Figma, Inc. (FIG) Earnings

Management highlights

### Core Business and AI Monetization Progress - Achieved third consecutive quarter of accelerated year-over-year revenue growth, with the first full quarter of AI credit monetization complete - Net dollar retention remains strong at 136%, gross retention holds steady in the mid-to-high 90s, and approximately two-thirds of large paid customers add full seats at renewal, consistent with historical trends - Early usage of new beta AI products (Figma Agent, Figma Make on Local Code, Motion, Generative Plugins, Code Layers) is trending ahead of expectations; over 50% of paid customers with >$10,000 in ARR use the Figma Agent weekly as of July 31, and 20% of weekly credit-consuming paid users exclusively use the Figma Agent - MCP (Model Context Protocol) write-to-Figma usage grew 75% quarter-over-quarter, enabling seamless movement of code between external repositories and the Figma canvas ### New Product Launches and Capabilities - Announced Code Layers at Config 2026, which lets interactive code live directly on the Figma canvas to enable collaborative, side-by-side iteration of code-backed prototypes; early access is planned for the near future - Updated Figma Make to support direct work in production codebases, allowing teams to go from idea to shipped product without leaving Figma - Launched native Motion and Shaders capabilities, enabling custom animations and custom dynamic textures directly on the Figma canvas without switching tools - Launched FigmaWeave for AI-generated media, which lets users sculpt and refine generated visual assets directly on the canvas, opening Figma to new audiences like in-house brand designers and creative agencies - Launched generative plugins, which let the Figma agent build custom reusable plugins for teams based on text descriptions; weekly plugin creation has more than doubled post-launch ### Strategic Direction - Figma is evolving from a design canvas to a unified canvas for full stack creation, as the line between software development and creative work dissolves, expanding total addressable market - Key differentiators against competing tools: a performant professional-grade canvas that supports collaboration between humans and AI agents, deep product context that makes agents useful, and full creative control via a combination of AI and direct manipulation - Pursuing a model-agnostic inference architecture, with growing investment in proprietary first-party models trained on Figma's design corpus to reduce cost and latency while maintaining quality ### Leadership Transitions - CTO Kris Rasmussen will move to the role of Chief Architect to focus on core engineering challenges starting with the Figma Agent; a new CTO search is underway, and engineering teams will report to CEO Dylan Field in the interim - Dev Akave promoted to Chief Security Officer - Chief Product Officer Yuki Yamashita departed after seven years; Chief Design Officer Loredana Krishnan will expand her role to lead the product function - Chief Marketing Officer Sheila Vashee will depart at the end of August; Chief Communications Officer Nairi Hourdajian will take over as CMO ### Go-to-Market and Global Expansion - Expanded global footprint with a new Sao Paulo office and local data hosting in Brazil, following prior data localization launches in Australia and India

Guidance

- For Q3 2026, management guides revenue of $373 million to $375 million, representing 36% year-over-year growth at the midpoint of the range - For full-year 2026, management raised revenue guidance by $40 million to a range of $1.463 billion to $1.467 billion, implying 39% year-over-year growth at the midpoint. The upward revision reflects stronger-than-expected AI credit consumption for currently monetized products, positive early signals from new product launches, strong customer conversion, and continued account expansion - Full-year 2026 non-GAAP operating income guidance is maintained at $125 million to $135 million, equal to a 9% operating margin at the midpoint. Management is leaning into increased investment in new products to build long-term competitive advantage, accepting temporary near-term margin pressure - Management's guidance philosophy only incorporates sustained, observable trends; revenue from products currently in beta/early access (which do not yet charge for paid credits) is not included in current full-year guidance, representing future upside as these products transition to general availability

