SaaS-pocalypse. SaaS-mageddon. These are just some of the intelligent software-as-a-service portmanteaus being tossed round as traders debate a large selloff within the sector that has vaporized roughly $1 trillion in valuations from latest highs, with greater than $285 billion in market worth worn out in February alone.
On Wednesday, it was cloud-based design platform Figma’s flip to announce its fourth quarter 2025 earnings outcomes to a market primed to seek for indicators of a seamless SaaS-nado. Traders have been able to pummel the inventory after Figma noticed a greater than 80% tumble since an IPO final yr that noticed its value surge above $140 earlier than sinking about $23. The This autumn headline numbers advised a optimistic story with income of $303.8 million, up 40% year-over-year and an acceleration from the 38% posted within the third quarter. Internet greenback retention fee—a measure of how a lot present purchasers are spending— hit 136%, the best it’s been in 10 quarters. Plus, the $12 billion design firm crossed the $1 billion annual income threshold for the primary time ever, wrapping up 2025 with roughly $1.1 billion. The fourth quarter noticed Figma’s finest efficiency ever of internet new income.
“2025 was a massive year for us,” mentioned Figma chief monetary officer Praveer Melwani in an interview earlier than the announcement. “There’s a lot of momentum, and if you zero in on the quarter specifically, growth accelerated from Q3 to Q4.”
In after-hours buying and selling following the earnings launch, the inventory traded up 15%.
Quarter-over-quarter acceleration—versus deceleration—can be a key sticking level for the market in Figma’s numbers and the story it tells about them. Giants similar to Intuit, Microsoft, Oracle, and Salesforce have tumbled, and in latest weeks Amazon, Alphabet, Meta, and Microsoft have all introduced important will increase in capital expenditures which have served to crush free money circulation numbers and lavatory down anticipated progress.
Figma’s adjusted free money circulation margin, which traders use to gauge how a lot of every income greenback can finally circulation to revenue, fell from 41% within the first quarter to 24% in Q2, to 18% in Q3, to 13% in This autumn. Gross margin slid from roughly 92% earlier this yr to 86% in This autumn, with the shrink attributed to the price of operating AI inference at scale.
In ready remarks, Melwani attributed the This autumn free money circulation decline to “continued investment in infrastructure and AI, changes in the timing of vendor payments, and a one-time $25 million IP transfer tax.” The latter is tied to Figma’s $200 million acquisition of AI-imaging startup Weavy, which has since been rebranded to Figma Weave.
Melwani mentioned the corporate “remains confident in the long-term cash generating profile of the business” and pointed to stabilization in gross margins over the previous two quarters. Q3 held at 86%, which was the identical in This autumn, though weekly energetic customers of Figma’s prototyping instrument, Figma Make, rose 70%. “Improvements in infrastructure optimization reduced our cost to serve each user,” he mentioned.
One other crucial stress take a look at will come subsequent month when Figma plans to modify on its consumption-based pricing per seat, which is how it’s planning to monetize AI utilization. Figma has allowed prospects to check out its choices to get particular person customers and groups acquainted and traders are watching intently to make sure AI investments are translating into income progress.
In an interview, Melwani laid out a two-pronged method. First, embedded credit throughout all seat sorts, together with starter and free customers, will get them began on the AI choices—and Figma hopes they’ll interact deeply with the instruments. Second, as soon as March rolls round and the consumption limits kick in, customers on the platform that exceed the bounds must buy an add-on pack, mentioned Melwani.
He mentioned the suitable indicators are all there. Some 75% of paid prospects with greater than $10,000 in annual recurring income (ARR) are actually bingeing AI credit on a weekly foundation. Greater than half of Figma’s paid prospects above $100,000 in ARR are utilizing Figma Make each week, he mentioned. Figma is betting that utilization will convert into income that offsets the infrastructure prices.
“We’ll slowly start to transition to include some consumption and as you do that, you’ll start to see an offset,” mentioned Melwani.
Figma will nonetheless must persuade traders that although its profitability appears to be creeping within the flawed course, it’s going to finally meet up with its prime line.
One other vivid spot comes from the corporate partnering—and explaining these partnerships—with Anthropic and OpenAI at a time when traders wish to perceive how companies are working with marquee AI companies reasonably than towards them. Figma introduced a partnership with Claude Code on Feb. 17, and works with OpenAI by means of a ChatGPT and FigJam integration.
Figma wrapped up This autumn with 67 prospects spending greater than $1 million yearly, up 68% year-over-year, which is a cohort Melwani mentioned the corporate doesn’t typically flag.
“We’ve done a lot of work to make sure what we’ve built is scalable for enterprise,” he mentioned. “That’s translated into accelerated growth.”
