Figma Inc. experienced a notable decline in its stock price, hitting its lowest level since the company’s initial public offering (IPO) on July 31. This drop followed the release of an annual revenue forecast that did not meet investor expectations.
In a statement made on Wednesday, Figma projected that its sales for the fiscal year would reach approximately $1.02 billion, aligning closely with the average estimate provided by analysts. The company also anticipated an adjusted operating income ranging from $88 million to $98 million, which was consistent with the average projection of $88 million.
The design software company, known for its tools used to create web and mobile applications, has been actively expanding its suite of services to include enhanced ideation, collaboration, and software development capabilities. In its first earnings report as a public entity, Figma indicated that over 80% of its customers utilized at least two of its products during the quarter that concluded on June 30.
On Thursday, Figma’s stock plummeted by 20%, closing at $54.56 in New York. This follows a substantial increase of 250% on its first trading day, when shares were offered at $33. Since that peak, Figma’s stock has now fallen by 53%.
Industry experts weighed in on the circumstances surrounding the stock’s decline. Doug Clinton, CEO of Intelligent Alpha, remarked that the company’s performance was underwhelming given its initial market debut. Analyst Rishi Jaluria from RBC Capital Markets expressed concerns that artificial intelligence might streamline application development, potentially diminishing the necessity for Figma’s services. Several emerging competitors focusing on AI-based software creation, such as Lovable and Bolt, have rapidly gained traction throughout the year.
Despite these challenges, Figma remains committed to investing in new technology, with analysts suggesting that AI could eventually bolster the company’s growth. In the second quarter, Figma demonstrated a robust net revenue retention rate of 129%, indicating that customers are continuing to invest in the platform.
Quarterly sales surged by 41%, reaching $249.6 million, while adjusted operating income rose to $11.5 million—up significantly from $4.88 million during the same period the previous year. As of June 30, the company reported having 11,906 customers generating over $10,000 each in annual recurring revenue, and 1,119 customers with annual revenue exceeding $100,000—both metrics aligning with analysts’ expectations.
