Right out of the bat, the deal's financials don't make much sense. Source: Dylan Field (Figma CEO) on Twitterĭespite Figma's under monetization, $20 billion is still a hefty price tag. Recognizing that we are in an unpredictable, inflationary environment, we currently have no plan to change Figma's pricing. It's difficult to put an exact number on this, but common sense says it would be significantly higher just based on pricing power.įigma's CEO said in a thread that pricing would not change over the short term, but we highly doubt this will hold true over the long term: What would ARR be if Figma hadn't had to compete with Adobe? The question we should ask ourselves here is: Now that it comes under Adobe's umbrella, Figma's pricing power has increased quite a bit. It had to take market share as much as possible as fast as possible. On top of that, Figma offers a very low price for its paying customers. They take advantage of the freemium model. We all know that a lot of these 'individual users' are actually businesses too. As an 'individual user' you can use Figma for free. The rationale is that once under Adobe's umbrella, Figma will not have to outcompete Adobe on price and will be able to implement value-based pricing. It's also true that this $400 million ARR is probably understated. Figma is expected to generate $400 million in ARR (annual recurring revenue) in 2022, so Adobe is paying around 50 times 2022 ARR. The first thing that stands out is the hefty price tag. Below, you can find some general information about Figma: Our thoughts on the acquisitionįirst of all, the deal is pending regulatory approval, but we believe it should go through based on Figma's size relative to Adobe and the fact that the FTC mostly scrutinizes big tech.
The acquisition of Figma is not an acquisition of an Adobe XD competitor, but more so of a whole new strategy to collaborate, which is where the industry is shifting.
FigJam allows team members to brainstorm and collaboratively design workflows, being able to connect designs from Figma directly:Īdobe knew that Figma was a threat and was investing in collaborative tools, but quickly shifting its core offerings toward a real-time collaborative environment proved to be more difficult than expected. Not only has Figma captured the E2E (end to end) design process, but it has also captured the brainstorming phase through FigJam.
The company also built everything on the web, reducing user friction and enabling real-time collaboration. Hence, it embarked on a path to build an integrated solution where everyone could collaborate.
The company acknowledged from the start that design was a task that required many more players than just designers. Figma: good or bad?įigma webpage A brief introduction to Figmaįigma is an all-in-one design solution focused on collaboration. The market is cautious and wants proof that this will work out for the company, and we completely understand this point of view. In this case, though, the market also has to factor in that Adobe eliminates a long-term threat, but you shouldn't expect the market to look many years out. History suggests that about three quarter of large acquisitions are value-destructing, more so at high multiples such as the one Adobe paid. It's very clear: the market didn't like the acquisition. Adobe's stock dropped 18% in one single day, losing more market cap than what it will pay for Figma:
#FIGMA PRICING PLUS#
The company announced the acquisition of Figma for $22 billion, $20 billion plus $2 billion in restricted stock units for Figma's management.īefore going over what this acquisitions means and how we interpret it, let's go over to the market's reaction to the news. Adobe ( NASDAQ: ADBE) reported earnings last Thursday but made an even more important announcement.
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