When a stock is up 13% in the post-earnings day session and the analyst covering it is still cutting the price target, something interesting is happening and you might want to dig deeper under the surface. That’s exactly the situation unfolding in Figma (FIG) right now.
The design software company delivered a first-quarter 2026 earnings report that caught Wall Street off guard. Revenue increased 46% year over year, customer retention hit its highest level in two years, and AI adoption metrics 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 it shared with me on TheStreet. Goldman’s message is that the quarter was genuinely good, the AI ​​monetization story is emerging, but the competitive threat from native AI design tools is real enough to warrant caution on multiples.
Goldman Sachs lowers 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 acknowledging that 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 non-GAAP operating margin of 16%
Free cash flow of $88.6 million, representing a free cash flow margin of 27%.
Net dollar retention rate of 139%, three percentage points higher than the previous quarter, the highest in more than 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 Q1 2026 Financial Results
Goldman noted in the shared note that revenue was 5% above Street estimates, EBIT margins were approximately 650 basis points above expectations and second-quarter revenue guidance is 6% above consensus. The forecast for the entire year 2026 was increased by $55 million.
“The first quarter was an incredible quarter for Figma,” said co-founder and CEO Dylan Field. “When code is a commodity, design is the competitive advantage: the craftsmanship, point of view, and human judgment that make a great product stand out above the rest.”
About 60% of paid customers with more than $100,000 in ARR used Figma Make weekly in the three months ended March 31, 2026, compared to more than 50% in the prior quarter. Cheng Xin/Getty Images
AI monetization data is the story Goldman wants investors to focus on most
The competitive fear hanging over Figma for the past year has been this. If AI agents can automatically generate designs and code, do teams still need Figma’s collaborative design platform? First-quarter data is starting to answer that question, and the answer is more favorable than bears expected.
My review of AI engagement metrics from Figma’s launch reveals a company where AI is driving expansion, not compression. And just as Goldman Sachs said, the most important signal is to increase monetization without degradation of usage.
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About 60% of paid customers with more than $100,000 in ARR used Figma Make weekly in the first quarter, up from 50% in the fourth quarter, according to Figma’s earnings report.
More than 75% of organizational and enterprise users who had exceeded AI credit limits continued to consume credits in April. More than 95% remained active on the platform as of April 30.
Pro teams who purchased AI Credit add-ons showed more than three times the average annualized spend compared to those who did not purchase add-ons. Customers with more than $100,000 in ARR using Figma’s Model Context Protocol (MCP) server got seats filled about 70% faster than those not using it.
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That last number is the one Goldman highlighted most prominently in the note. Rather than AI agents luring users into competing 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 the first quarter, driven by AI credit limits that incentivized tier upgrades. This is the monetization mechanism Figma needed to demonstrate, and Q1 was the first quarter where it clearly showed in the numbers.
Goldman’s $30 Target Cut and What the Neutral Rating Really Means Here
Goldman’s decision to reduce the price target from $35 to $30 – based on an EV/sales multiple of 10x, versus 13x – reflects a recalibration of its peer multiple rather than a deterioration in fundamental view, according to the note. Revenue estimates have been raised: Goldman now estimates $1.428 billion in 2026, $1.729 billion in 2027 and $2.039 billion in 2028.
The Neutral rating recognizes two real tensions. The positive case is being built because AI monetization is coming faster than feared, customer expansion is accelerating, and Figma’s multiplayer design architecture may be more defensible than critics assumed. Downside risk remains competitive pressure from native AI design tools, headwinds to gross margin as AI inference costs outpace monetization, and a valuation that still requires strong execution to justify.
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The gross margin loss of 110 basis points below estimates is the only number from the quarter that Goldman watched closely. Figma is driving AI adoption ahead of full monetization: credit limits weren’t implemented until March 18, meaning the revenue benefit from the applied limits has only just begun to flow through the income statement. Goldman expects the gap between revenue growth and gross profit growth to narrow as monetization increases.
At $22.92 with a $30 Goldman target and accelerated AI participation data, Figma is a stock whose fundamental story just improved significantly, even if Goldman Sachs isn’t ready to upgrade just yet.
Related: Goldman Sachs doubles down on 2026 stock market message
This story was originally published by TheStreet on May 17, 2026, where it first appeared in the Investments section. Add TheStreet as a preferred source by clicking here.
