Summary Figure offers a compelling opportunity amid the crypto and stock market correction, with strong fundamentals and secular blockchain tailwinds. FIGR's Q3 revenue surged 55% year-over-year to $156.4 million, far exceeding Wall Street expectations, driven by ecosystem and technology fees. The company boasts >50% adjusted EBITDA margins, rapid loan origination growth, and a successful new crypto exchange product launched in August 2024. Reiterating a buy rating, I recommend using near-term dips as buying opportunities given FIGR's profitability and long-term market potential. Amid the sharp correction in the stock market from recent highs, crypto assets are also facing a correlated reckoning, with Bitcoin now sitting stubbornly under $100k. The sharp and highly visible crash in the world's largest crypto asset has also taken down a number of very attractive stocks in the blockchain space, like Circle ( CRCL ) and Figure ( FIGR ), which have little to do with crypto speculation and enjoy long-term secular tailwinds from the blockchain's capacity to dramatically improve our payments infrastructure. Figure, in particular, just reported its first earnings quarter since going public in September at $25 per share. Though Figure is up from post-IPO levels, the stock is down about 25% from highs above $49 reached in August, technically putting the stock in a bear market. In my view, it's a great time for investors who are unfamiliar with this name to take a look at this stock with fresh eyes. Data by YCharts I last wrote a buy article on Figure in September, shortly after the IPO, when Figure was trading in the mid $30s. Since then, I've gained on my position, but a number of positive fundamental factors have also moved in Figure's favor. Its recently opened exchange product is delivering substantial revenue growth, and may actually benefit from recent crypto market volatility. Meanwhile, its core loan origination product is also showcasing rapid growth, while diversifying Figure away from its original base of HELOC loans. And perhaps most importantly, Figure is minting incredible adjusted EBITDA profits, which make the stock's slide more irresistible. I'm reiterating my buy rating here. As a reminder for investors who are newer to Figure, here is what I consider to be the core bull case drivers for the stock in the long haul: Figure is a vast improvement over existing lending infrastructure. Per the company's own estimates, the company provides 93% savings versus the cost to originate a traditional loan, and an 80% reduction in due diligence costs for securitizing collateralized products. Transactional and recurring revenue. The company's core lending products earn an upfront 3% origination fee on all loans originated through the Figure platform, while the company also earns traditional mortgage servicing revenue for all the debt under its administration. Figure Exchange opportunity. The company launched its own crypto trading exchange in August 2024, which is driving substantial revenue growth for the company. Stablecoin issuer. The company also offers a regulated, yield-bearing stablecoin (YLDS), which can benefit from continued interest in holding digital assets that serve as a means of payment and don't fluctuate in value. Unlike rival Circle ( CRCL ), which sponsors the much larger USDC coin, net interest income is just a small slice of Figure's overall revenue, meaning that Figure won't be hugely impacted if the Fed keeps cutting short-term rates. Already immensely profitable. Though Figure is still in the early stages of addressing what it believes to be a $2 trillion market opportunity in lending and $4 trillion in crypto and digital assets, the company is already generating a >50% adjusted EBITDA margin. Stay long here and use any near-term dips as a buying opportunity. Q3 download In mid-November, Figure released Q3 results, which were the first earnings results since the company went public in September. Though the stock is down since the print, the big beat to consensus expectations is a strong indicator of positive sentiment for the stock going forward. The Q3 earnings summary is shown below: Figure Q3 results (Figure Q3 earnings deck) Figure's revenue grew 55% y/y to $156.4 million, absolutely crushing Wall Street's expectations of $119.5 million (+18% y/y) by a massive margin. Of course, Figure is a very complex business with multiple income streams, so we need to take it piece by piece. The top contributor to growth is the company's "ecosystem and technology fees", which grew about ~5x y/y to $35.7 million, or 23% of the company's total. This was driven by the launch of Figure Exchange, which only had a small and partial-quarter contribution in Q3 of last year. We do expect this revenue line to decelerate in Q4 and beyond as Figure starts to comp last year's launch against full-quarter contributions. Still, we think Figure Exchange's broadening selection of cryptocurrencies as well as increasing interest in Bitcoin, especially given recent volatility, are all positive indicators for Figure. As a side note here: though Figure doesn't provide monthly metrics, many other exchanges do, giving us possible insight into how crypto market trading activity is moving past the close of Q3. Robinhood (HOOD) recently released trading activity for the completed month of October, which indicates that nominal crypto trading volumes on the Robinhood app (excluding the recent purchase of Bitstamp) rose 49% y/y to $13.9 billion, and nominally higher than September: which is a strong indication that we should expect Figure to have healthy trading revenue in Q4. Robinhood October trading activity (Robinhood October metrics release) Meanwhile, in the company's core lending arm, loan origination fees grew 13% y/y to $21.4 million, and servicing fees grew 22% y/y to $7.9 million. The company notes in the chart below that its total consumer loan volume grew 70% y/y to $2.47 billion in originations in Q3, which was driven by additional patents in the network and a broadening scope beyond HELOC loans. Figure key metrics (Figure Q3 earnings deck) The company notes that partners are increasingly turning to Figure to help originate first-lien loans, and not just HELOCs. Per CEO Michael Tannenbaum's remarks on the Q3 earnings call: Total consumer loan marketplace volume reached almost $2.5 billion in the third quarter, representing a 70% increase year-over-year. This growth reflects continued expansion across our origination partner network and increased utilization of Figure Connect for liquidity. As more partners leverage the platform to fund and sell loans, we're seeing meaningful gains in both scale and efficiency. A standout example being first lien lending, where adoption has accelerated sharply among both new and existing partners. Firstly, volumes nearly tripled year-over-year, making it one of our fastest-growing products this quarter. Partners are leaning into Figure Connect as a liquidity solution, enabling faster funding, improved execution and lower cost versus traditional channels." We note that interest income also supplemented Figure's results, with interest growing 40% y/y to $17.9 million (11% of company revenue) despite compression in interest rates, thanks to growing issuance of YLDS. We note here that Figure has a nice counterweight and hedge against interest rates: if rates go up, Figure will see better net interest spreads, but if rates come down as they are highly expected to do, Figure should benefit from greater loan origination activity that will help to offset softer net interest spreads. Figure is also showcasing immense profitability chops. Adjusted EBITDA, as shown in the chart below, jumped 75% y/y to $86.4 million, reflecting a 55.4% margin that improved 10 points y/y: Figure adjusted EBITDA bridge (Figure Q3 earnings deck) Valuation and key takeaways At current post-earnings share prices near $37, Figure trades at an $8.22 billion market cap. Netting off the $1.79 billion of cash, restricted cash, loans held for immediate sale and investments on Figure's balance sheet against $466 million of debt gives the company an enterprise value of $6.90 billion. For next year, FY26, Wall Street analysts peg Figure's revenue at $604.6 million, or 24% y/y growth. If we conservatively assume a 48% adjusted EBITDA margin against that revenue profile (flat to YTD 2025 actuals, and lower than the 55% margin that Figure notched in Q3, given that Q2-Q3 tend to be seasonal peaks for loan originations), adjusted EBITDA would be $290 million. This positions Figure's valuation at 23.8x EV/FY26 adjusted EBITDA. For a company with >70% adjusted EBITDA growth and >50% revenue growth amid multiple revenue streams, as well as attractive recurring revenue potential and a wide-open market in both blockchain lending and trading, this is still a modest entry point in this stock. Leverage the current dip as a buying opportunity.
