Adobe has entered into an agreement to acquire Figma, a leading cloud-based collaborative design platform, for USD 20 billion, in a half cash and half stock deal. This deal makes Adobe the dominant player in the market, as Figma has been directly competing with Adobe’s products (specifically Adobe XD) in the past. The acquisition is expected to close in 2023 subject to regulatory clearances and other closing conditions, including Figma’s shareholder approval.

Adobe reports a USD 16.5 billion total addressable market for Figma by 2025, and Figma is expected to contribute USD 200 million in net new ARR this year, exceeding USD 400 million in total ARR exiting 2022 (valuing Figma at 50x its current ARR).

Adobe plans to utilize Figma’s web-based and multi-user capabilities and is likely to combine Figma’s products into the Adobe creative suite. Figma expects to leverage Adobe’s expertise in 3D, video, vector, and imaging to improve its product design. 

Analyst QuickTake: The acquisition price of USD 20 billion is a sizable jump from Figma’s previous valuation of USD 10 billion at the time of its Series E round in June 2021 . The company’s significant growth can be attributed to the fact that Figma’s web-based platform has generally been the choice of design teams that prioritize collaboration features, as it is purpose-built to enable collaborative design in a single space, as opposed to Adobe XD, which is typically more suited for designers already invested heavily in Adobe’s ecosystem. In a similar move to bolster its Creative Cloud offering, Adobe also acquired collaborative video editing platform Frame.io in August 2021 .