Adobe reports 1 billion monthly active users across its businesses, a figure that grew more than 20% year over year in the third quarter of fiscal 2026. The company also achieved $6.76 billion in revenue for that same quarter, representing a 13% increase compared to the previous year. Despite these numbers, Adobe’s stock price fell approximately 37% in 2026. Bank of America analyst Tal Liani assigned the company an Underperform rating and a $190 price target, arguing that the company faces fundamental challenges. Liani projects that revenue growth will decelerate from 10.5% in 2025 to 8.8% in fiscal 2027. The core issue stems from generative AI delivering creative output at low or near-zero cost, which threatens the casual and occasional users who form a significant portion of the Adobe subscriber base.
Figma, meanwhile, saw its stock fall about 44% in 2026. However, BofA analyst Tal Liani maintains a Buy rating for Figma with a $30 target. He argues that Figma occupies the coordination layer where enterprises stitch AI-generated designs into products, making it harder for AI to replace the platform. Figma has also implemented a usage-based monetization model where customers pay per seat and receive AI credits. If they exceed these limits, they pay more. In the first quarter, more than 75% of enterprise users who hit their credit cap purchased additional credits. Figma’s paid users reached 690,000 at the end of that quarter, which is a 53% increase year over year.
| Feature | Figma | Adobe Creative Cloud |
|---|---|---|
| Primary Focus | UI/UX and digital product design | Photography, illustration, video, and print |
| Pricing Model | Per seat with AI credit allocation | Per-seat subscription |
| AI Capability | Figma Make, Dev Mode, AI assistance | Adobe Firefly, Creative Agent |
| Deployment | Browser-based | Native desktop applications |
| Collaboration | Real-time multiplayer editing | Creative Cloud Libraries and Team sharing |
The massive financial gap between competitors
Adobe possesses a level of capital that Figma cannot match. Adobe’s Firefly has already generated $400 million in direct revenue and contributed 11% of Creative Cloud’s new annual recurring revenue in fiscal 2024. Figma ended the third quarter of 2025 with $1.6 billion in cash. However, Figma’s annual research and development spend reached $834 million, and the company must fund expensive AI inference costs. Adobe can outspend Figma on AI development by a factor of 17.
Figma’s stock has struggled since its July 31, 2025, IPO. The company floated 6% of its shares at $33 per share, and the stock opened at $85. By January 2026, the stock lost 81% of its peak value and traded around $30. This decline follows the expiration of lock-ups and insider selling, such as CEO Dylan Field’s plan to sell up to 3 million shares. Figma’s current trading price represents about 13x trailing revenue, which is still a premium compared to Adobe’s 5.8x multiple.
The failed Adobe acquisition of Figma provides Figma with a significant cash cushion. Adobe agreed to pay a $1 billion breakup fee to Figma following the termination of their merger agreement due to regulatory concerns. Figma had previously raised $333 million in total funding. This $1 billion payment represents nearly triple the total capital Figma raised. For a company with 1,400 employees, this fee could cover two to three years of operating expenses.
Adobe struggles to convert massive user growth into revenue
Adobe’s strategy relies on expanding its user base through freemium models and deepening engagement with agentic experiences. The company’s total monthly active users exceeded 1 billion, and creative freemium monthly active users surpassed 100 million, growing more than 70% year over year. AI-first annual recurring revenue exceeded $650 million and grew more than 150% year over year. While these figures show growth, investors worry about whether Adobe can turn this massive user expansion into sustained, high-margin revenue.
Adobe’s management acknowledged that they prioritize freemium user acquisition and engagement before focusing on conversion. This decision led to a roughly 36% to 37% year-over-year decline in net new annual recurring revenue. The company also notes that deferred pricing actions in the Creative Cloud could have provided short-term support, but they believe expanding the user base is more important for long-term growth.
The company’s leadership is also in transition. Shantanu Narayen will become Executive Chair, and Anil Chakravarthy will take over as CEO on December 1. This change comes as the company navigates a difficult period where the stock has dropped more than 24% since the start of 2026, while the Nasdaq 100 rose about 14.5%. Will the new leadership successfully convert the hundreds of millions of free users into paying subscribers?
Figma dominates the professional design workflow
Figma maintains a massive lead in the UI/UX design space, where its market share sits between 80% and 90%. Adobe’s comparable product, Adobe XD, is losing market share to Figma, and Adobe stopped active development on XD in 2023. Figma’s strength comes from its browser-based, multiplayer environment. Product teams use it for wireframing, high-fidelity design, and developer handoff through Dev Mode.
Figma’s developer handoff workflow remains tighter than Adobe’s. Dev Mode gives developers access to measurements, CSS values, and exportable assets. This tool is included in paid Figma plans. For teams where the design-to-code gap creates operational problems, Figma provides a more integrated solution.
| Metric | Figma Status | Adobe XD Status |
|---|---|---|
| Market Share (UI/UX) | 80-90% | Rapidly losing share |
| Active Development | Active | Stopped in 2023 |
| Primary Interface | Browser-based | Legacy/Desktop |
| Developer Handoff | Dev Mode (included in paid plans) | Requires third-party tools or XD |
Professional designers often prefer Figma for building digital design systems because of its component system. This system uses nested components, variants, and variables to allow for easy updates. Teams building digital products find the real-time collaboration and shared component libraries more practical than Adobe’s tools.
