SaaS-pocalypse. SaaS-mageddon. These are just a few of the clever software-as-a-service portmanteaus being bandied about as investors debate a major sell-off in the sector that has erased $1 trillion in valuations from recent peaks, with more than $285 billion in market value lost in February alone.
On Wednesday, cloud-based Figma took its turn to release its 2025 results to a market primed to look for signs of a continuing SaaS-nado. Investors were ready to hammer the stock after Figma saw an over 80% drop since last year’s IPO—where its price surged above $140 before sinking to around $23. The Q4 headline numbers told a positive story: revenue hit $303.8 million, up 40% year over year and accelerating from the 38% posted in Q3. Net dollar retention rate—a metric measuring how much existing clients spend—reached 136%, the highest in 10 quarters. Plus, the $12 billion design firm crossed the $1 billion annual revenue threshold for the first time, wrapping up 2025 with roughly $1.1 billion. Q4 marked Figma’s best-ever net new revenue performance.
“2025 was a huge year for us,” Figma chief financial officer Praveer Melwani said in an interview before the announcement. “There’s strong momentum, and if you focus just on the quarter, growth picked up from Q3 to Q4.”
In after-hours trading following the earnings release, the stock rose 15%.
“Our growth and momentum prove our strategy is working,” during a call with analysts. “As AI improves, Figma does too—and we’re launching faster than ever. In 2025, we expanded from four to eight products and rolled out over 200 features, including new AI-native functionality.”
Field added that as code becomes more accessible and draws in more users, design will grow even more important—it inherently requires human input.
“I think humans will keep using software, and agents will increasingly do so too,” he continued. “This creates more areas for designers to work on and think through.”
Quarter-over-quarter acceleration (versus deceleration) will be a key sticking point for the market regarding Figma’s numbers and the narrative they tell. Giants such as , , , and have fallen, and in recent weeks , , , and Microsoft have all announced significant capital expenditure hikes that have served to and slow expected growth.
Figma’s adjusted free cash flow margin—used by investors to gauge how much of each revenue dollar flows to profit—dropped from 41% in Q1 to 24% in Q2, 18% in Q3, and 13% in Q4. Gross margin slid from roughly 92% earlier in the year to 86% in Q4, with the shrinkage attributed to the cost of scaling AI inference.
In prepared remarks, Melwani linked the Q4 free cash flow decline to “ongoing infrastructure and AI investments, changes in vendor payment timing, and a one-time $25 million IP transfer tax.” The latter is tied to Figma’s $200 million acquisition of AI-imaging startup Weavy, now rebranded Figma Weave.
Melwani said the company “remains confident in the business’s long-term cash generation profile” and pointed to stabilized gross margins over the past two quarters (Q3 and Q4 both at 86%), even as weekly active users of Figma’s prototyping tool Figma Make rose 70%. “Infrastructure optimization improvements reduced our cost to serve each user,” he said.
Another critical test comes next month when Figma plans to activate its pricing per seat—its plan to monetize AI usage. Figma has let customers try its offerings to familiarize individual users and teams, and investors are watching closely to ensure AI investments translate to revenue growth.
In an interview, Melwani outlined a two-pronged approach: First, embedded credits across all seat types (including starter and free users) will let them start using AI tools—Figma hopes they’ll engage deeply. Second, once March arrives and consumption limits take effect, users exceeding the limits will need to buy an add-on pack, Melwani said.
He noted positive signals: Around 75% of paid customers with over $10,000 in annual recurring revenue (ARR) now use AI credits heavily weekly. More than half of Figma’s paid customers with over $100,000 in ARR use Figma Make every week. Figma bets this usage will convert to revenue that offsets infrastructure costs.
“We’ll gradually transition to include some consumption-based pricing, and as we do, you’ll see an offset,” Melwani said.
Figma still needs to convince investors that even though profitability is trending downward, it will eventually align with its top-line growth.
Another bright spot comes from Figma’s partnerships with Anthropic and OpenAI (and explaining those ties) at a time investors want to understand how firms collaborate with top AI players rather than compete. Figma announced a with Claude Code on Feb. 17 and works with OpenAI via a ChatGPT and FigJam integration.
However, during the earnings call, an analyst asked Field about investor concerns that working with Anthropic and OpenAI could let the “fox into the hen house”—and where the lines between Figma and the AI labs lie. Field said Figma is “excited to deepen” collaboration between Anthropic and Figma.
“I think there’s far more we can do here, and a big part of our platform’s differentiation will come from unifying these surfaces,” Field said. “It’s also crucial to remember that the back-and-forth between code and design can set us apart—I’m very bullish on the opportunities that wouldn’t exist without this cycle.”
Figma ended Q4 with 67 customers spending over $1 million annually—up 68% year over year, a group Melwani said the company doesn’t often highlight.
We’ve put in a lot of work to ensure our products scale for enterprise,” he said. “That’s translated into faster growth.”