Figma stock shriveled on Thursday after the design software firm forecast decelerating revenue growth in the company's first quarterly report since its initial public offering.
The San Francisco-based company late Wednesday said it earned an adjusted 9 cents a share on sales of $249.6 million in the second quarter. Both figures were in line with analyst estimates, according to FactSet. On a year-over-year basis, Figma's revenue increased 41%.
However, it predicted revenue growth of 33% in the current quarter and 37% for the full year.
On the stock market today, Figma stock retreated 19.9% to close at 54.56.
"Our performance this quarter highlights the strength of our business and the critical value of design," Chief Financial Officer Praveer Melwani said in a news release.
He added, "We delivered best-in-class revenue growth and positive operating margin as we kept investing in AI and expanded our platform. Our 129% Net Dollar Retention Rate also shows that our customers are continuing to deepen their investment in Figma's platform."
Figma offers cloud-based tools for the collaborative design of websites, apps and other products. In 2023, federal regulators blocked an attempt by rival Adobe to acquire Figma.
Figma Stock Gets Price-Target Cuts
Four Wall Street firms lowered their price targets on Figma stock after the report. The firms — BofA, Morgan Stanley, RBC Capital and Wells Fargo — have neutral ratings on the stock.
Figma stock began trading on July 31. Its IPO priced shares at $33. Figma stock notched a record high of 142.92 in its second trading session on Aug. 1.
Based on the midpoint of its guidance, Figma expects third-quarter and full-year revenue of $264 million and $1.023 billion, respectively. Analysts polled by FactSet had expected $261.7 million and $1.022 billion. But the figures were likely short of buy-side expectations, Morgan Stanley said in a report.
William Blair analyst Arjun Bhatia said Figma's first post-IPO report matched expectations.
"There were no big surprises in Figma's second-quarter results as it continues to deliver robust growth with more monetization opportunities to come down the road," Bhatia said in a client note.
Bhatia believes the company's forward estimates will prove conservative.
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