Figma 1Q26 beats expectations, and AI looks more like a tailwind than a headwind

Overview

This report is Goldman Sachs' company research and earnings review following Figma Inc.'s 1Q26 results. The core view is that, although the market worries that LLMs and AI-native tools will compress Figma's design and engineering user base, current data more strongly suggest that AI is a tailwind rather than a headwind: revenue, margins, free cash flow, and guidance all exceeded expectations, while AI product engagement, credit consumption, seat upgrades, and high-value customer growth all indicate that platform stickiness remains strong.

Core views

Goldman Sachs is more positive on Figma's fundamentals, but keeps an investment rating of Neutral. Positive factors include: 1Q26 revenue was about 5.5% above market expectations, and operating margin and free cash flow were materially better than expected; Figma Make usage deepened among premium customers; AI credit limits did not trigger large-scale user churn and instead prompted some teams to buy additional credits and upgrade seats; users of Figma's MCP server grew full seats faster than customers who did not use it, suggesting that agentic workflows may not necessarily pull users away from Figma. Constraints include: AI inference costs and new growth investments are pressuring gross margin in the near term; valuation remains rich, with 2026E EV/Sales at about 7.2x and P/E at about 74.1x; AI-native competition, pricing and packaging, and product-market fit remain key uncertainties.

Analysis framework

The report combines actual results versus Goldman Sachs and market expectations, changes in company guidance, customer and AI usage metrics, revisions to financial forecasts, updates to valuation multiples, and the GS Factor Profile to form its judgment. On valuation, Goldman Sachs raised its 2026E to 2028E revenue forecasts to $1,428mn, $1,729mn, and $2,039mn, but lowered the target EV/Sales multiple from 13x to 10x, reflecting the reset in peer valuation multiples.

Methodology notes

• Valuation methodsEV/Sales target multiple

  Use 10x EV/Sales as the basis for the target price

  Goldman Sachs sets Figma's 12-month target price at $30, using 10x EV/Sales, down from 13x previously, mainly reflecting the reset in peer valuation multiples.

• Factor AnalysisGS Factor Profile

  Comparison across the four dimensions of Growth, Financial Returns, Multiple, and Integrated

  The GS Factor Profile compares the stock with the market and industry peers by percentile. Figma is strong in Growth, but weaker in Financial Returns and higher in Multiple, and its Integrated score is below the median, especially weaker relative to software peers.

• M&A FrameworkM&A Rank

  M&A Rank 3

  The report discloses Figma's M&A rank as 3, indicating a low acquisition probability, typically 0% to 15%, so M&A has little impact on the target price.

• Data ToolsQuantum

  Goldman Sachs proprietary financial database

  Quantum provides access to detailed historical financial statements, forecasts, and ratios, supporting deep single-company analysis as well as cross-industry and cross-market comparisons.

Asset mapping & comparison

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

• Figma Inc. (FIG.US)

  The company covered in the report and the core investment name

  Strengths

  Revenue and guidance beat expectations; strong AI adoption; accelerating premium customer growth; the platform still has control-plane potential across design, AI, code, and freeform operations.

  Weaknesses

  Gross margin is under near-term pressure from AI inference costs and reinvestment; the valuation multiple remains high; Financial Returns and Integrated factors are relatively weak versus software peers.

  Comparison

  Relative to Goldman Sachs Americas Coverage, Growth is near the high percentile; relative to Americas software peers, the Growth advantage narrows, Multiple remains elevated, and the Integrated percentile is lower.

  Risks

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

• Adobe Inc., Microsoft Corp., Salesforce Inc., ServiceNow Inc. and other software peers

  The coverage universe and valuation reference

  Strengths

  Used to compare Figma's growth, returns, valuation, and composite factors.

  Weaknesses

  The report does not separately discuss each peer's fundamentals, and lists them only as part of the rated coverage universe.

  Comparison

  Figma's valuation multiple is higher, its growth is stronger, but its composite factors are weaker relative to software peers.

  Risks

  Changes in peer valuation multiples will affect Figma's target price, and AI-native or large-platform competition will also affect its moat.

Key data

• RatingNeutralGoldman Sachs maintains a Neutral rating.
• 12-month target price$30.00Lowered from the previous $35, based on 10x EV/Sales.
• Report price$20.24Price shown in the report body and disclosure table.
• 1Q26 revenue$333mn5.2% above Goldman Sachs expectations and 5.5% above market expectations; up 46% YoY.
• 1Q26 operating margin16%About 650bps above market expectations.
• 1Q26 free cash flow$89mnAbout $66mn above market expectations; free cash flow margin of 27%.
• 2026E revenue forecast$1,428mnRaised from the previous $1,374mn.
• 2027E revenue forecast$1,729mnRaised from the previous $1,643mn.
• 2028E revenue forecast$2,039mnRaised from the previous $1,929mn.
• Figma Make premium customer usage rateAbout 60%About 60% of $100K+ ARR customers use Figma Make weekly, up from 50% in 4Q.
• >$10K ARR / >$100K ARR customer growth37% / 48% yoyGrowth accelerated across both customer tiers.
• 2026E gross margin82.7%Weighed down by AI adoption ahead of monetization and inference costs, below 2025's 88.2%.

Impact & implications

For investors, the report weakens the bear case that AI will replace or compress Figma's core user base, and shows that AI features may increase platform engagement, drive seat upgrades, and expand usage to non-technical roles such as product managers and marketers. But the Neutral rating and target price cut show that Goldman Sachs still believes high valuation, gross margin volatility, and AI-native competition will constrain risk-reward. If AI monetization arrives earlier, pricing power strengthens, or new product adoption exceeds expectations, the stock has upside catalysts; if competition intensifies or AI spending fails to translate into revenue, margins and valuation could remain under pressure.

Risks

• The newly introduced pricing and packaging could create customer pressure, or industry price competition could intensify.
• Product-market fit may miss the mark, causing new products or AI features to be adopted less than expected.
• AI investment upgrades may depress gross margin and operating margin without contributing enough revenue growth.
• Rising competition from AI-native players could weaken Figma's differentiation in design and engineering workflows.
• High valuation makes the stock more sensitive to slower growth, multiple compression, and shifts in market risk appetite.

What to watch

• The pace at which excess AI credit usage converts into revenue, and whether credit limits continue without hurting activity.
• Whether weekly usage of Figma Make among $100K+ ARR customers can keep rising.
• Whether >$10K ARR and >$100K ARR customer growth can maintain its acceleration.
• Whether new Pro team conversions and higher-tier seat upgrades continue to offset market concerns about seat compression.
• Whether gross margin can stabilize after dynamic model routing, first-party models, and AI monetization advance.
• Whether AI-native competitors erode Figma's multi-user collaboration, product-design context, and unified platform advantages.
• The impact of changes in target EV/Sales multiples and software peer valuations on the target price.