Figma Shares Rally as Strong Earnings and AI Initiatives Drive Growth
Figma’s stock experienced a significant surge of 15% in after-hours trading Wednesday, following the design software company’s release of robust financial results and forward-looking guidance that exceeded Wall Street’s expectations. This performance comes at a critical juncture for the software sector, which has been under pressure from investor concerns about the potential impact of generative artificial intelligence on growth prospects.
The company reported fourth-quarter earnings per share of 8 cents on an adjusted basis, surpassing the 7 cents projected by LSEG consensus. Revenue for the quarter reached $303.8 million, also beating the expected $293.15 million. This represents a substantial 40% year-over-year increase in revenue. While the company posted a net loss of $226.6 million, or 44 cents per share, for the quarter, this compares to a net income of $33.1 million, or 15 cents per share, in the same period of the previous year.
Looking ahead, Figma projects first-quarter revenue to be between $315 million and $317 million, indicating an anticipated growth rate of 38%. This outlook outpaces the $292 million anticipated by LSEG analysts. For the full year 2026, Figma forecasts adjusted operating income between $100 million and $110 million, with revenues projected to range from $1.366 billion to $1.374 billion, suggesting a 30% revenue growth. The LSEG consensus for 2026 revenue was $1.29 billion.
The broader software industry has recently faced headwinds, with generative AI technologies sparking debate about their potential to disrupt existing business models. As of Wednesday’s market close, Figma’s shares had seen a year-to-date decline of approximately 35%, a trend mirrored by the iShares Expanded Tech-Software Sector Exchange-Traded Fund, which slipped 22%. In contrast, the S&P 500 index has seen modest gains of nearly 1% over the same period.
Despite broader market anxieties, Figma demonstrated strong customer retention and expansion. The company reported an increase in net dollar retention from clients contributing at least $10,000 in annualized revenue to 136% from 131% in the third quarter, exceeding internal expectations.
“If you look at software, not only is it not going away. There’s going to be way more of it than ever before,” stated Dylan Field, co-founder and CEO of Figma, in a recent interview. However, he acknowledged that the market is “potentially increasingly competitive.”
Figma, which went public in July, is strategically positioning itself to capitalize on the growing adoption of AI in design processes. Its Figma Make tool leverages AI models from Anthropic and Google to generate app prototypes from simple text prompts. The company highlighted that over half of its customers with annual revenue exceeding $100,000 had employees utilizing Figma Make weekly during the quarter.
Significantly, Figma has been optimizing the cost of its AI services. Praveer Melwani, the company’s finance chief, noted that they have successfully reduced the operational costs associated with Figma Make for end-users through infrastructure enhancements. This efficiency has been maintained even as weekly active users of Figma Make saw a 70% increase from the third quarter, with adjusted gross margins holding steady at 86%.
Monetization of AI capabilities is set to increase. Beginning in March, Figma will implement monthly AI credit limits for various account tiers, with clients opting for usage-based payments or AI credit subscriptions. Melwani observed a “power law distribution” in AI usage, where a select group of users within organizations derive disproportionate value, often exceeding intended limits. The company anticipates this trend to continue evolving.
In a move to broaden its enterprise reach, Figma also announced a strategic collaboration with ServiceNow. This partnership aims to streamline the conversion of design concepts into enterprise-ready applications.
Analysts have responded positively to Figma’s strategic direction. Rishi Jaluria, an analyst at RBC, noted “positive commentary around both Figma Make and Figma Design, indicating increased adoption of AI workflows across Figma’s platform.”
Figma also sees opportunities to expand its user base beyond traditional designers, developers, and marketers. Field indicated that product managers are increasingly engaging with Figma files, and there’s potential to serve other roles such as UX researchers. This expansion into new use cases could further fuel growth and solidify Figma’s position as a comprehensive collaborative design platform.
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