Shares of Figma tumbled Thursday, falling 17.64%, or $4.97, to $23.18, after the design software company's second-quarter earnings report showed accelerating revenue growth and a raised full-year outlook, but a more cautious forecast for the current quarter proved enough to send investors heading for the exits.

The decline extends a brutal stretch for Figma's stock since its blockbuster initial public offering last year, with shares now trading well below their post-IPO highs as investors continue to weigh the company's strong underlying growth against persistent concerns about competition from AI-native design tools and questions about the sustainability of its premium valuation.

Strong Quarter, Muted Reaction

Figma reported second-quarter revenue of $370.08 million, up 48% from the same period a year earlier and comfortably ahead of the $351.56 million analysts had expected. Adjusted earnings came in at 8 cents per share, doubling the 4-cent consensus estimate. The quarter marked Figma's third consecutive period of accelerating revenue growth, and the company generated $60.9 million in net cash from operations and $53.2 million in free cash flow during the period.

Figma Chief Executive Dylan Field framed the results as validation of the company's broader strategic direction, saying in a statement that the second quarter marked Figma's third straight quarter of accelerated revenue growth, and that as code gets commoditized and value moves up the stack, the opportunity ahead of the company has only grown.

Guidance Fails to Match the Enthusiasm

Despite the strong headline numbers, Figma's forecast for the third quarter fell short of what........

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