Net Revenues Growth of 9.2% YoY, Net Income of
$1.9 million, Net Income Margin of 1.6% and Adjusted EBITDA Margin
of 13.4%
FIGS, Inc. (NYSE: FIGS) (the “Company”), the direct-to-consumer
apparel and lifestyle brand dedicated to the healthcare community,
today released its first quarter 2023 financial results and
published a financial highlights presentation on its investor
relations website at
ir.wearfigs.com/financials/quarterly-results/.
“Our first quarter performance was better than expected and
reflects progress against our key initiatives,” said Trina Spear,
Chief Executive Officer and Co-Founder, “We remain intently focused
on product innovation and connecting deeply with our healthcare
community. FIGS is an iconic brand and we look forward to advancing
our leadership position within the healthcare apparel industry,
while driving profitable growth for the long term.”
First Quarter 2023 Financial Highlights
- Net revenues were $120.2 million, an increase of 9.2%
year over year, driven by an increase in orders from existing and
new customers, partially offset by lower average order value
(“AOV”).
- Gross margin was 71.3%, an increase of 10 basis points
year over year, primarily related to lower utilization of air
freight partially offset by the impact from a higher mix of
promotional sales.
- Operating expenses were $82.4 million, an increase of
27.4% year over year. As a percentage of net revenues, operating
expenses increased to 68.5% from 58.7% in the prior year period
primarily due to higher selling expenses related to higher
fulfillment costs, including increased storage costs and, to a
lesser extent, an increase in the accrual for charitable donations
as well as an increase in stock-based compensation expense.
- Net income was $1.9 million and diluted earnings per
share was $0.01.
- Net income margin(1) was 1.6%, as compared to 8.1% in
the same period last year.
- Net income, as adjusted(2) was $2.5 million and
diluted earnings per share, as adjusted(1) was $0.01.
- Adjusted EBITDA(2) was $16.1 million, a decrease of $8.9
million year over year, or 13.4% of net revenues.(2)
Key Operating Metrics
- Active customers(3) as of March 31, 2023 increased 21.8%
to 2.4 million.
- Net revenues per active customer(3) was $216, a decrease
of 4.4% year over year.
- AOV(3) was $114, a decrease of 1.7% year over year
primarily due to a decrease in average unit retail partially offset
by higher units per transaction.
Financial Outlook
For Full-Year 2023, the Company now expects:
Net Revenues Growth as Compared to
2022
5.5% to 7.5%
Adjusted EBITDA Margin(1)(4)
12% to 13%
Daniella Turenshine, Chief Financial Officer, commented, “We are
pleased with our financial results and believe that we are well
positioned to drive accelerated growth once macro headwinds
subside. We have a strong balance sheet and the ability to generate
healthy free cash flow that we believe will enable us to
effectively manage near term macro challenges while continuing to
invest in our future growth.”
(1)
“Net income margin” and “adjusted EBITDA
margin” are calculated by dividing net income and adjusted EBITDA
by net revenues, respectively.
(2)
“Net income, as adjusted,” “diluted
earnings per share, as adjusted,” “adjusted EBITDA” and “adjusted
EBITDA margin” are non-GAAP financial measures. Please see the
sections titled “Non-GAAP Financial Measures and Key Operating
Metrics” and “Reconciliations of GAAP to Non-GAAP Measures” below
for more information regarding the Company’s use of non-GAAP
financial measures and reconciliations to the most directly
comparable GAAP measures.
(3)
“Active customers,” “net revenues per
active customer” and “average order value” are key operational and
business metrics that are important to understanding the Company’s
performance. Please see the sections titled “Non-GAAP Financial
Measures and Key Operating Metrics” and “Key Operating Metrics”
below for information regarding how the Company calculates its key
operational and business metrics and for comparisons of active
customers, net revenues per active customer and average order value
to the prior year period.
(4)
The Company has not provided a
quantitative reconciliation of its adjusted EBITDA margin outlook
to a GAAP net income margin outlook because it is unable, without
making unreasonable efforts, to project certain reconciling items.
