Figma (FIG 5.00%) stock has been on a roller coaster ride since its initial public offering (IPO) at $33 per share on July 31, 2025. The stock soared nearly 3.7 times to close at $122 on Aug. 1, after touching an intraday high of $142.92. However, the stock is down almost 69% from its high and closed at $44.25 (as of Nov. 7).
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Shares of Figma jumped by nearly 4.5% on Nov. 6, after the company delivered an impressive performance in the third quarter of fiscal 2025 (announced on Nov. 5). However, the stock has already given up most of the gains amid macroeconomic worries.
Investors may interpret these sharp swings as evidence of the limited visibility, uncertain near-term cash flows, and heavy investments typical of a newly public, high-growth software stock. However, Figma's third-quarter earnings paint a very different picture. The company is positioning itself as a holistic, artificial intelligence (AI)-native collaborative design platform that enables designers, product managers, and developers to translate ideas into designs, production-level code, and applications in a single, connected workflow.
Here are a few reasons why the company could become a crucial AI-powered design player in the next decade.
Improving financial and operational metrics
Despite heavy AI-related investments, Figma has demonstrated impressive financial performance in the third quarter of fiscal 2025 (ended Sept. 30). Revenue was up 38% year over year to $274.2 million, higher than the consensus of $264 million, and reached an annual revenue run-rate of over $1 billion. The company is also inching toward profitability, as is evident from its non-GAAP (adjusted) gross margin of 86% and non-GAAP operating margin of 12%. The company also exited the third quarter with 18% adjusted free cash flow margin and a cash balance of $1.6 billion on its balance sheet. These funds demonstrate the company's financial flexibility in investing in future growth initiatives such as expanding AI models, talent acquisition, and new product development without significant equity dilution. Figma expects revenues to be in the range of $1.044 billion to $1.046 billion, up 40% year over year at the midpoint, and non-GAAP operating income in the range of $112 million to $117 million in fiscal 2025.
NYSE: FIG
Key Data Points
Customer metrics are also strong. Net dollar retention for clients with recurring yearly revenue of $10,000 or higher was 131%, which highlighted the success of its cross-selling and upselling strategy. In fact, more than 70% of its customers are already using three or more products. The company catered to almost 540,000 paid customers at the end of the third quarter, up from nearly 450,000 customers at the end of the first quarter.
Hence, Figma's future growth trajectory is supported by solid numbers, not just hype.
AI-native workflows
CEO Dylan Field highlighted that, with AI proving exceptionally adept at code generation and asset creation, design and craft have become the key differentiators for brands and businesses. Figma is leveraging AI capabilities to make designers more effective, creative, and faster.
In the third quarter, the company introduced more than 50 features across every new product on its platform, accelerating the pace of converting ideas into finished outputs. This includes Figma Make, which became generally available in July 2025, enabling customers to convert simple text prompts or existing Figma designs into workable prototypes or complete applications. Figma Make's "Make Kits" capability ensures that the designs are consistent with the brand.
The success of this strategy is evident, as around 30% of customers with annual recurring revenue of $100,000 or more are already using Figma Make on a weekly basis. The rapid adoption, within months of launch, highlights that this product has successfully targeted an underserved niche in the design market.
Figma is now able to handle every stage of digital product development, from FigJam for brainstorming, to Figma Design for creating designs, to Dev Mode and the MCP server for coding and deploying ideas in a production environment. The interoperability of these products enables clients to build faster and higher-quality products, as well as collaborate more effectively.
Product integrations and Weavy acquisition
Integration of the Figma App inside large language model-powered chatbots such as OpenAI's ChatGPT and Alphabet's Gemini, as well as applications such as Microsoft's GitHub, Notion, Linear, and Supabase, can open new monetization avenues for the company. It is also helping position Figma as an essential creative tool for a large user base.
The recent acquisition of Weavy has led to the addition of the Figma Weave product to the company's platform. Figma Weave provides users with a browser-based canvas that integrates multiple AI models with professional editing tools.
Risks and valuation
Figma expects some pressure on near-term margins and a decline in free cash flow in the fourth quarter due to rising AI investments, incremental spending on AI inference (real-time deployment of AI models) providers, and one-time tax payments. Margins may also come under pressure due to elevated stock-based compensation expenses for several quarters after the IPO, as pre-IPO awards are expensed under an accelerated attribution method before normalizing over time. These concerns are playing a major role in the stock's ongoing volatility.
Additionally, Figma trades at 22.6 times sales, which is rich for a company that is not yet profitable. However, Wall Street seems to be valuing it not for its current business but mainly for its future growth potential. Hence, in case its execution matches its solid plan, Figma can emerge as a prominent design-focused software player in the next decade.
