Figma, Inc. Q3 FY2025 earnings call

• AI is a key tailwind for Figma, with value moving up the stack and Figma benefiting as AI models improve. - Q3 was the best quarter in Figma's history with $274 million revenue, 38% Y/Y growth, and crossing $1 billion annual revenue run rate. - Launched over 50 new features in Q3. - Figma Make is gaining momentum, with 30% of customers spending $100,000 or more in ARR creating in Figma Make weekly. - Acquired Weavy, which combines AI models with professional editing tools. - Invested in product velocity, platform strategy, and AI, with Figma being used in various workflows by customers like Intercom, Flipkart, Rivian, Lowe's, and Okta.

In Q3, Figma achieved $274 million in revenue, representing 38% year-over-year growth. The annualized revenue run rate crossed $1 billion. Net dollar retention for paid customers with ARR of $10,000 or more ended the quarter at 131%, an increase of 2 percentage points quarter-over-quarter. There were 540,000 total paid customers by the end of Q3, up from nearly 450,000 at the end of Q1. More than 70% of customers were using three or more products. The gross profit was $237 million with a gross margin of 86%, operating income was $34 million with an operating margin of 12%, and adjusted free cash flow margin was 18%.

• Raised outlook for revenue and operating income for the year. - Expect Q4 revenue to be between $292 million and $294 million, implying 35% Y/Y growth at midpoint. - Full-year revenue anticipated to be between $1.044 billion and $1.046 billion, an increase of $22 million from prior range. - Full-year operating income expected to be between $112 million and $117 million.

• Market competition could impact growth. - AI investments may affect near-term margins. - Uncertainties related to regulatory compliance and changing customer needs could pose risks.

Q: Keith Weiss from Morgan Stanley asked about Weavy's place in the design paradigm and value accrual in the AI tool chain.

A: Dylan Field responded that Weavy is a product allowing composition of AI model outputs with professional editing tools, opening up new possibilities for Creatives and fitting into Figma's thesis that design, craft, and point of view are differentiators.

Q: Rishi Jaluria from RBC inquired about tangible results from $100,000-plus customers using Figma Make and long-term adoption target.

A: Dylan Field mentioned Figma Make's progress and Praveer Melwani added that Figma Make adoption among $100,000-plus customers is growing and the platform narrative continues to resonate with folks.

Q: Arjun Bhatia from William Blair asked about how Buzz and Weavy fit together and go-to-market for new personas.

A: Dylan Field said Buzz is more focused on the graphics case and consistent workflow, while Weavy is about the production workflow, and they will operate as stand-alone initially with evaluation of integration later.

Q: Kash Rangan from Goldman Sachs asked about halo effect of Make on core product adoption and dev mode metrics.

A: Dylan Field talked about changing workflows and Praveer Melwani mentioned multiproduct adoption and continued innovation in Dev Mode.

Q: Alex Zukin from Wolfe Research asked about OpenAI integration impact and net dollar retention outlook.

A: Dylan Field said OpenAI integration is early days and Praveer Melwani discussed net dollar retention drivers and future outlook.

Q: Brad Sills from Bank of America asked about new paid customers' origin and traction of Buzz and Draw.

A: Praveer Melwani said new customers are across the board with international growth and traction in Buzz and Draw.

Q: Michael Turrin from Wells Fargo Securities asked about Make growth drivers and Q4 guide strength.

A: Praveer Melwani explained Q4 guide strength and Dylan Field discussed Make's focus on B2B teams.

Q: Mark Murphy from JPMorgan asked about customers moving to Figma Make due to competing products' limitations.

A: Dylan Field mentioned Figma's strategy of tying design systems to code and using MCP to build into code as a differentiator