These items include, but are not limited to, future stock-based
compensation expense, income taxes, expenses related to
non-ordinary course disputes, and transaction costs. These items
are inherently variable and uncertain and depend on various
factors, some of which are outside of the Company’s control or
ability to predict. For more information regarding the Company’s
use of non-GAAP financial measures, please see the section titled
“Non-GAAP Financial Measures and Key Operating Metrics.”
Conference Call Details
FIGS management will host a conference call and webcast today at
2:00 p.m. PT / 5:00 p.m. ET to discuss the Company’s financial and
business results and outlook. To participate, please dial
1-833-470-1428 (US) or 1-404-975-4839 (International) and the
conference ID 493313. The call is also accessible via webcast at
ir.wearfigs.com. A recording will be available shortly after the
conclusion of the call until 11:59 p.m. ET on May 11, 2023. To
access the replay, please dial 1-866-813-9403 (US) or
+44-204-525-0658 (International) and the conference ID 103434. An
archive of the webcast will be available on FIGS’ investor
relations website at ir.wearfigs.com.
Non-GAAP Financial Measures and Key Operating Metrics
In addition to the GAAP financial measures set forth in this
press release, the Company has included non-GAAP financial measures
within the meaning of Regulation G and Item 10(e) of Regulation
S-K.
The Company uses “net income, as adjusted,” “diluted earnings
per share, as adjusted,” “adjusted EBITDA” and “adjusted EBITDA
margin” to provide useful supplemental measures that assist in
evaluating its ability to generate earnings, provide consistency
and comparability with its past financial performance and
facilitate period-to-period comparisons of its core operating
results as well as the results of its peer companies. The Company
calculates “net income, as adjusted,” as net income adjusted to
exclude transaction costs, expenses related to non-ordinary course
disputes, other than temporary impairment of held-to-maturity
investments, stock-based compensation, including expense related to
award modifications, accelerated performance awards and ambassador
grants in connection with its initial public offering, and expense
resulting from the retirement of the Company’s previous CFO, and
the income tax impact of these adjustments. The Company calculates
“diluted earnings per share, as adjusted” as net income, as
adjusted divided by diluted shares outstanding. The Company
calculates “adjusted EBITDA” as net income adjusted to exclude:
other income (loss), net; gain/loss on disposal of assets;
provision for income taxes; depreciation and amortization expense;
stock-based compensation and related expense; transaction costs;
and expenses related to non-ordinary course disputes. The Company
calculates “adjusted EBITDA margin” by dividing adjusted EBITDA by
net revenues.
Reconciliations of non-GAAP financial measures to the most
directly comparable GAAP measures are included below under the
heading “Reconciliations of GAAP to Non-GAAP Measures.”
The Company has also included herein “active customers,” “net
revenues per active customer” and “average order value,” which are
key operational and business metrics that are important to
understanding Company performance. The number of active customers
is an important indicator of growth as it reflects the reach of the
Company’s digital platform, brand awareness and overall value
proposition. The Company defines an active customer as a unique
customer account that has made at least one purchase in the
preceding 12-month period. In any particular period, the Company
determines the number of active customers by counting the total
number of customers who have made at least one purchase in the
preceding 12-month period, measured from the last date of such
period. The Company believes measuring net revenues per active
customer is important to understanding engagement and retention of
customers, and as such, the value proposition for its customer
base. The Company defines net revenues per active customer as the
sum of total net revenues in the preceding 12-month period divided
by the current period active customers. The Company defines average
order value as the sum of the total net revenues in a given period
divided by the total orders placed in that period. Total orders are
the summation of all completed individual purchase transactions in
a given period. The Company believes the relatively high average
order value demonstrates the premium nature of its products. As the
Company expands into and increases its presence in additional
product categories and price points as well as expand
internationally, average order value may fluctuate.
Active customers as of March 31, 2023 and 2022, respectively,
net revenues per active customer as of March 31, 2023 and 2022,
respectively, and average order value for the three months ended
March 31, 2023 and 2022, respectively, are presented below under
the heading “Key Operating Metrics.”
