On the evening of September 15th, a thunderous news appeared in the software industry-the American design software giant Adobe made a huge increase and acquired the collaborative design software company Figma at a price nearly twice its valuation. The payment will be completed in cash and stock. According to the details announced so far, Adobe intends to complete the transaction in the form of 50% cash and 50% equity replacement.
But unfortunately, in the secondary market, investors seem to be not optimistic about this Adobe acquisition. Although from the perspective of the two companies alone, it is indeed a powerful alliance. Figma is the fastest-growing online collaborative office design software in recent years. According to relevant media reports, Figma is as early as 2020. The annual revenue reached about 75 million US dollars, and the second year revenue figure doubled directly to 150 million US dollars. According to Adobe's forecast for Figma, Figma's revenue this year may be around 400 million US dollars.
From an investment point of view, Figma's results are completely unusual. With only $75 million in revenue in 2020, its valuation is close to $2 billion, and its market-to-sales ratio is close to 2,000%. In June 2021, when Figma received a new round of financing again, the revenue forecast by the media at that time was about 150 million US dollars, and its valuation was about to exceed 10 billion US dollars, which means that in just one year, Figma's valuation has reached a new high, almost 100 times its revenue.
On the other hand, Adobe is obviously not a simple company. As a leader in the design software industry, its status in the related software field can go without saying, but such a seemingly powerful combination seems to be completely unaffected by secondary market recognition.
After the announcement of the news, Adobe's share price did not rise sharply after the US stock market opened, but ushered in an unexpected plunge, with the highest drop yesterday even approaching 17%. And this 17% means that Adobe has evaporated nearly 30 billion US dollars in market value, and the total transaction amount this time is only 20 billion US dollars. In an inappropriate way, this almost means that Adobe has lost money in the past 1 day. nearly $50 billion.
In fact, the reason for this is surprisingly simple. The essence is that the market has huge doubts about the value of Adobe's 20 billion dollars. Especially after just one year, the valuation was instantly pushed up to nearly twice the original valuation. Is such a high premium really worth it? And this kind of doubt will naturally dent investors' expectations for Adobe's future, and it is not difficult to understand that the stock price plummets.
To answer this question, three different aspects need to be considered.
First, of course, is the question of price. In fact, there are many stories of large American technology or Internet companies spending a lot of money to acquire competitors to help entrepreneurs land. It can even be said that this is a common operation of American Internet companies.
But the core problem this time is that it is expensive. In fact, this acquisition is not just one of Adobe's largest acquisitions over the years. You must know that Photoshop, the leading product in Adobe's family barrel, was also acquired through acquisitions. But Adobe's largest acquisition before that was worth billions of dollars.
So, this acquisition of Figma is almost the first-highest private company acquisition in history (the second was Facebook 's $19 billion acquisition of WhatsApp) and the third-highest subscription product company acquisition (the first two were Salesforce 's $27.7 billion , respectively). Slack, Microsoft's $26.2 billion acquisition of LinkedIn).
In addition, from the perspective of revenue alone, Figma's ARR is 400 million US dollars, and Adobe has paid 50 times the revenue multiple. For comparison, even when Salesforce acquired Slack, which was called a shocking acquisition in the field of SaaS services, Salesforce only paid 26x revenue multiple.
More importantly, according to the opinions of Wall Street analysts interviewed, Adobe currently has only about 3.7 billion US dollars in cash and equivalents, even if half of the amount in this transaction will be completed through equity replacement. , Adobe still has a funding gap of nearly 6 billion. According to the published information, these funding gaps may eventually have to be filled through borrowing and other means.Second, there is the question of the future.If Figma really has a flawless future, I believe that most investors will not have such a big objection to Adobe's acquisition.
We can take a look at some so-called "epidemic tools" that are similar to Figma and have emerged at similar time points, which emphasize the cross-regional collaboration of software and the fate of online office collaboration software. It's not hard to see why investors were so resistant to Adobe's acquisition of Figma at such a steep premium.
Take Zoom, the most popular SOFTWARE during the epidemic, as an example.
After careful observation, we see that its stock movements are almost closely related to the epidemic control strategies of overseas countries. With the outbreak of the number of infected people, the control of the epidemic in various countries has gradually strengthened, and Zoom's stock price has also begun to rise. The time node with the strictest control has reached the highest point.
In the next year, with the relaxation of control, people began to return to the office, and the only remaining peak of Zoom was only the increase brought by a few unlimited QE flooding markets in the United States. The follow-up is all the way down, almost returning to the initial appearance of its stock price in 2019.