Adobe Firefly leads in generative asset production
Adobe’s generative AI platform, Firefly, holds a dominant position in the AI design tool market. Firefly has generated over 24 billion AI assets and commands 29% of the market. This puts it ahead of competitors like Midjourney, Canva AI, or DALL-E. Firefly is embedded directly into Photoshop, Illustrator, and Premiere, meaning users do not need to learn a new workflow or purchase a separate tool to use these capabilities.
Figma’s AI tool, Figma Make, launched in July 2025. While it has seen adoption, with 30% of customers spending over $100,000 in annual recurring revenue using it weekly by the third quarter of 2025, it holds only about 2% of the market. Figma also subsidizes its AI inference costs to drive adoption, as the company does not currently enforce credit limits on its full seats. This decision impacts Figma’s gross margins, which stood at 86% in the third quarter, down from previous periods.
Adobe’s Firefly generates revenue through a credit-based consumption model. This model allows users to start generating content within their existing subscriptions and then upgrade to premium tiers as their usage increases. In fiscal 2024, Firefly generated $400 million in direct revenue.
The battle for enterprise collaboration
Figma focuses on the collaboration layer, where designers and stakeholders work together in the cloud. This functionality appeals to product managers, writers, and developers, not just designers. Figma’s ability to allow ten designers to work in the same file simultaneously is a major advantage for product teams.
Adobe’s collaboration capabilities are centered on Creative Cloud Libraries and Team features. These tools sync assets across applications, but they do not provide the same multiplayer experience as Figma. For agencies focusing on print, photography, or video, Adobe remains the standard. These professionals often use Illustrator for vector assets, Photoshop for retouching, and InDesign for print production.
Many creative agencies use both platforms to cover different needs. They use Adobe for brand and print assets and Figma for web and digital product design. For a freelance UI/UX designer, Figma at $15 per month is significantly cheaper than the Adobe All Apps plan at $59.99 per month. However, if a designer needs professional photo retouching or advanced illustration, they must use Adobe.
Acrobat and the shift toward agentic productivity
Adobe is transforming Acrobat from a PDF tool into an AI-powered document productivity platform. The company reports that people open more than 400 billion PDFs with Acrobat every year. Acrobat AI Assistant has seen its monthly active users double quarter over quarter. Adobe is also extending Acrobat’s reach to platforms like ChatGPT, Chrome, Claude, Microsoft Edge, and WhatsApp.
The company introduced the Adobe Productivity Agent to help users understand information in documents more quickly. This includes features like interactive reports, summary slides, and audio formats. New capabilities like Knowledge Base and Analyzer allow teams to ask questions across massive document collections. These tools aim to help users extract structured insights from thousands of files.
Adobe’s expansion into the productivity space competes with other players in the document and whiteboarding markets. Figma acquired the whiteboarding tool FigJam and has expanded its product suite to include Figma Slides and Dev Mode. In certain regions, such as Europe, Figma competes with Miro, which currently serves much of that market.
Divergent paths for market expansion
The creative cloud market is growing, with experts projecting the total visual cloud market will grow 13.5% annually to reach $237.3 billion by 2029. AI is viewed as a catalyst that could quadruple this market. Adobe is focusing on localized solutions to expand into high-growth regions like EMEA and APAC.
Figma is also seeking growth in new territories. While it has a strong presence in the US, it is making inroads in Europe. Figma’s growth strategy involves moving beyond UI/UX design to include more of the product development stack. The company acquired the team behind Bud, an AI agent platform, and has integrated with tools like Claude Code to improve its capabilities.
The competition between these two companies remains centered on different workflows. Adobe targets the professional creator and the enterprise needing heavy-duty creative tools. Figma targets the product team needing a unified, collaborative environment for digital design. The winner of the AI era will likely be the platform that successfully embeds AI into these existing, high-frequency workflows.
Maintaining a lead in professional creative tools
Adobe remains the dominant force in professional-grade creative work. Photoshop and Illustrator have deep plugin ecosystems built over decades, which Figma cannot match. For high-fidelity interactive prototypes, Figma is the better choice, but for motion and animation that feeds into video, After Effects has no peer.
Adobe’s strategy involves using its $5 billion cash reserve to accelerate research in collaborative web-based interfaces and AI. The company also recently agreed to acquire Topaz Labs to integrate its AI enhancement technology into Firefly and Creative Cloud. This acquisition is expected to close in the fourth quarter, subject to regulatory approvals.
Figma has the advantage of being a specialized, focused tool for design teams. Its users praise the ease of use and the ability to build responsive designs using Auto Layout and components. For professional designers, the choice between Adobe and Figma is often a matter of which specific task they are performing at that moment.