Segment performance

Figma reports consolidated results and does not break out performance into separate product segments in this call. The only segmented revenue contribution detail provided is that AI credit monetization contributed to results for the first full quarter in Q2 2026. Core consolidated financial performance for Q2 2026 is as follows: total revenue of $370 million, representing 48% year-over-year growth (third consecutive quarter of accelerated growth); non-GAAP gross profit of $314 million, up 40% year-over-year; non-GAAP gross margin of 85%, up 2.5 percentage points quarter-over-quarter; non-GAAP operating income of $36 million, equal to a 10% non-GAAP operating margin; free cash flow of $53 million, equal to a 14% free cash flow margin; net dollar retention rate of 136% for paid customers with over $10,000 in ARR; paid customers with over $10,000 in ARR grew 34% year-over-year; paid customers with over $100,000 in ARR grew 46% year-over-year; international revenue grew 50% year-over-year. Cash, cash equivalents, and marketable securities totaled $1.7 billion at the end of the quarter.

Risks & headwinds

- Actual results may differ materially from forward-looking statements due to unidentified risks and uncertainties, which are detailed in Figma's SEC filings, including the Q2 2026 Form 10-Q - Gross margin will fluctuate quarter-to-quarter in the near term, as the company bears inference costs for beta products that are not yet monetized - AI credit usage is more volatile than traditional fixed subscription revenue, which can introduce variability to revenue recognition depending on contracting and consumption structures - Early AI market evolution means customer preferences for pricing and packaging of AI credits are still developing, requiring continued iteration to remove adoption barriers - Increased competitive entry into AI-enabled design and development tools could pressure market share and pricing - New products depend on continued optimization of inference cost, latency, and quality to drive successful monetization; failure to deliver on these improvements could limit adoption

Analyst Q&A

• Q: With growing competition from new AI design and coding tools, how is Figma performing on top-of-funnel and upsell/cross-sell, and why is Figma continuing to win in this more crowded market? /

  A: Many competing tools target different use cases: some are focused solely on coding, others are optimized for individual or small team use cases. Building software at scale requires more than just code generation; it requires a professional-grade collaborative environment. Figma's key differentiators are a performant canvas that lets humans and AI agents work side-by-side, deep product context that makes agents useful, and full creative control via AI + direct manipulation, plus a growing ecosystem including MCP and upcoming Code Layers. Teams continue to double down on Figma as they mature their AI workflows, and the existing product base plus AI credit monetization model create strong tailwinds for growth. (337 characters)

• Q: Why is Q3 sequential revenue guidance more conservative than recent quarters, and how should we think about gross margin cadence over the medium term? /

  A: Figma's guidance philosophy only incorporates revenue from products with sustained, observable monetization trends. New products in beta/early access (including Figma Agent and Code Layers) are not yet monetized, so their revenue is not included in current guidance. The company is investing to optimize cost, latency, and quality for these new products before transitioning them to general availability and full monetization. The company is currently in an investment cycle that will pressure near-term margin, but once new products are monetized, gross profit dollar growth will accelerate over the medium to long term. (421 characters)

• Q: For the $40 million full-year revenue upward revision, how much comes from incremental AI credit usage versus higher seat growth, and are you including revenue from the new Config beta products in guidance? /

  A: Management explicitly does not include any revenue from products currently in early access or beta in the full-year guidance. These products represent future upside as they transition to general availability and paid monetization. The upward guidance revision reflects currently observable strength in existing monetized AI credit consumption, as well as sustained strong seat growth from existing core business. Management's approach is to only include revenue that the team has high confidence in based on observed trends. (386 characters)

• Q: What feedback have you received from customers on AI credit pricing, and what changes are you making to the pricing model? /

  A: The clearest customer demand is for more control and choice over AI credit usage and cost, alongside transparency around ROI. Figma is rolling out new features including user-level credit allocation controls to give admins better governance over organization-wide usage. The company is also working to accommodate customer preferences for more flexible credit drawdown over longer time periods. Figma is still learning about customer preferences for AI consumption pricing as the market is in early stages, and will continue iterating the model to remove adoption barriers over time. (370 characters)