Adobe acquires rival company Figma for $20 billion

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Adobe on Thursday announced it would acquire its biggest competitor in digital design, Figma, for $20 billion. The deal, which is a mix of half cash and half stock, marks the biggest ever takeover of a private software company.

The California-based software giant agreed to buy software design startup Figma for $20 billion to help it expand tools for creative professionals.

With the biggest ever takeover of a private software company, Adobe’s shares sank by 17%. This was its biggest drop since 2010.

About Adobe’s new acquisition

Figma was founded by Dylan Field and Evan Wallace in 2012. Figma pioneered in creating cloud-based design software that allows teams to collaborate in real time. It was a direct competitor to Adobe’s XD program.

Adobe acquires rival company Figma for $20 billion
Image Source-Inc. Magazine

The digital design company was valued at $10 billion in its last funding round a year ago. Figma is backed by various capital firms like Kleiner Perkins, Greylock Partners, and Index Ventures.

Figma is expected to generate more than $400 million in annual recurring revenue this year. Adobe has confirmed that Figma’s ARR will surpass $400 million by the end of 2022.

The software giant said it would introduce some of its own features, such as photography and video technology, into Figma’s platform. Its premium software services like Photoshop, Illustrator, Premiere Pro, and more are fairly popular worldwide.

The price of the acquisition has been widely criticized by analysts all over the globe. “We think the company overpaid for Figma, which indicates it was a defensive move,” wrote Oppenheimer’s Brian Schwartz.

Third-quarter results

Adobe, on Thursday, reported its third-quarter results. The company announced earnings per share of $3.4 on revenue of $4.43 billion. The revenue has seen a jump of 13%. This is the third consecutive quarter growth of less than 15%.

The company’s shares have already been down 34% from the beginning of the year, trading at $333.74.

Users around the globe favored Figma as a design tool over Adobe. The reason is that Figma was much simpler to use than the latter’s complex interface. The internet has many users expressing concern over the changes in the software after the new deal.

Adobe, on the other hand, will be hoping to counter problems of economic uncertainty with the help of its newest acquisition. The challenge would be to integrate its features into the Figma interface in a way that benefits the users.

For now, Dylan Field is expected to continue at Figma. Shantanu Narayen, the Chairman, and CEO of Adobe, will be hoping to get the best out of the new deal.

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Akshay Bhatt
Akshay Bhatt
Akshay hails from Rishikesh, the majestic land in the foothills of the Himalayas. He's a poet at heart and spills it all out on his blog. He grew up loving literature and history and was always interested in technology and worldly affairs. At Asiana Times, he brings his interest in sports and technology to light.

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