Adobe came up with big news this morning. Adobe announced to acquire Figma. Figma, a well-known design platform, has been acquired by Adobe for approximately $20 billion in cash, stocks, and equity. Adobe issued a press release confirming the rumored acquisition immediately after it began circulating early on Thursday morning. This is huge news for the design and development community, as it directly relates to Adobe’s XD products.
Sources familiar with the company’s finances have informed CNBC that Figma, whose investors include the likes of Index Ventures, Greylock Partners, and Kleiner Perkins, is projected to produce more than $400 million in annual recurring income this year. After 2022, Adobe predicted Figma’s annual recurring revenue (ARR) would reach $400 million.
As a result, Adobe is shelling out 50 times revenue at a time when sales multiples for cloud software are drastically decreasing from their record highs last year. From around 25 times revenue in February 2021, forward multiples for the leading cloud firms in the BVP Nasdaq Emerging Cloud Index have dropped to a little over 9 times revenue.
With this partnership, an Adobe representative said, “Together, Adobe and Figma will rethink the future of creativity and productivity, accelerate creativity on the web, promote product design, and inspire global communities of creators, designers, and developers.” Customers, stockholders, and the industry will benefit greatly from the combined company’s access to a vast, rapidly expanding market potential and capabilities.
In contrast to Adobe and its contemporaries, Figma is entirely web-based. Adobe hopes to merge the Figma community with its own, which will likely mean incorporating Figma’s goods and services into Adobe’s Creative Suite.
One of Adobe’s main goals is to improve people’s lives by creating more meaningful digital experiences. Adobe’s innovations over the years have impacted the lives of billions of people worldwide, and the company’s tools and platforms are the backbone of the modern digital economy. Adobe has been at the forefront of many technological revolutions, including the imaging and creative expression revolution with Photoshop, the electronic document revolution with PDF, and the digital marketing revolution with Adobe Experience Cloud.
The goal of Figma is to facilitate visual team collaboration and democratize design. The startup, started by Dylan Field and Evan Wallace in 2012, was an early leader in online product design. Multi-player processes, advanced design tools, and a robust, extendable developer ecosystem all contribute to its current state of fostering teamwork among those responsible for creating interactive mobile and online applications. It has a dedicated student base and a user base of millions of young designers and engineers.
“Adobe’s excellence has been rooted on our ability to develop new categories and offer cutting-edge technologies through organic development and inorganic acquisitions,” says Adobe’s CEO. More, Working together, we can move much faster toward our goal of fostering collaborative innovation.
Adobe Figma Acquisition Deal
Per the official agreement’s terms, Adobe would purchase Figma for roughly $20 billion, split roughly 50/50 between cash and stock. Figma’s CEO and employees will receive an additional 6 million restricted stock units, which will vest over a period of four years following closing. Adobe plans to use its existing cash reserves and, if necessary, a term loan to pay for the cash consideration.
Several requirements must be met before the deal can close, including the approval of Figma’s investors, but the transaction is still expected to go through in 2023. After the deal is finalized, Co-founder and CEO Dylan Field will continue to oversee the Figma team while reporting to Adobe’s Digital Media business president David Wadhwani. Each business will maintain its current structure and procedures until the merger is finalized.