One was born in 1982 and the other in 2012. But the age difference between Adobe and Figma has not been an obstacle for them to compete, nor will it be for them to merge once the regulatory authorities bless the purchase offer of the first over the second. Nobody denies the coherence of the transaction, but its price is disputed: 20,000 million dollars. The figure multiplies by 50 the money that Figma estimates to invoice this year and is 100 times higher than the income of 2021. Since the announcement in mid-September, Adobe's price has dropped more than 50%.
It can be seen as one more stock market event among others. Or it can be explained by the difficulty investors have in accepting that even a solid leader in its market, such as Adobe, can consider it plausible to eliminate – via acquisition – a competitor that has slipped behind and is fighting for a new batch of graphic design software users. Many investors wonder if it makes sense to pay for that competitor, Figma, a price that doubles the 10,000 million at which it was valued for its last round of financing.
Shantanu Narayen, CEO of Adobe for 15 years, doesn't discuss opportunity cost: he can afford it, because revenue from his flagship Creative Cloud platform is growing at 14% a year. And yet, 20 billion is a lot of millions. Not only is it his most expensive purchase, but its amount exceeds the sum of 55 previous acquisitions.
For Narayen, the important thing is that "the combination will deepen and accelerate our vision of collaborative creativity." Figma offers the market a cloud-based collaboration tool for web content design: up to 100 people can work on the same project at the same time and without geographical constraints.
The market is changing visibly and Figma's rise has been driven by that change over the last three years. Due to the pandemic, which has reactivated a latent trend: in those long months, designers have become accustomed to working in dispersed teams and collaborating online, exactly what Figma and Adobe XD offer them. A generation of professionals who are not employees of companies or work in design studios, go it alone and take care of the costs.
Indeed, Adobe caught on to the phenomenon and released a product that it intended to catch the tide with, but its rival was ahead of it. Dylan Field, founder of Figma, boasted not long ago of four million users who, in exchange for a fee of 15 dollars, avoid subscribing to the Adobe platform. One of the advantages of the acquisition would be that Narayen will not fear reactions if one day he decides to raise the price of his product.
Adobe dominates the software-aided design market, with the exception of the collaborative segment, led by Figma. With the addition of this, a total 46% is ensured and it incorporates a fresh base of users who have not been part of its client portfolio.
Still, Adobe and Figma won't be alone at any price: Australian company Canva offers a generous collection of consumer-friendly, out-of-the-box templates, which it sees as a stepping stone to attack professional design, a prospect that excites investors (it's valued in 26,000 million, out of orbit). Microsoft, with decades of collaboration with Adobe, has just launched its own product, Designer, with which it intends to strengthen its Office 365 suite. All these moves are, in their own way, defensive and believe they have done what was necessary at the right time.
