When a stock jumps 13% in the session after earnings day, and the analyst covering it still cuts the price target, something interesting is happening, and you may want to dig beneath the surface. That is exactly the situation unfolding at Figma (FIG) right now.
The design software company delivered a first-quarter 2026 earnings report that caught Wall Street off guard. Revenue were up 46% year over year, customer retention at its highest level in two years, and AI adoption metrics that directly challenge the narrative that AI tools are eating Figma’s lunch rather than expanding its market.
Goldman Sachs reviewed the results in a note shared with me at TheStreet. Goldman’s message is that the quarter was genuinely good, the AI monetization story is emerging, but the competitive threat from AI-native design tools is real enough to warrant caution on the multiple.
Goldman Sachs downgrades Figma stock price target to $30 from $35
Goldman Sachs maintained its Neutral rating and lowered its 12-month price target to $30 from $35, while simultaneously acknowledging the results were stronger than expected. At $22.92, that $30 target implies roughly 48% upside.
The first-quarter scorecard, according to Figma’s May 14 earnings release:
- Revenue of $333.4 million, up 46% year over year, accelerating from 40% in Q4 2025 and 38% in Q3 2025
- Non-GAAP operating income of $52.1 million, with a 16% non-GAAP operating margin
- Free cash flow of $88.6 million, representing a 27% free cash flow margin
- Net Dollar Retention Rate of 139%, up three percentage points from the prior quarter, the highest in over two years
- Paid customers with more than $100,000 in Annual Recurring Revenue (ARR) grew 48% year over year
- Total paid customers grew 54% year over year to approximately 690,000
Source: Figma First Quarter 2026 Financial Results
Goldman noted in the shared note that revenue came in 5% above Street estimates, EBIT margins were approximately 650 basis points above expectations, and second-quarter revenue guidance sits 6% above consensus. Full-year 2026 guidance was raised by $55 million.
“Q1 was an incredible quarter for Figma,” said co-founder and CEO Dylan Field. “When code is a commodity, design is the competitive edge – the craft, point of view, and human judgment that make a great product rise above the rest.”
Cheng Xin/Getty Images
The AI monetization data is the story Goldman most wants investors to focus on
The competitive fear hanging over Figma for the past year has been this. If AI agents can generate designs and code automatically, do teams still need Figma’s collaborative design platform? The Q1 data is beginning to answer that question, and the answer is more favorable than bears expected.
My review of the AI engagement metrics from Figma’s release reveals a company where AI is driving expansion, not compression. And just as Goldman Sachs said, the more important signal is scaling monetization without usage degradation.
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Approximately 60% of paid customers with more than $100,000 in ARR used Figma Make weekly in Q1, up from 50% in Q4, according to Figma’s earnings report,
More than 75% of Organization and Enterprise users who had exceeded AI credit limits continued consuming credits in April. More than 95% remained active on the platform as of April 30.
Pro teams purchasing AI credit add-ons showed more than three times the average annualized spend versus those not purchasing add-ons. Customers with more than $100,000 in ARR using Figma’s Model Context Protocol (MCP) server grew full seats approximately 70% faster than those not using it.
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That last number is the one Goldman flagged most prominently in the note. Rather than AI agents pulling users into competitor environments, early data suggests the opposite. Figma’s MCP integration is accelerating seat expansion among its largest customers.
New Pro team conversions grew more than 150% year over year in Q1, driven by AI credit limits incentivizing tier upgrades. This is the monetization mechanism Figma needed to demonstrate, and Q1 was the first quarter where it showed up clearly in the numbers.
Goldman’s $30 target cut and what the Neutral rating actually means here
Goldman’s decision to lower the price target from $35 to $30 – based on a 10x EV/sales multiple, down from 13x – reflects a peer multiple recalibration rather than a deteriorating fundamental view, according to the note. Revenue estimates were raised: Goldman now models $1.428 billion in 2026, $1.729 billion in 2027, and $2.039 billion in 2028.
The Neutral rating acknowledges two real tensions. The upside case is building because AI monetization is arriving faster than feared, customer expansion is accelerating, and Figma’s multiplayer design architecture may be more defensible than critics assumed. The downside risk remains competitive pressure from AI-native design tools, gross margin headwinds as AI inference costs run ahead of monetization, and a valuation that still requires strong execution to justify.
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The gross margin miss of 110 basis points below estimates is the one number in the quarter that Goldman watched carefully. Figma is driving AI adoption ahead of full monetization – credit limits were only implemented on March 18, meaning the revenue benefit of enforced limits has barely started flowing through the income statement. Goldman expects the gap between revenue growth and gross profit growth to compress as monetization scales.
At $22.92 with a $30 Goldman target and accelerating AI engagement data, Figma is a stock where the fundamental story just got meaningfully better, even if Goldman Sachs isn’t ready to upgrade yet.
Related: Goldman Sachs doubles down on stock market message for 2026
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