About FIGS
FIGS is a founder-led, direct-to-consumer healthcare apparel and
lifestyle brand that seeks to celebrate, empower, and serve current
and future generations of healthcare professionals. We create
technically advanced apparel and products for healthcare
professionals that feature an unmatched combination of comfort,
durability, function, and style. We market and sell our products in
14 countries directly through our digital platform to provide a
seamless experience for healthcare professionals.
Forward Looking Statements
This press release contains various forward-looking statements
about the Company within the meaning of the Private Securities
Litigation Reform Act of 1995, as amended, that are based on
current management expectations, and which involve substantial
risks and uncertainties that could cause actual results to differ
materially from the results expressed in, or implied by, such
forward-looking statements. All statements contained in this press
release that do not relate to matters of historical fact should be
considered forward-looking. These forward-looking statements
generally are identified by the words “anticipate”, “believe”,
“contemplate”, “continue”, “could”, “estimate”, “expect”,
“forecast”, “future”, “intend”, “may”, “might”, “opportunity”,
“outlook”, “plan”, “possible”, “potential”, “predict”, “project,”
“should”, “strategy”, “strive”, “target”, “will” or “would”, the
negative of these words or other similar terms or expressions. The
absence of these words does not mean that a statement is not
forward-looking. These forward-looking statements address various
matters, including the Company’s focus on product innovation and
connecting deeply with its community; the Company’s plans for
advancing its leadership position within the healthcare apparel
industry while driving profitable growth for the long term; the
Company’s belief that it is well positioned to drive accelerated
growth once macro headwinds subside; the Company’s belief that its
strong balance sheet and ability to generate healthy free cash flow
enable it to effectively manage near term macro challenges while
continuing to invest in its future growth and the Company’s outlook
as to net revenues growth and adjusted EBITDA margin for the full
year ending December 31, 2023; all of which reflect the Company’s
expectations based upon currently available information and data.
Because such statements are based on expectations as to future
financial and operating results and are not statements of fact, our
actual results performance or achievements may differ materially
from those expressed or implied by the forward-looking statements,
and you are cautioned not to place undue reliance on these
forward-looking statements. The following important factors and
uncertainties, among others, could cause actual results,
performance or achievements to differ materially from those
described in these forward-looking statements: the impact of
COVID-19 and macroeconomic trends on the Company’s operations; the
Company’s ability to maintain its recent rapid growth and
effectively manage its growth; the Company’s ability to maintain
profitability; the Company’s ability to maintain the value and
reputation of its brand; the Company’s ability to attract new
customers, retain existing customers, and to maintain or increase
sales to those customers; the success of the Company’s marketing
efforts; the Company’s ability to maintain a strong community of
engaged customers and Ambassadors; negative publicity related to
the Company’s marketing efforts or use of social media; the
Company’s ability to successfully develop and introduce new,
innovative and updated products; the competitiveness of the market
for healthcare apparel; the Company’s ability to maintain its key
employees; the Company’s ability to attract and retain highly
skilled team members; risks associated with expansion into, and
conducting business in, international markets; changes in, or
disruptions to, the Company’s shipping arrangements; the successful
operation of the Company’s distribution and warehouse management
systems; the Company’s ability to accurately forecast customer
demand, manage its inventory, and plan for future expenses; the
impact of changes in consumer confidence, shopping behavior and
consumer spending on demand for the Company’s products; the
Company’s reliance on a limited number of third-party suppliers;
the fluctuating costs of raw materials; the Company’s failure to
protect its intellectual property rights; the fact that the
operations of many of the Company’s suppliers and vendors are
subject to additional risks that are beyond its control; and other
risks, uncertainties, and factors discussed in the “Risk Factors”
section of the Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2023 to be filed with the Securities and
Exchange Commission (“SEC”), the Company’s Annual Report on Form
10-K for the year ended December 31, 2022 filed with the SEC on
February 28, 2023, and the Company’s other periodic filings with
the SEC. The forward-looking statements in this press release speak
only as of the time made and the Company does not undertake to
update or revise them to reflect future events or
circumstances.
