Figma, Inc. (FIG) stock intrinsic value fair value estimate & owner earnings analysis

Figma sells subscription software for collaborative product design, including Figma Design and Dev Mode, and went public on the New York Stock Exchange on July 31, 2025. The business is growing fast: revenue was $505 million in 2023, $749 million in 2024 and $1,056 million in 2025, and $704 million in the first half of 2026, up about 47% from the same period a year earlier. Customers keep spending more once they join; the net dollar retention rate was 122% in 2023, 134% in 2024 and 136% in 2025. Paid customers above $100,000 in annual recurring revenue rose from 630 to 1,405 over those two years. Sales are split roughly 47% United States and 53% international. The difficulty is what it costs to run. We treat stock awards to employees as a real expense, because they dilute owners just as surely as cash pay would. In 2025 Figma generated $251 million of operating cash flow, and after removing $98 million of timing benefit from working capital and about $5 million of maintenance capital spending, cash earnings before share awards were roughly $147 million. Stock-based compensation was $1,364 million. About $976 million of that was a one-time catch-up charge when the IPO satisfied a vesting condition on existing awards, plus a further $72 million catch-up on a CEO award. Even excluding those, the ongoing level is large: in the first six months of 2026 stock-based compensation was $317 million against $158 million of operating cash flow. That is roughly 45% of revenue, and it has not been shrinking as a share of sales. Owner earnings, meaning operating cash flow less working-capital timing, stock compensation and maintenance capital spending, were about negative $1,217 million in 2025 (negative $3.61 per share) and negative $743 million in 2024 (negative $3.80 per share). 2023 shows a positive $4.05 per share only because Figma received a $1.0 billion termination fee when its proposed merger with Adobe was abandoned; that is not part of normal earning power, and it is excluded from our view of the business. Only three years of filings exist, so no multi-year normal level can be drawn from history. Bear case, $0 per share. Stock compensation stays at or above the current run rate, so owner earnings stay negative. We do not assign a negative value because Figma has no borrowings outstanding that would leave owners owing more than the business is worth, but nothing in the record supports a positive value either. The disclosed $1.2 billion of unrecognized expense on employee RSUs, plus $342 million and $417 million on two CEO awards, shows that large charges are already contracted for the next several years. Base case, $0 per share. Revenue keeps growing, backed by the 136% retention record and by deferred revenue that grew from $92 million to $214 million a year in the cash flow statement. But cash earnings before share awards run at roughly 14 to 23% of revenue in 2024 and 2025 (the company itself reports about 23% on an adjusted basis, which we do not use), and share awards run at 40 to 45%. For the business to earn a positive amount for owners, the ratio of share awards to revenue would have to fall sharply. That has not yet happened, so under our rules we do not credit it, and the case is worth nothing. Bull case, $3.40 per share (about 525 million shares). Here the dollar amount of stock compensation stops rising at about $650 million a year, its first-half 2026 run rate, while revenue keeps growing from about $1.5 billion in 2026 toward $4.4 billion by 2035, and cash earnings before share awards hold at the 23% level reported in 2024 and 2025. Owner earnings turn positive around 2030 and reach roughly $360 million by 2035; we then carry that level flat for ten more years and then stop. Early losses are subtracted. This is the level Figma reaches if it executes well on its own levers, not a market recovery. What we left out: growth above what has already been contracted or demonstrated, any improvement in margins, benefits from newer products such as the Weavy acquisition, and any value for the cash and securities on the balance sheet, because owner earnings already reflect interest income and the method does not add balance-sheet cash on top. What would make this wrong: the two most likely errors are that stock compensation falls faster than we assume once the IPO awards are fully expensed, which would push the base case well above zero, and that growth persists longer than our bull path. We tested the idea that 2026 stock compensation would fade after the IPO catch-up, and the first-half 2026 figure of $317 million disproved it. Share awards are the deciding variable, and we could not reconcile from the filings how much of the 2026 expense comes from awards that will roll off versus new grants. The margin-of-safety price is $1.50 per share, and it applies only once the business condition is met: stock compensation at roughly 18% of revenue or less for a full year with revenue growth still at 25% or more.