For comparison, Salesforce paid a 31-times multiple for Slack in 2021, a period of rampant tech acquisitions. The 50-times revenue multiple most spooked investors who worry that Adobe is overpaying for Figma, particularly given the cold tech acquisition market. Adobe shares tumbled 17% Thursday, the company’s largest single-day drop in 12 years, and slid another 5% in mid-day trading Friday. The question, however, is whether a middle-aged outfit like Adobe can squeeze enough out of Figma to justify the $20 billion cost. While Adobe’s revenue growth is nothing to sneeze at-about 22% on average annually over the past five years-a sizable chunk is attributable to corporate acquisitions as opposed to improved product sales. More importantly, Figma’s cloud-based editing tool syncs well with Adobe’s mainstay subscription-based applications, including Photoshop, Acrobat, and Illustrator, upping the value of those products. “While we think the acquisition makes strategic sense, let’s be honest: it feels like Adobe was losing some momentum to Figma and it was better to buy them out and combine forces versus allowing them to create a bigger beachhead in the enterprise,” Evercore ISI analyst Kirk Materne wrote in a research note, according to MarketWatch. In doing so, Adobe eliminates a fast-rising competitor (we’ll see if antitrust regulators make any hay out of that) and acquires a hip product for its well-established customer base. Company executives praised Figma for its solid financials-a projected doubling of revenue this year, 90% margins, positive cash flow-but spent much of their time envisioning the possibilities for collaboration.Īdobe can simply absorb Figma’s burgeoning enterprise business, which counts Microsoft, Google, and Salesforce among its clients. Such a task will require some added ingenuity from Adobe, a Silicon Valley mainstay that has steadily, if a bit unspectacularly, chugged along the past few years.Īdobe officials acknowledged as much Thursday during an earnings call that doubled as an unveiling of the deal. The enormous price tag for Figma, a company that’s expected to gross just $400 million in revenue this year, marks a massive bet by Adobe that it can maximize Figma’s potential through direct sales and integration with its suite of legacy products. It sold Thursday for $20 billion (pending regulatory approval).įield made the most of his opportunity, and now it’s on Figma’s buyer, software giant Adobe, to carry the entrepreneurial mantle. His next venture, the collaborative software editing company Figma, very much did. Field’s first product, drone-modifying software, didn’t pan out.
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