Piper Sandler reaffirmed an Overweight recommendation and set a $35.00 price target for Figma Inc (FIG) following the company’s fourth-quarter report and fiscal 2026 guidance. The stock was trading at $24.19, implying roughly 45% upside to the broker’s target.
The research note emphasized that Figma surpassed expectations in the quarter, delivering a revenue beat of 3.7% and an operating income beat of 51.8%. Management’s guidance for fiscal 2026 calls for revenue growth of 30% year-over-year - roughly seven percentage points ahead of consensus estimates - a figure the brokerage described as material outperformance versus street expectations.
On quarterly operating metrics, Figma reported 40% year-over-year revenue growth in the fourth quarter, up from 38% in the third quarter. Net revenue retention expanded to 136% from 131% in the prior quarter, and weekly active users of the Figma Make product increased 70% quarter-over-quarter. Gross profit margins were reported at 84.76%.
Despite those top-line and margin strengths, company-wide profitability on a trailing-twelve-month basis remained negative, with a diluted EPS of -$3.54. However, analyst forecasts reflected in market data show an expectation that Figma will reach profitability this year, with an EPS projection of $0.32.
Piper Sandler said the fiscal 2026 guidance exceeded even its own optimistic upside scenario, which had assumed growth modestly above a roughly 23% year-over-year consensus pace. The firm flagged the trajectory in net revenue retention as a signal of additional upside potential to its model.
The research note also pointed to Figma’s transition to a hybrid pricing approach as a strategic positioning advantage in the application layer for artificial intelligence - a factor the broker views as supportive of future monetization. In its valuation work, Piper Sandler assigned an enterprise value-to-sales multiple of about 11 times on fiscal 2027 estimates.
Market-level metrics showed a market capitalization of $11.99 billion and a Price/Book ratio of 8.63. Those valuation measures, when compared to the firm’s fair value assessment, suggest the stock currently trades at a premium.
Separately, Figma’s reported fourth-quarter revenue was $303.8 million, a 40% increase year-over-year that topped analyst projections. Adjusted earnings per share for the quarter were $0.08, ahead of the consensus estimate of $0.06. Company commentary attributed the strong results to increased adoption of its platform and integration of AI capabilities across its customer base.
Management’s forward guidance for fiscal 2026 notably surpassed analyst expectations, reinforcing investor attention on the company’s growth trajectory. Together, the quarter’s results and the outlook drove Piper Sandler to maintain its favorable rating and price target while acknowledging the premium at which the stock trades.
Summary
Following Figma’s robust fourth-quarter performance and fiscal 2026 guidance that outpaces consensus, Piper Sandler reiterated an Overweight rating and a $35.00 target. Key operational indicators - accelerating revenue growth, expanding net revenue retention, and rising weekly users for Figma Make - underpinned the firm’s view, alongside a strategic shift to hybrid pricing that supports the company’s positioning in AI applications. Valuation metrics indicate a premium relative to fair value.
Key points
- Figma beat fourth-quarter revenue and operating income estimates by 3.7% and 51.8%, respectively.
- Management expects fiscal 2026 revenue growth of 30% year-over-year, outpacing consensus by about seven percentage points.
- Operational momentum includes 40% YoY revenue growth in Q4, net revenue retention at 136%, and a 70% QoQ rise in weekly active users for Figma Make; gross margins stood at 84.76%.
Risks and uncertainties
- The company remains unprofitable on a trailing-twelve-month basis with a diluted EPS of -$3.54, creating execution and cash-flow risks until profitability is realized.
- Valuation metrics - including a Price/Book of 8.63 and a market capitalization of $11.99 billion - point to a premium relative to fair value, which could amplify downside if growth disappoints.
- Analyst profitability expectations (EPS of $0.32 for the current year) and the company’s ability to sustain the revenue retention and user-growth trajectory are material uncertainties that will influence investor outcomes.
Tags: Figma, Technology, Software