The Company
Figma (FIG) is a cloud-based design platform used by product teams to build websites, apps, and digital experiences. The company went public on the NYSE on July 31, 2025, and filed its first 10-K on February 18, 2026, reporting results for the fiscal year ended December 31, 2025.
The headline numbers: $1.056 billion in revenue (up 41% year over year), an 82% gross margin, and a net loss of $1.25 billion. That loss-to-revenue ratio looks catastrophic until you understand what’s behind it. Nearly the entire deficit comes from stock-based compensation, most of which is a one-time accounting event tied to the IPO. Strip it out, and the underlying business generated $130 million in non-GAAP operating income and $243 million in adjusted free cash flow.
This post breaks down how Figma makes money, what the financial statements actually look like once you account for the SBC distortion, and what the company might be worth under different assumptions about how “real” that SBC cost is.
How Figma Makes Money
Figma is a pure subscription business. 100% of revenue comes from seats sold on its cloud-based platform, priced across four tiers: Starter, Professional, Organization, and Enterprise. Within those tiers, customers can purchase different seat types (Viewer, Collab, Content, Dev, Full) depending on the user’s role.
The model is land-and-expand. A small design team signs up, the product spreads across the organization, and the contract grows. This is reflected in the company’s net dollar retention rate (NDR), which measures how much existing customers spend year over year:
| Metric | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Revenue | $1,056M | $749M | $505M |
| YoY Growth | 41% | 48% | — |
| Paid Customers >$10K ARR | 13,861 | 10,517 | 7,233 |
| Paid Customers >$100K ARR | 1,405 | 963 | 630 |
| Net Dollar Retention | 136% | 134% | 122% |
A 136% net dollar retention rate means existing customers grew their spending by 36% before any new customer revenue. The $100K+ ARR customer cohort grew 46% year over year, which signals the product is moving upmarket into larger enterprise accounts.
Revenue is split roughly 47% U.S. and 53% international. Deferred revenue (prepaid subscriptions not yet recognized) reached $595 million, up 56% from $381 million the prior year.
In 2025, Figma doubled its product portfolio. In addition to the core design tool and FigJam (the collaborative whiteboard), the company launched Figma Sites (website builder), Figma Make (AI-powered design), Figma Buzz (slide decks), and Figma Draw (illustration). It also acquired Payload CMS and Weavy during the year. Starting in March 2026, Figma will begin monetizing AI-powered features through a credit-based system layered on top of subscriptions.
$1.36 Billion in Stock-Based Compensation
Figma reported $1.364 billion in stock-based compensation expense in FY2025, equal to 129% of revenue. In FY2024, SBC was $948 million, or 127% of revenue. Before that, in FY2023, SBC was just $2.7 million.
The jump from $2.7 million to $2.3 billion in cumulative SBC over two years is almost entirely explained by the company’s pre-IPO equity structure.
While Figma was private, it granted RSUs with a dual-trigger vesting structure. Employees had to satisfy both a service condition (time-based vesting) and a liquidity event condition (IPO or change of control). Because the liquidity event wasn’t considered “probable” under GAAP until it happened, virtually no SBC was recognized for years. Employees were earning their shares through service, but the accounting expense was deferred.
When the IPO occurred, years of accumulated service were recognized all at once. The result was a cumulative catch-up charge of roughly $976 million in a single quarter.
Here’s a breakdown of the major components:
| Component | Amount | One-Time? |
|---|---|---|
| IPO RSU release (cumulative catch-up) | ~$976M | Yes |
| May 2024 RSU modification (pre-IPO secondary) | ~$801M | Yes |
| 2021 CEO Market Award (catch-up at IPO) | $72M | Yes |
| 2021 CEO Service Award (catch-up across FY24-25) | ~$162M | Yes |
| 2024 fully-vested option grants | $88M | Yes |
| 2024 Tender Offer reclassification | $57M | Yes |
| Total one-time items | ~$2,156M | |
| 2025 CEO Stock Price Award (new, ongoing) | $56M | No |
| 2025 CEO Service Award (new, ongoing) | $47M | No |
| ESPP (new, ongoing) | $51M | No |
| Ongoing RSU grants and other | ~$78M | No |
| Total ongoing items (FY2025) | ~$232M |
Of the $2.3 billion in combined FY2024 and FY2025 SBC, roughly $2.2 billion was one-time. Only about $232 million reflects ongoing compensation expense.
