Sizing the Rivals

Sizing the Rivals

Adobe's Digital Media ARR growth decelerated five straight years — 19%, 15%, 14%, 13%, 11.5% — to an ending $19.20 billion, and its standalone AI products reached only ~$250 million of AI Direct ARR (about 1% of that book), even as Figma grows 41% with 136% net dollar retention in the adjacent collaborative-design pool, and Adobe folds its three segments into one from FY2026, removing the standalone Digital Media growth line as the competitive question sharpens.

Size both sides in the numbers as reported. Adobe's Digital Media book ended FY2025 at $19.20 billion of ARR, part of $25.2 billion of total company ARR [1]; against that, the standalone AI products Adobe has built so far — roughly $250 million of AI Direct ARR [2] — are about 1.0–1.3% of that book, while Figma, at $1.06 billion of revenue [3], is roughly 6% of Digital Media. The counter belongs in the same breath: net-new Digital Media ARR set a record in dollars in FY2025, with over 75% of it from subscriptions, cross-sell and upsell rather than price [4], and Figma's stronghold is the adjacent interface-and-product-design pool Adobe never won, not the imaging, photography and video work that anchors Creative Cloud. A slowing growth rate on a book still adding record dollars is a large franchise compounding, not a core being pulled out — the distinction the rest of this chapter sizes.

Two competitive fronts

Adobe faces competition on two distinct fronts, and conflating them overstates the danger. The first is an adjacent land-grab: well-funded software companies — Figma in collaborative interface design, Canva in prosumer and small-business creation — expanding into design work Adobe historically underserved. The second is generative substitution: image and video models (Midjourney, OpenAI, and a growing model layer) that commoditize the single act of "generate an asset" which Photoshop and Firefly monetize. Adobe's FY2025 10-K now names both — "web- and mobile-first design platforms" and "AI-first creativity and productivity tools" — as competition across every customer group [5]. The two fronts carry different economics, and the first is the one that shows up in a rival's revenue today.

That distinction is the missing external evidence behind the moat question the Creative Cloud Moat chapter left open: whether Adobe's decelerating-but-double-digit ARR reflects a franchise holding its base while ceding the fastest-growing new pools.

The field, sized

Sources: Adobe Digital Media revenue and growth, FY2025 10-K [6]; Figma revenue, growth and retention, FY2025 10-K [7] [8]; Canva figures are privately reported and unaudited.

The magnitudes set the scale of the contest. Adobe's Digital Media segment — Creative Cloud, Document Cloud, Express and Firefly — booked $17,649 million in FY2025, up 11% and 74% of company revenue, at a 95% gross margin [9] [10]. Figma turned over $1,056 million, up 41% [11]. Canva, still private, has publicly reported roughly $4 billion in annualized revenue growing about 35%, with 265 million monthly active users and its enterprise tier reaching roughly 95% of the Fortune 500. Autodesk — the closest listed design-software peer, in 3D, CAD and media — earned $7.2 billion, up 17.5%.

Sources: Adobe FY2025 10-K [12] [13]; Figma FY2025 10-K [14]; Autodesk FY2026 income statement [15]; Canva figures privately reported and unaudited.

Two things follow. Adobe remains, by a wide margin, the largest and by far the most profitable operator in the field: neither high-growth challenger yet earns a GAAP profit, and Figma's 41% growth comes at a 122% GAAP operating loss margin, cushioned by initial-public-offering stock compensation. And a mature, listed peer — Autodesk — grows faster than Adobe while earning a real margin, which locates Adobe's 11% growth as the low end of design software rather than an industry in decline.

Figma: expansion in the segment Adobe tried to buy

Figma is the most instructive rival because it competes exactly where Adobe conceded. Adobe agreed to buy Figma for $20 billion in 2022, abandoned the deal under regulatory pressure in 2023, and paid a $1 billion termination fee — cash that helped capitalize the competitor now in the market against it [16]. Adobe's own answer in this category, Adobe XD, was wound down. Figma listed on the NYSE in July 2025.

What Figma discloses is the metric Adobe does not: retention. Figma's net dollar retention was 136% in FY2025, up from 122% two years earlier — existing customers spent 36% more year over year [17]. Its customers paying more than $100,000 a year rose from 630 to 1,405 across two years, and those above $10,000 from 7,233 to 13,861 [18]. In the collaborative-design budget, spend is expanding and consolidating on Figma, not Adobe — and sell-side commentary now describes Figma as the industry standard in product design.

Source: Figma FY2025 10-K, Key Business Metrics [19].

The scale caveat matters as much as the trajectory. At $1.06 billion of revenue, Figma is about 6% of Adobe's Digital Media segment, and its stronghold — interface and product design — is adjacent to, not inside, the imaging, photography and video work that anchors Creative Cloud. Figma is taking a category Adobe never won, at a size that is still small against the incumbent core.

Generative substitution and the model layer

The second front is harder to size because the substitutes are mostly free or bundled. Text-to-image and text-to-video tools from Midjourney, OpenAI and others let non-professionals generate assets that once required a Creative Cloud seat, and they improve monthly. Adobe's response is to treat the model as a component rather than the product: its FY2025 10-K describes offering both its own commercially safe Firefly models and "an extensive ecosystem of third-party models," letting customers choose the model inside Adobe's applications [20].

The bet is that durable value sits in the workflow — the canvas, the file formats, the collaboration and the enterprise controls — not in whichever model is best this quarter. Figma is making the identical wager: its Figma Weave product "brings the world's leading AI models together with professional editing tools on a single, browser-based canvas," letting users pick Sora, Veo, Flux or others for a task [21]. That two independent incumbents converge on model-agnostic workflows is evidence the workflow layer is where the industry expects margin to accrue — but it is a shared thesis, not a proven moat, and it concedes that the generation step itself is commoditizing.

A ceiling more than a cliff

The measured read: the competition is real and now quantifiable, but the evidence does not show Adobe's installed Creative base being pulled out. It shows the challengers capturing the faster-growing new pools — collaborative interface design and non-designer creation — while Adobe's professional core renews, which is consistent with a franchise growing 11% rather than one losing revenue. The risk this frames is slower growth, not a near-term contraction in revenue, and it fits the price already discussed in Implied Growth: a market valuing the franchise as though growth fades toward a stall.

The strongest fact against that read is Figma's retention. Net dollar retention of 136% and a $100,000-plus customer count that more than doubled in two years show enterprise design budgets compounding on a rival — and Adobe discloses no comparable retention figure of its own, so a deterioration behind its held 11% growth could be masked, particularly with FY2025 Creative Cloud price actions flattering reported ARR. That visibility gets worse, not better: from Q1 FY2026 Adobe collapses its three reportable segments into one, removing the standalone Digital Media growth line exactly as the question sharpens [22].

What would turn slowing growth into an actual decline: Figma's expansion pattern spreading from interface design into Adobe's imaging and video core; a listed rival disclosing accelerating share of enterprise creative seats; or Adobe's own net-new ARR rolling over once the segment veil lifts and price effects normalize. Absent those, the challengers are growing fast in the rooms next door — not yet inside Adobe's.