Core Viewpoint - Figma's stock has experienced volatility after a strong IPO, but the company shows potential for significant growth driven by strong execution and favorable market trends [1] Revenue Growth - Figma's revenues have increased dramatically from under $100 million in 2021 to $749 million in 2024, with a March quarter revenue of $228.2 million, reflecting a 46% year-over-year growth and an annualized run rate of $913 million [3][4] - Consensus estimates project approximately $1.1 billion in revenue for the current fiscal year, with potential sales reaching $3.7 billion by FY'29 if the company maintains a 35% annual growth rate [3][4] Customer Engagement - Figma's Net Dollar Retention rate is 132%, indicating existing customers are spending 32% more annually, showcasing strong product stickiness and expansion [4] - The company's pricing model is seat-based, which encourages organic growth within organizations, minimizing customer acquisition costs and shortening sales cycles [4] Profitability - Figma reported a net income of $44.9 million on $228 million in revenues for the last quarter, resulting in nearly 20% net margins, with the potential to grow to 30% by FY'29 [5][6] - The company has achieved gross margins of about 90% and maintains a balanced cost structure, focusing on product innovation rather than aggressive sales tactics [6] Valuation Multiples - Figma is currently trading at over 37x estimated 2025 run-rate revenue, significantly higher than mature peers like Adobe, which trades at around 7.5x forward sales [7] - If Figma's sales reach $3.7 billion with profits of approximately $1.1 billion, a P/E multiple of 70x could yield a market cap of about $77 billion, nearly double its current valuation of $40 billion [7] Competitive Landscape - Figma must become essential across various workplace roles beyond designers, while also navigating increasing competition from companies like Microsoft and Canva [8] - The emergence of AI-native tools could also impact Figma's market position and customer reliance on traditional design platforms [8] Time Horizon - The timeline for achieving growth and margin improvements may vary, but as long as Figma continues its revenue expansion trajectory, the stock is likely to respond positively [9]