The software industry is currently navigating a period of intense scrutiny, dubbed the “SaaS-pocalypse” and “SaaS-mageddon” by some, as investors reassess valuations in the cloud-based software sector. Amidst this backdrop, Figma, the collaborative web-based design tool, offered a surprisingly positive outlook, alleviating some concerns about the impact of artificial intelligence on its business model.
Figma’s fourth-quarter 2025 earnings, released on , revealed revenue of $303.8 million, a 40% increase year-over-year. This acceleration in growth, up from 38% in the third quarter, was a key factor in boosting investor confidence. The company also reported a net dollar retention rate of 136%, the highest in ten quarters, indicating strong customer loyalty and expansion of usage within existing accounts.
Perhaps most significantly, Figma surpassed $1 billion in annual revenue for the first time, closing 2025 with approximately $1.1 billion in total revenue. This milestone positions Figma as a major player in the design software market, valued at $12 billion.
The positive results come after a period of significant volatility for Figma’s stock. Following an initial public offering (IPO) last year, the stock price surged before falling to around $23. Investors had been bracing for a potentially negative earnings report, given the broader downturn in the SaaS sector and anxieties surrounding the potential disruption of AI-powered design tools.
“2025 was a massive year for us,” stated Praveer Melwani, Figma’s chief financial officer, prior to the earnings announcement. “There’s a lot of momentum, and if you zero in on the quarter specifically, growth accelerated from Q3 to Q4.” This momentum was reflected in after-hours trading, with the stock price rising 15% following the release of the earnings report.
Figma’s CEO, Dylan Field, emphasized the company’s strategic focus on innovation, particularly in the realm of artificial intelligence. “Our growth and momentum show that our strategy is working,” Field said during a call with analysts. “As AI gets better, Figma gets better—and we’re shipping faster than ever. In 2025 we expanded from four to eight products and launched over 200 features, including new AI-native functionality.”
The company’s success is partially attributed to its proactive integration of AI into its platform. Rather than viewing AI as a threat, Figma appears to be leveraging it to enhance its existing offerings and attract new users. The increasing accessibility of code, driven by advancements in AI, is also expected to fuel demand for design tools like Figma, as more individuals and organizations seek to create visually compelling interfaces, and experiences.
Figma’s 2026 revenue forecast further reinforces this optimistic outlook. The company projects revenue between $1.36 billion and $1.37 billion for the year, exceeding previous estimates. This forecast suggests that Figma is well-positioned to capitalize on the growing demand for collaborative design tools and the increasing importance of design in the age of AI.
The broader context of the SaaS market remains challenging. A recent selloff in the sector has wiped out roughly $1 trillion in valuations, with over $285 billion in market value lost in February alone. However, Figma’s performance suggests that companies with strong fundamentals, innovative products, and a clear vision for the future can weather the storm and continue to thrive.
While Adobe, a long-standing competitor in the creative software space, has seen its stock decline by 43% over the past year, Figma’s trajectory indicates a different path. The company’s focus on collaboration, accessibility, and AI-powered features appears to be resonating with users and investors alike.
The success of Figma also highlights a broader trend within the software industry: the increasing importance of design as a core component of product development. As code becomes more accessible, the ability to create intuitive and visually appealing user interfaces becomes even more critical. Figma’s platform is designed to empower designers and developers to collaborate seamlessly, accelerating the design process and improving the overall user experience.
