Figma's first earnings report after stellar debut underwhelms investors
Figma posted a slight beat on second-quarter profit and revenue in its first financial report as a public company on Wednesday, but fell short of the lofty expectations set by AI and tech investors, sending its shares down 13 per cent after the bell.
The company delivered a blowout debut in July as investors rallied behind its new product lineup, revenue growth and potential to capture a significant share of the design software market.
Figma's strategy to incorporate every aspect of product development — from ideation to coding and shipping — into its software has made it an attractive option for companies such as Netflix and freelancers to create their own platforms.
"The stock had been priced for perfection at over two hundred times expected earnings, which means even solid numbers cannot carry that many layers without some flattening," said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
"Figma's high valuation was built on story and future potential and management's outlook disappointed," he said.
Shares of the company, which gained 250 per cent on the first day of trading, were down more than 40 per cent since the debut.
Figma's second-quarter revenue jumped 41 per cent to $249.6 million. Analysts on average estimated $248.8 million, according to data compiled by LSEG.
Its adjusted earnings per share of 9 cents also edged passed the estimate of 8 cents.
Figma has been aggressively rolling out new features to attract and retain subscribers. This year it launched four products, including Figma Make — an AI-powered product that turns a written prompt into a functional prototype.
The company expects fiscal 2025 revenue to be between $1.02 billion and $1.03 billion, while analysts estimate $1.01 billion.
Separately, as its stock price has met certain conditions relating to its initial public offering, the lock-up period for certain employees will end later this week, while senior executives will have to hold their shares till later in the year.
