Performance exceeding expectations cannot withstand valuation pressure, Wall Street big banks downgrade Figma (FIG.US) target price.

Figma(FIG.US) announced its fourth-quarter performance and latest guidance, which exceeded market expectations. Revenue growth accelerated, profitability stabilized, and the user penetration of its artificial intelligence (AI) tools continued to increase, driving further improvement in the company's fundamentals. Boosted by this news, Figma's stock price rose nearly 4% against the market on Thursday. RBC Capital Markets pointed out in their latest investor report that several core financial metrics for Figma in the fourth quarter exceeded consensus expectations. The RBC analyst team led by Rishi Jaluria stated that Figma's revenue for the quarter grew by 40% year-over-year, with a non-GAAP gross margin of 86.2% and a non-GAAP operating margin of 14.5%. Management explained that the stable gross margin was mainly due to infrastructure optimization reducing the cost per user, while the improvement in operating margin came from revenue exceeding expectations and stable gross margins, partially offset by continued increased investment. Additionally, pricing and product mix adjustments are expected to contribute positively to revenue growth in the mid-single digits in the 2025 fiscal year. Despite the impressive performance, RBC maintained a "sector perform" rating for Figma, lowering the target price from $38 to $31. The firm emphasized that Figma is showing strong momentum in developing multiple products synergistically, particularly in combining AI tools in the creative design field. In terms of product and user data, Figma's AI-related tools stood out. RBC noted that in the fourth quarter, over 80% of active users on Figma Make also used Figma Design. The weekly active users of Figma Make grew by over 70% month-over-month, with over half of customers spending over $100,000 in annual recurring revenue (ARR) on the product. Additionally, about 60% of Figma Make files are created by non-designer users, indicating an expansion of its user base to a wider range of enterprise roles. Management also disclosed that about 75% of paying customers with ARR exceeding $10,000 have started using AI points weekly. The company further strengthened its AI capabilities by acquiring Weavy and launching Figma Weave, covering image, video, animation, and dynamic content generation, with integration with Claude Code. By 2025, Figma's product line has expanded from 4 to 8, with over 200 new features released annually, many of which focus on AI. On the other hand, J.P. Morgan also acknowledged Figma's execution and technical roadmap but lowered the target price based on changes in the valuation system. Analyst Mark Murphy maintained a "neutral" rating for Figma but lowered the target price from $60 to $45, mainly due to a significant downward shift in comparable company valuation multiples. J.P. Morgan believes Figma Make is significantly better positioned and integrated than lightweight "ambient programming" products, which face challenges in integrating into enterprise workflows and compliance systems, making it harder to deploy in large enterprises. Over the past year, concerns about AI impacting software business models based on per seat fees have continued to weigh on the performance of the entire software sector. For example, the iShares Expanded Tech-Software Sector ETF (IGV.US) has fallen by about 24% during the same period. However, Figma's CFO and Treasurer Praveer Melwani emphasized in the earnings call that the company continues to achieve seat growth. Melwani stated that the company's outlook is based on the momentum of the business improving towards 2025, including incremental growth from new products, seat expansion from both new and existing customers, and expansion into international markets. He also mentioned that management will continually adjust assumptions based on actual customer usage and further drive the adoption of AI capabilities. Since March of this year, Figma's business model will gradually transition to monetizing both "seats + AI points", a change that has not yet been reflected in historical revenue data. As Figma's largest competitor, Adobe (ADBE.US) saw relatively stable stock performance on Thursday, with the market's focus more on Figma's continued progress in the AI design tools field and its potential impact on traditional software business models.