As we all know, Adobe, the leading design tool company, acquired its product design rival, Figma, for a whopping sum of $20 billion dollars in cash and stock, which many analysts have described as being way more than the private software company is worth.
Why did Adobe pay that much for Figma, and what will the software giant do with the company it acquired?
Figma was launched in 2016, which is over 33 years since the Adobe franchise was released in 1982. Although it is still young in the design path, it has recorded tremendous growth, especially in the product design aspect.
It specializes in releasing new and ground-breaking features that help designers collaborate and create problem-solving user interfaces, interactions, and, evidently, better products.
Since the acquisition, there has been a lot of confusion and theories made by analysts, reporters, and especially designers on why Adobe made this massive buyout and what the future of Figma will be.
There has been talking that Adobe bought the company to kill the market and make its own product design tool( Adobe XD) to gain market advantage, but Adobe itself has countered that statement through its CEO, Shatayanu Naraden, saying, “We have some aggressive goals to drive top-line growth through this acquisition.” And to support that statement, Adobe also included a 1.4 billion dollar, 4-year deal to keep the brains and wits behind Figma.
There has also been speculation that due to this buyout, Adobe will be forced to either reduce XD size or merge it with Figma since they both offer similar services.
According to the Figma CEO, “There is a huge opportunity for us to accelerate the growth and innovation of the Figma platform with access to Adobe’s technology expertise and creative space resources.” This will make it easier for designers to integrate other Adobe design resources into their Figma work and vice versa.
The bottom line is that currently, this deal is not doing well for the general Adobe stocks, as Adobe suffered a drop in its share price after making the Figma deal because investors are questioning if Figma is really worth the 50 times valuation that it was purchased for, which, according to Bloomberg’s analyst Anura Rana, “Figma may add less than 2% of Adobe’s sales growth rate and will likely decrease margins,” simply meaning the investment is a risk that has a really low predicted success rate.
Whatever the case, the decision will undoubtedly affect designers and how they perceive software.
As a designer, financial analyst, or even a spectator, what is your take on the future of Figma as it has become a part of Adobe?
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