10 October 2022

Adobe acquisition of Figma

A week ago, the American multinational software company Adobe disclosed it had signed a binding merger agreement to acquire Figma, a prominent collaborative web application for interface design. The deal is valued at approximately $20 billion, which consists of $10 billion in cash and $10 billion in common shares. The price is ten times the worth of Figma in 2020 or doubles that of Figma in June 2021. The company was valued 50 times its current ARR (Annual Recurring Revenue), the highest multiple paid for a large-scale software company

Adobe Figma deal

Adobe is a well-known giant in the creative software industry, with almost 80% graphics software market share worldwide in 2022. The history of acquisitions by Adobe is wide enough. Last year, it acquired Frame.io – a platform for collaborative video production. In 2012, Behance – a website for showcasing one's artistic endeavors – was acquired by Adobe. Even the most famous photo and raster graphics editor, Photoshop, was acquired by Adobe back in the 90s.

At the same time, Figma has a 31.4% market share in the collaborative design and prototyping category. In comparison, its former rival Adobe XD has almost 15% share in the same field. Figma was firstly released in 2016, and in 2021, the company was named the hottest startup with a $10 billion value. According to TechCrunch, Figma has around 4 million users, including big tech companies like Twitter, Slack, and Dropbox. At the same time, the user base of Adobe Creative Cloud is estimated at 26 million in 2021.

What does the transaction mean for the digital creative market? Simply put, with Figma no longer on the market, many fewer businesses may threaten Adobe's hegemony. Now, designers are especially concerned about the transaction since it means Adobe will continue to centralize the power of creative apps in one place, even though Figma was one of the few prominent competitors to Adobe.

There are two raised concerns among Figma's users. The first one is the price of products. Unlike Adobe, Figma's products are significantly cheaper, and the company offers free plans to its users. The next concern is quality. Some designers suggest that Figma under Adobe may become less responsive. Three years ago, Figma was comparing its products with Adobe products for UX designers – Adobe XD. According to the article from the Figma official website, Figma is faster in the cloud and more focused on small details that are essential in the daily designer's work. Furthermore, Adobe's lack of innovation contributed to Figma's enormous success. The level of Figma's popularity among UX/UI designers is phenomenal. These designers work in well-known companies like Netflix, Airbnb, Zoom, Spotify, Dropbox, and even Microsoft designers who choose Figma for their design needs.

Under the official Twitter account of Figma's CEO and co-founder, Dylan Field, Adobe is deeply committed to keeping Figma operating autonomously. The running of Figma will be in the same way as it was before. What excites Field the most is the scalability. Figma can utilize Adobe's assets and know-how to reach more users. Moreover, like many others, Field used Adobe products while growing up. Now, the prospect of assisting in the software's redesign naturally fascinates him. Finally, the CEO assured his audience that, for now, Figma doesn't have any plans to change the price plan.

In a time when regulatory agencies are taking their efforts to stop significant mergers in the tech industry more seriously, Adobe will make the deal. In the last article, we discussed Norton's acquisition of Avast, which was delayed due to a Competition and Markets Authority of the United Kingdom investigation.