Figma, Inc. (FIG) Earnings Call Transcript & Summary

Okay. Fantastic. We will go ahead and kick it off with Figma. Can we get the doors closed, please? Delighted to be on stage with [ Fiona Zhang ], my colleague and Dylan Field, CEO and Founder of Figma. Thank you for your time today.

Thank you for having me.

Dylan, I want to ask you a little bit about the product road map over the next 12 months. We came back from the Figma conference and the number of products that you're announcing in a very short amount of time has gone up. At the same time, 1 of the dynamics that we've talked about on the earnings call is this idea that customers are in a period of experimentation. So talk a little bit about what the vision for how Figma up levels into that period of innovation over the next 12 months and some of the things that you're looking at to gauge success?

Absolutely. I think maybe taking a step back, it's this wild time and 1 that we have wanted to see come true for so long. The amount of software that people are building the amount of creativity that folks are exploring, it's expanding so fast, it feels exponential. And then you look at adoption, and it's kind of flat overall. So not everything is getting actually adopted. Not everything is getting developed fully. And the attention economy at the end of the day is like quite limited for software, whether it's an enterprise, consumer, for marketing across all areas where people are using software as part of the business. The fight for attention is constant. And so when you look back at the launches we did at Config, a lot of that was around expression. How do you get the best ideas out there in a way that you can still shape but also with the benefit of AI. And so went for things like motion and expressive shaders, the ability to create your own tools in Figma and more. And now I think as we look across our platform, the first thing that we always have to remind ourselves of is design and designers are core, and we must always cater to their needs and make sure that they are the first folks that we take care of on the platform. I think that there's tons of opportunity outside of design as well. And as we look at it and look at the improvements that we're seeing with LLMs right now, I mean, it's pretty mind-boggling, how fast they're improving. And I think our core strategy remains the same, which is basically we see code as being increasingly commoditized, as it becomes more commoditized, I don't believe that the layer on top of that, they have [ abstraction ] of text, I think it's visual. I think that's what most people, including designers, want is to actually interact with a visual medium to go change and to pick up and really reflect their own point of view in the design in the medium. And as we do that, I think that, that will be increasingly the starting point from which you then go make APR from which you ship code and measure it. And if we can do that, I think it really enables us to open up code in the canvas alongside all sorts of other mediums because then the day code is just like an implementation detail. It's not the -- what it's not like what people are going for. And so to the degree we can do that fully, I think it expands the platform an opportunity quite a lot and puts us more in the token flow overall.

It leads nicely into a question on the evolution of user interface. One of the [ bare ] cases we've heard is, we can envision a world where knowledge workers have essentially some sort of central pane of glass with pumped bar and they're operating all of these different applications in the background, off of the pump bar rather than actually interacting with any specific app. Or you have agents and they are the ones actually doing the heavy lifting. They don't need a user interface. Maybe give us the pushback to that more bearish view of UI evolution?

Well, I don't think it's entirely bearish, first of all. But I would say that overall, like the core -- 1 of the core thesis of Figma is alongside prompting to get started and to get something out on to the canvas that you can like start thinking about and respond to because I'm sure all of you feel this new or staring at a blank canvas, a blank page, that is the hardest thing to be able to catalyze yourself into going [ crane ], editing, iterating from there. And to get some on the canvas is incredible. To able to do these tests that are pretty menial might take hours and automate them away is so helpful. But yes, to the degree that we're able to make it so people can get within [ each other's ] head onto the canvas and translate that and achieve with their hands of direct [ manipulation ] and also not just be building in 1 direction, whatever they happen to get from the agent, but actually building the right thing, which requires exploration. It requires divergence. And I think that the canvas is very useful here, it's a bird's eye view to actually have a sense of all the things that are going on, [ zero in ] on the thing that matters. That is ultimately where I see has been a very important step that a lot of folks are reporting to us as missing right now. We've gone from a place where designers and design teams inherently diverged to many folks trying to adopt AI workflows and process losing what made them designers in the first place and then trying to get back to it and figuring out, okay, how do we solve this? One of the things that we also launched in Config, sorry, announced in Config, and will be launched soon is Code Layers. And this isn't a way to just put a code on the canvas in that way across all these mediums, you can also see code and have a full function prototype that you can consider alongside other options.

