A-Portfolio

The company in one breath

Figma, ticker FIG on the New York Stock Exchange, is the shared workbench where designers, developers, product managers, and now AI agents turn an idea into a digital product. Companies pay for seats, extra products, and AI credits because keeping the whole crew in one file beats passing screenshots around like ransom notes.

The moat starts with habit. A design file becomes the meeting room, the blueprint, and the handoff to code. Good for a software company like this means customers invite more coworkers, add more products, and hate the thought of moving everything somewhere else.

Why now

Figma sold stock to the public at $33 in July 2025. Its latest overnight trade was $26.11 at 7:08 a.m. Eastern on August 14, from the Robinhood broker feed. That means the stock sits about 21 percent below its IPO price, and good entry quality means the business has improved while the bill has come down.

The business did improve. Second-quarter revenue reached $370.1 million, up 48 percent from a year earlier. Revenue is the money customers sent in before expenses, so this was fast, real growth. Good for a software leader at this scale would be 25 percent or better. Figma cleared that bar by plenty.

Management also lifted its 2026 sales forecast to $1.463 billion to $1.467 billion. That means the company now expects about 39 percent full-year growth, and good would be beating the midpoint without buying the growth through discounts or reckless spending.

The numbers, translated

Gross margin was 84 percent. Gross margin is what Figma kept after the direct cost of hosting the product and serving customers, so it kept 84 cents from each sales dollar before paying engineers, sellers, and office bills. Good for elite cloud software is 80 cents or more, but Figma fell from 89 cents because AI computing costs are real. The robot still eats electricity.

Net dollar retention was 136 percent. This measures what the same large customers spent compared with a year earlier, after upgrades, cutbacks, and cancellations. It means a group that spent $100 last year spent $136 this year. Good is above 120 percent. At 136 percent, customers are not merely staying, they are expanding hard.

Customers spending at least $100,000 a year reached 1,635, up 46 percent. That means big companies are adopting more of the platform, and good would be that count growing faster than total revenue because enterprise accounts tend to stay longer and buy more.

Free cash flow was $53.2 million, or 14 percent of revenue. Free cash flow is the cash left after running the business and buying necessary equipment and software. Good for a company growing near 40 percent would be a margin above 15 percent, so Figma is close but not cleanly over the line.

Stock compensation was $147.6 million, almost 40 percent of revenue. Stock compensation pays workers with slices of the company instead of cash, which makes every existing slice smaller over time. Good would be below 10 percent of revenue and falling. Figma is nowhere near that standard, even though much of today's expense traces back to grants that began hitting the books after the IPO.

Cash and marketable securities totaled $1.67 billion. That means Figma has a thick cushion and no need to beg a lender for oxygen. Good is enough cash to fund product bets without selling more shares, and Figma has that.

At $26.11, I calculate a stock-market value of about $13.92 billion and an operating-business value of about $12.25 billion after subtracting cash and marketable securities. Against the midpoint of management's sales forecast, that is about 8.4 times expected 2026 sales. Good for a company growing around 40 percent can stretch toward seven times sales, but 8.4 still demands excellent execution.

What I like

I like the category position. Figma is not another AI wrapper with a logo and a prayer. Designers already work there, developers already consume the output, and product teams already organize around the files. Good category leadership means the new feature sells into an old habit instead of asking customers to invent a new one.

I like that AI is becoming a paid product. More than 80 percent of customers spending at least $10,000 a year used AI credits weekly, and more than 50 percent of that group used the Figma agent weekly by July 31. That means AI adoption moved beyond demos, and good would be those credits lifting customer spending without crushing gross margin.

I like the expansion engine. The 136 percent retention rate says existing large customers spent 36 percent more, while the $100,000 customer count grew 46 percent. Good software compounds from inside the customer base. Figma is doing exactly that.

The last-30-days scan also found real product tension, which I prefer to cheerleading. A popular r/FigmaDesign post praised AI for helping a designer build a plugin, while another thread called Figma's new Slots feature great in theory and lousy in practice. Good products create complaints because people actually use them. Dead products have peaceful forums.

What worries me

The accounting loss is ugly. Figma lost $117.3 million from operations, equal to 32 percent of revenue. That means normal reported expenses exceeded gross profit by 32 cents for every sales dollar. Good would be a positive operating margin, even after counting worker stock grants.

Stock compensation explains more than the entire operating loss, but that does not make it free. Figma still had $1.4 billion of unrecognized restricted-stock compensation scheduled to hit over about 3.4 years, excluding special chief-executive awards. That means the dilution bill has not finished arriving. Good would be the expense falling each year while revenue per share rises faster than the share count.

AI costs hit the product economics. Cost of revenue more than doubled while revenue grew 48 percent, and gross margin fell five percentage points. That means AI can sell more credits and still make each sales dollar less valuable. Good would be gross margin stabilizing above 82 percent as usage grows.

Competition is coming from both directions. Adobe owns a giant creative suite. Canva pushes simplicity. New AI tools can jump from words to working screens. Good would be Figma owning the collaboration layer even when customers use outside models and code tools.

What would make this a buy

This letter does not issue buy signals. It sets the homework bar.

My price trigger is $22 to $24 a share. In that range, the operating business would cost about 6.9 to 7.6 times management's expected 2026 sales. That means the price would leave more room for an imperfect quarter, and good would be reaching the range without a product, retention, or guidance break.

