Software giant Adobe, on Thursday, announced it will acquire design software firm Figma. The deal, which is in half cash and half stock, is worth about $20 billion. Adobe’s shares fell 17%, in a biggest plunge since 2010.
Founded in 2012 by Dylan Field and Evan Wallace, Figma spearheaded product design on the web. It makes cloud-based design software that makes bring teams together to collaborate in real time. It competes head-to-head with Adobe’s XD program.
Figma, whose investors include Index Ventures, Greylock Partners and Kleiner Perkins, is expected to generate more than $400 million in annual recurring revenue this year. Adobe confirmed Figma’s Annual Recurring Revenue (ARR- a formula that determines the annual percentage rate of return of a project. It is calculated as average annual profit / initial investment) will surpass $400 million exiting 2022.
Demand for Figma, which allows customers to collaborate on software as they build it, increased during Covid-19 as more individuals adopted to work-from-home style. The company increased its customer base in recent times from software designers at big companies like Airbnb Inc., Google, Herman Miller Inc. and Kimberly-Clark Corp. — to as diverse as individuals building lightweight games, maps and presentations. The company was valued at $10 billion in its last funding round in 2021.
Adobe said it will incorporate some features from its various products, such as illustration, photography and video technology, into Figma’s platform. Adobe offers a range of software services for photo and video professionals, like Photoshop, Illustrator, Premiere Pro and more.
“Adobe’s success has its roots in our capacity to establish new categories and provide cutting-edge technology through inorganic growth and organic innovation,” said Adobe CEO Shantanu Narayen. “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity,” he added.
By 2025, Figma’s addressable market will be worth $16.5 billion overall. The company is anticipated to increase net new ARR by about $200 million this year, surpassing $400 million in total ARR by the end of 2022.
