Adobe Inc agreed on Thursday to acquire San Francisco-based design company Figma, whose products are used by software developers to collaborate, for $20 billion. It’s the biggest deal in Adobe’s history to acquire a small-but-fast-growing rival. The acquisition is coming in the form of a deal that is half cash and half stock.The deal is expected to close in 2023. The smaller company Figma was valued at $10 billion in a funding round last year and has been expected to surpass annual recurring revenue of $400 million for 2022. Figma’s products are akin to digital whiteboards in which designers and engineers can share design iterations and annotate them with feedback and suggestions cloud-based environment. Customers include Airbnb Inc., Google, Netflix Inc. and Twitter Inc. The company spent several years in stealth mode before introducing browser-based tools that allow software designers to work together in real time.
“With Adobe’s amazing innovation and expertise, especially in 3D, video, vector, imaging and fonts, we can further reimagine end-to-end product design in the browser, while building new tools and spaces to empower customers to design products faster and more easily,” added Dylan Field, co-founder and CEO of Figma. Adobe said it expected the deal to be accretive to its earnings three years after its completion. Prior to Figma, its largest acquisition was that of software maker Marketo for $4.75 billion in 2018. Adobe, which had a market value of about $174 billion before the deal was announced, reported fiscal third-quarter net income of $1.14 billion and revenue of $4.43 billion, which was up 13% year-over-year. Adobe’s shares ended Thursday trading down nearly 17%. Adobe’s Mr. Wadhwani declared that Figma’s customers are a new segment of users that aren’t designers but mostly software developers and product managers.