Adobe Inc agreed on Thursday to buy Figma, whose products are used by software developers, for $20 billion, sparking investor concern over the high price, which sent the value down more than $30 billion. photoshop maker market.
Adobe Chief Executive Shantanu Narayen called Figma’s business “the future of work” and said there were “huge opportunities” in combining it with his company’s offerings such as the Acrobat document reader and Figjam online whiteboard.
Investors were unconvinced and Adobe shares were down 17%.
Many said they understood the rationale for the strategy, but argued that Adobe paid too much for a company that was valued at about $10 billion in a private fundraising round just over a year ago.
David Wagner, portfolio manager and equity analyst at Aptus Capital Advisors, which owns a 1.5% stake in Adobe, said Figma’s annual recurring revenue (ARR) was $400 million, a tiny fraction of Adobe’s $14 billion, so it was unreasonable to pay the equivalent of 11% of its market value for 2.8% more ARR.
“We are disappointed with the price paid by the company (Figma),” Wagner said.
Adobe said it expects the deal to be positive for its earnings three years after its completion. He added that the total Figma market would reach $16.5 billion in 2025 in the areas of design, whiteboard and collaboration.
Before Figma, Adobe’s biggest acquisition was software maker Marketo for $4.75 billion in 2018.
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