Adobe is ready to shell out $20 billion for cloud-based collaboration company Figma as it strives to meet the needs of developer teams that can't work together in person.
Figma's software lets developers collaborate remotely on the design of applications and websites. Adobe's offer, unveiled Thursday, is the largest in company history. Adobe expects to close the deal next year.
Figma, founded in 2012 and headquartered in San Francisco, offers two products: an online design platform called Figma; and FigJam, a virtual whiteboard. Microsoft, Zoom, Twitter, Netflix and Dropbox are Figma customers.
The acquisition would make Adobe a formidable competitor in a collaboration market that grew with the increase of remote workers during the COVID-19 pandemic. Figma's offerings have proven more popular than Adobe products among software developers. Almost 80% of designers used Figma for user interface design, compared to just a quarter that used Adobe's competing XD software, according to a 2021 worldwide survey by web publication UX Tools. The survey's more than 3,000 respondents also ranked Figma as the most-used tool for prototyping, managing different versions of designs and handing them off to programmers.
"[Figma has] delivered a really incredible technology platform and solved a number of the issues that need to be solved to allow multiple people to collaborate on the web," said Adobe CEO Shantanu Narayen, according to a Seeking Alpha transcript of the company's Thursday earnings call.
FigJam will prove helpful to Adobe, said Gartner analyst Brent Stewart. Because online whiteboards let workers visualize ideas easily, communications platforms like Zoom, Microsoft Teams, Cisco Webex, BlueJeans by Verizon and RingCentral have launched the feature. The collaborative nature of designing makes whiteboards especially useful in product development, Stewart said.
"[Adobe] has acquired an emerging visual collaboration platform to rival [standalone whiteboard products] Miro and Mural -- something completely absent in their current product portfolio," he said.
Market reaction to the deal has been negative. Adobe's stock slipped 17% after news of the deal Thursday. In the company's earnings call, financial analysts questioned the high price of the acquisition and whether executives were still confident in the company's ability to innovate. Narayen defended the move, saying he believed it would be transformative for Adobe.
"We understand that there will be questions associated with valuation," he said. "Opportunities like this present themselves rarely."
Figma CEO Dylan Field will continue running the Figma team after the deal closes, according to Adobe. He will report to Adobe Digital Media president David Wadhwani.
"We plan to run Figma the way we have always run Figma -- continuing to do what we believe is best for our community, our culture and our business," Field wrote in a blog post. "[With the move,] we will have the opportunity to incorporate [Adobe's] expertise in imaging, photography, illustration, video, 3D and font technology to the Figma platform."
Adobe has previously sought to add to its collaboration capabilities through acquisition. Last year, the company bought software firm Frame.io to let remote teams work together on video production.
Mike Gleason is a reporter covering unified communications and collaboration tools. He previously covered communities in the MetroWest region of Massachusetts for the Milford Daily News, Walpole Times, Sharon Advocate and Medfield Press. He has also worked for newspapers in central Massachusetts and southwestern Vermont and served as a local editor for Patch. He can be found on Twitter at @MGleason_TT.