San Francisco — Figma (FIG) stock surged 5% following the company’s third-quarter earnings report, driven by strong revenue growth and rising adoption of its AI-powered design tool.

The design software company reported adjusted earnings of 10 cents per share on revenue of $274.2 million, exceeding analyst expectations of $265.2 million. This represents a 38% year-over-year increase in revenue, highlighting strong demand for Figma’s collaborative design platform.

However, net losses widened sharply to $1.10 billion, or $2.72 per share, compared with a loss of $15.6 million, or 7 cents, in the same period last year.

AI-Powered Growth Drives Momentum

CEO Dylan Field highlighted Figma’s AI product, Figma Make, as a major growth driver. The tool allows developers to create app interfaces using generative AI models. Around 30% of customers spending over $100,000 annually now use Figma Make weekly, Field noted, adding that usage continues to rise rapidly.

“We will continue investing heavily in AI and trade near-term margin to build the right long-term platform for our customers,” Field said during the earnings call.

Stock Performance

Figma shares jumped as much as 12% in extended trading before settling at a 5% gain ahead of Thursday’s opening bell. Despite this rally, the stock remains down about 70% from its all-time high of $143 set shortly after its public debut.

Investors continue to weigh valuation and profitability concerns amid a broader cooling in the high-growth tech sector, even as Figma’s AI-driven products offer promising long-term potential.