By Paul R. La Monica

Figma went from being one of the initial public offering heroes of 2025 to an IPO flop. The design-software company's earnings, due after the close of trading on Wednesday, offer a chance to change the narrative.

While the stock surged 250% on its debut day in late July, it has plunged 37% this year and is now hovering under its offering price of $33. Figma shares are 85% below the all-time intraday high they hit on their second day of trading.

While concerns about the impact of artificial intelligence are weighing on Figma stock, as they are on shares of other software companies, the company is fighting back. Shares of Figma rose 2.5% Tuesday after the company announced a partnership with Anthropic, developer of the Claude AI large language model, that lets users turn AI-generated code into designs.

The stock was up again Wednesday morning before the earnings report.

As it discusses its results and outlook, Figma is likely to tout that deal, along with others with ChatGPT creator OpenAI and Gemini owner Alphabet, as reasons why it may be able to do better than other software firms.

That includes rival and former merger partner Adobe, whose stock has tumbled more than 25% this year. Adobe had agreed to buy Figma in 2022 for $20 billion but was forced to abandon the deal a year later due to antitrust concerns. Figma's market value is now hovering around $11.7 billion.

Figma is expected to post strong revenue growth in the fourth quarter, up 35% from a year ago, to $293 million. Wall Street is forecasting an adjusted profit of 7 cents a share, or about $35 million. That number excludes stock-based compensation expenses related to the IPO, as well as some other charges. Under generally accepted accounting principles, Figma is forecast to lose $159 million.

The stock plunged in September after the company reported its second- quarter results, the first earnings release for Figma since its IPO. But sales for the third quarter, which Figma reported in November, topped Wall Street's forecasts.

Analysts have their doubts about a comeback for the stock. Despite the pullback, the shares are still richly priced, trading at nearly 90 times the earnings forecasts for this year. Only three of the twelve that cover Figma recommend it as a Buy, while eight rate it as a Hold. One analyst has it at Sell.

In addition to the broader worries about the software sector, Figma also faces tough competition from Canva, a startup that is expected to file for an IPO at some point this year.

But as Figma looks to pitch how it can benefit from AI, any signs that revenue momentum could start to accelerate may be warmly received by investors.

Write to Paul R. La Monica at paul.lamonica@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 18, 2026 10:14 ET (15:14 GMT)

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