Adobe announced on Thursday that it will acquire Figma, a maker of design tools, for about $20 billion in cash and stock. The stock of Adobe plummeted 17%, the most since 2010.

Making cloud-based design software that enables real-time collaborative collaboration, Figma was founded in 2012. It competes with Adobe’s XD programme.

The business was valued at $10 billion on the previous financing round in 2021.

Figma, which includes Index Ventures, Greylock Partners, and Kleiner Perkins, is expected to generate more than $400 million in annual recurring revenue this year, according to people familiar with the company’s finances. By the end of 2022, Figma’s ARR will surpass $400 million, according to Adobe.

That means Adobe is paying close to 50 times revenue at a time when cloud software sales multiples are sharply declining from their record highs established last year. The top cloud companies in the BVP Nasdaq Emerging Cloud Index’s forward multiples have dropped from more than 25 times revenue in February 2021 to just over 9 times revenue at present.

According to Adobe, the platform for Figma would incorporate a few capabilities from its other products, including graphics, photography, and video technologies. Photoshop, Illustrator, Premiere Pro, and other software services are available from Adobe for purchase by professionals in the picture and video industries.

According to Adobe CEO Shantanu Narayen, “Adobe’s excellence has been rooted on our ability to build new categories and provide cutting-edge technology through organic innovation and inorganic acquisitions.” “Adobe and Figma working together is a game-changer and will help us realise our goal for collaborative innovation.”

Dylan Field, co-founder and CEO of Figma, will remain in that position after the transaction is completed. He will report directly to Adobe’s head of digital media, David Wadhwani.

Additionally, the third fiscal quarter results for Adobe were made public. The adjusted earnings per share of $3.40 outperformed the Refinitiv expectation of $3.33. Analyst predictions were met by the $4.43 billion in revenue it posted.

The company gave inconsistent guidance for the fourth quarter of the current fiscal year. Adobe estimated that their quarterly revenue will be $4.52 billion as opposed to the $4.6 billion consensus projection, according to StreetAccount. With adjusted earnings of $3.50 per share, it expects to surpass StreetAccount’s forecast of $3.47.