Where the SBC Hides
The SBC is not evenly distributed across the income statement. It concentrates heavily in R&D and G&A:
| Line Item | GAAP (FY2025) | SBC | Ex-SBC | SBC as % of GAAP |
|---|---|---|---|---|
| Cost of revenue | $186M | $51M | $135M | 27% |
| R&D | $1,030M | $698M | $332M | 68% |
| Sales & marketing | $576M | $219M | $357M | 38% |
| G&A | $556M | $397M | $159M | 71% |
| Total | $2,347M | $1,364M | $983M | 58% |
68% of reported R&D expense and 71% of G&A are non-cash SBC charges. On a GAAP basis, Figma looks like it spends 98% of revenue on R&D. On a cash basis, R&D is 31% of revenue, which is in line with other high-growth SaaS companies.
The “Real” P&L
Here is the income statement restated three ways: GAAP as reported, excluding only the one-time SBC, and the company’s non-GAAP presentation (excluding all SBC plus related items):
| GAAP | Ex One-Time SBC | Non-GAAP | |
|---|---|---|---|
| Revenue | $1,056M | $1,056M | $1,056M |
| Gross profit | $870M (82%) | $921M (87%) | $921M (87%) |
| Operating income (loss) | ($1,290M) | (~$158M) | $130M |
| Net income (loss) | ($1,250M) | (~$118M) | $167M |
| EPS (basic, ~337M shares) | ($3.71) | (~$0.35) | ~$0.50 |
The GAAP loss of $1.25 billion and the non-GAAP profit of $130 million describe the same business in the same year. The difference is $1.36 billion in SBC, a majority of which will not recur.
The Balance Sheet
Figma’s balance sheet is clean. There is no debt.
| Dec 2025 | |
|---|---|
| Cash and equivalents | $403M |
| Marketable securities | $1,252M |
| Digital assets (USDC, Bitcoin, ETF) | $105M |
| Total liquid assets | $1,760M |
| Outstanding debt | $0 |
| Undrawn revolving credit facility | $500M |
The company has a $500 million revolving credit facility with Morgan Stanley, maturing June 2030 at SOFR + 1.0%. It was briefly drawn for $330 million at the IPO to cover RSU tax withholding and repaid the next day. As of year-end, the balance was zero.
The only covenant is a minimum liquidity requirement of $100 million at quarter-end. Figma has 17 times that.
Non-debt obligations include $498 million in non-cancellable hosting and cloud purchase commitments ($74 million due in 2026, ramping to $135 million in 2027), $80 million in operating lease obligations, and $595 million in deferred revenue (a liability, but one that represents prepaid customer subscriptions).
Cash Flow
| FY2025 | FY2024 | FY2023 | |
|---|---|---|---|
| Operating cash flow | $251M | ($62M) | $1,047M |
| Capex | ($8M) | ($7M) | ($6M) |
| Adjusted free cash flow | $243M | ($69M) | $1,041M |
| FCF margin | 23% | (9%) | 206% |
FY2023 operating cash flow of $1.047 billion includes the $1 billion Adobe termination fee. FY2024 was negative primarily due to $418 million in SBC-related tax withholding payments. FY2025 marks the first year of “normal” cash generation: $251 million in operating cash flow and $243 million in adjusted free cash flow, a 23% margin.
The company also spent $500 million on SBC tax withholding in FY2025 (reported in financing activities), $58 million on acquisitions, and $45 million on digital asset purchases.
6% Annual Dilution With No Buyback Offset
SBC is not free. Even though it does not consume cash directly, it dilutes existing shareholders by expanding the share count. And Figma has no buyback program to offset it.
| Shares | |
|---|---|
| Outstanding (Dec 31, 2025) | ~513M |
| Unvested RSUs | ~87.8M |
| Outstanding options | ~13.3M |
| Remaining under 2025 equity plan | ~53.0M |
| ESPP reserved | ~16.8M |
| Annual evergreen (5% equity plan + 1% ESPP) | ~30.8M/yr |
| Potential fully-diluted shares | ~680M+ |
That is roughly 33% dilution from the current share count, with no buyback offset.
The Evergreen Provision
Most public companies authorize a fixed number of shares for their equity incentive plan. When those shares are used up, the company has to go back to shareholders and ask for more. This gives shareholders a periodic vote on how much dilution they’re willing to accept.
Figma’s 2025 Equity Incentive Plan works differently. It includes an evergreen provision that automatically increases the share pool each year by the lesser of 5% of total outstanding shares or a number set by the board. The ESPP has a similar provision at 1%. Shareholders have already pre-approved perpetual, compounding dilution without needing to vote again.
Here is what that looks like over five years:
| Year | Est. Shares Outstanding | 5% Equity Plan Add | 1% ESPP Add | Total New Shares |
|---|---|---|---|---|
| 2026 | 513M | 25.7M | 5.1M | 30.8M |
| 2027 | 545M | 27.3M | 5.5M | 32.7M |
| 2028 | 578M | 28.9M | 5.8M | 34.7M |
| 2029 | 613M | 30.6M | 6.1M | 36.8M |
| 2030 | 650M | 32.5M | 6.5M | 39.0M |
| Cumulative | 145M | 29M | 174M |
Because the base grows each year (more shares outstanding means a larger 5% slice), the dilution accelerates rather than fades. By 2030, the plan will have authorized roughly 174 million new shares for compensation, on top of the roughly 170 million already reserved today.
