When a inventory jumps 13% within the session after earnings day, and the analyst overlaying it nonetheless cuts the worth goal, one thing attention-grabbing is occurring, and chances are you’ll need to dig beneath the floor. That’s precisely the scenario unfolding at Figma (FIG) proper now.
The design software program firm delivered a first-quarter 2026 earnings report that caught Wall Avenue off guard. Income had been up 46% yr over yr, buyer retention at its highest stage in two years, and AI adoption metrics that immediately problem the narrative that AI instruments are consuming Figma’s lunch somewhat than increasing its market.
Goldman Sachs reviewed the ends in a word shared with me at TheStreet. Goldman’s message is that the quarter was genuinely good, the AI monetization story is rising, however the aggressive risk from AI-native design instruments is actual sufficient to warrant warning on the a number of.
Goldman Sachs downgrades Figma inventory worth goal to $30 from $35
Goldman Sachs maintained its Impartial score and lowered its 12-month worth goal to $30 from $35, whereas concurrently acknowledging the outcomes had been stronger than anticipated. At $22.92, that $30 goal implies roughly 48% upside.
The primary-quarter scorecard, in response to Figma’s Could 14 earnings launch:
Income of $333.4 million, up 46% yr over yr, accelerating from 40% in This autumn 2025 and 38% in Q3 2025
Non-GAAP working earnings of $52.1 million, with a 16% non-GAAP working margin
Free money move of $88.6 million, representing a 27% free money move margin
Internet Greenback Retention Charge of 139%, up three share factors from the prior quarter, the best in over two years
Paid prospects with greater than $100,000 in Annual Recurring Income (ARR) grew 48% yr over yr
Whole paid prospects grew 54% yr over yr to roughly 690,000 Supply: Figma First Quarter 2026 Monetary Outcomes
Goldman famous within the shared word that income got here in 5% above Avenue estimates, EBIT margins had been roughly 650 foundation factors above expectations, and second-quarter income steering sits 6% above consensus. Full-year 2026 steering was raised by $55 million.
“Q1 was an unbelievable quarter for Figma,” stated co-founder and CEO Dylan Discipline. “When code is a commodity, design is the aggressive edge – the craft, perspective, and human judgment that make an ideal product rise above the remaining.”
Roughly 60% of Paid Clients with greater than $100,000 in ARR used Figma Make weekly within the three months ended March 31, 2026, up from over 50% within the prior quarter. Cheng Xin/Getty Photographs
The AI monetization knowledge is the story Goldman most needs buyers to concentrate on
The aggressive concern hanging over Figma for the previous yr has been this. If AI brokers can generate designs and code routinely, do groups nonetheless want Figma’s collaborative design platform? The Q1 knowledge is starting to reply that query, and the reply is extra favorable than bears anticipated.
My evaluate of the AI engagement metrics from Figma’s launch reveals an organization the place AI is driving growth, not compression. And simply as Goldman Sachs stated, the extra essential sign is scaling monetization with out utilization degradation.
Extra Tech Shares:
Roughly 60% of paid prospects with greater than $100,000 in ARR used Figma Make weekly in Q1, up from 50% in This autumn, in response to Figma’s earnings report,
Greater than 75% of Group and Enterprise customers who had exceeded AI credit score limits continued consuming credit in April. Greater than 95% remained energetic on the platform as of April 30.
Professional groups buying AI credit score add-ons confirmed greater than 3 times the typical annualized spend versus these not buying add-ons. Clients with greater than $100,000 in ARR utilizing Figma’s Mannequin Context Protocol (MCP) server grew full seats roughly 70% quicker than these not utilizing it.
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That final quantity is the one Goldman flagged most prominently within the word. Fairly than AI brokers pulling customers into competitor environments, early knowledge suggests the alternative. Figma’s MCP integration is accelerating seat growth amongst its largest prospects.
New Professional staff conversions grew greater than 150% yr over yr in Q1, pushed by AI credit score limits incentivizing tier upgrades. That is the monetization mechanism Figma wanted to exhibit, and Q1 was the primary quarter the place it confirmed up clearly within the numbers.
Goldman’s $30 goal reduce and what the Impartial score really means right here
Goldman’s choice to decrease the worth goal from $35 to $30 – primarily based on a 10x EV/gross sales a number of, down from 13x – displays a peer a number of recalibration somewhat than a deteriorating elementary view, in response to the word. Income estimates had been raised: Goldman now fashions $1.428 billion in 2026, $1.729 billion in 2027, and $2.039 billion in 2028.
The Impartial score acknowledges two actual tensions. The upside case is constructing as a result of AI monetization is arriving quicker than feared, buyer growth is accelerating, and Figma’s multiplayer design structure could also be extra defensible than critics assumed. The draw back threat stays aggressive strain from AI-native design instruments, gross margin headwinds as AI inference prices run forward of monetization, and a valuation that also requires robust execution to justify.
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The gross margin miss of 110 foundation factors beneath estimates is the one quantity within the quarter that Goldman watched rigorously. Figma is driving AI adoption forward of full monetization – credit score limits had been solely applied on March 18, that means the income good thing about enforced limits has barely began flowing by the earnings assertion. Goldman expects the hole between income development and gross revenue development to compress as monetization scales.
At $22.92 with a $30 Goldman goal and accelerating AI engagement knowledge, Figma is a inventory the place the basic story simply bought meaningfully higher, even when Goldman Sachs is not able to improve but.
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This story was initially printed by TheStreet on Could 17, 2026, the place it first appeared within the Investing part. Add TheStreet as a Most popular Supply by clicking right here.
