Figma's AI Play Just Turned "Software Is Dead" Into Aged Milk…

Everyone: “Saas companies are dead…”

Figma: Bet

Apparently the Pixel Pixies were on full tilt last quarter because Figma just dropped the hottest diss of the SaaSpocalypse so far. Shares mooned north of 15% yesterday as Figma dropped quarter numbers that had literally zero business of being this good.

(Source: Giphy) 

In short, revenue came in like a wrecking ball at $303.8 million in revenue against a $293 million consensus which is a… *checks notes* 40% YoY of growth. Additionally, guidance was so far above expectations that I genuinely wonder what the sell-side analysts were doing. Q1 guide of $315-317 million versus the $292 million the Street had penciled in. Because math. 

Friendly reminder that the home of vibe-designers was down 35% YTD going into the print. Mainly because AI has been taking Saas companies behind the barn lately (perhaps you’ve heard?). Which is why the plot twist of Figma’s earnings was how stupid (in a good way) the AI numbers looked. For example, Figma Make (their “type words, get app prototypes” tool powered by Anthropic and Google) is getting used weekly by more than half their $100K+ customers. Weekly actives up 70% from Q3. And the gross margin didn't even flinch. That money printer is still sitting at 86%. Translation:  The infra team over there is doing ungodly things with compute costs and nobody's talking about it. Oh, and staring in March? The AI credits stop being free. #savage. 

(Source: CNBC) 

Naturally, Figma’s CFO was pretty blunt about it:  usage follows a power law, a chunk of users are getting way more value than they're paying for, and that's about to change. Which is the dream scenario if you're long this thing. The product is cracked enough that heavy users will just... pay. That's it. That's the moat. 

From there, net dollar retention from $10K+ customers hit 136%, up from 131% last quarter. Meaning, people aren’t just staying, they’re spending more. What’s more is that they also announced a collab with $NOW to turn designs into enterprise apps, which sounds boring until you realize that's exactly how platforms become infrastructure nobody can rip out. However, while this was an absolute clinic of an earnings itself, the real play though… which Field touched on… is that Figma's TAM isn't "designers" anymore. Product managers are in the files now. UX researchers are next. The tool is becoming the place where everyone who touches a digital product actually works, not just the people pushing pixels. That's a very different company than the one the market was pricing at -35%.

 

Now of course, one earnings report doesn't fix a chart that looks like it fell down a flight of stairs. And the AI monetization story needs to actually show up in revenue once the credit limits kick in. But the market spent the last six months treating Figma like it was the victim of the AI revolution, and Figma just showed up with receipts saying it might actually be one of the winners. Shocking… I know. 

Turns out building the platform where AI tools get used is a better business than getting replaced by them… and you just know LegalZoom has to be punching air right now. Until next time, friends… 

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.