In practice, not all authorized shares are granted, and not all granted shares vest. Employee departures, forfeited RSUs, and unexercised options typically reduce actual dilution to 70 to 85% of the authorized amount. The estimates above use the full authorization as a conservative assumption.
A 5% evergreen is at the high end of industry practice but not unusual for post-IPO software companies. Snowflake, Datadog, CrowdStrike, and Cloudflare all use the same 5% rate. The difference is that several of those companies offset the dilution with share repurchase programs. Duolingo, which has a similar 5% evergreen, just authorized a $400 million buyback. Figma has not.
The Ongoing Cost
Figma spent $1.36 billion on SBC in FY2025, but roughly $1.13 billion of that was one-time IPO catch-up charges. The remaining $232 million understates the true run-rate because many of the new awards granted in 2025 are still in early stages of vesting. As those ramp up and the company continues granting new RSUs each year through the evergreen provision, the steady-state annual SBC should settle in the range of $500 to $600 million per year.
| Component | Estimated Annual Cost |
|---|---|
| Employee RSU grants | ~$350-400M |
| CEO Stock Price Award (annualized over ~4 years) | ~$85M |
| CEO Service Award (annualized over ~4.5 years) | ~$93M |
| ESPP | ~$50M |
| Total | ~$578-628M |
This is not a cost that winds down. The evergreen adds new shares to the plan each year, management grants those shares to retain employees, and the expense cycle repeats. At current growth rates, $500 to $600 million in annual SBC represents roughly 35 to 40% of revenue today, compressing toward 20 to 25% over the next few years as revenue scales faster than headcount. Mature SaaS companies typically run SBC at 15 to 25% of revenue. Figma will get there eventually, but the path runs through years of elevated dilution with no buyback offset.
Buybacks Are Not Automatic
The natural response to 6% annual dilution is to demand a buyback program. But Figma has a dual-class share structure. Class B shares carry 15 votes each, and the co-founders hold enough to control all shareholder votes. Outside shareholders cannot force a buyback or any other capital return through a proxy contest. Even if one were announced, buybacks only create value when the stock is purchased at or below intrinsic value. A company buying back shares at 50 times free cash flow is transferring wealth from remaining shareholders to departing ones.
There is also a real tradeoff between buying back shares and investing in growth. Every dollar spent on buybacks is a dollar not spent on R&D, new products, or acquisitions. Figma spent $58 million on acquisitions in FY2025, launched four new products, and is building AI infrastructure that it plans to monetize starting in 2026. If those investments compound at 30 to 40% returns, they will create far more per-share value over time than retiring stock at current multiples. A company growing 41% annually should be biased toward reinvestment.
The right time for Figma to start buying back shares is when the growth rate slows, the product portfolio matures, and the free cash flow exceeds what the business can productively reinvest. But that inflection point carries its own risk. Companies often launch buyback programs during the early stages of a growth deceleration, when the stock still reflects the old growth expectations. The result is billions spent retiring shares at prices that look expensive in hindsight. Figma could find itself in 2028 buying back stock at 15 to 20 times revenue just as the market decides a company growing 20% deserves 10 to 12 times. There is no clean answer here. The dilution is real today, and the tools available to address it come with their own costs and timing risks.
Valuation
Figma’s valuation depends on a question that has no clean answer: how much of the SBC should be treated as a real economic cost?
If SBC is mostly noise and free cash flow is what matters, the stock is cheap at current levels. If SBC is fully real and should be deducted like any other compensation expense, the stock is expensive. The truth is somewhere in the middle, and your answer to that question drives a wide range in valuation outcomes.
The valuations below use 513 million shares outstanding with no dilution assumed. A dilution adjustment is applied at the end.
Revenue Multiple
Figma’s operating profile places it in the top tier of SaaS companies: 87% non-GAAP gross margin, 41% revenue growth, 136% net dollar retention, and 23% free cash flow margin. The Rule of 40 score (growth plus FCF margin) is 64.
