Figma shares fell 18% after its first earnings report as a public company

Figma shares dropped by nearly 20% on Thursday, hitting their lowest level since the company’s IPO in July 2024, after reporting earnings for the first time since going public.

The sharp decline dragged the stock well below its debut price, dealing a blow to what had once been hyped as one of the strongest tech IPOs in recent years. The numbers came in slightly above estimates, but they weren’t strong enough to stop the sell-off.

According to the earnings report, Figma posted second-quarter revenue of $249.6 million, up 41% year-over-year, and just ahead of the $248.8 million expected by analysts tracked by LSEG.

The results weren’t a surprise since the company had already shared preliminary figures more than a month earlier. But that didn’t stop the stock from collapsing.

Analysts at Piper Sandler called the earnings “largely a non-event,” pointing out that the stock has been swinging wildly since its debut, when it surged 250% on the first day.

Stock has lost over half its value since debut

The company, headquartered in San Francisco, opened trading in July at $33 a share, then exploded to $115.50 by the end of its first day. Since then, Figma has lost more than half of that value, closing around $66.85 on Wednesday before Thursday’s crash.

That brought the company’s total market capitalization down to about $27 billion. The drop was especially harsh given how big the IPO was for Silicon Valley, which had been waiting for a tech comeback after years of weak listings. The last major wave of IPOs had dried up in early 2022 when inflation and interest rates started rising fast.

Looking ahead, Figma expects to make $263 million to $265 million in revenue for the third quarter. That implies about 33% growth, which would beat the analyst consensus of $256.8 million, according to LSEG, and $261.7 million from FactSet. Even with those forward-looking numbers, investors weren’t convinced.

CEO Dylan Field said the company is still focused on expanding how businesses design products and engage users. “In this age of AI where it’s easier to build software than ever before, I think people are realizing that the average is not good enough, and you really have to invest in your system, your craft, your point of view,” Dylan said on the earnings call. He emphasized that Figma continues to add customers and grow within existing accounts.

The platform, which lets teams design and test digital products collaboratively, showed strong expansion in its customer base. The number of paid accounts with over $10,000 in annual recurring revenue increased by 31% from last year. Larger accounts, those spending over $100,000 a year, went up by 42%. Dylan said this growth includes businesses of all sizes—from big companies to small startups—spending more on design tools.

Company turns profit and commits to AI expansion

This quarter, Figma recorded a profit of $28.2 million, translating to breakeven per share, compared with a loss of $827.9 million a year earlier. That previous figure had been distorted by $858.4 million in stock-based compensation expenses, which didn’t appear this time. Analysts surveyed by FactSet were expecting earnings of 9 cents per share, so while Figma technically missed on EPS, the profit was a notable shift from last year’s massive loss.

Dylan said the company is leaning into AI after launching several new tools last quarter. These tools are part of a longer-term strategy to make AI a core part of product design. “We obviously believe that AI is super critical to how designer, developer workflows are going to evolve and exist moving forward,” Dylan said. “Our philosophy is that it should always be the case that as models get better, we get better.”

Retention metrics also got attention. Figma posted a 129% net retention rate, which shows how much more current users are spending. That figure is down slightly from the 132% reported in Q1, suggesting a minor slowdown in upsells or renewals.

This report was the company’s first official earnings release as a public company. While the revenue growth of 41% and future forecast of $1.02 billion for the full year line up with analyst expectations, Wall Street clearly wanted more. The projected 37% year-over-year growth wasn’t enough to hold investor enthusiasm, especially after the early rally that had pushed the stock to triple digits.

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