The $20 billion acquisition of design rival Figma by Adobe is the biggest story to come out of Silicon Valley this year. The information was released by Adobe along with its third-quarter financial results, which showed revenues of $4.43 billion and non-GAAP earnings per share of $3.40, which met and exceeded analysts’ forecasts, respectively.
Although the company provided a cautious outlook for the upcoming quarter, with revenues projected to be $4.52 billion and EPS projected to be $3.50, it acknowledged that it might need to borrow money to finance this transaction. Adobe cited “the overall macroeconomic environment” and “FX headwinds” as reasons for this.
While Adobe may have diversified its products over the years with Dreamweaver, Adobe XD, Adobe Reader and others, design remains a fundamental and crucial part of the business. Acquiring Figma not only eliminates a significant threat to the company but also brings in Figma’s rapidly expanding client base in the fold.
By 2025, Figma’s entire addressable market is estimated to reach $16.5 billion, and the firm expects to add $200 million in net new annual recurring revenue this year, hitting $400 million by the end of 2022, with best-in-class net dollar retention of more than 150%.