OF course, compared to the ability of online meetings, which cannot be regarded as the ultimate rigid demand, many designers have obviously stronger needs for Figma. After all, if you go to the conference room online, it is naturally more convenient than using software, and it will not disturb others.
However, product design is a team work, and requires a large number of tools to cooperate with each other to complete high-quality completion. The friction and management costs brought about by this cooperation process gradually increase; the users of the design tool output are not designers, and they are in the design process. Poor experience; with the development of browser technology and the improvement of network quality, cross-platform low-cost collaboration is possible.
This can indeed be said to be the distinctive core capability of Figma, which is why, as a new company, Figma is still at a disadvantage even when Adobe launched Sketch, allowing Figma to break out of the siege.
Finally, there are concerns about how the two work together.
In fact, the most perfect form we expect is to perfectly integrate all the capabilities of Figma into Adobe, which can not only bring a completely different experience to the designer team, and finally transform Adobe's family bucket into an almost equivalent It is a cross-generational product.
Unfortunately, there is a high probability that this cannot be achieved, and the last key point that investors are not optimistic about this acquisition is precisely this. After all, Figma is essentially a browser-based software. If you want to forcibly integrate it into Adobe's existing capabilities, code, optimization, and internal function conflicts are almost all huge problems.
For example, Slack, as a R&D management platform tool service provider, acquired a video writing product called Screenhero in 2015, which allows the screens of both parties to interact with each other. After the acquisition, Slack wanted the company's former CEO to stop developing the product and instead integrate the product into Slack's meeting features.
While this did eventually happen, the performance situation was horrendous and almost impossible to solve with optimizations. The same case is LiveLoop, which was acquired by Microsoft in 2015, began to try to help Office series products add real-time collaboration capabilities. However, to this day, the Office family of products is far less experienced in trying to sync than the Google suite. Not to mention other collaborative office software.
This means that if Adobe wants to turn the function of Figma into a small button (that is, one of the functions) on Adobe's family bucket software, it needs to face a huge gamble. If the gamble is successful, it will naturally be a cross-generational software experience. . But if the gamble fails and Figma fails to maintain a stable update iteration, it almost means that $20 billion is thrown into the water.
After all, it is not an easy way to integrate old products with each other or develop new functions on the basis of existing products. The only good news is that at least Figma's original product was built on a browser, and Figam at least has a lot of experience with recreating a browser in a browser.
With so many questions, why Adobe just can't let Figma go:
With so many questions, we can almost call this acquisition Adobe's $20 billion gamble. Why can't Adobe, the industry leader, hold a small Figma?
In this regard, we can also roughly divide it into 3 parts.
First, there is the potentially huge possibility. As mentioned above, the collaboration of the designer team is becoming more and more important. With the gradual development of e-commerce, more and more materials, designs, UI, etc. need to be completed through cross-departmental collaboration.
For example, with the development of e-commerce, the marketing department, e-commerce department and design department need to be closely integrated to prepare corresponding content for each big promotion in advance. There may be thousands of different materials. Different photos, and integration of various content.
Figma's ease of use does have a bright future for cross-departmental collaboration.
Secondly, it is the development of the industry. In fact, many practitioners in the marketing industry have told Morketing when talking about this issue that at present, the development of Martech from the technical level has almost reached the ceiling, and there will not be too many changes. If you want to continue involution, there is almost only one way to price war.
From the current point of view, the trend of the industry points to a relatively clear direction - content technology.
However, this point has also been mentioned above. Although this may be a new trend in future development at present, but at this stage, advertisers are not very accepting of this form of content in the middle stage, and paying Willingness can only be said in general. That means Figma still has a long way to go.
Finally, Figma has really caused huge trouble for Adobe right now.
In the 2021 design tool statistics of UX Tools (a well-known overseas survey website for the use of design tools), Figma almost won the victory.
In the five areas of UI design, prototyping, delivery, design system, and version control, it is the first; in the whiteboard area, the second and third are Figma; instead of continuing to let development, it is better to take it under its command.
And to do this, how many people did Figma use? The answer is about 850 people. Correspondingly, Adobe has more than 26,000 employees.
More importantly, in addition to these design achievements, Figma's personnel capabilities are extremely high, and the gross profit margin is close to 90%. As long as its income is under its command, it can almost quickly acquire a group of excellent talents.
Conlusion:
Obviously, it is undeniable that Adobe's acquisition of Figma is indeed a big gamble, from whether it can be integrated, whether it can achieve synergies, and betting that the future design industry will definitely embark on the road of content technology.
After all, looking at the same traffic + crowd strategy only from the advertising industry, the difference in effect that creativity can bring is about 19 times. However, I am afraid it will take at least three years to see the real results of this big gamble.
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