Net Revenues Growth of 10.7% YoY, Net Income of
$6.1 million, Net Income Margin of 4.2% and Adjusted EBITDA Margin
of 17.2%
Finance Executive, Mario Marte, Appointed to
Board of Directors
FIGS, Inc. (NYSE: FIGS) (the “Company”), the direct-to-consumer
apparel and lifestyle brand dedicated to the healthcare community,
today released its third quarter 2023 financial results and
published a financial highlights presentation on its investor
relations website at
ir.wearfigs.com/financials/quarterly-results.
Third Quarter 2023 Financial Highlights
- Net revenues were $142.4 million, an increase of 10.7%
year over year, driven by an increase in orders from existing and
new customers and, to a lesser extent, an increase in average order
value (“AOV”).
- Gross margin was 68.4%, a decrease of 220 basis points
year over year, primarily due to product mix shift and, to a lesser
extent, a higher mix of promotional sales and higher duties,
partially offset by lower air freight utilization and ocean freight
rates.
- Operating expenses were $87.4 million, an increase of
9.8% year over year. As a percentage of net revenues, operating
expenses decreased to 61.5% from 61.9% in the prior year period due
to lower selling expenses associated with reduced storage costs
within fulfillment, and lower marketing expenses as a result of
greater efficiency in digital marketing.
- Net income was $6.1 million and diluted earnings per
share was $0.03.
- Net income margin(1) was 4.2%, as compared to 3.1% in
the same period last year.
- Net income, as adjusted(2) was $6.3 million and
diluted earnings per share, as adjusted(2) was $0.03.
- Adjusted EBITDA(2) was $24.4 million, an increase of
$3.4 million year over year.
- Adjusted EBITDA margin(1)(2) was 17.2%, as compared to
16.4% in the same period last year.
Key Operating Metrics
- Active customers(3) as of September 30, 2023 increased
19.6% to 2.6 million.
- Net revenues per active customer(3) were $212, a
decrease of 6.6% year over year.
- AOV(3) was $114, an increase of 1.8% year over year,
primarily driven by an increase in units per transaction and, to a
lesser degree, an increase in average unit retail.
“We are pleased with our third quarter performance and to be
raising our full year guidance,” said Trina Spear, Chief Executive
Officer and Co-founder. “Net revenues growth of 11% and adjusted
EBITDA margin expansion to 17.2% exceeded our expectations and led
to $46 million in free cash flow(2) generation in the third
quarter. Through strong execution of our strategic priorities, we
added more new healthcare professionals to our active customer base
than in any prior year, delivered record growth in our
international and TEAMS businesses and deepened engagement with our
community through advocacy. Looking ahead, we see tremendous
opportunity to leverage our brand authenticity, industry leading
product innovation, strong balance sheet and scale to capitalize on
industry tailwinds and deliver long term growth and
profitability.”
Appointment to Board of Directors
FIGS also announced the appointment of Mario Marte, former Chief
Financial Officer of Chewy, Inc., to its Board of Directors,
effective November 3, 2023. Mr. Marte joins the Board as an
independent director and has also been appointed to the Board’s
Audit Committee.
Mr. Marte most recently served as Chief Financial Officer of
Chewy, Inc., the world’s leading online retailer of pet products
and services from September 2018 to July 2023, after serving as the
company’s Vice President—Finance & Treasurer from April 2015
until September 2018. During his eight-year tenure at Chewy, Mr.
Marte built the Finance organization, helped the company grow from
$200 million to over $11 billion in annual sales, and led the
company’s IPO in June 2019. Previously, Mr. Marte served as the
Vice President of Financial Planning & Analysis for Hilton
Worldwide Holdings, Inc., and in various other roles at Hilton,
American Airlines Group Inc. and Accenture LLC. Since January 2021,
Mr. Marte has served on the board of directors of Best Buy Co.,
Inc., and as chair of the audit committee since June 2023.
“We are delighted to welcome Mario, a seasoned finance
executive, to our Board,” said Heather Hasson, Executive Chair.
“Since our IPO, we have added new independent directors with strong
and varied expertise, and the appointment of Mario further expands
the skillset of our Board. We look forward to benefiting from
Mario’s extensive background in finance, strategy and operations
across industry leading companies. His experience and strategic
mindset will be invaluable as we continue to execute on our long
term growth strategy and serve our healthcare community.”
Financial Outlook Raises full-year 2023 outlook:
Net Revenues Growth as Compared to
2022
~ 8.5%
Adjusted EBITDA Margin(1)(2)(4)
~ 14%
Daniella Turenshine, Chief Financial Officer, commented, “Our
third quarter performance reflects strong execution of our
strategic priorities. We have an incredibly healthy balance sheet
with ample cash and no debt and our business model generates strong
cash flow. We are in the early stages of growth and intend to make
the investments that we believe will drive accelerated growth as we
move past near term macro challenges.”
(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,” “adjusted EBITDA margin” and “free
cash flow” 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 315705. 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 November 9, 2023. To
access the replay, please dial 1-866-813-9403 (US) or
+1-929-458-6194 (International) and the conference ID 658204. 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
uses “free cash flow” as a useful supplemental measure of liquidity
and as an additional basis for assessing its ability to generate
cash. 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 associated payroll taxes and costs, 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. The
Company calculates “free cash flow” as net cash (used in) provided
by operating activities reduced by capital expenditures, including
purchases of property and equipment and capitalized software
development costs.
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 its 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, price points and international markets, average
order value may fluctuate.
Active customers as of September 30, 2023 and 2022,
respectively, net revenues per active customer as of September 30,
2023 and 2022, respectively, and average order value for the three
and nine months ended September 30, 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 that feature an unmatched
combination of comfort, durability, function and style. We share
stories about healthcare professionals’ experiences in ways that
inspire them. We create meaningful connections within the
healthcare community that we created. Above all, we seek to make an
impact for our community, including by advocating for them and
always having their backs.
We serve healthcare professionals in numerous countries in North
America, Europe, the Asia Pacific region and the Middle East. We
also serve healthcare institutions through our TEAMS platform.
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 opportunity to leverage its brand
authenticity, industry leading product innovation, strong balance
sheet and scale to capitalize on industry tailwinds and deliver
long term growth and profitability; the Company’s stage of growth;
the Company’s intention to make the investments that it believes
will drive accelerated growth as it moves past near term macro
challenges; 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, the Company’s 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 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 impact of COVID-19 and
macroeconomic trends on the Company’s operations; 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 September 30, 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
September 30,
2023
December 31,
2022
Assets
(Unaudited)
Current assets
Cash and cash equivalents
$
182,951
$
159,775
Short-term investments
49,148
—
Accounts receivable
6,316
6,866
Inventory, net
143,183
177,976
Prepaid expenses and other current
assets
13,446
11,883
Total current assets
395,044
356,500
Non-current assets
Property and equipment, net
16,306
11,024
Operating lease right-of-use assets
16,380
15,312
Deferred tax assets
12,812
10,971
Other assets
1,239
1,257
Total non-current assets
46,737
38,564
Total assets
$
441,781
$
395,064
Liabilities and stockholders’
equity
Current liabilities
Accounts payable
$
15,014
$
20,906
Operating lease liabilities
3,997
3,408
Accrued expenses
16,145
26,164
Accrued compensation and benefits
6,681
3,415
Sales tax payable
4,048
3,374
Gift card liability
8,689
7,882
Deferred revenue
3,337
2,786
Returns reserve
2,640
3,458
Income tax payable
9,670
—
Total current liabilities
70,221
71,393
Non-current liabilities
Operating lease liabilities,
non-current
16,190
15,756
Other non-current liabilities
176
176
Total liabilities
$
86,587
$
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 September 30, 2023
and December 31, 2022; 161,020,834 and 159,351,307 shares issued
and outstanding as of September 30, 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 September 30, 2023
and December 31, 2022; 8,016,338 and 7,210,795 shares issued and
outstanding as of September 30, 2023 and December 31, 2022,
respectively
—
—
Preferred stock — par value $0.0001 per
share, 100,000,000 shares authorized as of September 30, 2023 and
December 31, 2022; zero shares issued and outstanding as of
September 30, 2023 and December 31, 2022
—
—
Additional paid-in capital
303,428
268,606
Accumulated other comprehensive loss
(4
)
—
Retained earnings
51,754
39,117
Total stockholders’ equity
355,194
307,739
Total liabilities and stockholders’
equity
$
441,781
$
395,064
FIGS, INC.
STATEMENTS OF
OPERATIONS
(In thousands, except share
and per share data)
(Unaudited)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Net revenues
$
142,364
$
128,589
$
400,728
$
360,937
Cost of goods sold
44,971
37,756
121,625
105,325
Gross profit
97,393
90,833
279,103
255,612
Operating expenses
Selling
32,195
31,940
97,092
80,801
Marketing
19,012
20,031
56,965
56,263
General and administrative
36,232
27,652
105,229
84,142
Total operating expenses
87,439
79,623
259,286
221,206
Net income from operations
9,954
11,210
19,817
34,406
Other income, net
Interest income
1,901
604
4,494
683
Other income (expense)
(6
)
1
(11
)
—
Total other income, net
1,895
605
4,483
683
Net income before provision for income
taxes
11,849
11,815
24,300
35,089
Provision for income taxes
5,703
7,771
11,663
17,294
Net income
$
6,146
$
4,044
$
12,637
$
17,795
Earnings attributable to Class A and Class
B common stockholders
Basic earnings per share
$
0.04
$
0.02
$
0.08
$
0.11
Diluted earnings per share
$
0.03
$
0.02
$
0.07
$
0.09
Weighted-average shares
outstanding—basic
168,668,844
165,543,067
167,628,888
164,960,561
Weighted-average shares
outstanding—diluted
181,429,745
186,991,769
182,545,627
189,762,364
FIGS, INC.
STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Nine months ended
September 30,
2023
2022
Cash flows from operating
activities:
Net income
$
12,637
$
17,795
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization expense
2,128
1,287
Deferred income taxes
(1,841
)
(976
)
Non-cash operating lease cost
2,138
1,719
Stock-based compensation
34,305
26,288
Accretion of discount on
available-for-sale securities
(897
)
—
Changes in operating assets and
liabilities:
Accounts receivable
550
(5,927
)
Inventory
34,793
(82,020
)
Prepaid expenses and other current
assets
(1,563
)
(6,470
)
Other assets
18
(678
)
Accounts payable
(4,092
)
6,421
Accrued expenses
(9,496
)
7,584
Accrued compensation and benefits
3,266
(1,248
)
Sales tax payable
674
(25
)
Gift card liability
807
403
Deferred revenue
551
640
Returns reserve
(818
)
663
Income tax payable
9,670
(3,973
)
Operating lease liabilities
(2,183
)
(1,336
)
Other non-current liabilities
—
(28
)
Net cash (used in) provided by operating
activities
80,647
(39,881
)
Cash flows from investing
activities:
Purchases of property and equipment
(9,733
)
(4,256
)
Purchases of available-for-sale
securities
(65,805
)
—
Maturities of available-for-sale
securities
17,550
—
Purchases of held-to-maturity
securities
—
(500
)
Net cash used in investing activities
(57,988
)
(4,756
)
Cash flows from financing
activities:
Proceeds from stock option exercises and
employee stock purchases
763
2,310
Tax payments related to net share
settlements on restricted stock units
(246
)
—
Capital contributions
—
479
Net cash provided by financing
activities
517
2,789
Net increase (decrease) in cash, cash
equivalents, and restricted cash
23,176
(41,848
)
Cash, cash equivalents, and restricted
cash, beginning of period
159,775
197,430
Cash and cash equivalents, end of
period
$
182,951
$
155,582
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 with diluted
earnings per share:
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
(in thousands, except share
and per share amounts)
Net income
$
6,146
$
4,044
$
12,637
$
17,795
Add (deduct):
Transaction costs
—
—
—
145
Expenses related to non-ordinary course
disputes(1)
—
254
1,256
5,458
Stock-based compensation expense in
connection with the IPO and other(2)
290
—
290
—
Income tax impacts of items above
(140
)
(167
)
(847
)
(2,458
)
Net income, as adjusted
$
6,296
$
4,131
$
13,336
$
20,940
Diluted EPS
$
0.03
$
0.02
$
0.07
$
0.11
Diluted EPS, as adjusted
$
0.03
$
0.02
$
0.07
$
0.11
Weighted-average shares used to compute
Diluted EPS and Diluted EPS, as adjusted
181,429,745
186,991,769
182,545,627
189,762,364
(1) Exclusively represents attorney’s fees, costs and expenses
incurred by the Company in connection with the Company’s
now-concluded litigation against Strategic Partners, Inc.
(2) Includes certain stock-based compensation expense in
connection with the IPO, including expense related to accelerated
performance awards and associated payroll taxes and costs.
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
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
(in thousands, except
margin)
Net income
$
6,146
$
4,044
$
12,637
$
17,795
Add (deduct):
Other income, net
(1,895
)
(605
)
(4,483
)
(683
)
Provision for income taxes
5,703
7,771
11,663
17,294
Depreciation and amortization
expense(1)
756
479
2,128
1,287
Stock-based compensation and related
expense(2)
13,713
9,082
36,195
26,335
Expenses related to non-ordinary course
disputes(3)
—
254
1,256
5,458
Adjusted EBITDA
$
24,423
$
21,025
$
59,396
$
67,486
Net revenues
$
142,364
$
128,589
$
400,728
$
360,937
Net income margin(4)
4.2
%
3.1
%
3.1
%
4.9
%
Adjusted EBITDA margin
17.2
%
16.4
%
14.8
%
18.7
%
(1) Excludes amortization of debt issuance costs included in
“Other income, net.”
(2) Includes stock-based compensation expense, payroll taxes and
costs related to equity award activity.
(3) Exclusively represents attorney’s fees, costs and expenses
incurred by the Company in connection with the Company’s
now-concluded litigation against Strategic Partners, Inc.
(4) Net income margin represents net income as a percentage of
net revenues.
The following table presents a reconciliation of free cash flow
to net cash (used in) provided by operating activities, which is
the most directly comparable financial measure calculated in
accordance with GAAP:
Nine months ended
September 30,
2023
2022
(in thousands)
Net cash (used in) provided by operating
activities
$
80,647
$
(39,881
)
Less: capital expenditures
(9,733
)
(4,256
)
Free cash flow
$
70,914
$
(44,137
)
FIGS, INC.
KEY OPERATING METRICS
(Unaudited)
Active customers as of September 30, 2023 and 2022,
respectively, net revenues per active customer as of September 30,
2023 and 2022, respectively, and average order value for the three
and nine months ended September 30, 2023 and 2022, respectively,
are presented in the following tables:
As of September 30,
2023
2022
(in thousands)
Active customers
2,576
2,154
As of September 30,
2023
2022
Net revenues per active customer
$
212
$
227
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
Average order value
$
114
$
112
$
114
$
112
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102662811/en/
Investors: Jean Fontana IR@wearfigs.com
Media: Todd Maron press@wearfigs.com
FIGS (NYSE:FIGS)
Historical Stock Chart
From Nov 2024 to Dec 2024
FIGS (NYSE:FIGS)
Historical Stock Chart
From Dec 2023 to Dec 2024