Adobe snaps up Figma for $20B, taking out one of its biggest rivals in digital design

Adobe will acquire Figma for $20 billion, taking out one of its biggest rivals in the realm of digital design.

The deal to acquire Figma was close to being announced by Adobe, according to reports. Adobe confirmed the news at the same time as it reported its earnings.

The company posted revenues of $4.43 billion and non- GAAP earnings per share of $3.40, which were both in line with analysts expectations. The stock is down almost 8% before the market opens.

6 million additional restricted stock units will be granted to Figma's CEO and employees that will vest over four years following the closing of the deal. The closing is expected to take place in 2023, subject to the receipt of required regulatory clearances and approvals and the satisfaction of other closing conditions.

Figma's product strengths are design and prototyping, executed in a very streamlined and modern environment, and it has 4 million users to date. Adobe has been building and acquiring businesses in the wider world of digital creation, which includes design but also marketing and other links. It has built out icons in areas such as graphic design, video, and 3D, and it's also in design.

Building it out as a native platform will allow for a seamless connection between these and Figma. Adobe had a similar product called AdobeXD. It is unclear what will happen with that.

Since Adobe is already dominant in so many of the tools that are used, and now will be the dominant platform player, it will be worth watching.

Adobe has been able to create new categories and deliver cutting edge technologies through organic innovation and acquisitions. Our vision for collaborative creativity will be accelerated by the combination of Adobe and Figma.

Dylan Field said, "With Adobe's amazing innovation and expertise, 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." Adobe said that he will remain as the company's leader.

Figma was last valued at $10 billion in June 2021, but Adobe is doing more than just taking out a competitor. The total addressable market for Figma is $16.5 billion by the year 2025.

The company is expected to add $200 million in net new ARR this year, surpass $400 million in total ARR exiting 2022, with best-in-class net dollar retention of greater than 150 percent. Figma has built an efficient, high-growth business with positive operating cash flows.

The deal lays down a challenge for other big names in the field of digital design. It will be interesting to see what the future holds for companies like Sketch.

Field is due to speak at our event, and it will be a great session if he does.

There's more to come.