Core Viewpoint - FIGS (NYSE:FIGS) is facing challenges with low operating margins, decelerating growth, and increasing competition, leading to a Hold rating despite a recent stock price increase of 20% following earnings release [1][2][10]. Financial Performance - In 1Q24, FIGS reported a revenue decline of 0.8%, marking the second consecutive quarter of low or no growth, despite a 9% increase in customer count [3][12]. - Gross margins decreased due to a shift in product and geographic mix, with international sales and non-scrub products contributing to lower margins [5][12]. - Operating margins were close to breakeven, exacerbated by higher investments, particularly in growth initiatives [12][16]. Cost Structure - Selling expenses decreased due to accounting changes but are expected to rise in the next quarter due to a fulfillment center transition [6]. - General and administrative (G&A) expenses grew by 5% year-over-year, raising concerns about excess costs, particularly in management compensation [8]. - Marketing expenses remained flat, with ongoing investments in brand marketing, including campaigns for Nurses Week [7]. Cash Flow and Valuation - The company generated $12 million in free cash flow in 1Q24, but $11.6 million was attributed to stock-based compensation, indicating a lack of robust cash flow generation [9]. - The adjusted enterprise value (EV) is estimated at $970 million when accounting for potential share dilution from stock options [11]. - To achieve a reasonable valuation, FIGS would need to significantly increase revenues or improve operating margins, which appears unlikely under current conditions [14][16]. Future Outlook - International sales present a key opportunity for growth, as FIGS has yet to penetrate markets outside the US effectively [18]. - Increased competition in the US market from direct-to-consumer brands could pressure FIGS' pricing and margins, necessitating close monitoring of promotional activities and margin changes [19].

Financial Data and Key Metrics Changes - Net revenues for the first quarter decreased by 0.8% to $119.3 million compared to the same period last year, reflecting $1.4 million in contra revenue associated with duty subsidies [30][32] - Adjusted EBITDA margin for Q1 was 10.9%, down from 13.4% in Q1 2023, with adjusted EBITDA totaling $13 million [31][133] - Gross margin for Q1 was 68.9%, compared to 71.3% in Q1 2023, primarily due to a product mix shift [10][133] - General and administrative expenses for Q1 were $36 million, representing 30.2% of net revenues, up from 28.4% in Q1 2023 [11] Business Line Data and Key Metrics Changes - Non-scrubs product category grew by 9%, reaching 20.5% of net revenues [10] - Active customers increased by 8.6% on a trailing 12-month basis compared to the previous year [30] - Average order value (AOV) increased by 1.8% to $116, driven by higher average unit retail (AUR) and units per transaction (UPT) [30][140] Market Data and Key Metrics Changes - International net revenues grew by 29% in the first quarter compared to last year, despite a negative impact of 11 percentage points from duty subsidies [6] - The company is seeing strong engagement and repeat frequency trends in both the U.S. and international markets [68][112] Company Strategy and Development Direction - The company is focused on enhancing product innovation and expanding its product categories beyond scrubs, with a goal to diversify its offerings [77][138] - A new fulfillment center is expected to improve operational efficiency and support global distribution, with a focus on enhancing customer experience [31][96] - The company plans to increase investments in brand marketing to capitalize on recent positive trends and drive long-term growth [32][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving trends in repeat frequency and customer engagement, attributing this to successful product launches and marketing campaigns [47][68] - The long-term growth outlook for the healthcare industry remains favorable, supported by a strong balance sheet and cash flow generation [8][133] - The company anticipates a challenging comparison in Q3 due to last year's successful sample sale but remains committed to its growth strategy [32] Other Important Information - The company is committed to maintaining a disciplined promotional cadence, particularly during significant events like Nurses Week [60] - The transition to the new fulfillment center is expected to be largely complete by the end of Q3, with anticipated cost savings in the future [33][108] Q&A Session Summary Question: Can you elaborate on the adjustments to guidance and the nature of the investments? - Management indicated that the increase in brand marketing spend is a short-term dynamic aimed at capitalizing on improving trends, while the EBITDA margin guidance was adjusted down due to these investments [35][137] Question: What is the outlook for gross margin and how does it relate to marketing spend? - Management confirmed that gross margin is expected to remain flat year-over-year, with the EBITDA margin adjustment primarily reflecting increased marketing investments [70][138] Question: How is the company addressing the replacement cycle and customer engagement? - Management noted that repeat rates have bottomed and are now rising, indicating a positive shift in customer engagement and demand [82] Question: What are the growth expectations between international and U.S. markets? - Management highlighted strong growth in international markets, with a focus on localizing strategies to engage new healthcare professionals [112][118]

For the quarter ended March 2024, Figs (FIGS) reported revenue of $119.29 million, down 0.8% over the same period last year. EPS came in at $0.01, compared to $0.01 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $117.4 million, representing a surprise of +1.61%. The company delivered an EPS surprise of +200.00%, with the consensus EPS estimate being -$0.01.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how the ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ___________________ Commission File Number: 001-40448 FIGS, Inc. (Exact Name of Registrant as Specified in its Charter) (State o ...

