Adobe's stock price declines after agreeing to buy Figma for $20 billion.

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Adobe said Thursday that it would buy Figma for $20 billion in cash and shares. Adobe's stock fell 17%, the most since 2010.

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Figma develops cloud-based design tools for real-time teams since 2012. It rivals Adobe's XD software.

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The most recent financing round for the corporation, which took place in 2021, resulted in a valuation of $10 billion for the enterprise.

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Figma, backed by Index Ventures, Greylock Partners, and Kleiner Perkins, is estimated to pull in over $400 million in recurring revenue this year.

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Adobe forecasts that by the end of 2022, Figma's annual recurring revenue will have surpassed $400 million.

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Adobe is paying close to 50 times the company's yearly revenue as cloud software sales multiples decline from historic highs.

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Future multiples for leading cloud businesses in the BVP Nasdaq Emerging Cloud Index have dropped to 9 times sales from 25 times revenue in February 2021.

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Figma's infrastructure will benefit from Adobe's contributions in the areas of graphics, photography, and video.

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Photoshop, Illustrator, and Premiere Pro are just few of the tools that Adobe sells to professionals in the industry as part of its suite of image and video editing software.

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