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

Big news in the world of digital creative technology: Adobe announced today that it will acquire Figma for $20 billion, eliminating one of its biggest rivals in the digital design space.

The WSJ and Bloomberg reported earlier this morning that Adobe was set to announce the agreement to acquire Figma. Ultimately, Adobe confirmed that the news coincided with its quarterly results.

Those third-quarter earnings saw the company post revenue of $4.43 billion and non-GAAP earnings per share of $3.40, which respectively met and exceeded analysts’ expectations. Still, the company said it may need to fund the deal with a loan, and it provided a lukewarm outlook for the next quarter, with revenue expected at $4.52 billion and EPS of 3.50. dollars, citing “the global macro environment” and “FX headwinds”. elimination of a rival could give him a boost.

Investors aren’t the only ones a little worried…

It’s the kinds of reactions – from their target community – that are a strong signal for Adobe and Figma to keep tabs on how they’re onboarding and supporting their users whatever happens next.

The acquisition is in the form of a half-cash, half-stock deal, Adobe said, and it will also include an additional 6 million restricted stock units granted to Figma’s CEO and employees who will be vested over four years after closing. It is expected to close in 2023, “subject to receipt of required regulatory clearances and approvals and satisfaction of other closing conditions, including Figma shareholder approval.”

Design and prototyping, for individuals and teams, performed in a highly streamlined and modern cloud environment, are the strengths of the Figma product, and it has some 4 million users to date. During this time, Adobe has built and acquired a number of companies in the wider world of digital creation, and this has brought it not only into the broader and more general areas of design, but also into marketing. and other areas adjacent to design in the longer creative chain. Adobe’s DNA is in the design, however, and it has created iconic products in areas such as imaging (like Photoshop), fonts, illustration, video and 3D and more.

The idea now will be to create a seamless connection between these and Figma, essentially building it as the native platform to bring them all together. Adobe, of course, already had something like this, in the form of AdobeXD. It’s unclear what will happen with that when this deal is done.

Indeed, it will be worth watching if any of this will attract the attention of antitrust authorities: Adobe is already dominant in so many of the tools used, and now it will also be the dominant player in the platform to integrate and provide all of these tools.

“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, in a statement. . “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.”

“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,” added Dylan Field, co-founder and CEO of Figma. Field will remain and continue to lead the Figma business, Adobe said.

A $20 billion price tag is a huge leap for Figma, which was last valued at $10 billion in June 2021, when it raised $200 million. But Adobe is doing more than just knocking out a big competitor. This is a fast growing business.

He notes that Figma’s total addressable market is $16.5 billion by 2025, and that “the company is expected to add approximately $200 million in net new ARR this year, surpassing $400 million in total ARR at exiting 2022, with best-in-class net dollar retention of more than 150 percent.With gross margins of around 90% and positive operating cash flow, Figma has built an efficient and strong growth,” he said.

The deal definitely lays down the gauntlet for other big names in the digital design world. Specifically, it will be interesting to see what comes next for companies like Canva and Sketch.

Field is due to speak at our Disrupt event this year: I hope (!) he still pulls it off – it’ll be one hell of a session if he does.

The companies will hold a conference call later today and we will listen and add interesting details as they arise.

More soon.

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