My proof trigger is two more quarters with revenue growth above 30 percent, net dollar retention above 125 percent, free-cash-flow margin above 15 percent, and gross margin above 82 percent. Those tests mean growth stayed fast, customers kept expanding, cash quality improved, and AI costs stayed under control. Good is passing all four together.

The final trigger is stock compensation below 25 percent of revenue on a quarterly basis. That would still be high, but it would show the IPO grant wave is rolling downhill instead of becoming a permanent tax on shareholders.

What makes me walk away

I walk if net dollar retention falls below 115 percent for two quarters. That would mean the expansion engine is losing pressure. Good would be staying above 125 percent while large-customer growth remains strong.

I walk if gross margin falls below 78 percent without a clear, temporary reason. That would mean AI hosting and free-user costs are eating the software economics. Good would be holding above 82 percent and rebuilding toward the mid-80s.

I walk if full-year sales guidance gets cut while stock compensation stays above 30 percent of revenue. That would mean growth slowed before dilution did. Good would be the opposite, faster sales and a smaller stock-pay burden.

I also walk if the share count grows more than 8 percent in a year without free cash flow per share growing faster. A bigger pie does not help if management keeps handing out slices faster than the kitchen can bake.

IPO Watch

Lyntris, expected August 19 at $19 to $22: Lyntris sells sensors, radar hardware, software, and data-fusion systems that help U.S. and allied militaries detect threats and act faster. Only about 4.9 million of the 24 million shares come from the company, while selling stockholders unload the rest, and most company proceeds will repay debt. That means this debut is heavy on insider liquidity and light on fresh growth money. I would write a full issue if it prices at the low end and the first public quarter proves backlog becomes cash instead of PowerPoint.

Earnings On Deck

FN, August 17 after the close: Fabrinet builds optical and electronic equipment for other technology companies. Watch demand tied to AI data centers, which means the hardware that moves huge amounts of information between chips and servers. A good print would pair strong sales growth with stable margins. A bad print would show customers ordering less or forcing Fabrinet to eat higher costs.

VIK, August 19 before the open: Viking runs premium cruises and joined the public market in 2024. Watch booking growth, future reservations, and debt. A good print would show customers booking far ahead without heavy discounting. A bad print would show weaker prices or rising costs swallowing passenger growth.

IOND, August 19 after the close: Ionic Digital mines bitcoin and operates computing infrastructure. Watch power cost, bitcoin output, and progress turning sites into broader computing assets. A good print would show more output per dollar of power and real contracts beyond mining. A bad print would show capital spending rising faster than operating cash.

The verdict

82 out of 100. Candidate. I gave Figma 19 of 20 for category leadership, 20 of 20 for growth, 14 of 20 for financial quality, 9 of 15 for valuation, 8 of 10 for management, 9 of 10 for catalysts, and 3 of 5 for entry quality. It earned the big numbers with 48 percent growth, 136 percent customer expansion, an 84 percent gross margin, and a $1.67 billion liquid cushion. It lost points for an 8.4-times-sales valuation, a 32 percent reported operating loss, founder control, and stock compensation equal to almost 40 percent of quarterly revenue.

A score of 82 puts Figma in the candidate bucket, which starts at 80. That means the company deserves staged diligence, not a blind order ticket. The business is rare. The accounting is messy. The price is closer, but I still want a better bargain or cleaner proof.

The DBTech read

Remaining performance obligations are contracted sales that Figma has not counted as revenue yet because it still owes the customer service. Figma had $687 million of these obligations at June 30, which means a chunk of future work is already signed. Good is a growing balance that later turns into reported sales and cash, not contracts that shrink or get canceled. Think of a restaurant holding deposits for next month's private parties, the bookings help, but the cook still has to serve dinner. This number gives visibility, not certainty.

Sources and as-of date

As of August 14, 2026 at 7:10 a.m. Eastern. FIG's latest overnight trade was $26.1067 at 7:08:05 a.m. Eastern, from the Robinhood broker feed. That means it was the freshest executed price available before the regular market opened, and good price discipline means naming both the session and the clock. The official August 13 close was $26.35, from the SIP listing-exchange close supplied by Robinhood.

1. Figma Q2 2026 Form 10-Q, filed August 5, 2026: https://www.sec.gov/Archives/edgar/data/1579878/000162828026053348/fig-20260630.htm

2. Figma Q2 2026 earnings release, August 5, 2026: https://www.sec.gov/Archives/edgar/data/1579878/000162828026053331/q226pressrelease.htm

3. Figma IPO prospectus, $33 initial price, filed July 31, 2025: https://www.sec.gov/Archives/edgar/data/1579878/000162828025037014/figma424b4.htm

4. Figma official company description: https://www.figma.com/

5. Robinhood broker feed and official prior-session close: https://robinhood.com/us/en/stocks/FIG/

6. Last-30-days community scan, run August 14, 2026: /home/derek/.hermes/profiles/bobby/workspace/newsletters/a-portfolio/research/figma-fig-stock-earnings-raw-v3-plan.md

7. Nasdaq August 2026 IPO calendar and August 17 to 21 earnings calendar, checked August 14, 2026: https://api.nasdaq.com/api/ipo/calendar?date=2026-08

8. Lyntris preliminary prospectus, filed August 12, 2026: https://www.sec.gov/Archives/edgar/data/2132582/000119312526346328/d23330ds1a.htm