Figma turns its SaaSpocalypse into aged milk...

Hey there Folks,

In tonight’s edition, we’ve got Figma’s AI play that just turned “software is dead” into aged milk, America’s favorite red head getting an $8 billion suitor, and why Nelson Peltz is double dipping… 

Let’s get started…

- Everyone: “Saas companies are dead…”  Figma: Hold my beer. 

Apparently the Pixel Pixies were on full tilt last quarter because Figma just dropped the hottest diss of the SaaSpocalypse so far. Shares mooned north of 15% yesterday as Figma dropped quarter numbers that had literally zero business of being this good.

In short, revenue came in like a wrecking ball at $303.8 million in revenue against a $293 million consensus which is a… checks notes... 40% YoY of growth. Additionally, guidance was so far above expectations that I genuinely wonder what the sell-side analysts were doing. Q1 guide of $315-317 million versus the $292 million the Street had penciled in. Because math. 

Friendly reminder that the home of vibe-designers was down 35% YTD going into the print. Mainly because AI has been taking SaaS companies behind the barn lately (perhaps you've heard?). Which is why the plot twist was how stupid (in a good way) the AI numbers looked. Figma Make is getting used weekly by more than half their $100K+ customers. Weekly actives up 70% from Q3. Gross margin didn't even flinch, still sitting at 86%. Translation: The infra team over there is doing ungodly things with compute costs and nobody's talking about it. Oh, and starting in March? The AI credits stop being free. #savage.

Naturally, Figma's CFO was pretty blunt: usage follows a power law, a chunk of users are getting way more value than they're paying for, and that's about to change. The product is cracked enough that heavy users will just... pay. That's it. That's the moat.

Net dollar retention from $10K+ customers hit 136%, up from 131% last quarter. People aren't just staying, they're spending more. But the real play is that Figma's TAM isn't "designers" anymore. Product managers are in the files now. UX researchers are next. The tool is becoming the place where everyone who touches a digital product actually works. That's a very different company than the one the market was pricing at -35%.

Now of course, one earnings report doesn't fix a chart that looks like it fell down a flight of stairs. But the market spent six months treating Figma like it was the victim of the AI revolution, and Figma just showed up with receipts saying it might actually be one of the winners. Shocking… I know.

Turns out building the platform where AI tools get used is a better business than getting replaced by them… and you just know LegalZoom has to be punching air right now. Until next time, friends…

- The Meal of Fortune… 

Nelson Peltz has a fever and the only medicine is America's favorite Carrot Top (read: Wendy's). According to an SEC filing dropped Wednesday, Peltz's Trian Fund Management has been chatting up financiers, co-investors, and "strategic partners" about potential deals for Wendy's… including a full acquisition.

Naturally, shares immediately melted faces, ripping 17% on the news. But wait, haven't we seen this movie before? You betcha. Peltz kicked the tires on a takeover back in 2022 and then just… didn't. Basically ghosted the whole thing and left Wendy's on read. Now he's back with a 16.24% stake saying the stock is undervalued and he might enter into "financial instruments or other agreements" to increase his exposure. Translation: Peltz is getting his Bobby Axelrod on by either buying this thing or making everyone think he's buying this thing until the price moves. 

The reality though, is Wendy's needs it. The damsel in distress saw same-store sales in the U.S. crater -11% last quarter. For context, a year ago that number was +4.1%. Woof. All this while Ronald and the Gang (McDonalds) are running value meal plays and Taco Bell is stealing share.

Which brings us to the main question: what's Peltz actually seeing here? Probably a brand that's way more valuable than its operations suggest, sitting at a price where the math starts working for a take-private or a strategic flip. Wendy's has brand recognition. It has the real estate footprint. What it doesn't have is momentum, and that's exactly the kind of problem a guy like Peltz thinks he can fix with some financial witchcraft and operational tough love.

Of course, Wendy's board put out the usual boilerplate, but whether Peltz actually pulls the trigger this time or if this is another 2022 situation where he circles the drive-thru and leaves without ordering… is anyone's guess. 

Either way, the stock needed something. You don't drop 11% in same-store sales and just "where's the beef?" your way through it. Sometimes you need a billionaire activist investor to file a 13D and remind the market you exist. 

The Team at Bullseye Trades