```markdown [Executive Summary](index=1&type=section&id=Executive%20Summary) FIGS achieved strong Q1 2024 results, improved momentum, and a raised full-year net revenues outlook [Q1 2024 Performance Highlights](index=1&type=section&id=First%20Quarter%202024%20Financial%20Highlights) FIGS reported Q1 2024 net revenues at the upper end of guidance, with improved momentum and customer growth - Improved momentum in business, especially repeat frequency trends, observed towards the end of Q1 and into Q2, attributed to new product innovation and storytelling campaigns[3](index=3&type=chunk) Q1 2024 Financial Highlights (YoY Change) | Metric | Q1 2024 Value | YoY Change | | :-------------------------------- | :------------ | :--------- | | Net Revenues | $119.3 million | -0.8% | | Gross Margin | 68.9% | -2.4% | | Operating Expenses | $81.7 million | -0.8% | | Net Income | $1.4 million | -$0.5 million | | Diluted EPS | $0.01 | Unchanged | | Net Income Margin | 1.2% | -0.4% | | Adjusted EBITDA | $13.0 million | -$3.1 million | | Adjusted EBITDA Margin | 10.9% | -2.5% | - Active customers increased **8.7%** year over year to **2.6 million** as of March 31, 2024[6](index=6&type=chunk) - Average Order Value (AOV) increased **1.8%** year over year to **$116**, primarily driven by an increase in average unit retail and higher units per transaction[6](index=6&type=chunk) [FY 2024 Financial Outlook](index=2&type=section&id=Financial%20Outlook) FIGS raises full-year net revenues outlook, revises adjusted EBITDA margin, and plans strategic marketing investments - Company is strategically ramping investments, predominantly in marketing, to further fuel growth across the business[3](index=3&type=chunk) - Expects to sustain strong free cash flow, which will help to support long term sustainable profitable growth[3](index=3&type=chunk) Full-Year 2024 Financial Outlook | Metric | Outlook | | :-------------------- | :---------- | | Net Revenues versus 2023 | -2% to +2% | | Adjusted EBITDA Margin | 9.5% - 10.5% | [Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of FIGS as a healthcare apparel brand and outlines important forward-looking statement disclaimers [About FIGS](index=3&type=section&id=About%20FIGS) FIGS is a founder-led, direct-to-consumer healthcare apparel brand serving professionals globally with advanced, stylish products - FIGS is a founder-led, direct-to-consumer healthcare apparel and lifestyle brand dedicated to improving the lives of healthcare professionals[12](index=12&type=chunk) - Creates technically advanced apparel and products that feature an unmatched combination of comfort, durability, function, and style[12](index=12&type=chunk) - Serves healthcare professionals in numerous countries across North America, Europe, Asia Pacific, and the Middle East, and healthcare institutions through its TEAMS platform[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This section details forward-looking statements, emphasizing inherent risks and uncertainties that may cause actual results to differ materially - Forward-looking statements are based on current management expectations and involve substantial risks and uncertainties that could cause actual results to differ materially[14](index=14&type=chunk) - Key factors that could cause actual results to differ include the Company's ability to maintain growth and profitability, brand value, attract/retain customers, success of marketing efforts, product development, market competitiveness, international expansion risks, supply chain disruptions, inventory management, macroeconomic trends, reliance on third-party suppliers, data security, and intellectual property rights[15](index=15&type=chunk) [GAAP Financial Statements](index=5&type=section&id=GAAP%20Financial%20Statements) This section presents FIGS' consolidated balance sheets, statements of operations, and statements of cash flows under GAAP [Balance Sheets](index=5&type=section&id=BALANCE%20SHEETS) FIGS reported increased total assets and liabilities as of March 31, 2024, driven by higher cash and inventory Balance Sheet Highlights (in thousands) | Item | March 31, 2024 | December 31, 2023 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Cash and cash equivalents | $155,328 | $144,173 | +$11,155 | | Inventory, net | $130,466 | $119,040 | +$11,426 | | Total current assets | $405,578 | $385,659 | +$19,919 | | Total assets | $510,938 | $473,209 | +$37,729 | | Total current liabilities | $71,825 | $57,292 | +$14,533 | | Total liabilities | $121,063 | $96,359 | +$24,704 | | Total stockholders' equity | $389,875 | $376,850 | +$13,025 | [Statements of Operations](index=6&type=section&id=STATEMENTS%20OF%20OPERATIONS) Q1 2024 saw a slight decrease in net revenues and gross profit, leading to reduced net income due to product mix shift Statements of Operations Highlights (Three months ended March 31, in thousands) | Item | 2024 | 2023 | YoY Change | | :-------------------------------- | :----- | :----- | :--------- | | Net revenues | $119,293 | $120,232 | -$939 | | Cost of goods sold | $37,156 | $34,556 | +$2,600 | | Gross profit | $82,137 | $85,676 | -$3,539 | | Total operating expenses | $81,694 | $82,379 | -$685 | | Net income from operations | $443 | $3,297 | -$2,854 | | Net income | $1,435 | $1,909 | -$474 | | Diluted earnings per share | $0.01 | $0.01 | Unchanged | - Gross margin decreased by **2.4%** year over year, primarily related to product mix shift[6](index=6&type=chunk) - Operating expenses as a percentage of net revenues remained consistent with the prior year period at **68.5%**, due to lower selling expenses (including storage costs) offset by higher general and administrative expenses (primarily investments in people)[6](index=6&type=chunk) [Statements of Cash Flows](index=7&type=section&id=STATEMENTS%20OF%20CASH%20FLOWS) FIGS achieved positive net cash from operating activities in Q1 2024, a significant improvement driven by favorable asset and liability changes Statements of Cash Flows Highlights (Three months ended March 31, in thousands) | Item | 2024 | 2023 | YoY Change | | :------------------------------------------ | :----- | :----- | :--------- | | Net cash (used in) provided by operating activities | $11,619 | $(2,881) | +$14,500 | | Net cash used in investing activities | $(474) | $(772) | +$298 | | Net cash (used in) provided by financing activities | $10 | $(245) | +$255 | | Net change in cash and cash equivalents | $11,155 | $(3,898) | +$15,053 | | Cash and cash equivalents, end of period | $155,328 | $155,877 | -$549 | [Non-GAAP Measures and Key Operating Metrics](index=2&type=section&id=Non-GAAP%20Measures%20and%20Key%20Operating%20Metrics) This section defines and reconciles non-GAAP financial measures and presents key operating metrics for performance evaluation [Non-GAAP Financial Measures Definitions](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Key%20Operating%20Metrics) This section defines FIGS' non-GAAP financial measures, including adjusted net income, EBITDA, and free cash flow, and their calculation - Non-GAAP measures provide useful supplemental information for evaluating earnings generation, consistency with past financial performance, and comparability with peer companies[9](index=9&type=chunk) - Net income, as adjusted, excludes transaction costs, non-ordinary course disputes, impairment of investments, stock-based compensation, ambassador grants, and CFO retirement expense, along with their income tax impacts[9](index=9&type=chunk)[10](index=10&type=chunk) - Adjusted EBITDA excludes other income/loss, gain/loss on asset disposal, income taxes, depreciation/amortization, stock-based compensation, transaction costs, and expenses related to non-ordinary course disputes[10](index=10&type=chunk) - Free cash flow is calculated as net cash (used in) provided by operating activities reduced by capital expenditures (purchases of property and equipment and capitalized software development costs)[10](index=10&type=chunk) [Reconciliations of GAAP to Non-GAAP Measures](index=8&type=section&id=RECONCILIATIONS%20OF%20GAAP%20TO%20NON-GAAP%20MEASURES) This section provides detailed reconciliations of GAAP to non-GAAP measures, including net income, adjusted EBITDA, and free cash flow [Net Income and Diluted EPS Reconciliation](index=8&type=section&id=Net%20income%20reconciliation) Q1 2024 GAAP and adjusted net income were identical due to the absence of non-ordinary course dispute expenses Net Income and Diluted EPS Reconciliation (Three months ended March 31, in thousands) | Item | 2024 | 2023 | | :---------------------------------------------------- | :----- | :----- | | Net income | $1,435 | $1,909 | | Add (deduct): Expenses related to non-ordinary course disputes | — | $1,256 | | Income tax impacts of items above | — | $(707) | | Net income, as adjusted | $1,435 | $2,458 | | Diluted EPS | $0.01 | $0.01 | | Diluted EPS, as adjusted | $0.01 | $0.01 | [Adjusted EBITDA and Margin Reconciliation](index=8&type=section&id=Adjusted%20EBITDA%20reconciliation) Q1 2024 adjusted EBITDA decreased to **$13.0 million** from **$16.1 million**, with margin declining from **13.4%** to **10.9%** Adjusted EBITDA and Margin Reconciliation (Three months ended March 31, in thousands) | Item | 2024 | 2023 | | :------------------------------------ | :----- | :----- | | Net income | $1,435 | $1,909 | | Add (deduct): Other income, net | $(2,837) | $(1,071) | | Provision for income taxes | $1,845 | $2,459 | | Depreciation and amortization expense | $850 | $659 | | Stock-based compensation and related expense | $11,697 | $10,865 | | Expenses related to non-ordinary course disputes | — | $1,256 | | Adjusted EBITDA | $12,990 | $16,077 | | Net revenues | $119,293 | $120,232 | | Net income margin | 1.2% | 1.6% | | Adjusted EBITDA margin | 10.9% | 