Figma's stock plunges after company's first earnings report since IPO

Figma's shares took a significant hit, plummeting 13% in after-hours trading on Wednesday after the design software firm unveiled its inaugural earnings report since going public in July. According to the company, its revenue saw a remarkable 41% year-over-year increase in the second quarter. Figma had previously estimated revenue between $247 million to $250 million in a regulatory filing from July. Notably, the company reported a net income of $846,000, a stark contrast to the staggering loss of $827.9 million recorded in the same quarter last year. Its adjusted operating income reached $11.5 million, exceeding earlier projections of $9 million to $12 million. For the upcoming third quarter, Figma anticipates revenue in the range of $263 million to $265 million, which would equate to approximately 33% growth at the midpoint, surpassing the LSEG consensus of $256.8 million. Additionally, Figma expects to achieve adjusted operating income between $88 million and $98 million for the full year, alongside a revenue forecast exceeding $1.02 billion. This projection suggests a growth rate of around 37%, also above the $1.01 billion consensus from LSEG. In its second-quarter report, Figma introduced new features like Figma Make, which leverages artificial intelligence to generate app and website designs based on user descriptions, and Figma Sites, which converts designs into functional websites. The company also expanded its portfolio by acquiring vector graphics startup Modyfi and content management system startup Payload. The software industry has been under scrutiny this year, as many vendors grapple with potential disruptions from AI technologies. However, Figma co-founder and CEO Dylan Field expressed optimism, asserting that the demand for designers will only increase as AI simplifies software creation. "As software becomes easier to build with AI, the necessity for human input will become more evident," Field commented. He acknowledged that Figma has been integrating AI-driven tools to enhance its software development process. Figma reported a net retention rate of 129%, reflecting growth among existing customers, though this figure was slightly down from 132% in the previous quarter. Following its IPO, a lockup period is set to expire on September 4, allowing some employees to sell 25% of their shares. However, investors holding over half of Figma's Class A stock have agreed to extend their lock-up until August 2026 for approximately 35% of their shares. Field emphasized the importance of transparency with investors, stating, "I believe this information is valuable." As of Wednesday, Figma's stock closed at $68.13, a significant rise from its IPO price of $33, where shares initially surged to $115.50 on debut. Company executives are scheduled to discuss the second-quarter results with analysts during a conference call at 5 p.m. ET. This developing story will continue to be updated.