Specialist
Former executive at Adobe Inc
Agenda
- What integration with Adobe (NASDAQ: ADBE) will look like and expected changes to Figma’s platform
- Financial impacts for Adobe of USD 20bn deal
- Adobe’s motivation to remain a one-stop-shop for creative pros
- Competitive landscape impacts – how companies such as Canva, Miro, Sketch and InVision will be affected
- What to expect from Figma’s product pipeline and pricing model and how deal could be a major accelerant
Questions
1.
What are your thoughts on Adobe’s proposed acquisition of Figma? Is this something you saw coming?
2.
What drove the deal? Do you think it was a more defensive move by Adobe to retain market share, or do you think it was offensive, as you mentioned? Was it done to go out, add tech and add customers?
3.
One thing that may concern investors is that one year after Figma raised money at a USD 10bn valuation, Adobe paid USD 20bn in the deal. What are your thoughts on the purchase price, and what do you think drove Adobe to pay such a high price at this point?
4.
What are the risks to the deal? If we looked back in five years and said, “That was actually a poor use of capital,” what do you think would be the primary reason for that?
5.
A couple of years ago, Adobe introduced Adobe XD as its version of a web-based UI/UX collaboration tool around the same time Figma was released. However, it obviously hasn’t gained nearly the same traction, especially with SMBs and creative individual customer segments. For a company so used to winning across the board in graphic design, could you discuss what led to Adobe needing to acquire Figma to remain an industry leader in this space?
6.
How would you break down web-based graphic design collaboration tool market share across Adobe, Figma and the other huge player here, Canva? How could market share shift over the next 2-4 years following this deal?
7.
Do you think Adobe considered buying a Canva as part of the acquisition process, or wouldn’t it have had the same product fit as Figma?
8.
Could the Figma acquisition have a significant impact on Canva’s growth, or is Canva’s solution differentiated enough that it will continue to grow within its own customer segment and product areas?
9.
You view the Figma acquisition as more of an offensive move from Adobe, but I think general consensus is that one justification for the deal is to eliminate one of the key threats or competitors to Adobe’s position, as well as to maintain its ability to be this one-stop shop for creative pros. Could this indicate that Adobe’s overall competitive positioning is or was being threatened a little bit more than previously thought?
10.
You mentioned earlier that on the heels of the acquisition news, Adobe’s stock price dropped. One of the reasons is that I think people went out, assessed their financial models and considered that the cash flows they had been forecasting for Adobe in Creative Cloud may have been under a bit more pressure than we thought. Do you think we should be at all concerned about Adobe achieving its forecasted growth of 15% in 2023? I ask especially as it may roll back the XD programme, which albeit is immaterial at this point. What could be a realistic growth rate for Creative Cloud?
11.
What have we seen in terms of demand for Figma-specific products and the rest of Creative Cloud? How do you think spending and revenue will fare if we go into a more recessionary period?
12.
I think one of the knocks on Adobe’s products is they’ve historically been a little bit in single-player mode. Companies such as Figma and Canva are more in multi-player space collaboration, which really got accelerated during coronavirus. Is this an issue across Adobe’s Creative Cloud portfolio? Could this potentially signal any decline in performance across the rest of the business or any future issues or concerns?
13.
Do you see a lot of synergies between Adobe and Figma? Could the integration actually be quite beneficial for both sides? What does Figma’s product portfolio looks like? What will the new elements be for Adobe? Will they just be improved versions of what it already has?
14.
You’ve mentioned it a couple of times, but XD really didn’t live up to expectations and obviously hasn’t matched the quality of the Figma platform. What happened? Was it just a lack of investment? Is it at all surprising that Adobe lost out to Figma in this area that the company knew would be big and important for the portfolio?
15.
What are your thoughts on Adobe’s TAM targets, especially for Creative Cloud? The company recently estimated the available market to be around USD 41bn in 2023. Is this figure, which is 5-6x current ARR, realistic?
16.
During the acquisition, management identified a USD 16.5bn TAM for Figma specifically. How much of this USD 16.5bn is incremental to what Adobe currently serves vs overlaps with the company’s current TAM estimates?
17.
Could you discuss the current customer breakdown for Creative Cloud? How could the Figma acquisition improve Adobe’s ability to reach new customer segments?
18.
Obviously, the deal size is unprecedented in Adobe’s history. Why do you think the company decided to make this acquisition given current market conditions? Do you think this is a one-off deal, or could it lead to other serious M&A, maybe given the deflated values across the industry right now?
19.
While nothing has been close to the magnitude of the Figma deal, Adobe has engaged in billion-dollar M&A in the past. What does its go-to-market integration strategy look like? How do you assess the overall success of past deals, including some of the ones you mentioned – Frame.io, Workfront, Marketo and Magento?
20.
Figma and Canva have achieved such tremendous growth over the past couple of years. Has this market become at all saturated during that period? Are these growth rates sustainable in the future?
21.
I think a lot of people expect the Figma platform, at least in the short term, to stay the same, or maybe even get some additional benefits from Adobe. However, I think something a lot of people are watching is pricing. Adobe has historically used the 7-30-day free trials for its products as opposed to the freemium approach that Figma has used. Could Adobe adopt the freemium model from Figma as it integrates the business? Alternatively, given its position as a public value stock with an addiction to ARR, could it transition Figma to more of a 7-30-day free trial model? What are your thoughts on future industry pricing?
22.
We touched on Canva, but what could the Adobe-Figma merger mean for smaller players such as Miro, Sketch and InVision? Could anyone else take market share, particularly in the non-professional space?
23.
When you were comparing Figma and Canva earlier, you said there’s some overlap but not a ton. Do you view Canva as a threat to Adobe given Canva is developing its product portfolio and trying to become a more robust platform? Is it yet to be a serious threat?
24.
Let’s say we’re looking back on the acquisition in 2-3 years. What’s the best- vs worst-case scenario?
