TLDR: Figma is a speculative buy if there is a post-IPO dip - a bet on the potential upside that could come from a splashy AI acquisition. But dependency on a single product, a narrow TAM, and complex enterprise growth mean there are real headwinds.

My View & Prediction

Figma's IPO offers a high-risk, high-reward play. The most bullish case? A splashy and successful AI acquisition that positions Figma as the design standard of the generative era. But without that kind of narrative jolt, I see this IPO as more about survival than continued breakout growth.

Currently, it seems like Figma's explosive growth is dependent on one main product (Figma Design) and a sales cycle with growing complexity - not a great combo in a macro environment where firms are increasingly looking to cut costs aggressively. Its history with Adobe reminds me of Snap post-Facebook bid - a beloved product with cultural clout, but limited expansion beyond its core. Figma, like Snap, faces the uphill battle of crossing the chasm from niche to platform. Snap’s performance since IPO shows how hard that path can be. However, I can see an AI acquisition pop, mirroring Snap's AR hype pop in 2021.

How we got here

Figma is one of the OG browser-native tools. It emerged in 2013 as an alternative to design industry staples Illustrator and Sketch, gaining traction fast among UI/UX pros due to its real-time collaboration features. With a free tier that led into professional and enterprise plans, its product‑led growth strategy quickly fueled adoption. The 2022 Adobe acquisition bid (then halted because of anti-trust concerns) gave it legitimacy and ~$1B in breakup fees, but also triggered a massive RSU expense and shifted the narrative to a potential IPO.

My personal experience: Having done UI/UX and graphic design since I was a teen, I was an early adopter of Figma - switching over from Illustrator almost immediately after it launched. It was a joy to use due to the simpler and crisp UX - jumping on the Figma together with friends felt like magic.

But over time, the increasingly restrictive pay walls have become frustrating. Today, as a non-designer, I still use Figma, albeit sparingly. The free Starter plan limits how many pages you can create, which makes it hard to use for more extensive projects.

Financial & Operational Highlights from the S-1

• Strong revenue growth: $821M in LTM revenue (as of March 31, 2025), up 46% YoY

• World-class margins: 91% gross margin, 17% operating margin

• Sticky product across cohorts: ~132% Net Dollar Retention

  

• Diverse & recurring user base: 13m MAU’s (2/3 non-designers), over 10.5K enterprise customers, ~1K paying 100K+ ARR, 95% of Fortune 500 on Figma

• Large international presence: 85% of MAU's based outside of the US (but representing <50% of revenue)

Main Concerns from the S-1

1. Figma states that the Use of Proceeds is partly towards AI acquisitions. But I believe investment into AI will not yield results unless it overhauls the entire core product suite to fit the new paradigm. Today's AI design gold standard is something like Vercel's v0 - describe what you want, generate the UI, circle any issues, re-generate and choose what fits. It's a white-glove AI designer at your service. If Figma can’t match that, it risks becoming dated and paced by the future.

2. Management highlighted risk of rising tech debt is something to watch. Even through they are operationally profitable, this cost can grow exponentially. Additionally, we can see from the Meta / OpenAI poaching recently, engineers (especially the ones in AI) can be easily swayed to leave, especially after a liquidity event like the IPO.

3. Management highlighted risk of their sales cycle getting more complex. Figma's growth has come from signing on larger enterprise customers, including government agencies. This requires a higher expertise salesforce and slower conversion cycles, both negative for further growth. Larger enterprise partners are also reticent to spend on AI due to ethical or security concerns. The Seats system is also more and more complex, as seen below:

1. Apart from Figma Design, the rest of the product suite is unproven, and honestly not too compelling. This is what they have to say: "With the addition of these new products, Figma has expanded to help teams go from idea to shipped product faster, all in one place. We believe that AI will accelerate this process even further and allow our users to continue to push the boundaries of what is possible on our platform." -> this is all fluff, half the products were launched in 2025 - most products don't even go from idea to product that fast.There is also no mention of any Spacial Computing Design tools, which I believe is still the next frontier for UI/UX design.

