Figma's Revenue Outlook Falls Flat, Shares Plummet

Figma's shares fell after the company gave an uninspiring annual revenue outlook, disappointing investors. The latest momentum IPO to pull back from recent highs, Figma's performance marks a trend in the tech sector.

Figma Inc. (FIG) experienced a significant drop in its stock price following the release of its uninspiring annual revenue outlook. The design software company's shares fell by approximately 10% in after-hours trading on Wednesday, September 2, 2025. The company reported a revenue of $249.6 million for the second quarter, marking a 41% year-over-year (YoY) increase [1]. This performance matched the FactSet consensus estimate of $249.6 million but fell short of investor expectations.

Figma's adjusted net profit for the quarter was $11.5 million, which was significantly lower than the estimated $13.5 million. This earnings miss contributed to the stock's decline. Figma's stock has been under pressure recently, declining 13.8% over the past month [2].

For the third quarter, Figma guided between $263 million and $265 million in revenue, which would represent a 33% YoY growth rate at the midpoint. The full-year 2025 revenue guidance was set at $1.021 billion to $1.025 billion, indicating a 37% YoY growth at the midpoint. The company did not provide explicit earnings per share (EPS) guidance [3].

Despite strong revenue growth, investors remain concerned about profitability. The company's operating margin was 1% on a GAAP basis and 5% on a non-GAAP basis. Figma's cash flow from operations was $62.5 million, with a robust operating cash flow margin of 25% [3].

Figma's stock has faced regulatory challenges, including a failed acquisition attempt by Adobe Inc. (ADBE) in 2022. The company's market capitalization is currently sitting at $32 billion [2].

The recent earnings report and volatile stock performance of Figma have ignited a critical debate about the realism of valuations in the AI-design software sector. After a meteoric IPO in July 2025—where shares surged over 300% on the first day—Figma's stock has since plummeted by 39% in August 2025, raising questions about whether the market overestimated its growth potential [2].

The earnings miss underscores a recurring theme in tech IPOs: the danger of conflating innovation with financial viability. Figma's aggressive investments in AI tools like Figma Make and AI Credits have undoubtedly expanded its product ecosystem, but these expenditures have also strained margins. The company's 2024 net loss of $827.9 million—largely due to a $801.2 million stock-based compensation charge—casts a long shadow over its current profitability [2].

The Figma case exemplifies the broader cooling of the tech IPO market in 2025. After years of exuberant valuations, investors are recalibrating expectations, particularly for companies lacking proven profitability. Figma's post-IPO correction—from $115.50 to $68.13—reflects this shift [2].

For investors, the key question is whether Figma's AI-driven innovation can justify its valuation over the long term. The company's 68.6x P/S ratio is among the highest in the SaaS sector, dwarfing Adobe's 6.93x and Shopify's 18.51x. While Figma's 41% revenue growth and 129% net dollar retention rate are impressive, its valuation assumes a level of future dominance that may not materialize [2].

Figma's earnings miss and volatile IPO performance highlight the inherent risks of overhyped tech valuations. While the company's AI-driven design tools and cross-functional platform are undeniably innovative, its financial metrics and peer comparisons suggest a valuation that is stretched. Investors navigating the cooling tech IPO market should approach Figma—and similar high-growth SaaS companies—with a mix of optimism and caution. The key to long-term success lies not in chasing speculative multiples but in identifying companies that can sustain innovation while delivering tangible profitability [2].

References:
[1] https://www.ainvest.com/news/figma-shares-drop-10-post-market-q2-revenue-250-million-41-yoy-adjusted-net-profit-11-5-million-full-year-revenue-forecast-1-021-1-025-billion-2509/
[2] https://www.ainvest.com/news/figma-earnings-plummeting-ipo-performance-cautionary-tale-ai-design-software-valuations-2509/
[3] https://www.ainvest.com/news/antitrust-enforcement-tech-sector-valuations-strategic-resilience-regulated-era-2509/