(Reuters) -Photoshop maker Adobe will acquire software platform Semrush in a $1.9 ​billion deal, the companies said on Wednesday. Adobe ‌will pay $12 per share for the company, representing a premium ‌of around 77.5% to Semrush's closing price on Tuesday. Semrush shares jumped 55% in premarket trading. Semrush designs and develops software that helps companies with search ⁠engine optimization, ‌social media and digital advertising. The potential acquisition would allow Adobe, which offers tools such ‍as ...

Core Viewpoint - Figma, a leading design tool, is preparing for its IPO in 2025 after being abandoned by Adobe, showcasing impressive financial growth and a focus on AI integration despite facing competition and challenges in the market [3][5][6]. Group 1: Figma's Background and Market Position - Adobe attempted to acquire Figma for $20 billion in 2022, but the deal fell through due to antitrust scrutiny and a shift in Adobe's focus towards AI [7][13][14]. - Figma has experienced explosive growth during the pandemic, emphasizing real-time collaboration, which differentiates it from traditional software like Adobe's [10][12]. - Figma claims to have a strong market presence, with 95% of Fortune 500 companies reportedly using its platform, and it has over 13 million users, with a significant portion being high-value clients [19][22]. Group 2: Financial Performance - Figma reported a 48% revenue growth over the past 12 months, reaching $821 million, and boasts a free cash flow margin of 28%, surpassing the industry median of 18% [17][19]. - The company is nearing a break-even point in its finances, indicating a strong operational performance [19]. Group 3: AI Integration and Challenges - Figma's IPO prospectus mentions AI 150 times, highlighting its importance in the company's future strategy [24]. - While Figma aims to leverage AI to enhance its offerings, it acknowledges that short-term investments in AI may compress profit margins and operational profitability [26]. - Competitors like Framer and Penpot have already introduced advanced AI features, posing a challenge to Figma's market position [26][30]. Group 4: Competitive Landscape - Figma faces increasing competition from AI-native design tools that simplify the design process, potentially threatening its user base, especially among non-professional designers [30][31]. - The company is perceived as being in an experimental phase regarding AI, lacking a comprehensive strategy to address the challenges posed by emerging competitors [31].

Core Viewpoint - Adobe is expected to report its second-quarter fiscal 2025 results on June 12, projecting total revenues between $5.77 billion and $5.82 billion, with non-GAAP earnings between $4.95 and $5 per share [1][10] Revenue Projections - The Zacks Consensus Estimate for revenues is $5.79 billion, indicating an 8.99% growth from the previous year [2] - The Digital Media segment revenues are projected to be between $4.27 billion and $4.30 billion, suggesting a 9.3% year-over-year growth [3] - The Digital Experience segment revenues are anticipated to be in the range of $1.43 billion to $1.45 billion, with a consensus estimate of $1.43 billion indicating an 8.3% year-over-year growth [4] Earnings Expectations - The consensus mark for earnings has remained at $4.96 per share, reflecting a 10.71% growth from the year-ago quarter [2] Growth Drivers - Adobe's strong Generative AI portfolio and partnerships with major companies like Amazon, Microsoft, and Alphabet are expected to drive top-line growth [5] - The launch of Firefly Image Model 3 and enhancements to existing models have improved user experiences across Adobe's tools [6] - Increased adoption of Adobe Express by businesses and integrations with popular applications like ChatGPT and Google have expanded customer reach [7] Competitive Landscape - Adobe's Document Cloud AI Assistant is now integrated into various platforms, enhancing its utility for users [8] - Despite strong growth factors, Adobe faces stiff competition in the GenAI space and challenges in monetizing its AI solutions [9][20] Stock Performance - Year-to-date, Adobe shares have declined by 6.4%, underperforming the broader Zacks Computer and Technology sector and the Zacks Computer Software industry [11] - Adobe's current valuation is considered stretched, with a forward 12-month price/sales ratio of 7.22X, higher than the sector's 6.37X [14] Strategic Partnerships - Adobe's partnerships with Amazon and other tech giants enhance its offerings and customer base, particularly through the Adobe Experience Platform on Amazon Web Services [17] - The integration of Acrobat PDF technology into Microsoft Edge and Google Chrome is a significant advantage, contributing to rising free-to-paid conversions [17]