The adobe (the design technology titan) is buying Figma for $20 billion (using roughly half cash and half share) to beef up its capabilities for online users.
Kind of reality distortion power is required to justify 50 time annual recurring revenue payment which is a big transaction for Adobe boss Shantanu Narayen.
The $145 billion company Shantanu leads generally focuses on smaller acquisitions, developing new products and improving existing ones internally. But 10-year-old Figma managed to crack the code to allow multiple users to watch each other design and edit documents in real time, quickly attracting customers inside and outside of Microsoft. Figma also shamelessly poked at its larger rival, crowing on its website: here “Don’t sync to the cloud with Adobe XD.”
Indeed, the deal could be “transformational,” as Narayen puts it in the overused vernacular of the merger handbook.
For this to be the case, Adobe would have to successfully adapt its own Figma engineering software to make a significant improvement. Figma’s revenue is currently expected to double to $400 million this year. Even if it doubles again in 2023, it would represent just 4% of the $20 billion analysts expect Adobe to generate, according to Refinitiv.
This math suggests that Narayen used too much creative license. Adobe had already lost more than a third of its market value this year before the Figma news broke as part of a broader flight from both publicly traded tech stocks and privately backed firms.
And yet, even then, Adobe saw fit to double Figma’s $10 billion valuation as of June 2021 on PitchBook and buy out at a staggering multiple of sales.
Adobe’s investors couldn’t muster the same amount of imagination. They sent the stock tumbling 16%, wiping out another $27 billion in market capitalization, on the same day the company revealed a 13% year-over-year top-quarter growth. Ignoring convention is generally better suited to art than finance.
Adobe Photoshop
Adobe Photoshop is software widely used for bitmap editing, graphic design, and digital art. It uses layering to allow depth and flexibility in the design and editing process, as well as providing powerful editing tools that are capable of almost anything when combined.
Figma
Figma is one of the most revolutionary graphics editing applications taking the design world by storm. What makes it so attractive is the fact that it is free.
If you’re still new to this amazing web app or looking for tips on how to get the most out of the software, Figma is the place to be.
