEO and employees, which will vest over a four-year period following the closing.

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Users react

Many users have taken to Twitter to express their opinions. For some, it seems like a great opportunity to explore all the services combined, while for others, they disagree.

Figma users need to see this as an opportunity rather than a threat. Adobe is a giant in the creative product market. There’s much more to gain with integrations, refining etc It’s a reward to show every creative that you can also get noticed when you build great products. @SeyiOniyitan

I don’t think this is good news for Figma users. Merging with Webflow would have been super delightful news. Hopefully, they wait until next year before they make Figma a subscription-only tool. @chukkaemmanuel

What do you think about this acquisition? Please share your comments below.


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