Figma’s stock saw a significant surge in after-hours trading on Wednesday, climbing as much as 15% following the release of its fourth-quarter earnings report. While the stock ultimately closed up 7% on Thursday, the initial enthusiasm highlighted investor optimism around the design software maker’s performance and future outlook.
The company reported robust fourth-quarter revenue of $303.8 million, marking a substantial 40% year-over-year increase. This figure surpassed analysts’ expectations. However, Figma posted a net loss of $226.6 million, or 44 cents per share, a shift from the $33.1 million net income ($0.15 per share) recorded in the same quarter of the previous year.
Looking ahead, Figma provided an optimistic forecast for the first quarter, projecting revenue between $315 million and $317 million. This guidance indicates an anticipated year-over-year growth of 38%, considerably higher than the $292 million expected by analysts surveyed by LSEG.
Analysts at Bank of America acknowledged the solid fourth-quarter results, emphasizing that the company’s forward-looking guidance was the standout element. They believe that Figma’s core growth drivers are firmly in place. However, they also cautioned that broader market uncertainties could still present some headwinds for the stock.
“Figma’s AI monetization timeline appears to be on track,” noted the Bank of America analysts in a Wednesday report. “Nevertheless, shares may continue to face pressure until tangible revenue figures related to AI are disclosed, particularly given the prevailing bearish sentiment surrounding applications in general.”
In recent months, the broader technology sector, especially software companies, has experienced considerable investor apprehension regarding the potential disruption posed by artificial intelligence. This concern has triggered a significant sell-off across the sector, with the iShares Expanded Tech-Software Sector ETF registering a decline of over 20% year to date.
Figma, having been caught in this market downturn, has been actively integrating AI capabilities into its product offerings. In a significant development announced on Tuesday, the company revealed a new partnership with the artificial intelligence startup Anthropic. This collaboration is expected to enhance Figma’s AI-driven features and further solidify its position in the evolving tech landscape.
Figma CEO Dylan Field addressed the market sentiment in a recent interview, stating, “If you look at software, not only is it not going away, there’s going to be way more of it than ever before.” He did, however, acknowledge that the market is “potentially increasingly competitive.”
Analysts at Morgan Stanley observed that even Figma’s “best-in-class growth rates” have not been enough to shield its shares from the “rising tide of investor concerns around the disruptive impacts of GenAI.” They further commented that the company’s fourth-quarter performance indicates it is a strong participant in the AI innovation cycle, rather than a company at risk of being disrupted.
The Morgan Stanley team highlighted the increasing adoption of Figma’s AI-powered tools, the expansion of its partnerships with AI firms, and the development of competitive monetization strategies as key indicators of its strong market position.
“In conclusion, we feel more optimistic about Figma’s expanding solution portfolio and its positioning in an AI-driven world following the Q4 earnings release,” the analysts wrote in a Thursday note. “With shares having experienced a considerable pullback, we see a much more attractive risk/reward profile for the stock.”
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/19021.html