Fantastic. Okay. Let me ask you 1 more core Figma IP question before we start talking about competition. One of the things that's always [ shot out ] to us on the Figma back end is the way that you solved multiplayer. So multiple folks in the room can orchestrate across 1 canvas and the changes sort of sync seamlessly. That seems like a pretty important piece of IP for how agents work because agents also have to sync. So walk us through what that could look like? Can you use your core IP on multiplayer, essentially the gaming engine that you have? Can you extend that to agents?

Yes. I mean, first of all, we agree. We think it's a big opportunity to bring not just humans but also agents into the canvas together. With the Figma agent you're starting to see the innings of that, more to come. And that's 1 of the things I'm most excited about right now is how we can get the agent in Figma design to be maximally useful, high quality, but also really fast. I think the speed, the cost and the quality, those are 3 parts of it that all matter. I wouldn't say it's the only thing that matters, though, is getting agents and humans working alongside each other. I also think that anything you can do to be able to be in the data loop of the customer creates context then creates capability for the customer too. And I think that is something that will increasingly be seen as a core mode of the business and a big part of the way that we better serve customers as well.

Let's talk a little bit more about competition. So the tools from Frontier Labs or AI native startups are no longer just about generating code anymore, but they're generating more complete products. So the Frontier Lab models continue to innovate and improve at their current pace. Where do you see the swim lanes are converging with Figma potentially?

Yes. I think that it's been super impressive how the Frontier models overall are improving. I mean, if you all are playing with Astra, for example, which just came out, I mean, what it can do with math, what it can do on the coding side and the improvements we're seeing overall there are very strong. I would say for design, it feels they get incremental. There's always a sort of psychosis we will go through a few days after a model release where it's like the best things bubble to the top of the algo feed. And then you're like, "Oh, but I can do the thing," and then you try to do the thing, it doesn't quite work. And our only [ valves ] like it is progress. It's incremental on design, but overall, this is still in the realm of -- I think the visuals are not quite there, let alone the experiential details, UX providing and actually understanding larger context. And adhering to a design system, especially as design systems involve more and more complexities. And so I think that, that's been both our challenge and our opportunity is how do we take models frontier, proprietary and make it that we're able to actually use them to make the lives of designers better and the workflows of designers better as well as everyone they're working with. And so that's a huge area of our focus when it comes to Figma agent is making it so that we are able to provide truly valuable use cases there.

With these Frontier Labs and AI native start-ups, how do you balance openness and partnership while maintaining strategic differentiation from them?

Yes. I mean our MCP, I think, is a good example of this, where with MCP, we've tried to make sure that you can go from Figma designs that exist in the canvas, click 1, pull in the MCP, through MCP into your coding agent, and go build it. And I think what's been also really exciting is to see the growth overall of the way that these are now writing back to Figma. And overall, we're seeing just a ton of people, which is growing quarter-over-quarter in significant ways, writing back with our [ used ] Figma tool call to the canvas, which I think just shows how the Canvas remains the center of work even as models get better and better. And I think that as Figma agent increases quality and speed gets better, too, we'll see more and more of that work happening in Figma directly, rather than going out to the Figma -- to the coding agent in a terminal or an ID where we've heard repeatedly from our customers. It's not where they want to work. It's not where they want to live and instead starting in your design tool.

You talked about the importance of context. And then 1 of the major debates we hear is where and who owns the proprietary data moats. What you need context does Figma accumulate across the product development life cycle? And why is that context so difficult for a competitor to replicate?

