To The Moon

Figma Inc. $Figma(FIG)$ , the collaborative design software powerhouse, delivered its Q3 2025 earnings report on November 5, 2025, showcasing resilient growth in a competitive market. The results, which highlighted the impact of AI integrations on customer acquisition and retention, come on the heels of a challenging Q2 where the stock faced significant pressure following its July 2025 IPO. As of after-hours trading on November 5, shares climbed 6.7% to $47, signalling investor approval of the beat-and-raise quarter. In this analysis, we'll break down the key metrics, compare them to Q2, examine the stock's trajectory, and provide an independent assessment of Figma's trajectory.

Q3 2025 Highlights: Beating Expectations with AI Momentum

Figma reported Q3 revenue of $274.2 million, a 38% year-over-year increase that surpassed analyst estimates of $265.2 million and the company's own prior guidance midpoint of $264 million. This marks the company's first $1 billion annual run-rate milestone, underscoring its scaling prowess in the design tools space.

On the bottom line, GAAP results were weighed down by a massive $975.7 million stock-based compensation charge tied to the IPO, resulting in a $1.1 billion net loss and $(2.72) EPS. However, non-GAAP metrics painted a healthier picture: net income of $62.4 million, diluted EPS of $0.10 (beating forecasts of ~$0.08-0.09), and operating income of $34.0 million with a 12% margin. Cash generation remained solid, with $51.2 million in operating cash flow (19% margin) and $49.0 million in adjusted free cash flow (18% margin).

Operational metrics further bolstered the narrative of enterprise traction: Net Dollar Retention (NDR) for customers with >$10,000 ARR rose to 131% (up from 129% in Q2), with 12,910 such customers (a net add of over 1,000 QoQ) and 1,262 with >$100,000 ARR (up ~140 QoQ). Executives credited AI features, like the "Figma Make" tool, for driving multi-product adoption and attracting new users in a market increasingly focused on efficiency tools.

Comparison to Q2 2025: From Miss to Momentum

Q2 2025, reported on September 3, was Figma's first post-IPO earnings release and set a high bar with $250 million in revenue (41% YoY growth), though it slightly missed some Street estimates of around $252-255 million. Non-GAAP operating income was $11.5 million (5% margin), a step toward profitability, but non-GAAP EPS came in at -$0.04, below expectations. Customer metrics were strong but slightly less robust than Q3: NDR at 129%, 11,906 customers with >$10,000 ARR, and 1,119 with >$100,000 ARR.

Here's a side-by-side comparison of key metrics:

Q3's sequential improvements in margins and customer adds suggest accelerating operational efficiency, likely fueled by AI enhancements that were in early rollout during Q2. While YoY growth

decelerated slightly—a common post-IPO trend as comps toughen—the absolute revenue beat and margin expansion indicate better cost control and product stickiness.

Stock Performance: Post-Q2 Decline Gives Way to Q3 Rebound

Following Q2 earnings, Figma's stock took a hit, dropping nearly 20% the next day to close at $54.56 on September 4, 2025, amid concerns over the EPS miss and decelerating growth from Q1's 46%. The shares continued to slide over the subsequent months, shedding another ~19% to close at $44.01 on November 5 pre-earnings, reflecting broader market scepticism on software valuations and post-IPO adjustments.

The Q3 release flipped the script: After-hours trading pushed shares to $47 (+6.7%), recouping some losses and aligning with analyst optimism. Consensus price targets sit at $71.12, implying ~51% upside from after-hours levels, with ratings leaning positive despite a recent Wells Fargo target cut to $52. Volume spiked to 11.46 million shares on November 5, indicating heightened interest.

Full-Year 2025 Guidance: Raised Outlook Signals Confidence

Figma raised its FY 2025 revenue guidance to $1.044-1.046 billion (midpoint +40% YoY), up from the Q2 outlook of $1.021-1.025 billion. Non-GAAP operating income guidance was also lifted to $112-117 million, from $88-98 million in Q2. For Q4, revenue is projected at $292-294 million (+35% YoY implied midpoint). This upward revision reflects tailwinds from AI-driven features and enterprise expansions, positioning Figma to end the year on a high note despite macroeconomic headwinds in tech spending.

Independent Commentary and Analysis

From my perspective, Figma's Q3 results demonstrate a company maturing beyond its startup roots, with AI as a clear differentiator in a crowded design software arena dominated by players like Adobe. The sequential margin jump from 5% to 12% non-GAAP is particularly impressive, suggesting disciplined expense management amid IPO-related costs. Customer metrics, especially the NDR uptick, point to sticky, expanding usage— a hallmark of SaaS leaders like Salesforce or Zoom in their growth phases.

That said, the GAAP losses highlight the dilutive impact of stock-based comp, which could persist as Figma retains talent in a competitive AI talent market. Growth deceleration (41% in Q2 to 38% in Q3) warrants monitoring; if it dips below 30%, valuation multiples could compress further. Post-IPO volatility is par for the course, but the stock's decline from $54+ to $44 pre-earnings seems overdone, given the $1.6 billion cash pile and debt-free balance sheet. At a forward P/S ratio of ~15x (based on FY guidance midpoint), Figma trades at a discount to peers like Canva or Miro, offering value if AI integrations accelerate adoption.

In summary, while Q2 exposed vulnerabilities to high expectations, Q3's beat and raise reaffirm Figma's fundamentals. The market reaction underscores renewed faith in its AI strategy.

Definitive Assessment: Bullish Outlook Confirmed

Figma's Q3 2025 earnings report is a resounding success that firmly re-establishes the company's position as a leading player in the collaborative design and whiteboarding space. The market's positive reaction is fully justified by the exceptional financial performance, the achievement of key milestones, and confident forward guidance.

For investors, this report suggests that Figma is executing its strategy effectively and is well-positioned for continued growth. The bullish case for FIG has been significantly strengthened, and this quarter should alleviate many of the concerns that clouded its initial public offering journey. While competition and market dynamics always warrant vigilance, Figma has demonstrated its ability to deliver in spades.

@TigerWire