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Shares of Adobe Systems Incorporated (NASDAQ:ADBE) are down 10% in premarket Thursday trading after the company reported FQ3 earnings and said it will acquire design platform Figma for $20 billion in cash and stock.
Adobe reported Q3 EPS of $3.40 to beat the analyst estimate of $3.33. Revenue came in-line at $4.43 billion. For this quarter, the company expects to see EPS of $3.50 on revenue of $4.52 billion, which compares to the analyst consensus of $3.45 on revenue of $4.58 billion.
Moreover, Adobe announced it will buy Figma, which offers web design products, for $20 billion in cash and stock.
“Adobe’s greatness has been rooted in our ability to create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions,” said Shantanu Narayen, chairman and CEO, Adobe. “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.”
Vital Knowledge analysts see this move as evidence that Adobe is spending a lot of money to expand its annual recurring revenue, which now stands at only 3% of the overall revenue.
“Given that Figma is one of the more potent competitors facing Adobe, it will be interesting to see how regulators approach this deal,” analysts wrote.