Yes. I think that going back quite a ways, whether or not a company wants us to use it, we have incredible context on the designs, the commentary and feedback, workflow, design systems of a customer. And this can both be helpful for our first-party model training. And in the future, as we branch out and are able to work with our customers more to enable them to fully use the contact and Figma design, they already can use the context they have outside of Figma design, but we want to make sure they can use it more first-party as well. That, I think, will be increasing, like I said, the data moat that matters. And all of that is workflow data that can really impact the way you work and expand it so that more people in your organization are able to use Figma and go create, whether it's continuing ideas to a software project or it's making it that you're able to express different branding marketing you want to do. These are all opportunities. I think more people in the organization as AI gets people to go more generalist will want to contribute to, and we're already seeing lots of signs of that.

Dylan, maybe just make this example a little bit more tangible. So let's say, we're a large financial institution. We have all of our branding content in-house. We have all of our data assets stored in Figma. Explain to us the difference between using something like the Figma agent to be able to start a new mobile app versus plugging in 1 of the third-party coding tools, 1 of the third-party LLMs, giving it access to that data set and saying, here are all the data assets you need go build us the mobile app?

Sure. I think that in the future, you'll be asking about where do you want your data to live. And you'll also be trying to figure out, okay, what are the different ways to ensure correctness of our assets, whether it's on brand and marketing or it's in software. Actually adhering to these design systems, brand guidelines is something that everyone cares about and a few are able to do with coding agents of anyone. And so it's a very big effort to get there, but 1 that we believe if we can enable customers to be able to define that, it will really help them.

Explain that a little bit more. So could I potentially give the coding agent, let's say, it's Claude, some sort of style guide or design guide that we've written in-house, maybe we even leverage Figma to do it. And then it goes off and sticks to the style guide and all the data still lives within the financial institution. Is that architecture something that would risk to Figma?

Well, right now, what we're seeing overall is even as these agents are improving, adherence, strict adherence to these guidelines is not a given. Hallucination is a huge issue as well as adhering to things in the wrong context. And so it's an easy thing to say. And I'm speaking as someone who said it before, and a harder thing to actually go make happen. And so I think that is 1 component of it. And I also think that there's many others in terms of the workflows that customers do and how we can make them truly actionable and make it so that the system is learning from them all the time.

So how did you then solve the same hallucination and commercial safety challenges within your own agent?

Well, we continue to [ hill climb ] on it, to be perfectly frank. I think that it's something that's been a focus of ours for quite a long time, and we're getting better and better. But I wouldn't say it's universally solved at this point. And I don't think it can be without the customer's help. And so that's typically where you fall down is if a customer -- a large financial institution, for example, were to say, okay, here is a set of written principles, it's [ actually ] not enough. You need to have positive and negative cases of what you want to see.

I think coming back to product a little bit. You've mentioned that AI has lowered the floor, but have yet to [ weigh ] the ceiling. If you look across your product road map in the next 12 to 24 months, what has the greatest potential in your mind to raise that ceiling?

I think our users, it's the case that people are able to do this incredible work overall with AI. But at the end of the day, every trope that gets created, that's at the center of the distribution is cliche after a very short amount of time. And so in order to actually go push that distribution in the first place, it requires cleverness, it requires a point of view and a reason why you're trying to go do something different. But if you don't, then you are out of luck, I think, because people just don't have the attention to go see the thing that's cliche over and over again. And they dismissed it actually as AI slop right away. I don't know if anyone in this room has the same reaction I do when they see [ writing the head ] like the AI cliche in it. It's not -- it's this, not that, for example, or you're absolutely correct. You can go on and on. But I think it's like kind of wild, I mean I stopped using em dashes for a while. Should I have? I like em dashes.

I like them too.

Yes, they're good.

They're grammatically correct.

But then I see people using em dash, and I'm like, slop. It's like you have this knee-jerk reaction. So I feel like there's plenty of AI tropes that are good in isolation, but then you don't want people to think you're just like generating something and putting out there. Is that dynamic to point out.