Last Updated on December 8, 2025 by Jason Andrew
This might be the hottest IPO of 2025.
Figma just filed to go public. Bang.
But is this Peter Thiel blessed, design first decacorn really worth the hype?
Or is it just the best looking kid in a pretty ugly playground?
Let’s break down the Figma story from its dorm room inception, to Adobe’s $20B failed acquisition, to its NYSE listing.
What is Figma?
Figma is a software company that lets teams design together in the browser.
They started back in 2012 and have grown to become one of the darlings of Silicon Valley.
Figma’s numbers are just as beautiful as the software.
Unlike the wave of unprofitable companies that went out in the ZIRP era of 2021 to 2022, Figma is already cash generative and extremely sticky.
- $821m LTM revenue
- 46% YoY revenue growth
- 18% non-GAAP EBIT margins
- 91% gross margins
A Late Bloomer
For Aussies, this IPO is actually quite important because Figma is one of the closest comps to Canva, which is set to IPO sometime in the next few years.
Figma’s product is geared toward serious designers rather than the broader DIY market that Canva serves, which is why its user base is only about one tenth the size.
This feels like the kind of story that could only have been possible for a 22 year old college drop out backed by venture dollars. I imagine Dylan would have been eating a lot of ramen from 2011 to 2016.
Business Model + GTM
The beautiful thing about the sales motion of Figma is how organic the growth was. Intuitively, we know it to be true that the best products spread by word of mouth.
But with Figma, this was definitely true.
From the outset, Figma was designed to be a multiplayer product. Once a designer is on Figma, they then invite other people in the organisation to collaborate with them on the work.
In fact, 2 in 3 customers who use Figma are not actually designers, showing the power of designers looping in other people in the org to collaborate on design projects. Figma has become the de facto workflow tool to do anything related to design.
This helped to drive growth within organisations, with the product growing like a weed.
In 2018, after launching their enterprise product, Figma layered a top down sales function on top of their bottom up motion, targeting larger teams. That shift unlocked their next wave of growth. Today, more than 13 million people use Figma.
Their business model has a free tier, with paid plans for businesses and enterprise customers, with various plans according to the size and security demands of the business.
Pricing works on a per seat basis for businesses, with varying seats depending on what different customers need.
Today, the business has four plans:
- Collab Seat
- Content Seat
- Dev Seat
- Full Seat
Adobe Deal Falls Over
Adobe x Figma was the big acquisition that never closed.
In 2022, Adobe offered $20bn to take over Figma, in what would have been an exceptional result for investors. At the time, Figma was generating ~$400m in ARR, implying a 50x EV/Revenue multiple. This looked expensive but, retrospectively, would have been a great buy.
But the story wasn’t meant to be.
The deal got heaps of regulatory scrutiny from the EU over antitrust concerns in the design software market. It seems pretty incredible to me that a merger between two US companies could be blocked by a regulatory body in Europe, but that goes to show the power of the EU.
In fairness, however, the #1 design player in the world was going to buy what looks to be their genuine #2 competitor, which wouldn’t be great for customers.
By late 2023, Adobe and Figma agreed to end deal talks after an ongoing investigation into anti competitive concerns.
So Dylan did what any good Founder would do in his right mind: focus on shipping more features, continue to aggressively grow revenue, and gear up for an IPO.
Dylan Field was spotted wearing this Allen & Company vest in 2024, you know a founder is serious about going public when the banker merch starts coming out.
Cooking the Books: Net Dollar Retention
One of the metrics Figma has come under fire for is its “net dollar retention calculation.”
Figma has reported its NDR as ~132%.
The way NDR is typically measured is by taking ARR and accounting for both churned ARR as well as upgrades/downgrades during the period, but Figma’s definition excludes churned customers.
It’s never a good sign when companies start making up their own financial metrics.
This obviously makes the numbers look better, but they have been very explicit about this calculation.
It would have been interesting to see what this number looked like inclusive of churn.
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Performance Benchmarking
It’s only when you start to compare Figma against its other publicly traded peers that you realise just how incredible this business is.
Jamin Ball at Altimeter did a breakdown of Figma’s metrics versus other publicly traded technology companies, but here are the important ones summarised below:
- LTM gross margin – 89 percent, ~90th percentile
- LTM revenue growth – 49 percent, best in peer set
- LTM operating margins – 18 percent, ~85th to 90th percentile
- Note that this margin is adjusted for one-off expenses associated with the Adobe transaction that fell through
- Rule of 40 – 77 percent, best in class
- Note that the FCF margin used is also adjusted for the Adobe transaction here
Figma LTM Gross Margin vs Peers
Figma LTM Revenue Growth vs Peers
Figma LTM Operating Margin vs Peers
Figma LTM Rule of 40 Vs Peers
Valuation
The S1 doesn’t go into any detail about the valuation that we expect Figma to go out at.
But we can do some back of the napkin math around multiples based on other businesses in the market.
Looking at other large cap US software companies, I think a multiple around the ~15x range would be reasonable but I wouldn’t be surprised if this pushes up towards the ~20x–25x range given the quality of the business.
Looking at Figma’s previous valuations, a ~15x LTM (50th percentile) revenue multiple implies a ~12bn valuation, similar to the $12.5bn secondary round in 2024, which allowed early investors and employees to exit some of their positions, but well below the $20bn valuation offered by Adobe in 2022.
Although irrelevant, this $20bn price tag will likely serve as something to anchor to in the minds of their investors.
Mostly Metrics thinks we can expect a ~15x (lower limit)–25x (aggressive) forward EV/Revenue valuation range, depending on how aggressive the bankers are.
What Will Figma Do With All the Cash?
Dylan and Figma are sitting on a goldmine. Dylan, aged ~33, is set to personally make $1.5bn at a $20bn IPO valuation. The business itself is also laden with cash.
There are going to be some big winners in this IPO. There are at least six investors set to return at least $1bn in proceeds at a $20bn IPO valuation (Mostly Metrics), a pretty incredible result.
Dylan Field will net around $1.5bn. Interestingly, Dylan Field has been granted special Class C shares which give him 15:1 voting rights, controlling 75% of votes for the company, so it looks like this business is going to be founder led for a very long time.
But where will all this cash go?
Figma already has $618m in cash & cash equivalents and another $923m in marketable securities on its balance sheet (commercial paper, U.S. agency securities, U.S. treasury securities, corporate bonds, and a Bitcoin exchange traded fund).
They also have no debt currently.
Although there is a rumour that Figma will raise $1.5bn in primary proceeds, I think it’s quite likely that Figma will not issue any new shares and instead just cash out existing investors.
If Figma does decide to raise this money, they will have a $3bn war chest, so expect lots of M&A activity in the coming years. This could help to hedge against AI risk by buying up new AI native design players that emerge, similar to Facebook’s aggressive M&A strategy after going public.
Where Is the Ceiling for Figma?
Let’s play the red team for a bit.
What can go wrong for Figma?
Actually, a fair bit.
Similar to other vertical software companies, Figma is quickly growing into maturity in the design market, and it’s unclear how much more value they can extract from their existing customer base.
They currently note that 95% of Fortune 500 companies use the product, so there’s certainly not going to be a huge explosion in large enterprise customers. The question is how much wallet share can Figma grow.
Today, Figma only has ~1,000 customers paying $100k per year for the product, relative to ~11,000 paying $10k per year. So how many customers can they move up to the $100k category?
It’s not totally clear.
The other big risk noted in the S1 filing was AI. Figma was built for a world before generative AI existed.
Will this method of designing in the browser still exist in an AI native world?
Just as Cursor might make VS Code irrelevant, a new AI native design player might make Figma irrelevant.
The company is certainly doing everything in its power to stay ahead of the curve, releasing tools like Figma Make that help customers go from design to working prototypes. But it hasn’t been built from the ground up to use AI.
Figma currently specialises in the ideation stage of building software, helping to mock up what user interfaces will look like. But will this design paradigm shift with language models?
Maybe. It’s certainly something to think about if Figma’s IPO is priced to perfection.
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