Adobe’s Figma Deal: A $20 Billion Bet on a Complement That Regulators Saw as a Rival

On Wednesday, December 13, 2023, Adobe chief executive Shantanu Narayen told CNBC that the company still believed in its planned purchase of Figma. He called Figma an adjacency, said Adobe stood by the merits of its case, and conceded that the regulatory environment was challenging. Five days later, Adobe and Figma announced a mutual decision to terminate the merger, saying they saw no clear path to approval from the European Commission and the UK Competition and Markets Authority (CMA).

That word, adjacency, carries the whole dispute. The Adobe Figma acquisition was a roughly $20 billion bet that a fast-growing design platform would extend Creative Cloud rather than compete with it. Regulators read the same company differently: as Adobe’s closest rival in one market and a credible future challenger in two others. This article follows the gap between those readings, then looks at what the record since the deal collapsed can and cannot tell us.

What did Adobe want from Figma?

Adobe announced the deal on September 15, 2022, for approximately $20 billion in cash and stock, split roughly half and half. It came the same morning as Adobe’s fiscal third-quarter earnings, and investors were unimpressed: the shares fell 17%, their worst day since 2010. It was the largest deal in Adobe’s history, and Figma’s last private funding round, in 2021, had valued the company at $10 billion.

The numbers Adobe put behind it were strong. Figma was expected to add about $200 million in net new annual recurring revenue (ARR) in 2022 and to exit the year above $400 million, with net dollar retention above 150%, gross margins near 90% and positive operating cash flow. It had roughly 850 employees. Divided by the $400 million ARR level Adobe cited, the price works out to about 50 times recurring revenue, which is how CNBC framed it at the time; because Adobe said ARR would surpass that level, the true multiple was slightly lower. CNBC set that against a cooling market, noting that forward revenue multiples for leading companies in the BVP Nasdaq Emerging Cloud Index had fallen to just over nine from about 25 in February 2021. Adobe told investors it expected the deal to add to non-GAAP earnings per share by the end of year three, and that it would keep repurchasing shares to offset the stock it issued.

The strategic argument was about the web and about collaboration. Adobe said Figma’s browser-based, multiplayer platform could speed up the delivery of Creative Cloud on the web, and that its own imaging, illustration, video, 3D and font technology could flow into Figma. A slide in its investor presentation pointed to combining Adobe Express, Acrobat and Figma’s whiteboard, FigJam. Adobe put Figma’s addressable market at $16.5 billion by 2025. Dylan Field was to keep running the company, reporting to David Wadhwani, who then led Adobe’s Digital Media business.

There was one awkward fact inside the thesis. Figma competed head-to-head with Adobe XD, Adobe’s own product design tool. Adobe was buying the leader in a category where it already had a product of its own.

Why did regulators see a rival instead of a complement?

The deal was notified to the European Commission in June 2023 and referred to Brussels by a group of EU countries. The CMA sent it to an in-depth Phase 2 inquiry on July 13, and the Commission opened its own in-depth investigation on August 7. Both authorities reached for the same two ideas.

The first was ordinary head-to-head competition. The CMA’s investigation found that around 80% of the professional product design market used Figma, whose customers included companies such as Airbnb, Patagonia and Vodafone. It provisionally concluded that the deal would remove the constraint Adobe exerted through XD. It went further. It provisionally found that Adobe had abandoned development of new product design software that could have competed even more closely with Figma and, given the timing, did so as a consequence of the merger.

The second idea was about the future. On November 17, 2023, the Commission sent Adobe a Statement of Objections setting out its preliminary view that the deal might reduce competition in global markets for interactive product design software and other creative design software. In vector editing, where Adobe sells Illustrator, and raster editing, where it sells Photoshop, the Commission said the deal would eliminate Figma as a potential competitor, and that Figma was significantly likely to enter those markets and grow into an effective competitive force. On November 28 the CMA published provisional findings in similar terms. It saw Figma as a credible future competitor in image editing and illustration, and judged that the threat had already spurred development of Photoshop and Illustrator, including their web versions.

Those labels matter. A Statement of Objections is a preliminary view that invites a response. The CMA called its findings provisional, said it would consult on remedies that could include blocking the deal outright, and set December 19 for responses and February 25, 2024 for its final decision. Neither authority reached a final ruling, because the companies ended the deal first.

This is why the dispute could not be settled by looking at Figma’s product list in 2022. Adobe was describing what Figma was: a collaborative interface design tool, a different job from retouching photographs. The regulators were describing what Figma might become, and how Adobe behaved while that possibility hung over the deal. Potential-competition cases rest on judgments about a future that has not happened, and on documents, roadmaps and incumbent reactions that outsiders rarely see.

How did the Adobe–Figma deal end?

On December 18, 2023, the companies said they had agreed to terminate on a joint assessment that there was no clear path to approvals from the Commission and the CMA, while stating that they strongly disagreed with the regulatory findings. Field said it had become increasingly clear over the preceding months that regulators did not see things the same way.

The paperwork is precise. Adobe’s SEC filing says the termination took effect on December 17, that Adobe would pay the previously agreed $1 billion termination fee within three business days, and that the fee was the sole remedy under the merger agreement. Adobe’s annual report says it paid the fee on December 20 and recorded it in operating expenses in the first quarter of fiscal 2024.

