Figma jumps as AI push boosts software design spending
FILE PHOTO: Figurines with computers and smartphones are seen in front of the words "Artificial Intelligence AI" in this illustration created on February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
Feb 19 : Shares of Figma rose around 14 per cent before the bell on Thursday as investors cheered the software design provider's strong revenue forecasts and commentary around its artificial intelligence ambitions.
Figma has become a popular choice for design among diverse groups, including enterprises and freelancers, as it allows users to execute every step of the creative process - from ideation and brainstorming to coding and shipping - on a single platform.
To grow its foothold in a highly competitive market, Figma has embedded AI into its platform to attract more users - a strategy also employed by larger rival Adobe, as they tussle for customer dollars.
Figma on Wednesday forecast 2026 revenue of between $1.36 billion and $1.37 billion, compared with estimates of $1.29 billion, according to data compiled by LSEG.
Starting in March this year, the company will also shift to a hybrid monetization model by selling AI credits.
"We will begin enforcing credit limits ... for power users that go over those embedded credit limits, we'll be selling add-ons," Figma's chief financial officer Praveer Melwani told Reuters in an interview on Wednesday.
However, investments in AI and business operations, and stock-based compensation are pushing up overall costs. Executives have previously said that AI spend will weigh on gross margins.
If current gains hold, Figma is set to add over $1.7 billion to its market value.
