Figma Sinks to Post-IPO Lows as First Earnings Miss High Expectations

Figma delivered its first earnings report as a public company Wednesday, and the results left Wall Street disappointed. The design software firm, which went public in late July in one of the year’s most closely watched IPOs, reported solid year-over-year growth but failed to deliver the kind of breakout performance investors had hoped for. Revenue rose 41% to $249.6 million, slightly below consensus estimates of $250 million, while net income totaled just $846,000, essentially breakeven and well shy of analyst expectations for $0.09 per share. With guidance that also failed to inspire, shares dropped 15% in after-hours trading, falling to fresh post-IPO lows of $57.

Relative to consensus, the results were modestly mixed. Revenue beat by less than $1 million, while adjusted operating income of $11.5 million topped estimates of $10.2 million. Still, margins remain under pressure, with heavy investment in artificial intelligence weighing on profitability. For the third quarter, Figma forecast revenue of $263–$265 million, implying 33% growth at the midpoint, slightly ahead of consensus at $256.8 million. Full-year revenue guidance was set at $1.021–$1.025 billion, above analyst expectations of $1.01 billion, with non-GAAP operating income projected between $88–$98 million, largely in line with forecasts. While those numbers suggest continued growth, they also highlight a deceleration from the hypergrowth levels that once defined the business.

The key drivers of the quarter included robust customer adoption and product expansion. Figma reported 1,119 customers generating more than $100,000 in annual recurring revenue, up from 1,031 in the March quarter. Its net dollar retention rate among customers with ARR above $10,000 was 129%, still healthy but down from 132% in the prior quarter. Product launches such as Figma Make—an AI tool that builds designs from user prompts—and Figma Sites, which converts designs into functional websites, showcased innovation but also underscored the company’s need to lean heavily into AI to stay competitive. The landscape is increasingly crowded, with free AI-powered design tools threatening to erode Figma’s moat, pushing management to invest aggressively at the expense of near-term margins.

For investors, several areas demand focus. First, valuation remains a sticking point. Even after the pullback, Figma trades at an eye-watering 82x forward free cash flow, far above peers such as Adobe, which was once set to acquire Figma before antitrust pushback scuttled the deal. Analysts argue that if revenue growth dips below the 30% threshold in 2026, a sharp multiple compression could follow. Second, competitive risk looms large, as the very AI tools Figma is deploying are also enabling rivals to replicate its offerings at lower cost. And third, while the balance sheet is strong—holding $1.6 billion in cash and securities, including a small Bitcoin stake—this alone isn’t enough to offset valuation concerns and decelerating growth.

The stock’s reaction reflects these doubts. Heading into earnings, Figma shares had been consolidating in a descending triangle pattern—a bearish setup that often precedes breakdowns if results don’t exceed expectations. The Q2 miss was just enough to trigger a decisive move lower, with shares tumbling to $57, their lowest level since listing. This is uncharted technical territory, making it difficult to identify strong support levels. For bulls, a recovery toward $65 would be a positive sign, but with broader markets choppy and Figma’s fundamentals under scrutiny, achieving that rebound will be a tall order.

Beyond the short-term reaction, investors should watch for whether the stock can form a base at these new lows. If institutional investors step in to accumulate at depressed levels, the stock could stabilize. However, recent trading patterns show little evidence of sustained accumulation, raising the possibility that large investors are steering clear until the valuation compresses further. Lockup expirations in September and 2026 also add another layer of supply risk that could keep pressure on the stock.

In the bigger picture, Figma’s long-term bull case hinges on whether it can scale its AI tools, expand its customer base, and maintain 30%+ growth rates in a highly competitive environment. Analysts remain cautious: only four of the 11 covering the stock rate it a Buy, with most advising patience until valuation becomes more compelling. For now, Figma is in the uncomfortable transition from a hyped IPO to a maturing growth company, where scrutiny of profitability and sustainability replaces the excitement of early-stage adoption.

The bottom line: Figma’s first public report was respectable but fell short of lofty expectations, leaving the stock vulnerable. While the company remains profitable with strong cash reserves and continued innovation, slowing growth, fierce competition, and an extreme valuation are major headwinds. With shares breaking to post-IPO lows, $57 is the new battleground. Bulls will be hoping for stabilization and a climb back toward $65, but in the absence of a catalyst, the path of least resistance appears lower in the near term.