Why Adobe (ADBE) Is Buying Figma For $20 Billion

By Amit Chowdhry ● Sep 15, 2022
  • Adobe (ADBE) announced it is buying Figma for $20 billion. This is why.

Adobe (Nasdaq: ADBE) announced it has entered into a definitive merger agreement to acquire Figma, a leading web-first collaborative design platform, for approximately $20 billion in cash and stock.

Figma’s business model: Figma’s goal is to help teams collaborate visually and make design accessible to all. Launched by Dylan Field and Evan Wallace in 2012, the company pioneered product design on the web. And it is making it possible for everyone who designs interactive mobile and web applications to collaborate through multi-player workflows, sophisticated design systems, and an extensible developer ecosystem. Plus Figma has attracted a new generation of millions of designers and developers and a loyal student following.

Adobe and Figma will reimagine the future of creativity and productivity, accelerate creativity on the web, advance product design, and inspire global communities of creators, designers, and developers. And the combined company will have a massive, fast-growing market opportunity and capabilities to drive significant value for customers, shareholders, and the industry.

Integration with Adobe: Figma’s web-based and 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 and Figma will benefit all stakeholders in the product design process, from designers to product managers to developers, by bringing powerful capabilities from Adobe’s imaging, photography, illustration, video, 3D, and font technology into the Figma platform. The combination of Adobe’s and Figma’s communities will bring designers and developers closer together to unlock the future of collaborative design.

Deal details: Under the definitive agreement, Adobe has agreed to acquire Figma for approximately $20 billion, comprised of approximately half cash and half stock, subject to customary adjustments. About 6 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.

Metrics: Figma has a total addressable market of $16.5 billion by 2025. And the company is expected to add approximately $200 million in net new ARR this year, surpassing $400 million in total ARR exiting 2022, with best-in-class net dollar retention of greater than 150 percent. With gross margins of approximately 90% and positive operating cash flows, Figma has built an efficient, high-growth business.

KEY QUOTES:

“Adobe’s greatness has been rooted in our ability to create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions. The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.”

— Shantanu Narayen, chairman and CEO, Adobe

“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.”

— David Wadhwani, president of Adobe’s Digital Media business

“With Adobe’s amazing innovation and expertise, especially in 3D, video, vector, imaging and fonts, we 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.”

— Dylan Field, co-founder and CEO, Figma