Valuation

Public Comps Analysis

Note: Adobe’s $20B offer and 2023’s $12.5B tender set the market anchor points.

At an expected 15–18x Price/Revenue, the much anticipated IPO is priced well above enterprise peers like Adobe and Salesforce (7–8x). For a wider comp set, Bessemer's Cloud SaaS revenue multiple is currently 9.0x. Figma's multiple can be justified from the higher growth (40+% vs ~10%), but there are limited tailwinds in Figma's favor. Figma management's estimated $33B TAM implies it’s already reaching over 50% of its total market opportunity - in contrast to giants like Salesforce, which still have room to grow into a $200B+ TAM.

Private Comp Analysis

Figma's most direct private comp is the Australian decacorn Canva, valued in 2024 at $33B. the primary difference is in target audience: Figma users are design pros while Canva's are the common folk. Canva dwarves Figma in user (200m vs 13m) and revenue scale (3–4×) across both free and paid tiers, with similar YoY top line growth (44% in 2024) Canva currently trades at ~12.5× revenue, while Figma’s prospective 15–18× multiple looks full vs a bigger player that’s showing both scale and early monetization momentum.

Simple DCF

Assumptions:

The estimated Enterprise Value of Figma is approximately $9.25 billion. This is notably below the expected IPO valuation range of $15–18B, suggesting that Figma’s IPO may be richly priced even under optimistic FCF margin assumptions.

Sources

1. Figma S-1 (2025): https://www.sec.gov/Archives/edgar/data/1579878/000162828025033742/figma-sx1.htm#i8dccdb6f4d824d4aba81e7c665eaa62d_7

2. Canva User & Revenue Stats (2024): https://backlinko.com/canva-users

3. Bessemer Cloud Index (2025): https://cloudindex.bvp.com/

TLDR: Figma is a speculative buy if there is a post-IPO dip - a bet on the potential upside that could come from a splashy AI acquisition. But dependency on a single product, a narrow TAM, and complex enterprise growth mean there are real headwinds.

My View & Prediction

Figma's IPO offers a high-risk, high-reward play. The most bullish case? A splashy and successful AI acquisition that positions Figma as the design standard of the generative era. But without that kind of narrative jolt, I see this IPO as more about survival than continued breakout growth.

Currently, it seems like Figma's explosive growth is dependent on one main product (Figma Design) and a sales cycle with growing complexity - not a great combo in a macro environment where firms are increasingly looking to cut costs aggressively. Its history with Adobe reminds me of Snap post-Facebook bid - a beloved product with cultural clout, but limited expansion beyond its core. Figma, like Snap, faces the uphill battle of crossing the chasm from niche to platform. Snap’s performance since IPO shows how hard that path can be. However, I can see an AI acquisition pop, mirroring Snap's AR hype pop in 2021.

How we got here

Figma is one of the OG browser-native tools. It emerged in 2013 as an alternative to design industry staples Illustrator and Sketch, gaining traction fast among UI/UX pros due to its real-time collaboration features. With a free tier that led into professional and enterprise plans, its product‑led growth strategy quickly fueled adoption. The 2022 Adobe acquisition bid (then halted because of anti-trust concerns) gave it legitimacy and ~$1B in breakup fees, but also triggered a massive RSU expense and shifted the narrative to a potential IPO.

My personal experience: Having done UI/UX and graphic design since I was a teen, I was an early adopter of Figma - switching over from Illustrator almost immediately after it launched. It was a joy to use due to the simpler and crisp UX - jumping on the Figma together with friends felt like magic.

But over time, the increasingly restrictive pay walls have become frustrating. Today, as a non-designer, I still use Figma, albeit sparingly. The free Starter plan limits how many pages you can create, which makes it hard to use for more extensive projects.

