Figma's Q3 Disappointment: A Welcome Correction or a Buying Opportunity?

Figma's Q3 figures met expectations but forecasts disappointed, leading to a stock correction. The company's valuation is high, but its intrinsic quality remains strong due to its niche market, high margins, and significant customer base. Figma's leadership in UX/UI design, combined with its focus on artificial intelligence, positions it well for future growth despite its current valuation.

Figma's Q3 earnings report, released on September 3, 2025, met revenue expectations but fell short of investor forecasts, leading to a significant stock correction. The design software company reported $263 million in revenue, which was in line with analyst expectations of $256.8 million. However, the company's guidance for the third quarter and full year disappointed investors, with revenue forecasts of $263 million to $265 million for the third quarter and $1.02 billion to $1.025 billion for the full year, both below the LSEG consensus.

Despite the revenue growth of 41% year over year in the second quarter, Figma's net income of $846,000 was not enough to offset the losses from the previous year. The company's adjusted operating income was $11.5 million, which was above the prior estimate of $9 million to $12 million. However, the GAAP operating margin of 1% was a stark contrast to its non-GAAP 5%, highlighting the cost of scaling AI initiatives and expanding its enterprise footprint.

Figma's high forward price-to-sales (P/S) ratio of 68.6x raised concerns among investors about its valuation. The company's intrinsic value was estimated at $3.91 per share, implying a 1,875% overvaluation compared to its LTM EBITDA of -$843.11 million and a -94% operating margin. These metrics suggest that Figma's valuation is built on speculative optimism rather than sustainable earnings momentum.

Figma's leadership in UX/UI design and focus on artificial intelligence position it well for future growth. The company's product launches, such as Figma Make and Figma Sites, and its strategic acquisitions of Modyfi and Payload, have expanded its capabilities into development and AI-driven workflows. However, the company's aggressive AI investments are eroding margins, with projected 2026 gross margins dropping to 83%.

In comparison, Figma's primary competitor, Canva, has maintained profitability since 2017 while scaling to $3.3 billion in annual recurring revenue (ARR) and 240 million monthly active users (MAUs). Canva's ability to scale AI without eroding margins underscores a more sustainable model.

Investors must weigh Figma's product momentum against its financial discipline. While its growth metrics are impressive, the absence of profitability and the looming share unlock risk make its bull case a high-stakes bet. Figma's stock closed at $68.13 on Wednesday, down from its IPO price of $33 and the high of $115.50 in its debut.

References:
[1] https://www.cnbc.com/2025/09/03/figma-fig-q2-earnings-report-2025.html
[2] https://www.ainvest.com/news/figma-revenue-growth-persistent-losses-bull-case-valid-2509/
[3] https://www.ainvest.com/news/figma-financial-performance-market-outlook-post-ipo-assessing-valuation-sustainability-strong-growth-volatility-2509/