Figma Reports 41% Revenue Growth

Figma (NYSE:FIG) reported Q2 2025 earnings on July 28, 2025, delivering $250 million in quarterly revenue (41% year-over-year revenue growth), a 5% non-GAAP operating margin, and a 24% adjusted free cash flow margin. Management announced multi-product expansion, new product launches, key M&A activity, and margin pressure from increased AI investment, while providing initial public guidance for Q3 and FY2025 operating results and revenue, setting the tone for evolving reporting methodology and near-term reinvestment.

This summary analyzes strategic expansion impacts, AI-led investment trade-offs, and evolving business model signals from Figma's inaugural earnings call as a public company.

Figma multiplies platform scope with accelerated product launches

Figma doubled its product portfolio at the Q2 Config conference, introducing Figma Make, Draw, Sites, and Buzz, while also making two acquisitions (Modify and Payload) to enhance product capabilities. These moves helped support 41% year-over-year revenue growth and expand cross-product adoption, as more than 80% of customers used two or more products and two-thirds use three or more.

"At Config, we launched four new products, doubling our product offering. These products are Figma Make, Figma Draw, Figma Sites, and Figma Buzz. We also launched our dev mode MCP server, which speeds up developer workflows by bringing context from Figma Design into any surface that consumes MCP, for example, IDs like Versus Code and Cursor. In Q2, we also made two exciting acquisitions, a company called Modify, support our work around visual expression, and Payload, an open-source company with a strong developer community that offers a leading headless content management system and application framework."
-- Dylan Field, Co-Founder and Chief Executive Officer

This aggressive expansion positions Figma as a unified platform for the broader product development lifecycle, enhancing customer lock-in and expanding the addressable market beyond core design users.

AI-driven innovation to pressure near-term margins for Figma

Gross margin (non-GAAP) declined to 90% and management forecasted further near-term margin pressure due to increased AI model (inference) infrastructure spending to support the rollout of Figma Make and future AI features. The company maintained a $1.6 billion cash balance to fund this investment, signaled willingness to deepen reinvestment at the cost of shorter-term profitability, and explicitly guided for FY2025 revenue of $1.021 billion to $1.025 billion, representing 37% year-over-year growth at the midpoint and non-GAAP operating income of $88 million to $98 million for FY2025.

"We anticipate that we will see further gross margin compression in the near term as we roll out our AI products, including FigmaMake, and recognize increases in inference spend. This is the largest driver of the quarter-over-quarter change in our gross margin. We view this as an investment in our products, our product differentiation, and meeting the evolving needs of our customers."
-- Praveer Melwani, Chief Financial Officer

The explicit commitment to prioritize sustained innovation over near-term margins signals a clear, long-term value creation strategy and demonstrates management's discipline in capital deployment and market positioning.

Figma’s evolving business model and pricing approach deepen customer penetration

With new pricing and packaging rolled out in March 2025, Figma migrated all monthly customers and began updating annual contracts at renewal, aiming to increase ARPU through multiproduct seats and admin control improvements; this transition is expected to drive a mid-to-high single-digit percentage growth tailwind for the year. Net dollar retention for accounts spending over $10,000 in annual recurring revenue (ARR) reached 129%, underpinned by seat expansion and multiproduct adoption.

"We introduced the concept of a multiproduct seat giving more functionality to each user. Second, we changed the admin upgrade experience, effectively empowering our admins to have explicit approval authority prior to a new user being provisioned. And lastly, we increased the price of our full user seat type."
-- Praveer Melwani, Chief Financial Officer

Effective execution on packaging and seat expansion initiatives is building durable, high-quality recurring revenue streams that support Figma’s move upmarket and provide leverage as adoption of new tools matures.

Looking Ahead

Management guided Q3 2025 revenue to $263 million to $265 million and full-year FY2025 revenue to $1.021 billion to $1.025 billion, implying 37% year-over-year growth at the midpoint, with full-year non-GAAP operating income guidance of $88 million to $98 million. The company plans to evolve its monetization models, adding usage-based pricing alongside seat-based subscriptions, and expects continued pressure on non-GAAP gross margin as AI products scale. No additional segment-level or quantitative product adoption guidance was provided, and management explicitly reserved the right to update metric disclosures in future periods as its business model and revenue mix evolve.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.