Adobe snaps up web-based design platform Figma for US$20bn

Adobe has snapped up web-first collaborative design platform, Figma, for about US$20 billion in cash and stock. According to Adobe, the acquisition will "usher in a new era of collaborative creativity". Both parties are said to share a passion for helping individuals and teams be more creative and productive.

Upon the closing of the transaction, Dylan Field, Figma’s co-founder and CEO, will continue to lead the Figma team, reporting to David Wadhwani, president of Adobe’s Digital Media business. Until the transaction closes, each company will continue to operate independently.

Figma’s web-based, multi-player capabilities will accelerate the delivery of Adobe’s Creative Cloud technologies on the web, making the creative process more productive and accessible to more people. Adobe said that individuals in the product design process from designers to product managers and developers will benefit from the acquisition, by combining Adobe’s imaging, photography, illustration, video, 3D and font technology with the Figma platform.

Figma has a total addressable market of US$16.5 billion by 2025. The company is expected to add approximately US$200 million in net new annual recurring revenue (ARR) this year, surpassing US$400 million in total ARR exiting 2022, with net dollar retention of greater than 150%.

With Adobe’s and Figma’s product portfolio, Adobe explained that the combined company will have "a rare opportunity to power the future of work" by bringing together capabilities for brainstorming, sharing, creativity and collaboration and delivering these innovations to customers.

Approximately six million additional restricted stock units will be granted to Figma’s CEO and employees that will vest over four years subsequent to closing. Adobe expects the cash consideration to be financed through cash on hand and, if necessary, a term loan. The transaction is expected to close in 2023, subject to the receipt of required regulatory clearances and approvals and the satisfaction of other closing conditions, including the approval of Figma’s stockholders.

Adobe's Wadhwani said Figma has built a phenomenal product design platform on the web. "We look forward to partnering with their incredible team and vibrant community to accelerate our joint mission to reimagine the future of creativity and productivity," he added.

Meanwhile, Figma's Field added that with Adobe's innovation and expertise, especially in 3D, video, vector, imaging and fonts, the team can further reimagine end-to-end product design in the browser, while building new tools and spaces to empower customers to design products faster and more easily.

According to The Wall Street Journal, Adobe's shares slid by nearly 17% at the end of Thursday following the announcement. This was amidst concern regarding the outlook and worry that the acquisition highlights that Adobe might be worried about being surpassed by competitors.

Forrester VP, principal analyst Jay Pattisall said the combination of Adobe Creative Cloud and Figma design collaboration technology will be a useful tool to help creative industries maintain and realize their value in the future of anywhere work.

"The agencies’ environment of creative collaboration has always been one of its important attributes. Yet, fewer than 20% of agency employees have returned to office full-time, challenging their creative culture advantage," he said.

Meanwhile, Forrester's senior analyst Sheila Mahoutchian said the acquisition of Figma by Adobe represents "a future-forward strategic move" on Adobe's part to stay adaptive and responsive to designer needs.

“Figma's collaboration workflow platform has changed the landscape for design tools, moving the world of design from individual contributors to collaboration-based team enablement. We're looking forward to learning more on how Adobe will integrate these trends and learnings into its expansive suite of design tools," she added.

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