Figma Stock Drops 17% Despite Revenue Beat on AI Cost Surge

Figma's stock tumbled 16.52% in after-hours trading Wednesday despite reporting second-quarter results that exceeded both revenue and earnings expectations, as investors reacted to ballooning AI-related costs that compressed the design software company's operating margins.

The company posted revenue of $370.1 million for the quarter, up 48% year-over-year and above its own guidance range. Adjusted earnings per share of $0.08 beat the Wall Street consensus estimate of $0.04, according to details first reported by Quartz.

Operating costs surge with AI investment

Beneath the headline numbers, Figma's cost structure revealed the financial strain of scaling AI capabilities. GAAP operating expenses reached $426.9 million in the quarter, nearly doubling from $219.7 million a year earlier. This produced a GAAP operating loss of $117.3 million, a sharp reversal from operating income of $2.1 million in the same period of 2024.

Stock-based compensation accounted for $147.6 million of quarterly expenses. Cost of revenue more than doubled year-over-year to $60.5 million, driving GAAP gross margin down to 84% from 89% a year earlier. On a non-GAAP basis, which excludes stock compensation and other items, operating income was $36.1 million, representing a 10% operating margin.

CFO Praveer Melwani characterized the quarter as "our first full quarter of AI credit monetization" in a statement. The company reported that over 80% of paid customers with more than $10,000 in annual recurring revenue were consuming AI credits weekly as of June 30. More than 50% of that cohort were using Figma's built-in AI agent feature weekly by July 31.

Growth rate deceleration ahead

Figma guided third-quarter revenue to $373 million to $375 million, implying 36% year-over-year growth at the midpoint—a notable deceleration from the 48% pace achieved in the second quarter. The company raised its full-year revenue target by $40 million to between $1.463 billion and $1.467 billion, representing approximately 39% growth at the midpoint.

Net dollar retention rate stood at 136% in the quarter, down three percentage points from the 139% reported in the first quarter, though still indicating strong expansion among existing customers through both seat additions and AI credit purchases.

For the full year, Figma projected non-GAAP operating income of $125 million to $135 million, representing roughly a 9% non-GAAP operating margin at the midpoint.

Why it matters

Figma's results illustrate a challenge facing software companies racing to integrate generative AI: the technology can drive new revenue streams, but the infrastructure costs arrive immediately while monetization scales more gradually. The market's negative reaction despite strong top-line growth signals investor concern about whether AI features will ultimately expand or compress margins in the design software category. With growth rates expected to decelerate and operating leverage still under pressure, Figma faces questions about the return on its AI investments even as adoption metrics show customer engagement.

These details were first reported by Quartz.