Figma (NYSE: FIG) reported its strongest quarterly revenue to date, thereby easing investor concerns that artificial intelligence could undermine demand for traditional software platforms.
The design software provider paired top-line growth with improving customer metrics and upbeat full-year guidance, prompting a swift shift in market sentiment.
Following the earnings release, Figma (NYSE: FIG) shares climbed as much as 20% in after-hours trading. The stock was last quoted at $28.30, up 16.99%, after closing the regular session at $24.19, a 4.72% gain. The company’s market capitalization now stands at roughly $11.45 billion.
Revenue Strength Reinforces Growth Narrative
Fourth-quarter results highlighted continued momentum. Revenue reached $304 million, a 40% year-over-year increase that exceeded the $293 million consensus estimate compiled by FactSet. Adjusted earnings came in at 8 cents per share, matching analyst expectations.
Beyond headline revenue, underlying customer dynamics also trended positively. The net dollar retention rate among clients generating at least $10,000 in annual recurring revenue rose to 136%, up five percentage points sequentially. This improvement signals stronger expansion within the existing customer base.
Moreover, Figma ended the year with 67 customers contributing more than $1 million each in annual recurring revenue. This total reflects a 68% year-over-year increase, signaling deeper enterprise adoption.
Nevertheless, the broader market backdrop remains challenging. Figma stock has declined 34% year to date and remains 83% below its post-IPO peak from last July. This pullback mirrors a broader repricing across software equities as investors weigh the long-term implications of AI disruption.
AI Investment Reshapes Product and Pricing Strategy
Against this backdrop, management is positioning artificial intelligence as central to the company’s next phase. Chief executive and co-founder Dylan Field described 2025 as a pivotal year, during which the product suite expanded from four offerings to eight and more than 200 features were introduced.
That momentum continued with a recently announced integration with Anthropic’s Claude Code, enabling users to transform code into editable design assets directly inside the platform. According to Field, the industry is moving toward a future where coding is less of a constraint and design plays a larger role in value creation.
To align monetization with this shift, the company plans to introduce a revised pricing model in March. Specifically, the framework blends traditional seat-based subscriptions with AI usage credits — a departure from its prior non-consumption pricing approach.
However, that expansion carries cost implications. Reliance on external AI models increases infrastructure and inference expenses, and management expects margin compression as a result. Consequently, Figma expects its 2026 non-GAAP operating margin to average 8% at the midpoint. That compares with 14% in the fourth quarter and 12% for full-year 2025.
Even with near-term margin pressure, management views these investments as essential. For instance, Field noted that infrastructure optimization efforts have helped stabilize gross margins sequentially.
Meanwhile, chief financial officer Praveer Melwani said adjusted free cash flow declined in the quarter due to elevated AI spending but expressed confidence in a recovery as efficiency improves.
Full-Year Outlook Points to Continued Expansion
Looking ahead, the company forecasts full-year revenue between $1.366 billion and $1.374 billion. This range implies 30% annual growth and exceeds Wall Street’s $1.287 billion projection.
Taken together, the latest results suggest the company is sustaining expansion even as the software sector navigates volatility and AI-driven change. While near-term profitability may soften, management is positioning AI capabilities as a foundation for sustained growth and long-term profitability.
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