Figma is about to go Public (S-1 review)

In the Founder’s letter, he makes it clear that they are positioning for the longterm. I really like that. 

He mentions AI repeatedly. In a show of humility, he says that the capital investments Figma will make in AI will “be a drag on our share price”. Again, I love the humility. He says, “they have more ideas than ever”…

Currently they have 13M monthly active customers

95% of the Fortune 500 uses Figma

Financial returns:

Revenue in 2024 was $749M, representing a 48% year-over-year growth rate

Their story: 

They want to move Figma from a design tool to a product development platform. 

They define their Total Addressable Market as $33B

I’m very happy that they went through a very detailed product description of their various tools. I spend a lot of time in Figma, so I’m familiar with these.  Most surprising is “Figma Make”, which they want to help create and run ads. This is actually a tool I’ve been looking for, and I thought templates were my only option. To me, this shows how well Figma knows their customer— a great sign for a business. 

Alright, but, as is usual, my biggest question is "WHAT'S THE GROWTH PLAN"

…which they laid out, and it looks like it was written by chatGPT. Not in love with this

... but then again, with revenue growing at 50% year over year, I guess it does make sense to not do anything too crazy. I just wish they shared more of their vision beyond "...AI!"

Looking at their income statement, one thing pops out like crazy. That Other Income from 2023 is because Adobe planned to acquire Figma. In that deal, Adobe promised that if the deal were to fall through for any reason, they would give them $1B in cash. FTC denied Adobe’s acquisition offer, so they got an extra $1B. 

They also don’t have any debt, which is awesome. The blank columns are because it’s an S-1. They will have more info in there as they get ready to IPO. 

Not in love with any of these results. Negative operating income… FCF margin is good, but they need to get profitable. 

Last thing I’ll point out is that they are really good at retaining customers. 

Those are the big things I noticed! Man, I’m really glad we break up research into multiple steps, because this felt all over the place. 

Depending on how the IPO is priced, I could see me taking a position in this company. However, the IPO market does seem quite hot right now, so I may stay away and let the dust settle (and let them communicate their growth plan more)