Is Figma Inventory a Purchase Now?

Shares of design software program developer Figma (NYSE: FIG) skilled unimaginable success once they went public final July, debuting at $33 per share earlier than skyrocketing to a 52-week excessive of $142.92 in August.

Since then, the inventory has reversed course huge time. Shares hit a 52-week low of $26.79 on Jan. 21, dropping beneath the IPO value. This can be a terrific alternative to scoop up Figma inventory. Or might causes exist to carry off?

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Answering these questions requires a deeper dive into Figma’s enterprise.

Figma is striving to reinvent design software program, and one of many methods it is doing so is by incorporating synthetic intelligence. As an illustration, the corporate acquired AI design start-up Weavy in October.

Weavy, now referred to as Figma Weave, combines a number of main AI fashions with skilled modifying instruments to streamline the design course of and allow designers to make use of AI as a collaborator to shortly obtain their artistic visions.

The corporate’s proprietary AI software, Figma Make, is seeing 30% of consumers offering annual recurring income (ARR) of $100,000 or extra utilizing it on a weekly foundation, and utilization is rising.

CFO Praveer Melwani defined the corporate’s progress technique on a November name with analysts, saying, “We deepened our investments in Q3 to construct for the AI native workflows of the long run.” The method is working, as evidenced by Figma’s robust buyer progress and retention.

Within the third quarter of 2025, the corporate added greater than 1,000 clients with ARR of $10,000 or extra. As well as, Figma’s web greenback retention charge for purchasers with ARR of not less than $10,000 was 131%, which signifies these high-value clients are increasing their spending.

The corporate’s success in buying and retaining clients is driving gross sales progress. In Q3, Figma achieved report income of $274.2 million, a 38% year-over-year enhance. In actual fact, gross sales have grown each quarter since Q1 of 2024, when income totaled $156.2 million.

Figma expects that development to proceed. It anticipates This fall income to return in between $292 million and $294 million, representing 35% year-over-year progress on the midpoint.

The corporate additionally boasts an impressive steadiness sheet. It exited Q3 with complete property of $2.1 billion, of which over $1.5 billion was money, money equivalents, and marketable securities. Complete liabilities have been $684.7 million, however $473.6 million of that was deferred income, representing upfront buyer funds that might be acknowledged as gross sales after companies are delivered.

Regardless of robust income progress, Figma suffered an enormous Q3 web lack of $1.1 billion because of stock-based compensation prices associated to its IPO. Within the second quarter, nevertheless, the corporate was worthwhile, posting web earnings of $28.2 million. This means Figma can return to profitability in subsequent quarters.

Even with the potential of a near-term rebound to profitability, the corporate’s massive Q3 web loss, coupled with a sky-high inventory valuation, has led to a steadily falling share value for the reason that preliminary IPO spike. Consequently, the scenario warrants an analysis of the inventory’s present worth.

Given Figma wasn’t worthwhile in Q3, its share value valuation could be assessed utilizing the price-to-sales ratio (P/S), which measures how a lot traders are paying for each greenback of income generated over the trailing 12 months.

The chart exhibits Figma’s gross sales a number of exceeded 60 not lengthy after the IPO, however has steadily declined since then. Now, the inventory’s P/S ratio of about 15 is way extra cheap.

Given the decrease valuation, Figma seems like a compelling inventory to purchase. Its gross sales progress is poised to proceed. Its glorious buyer acquisition and retention numbers show that purchasers discover its merchandise worthwhile.

Figma’s method to AI, the place the tech is an enabler somewhat than a substitute for human designers, is a smart technique given AI’s limitations. Figma seems prefer it’s making the best strikes for long-term enterprise success amid the rise of AI.

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Robert Izquierdo has positions in Figma. The Motley Idiot has positions in and recommends Figma. The Motley Idiot has a disclosure coverage.

Is Figma Inventory a Purchase Now? was initially printed by The Motley Idiot