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Figma breaks ground in the domain of technology initial public offerings

Figma sets IPO share price at $33, exceeding expectations reported by CNBC, surpassing the anticipated range of $30-$32, and far surpassing the initial range of $25-$28 announced a week prior. This offering generated $1.2 billion, with the majority of funds earmarked for...

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Figma Lifts the Veil on the "Technology Initial Public Offering"
Figma Lifts the Veil on the "Technology Initial Public Offering"

Figma breaks ground in the domain of technology initial public offerings

Figma, the leading cloud-based collaborative design platform, made a splash in the tech industry with its successful initial public offering (IPO) in 2025. The company, which went public with a valuation of approximately $19.4 billion, has had an eventful journey leading up to this milestone.

Originally, Figma was the subject of a high-profile failed acquisition by Adobe in 2022, with the deal terminated in December 2023 due to regulatory hurdles in Europe and the UK. Adobe paid Figma a $1 billion reverse termination fee as part of the breakup, a costly move considering Figma's subsequent IPO success. The company's market capitalization briefly reached approximately $68 billion at debut and settled around $56–62 billion thereafter, significantly exceeding Adobe's original offer by about $37 billion.

Figma's IPO was among the largest of 2025, raising over $1.2 billion. The company priced its shares at $33, but they soared to $142.92 on the first day, driven by investor enthusiasm over its impressive financial performance. In Q1 2025 alone, Figma achieved $228.2 million in revenue, a 46% year-over-year increase, along with a notable net income of $44.9 million and a gross margin of 91%.

Despite solid fundamentals, including a 132% net dollar retention rate and 91% gross margin, the stock experienced volatility post-IPO, dropping by about 38% to $78.11 by early August 2025. This was partly due to a very limited public float (only about 8.7% of shares available), creating liquidity challenges, and a very high price-to-sales ratio of 68.6x, well above comparable companies like Shopify (15x) and Adobe (12x), indicating investor expectations outpaced current financial metrics.

Notable additions to Figma's board include Mike Krieger, co-founder of Instagram and chief product officer of artificial intelligence model developer Anthropic, and Luis von Ahn, co-founder and CEO of Duolingo. Existing shareholders, including Index, Greylock, Kleiner Perkins, and Sequoia, are cashing out some shares in the IPO.

Figma has fundamentally transformed how design work is done, moving from siloed desktop applications to real-time collaborative web-based tools. The company has also demonstrated its crypto-forward thinking by investing in a stablecoin and a Bitcoin exchange-traded fund.

Looking ahead, Figma's financial metrics show hypergrowth, with Q2 2025 preliminary revenue of $247-$250 million, representing a 40% growth. The company expects to swing from an operating loss to potential profitability. Figma's 19x multiple suggests market confidence but not irrational exuberance.

The failed Adobe acquisition may prove to be a blessing in disguise, allowing Figma to remain independent and capture the full upside of the AI transformation in software development. As of Q1 2025, Figma had 13 million active monthly users and 95% of Fortune 500 companies as customers.

Figma's IPO represents a watershed moment for the design software industry, and its unusual structure, with a 2:1 ratio of secondary to primary shares, signaling strong demand, liquidity for early investors, and limited dilution. This year's biggest IPOs include stablecoin issuer Circle Internet Group (CRCL) and CoreWeave (CRWV), an artificial intelligence (AI) cloud company, which raised $1.05 billion and $1.5 billion, respectively.

In summary, Figma's background before its 2025 IPO is marked by rapid growth, profitability, and a landmark failed acquisition by Adobe. Its IPO was among the largest of 2025, raising over $1.2 billion, but the resulting market valuation revealed a significant premium over prior acquisition offers and showcased both strong fundamentals and post-IPO volatility.

  1. Figma, the successful cloud-based collaborative design platform, attained a valuation of $19.4 billion during its 2025 IPO, significantly surpassing Adobe's original offer by about $37 billion.
  2. In 2022, Figma was the subject of a failed acquisition by Adobe, with the deal terminated in December 2023 due to regulatory hurdles in Europe and the UK.
  3. Figma's IPO raised over $1.2 billion, with the company pricing its shares at $33 that soared to $142.92 on the first day.
  4. In Q1 2025 alone, Figma achieved $228.2 million in revenue, a 46% year-over-year increase, along with a net income of $44.9 million and a gross margin of 91%.
  5. Notable additions to Figma's board include Mike Krieger, co-founder of Instagram, and Luis von Ahn, co-founder and CEO of Duolingo.
  6. Figma has demonstrated its crypto-forward thinking by investing in a stablecoin and a Bitcoin exchange-traded fund.
  7. Figma's financial metrics show hypergrowth, with Q2 2025 preliminary revenue of $247-$250 million, representing a 40% growth.
  8. The failure of the Adobe acquisition might prove to be advantageous for Figma, allowing it to remain independent and capitalize on the AI transformation in software development.
  9. Figma's IPO structure, with a 2:1 ratio of secondary to primary shares, signaled strong demand, liquidity for early investors, and limited dilution.

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