13.4% | [Free Cash Flow Reconciliation](index=9&type=section&id=Free%20cash%20flow%20reconciliation) FIGS achieved a positive free cash flow of **$11.1 million** in Q1 2024, a significant improvement from a negative **$3.7 million** in Q1 2023 Free Cash Flow Reconciliation (Three months ended March 31, in thousands) | Item | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Net cash (used in) provided by operating activities | $11,619 | $(2,881) | | Less: capital expenditures | $(496) | $(772) | | Free cash flow | $11,123 | $(3,653) | [Key Operating Metrics](index=10&type=section&id=KEY%20OPERATING%20METRICS) This section presents key operating metrics such as active customers, net revenues per active customer, and average order value - Active customers are defined as unique customer accounts that have made at least one purchase in the preceding 12-month period[11](index=11&type=chunk) - Net revenues per active customer is the sum of total net revenues in the preceding 12-month period divided by the current period active customers[11](index=11&type=chunk) - Average order value is the sum of the total net revenues in a given period divided by the total orders placed in that period[11](index=11&type=chunk) Key Operating Metrics (As of/Three months ended March 31) | Metric | 2024 | 2023 | YoY Change | | :-------------------------- | :----- | :----- | :--------- | | Active customers (in thousands) | 2,597 | 2,390 | +8.7% | | Net revenues per active customer | $210 | $216 | -2.8% | | Average order value | $116 | $114 | +1.8% | [Additional Information](index=2&type=section&id=Additional%20Information) This section provides details for the conference call discussing Q1 2024 results and contact information [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) This section provides access details for the Q1 2024 financial results conference call and webcast - Conference call and webcast held on May 9, 2024, at **2:00 p.m. PT / 5:00 p.m. ET**[8](index=8&type=chunk) - Dial-in for participation: **1-833-470-1428** (US) or **1-404-975-4839** (International), Conference ID **292339**[8](index=8&type=chunk) - Webcast accessible at ir.wearfigs.com, with a recording available until **11:59 p.m. ET on May 16, 2024**[8](index=8&type=chunk) [Contacts](index=11&type=section&id=Contacts) This section lists contact information for investor relations and media inquiries for FIGS, Inc - Investors contact: Jean Fontana at **IR@wearfigs.com**[28](index=28&type=chunk) - Media contact: Todd Maron at **press@wearfigs.com**[28](index=28&type=chunk) ```

The upcoming report from Figs (FIGS) is expected to reveal quarterly loss of $0.01 per share, indicating a decline of 200% compared to the year-ago period. Analysts forecast revenues of $117.4 million, representing a decrease of 2.4% year over year.The consensus EPS estimate for the quarter has been revised 25% lower over the last 30 days to the current level. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe.Prior to a company's ea ...

Shares of healthcare apparel company Figs (FIGS -16.42%) plunged on Thursday after the company reported financial results for the fourth quarter of 2023. As of noon ET, Figs stock was down about 15%. This former market darling is now down 90% from its all-time high in 2021.A tale of two expectations for FigsIn the previous quarter, Figs' management said it expected full-year 2023 revenue to be down 8.5% from 2022. But Q4 net revenues of $145 million came in better than management's guidance. Full-year net r ...

For the quarter ended December 2023, Figs (FIGS) reported revenue of $144.92 million, up 0% over the same period last year. EPS came in at $0.05, compared to $0.05 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $149.64 million, representing a surprise of -3.15%. The company delivered an EPS surprise of +150.00%, with the consensus EPS estimate being $0.02.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street exp ...

1 To celebrate, empower & serve those who serve others This presentation also contains estimates and other statistical data relating to the Company's industry and estimated total addressable market. Such estimates and data are based on studies, publications, and surveys obtained from third-party sources and the Company's own internal estimates and research. While the Company believes these third-party sources and the Company's internal estimates and own research to be reliable as of the date of this present ...

Figs (FIGS) came out with quarterly earnings of $0.05 per share, beating the Zacks Consensus Estimate of $0.02 per share. This compares to earnings of $0.05 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 150%. A quarter ago, it was expected that this health care apparel company would post earnings of $0.02 per share when it actually produced earnings of $0.03, delivering a surprise of 50%.Over the last four quarters, the comp ...