Adobe agrees to acquire Figma in a deal of $20 billion

• ByStartupStory     |    September 15, 2022

Adobe has announced that it’s acquiring Figma, a popular design platform, for around $20 billion in cash and stock. After many rumors early on Thursday about a potential acquisition, Adobe made it official in a press release shortly afterward. It’s a significant advancement in the design and development world, particularly as Figma has been competing heavily with Adobe’s XD products in recent years.

Figma is a design software startup formed in 2012 in San Francisco. Figma, which enables clients to collaborate on software development in real-time, increased demand during the pandemic, when more individuals worked remotely. In the last several years, the company’s client base has extended from software designers at large corporations such as Airbnb Inc., Google, Herman Miller, and Kimberly-Clark Corp. to people creating lightweight games, maps, and presentations. In addition, it has gained a dedicated student following. The firm was valued at $10 billion a year ago at its most recent investment round. The venture capital companies Kleiner Perkins, Index Ventures, and Greylock Partners support Figma. 

Figma focuses only on online design, while Adobe and other competitors have struggled to reach that. Adobe now intends to merge its own community with Figma, which would likely include the integration of Figma’s goods and services into Adobe Creative Suite in the future. 

Figma also intends to use Adobe’s experience in 3D, video, vector, image, and typefaces to significantly enhance web-based product creation. Field said that the merged business would develop new tools and spaces that enable users to create things more quickly and simply. “We plan to continue to run Figma the way we have always run Figma — continuing to do what we believe is best for our community, our culture and our business,” explains Dylan Field, co-founder, and CEO of Figma. “Adobe is deeply committed to keeping Figma operating autonomously.” Field will continue to serve as CEO and report to Adobe president David Wadhwani. 

Figma’s addressable market will be $16.5 billion by 2025. Adobe expects to generate $200 million in net new yearly recurring revenue this year and achieve $400 million by 2022, with net dollar retention of over 150%. Adobe stated Figma had 850 workers and 90% gross margins. The deal should boost Adobe’s adjusted EPS in the third year.

“We’re confident that if you look at this in the long run, it’s going to be a big value for their shareholders and our shareholders as well,” Narayen said.

The acquisition grants Figma’s CEO and staff 6 million extra restricted stock units that vest over four years. Adobe aims to fund the cash consideration using cash on hand and a term loan.

 

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