Coming into 2025, IPO activity was broadly expected to pick up from recent lows. However, uncertainty around President Donald Trumpβs tariff policy and the ensuing market correction has slowed deal activity. Despite market trepidation, Figma confidentially filed its S1.
Experts broadly believe Figma is better positioned to go public than some peers, owing to a strong product suite that it is working to expand. However, there is some debate on how Figma will fare amid competition with legacy platforms and a flurry of new AI-powered upstarts. Additionally, questions arise concerning what the creative cloud market will look like in an AI-first world.
Figmaβs potential IPO plans follow Adobeβs failed takeover attempt in late 2023. The $1 billion termination fee Adobe paid to Figma provided a significant capital injection, helping the company position itself for filing.
Below, we leverage expert transcripts and other insights from the AlphaSense platform to assess Figma and the competitive dynamics of the creative cloud space.
Donβt miss our other AlphaSense primers:
- StubHub and the Global Ticketing Market | An AlphaSense Primer
- Klarna and the Buy Now, Pay Later Market | An AlphaSense Primer
Creative Cloud Market Overview: Figma On the Rise
The creative cloud market encompasses tools and platforms that support design, collaboration, and content creation. Growing demand for digital content and integrated workflows is expected to spur significant growth in the creative cloud space. Industry watchers project the total visual cloud market β which includes creative cloud β to surge 13.5% annually to $237.3 billion by 2029.
Figma has carved out a niche in this market through its specialization in user interface (UI) and user experience (UX) design, prototyping, and collaboration. While initially geared toward designers, Figmaβs growth strategy centers on expanding beyond its core design platform. Figma now touts four flagship products: Figma Design, Dev Mode, FigJam, and Figma Slides. Each one can be customized to fit a variety of use cases, from a basic starter package to an enterprise-scale solution.
Figma is known for its real-time collaboration capabilities that enable multiple users to work on the same project simultaneously. This functionality and ease of use is one reason Figma has gained significant traction among not just designers, but also product⬠managers, writers, and developers. Figma has increasingly set its sights more on selling into the enterprise market, driven by a strategy to improve design process and collaboration in a larger setting.
How Figma Stacks Up Against the Competition
The incumbent leader in the creative cloud market is Adobe, offering a suite of tools like Photoshop, Illustrator, and XD. Adobe is widely used by professionals for high-end creative work. Figma also faces stiff competition from Canva β which dominates the consumer and SMB segments β and open-source, AI-heavy alternatives like Penpot.
Figma is doing well relative to its peers, with comparable spend share to Canva, according to recent surveys. Of all creative software platforms aside from Adobe, Figma and Canva are tied in overall usage, with 67% of survey respondents saying their organization uses each platform. One expert believes new offerings from Figma and Canva could challenge demand for Adobeβs Creative Cloud segment.
Figmaβs real advantage lies in the UI/UX design space, where its market share is estimated to be around 80-90%. Adobeβs comparative offering, Adobe XD, is rapidly losing market share to Figma. One customer with eight years of experience using Figma is bullish on the companyβs prospects due to projects currently in the pipeline:
[Figma] will absolutely grow because I feel like, even just attending Config and getting a sense of the rumblings of what Figma is planning to launch in the next couple of years, there is a market that is not addressed right now, which is the ability to build real things very quickly.
Value Proposition of Creative Cloud in Question
Figmaβs recent price hikes have sparked a debate about the companyβs value proposition. Open-source solutions like Penpot offer similar functionality at significantly lower costs β reportedly 50-75% cheaper β which could become increasingly attractive if customer budget constraints tighten.
Even as some experts complain about Figma raising prices and effectively abandoning its underdog roots, most agree that Figmaβs utility justifies its price tag. One current customer even says Figma could charge three times its current price before they would consider switching vendors. After all, even with the recent price increase, Figma is still cheaper than Adobe.
If I compare itβ¬β to Adobe, even if you get a full packageβ¬ of Adobe,β¬β itβs multiple times more expensive thanβ¬β just having Figma.β¬β In my opinion, itβsβ¬ worth it. Itβs still worth it. I donβt see a reason to transition due to the price hike. I donβtβ¬ think itβs problematic.β¬ ...
Using Figma is easy. Designing is seamless. That is very intuitive. When does the learningβ¬ curve come into play is learning how to create components and then create auto layouts.β¬ I struggle with that learn curve as well, but once youβre past that peak, it becomesβ¬ extremely intuitive.β¬β It becomes the best way to designβ¬β anything moving forwardβ¬β becauseβ¬ using auto layout and components allows you to make edits extremely seamlessly with aβ¬ minute amount of time.
What Lies Ahead for the Creative Cloud Market?
Expansion to new regional markets is considered a significant opportunity for creative cloud players. High-growth regions like EMEA and APAC are seen as especially ripe for expansion. Adobe in particular is focusing on localized solutions and partnerships to tap into these markets. Yet, one expert says Figma is making inroads in different regions β especially Europe, which is now served primarily by Miro.
I think theyβre using a good playbook today. Theyβre essentially leveraging the playbook that Miro had and just overlaying that with their Figma design product in order to be able to compete more directly with the Miro or Canva in those markets. I think theyβre making inroads. Theyβre certainly still the more economical product when it comes to Miro, for sure.
AI is seen as an even more powerful growth catalyst for the overall market. Experts see potential for AI to enhance design workflows, such as generating designs or automating repetitive tasks. While Figmaβs current AI capabilities lag behind competitorsβ, the companyβs new enterprise-grade AI solution could pave the way for mass adoption and further technological advancement.
Investment in AI capabilities and a surge in AI-powered competition raises the question: Will AI boost creative cloudβs total addressable market? One expert thinks so, expecting the creative cloud market to quadruple as AI and other technological advances take hold.
With its recent investments and strong pipeline, Figma is positioning itself as a key player in creative cloudβs next phase.
Elevate Your Market Research with AlphaSense
Using the AlphaSense platform, investors can perform a deep dive on any company, including pre-IPO names like Figma, with ease. Our Canalyst Models provide financial professionals with an extensive library of 4,000+ pre-built, highly accurate, and granular financial models that update automatically. Our company-specific IPO models, including for companies like Figma, are available within days of filing, enabling faster, more confident decision-making.
See how AlphaSense can level up your investment research workflow. Start your free trial today.
