Goldman Sachs believes AI is more of a tailwind than a headwind for Figma, but keeps Neutral and cuts the target price

Overview

This is Goldman Sachs' earnings review of Figma Inc. The core view is that although the market has worried that LLMs and AI-native design tools will weaken Figma's design and engineering user base, 1Q26 data and customer behavior show that AI is currently more of a demand tailwind: revenue, guidance, customer growth, AI credit consumption, and engagement among high-end users all look strong. At the same time, Goldman Sachs still maintains Neutral because gross margin remains volatile in the near term due to AI inference costs and reinvestment, and AI-native competition, pricing/packaging, and valuation multiples remain constraints.

Core views

Goldman Sachs believes Figma's fundamentals strengthened further in 2026: 1Q26 revenue was 5% above market expectations, EBIT margin was about 650bps above market, 2Q revenue guidance was 6% above market, and 2026 revenue guidance was raised 4% (a true increase of about 3%). The key question for AI adoption is not simply usage volume, but whether it can be monetized without hurting platform engagement. Current evidence shows users continue to consume after exceeding credit limits, and the average annualized spend of Pro teams that purchased AI credit add-ons is more than 3x that of teams that did not. The report also notes that AI may expand the pool of design participants, making design an abstraction layer through which product managers, marketers, and non-technical roles can participate in creation.

Analysis framework

The report combines earnings comparisons, management guidance, customer segmentation metrics, AI credit consumption behavior, seat upgrades, valuation multiples, and Goldman Sachs' factor framework. The short-term focus is the deviation of 1Q26 actual results from Goldman Sachs and market expectations, while the medium-term focus is whether AI adoption translates into revenue, whether gross margins can recover, and whether Figma's moat in collaborative architecture, product and design context, and a unified platform for AI, code, and free-form operations is durable.

Methodology notes

• Factor analysisGS Factor Profile

  Compares individual stocks with the market and industry peers across growth, financial return, valuation multiple, and composite score.

  Figma ranks relatively strong on the growth factor versus the U.S. equity coverage universe and medium versus software peers; financial return is weak; valuation multiple percentile is very high; and the composite score is moderate.

• M&A probability frameworkM&A Rank

  Goldman Sachs ranks potential acquisition probability from 1 to 3, where 1 means high probability and 3 means low probability.

  The chart shows Figma's M&A rank is 3, meaning acquisition probability is viewed as low and typically does not materially enter target price construction.

• Financial databaseQuantum

  Goldman Sachs' proprietary database for financial history, forecasts, and ratio comparisons.

  The report says Quantum can be used for deep single-company analysis as well as cross-industry and cross-market comparisons.

• Valuation methodEV/sales multiple

  Estimates target price using enterprise value relative to sales multiple.

  The 12-month target price of $30 is based on 10x EV/sales, down from the prior 13x because comparable-company multiples have reset.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Figma Inc. equity

  Core research subject

  Strengths

  Revenue, operating income, EPS, and free cash flow all beat expectations; AI adoption and engagement among high-end customers improved; enterprise customer net revenue retention and large-customer growth accelerated.

  Weaknesses

  Gross margin remains under near-term pressure from AI inference costs and earlier investment; the financial return factor is relatively weak versus software peers; valuation multiples remain high.

  Comparison

  Growth ranks high relative to the U.S. equity coverage universe but only mid-pack relative to Americas Software peers; valuation multiples are near the high end, and the composite factor score is not standout.

  Risks

  AI-native competition, pricing and packaging pressure, product-market-fit risk, and AI investment failing to generate sufficient revenue contribution.

• Adobe Inc. and software coverage peers

  Peer comparison set in the coverage universe

  Strengths

  Used as the peer set against which Figma's rating is compared to assess total return potential and relative valuation position.

  Weaknesses

  The report does not compare each peer's operating metrics individually.

  Comparison

  Figma's rating is evaluated relative to the software coverage universe, including Adobe, Microsoft, Salesforce, ServiceNow, and Snowflake.

  Risks

  A refresh in peer valuation multiples would directly affect Figma's target price multiple.

Key data

• Current share price$20.24Price disclosed on the report cover.
• 12-month target price$30.00Lowered from the previous $35.
• RatingNeutralGoldman Sachs maintains a Neutral rating.
• 1Q26 revenue$333mnUp 46% year over year, 5.2% above Goldman Sachs' estimate and 5.5% above market expectations.
• 1Q26 operating margin16%About 650bps above market expectations.
• 1Q26 gross margin82%About 334bps below Goldman Sachs' estimate and about 110bps below market expectations.
• 1Q26 EPS$0.11Above Goldman Sachs' estimate of $0.07 and market expectations of $0.06.
• 1Q26 free cash flow$89mnAbout $45mn above Goldman Sachs' estimate and $66mn above market expectations.
• 2026E/2027E/2028E revenue forecasts$1,428mn / $1,729mn / $2,039mnPrior forecasts were $1,374mn / $1,643mn / $1,929mn.
• 2026E revenue growth35.3%After that, 2027E is expected at 21.1% and 2028E at 17.9%.
• 2026E gross margin82.7%Expected to stabilize at about 83.1% in 2027E and 2028E.
• $100K+ ARR customers' Figma Make weekly active usage rate约60%Above 50% in 4Q.
• Org and Enterprise users continuing to consume AI credits after exceeding limits>75%Shows that AI credit limits have not caused obvious usage interruption.
• Users remaining active on the platform after exceeding limits>95%Supports the view that AI adoption has not materially weakened platform stickiness.
• Average annualized spend of Pro teams that purchased AI credit add-ons>3xCompared with teams that did not buy add-ons.
• New Pro team conversions约+150% yoyCredit limits are driving upgrades to higher-tier seats.
• Market cap$12.4bnDisclosed in the chart's key data panel.
• Enterprise value$11.9bnDisclosed in the chart's key data panel.

Impact & implications

The report's investment implication for Figma is balanced: improving fundamentals and evidence of AI monetization could support higher revenue expectations and a positive after-hours stock reaction, but lower valuation, gross margin pressure, and competitive uncertainty limit an upgrade to the rating. If AI credits continue to convert into paid usage, platform activity stays strong, and dynamic model routing plus in-house models lower inference costs, the gap between Figma's revenue growth and gross margin growth could narrow. Conversely, if AI-native tools pull users toward code-first environments or price competition compresses monetization, the cautious stance behind the Neutral rating will be better supported.

Risks

• New pricing and packaging could create pressure, or price competition could intensify.
• Product-market fit could diverge from expectations.
• AI investment upgrades could pressure margins if revenue contribution remains insufficient.
• AI-native competitors could weaken Figma's differentiation and control over user workflows.
• Gross margin may continue to fluctuate because of inference costs and reinvestment in new growth areas such as Weave.
• A lower valuation multiple could continue to cap the target price even if revenue forecasts rise.

What to watch

• Whether 2Q revenue continues to beat market expectations and whether full-year 2026 revenue guidance is raised again.
• Whether the post-excess consumption rate of AI credits and platform activity remain stable.
• Whether Figma Make weekly active usage among $100K+ ARR customers continues to rise.
• Whether the spending multiple of teams buying AI credit add-ons stays well above that of teams without add-ons.
• Whether credit limits continue to drive upgrades to Pro and Enterprise tiers instead of causing seat compression.
• Whether dynamic model routing and first-party models improve the AI cost curve and gross margin.
• Whether AI-native design and code-generation competitors push users toward code-first environments.
• Whether Goldman Sachs adjusts the EV/sales multiple, target price, or rating again.