FIGS, INC.
BALANCE SHEETS (In thousands,
except share and per share data)
As of
March 31, 2023
December 31,
2022
Assets
(Unaudited)
Current assets
Cash and cash equivalents
$
155,877
$
159,775
Accounts receivable
3,781
6,866
Inventory, net
180,373
177,976
Prepaid expenses and other current
assets
9,580
11,883
Total current assets
349,611
356,500
Non-current assets
Property and equipment, net
11,241
11,024
Operating lease right-of-use assets
14,646
15,312
Deferred tax assets
11,411
10,971
Other assets
1,195
1,257
Total non-current assets
38,493
38,564
Total assets
$
388,104
$
395,064
Liabilities and stockholders’
equity
Current liabilities
Accounts payable
$
8,571
$
20,906
Operating lease liabilities
3,437
3,408
Accrued expenses
21,270
26,164
Accrued compensation and benefits
3,646
3,415
Sales tax payable
3,706
3,374
Gift card liability
7,531
7,882
Deferred revenue
706
2,786
Returns reserve
3,502
3,458
Income tax payable
382
—
Total current liabilities
52,751
71,393
Non-current liabilities
Operating lease liabilities,
non-current
14,984
15,756
Other non-current liabilities
176
176
Total liabilities
$
67,911
$
87,325
Commitments and contingencies
Stockholders’ equity
Class A Common stock — par value $0.0001
per share, 1,000,000,000 shares authorized as of March 31, 2023 and
December 31, 2022; 159,576,825 and 159,351,307 shares issued and
outstanding as of March 31, 2023 and December 31, 2022,
respectively
16
16
Class B Common stock — par value $0.0001
per share, 150,000,000 shares authorized as of March 31, 2023 and
December 31, 2022; 7,482,014 and 7,210,795 shares issued and
outstanding as of March 31, 2023 and December 31, 2022,
respectively
—
—
Preferred stock — par value $0.0001 per
share, 100,000,000 shares authorized as of March 31, 2023 and
December 31, 2022; zero shares issued and outstanding as of March
31, 2023 and December 31, 2022
—
—
Additional paid-in capital
279,151
268,606
Retained earnings
41,026
39,117
Total stockholders’ equity
320,193
307,739
Total liabilities and stockholders’
equity
$
388,104
$
395,064
FIGS, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (In thousands, except share and per share
data) (Unaudited)
Three months ended March
31,
2023
2022
Net revenues
$
120,232
$
110,100
Cost of goods sold
34,556
31,670
Gross profit
85,676
78,430
Operating expenses
Selling
31,158
22,058
Marketing
17,064
15,408
General and administrative
34,157
27,219
Total operating expenses
82,379
64,685
Net income from operations
3,297
13,745
Other income, net
Interest income
1,072
9
Other expense
(1
)
(1
)
Total other income, net
1,071
8
Net income before provision for income
taxes
4,368
13,753
Provision for income taxes
2,459
4,854
Net income and comprehensive
income
$
1,909
$
8,899
Earnings attributable to Class A and Class
B common stockholders
Basic earnings per share
$
0.01
$
0.05
Diluted earnings per share
$
0.01
$
0.05
Weighted-average shares
outstanding—basic
166,773,335
164,406,142
Weighted-average shares
outstanding—diluted
182,853,746
193,379,275
FIGS, INC.
