Adobe has agreed to acquire design software company Figma for about $20 billion, delivering a shock through the sector hardest hit in the tech sell-off that began late last year.
San Francisco-based Figma, founded in 2012, allows software developers and designers to collaborate remotely and design everything from slides to presentations to user interfaces on the web. mobile application.
Together with Australian startup Canva, it is part of a new wave of browser-based design tools that have opened the creative process to millions of non-designers, expanding markets and poses a potential threat to Adobe, the traditional leader in design software.
The purchase price, which will be paid half in cash and half in stock, is double what Figma was valued at in its most recent private funding round last year and 10 times its valuation in 2019. , despite the recent crash in software stocks. It values the company at 50 times annual recurring revenue, which Adobe says will hit $400 million by 2022.
Acquisitions in multiples of 50 times revenue and higher are common during the software boom that peaked during the pandemic, but multiples for most companies have fallen below 20 in the past year. this year and acquisitions become scarce.
The large premium contributed to Adobe’s stock price plunge early Thursday, triggered by a cautious earnings forecast from the company. The optimistic forecast erased 16.8%, or $29 billion, from its value.
At the time of signing, the acquisition was the most expensive ever by a private US company, topping Facebook’s $19 billion purchase of WhatsApp in 2014. Adobe’s stock price fell. The strong push pushed the value of the Figma deal down to $18.3 billion by year-end. of Thursday.
“People in this environment are asking, ‘why are the deals big?’ There are questions,” said Shantanu Narayen, chief executive officer of Adobe. But he insists Figma will be a “transformative” deal for Adobe and that its browser-based approach and collaborative tools will boost the company’s overall market.
Danny Rimer, a partner at Index Ventures, which says it is Figma’s biggest investor, said the company is on track for an initial public offering before starting negotiations with the company. Adobe.
Figma CEO Dylan Field came up with the idea of starting the company after dropping out of Brown University with co-founder Evan Wallace at the age of 19, after receiving a $100,000 grant from Peter Thiel, the financial liberalism. Thiel started offering 20 “scholarships” a year more than a decade ago after deciding that the best scientists and entrepreneurs were wasting their time getting a traditional university education.
Field told the Financial Times, the idea that complex design tools could be offered in a web browser was widely disproved when Figma started.
Liz Miller, an analyst at Constellation Research, said the company’s web-based tools will help Adobe have a better vision of “a more modern, cloud-based, composable and open future.” ” is opening up to design software, said Liz Miller, an analyst at Constellation Research.
The merger will allow Figma to bring Adobe’s imaging, 3D and video capabilities to its platform, Adobe said. The company is looking to reach the millions of customers using Figma, which has boomed during the pandemic as employees work remotely. Its customers include Twitter, News UK, Google and Netflix.
In its third-quarter results released on Thursday, Adobe posted net income of $1.1 billion on revenue of $4.4 billion, up 13% year-over-year or 15% on a year-over-year basis. currency remains unchanged.