The median public SaaS company trades at roughly 6x next-twelve-month revenue. High-growth leaders command a significant premium, though the range is wide. CrowdStrike trades at roughly 22x on 23% growth and cybersecurity category dominance. ServiceNow trades at 15 to 20x on 20% growth and deep enterprise penetration. Datadog trades at roughly 10x on 28% growth. Figma’s growth rate is faster than all three, but it is also six months into its public market life with an SBC profile that makes comparisons difficult.
| NTM Revenue Multiple | Enterprise Value | Net Cash | Equity Value | Per Share |
|---|---|---|---|---|
| 8x (conservative) | $11,200M | $1,760M | $12,960M | ~$25 |
| 12x (mid) | $16,800M | $1,760M | $18,560M | ~$36 |
| 16x (premium) | $22,400M | $1,760M | $24,160M | ~$47 |
DCF
Three scenarios, all using an 11% discount rate and a five-year projection through FY2030.
| Bear | Base | Bull | |
|---|---|---|---|
| FY2026E growth | 25% | 33% | 42% |
| FY2030E growth | 12% | 17% | 19% |
| FY2030E revenue | $2,366M | $3,204M | $3,792M |
| FY2030E FCF margin | 29% | 34% | 38% |
| Terminal growth | 3% | 4% | 5% |
| PV of cash flows | $1,655M | $2,518M | $3,144M |
| PV of terminal value | $5,424M | $9,888M | $15,754M |
| Net cash | $1,760M | $1,760M | $1,760M |
| Equity value | $8,839M | $14,166M | $20,658M |
| Per share | ~$17 | ~$28 | ~$40 |
Cross-Check
| Scenario | DCF | Revenue Multiple Range | Blended |
|---|---|---|---|
| Bear | $17 | $24 (8x) | $20 |
| Base | $28 | $36-42 (12-14x) | $33 |
| Bull | $40 | $50-56 (16-18x) | $48 |
The DCF produces lower values than the revenue multiple in every scenario because it directly captures the years of sub-30% FCF margins in the near term. The revenue multiple reflects what the market is likely to pay based on comparable companies, which tends to be more generous. The blended estimate splits the difference.
Adjusting for Dilution
The targets above assume today’s 513 million shares with no change. In reality, the evergreen provision adds shares every year, and the impact depends on whether the company offsets any of that dilution through buybacks.
| Annual Net Dilution | 3-Year Multiplier | Bear | Base | Bull |
|---|---|---|---|---|
| 0% (full buyback offset) | 1.00x | $20 | $33 | $48 |
| 2% (partial offset) | 0.94x | $19 | $31 | $45 |
| 4% (minimal offset) | 0.89x | $18 | $29 | $43 |
| 6% (no offset) | 0.83x | $17 | $27 | $40 |
At the current 6% gross dilution rate with no buyback, the adjustment is a 17% haircut across all scenarios. If Figma introduces a partial buyback program that cuts net dilution to 2%, the haircut drops to 6%. The difference between those two outcomes is the gap between a base case of $27 and a base case of $31.
At the Current Price
At $25.13, the return profile over a three-year holding period depends on which dilution scenario plays out:
| Scenario | No Offset (6%) | Partial Offset (2%) |
|---|---|---|
| Bear | $17 (-32%) | $19 (-24%) |
| Base | $27 (+7%) | $31 (+23%) |
| Bull | $40 (+59%) | $45 (+79%) |
The downside in the bear case is real. The base case with no dilution offset barely clears the current price. The stock needs either a buyback program or a bull case outcome to generate a meaningful return from here. The single biggest catalyst for re-rating is not revenue growth or margin expansion. It is management signaling that it takes dilution seriously.
What to Watch
| Catalyst | Why It Matters | Timeline |
|---|---|---|
| Q1 2026 earnings + lockup release | First full quarter with AI credit monetization; watch for gross margin trends. Roughly 61 million locked shares unlock on the second trading day after the report, the single largest remaining tranche. | Estimated May 8-18, 2026 |
| Q2 2026 earnings + final lockup expiration | The remaining 78 million locked shares unlock after the report, or by August 31, 2026 at the latest. This marks the end of the Extended Lock-Up Agreement and removes the supply overhang. Combined with Q1, roughly 139 million shares (27% of outstanding) will have entered the float since March 2026. | Late July / August 31, 2026 at latest |
| SBC run-rate in Q1-Q2 2026 | Will confirm whether the one-time catch-up is truly behind them | Mid-2026 |
| Buyback announcement | Any share repurchase authorization would signal capital allocation maturity and offset dilution concerns | 2026-2027 |
| NDR trajectory | Sustained 130%+ confirms enterprise expansion; a drop below 120% is a warning sign | Quarterly |
| AI inference cost trends | Gross margin compression from 91% to 82% over two years is meaningful; needs to stabilize | Quarterly |
| New product revenue contribution | Sites, Make, Buzz, Draw need to show up in ARR metrics to justify the “platform” narrative | FY2026 annual report (February 2027) |
Sources:
Research and analysis conducted with AI assistance using SEC EDGAR filings as primary sources.