Adobe to acquire Workfront for $1.5 Billion
Adobe has been a leader in the graphics and visual software industry for decades, but hasn’t offered collaboration tools. The company’s shares, which have climbed 43% this year, declined 4.8% to $471.14 at the close in New York.
Adobe Inc. said it will acquire Workfront Inc. for $1.5 billion to add a collaboration tool to its marketing software, providing expanded offerings during a pandemic that has forced companies to maintain productivity while employees work from home.
The deal is expected to close sometime from December to February 2021, San Jose, California-based Adobe said Monday in a statement. Workfront, based in Lehi, Utah, will take its 3,000 corporate customers and 1 million users to the software maker best known for Photoshop. Bloomberg earlier reported that the acquisition could come as soon as Monday.
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After recent stumbles, the acquisition is Adobe's biggest effort to reorient its Experience Cloud division, which includes marketing, advertising and analytics software, toward areas that are growing. The company has sought to make its creative and business applications more collaborative, so that teams can more easily work together on projects. During the Covid-19 pandemic, businesses have found it essential to have better communication among colleagues working remotely. Adobe has curtailed some of its advertising services that had a low profit margin and said it had a new strategy of catering to customers that use multiple Experience Cloud tools.
Unlike other makers of work productivity tools, including Asana Inc. and Atlassian Inc., which owns Trello, Workfront is focused on marketers, who use the software every day to “manage content, plan and track marketing campaigns and execute complex workflows across teams,” Adobe said in the statement. Marketers are also major clients for Adobe, which already integrates several of its products with Workfront's offering.
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Workfront will be Adobe's fifth-biggest acquisition, according to data compiled by Bloomberg.
The purchase marks the first major action by Anil Chakravarthy, an executive vice president, who joined Adobe in January after serving as chief executive officer of Informatica LLC. Chakravarthy said in an interview that Adobe and Workfront have more than 1,000 mutual clients.
“Every customer that we talk to is investing more and more in digital marketing,” he said. “They want to get more efficiency out of digital marketing efforts. They want to get more agility and speed into their digital marketing efforts. As the investments grow the amount of work involved in marketing, is growing exponentially and they really need a system to be able to manage work so they get the right efficiency, productivity and collaboration across their teams.”
Workfront has seen interest in its software increase during the pandemic as marketing companies seek to get more insight into which employees are working on what part of a project, Alex Shootman, Workfront's chief executive officer, said in an interview. The Adobe acquisition, he said, is an “awesome outcome.”
“When you have an opportunity to work with the company that CMOs rely on to run their business, which is Adobe, and you're a company like Workfront, that takes us forward years in terms of what we would have been able to accomplish on our own,” Shootman said.
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Shootman will continue to run the Workfront team and will report to Chakravarthy when the acquisition is completed.
Workfront has raised about $100 million to date, according to PitchBook. Last year, W Capital Partners, Susquehanna Growth Equity and AllianceBernstein's AB Private Credit Investors acquired a minority stake in the company after buying out some of its investors for $280 million. It's also backed by OpenView, Greenspring Associates and JMI Equity.
The company, formerly known as AtTask, was founded in 2001 by Scott Johnson, who is now its chairman. Workfront said last year that it had generated $200 million in revenue in 2018.
By Nico Grant, Liana Baker, and Katie Roof
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