RBC Capital lowered its price target for Figma Inc (NYSE:FIG) to $31 from $38 while maintaining a Sector Perform rating, the firm said Wednesday. The revised target still implies upside relative to Figma's then-current share price of $24.19, though the stock has experienced a significant decline and was trading nearly 83% below its 52-week high of $142.92.
Financial results and margins
Figma reported fourth-quarter results that outpaced consensus expectations. Revenue reached $303.8 million, representing 40% year-over-year growth. The company posted strong profitability metrics on a non-GAAP basis, with gross margins of 86.2% and operating margins of 14.5% - both figures came in ahead of analyst estimates. Data referenced in the release and third-party reporting show a trailing twelve-month gross profit margin of 84.76%, and analysts are modeling roughly 40% sales growth for the current fiscal year.
Adjusted earnings per share for the quarter were $0.08, above the consensus of $0.06. Company statements attributed the outperformance in part to broader platform adoption and the integration of AI across its customer base.
Customer expansion and retention
Figma continued to expand its customer base and upward revenue penetration. Net dollar retention increased by five percentage points to 136%. The number of customers bringing in more than $10,000 in annual recurring revenue rose 32% year-over-year, while those with more than $100,000 in annual recurring revenue grew 46% year-over-year. The cohort of customers contributing more than $1 million in annual recurring revenue reached 67, compared with more than 40 as of the first quarter of fiscal 2025.
RBC Capital highlighted evidence of multi-product traction at the design software company. Following the quarterly release, shares rose roughly 15% in after-hours trading.
Guidance and analyst reactions
Figma provided fiscal 2026 revenue guidance that implies about 30% year-over-year growth, which the company said is roughly 7 percentage points above consensus expectations. In the wake of the results and the company's guidance, Piper Sandler reiterated an Overweight rating on Figma and maintained a $35.00 price target.
Implications
The quarter combined robust revenue growth, high gross margins and expanding large-customer cohorts with guidance that exceeded consensus, yet RBC's cut in the price target underscores valuation concerns despite those operational gains. Investors and market participants will likely weigh the company's demonstrated margin profile and customer-led growth against the stretched historic share-price decline and differing analyst views.
Key points
- RBC trimmed its Figma price target to $31 from $38 but kept a Sector Perform rating; the stock was trading at $24.19 and remained nearly 83% below its 52-week high - impacts technology and software sector valuations.
- Figma reported $303.8 million in fourth-quarter revenue, up 40% year-over-year, with strong non-GAAP gross margins of 86.2% and operating margins of 14.5% - relevant to investors focused on profitability in the software industry.
- Customer metrics showed broad expansion: net dollar retention rose to 136%, customers over $100k ARR grew 46% year-over-year, and customers over $1M ARR increased to 67 - signaling traction for platform monetization and multi-product adoption.
Risks and uncertainties
- Valuation remains a headline concern - despite strong operational results, RBC reduced its target on valuation grounds, creating uncertainty for equity investors in the tech/software sector.
- Future growth may depend on continued platform adoption and AI integration across the customer base; if adoption slows, fiscal 2026 guidance may prove challenging to meet, affecting software demand and investor sentiment.
- Divergent analyst assessments, such as RBC's Sector Perform versus Piper Sandler's Overweight at a $35 target, introduce differing expectations that can increase near-term stock volatility in the market.