Financial & Operational Highlights from the S-1

• Strong revenue growth: $821M in LTM revenue (as of March 31, 2025), up 46% YoY

• World-class margins: 91% gross margin, 17% operating margin

• Sticky product across cohorts: ~132% Net Dollar Retention

  

• Diverse & recurring user base: 13m MAU’s (2/3 non-designers), over 10.5K enterprise customers, ~1K paying 100K+ ARR, 95% of Fortune 500 on Figma

• Large international presence: 85% of MAU's based outside of the US (but representing <50% of revenue)

Main Concerns from the S-1

1. Figma states that the Use of Proceeds is partly towards AI acquisitions. But I believe investment into AI will not yield results unless it overhauls the entire core product suite to fit the new paradigm. Today's AI design gold standard is something like Vercel's v0 - describe what you want, generate the UI, circle any issues, re-generate and choose what fits. It's a white-glove AI designer at your service. If Figma can’t match that, it risks becoming dated and paced by the future.

2. Management highlighted risk of rising tech debt is something to watch. Even through they are operationally profitable, this cost can grow exponentially. Additionally, we can see from the Meta / OpenAI poaching recently, engineers (especially the ones in AI) can be easily swayed to leave, especially after a liquidity event like the IPO.

3. Management highlighted risk of their sales cycle getting more complex. Figma's growth has come from signing on larger enterprise customers, including government agencies. This requires a higher expertise salesforce and slower conversion cycles, both negative for further growth. Larger enterprise partners are also reticent to spend on AI due to ethical or security concerns. The Seats system is also more and more complex, as seen below:

1. Apart from Figma Design, the rest of the product suite is unproven, and honestly not too compelling. This is what they have to say: "With the addition of these new products, Figma has expanded to help teams go from idea to shipped product faster, all in one place. We believe that AI will accelerate this process even further and allow our users to continue to push the boundaries of what is possible on our platform." -> this is all fluff, half the products were launched in 2025 - most products don't even go from idea to product that fast.There is also no mention of any Spacial Computing Design tools, which I believe is still the next frontier for UI/UX design.

Valuation

Public Comps Analysis

Note: Adobe’s $20B offer and 2023’s $12.5B tender set the market anchor points.

At an expected 15–18x Price/Revenue, the much anticipated IPO is priced well above enterprise peers like Adobe and Salesforce (7–8x). For a wider comp set, Bessemer's Cloud SaaS revenue multiple is currently 9.0x. Figma's multiple can be justified from the higher growth (40+% vs ~10%), but there are limited tailwinds in Figma's favor. Figma management's estimated $33B TAM implies it’s already reaching over 50% of its total market opportunity - in contrast to giants like Salesforce, which still have room to grow into a $200B+ TAM.

Private Comp Analysis

Figma's most direct private comp is the Australian decacorn Canva, valued in 2024 at $33B. the primary difference is in target audience: Figma users are design pros while Canva's are the common folk. Canva dwarves Figma in user (200m vs 13m) and revenue scale (3–4×) across both free and paid tiers, with similar YoY top line growth (44% in 2024) Canva currently trades at ~12.5× revenue, while Figma’s prospective 15–18× multiple looks full vs a bigger player that’s showing both scale and early monetization momentum.

Simple DCF

Assumptions:

The estimated Enterprise Value of Figma is approximately $9.25 billion. This is notably below the expected IPO valuation range of $15–18B, suggesting that Figma’s IPO may be richly priced even under optimistic FCF margin assumptions.

Sources

1. Figma S-1 (2025): https://www.sec.gov/Archives/edgar/data/1579878/000162828025033742/figma-sx1.htm#i8dccdb6f4d824d4aba81e7c665eaa62d_7

2. Canva User & Revenue Stats (2024): https://backlinko.com/canva-users

3. Bessemer Cloud Index (2025): https://cloudindex.bvp.com/