STATEMENTS OF CASH FLOWS (In
thousands) (Unaudited)
Three months ended
March 31,
2023
2022
Cash flows from operating
activities:
Net income
$
1,909
$
8,899
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization expense
659
375
Deferred income taxes
(440
)
(406
)
Non-cash operating lease cost
666
374
Stock-based compensation
10,790
8,477
Changes in operating assets and
liabilities:
Accounts receivable
3,085
(469
)
Inventory
(2,397
)
(16,697
)
Prepaid expenses and other current
assets
2,303
(3,857
)
Other assets
62
(185
)
Accounts payable
(12,439
)
2,372
Accrued expenses
(4,894
)
(560
)
Accrued compensation and benefits
231
(2,371
)
Sales tax payable
332
607
Gift card liability
(351
)
(315
)
Deferred revenue
(2,080
)
9
Returns reserve
44
(233
)
Income tax payable
382
(3,648
)
Operating lease liabilities
(743
)
(389
)
Net cash used in operating activities
(2,881
)
(8,017
)
Cash flows from investing
activities:
Purchases of property and equipment
(772
)
(364
)
Net cash used in investing activities
(772
)
(364
)
Cash flows from financing
activities:
Proceeds from stock option exercises and
employee stock purchases
1
352
Tax payments related to net share
settlements on restricted stock units
(246
)
—
Net cash (used in) provided by financing
activities
(245
)
352
Net change in cash, cash equivalents, and
restricted cash
(3,898
)
(8,029
)
Cash, cash equivalents, and restricted
cash, beginning of period
159,775
197,430
Cash, cash equivalents, end of period
$
155,877
$
189,401
FIGS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP
MEASURES (Unaudited)
The following table presents a reconciliation of Net income, as
adjusted to Net income, which is the most directly comparable
financial measure calculated in accordance with GAAP, and presents
Diluted earnings per share (“EPS”), as adjusted and Diluted
earnings per share:
Three months ended
March 31,
2023
2022
(in thousands, except share
and per share amounts)
Net income
$
1,909
$
8,899
Add (deduct):
Expenses related to non-ordinary course
disputes(1)
1,256
2,417
Income tax impacts of items above
(707
)
(853
)
Net income, as adjusted
$
2,458
$
10,463
Diluted EPS
$
0.01
$
0.05
Diluted EPS, as adjusted
$
0.01
$
0.05
Weighted-average shares used to compute
Diluted EPS and Diluted EPS, as adjusted
182,853,746
193,379,275
(1)
Exclusively represents attorney’s fees,
cost and expenses incurred by the Company in connection with the
Company’s litigation against Strategic Partners, Inc., as further
described in the section titled “Legal Proceedings” appearing in
the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2023.
The following table presents a reconciliation of Adjusted EBITDA
to Net income, which is the most directly comparable financial
measure calculated in accordance with GAAP, and presents Adjusted
EBITDA margin with Net income margin, which is the most directly
comparable financial measure calculated in accordance with
GAAP:
Three months ended
March 31,
2023
2022
(in thousands, except
margin)
Net income
$
1,909
$
8,899
Add (deduct):
Other income, net
(1,071
)
(8
)
Provision for income taxes
2,459
4,854
Depreciation and amortization
expense(1)
659
375
Stock-based compensation and related
expense(2)
10,865
8,447
Expenses related to non-ordinary course
disputes(3)
1,256
2,417
Adjusted EBITDA
$
16,077
$
24,984
Net revenues
$
120,232
$
110,100
Net income margin(4)
1.6
%
8.1
%
Adjusted EBITDA margin
13.4
%
22.7
%
(1)
Excludes amortization of debt issuance
costs included in “Other income, net.”
(2)
Includes stock-based compensation expense
and payroll taxes related to equity award activity.
(3)
Exclusively represents attorney’s fees,
cost and expenses incurred by the Company in connection with the
Company’s litigation against Strategic Partners, Inc., as further
described in the section titled “Legal Proceedings” appearing in
the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2023.
(4)
Net income margin represents Net income as
a percentage of Net revenues.
FIGS, INC.
KEY OPERATING METRICS
(Unaudited)
Active customers as of March 31, 2023 and 2022, respectively,
net revenues per active customer as of March 31, 2023 and 2022,
respectively, and average order value for the three months ended
March 31, 2023 and 2022, respectively, are presented in the
following tables:
As of March 31,
2023
2022
(in thousands)
Active customers
2,390
1,962
As of March 31,
2023
2022
Net revenues per active customer
$
216
$
226
Three months ended
March 31,
2023
2022
Average order value
$
114
$
116
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504005994/en/
Investors: Jean Fontana IR@wearfigs.com Media: Todd Maron
press@wearfigs.com
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