Adobe CEO Defends Acquisition of Figma, saying, “We think it’s an Adjacency”

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Adobe CEO Shantanu Narayen discussed the proposed acquisition of design software firm Figma during an interview with CNBC’s Jim Cramer. Narayen emphasized the benefits for customers despite regulatory scrutiny over concerns that the deal may harm competition.

According to Narayen, the acquisition aims to combine Figma’s capabilities in creative collaborative software on the web with Adobe’s expertise in creative tools. The goal is to make these tools more accessible for a broader audience. However, he acknowledged the challenging regulatory environment surrounding the deal.

Figma, founded in 2012, provides a platform for users to collaborate on app and website design. Adobe announced its intention to acquire Figma in September 2022, with the deal valued at around $20 billion.

Regulators in the U.K. expressed concerns that the acquisition could negatively impact the country’s digital design sector. Additionally, the U.S. Justice Department is reportedly working on a case to prevent the deal.

Despite the regulatory challenges, Adobe reported quarterly earnings that exceeded Wall Street’s expectations. However, the company provided a weaker-than-expected forecast for 2024, leading to a nearly 5% drop in the stock during after-hours trading.

Narayen defended the company’s guidance, stating that Adobe takes it seriously. He highlighted the strong momentum in digital media annual recurring revenue (ARR), with the company guiding to the highest number at the beginning of the year.

In summary, Adobe’s proposed acquisition of Figma faces regulatory hurdles, with concerns raised by authorities in the U.K. and the U.S. While Narayen remains optimistic about the deal’s merits, the stock experienced a decline in after-hours trading following the release of Adobe’s quarterly earnings and the 2024 forecast.

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