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Investing.com -- In a note to clients on Monday, DA Davidson called Figma “an ideal IPO candidate to lead the way for additional software IPOs over the next 12–18 months.”
The firm expects Figma to begin trading later this week. The note highlights strong investor appetite and points to the firm’s fundamentals, stating that Figma “checks the boxes in terms of growth, profitability, and technology.”
Figma is part of a broader wave of well-capitalized private software companies, such as Canva, Databricks, and Genesys, preparing to go public following a prolonged IPO drought.
According to DA Davidson, these firms have become “fit,” with reports of positive free cash flow alongside healthy double-digit revenue growth.
With 46% year-over-year growth in the first quarter of 2025 and a projected 39%–41% increase in the second, Figma’s performance stands “well above the median for SaaS names in our universe at 13%,” DA Davidson added.
“We see a pathway to durable growth going forward,” stated the firm, citing a growing enterprise motion and improved monetisation of free users.
While investors are closely watching the evolving competitive dynamics with Adobe (NASDAQ:ADBE) and Canva, DA Davidson believes Figma “has a strong argument to remain a category leader” due to its “key role in product management workflows, collaboration capabilities, and partner ecosystem.”
The analysts expect “a positive day 1 reaction,” noting that the IPO pricing range implies a fully diluted valuation between $14.6 billion and $16.4 billion.
“For a story with solid growth potential, positive operating margin trends, and strong brand awareness we believe that institutional and retail interest will be high leading to a positive initial reaction,” DA Davidson concluded.