Shares of Figma, the collaborative design software platform, moved higher in Friday afternoon trading, extending a post-earnings rally. The stock's upward momentum followed the company's decision to increase its financial projections for the coming year, even as it prepares to introduce a significant change to how customers access its artificial intelligence features.
Financial Forecast Revised Upward
This week, Figma provided investors with an upgraded revenue outlook for the 2026 fiscal year. The company now anticipates revenue to reach as much as $1.37 billion, a figure that surpasses the $1.29 billion consensus estimate compiled by LSEG. In a recent interview, Chief Financial Officer Praveer Melwani linked the company's improving prospects directly to advancements in AI, stating, "As AI gets better, Figma gets better." The company closed the 2025 fiscal year with a robust balance sheet, holding $1.7 billion in cash and marketable securities.
Management celebrated a strong finish to the year, with CEO Dylan Field calling the fourth quarter its "best quarter yet," highlighting accelerated revenue and customer growth. CFO Melwani added that Q4 set a new record for net new revenue.
March Brings AI Monetization Shift
The focal point for investors is the company's planned policy change for AI tool access, scheduled for next month. In March, Figma will begin enforcing limits on the AI credits available to users, a move designed to guide its most active clients toward purchasing paid add-on packages. This strategy is a critical component of Figma's broader effort to monetize its AI investments and keep pace with larger industry competitors.
The central question facing the company is whether it can successfully translate rapidly growing user adoption of AI features into a reliable and growing revenue stream. The challenge lies in doing so without alienating customers with new costs or sacrificing profit margins as the company's own expenses for AI infrastructure continue to rise.
Wall Street Reacts with Caution
Despite the improved revenue guidance, several analyst firms adopted a more cautious stance, reducing their price targets for Figma stock. Their concerns primarily revolve around the uncertainty of how customers will respond to the new paid AI model and the potential for margin pressure.
Stifel lowered its price target to $30 from $40 while maintaining a Hold rating. The firm expressed worries about margin pressures and the uncertain pace at which users will adopt paid AI services once the free credit limits take effect.
Similarly, RBC Capital Markets reduced its target to $31 from $38. While RBC noted evidence of wider product adoption, a strong net dollar retention rate of 136%, and growth in large enterprise customers, it still tempered its outlook due to the upcoming business model transition.
Broader Market Context
Figma's situation reflects a larger industry dilemma as software companies grapple with the high costs of developing and running generative AI features. Some firms are layering usage-based fees on top of traditional subscription licenses, while others are absorbing the costs to remain competitive and protect market share.
The core issue is a potential squeeze on gross margins when the expense of AI computing outstrips the revenue it generates. This dynamic risks causing customers to limit their usage or seek alternative solutions, a particular threat in the increasingly competitive markets for design, collaboration, and development tools.
For now, traders and investors are closely watching for initial signals that the March pricing adjustments will successfully increase revenue per user without stunting the company's overall growth trajectory. An equally important watchpoint is the company's ability to manage its operating expense growth in line with its newly raised financial expectations.