The fee equalled 5% of the headline price. It had been agreed in advance, which suggests both sides treated regulatory failure as a real possibility from the start, though that is inference, not something either company has said. The public statements also leave open which remedies were discussed, or why Adobe chose termination over waiting for final decisions. What the record does show is the duration: signed September 15, 2022, ended fifteen months later.

What happened to Figma after the deal collapsed?

Figma stayed independent and widened its range. At its Config conference on May 7, 2025, it introduced Figma Sites for building websites, Figma Make for prompt-based prototyping, Figma Buzz for marketing assets and Figma Draw, a vector-editing space inside Figma Design that The Verge likened to a simplified version of Adobe Illustrator.

Then it went public. Figma priced its IPO on July 30, 2025 at $33 a share, a dollar above its marketed range, selling 36,937,080 shares, of which Figma itself offered about 12.5 million and existing stockholders the rest. The offering raised about $1.2 billion in total and valued the company at roughly $19.3 billion. The stock’s first trade the next day, at $85, valued Figma near $50 billion. Field offered a caution that applies to anyone reading those numbers: a share price, he said, is a moment in time. Figma’s prospectus had reported more than 13 million monthly active users in the first quarter of 2025, two-thirds of them non-designers.

The operating record is steadier than the stock. Figma reported 2025 revenue of $1.056 billion, up 41%. In the second quarter of 2026 revenue reached $370.1 million, up 48%, with net dollar retention of 136%, free cash flow of $53.2 million and $1.7 billion in cash and marketable securities, alongside a GAAP operating loss of $117.3 million. On October 16, 2026, the shares closed at $21.49, according to Yahoo Finance and CNBC. On Morningstar’s share count that is a market value of roughly $11.5 billion, though providers differ on share counts and the figure should be read as approximate.

How should the $20 billion figure be read now?

It is easy to line up four numbers and subtract: $20 billion in 2022, $50 billion on the first trade in 2025, $19.3 billion at the IPO price, and roughly $11.5 billion in October 2026. Those figures are not interchangeable. The $20 billion was a negotiated price for control, about half of it in Adobe shares. The IPO valuation was what investors paid for a minority stake in a newly listed company. The first-day trade was a market reaction; nobody paid that amount for the company as a whole. Annual recurring revenue, reported revenue and market capitalization also measure different things, and enterprise value, which adjusts for cash and debt, would differ from market capitalization again.

Read with those limits, the record supports a narrower statement. Public investors priced Figma at about $19.3 billion in July 2025, roughly 3.5% below Adobe’s headline figure from three years earlier, and the market valued it well below that in October 2026. Its 2025 revenue was more than double the recurring revenue Adobe cited for 2022, although those are different measures. A claim that Adobe lost tens of billions by walking away depends on choosing a peak day. A claim that Adobe dodged an overpayment depends on choosing a recent one. The evidence does not justify either.

Adobe itself is still growing. In the third quarter of fiscal 2026 it reported record revenue of $6.76 billion, up 13%, and total annualized recurring revenue of $27.50 billion. It will also change chief executives on December 1, when Anil Chakravarthy succeeds Narayen, who becomes executive chair.

What does the evidence prove, and what does it leave open?

The evidence supports one point. Figma kept widening its products, including into illustration, and it did so as a standalone company. That is consistent with how the CMA and the Commission described Figma: a company likely to keep expanding beyond interface design.

It does not prove the larger claims. The regulators’ concern was about what the merger would do to competition and innovation, and nobody can observe a combined Adobe and Figma. Figma building Draw on its own shows ambition and capability, not that a merged company would have stopped innovating. The company’s disclosures do not show whether Draw or Figma’s other launches have taken meaningful business from Illustrator or Photoshop. Adobe’s continued growth points the other way, but it is only consistent with Adobe’s argument, not a verdict on it. Nor can anyone say how Figma would have developed inside Adobe, which is the question the whole dispute turned on.

What can acquirers take from the Adobe–Figma deal?

Three points follow from the record rather than from general principle.

An acquirer’s own product decisions become evidence. The CMA’s provisional finding that Adobe stopped work on a closer Figma rival, and that the timing pointed to the merger, shows how choices made while a deal is pending can be read as evidence of how closely two companies compete. Adobe and Figma said they strongly disagreed with the regulators’ findings, and the CMA’s conclusion remained provisional, but any acquirer in a similar position should expect its roadmap decisions to be examined.

An adjacency thesis has to survive contact with the acquirer’s own catalogue. Adobe described Figma as adjacent while selling XD against it, and while Photoshop and Illustrator sat in the markets regulators said Figma was approaching. Before signing, an acquirer can test the thesis by asking what the strongest regulator’s case would look like, and which internal documents it would cite.

A reverse termination fee caps one cost and leaves others open. The $1 billion limited Adobe’s cash exposure if the deal failed. It did not shorten the fifteen months between signing and termination.

The question Adobe and the regulators disagreed about, whether Figma was a complement or a future rival, will now be answered by competition in the market. The next checkpoint is November 4. Figma’s next results may show whether overall revenue growth, customer retention and margins are holding up, but they will not isolate how much the newer products contribute. Neither those results nor Adobe’s next ones can reveal what would have happened inside a combined company, which is why the deal’s cost remains an argument rather than a figure.