Figma, the design platform darling, recently announced it crossed the $1 billion annual revenue run rate milestone. CEO Dylan Field is touting AI investments, specifically Figma Make and the MCP server, as the keys to broadening the user base. Revenue for the last quarter hit $274.2 million, a 38% year-over-year jump, beating estimates of $263.95 million. On the surface, it’s a great story – AI injected into a creative platform leading to growth.

But let's dig into the numbers, because that's where the real story usually hides.

Cracks in the Foundation?

First, that 38% growth figure. It's solid, no doubt. However, look closer. Figma itself forecasted revenue between $263 million and $265 million. Beating the low end of your own guidance by a measly $9 million (or 3.4%) isn’t exactly cause for popping champagne, is it? It's not a blowout quarter; it's a slightly-better-than-expected quarter.

And then there's the insider activity. A flurry of sales by top executives on the very day this “strong” quarter was announced. CAO Herb Tyler, GC Brendan Mulligan, CRO Shaunt Voskanian, CTO Kris Rasmussen, and CFO Praveer Melwani all cashed in shares. Rasmussen alone dumped $3.5 million worth of stock. Now, I'm not saying this definitely means something nefarious is afoot. Executives sell stock for all sorts of reasons. But the timing is… interesting. A company trumpeting its AI-driven success, while simultaneously, the C-suite heads for the exits (at least partially). Figma Executives Cash In: Massive Stock Sales Revealed!

The market cap sits at $22.44 billion. That’s a hefty price tag for a company with decelerating growth, regardless of the AI narrative.

The Retention Rate Riddle

Figma highlights a net dollar retention rate of 129% for customers generating at least $10,000 in annual recurring revenue. On the surface, this looks fantastic. Existing big clients are spending 29% more than they did the previous year. But the devil's in the details, as always. This retention rate has been declining for two straight quarters. It’s the weakest rate in over a year. Why? The company isn't saying. Is it increased competition? Are customers finding the platform less sticky as they scale? Is the AI not living up to the hype?

And this is the part of the report that I find genuinely puzzling. If the AI features are genuinely driving new user adoption and increased spending from existing customers, shouldn't we be seeing an acceleration in the retention rate, not a deceleration? The narrative and the numbers aren't lining up.

Wells Fargo lowered Figma’s price target, citing concerns about the company’s “premium valuation,” the upcoming lock-up release (meaning more shares potentially flooding the market), and the timing of pricing impacts. But they also mention “long-term considerations about growth sustainability and new product integration.” That’s analyst-speak for “we’re not entirely convinced this AI thing is going to work long-term.”

Consider this: Figma allows anyone to sign up for free, but the real value is locked behind monthly subscriptions ranging from $3 to $90 per user. Are they hitting a saturation point with their current pricing model? Are potential customers balking at the cost once they move beyond the free tier?

So, What's the Real Story?

Figma's AI story is compelling, but the numbers suggest a more nuanced reality. A slightly better-than-expected quarter, coupled with executive stock sales and a declining retention rate, raises legitimate questions. The market is valuing Figma as a high-growth AI play. If that growth stalls, or if the AI features don't deliver on their promise, that $22.44 billion market cap could quickly deflate.