Adobe's management did something in June that the disruption script did not anticipate. It deferred planned Creative Cloud price increases and leaned harder into a free tier that now carries more than 90m monthly active users — deliberately trading near-term subscription revenue for reach. Figma, reporting on 5 August, went further: its newest AI features, including an in-product agent, Code Layers, Motion, Shaders and the prompt-to-design tool Make, carry no price at all and are excluded from guidance entirely.

Both companies are absorbing the cost of generative AI rather than billing it. That is the opposite of what the bear case predicted, which was that AI would erode the per-seat subscription while the vendor had nothing to replace it with. What is happening instead is that the seat is holding and the AI is free.

Adobe: the price cut it chose

Adobe, which sells Photoshop, Illustrator and Premiere to professional creators and Acrobat to nearly everyone else, grew revenue 12.7% to $6.62bn in its May quarter — a record, and the fourth consecutive quarter of acceleration. Total annual recurring revenue reached $27.1bn, up 12.5%. Roughly $480m of that came from Semrush, the search-optimization vendor Adobe bought for about $1.9bn in April.

Strip the acquisition and the company's own ARR growth target falls to about 8.3%. Management attributed roughly half the reduction to deferring price increases and half to freemium expansion. Against that, AI-first ARR tripled year on year past $500m, with Firefly approaching $300m.

Generative compute is invisible in Adobe's cost of revenue: gross margin sat at 89.2%, versus 89.1% a year earlier. The strain is one line down. Operating income grew 6.1% against 12.7% revenue, and operating margin fell from 35.9% to 33.8%. Net income rose 1.2%; earnings per share held up mainly because the share count fell 7.2% in a year. Chief financial officer Dan Durn left four days after the print, and RBC cut its price target citing the exit and the ARR change.

Figma: AI as a cost of goods

Figma, the browser-based design canvas product teams use to draw and hand off interfaces, grew revenue 48.2% to $370.1m — its third straight acceleration. Net dollar retention was 136%, and customers spending over $100,000 a year rose 46%. More than 80% of its larger paid customers consume AI credits weekly, and about two-thirds of expansions come from adding full seats at renewal. The seat is not being deleted; it is being bought.

The bill arrives in cost of revenue. GAAP gross margin fell to 83.7% from 88.8%, gross profit grew 39.6% against 48.2% revenue, and the operating line swung from a $2.1m profit to a $117.3m loss. The number that has not been priced: gross margin rose 4.3 points sequentially, from 79.4%, while the new AI products remain free. Non-GAAP gross margin was 85%, up 2.5 points, with a 14% free-cash-flow margin and $1.7bn of cash. Management ascribes the volatility to unmonetized launches and routes inference across multiple model providers and its own first-party models to control it. Third-quarter guidance implies deceleration to about 36%.

The competitive field, meanwhile, widened: Google upgraded its free design canvas Stitch in March and Anthropic launched Claude Design in April, turning a near-monopoly into a crowded field. Figma also disclosed the departure of its chief product officer and chief marketing officer, with a chief technology officer search underway.

The group is not one business

Creative software as a category rose about a third over the past month, but Unity supplied 44% of that average by itself — and Unity is no longer a design-seat business. Its advertising arm grew 63% year on year and its Vector ad platform passed a $1bn run rate two quarters early; that is a mobile ad network, not a creative tool. Autodesk, which sells AutoCAD and Revit to engineering and construction firms, grew revenue 18.4% and trades at 35x trailing earnings — it was never de-rated in the first place.

Neither Adobe nor Autodesk reported inside the window. Adobe's last results were 11 June, and its 25% advance since late July is multiple repair on a rotation out of expensive semiconductor names into beaten-down application software. Its 50-day average crossed above its 200-day on 18 August, the first non-bearish reading in roughly a year. Excluding the concentrated late-July rotation sessions, Adobe is up only about 9.6% across 19 trading days, eight of them down — a grind, not a gap. Figma's month was stranger still: it fell 14.9% the session after its beat-and-raise, then rebuilt the gain over the following ten sessions.

On price per dollar of gross profit — the fair comparison, since the two carry margins five points apart — Adobe trades at 4.89x trailing and 4.65x forward, against 4.40x in late July and a five-year median trailing price/earnings ratio near 42. It sits at 11.3x forward earnings with a 9.7% free-cash-flow yield. Figma is at 13.26x trailing gross profit, 2.7 times Adobe's, though below its own 13.91x reading of 29 July: gross profit grew faster than the share price. Its final lockup expires on 31 August, freeing venture holders of more than half the company.

The setup

Where it stands — Both companies are absorbing AI cost while demand accelerates; neither has yet turned generative usage into a priced billing unit. Would confirm — Figma's gross margin extending its sequential recovery above 85% GAAP, and Adobe's September quarter showing net-new Digital Media ARR stabilizing. Would invalidate — Adobe's organic ARR growth falling below 8% or Figma's third-quarter growth undershooting the 36% implied guide. Watch next — Figma's final lockup expiry on 31 August; Adobe's fiscal third-quarter results in September. Valuation — Adobe 15.78x trailing and 11.32x forward earnings; Figma 13.26x trailing gross profit versus Adobe's 4.89x.