Figma is growing and it’s profitable.
Adobe’s previous offer acts as validation for the business and its valuation.
The company is innovating rapidly in AI, taking advantage of a huge opportunity.
10 stocks we like better than Figma ›
Figma (NYSE: FIG) has been one of the hottest IPOs this year.
The debut of the cloud software company that specializes in user interface and user experience (UI/UX) was highly anticipated after regulators blocked Adobe‘s (NASDAQ: ADBE) $20 billion acquisition of the company back in 2022.
Figma stock finally hit the public markets on July 31 and soared on the opening, climbing from its IPO price of $33 all the way to an intraday peak of $142.92 the following day before cooling off. It’s now trading around $55.
With the stock price looking more reasonable following that retreat, I took the opportunity to scoop up a few shares. Here’s why.
Image source: Figma.
Unlike many of its peers in the software-as-a-service sector, Figma is actually profitable, and relatively few cloud software stocks can say they were at the time of their IPO.
In the second quarter, revenue jumped 41% to $249.6 million, and the company delivered balanced growth from both existing customers and new ones. Net dollar retention rate was up 129%, meaning existing customers increased their spend with Figma by 29% over the last four quarters.
Meanwhile, it added 799 new customers with annual recurring revenue (ARR) of more than $10,000 in the second quarter, a sequential increase of 7.2%. The company is also successfully getting its customers to use more of its products, making the overall business stickier. As of the end of the second quarter, 80% of its customers used two or more of its products, while two-thirds used three or more.
Additionally, while its profit margins are pulling back as it invests in new artificial intelligence (AI) products, the full-year forecast still looks strong as it expects adjusted operating income of $88 million to $98 million on revenue of $1.021 billion to $1.025 billion, or an adjusted…
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