Daily Brief: Adobe Has Decided It’s Worth Gobbling Up Figma

Daily Brief: Adobe Has Decided It’s Worth Gobbling Up Figma

over 1 year ago3 mins

Mentioned in story

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.

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%.

Adobe recurring revenue

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.

Adobe stock
Source: Google Finance

Keep reading for our next story...

British Retailer John Lewis Posted A Loss

John Lewis image

British retailer John Lewis announced on Thursday that it made a loss in the first half of this year.

What does this mean?

John Lewis makes a lot of its money by flogging big-ticket items to middle-class shoppers, but those loyal shoppers aren’t so loyal now that bills for energy and other essentials are on the up. Those that did have spare change used it to escape reality by booking holidays and fancy restaurants instead, which might explain why like-for-like sales at John Lewis department stores grew just 3% in the first half of this year from the same period last year. Even sales at John Lewis-owned Waitrose – a high-end grocery chain – dropped 5%, as its little luxuries-seeking shoppers flocked to discount competitors like Aldi and Lidl. Layer in the company’s altruistic reluctance to fully push higher costs onto its customers, and the employee-owned group notched a $114 million loss in the first six months of the year.

Why should I care?

The bigger picture: Happy holidays.

John Lewis’s sales tend to change with the seasons, and losses in the first half of the year are pretty common. But this dip more than tripled last year’s, and it looks like the retail giant is banking on festive sales to make up the gap. John Lewis plans to hire 10,000 temporary staff to help it make the most of seasonal demand, but that’ll only work if demand’s actually there: UK inflation fell for the first time since September 2021 last month, sure, but it’s still sitting at a shopping-blocking 9.9%.

UK inflation

Zooming out: Good old American positivity.

Inflation in the US isn’t much better, but American shoppers are a hardy bunch: consumer sentiment in the country rose from historic lows last month after a slip in energy prices. That might be why stateside retail sales were up 0.3% in August from the month before, washing away economists’ worries of a 0.1% fall.

US retail sales
Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG