Figma’s Shares Drop After IPO Results
Figma’s shares took a hit, falling 14% in after-hours trading on Wednesday, following the release of its first public offering results from July.
Here’s a quick glimpse of how Figma’s performance stacked up against market expectations:
- Earnings per share: break even
- Revenue: $249.6 million, slightly ahead of the $248.8 million estimate
The company reported a 41% year-on-year revenue increase for the second quarter, totaling $249.6 million compared to $177.2 million the previous year. In July, Figma gave a preliminary revenue range of $247 million to $250 million in a regulatory submission. Since this was Figma’s initial revenue report, it lacks profit projections.
Net income reached $846,000, a significant recovery from a loss of $827.9 million during the same period last year. The adjusted operating income came in at $11.5 million, down from a previous estimate of $12 million.
For the upcoming third quarter, Figma expects revenue between $263 million and $265 million, indicating a roughly 33% growth in the middle of that range. Market expectations were set at $256.8 million.
The company also projects its adjusted operating income for the year to be between $88 million and $98 million, translating to earnings exceeding $1.02 billion. This revenue range points to a growth of around 37%, surpassing the $10.1 billion consensus from market analysts.
Figma saw increased revenue from customers thanks to the introduction of DEV mode, which assists software developers in implementing designs created by designers. Still, Figma’s co-founder and CEO, Dylan Field, mentioned that momentum is expected to slow down in the third quarter.
Recently, Figma launched Figma Make, an AI-powered tool that generates app and website designs based on user descriptions. The company has also made strides by acquiring assets from the vector graphics startup Modyfi.
The company is beginning to charge for its AI product, although it states that it has incorporated basic costs into the model. There are no forecasts available for Q3’s adjusted operating profit.
During an analyst call, Praveer Melwani, Figma’s finance chief, noted the plan to inform customers about options for purchasing additional AI credits in the future.
This year, numerous software vendors are feeling the heat over AI-related concerns and their impact on business. Field remarked that he doesn’t view AI as a replacement for designers. In fact, he emphasized that as software development becomes easier thanks to AI, the role of human designers will only grow more significant.
Figma’s net retention rate stands at 129%, which indicates growth among existing clients, though it’s a slight decline from 132% in the previous quarter.
With the IPO completed, Figma anticipates that a lockup period for approximately 25% of employee shares will end after market close on September 4.
Investors owning half of Figma’s Class A shares have agreed to an extension on lockup, even as the final 35% of shares expired in August 2026. Field expressed a desire to provide clearer information to investors.
On Wednesday, Figma’s stock closed at $68.13, having been priced at $33 during the IPO and rising to $115.50 on its first day.
Figma now counts 1,119 customers generating annual revenues exceeding $100,000, up from 1,031 in March.
As of June 30, the company had approximately $1.6 billion in cash, cash equivalents, and marketable securities.
Field downplayed ambitions that might align the company with high-profile figures like Michael Saylor, clarifying that Figma is a design company, truly separate from the Bitcoin arena. Still, he acknowledged the balance sheet’s role in a broader financial strategy.
