Adobe is looking to up the ante on product design collaboration with its latest acquisition, announcing plans to buy the first web-based collaboration platform, Figma, for approximately US$20 billion.
Figma was founded in 2012 in California by Dylan Field and Evan Wallace, both software engineers and from organizations such as Flipboard, Microsoft and Pixar. The duo pioneered web-based product design, enabling users to design mobile and web apps and prototypes through collaborative workflows and systems.
The company initially raised US$17 million in Series A investment to grow its offering, and today boasts millions of designers and developers and a loyal student following. Following a $200 million capital raise last year and its acquisition of front-end design tool Visly, Figma received a market valuation of around $10 billion. In total, the company had raised $332.9 million, according to Crunchbase.
In a statement, Adobe said the ambition to buy Figma was to reinvent creativity and productivity, accelerate its ability to support creative projects on the web, and advance product design. The companies bundle Adobe’s Creative Cloud portfolio of solutions with web-based product design tools, collaborative and multiplayer workflows.
He asserted that the combined company will have a massive, fast-growing market opportunity and capabilities to become more accessible to more people. Target users include designers, product managers, and developers.
“Adobe’s greatness is built on our ability to create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions,” said Shantanu Narayen, president and CEO of Adobe. “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.”
Figma has affected a total addressable market of US$16.5 billion by 2025. The company is expected to add approximately $200 million in new net annual recurring revenue (ARR) this year, surpassing $400 million in total ARR at exiting 2022. It also reported gross margins of around 90% and positive operating cash flow.
“With Adobe’s incredible innovation and expertise, especially in 3D, video, vectors, imagery and fonts, we can further reinvent end-to-end product design. end-to-end in the browser, while creating new tools and spaces to enable customers to design products faster and more. easily,” Field said.
The $20 billion purchase price is half cash and half stock, with an additional 6 million restricted stock units granted to Figma’s CEO and employees to vest over four years after closing. The transaction is expected to be finalized in 2023.
As part of the deal, Field will continue to lead the Figma team, reporting to Adobe Digital Media President David Wadhwani. Until the closing of the transaction, each company will continue to operate independently.
Raab and Associates chief David Raab said the deal makes sense as a product move. “Adobe’s current products have cloud-based versions, but aren’t built from the ground up for web-based collaboration like Figma,” he said. CMO.
“But the steep price tag makes it seem like they were in a rush to catch up with their customers before companies like Figma made a serious inroad into Adobe’s core creative cloud business.”
Raab noted that the stock market’s reaction to the news has been negative, indicating that most people think the price is too high. But talking to CMOthe sister publication of, computer worldWayne Kurtzman, vice president of collaboration and communities research at IDC, described the deal as a potential blow to Adobe.
The growing importance of visual collaboration is a key market driver for Adobe, and buying Figma is “exactly the right decision,” he said. The challenge will be to continue to improve products and build on Figma’s collaborative vision, Kurtzman added.
Forrester vice president and principal analyst Jay Pattisall saw Adobe’s acquisition of Figma create a suite of creative collaboration tools, empowering design, production and marketers with more digital tools to ‘replicate the magic in person’.
“Agencies’ creative collaborative environment has always been one of its important attributes. Yet less than 20% of agency employees have returned to the office full-time, challenging their creative cultural edge,” he continued. “The combination of Adobe Creative Cloud and Figma design collaboration technology will be a useful tool to help creative industries sustain and realize their value in the future of work anywhere.”
Other vendors playing in the collaborative product design space include Adobe’s own XD product, InVision, Axure RP, Moqups, UXPin, and Lucidchart.
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