Figma shares jumped as much as 20% in extended trading on Wednesday after the design software maker reported robust results and quarterly guidance than Wall Street had predicted.

Here’s how the company did in comparison with LSEG consensus:

• Earnings per share: 8 cents adjusted vs. 7 cents expected
• Revenue: $303.8 million vs. $293.15 million expected

Figma’s revenue grew 40% year over year in the fourth quarter, according to a statement. The company had a net loss of $226.6 million, or 44 cents per share, compared with net income of $33.1 million, or 15 cents per share, in the fourth quarter of 2024.

Management called for $315 million to $317 million in first-quarter revenue, which implies 38% growth. Analysts polled by LSEG were expecting $292 million.

For 2026, Figma sees $100 million to $110 million in adjusted operating income on $1.366 billion to $1.374 billion in revenue, which would suggest 30% revenue growth. The LSEG revenue consensus was $1.29 billion.

Lately, investors have become more concerned that generative artificial intelligence products could weaken the growth prospects of software companies. As of Wednesday’s close, Figma shares were down about 35% year to date, while the iShares Expanded Tech-Software Sector Exchange-Traded Fund has slipped 22%. The S&P 500 index has gained almost 1% in the same period.

“If you look at software, not only is it not going away. There’s going to be way more of it than ever before,” Figma’s co-founder and CEO, Dylan Field, said in a Wednesday interview. But he said the market is “potentially increasingly competitive.”

The company, which went public in July, wants to ensure it can benefit as people turn to AI products for design. The Figma Make tool allows people to type in a few words and have AI models from Anthropic and Google interpret the information to craft app prototypes. More than half of customers spending over $100,000 in annualized revenue had people using Figma Make every week during the quarter, according to the statement.

Figma managed to lower the cost of running the Make service for end users by optimizing its computing infrastructure, Praveer Melwani, the company’s finance chief, said on a conference call with analysts. The company’s adjusted gross margin stayed put at 86%, despite that Figma Make weekly active users increased 70% from the third quarter.

Soon Figma will be bringing in more revenue from AI adoption. In March, it will start enforcing monthly AI credit limits for different types of account holders. Clients will pay based on monthly usage or sign up for AI credit subscriptions, according to a blog post from December.

“What we’ve observed is it tends to be a power law distribution, where a subset of users within an organization are receiving outsized value, and as such, are going over the projected limits that we intend to enforce,” Melwani said. “Now, our expectation is that that will continue to evolve.”

Also during the quarter, Figma announced a collaboration with ServiceNow to convert designs into applications for large companies to adopt.

“We were pleased to see positive commentary around both Figma Make and Figma Design, indicating increased adoption of AI workflows across Figma’s platform,” RBC analyst Rishi Jaluria, with the equivalent of a hold rating on the stock, wrote in a note to clients.

This is developing news. Please check back for updates.

WATCH: How the AI sell-off ripped through software

Elon Musk’s xAI, which merged with SpaceX last week, is facing increased pressure from environmental and civil rights groups over pollution concerns, this time at the company’s facility in Southaven, Mississippi.

On Friday, the Southern Environmental Law Center and Earthjustice, on behalf of the NAACP, sent a notice of intent to sue xAI and subsidiary MZ Tech LLC, saying the company’s use of dozens of natural gas-burning turbines requires a federal permit, violates the Clean Air Act and harms nearby communities.

Pollution from the turbines, which xAI has also used in Memphis, Tennessee, for its Colossus 1 and Colossus 2 data centers, has been a major source of local contention for more than a year.

Plans for a third data center in Southaven, located about 20 miles from Memphis, were announced early this year, when Mississippi Republican Governor Tate Reeves said he expected the project to create “hundreds of permanent jobs throughout DeSoto County.”

Launched by Musk in 2023, xAI is trying to compete with OpenAI, Anthropic and Google in the booming generative AI market. On Feb. 2, Musk said SpaceX, his rocket maker and defense contractor, acquired xAI in a deal that valued the combined entity at $1.25 trillion.

Musk is banking on the area in and around Memphis as the foundation of his AI ambitions, and he’s been flouting environmental rules in order to develop as quickly as possible. Musk’s social network X, formerly Twitter, is also owned by xAI, which created the Grok AI chatbot and image generator.

XAI is currently under a myriad of government investigations in Europe, Asia and the U.S. after Grok enabled users to easily create and share deepfake porn, including explicit imagery depicting child sexual abuse.

Last year, residents in the majority-Black community of Boxtown in South Memphis testified at public hearings about a stench in the air, and the impact of worsening smog on their health caused by xAI’s use of natural gas turbines. Research by scientists at the University of Tennessee also found that xAI’s turbine use added to air pollution woes in the area.

Environmental advocates, including the NAACP, had previously said they would sue to stop xAI’s un-permitted use of the turbines in Memphis. But they stopped short of filing a legal complaint after Shelby County’s health department allowed xAI to treat the turbines as temporary, non-road engines, and issued permits for their use.

At the federal level, the EPA recently clarified gray areas of the law and said these turbines can’t be categorized as temporary non-road engines. Nonetheless, xAI has been using the turbines across state lines without obtaining federal permits.

XAI didn’t immediately respond to a request for comment.

Noise pollution from the turbines has also been a source of local consternation. Jason Haley, a Southaven resident, told CNBC the turbines make headache-inducing noises around the clock that he can hear inside his home.

Haley is part of a group called Safe and Sound which documents the decibel levels, and is pressing local officials to stop xAI from making so much noise, especially overnight, with its turbines.

Mississippi officials will hold a public hearing, scheduled for Tuesday, for community members who wish to express their concerns about xAI’s expansion plans in the area. The hearing will focus on whether the state should give xAI permission to install and run 41 permanent turbines at its Southaven facility, Mississippi Today previously reported.

Similar community dynamics are playing out across the U.S. as tech giants rush to construct massive data centers, which can strain local energy and water supply and cause prices to increase.

In November, Microsoft ended efforts to build a data center in Wisconsin due to the community’s vocal opposition. Amazon also pulled out of plans for a data center in Arizona after community protests.

In terms of Musk’s Southaven project, Patrick Anderson, a senior attorney with SELC, said xAI “has to follow the law, just like any other company.”

“And when it flouts the Clean Air Act’s bedrock protections against unpermitted emissions, it puts the health and welfare of ordinary citizens at risk,” Anderson said in an email. “That’s why we intend to hold xAI accountable here.”

The Mississippi Department of Environmental Quality did not immediately respond to requests for comment.

Read the environmental groups’ notice of intent to sue xAI here: