FIGS Releases Third Quarter 2024 Financial Results
Completed State-of-the-Art Fulfillment Center Transition
Updates Full Year 2024 Outlook
Third Quarter 2024 Financial Highlights
-
Net revenues(1)were
$140.2 million , a decrease of 1.5% year over year, due to a decrease in average order value (“AOV”),(2) partially offset by an increase in orders from existing customers. - Gross margin was 67.1%, a decrease of 1.3% year over year, primarily from higher discounted sales and, to a lesser extent, product mix shift related to limited edition scrubwear.
-
Operating expenses were
$102.7 million , an increase of 17.4% year over year. As a percentage of net revenues, operating expenses increased to 73.2% from 61.5% primarily due to higher marketing and selling expenses, including higher digital and brand marketing expenses related to our 2024Olympics campaign and higher transitory expenses associated with the transition to our new fulfillment center. -
Net income (loss) and Net income (loss), as adjusted(3) were
$(1.7) million (or$(0.01) in diluted earnings per share), a decrease of$7.8 million as compared to net income in the same period last year and a decrease of$8.0 million as compared to net income, as adjusted(3) in the same period last year. - Net income (loss) margin(4) was (1.2)%, as compared to 4.2% in the same period last year.
-
Adjusted EBITDA(3) was
$4.8 million , a decrease of$19.6 million year over year. - Adjusted EBITDA margin(3)(4) was 3.4%, as compared to 17.2% in the same period last year.
Key Operating Metrics
-
Active customers(2)as of
September 30, 2024 increased 3.8% year over year to 2.7 million. -
Net revenues per active customer(2)(5)were
$205 , a decrease of 3.3% year over year. -
AOV(2)(5)was
$108 , a decrease of 5.3% year over year, primarily driven by a combination of factors including lower units per transaction, higher discounts and returns, and the accounting reclassification between net revenues and selling expense related to duty subsidies for international customers.
“The third quarter included several key investments to support and scale FIGS, highlighted by our incredible
The Company also announced that it signed and closed a
Expected to launch within the next six months, OOG offers an AI-powered, multi-disciplinary education platform for healthcare professionals. While more details will be announced about OOG when its platform launches, FIGS also expects to work with OOG in ways that will enable FIGS to receive a range of benefits across marketing, community engagement, data and AI. OOG was founded, and is led, by FIGS Co-Founder and Executive Chair
A special committee of the Company’s board of directors (the “Board”) comprised solely of independent and disinterested directors, evaluated, negotiated and recommended approval of this transaction, which was subsequently approved by the Board.
“We are thrilled to be investing in and collaborating with OOG,” said
Financial Outlook
For Full-Year 2024, the Company now expects:
Net Revenues growth versus 2023 |
Down 1% to flat |
|
|
Adjusted EBITDA Margin(3)(6) |
~ 8% |
(1) Third quarter 2024 net revenues results reflect
(2) “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.
(3) “Net income (loss), 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.
(4) “Net income (loss) margin” and “adjusted EBITDA margin” are calculated by dividing net income (loss) and adjusted EBITDA by net revenues, respectively.
(5) Net revenues per active customer and AOV results for the third quarter 2024 each reflect international duty subsidies recorded as contra revenue, which were not reflected in the results for these metrics for third quarter 2023. As a result, year over year growth in net revenues per active customer and AOV were negatively impacted by approximately 2 and 1 percentage points, respectively.
(6) 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
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.
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 Company believes 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
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 build 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
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 plans to address challenges experienced in the quarter ended
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BALANCE SHEETS |
|||||
(In thousands, except share and per share data) |
|||||
|
As of |
||||
|
|
|
|
||
Assets |
(Unaudited) |
|
|
||
Current assets |
|
|
|
||
Cash and cash equivalents |
$ |
124,103 |
|
$ |
144,173 |
Short-term investments |
|
157,607 |
|
|
102,522 |
Accounts receivable |
|
10,499 |
|
|
7,469 |
Inventory, net |
|
123,396 |
|
|
119,040 |
Prepaid expenses and other current assets |
|
18,689 |
|
|
12,455 |
Total current assets |
|
434,294 |
|
|
385,659 |
Non-current assets |
|
|
|
||
Property and equipment, net |
|
35,395 |
|
|
24,864 |
Operating lease right-of-use assets |
|
52,769 |
|
|
43,059 |
Deferred tax assets |
|
17,870 |
|
|
18,291 |
Other assets |
|
2,160 |
|
|
1,336 |
Total non-current assets |
|
108,194 |
|
|
87,550 |
Total assets |
$ |
542,488 |
|
$ |
473,209 |
Liabilities and stockholders’ equity |
|
|
|
||
Current liabilities |
|
|
|
||
Accounts payable |
$ |
27,399 |
|
$ |
14,749 |
Operating lease liabilities |
|
11,849 |
|
|
8,230 |
Accrued expenses |
|
29,036 |
|
|
7,906 |
Accrued compensation and benefits |
|
5,407 |
|
|
7,312 |
Sales tax payable |
|
4,250 |
|
|
3,149 |
Gift card liability |
|
7,944 |
|
|
8,240 |
Deferred revenue |
|
3,883 |
|
|
2,160 |
Returns reserve |
|
4,632 |
|
|
2,989 |
Income tax payable |
|
345 |
|
|
2,557 |
Total current liabilities |
|
94,745 |
|
|
57,292 |
Non-current liabilities |
|
|
|
||
Operating lease liabilities, non-current |
|
44,050 |
|
|
38,884 |
Other non-current liabilities |
|
183 |
|
|
183 |
Total liabilities |
$ |
138,978 |
|
$ |
96,359 |
Commitments and contingencies |
|
|
|
||
Stockholders’ equity |
|
|
|
||
Class A Common stock — par value |
|
16 |
|
|
16 |
Class |
|
— |
|
|
— |
Preferred stock — par value |
|
— |
|
|
— |
Additional paid-in capital |
|
340,684 |
|
|
315,075 |
Accumulated other comprehensive income |
|
221 |
|
|
5 |
Retained earnings |
|
62,589 |
|
|
61,754 |
Total stockholders’ equity |
|
403,510 |
|
|
376,850 |
Total liabilities and stockholders’ equity |
$ |
542,488 |
|
$ |
473,209 |
|
|||||||||||||||
|
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STATEMENTS OF OPERATIONS |
|||||||||||||||
(In thousands, except share and per share data) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three months ended |
|
Nine months ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net revenues |
$ |
140,209 |
|
|
$ |
142,364 |
|
|
$ |
403,726 |
|
|
$ |
400,728 |
|
Cost of goods sold |
|
46,181 |
|
|
|
44,971 |
|
|
|
130,299 |
|
|
|
121,625 |
|
Gross profit |
|
94,028 |
|
|
|
97,393 |
|
|
|
273,427 |
|
|
|
279,103 |
|
Operating expenses |
|
|
|
|
|
|
|
||||||||
Selling |
|
38,599 |
|
|
|
32,195 |
|
|
|
103,992 |
|
|
|
97,092 |
|
Marketing |
|
28,529 |
|
|
|
19,012 |
|
|
|
68,778 |
|
|
|
56,965 |
|
General and administrative |
|
35,529 |
|
|
|
36,232 |
|
|
|
107,292 |
|
|
|
105,229 |
|
Total operating expenses |
|
102,657 |
|
|
|
87,439 |
|
|
|
280,062 |
|
|
|
259,286 |
|
Net income (loss) from operations |
|
(8,629 |
) |
|
|
9,954 |
|
|
|
(6,635 |
) |
|
|
19,817 |
|
Other income, net |
|
|
|
|
|
|
|
||||||||
Interest income |
|
2,926 |
|
|
|
1,901 |
|
|
|
8,603 |
|
|
|
4,494 |
|
Other income (expense) |
|
2 |
|
|
|
(6 |
) |
|
|
(8 |
) |
|
|
(11 |
) |
Total other income, net |
|
2,928 |
|
|
|
1,895 |
|
|
|
8,595 |
|
|
|
4,483 |
|
Net income (loss) before provision for income taxes |
|
(5,701 |
) |
|
|
11,849 |
|
|
|
1,960 |
|
|
|
24,300 |
|
Provision for income taxes |
|
(4,001 |
) |
|
|
5,703 |
|
|
|
1,125 |
|
|
|
11,663 |
|
Net income (loss) |
$ |
(1,700 |
) |
|
$ |
6,146 |
|
|
$ |
835 |
|
|
$ |
12,637 |
|
Earnings (loss) attributable to Class A and Class B common stockholders |
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share |
$ |
(0.01 |
) |
|
$ |
0.04 |
|
|
$ |
— |
|
|
$ |
0.08 |
|
Diluted earnings (loss) per share |
$ |
(0.01 |
) |
|
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.07 |
|
Weighted-average shares outstanding—basic |
|
170,168,732 |
|
|
|
168,668,844 |
|
|
|
170,161,922 |
|
|
|
167,628,888 |
|
Weighted-average shares outstanding—diluted |
|
170,168,732 |
|
|
|
181,429,745 |
|
|
|
180,614,560 |
|
|
|
182,545,627 |
|
|
|||||||
|
|||||||
STATEMENTS OF CASH FLOWS |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
|
Nine months ended
|
||||||
|
|
2024 |
|
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
835 |
|
|
$ |
12,637 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization expense |
|
4,848 |
|
|
|
2,128 |
|
Deferred income taxes |
|
421 |
|
|
|
(1,841 |
) |
Non-cash operating lease cost |
|
6,211 |
|
|
|
2,138 |
|
Stock-based compensation |
|
32,618 |
|
|
|
34,305 |
|
Accretion of discount on available-for-sale securities |
|
(4,335 |
) |
|
|
(897 |
) |
Changes in operating assets and liabilities: |
|
|
|
||||
Accrued interest |
|
(385 |
) |
|
|
— |
|
Accounts receivable |
|
(3,030 |
) |
|
|
550 |
|
Inventory |
|
(4,356 |
) |
|
|
34,793 |
|
Prepaid expenses and other current assets |
|
(7,965 |
) |
|
|
(1,563 |
) |
Other assets |
|
(824 |
) |
|
|
18 |
|
Accounts payable |
|
10,828 |
|
|
|
(4,092 |
) |
Accrued expenses |
|
21,231 |
|
|
|
(9,496 |
) |
Accrued compensation and benefits |
|
(1,905 |
) |
|
|
3,266 |
|
Sales tax payable |
|
1,101 |
|
|
|
674 |
|
Gift card liability |
|
(296 |
) |
|
|
807 |
|
Deferred revenue |
|
1,723 |
|
|
|
551 |
|
Returns reserve |
|
1,643 |
|
|
|
(818 |
) |
Income tax payable |
|
(2,212 |
) |
|
|
9,670 |
|
Operating lease liabilities |
|
(5,405 |
) |
|
|
(2,183 |
) |
Net cash provided by operating activities |
|
50,746 |
|
|
|
80,647 |
|
Cash flows from investing activities: |
|
|
|
||||
Purchases of property and equipment |
|
(13,658 |
) |
|
|
(9,733 |
) |
Purchases of available-for-sale securities |
|
(191,379 |
) |
|
|
(65,805 |
) |
Maturities of available-for-sale securities |
|
141,230 |
|
|
|
17,550 |
|
Net cash used in investing activities |
|
(63,807 |
) |
|
|
(57,988 |
) |
Cash flows from financing activities: |
|
|
|
||||
Repurchases of Class A common stock |
|
(7,277 |
) |
|
|
— |
|
Proceeds from stock option exercises and employee stock purchases |
|
268 |
|
|
|
763 |
|
Tax payments related to net share settlements on restricted stock units |
|
— |
|
|
|
(246 |
) |
Net cash (used in) provided by financing activities |
|
(7,009 |
) |
|
|
517 |
|
Net change in cash and cash equivalents |
|
(20,070 |
) |
|
|
23,176 |
|
Cash and cash equivalents, beginning of period |
|
144,173 |
|
|
|
159,775 |
|
Cash and cash equivalents, end of period |
$ |
124,103 |
|
|
$ |
182,951 |
|
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
(Unaudited)
The following table presents a reconciliation of net income (loss), as adjusted to net income (loss), which is the most directly comparable financial measure calculated in accordance with GAAP, and presents diluted earnings per share (“EPS”), as adjusted with diluted EPS:
|
Three months ended
|
|
Nine months ended
|
|||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
|
(in thousands, except share and per share amounts) |
|||||||||||||
Net income (loss) |
$ |
(1,700 |
) |
|
$ |
6,146 |
|
|
$ |
835 |
|
$ |
12,637 |
|
Add (deduct): |
|
|
|
|
|
|
|
|||||||
Expenses related to non-ordinary course disputes(1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
1,256 |
|
Stock-based compensation expense in connection with the IPO and other(2) |
|
— |
|
|
|
290 |
|
|
|
— |
|
|
290 |
|
Income tax impacts of items above |
|
— |
|
|
|
(140 |
) |
|
|
— |
|
|
(847 |
) |
Net income (loss), as adjusted |
$ |
(1,700 |
) |
|
$ |
6,296 |
|
|
$ |
835 |
|
$ |
13,336 |
|
Diluted EPS |
$ |
(0.01 |
) |
|
$ |
0.03 |
|
|
$ |
— |
|
$ |
0.07 |
|
Diluted EPS, as adjusted |
$ |
(0.01 |
) |
|
$ |
0.03 |
|
|
$ |
— |
|
$ |
0.07 |
|
Weighted-average shares used to compute Diluted EPS and Diluted EPS, as adjusted |
|
170,168,732 |
|
|
|
181,429,745 |
|
|
|
180,614,560 |
|
|
182,545,627 |
|
(1) Exclusively represents attorney’s fees, costs and expenses incurred by the Company in connection with the Company’s now-concluded litigation against
(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 (loss), which is the most directly comparable financial measure calculated in accordance with GAAP, and presents adjusted EBITDA margin with net income (loss) margin, which is the most directly comparable financial measure calculated in accordance with GAAP:
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
(in thousands, except margin) |
||||||||||||||
Net income (loss) |
$ |
(1,700 |
) |
|
$ |
6,146 |
|
|
$ |
835 |
|
|
$ |
12,637 |
|
Add (deduct): |
|
|
|
|
|
|
|
||||||||
Other income, net |
|
(2,928 |
) |
|
|
(1,895 |
) |
|
|
(8,595 |
) |
|
|
(4,483 |
) |
Provision for income taxes |
|
(4,001 |
) |
|
|
5,703 |
|
|
|
1,125 |
|
|
|
11,663 |
|
Depreciation and amortization expense(1) |
|
2,885 |
|
|
|
756 |
|
|
|
4,848 |
|
|
|
2,128 |
|
Stock-based compensation and related expense(2) |
|
10,544 |
|
|
|
13,713 |
|
|
|
32,506 |
|
|
|
36,195 |
|
Expenses related to non-ordinary course disputes(3) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,256 |
|
Adjusted EBITDA |
$ |
4,800 |
|
|
$ |
24,423 |
|
|
$ |
30,719 |
|
|
$ |
59,396 |
|
|
|
|
|
|
|
|
|
||||||||
Net revenues |
$ |
140,209 |
|
|
$ |
142,364 |
|
|
$ |
403,726 |
|
|
$ |
400,728 |
|
Net income (loss) margin(4) |
|
(1.2 |
)% |
|
|
4.2 |
% |
|
|
0.2 |
% |
|
|
3.1 |
% |
Adjusted EBITDA margin |
|
3.4 |
% |
|
|
17.2 |
% |
|
|
7.6 |
% |
|
|
14.8 |
% |
(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
(4) Net income (loss) margin represents net income (loss) as a percentage of net revenues.
The following table presents a reconciliation of free cash flow to net cash provided by operating activities, which is the most directly comparable financial measure calculated in accordance with GAAP:
|
Nine months ended
|
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(in thousands) |
||||||
Net cash provided by operating activities |
$ |
50,746 |
|
|
$ |
80,647 |
|
Less: capital expenditures |
|
(13,658 |
) |
|
|
(9,733 |
) |
Free cash flow |
$ |
37,088 |
|
|
$ |
70,914 |
|
KEY OPERATING METRICS
(Unaudited)
Active customers as of
|
As of |
||
|
2024 |
|
2023 |
|
(in thousands) |
||
Active customers |
2,673 |
|
2,576 |
|
As of |
||||
|
|
2024 |
|
|
2023 |
Net revenues per active customer |
$ |
205 |
|
$ |
212 |
|
Three months ended
|
|
Nine months ended
|
||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
Average order value |
$ |
108 |
|
$ |
114 |
|
$ |
112 |
|
$ |
114 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241107063692/en/
Investors:
IR@wearfigs.com
Media:
press@wearfigs.com
Source: