What's going on?

Adobe announced on Thursday that it�s acquiring software design startup Figma.

What does this mean?

Imagine a graphic designer hard at work, and you�ll probably picture the Adobe logo in the corner of their screen. But analysts aren�t convinced the software maker � creator of products like Photoshop and After Effects � has the edge on the competition that it used to, especially now smaller rivals like Figma are gaining traction. And real traction, at that: Figma got a leg up during the pandemic because its cloud-based design software lets hybrid workers collaborate in real time, and it now boasts goliaths like Google and Netflix among its customers. Adobe, in fairness, did put some graft into making more accessible web-based products like Photoshop Express, but that hasn�t panned out as well as it had hoped. So if you can�t beat �em, buy �em: the software giant announced it would buy Figma in a deal worth $20 billion � the biggest takeover of a private software company ever (tweet this).

Why should I care?

Zooming in: Big dreams.
Adobe�s expecting big things: it’s estimated the market Figma sits in could be worth nearly $17 billion by 2025. Adobe shouldn�t need to wait that long for good news though: Figma�s predicted to surpass $400 million in annual recurring revenue � made from things like subscriptions � by the end of the year. That�s just what Adobe needs: it announced on Thursday that revenue rose 13% last quarter from the same time last year, marking the third consecutive quarter of growth languishing under 15%.

For markets: Show me the money.
If Adobe�s one thing, it�s generous: Figma was valued at $10 billion � yup, half of what Adobe�s set to fork out � in June 2021, and valuations across the board have been on a slippery slope since then. Layer in the fact that Adobe will probably need to load up on debt to help finance the deal, and that might explain why dubious investors sent its shares down 17% after the news.