Adobe buys out collaborative software company Figma for USD 20 billion

By Ayushi Garg  | Date: 2022-09-19

Adobe buys out collaborative software company Figma for USD 20 billion

Adobe Inc. is reportedly planning to acquire collaboration-software company Figma, for about USD 20 billion.  This is expected to be the largest transaction in Adobes history, and it will enable the tech giant to gain access to a wider market by acquiring small-but-expanding competition.

Notably, Figma is relatively new to the wider audience, but its cloud-based collaboration tools have a devoted massive following among software engineers and product managers who create applications and other technological goods.

Therefore, Adobe executives believe the acquisition will allow them to tap into demand from such consumers in a way that complements the base of designers who use the companys existing software solutions.

Additionally, President of Adobes digital-media business, David Wadhwani, cited that the stock markets collapse makes it difficult for tech entrepreneurs to go public at the values they desire, which helped facilitate the deal. He also believes that opportunities like these are once-in-a-lifetime deal, grab it or leave it.

However, the California-based company is paying a high price for Figma, which will be paid with roughly half cash and half shares. Figma, the smaller firm was valued at USD 10 billion in a fundraising round last year and is expected to exceed USD 400 million in annual recurring income by 2022, roughly 1/50th of its acquisition price.

According to Adobe, Figma has gross profit margins of around 90% and positive operating cash flow. The company has announced the acquisition alongside its quarterly results, which were pushed ahead after The Wall Street Journal inquired about an acquisition.

Adobe reported a net income of USD 1.14 billion and revenue of USD 4.43 billion in the current fiscal years third quarter, which was up by 13% year on year. Moreover, the tech behemoth also released fourth-quarter revenue projections that fell short of Wall Street expectations, citing foreign-exchange issues related to the rise in the value of the US dollar.

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Ayushi Garg

Ayushi Garg

Currently working as an associate content writer, Ayushi pens down insightful articles for several websites. She began her profession by taking classes in digital marketing to broaden her skills. Given her passion for writing, she took up several freelancing projects ...

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