Adobe buys interface design startup Figma for $20 billion

Adobe Inc. has signed a $20 billion cash and stock deal to acquire Figma Inc., a startup with a popular UI development tool of the same name.

Businesses announcement acquisition today. Adobe will fund half of the $20 billion it has agreed to pay in cash and the other half in stock.

Investors weren’t so sure about the significant acquisition. Shares of Adobe, which also released quarterly results this morning, fell nearly 17% today on the news.

Founded in 2012, Figma provides a cloud-based platform that businesses use to design user interfaces for websites and apps. The startup’s platform allows several designers to edit an interface at the same time. Figma also helps collect feedback from other users who may be involved in a project, such as software developers.

To speed up the initial prototyping phase of projects, Figma offers tools that allow users to quickly design an application interface without writing code. According to the startup, its platform speeds up common design tasks such as drawing geometric shapes.

When an interface design is ready, Figma can automatically generate some of the code needed to turn it into a working app or website. Figma also offers a second product, FigJam, which provides a virtual whiteboard for prototyping new interface elements. It also lends itself to other tasks, such as planning marketing campaigns.

Figma’s interface design platform and FigJam have proven popular in the business. After his most recent funding cycle Last June, the startup revealed that it had more than 4 million users.

The popularity of Figma’s services has helped the startup achieve rapid revenue growth. Adobe revealed today, alongside the announcement of the acquisition, that Figma is on track to double its recurring annual revenue this year to more than $400 million. The startup’s net dollar retention, a metric that tracks how much existing customers increase their spend over time, exceeds 150%.

Adobe also clarified that Figma maintains gross margins of around 90%. Additionally, the startup has positive operating cash flow.

“Adobe’s greatness is built on our ability to create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions,” said Shantanu Narayen, CEO of Adobe (pictured). “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.”

Figma’s products compete with some of the design tools included in Adobe’s Creative Cloud software suite. After the acquisition is complete, Adobe intends to add a number of features from the Creative Cloud suite to Figma.

In a blog post Today, Figma Co-Founder and CEO Dylan Field said, “We will have the opportunity to bring their expertise in imagery, photography, illustration, video, 3D, and font technology to the Figma platform. Plus, we’ll get a chance to re-imagine what the best creative tools within the Figma tech stack might look like.

Adobe expects to complete the acquisition next year. After the transaction closes, Figma will continue to operate under Field’s leadership. “We plan to continue to run Figma as we always have – continuing to do what we believe is best for our community, our culture and our business,” Field said.

Adobe also released its fiscal third quarter results today. It saw a 13% increase in revenue, or 15% in constant currency terms, to $4.43 billion. Its net income was $1.14 billion, or $2.42 per share, compared with $1.21 billion, or $2.52 per share, a year ago.

For its fourth fiscal quarter, Adobe expects to earn $2.44 per share on revenue of $4.5 billion.

Photo: Adobe/Flickr

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