Financial Performance - In 2022, the company generated $1.1 billion in net sales and served over 2.3 million active customers, with an average order value of $304[44] - Approximately 85% of net sales in 2022 were at full price, indicating effective inventory management and pricing strategies[35] - The company's owned brands contributed 22.4% of the REVOLVE segment's net sales in 2022, with a significant increase from previous years[37] Customer Engagement and Marketing - Mobile sales accounted for 66.6% of total orders in 2022, reflecting the growing trend of digital channel usage among consumers[40] - In 2022, 48% of traffic for REVOLVE was driven from free and low-cost sources, highlighting the effectiveness of its marketing strategy[48] - The company has over 10.3 million Instagram followers across its brands, enhancing its social media and influencer marketing efforts[67] Product Development and Innovation - The company launched over 1,500 new styles per week on average in 2022, showcasing its commitment to product newness and trend responsiveness[35] - The company utilizes machine learning and artificial intelligence to optimize assortment and personalize the website experience, enhancing customer engagement[71] - The management team emphasizes a culture of innovation and data-driven decision-making, which has proven effective in navigating macroeconomic challenges[53] Customer Relationship Management - The company aims to continue acquiring new customers, leveraging strong repeat purchase behavior to enhance customer lifetime value relative to acquisition costs[54] - The company plans to deepen existing customer relationships to improve revenue retention and increase wallet share through enhanced customer experience and expanded loyalty programs[55] International Expansion - The company intends to grow international sales by localizing the shopping experience and leveraging its influencer network to accelerate growth outside the United States[56] Technology and Operations - The company has developed a highly scalable technology platform that supports its operations and enhances customer experience through data analytics and reporting[69] - The company's proprietary technology platform manages hundreds of millions of data points, enhancing its merchandising and marketing capabilities[51] Workforce and Structure - As of December 31, 2022, the company had 1,384 employees, with the largest teams in fulfillment and logistics (682 employees) and owned brand design and development (144 employees)[75] Strategic Focus - The company is focused on pursuing strategic acquisitions and investments to expand its product offerings and improve technology infrastructure[59] - The company has a portfolio of 31 owned brands and continuously optimizes its assortment to drive revenue and profitability growth[62] Financial Management - The company primarily holds cash and cash equivalents in money market funds and cash deposits, which are not significantly affected by interest rate changes[416] - Most sales are denominated in U.S. dollars, minimizing foreign currency risk; however, pricing in local currencies may impact demand in foreign markets[417] - Fluctuations in foreign currency exchange rates have not materially affected the consolidated financial statements, and the company has not engaged in foreign currency hedging[418]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ 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: 001-38927 REVOLVE GROUP, INC. (Mark One) (Exact name of registrant as specified in its charter) Delaware 46-1640160 (State or other juri ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ 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: 001-38927 REVOLVE GROUP, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

Financial Performance - Gross margin for Q1 2022 was 54.5%, up from 54.0% in Q1 2021[90] - Adjusted EBITDA for Q1 2022 was $31,543,000, compared to $23,340,000 in Q1 2021, representing a year-over-year increase of 35.5%[90] - Free cash flow for Q1 2022 was $52,727,000, an increase of 62.3% from $32,473,000 in Q1 2021[90] - Net income for the three months ended March 31, 2022, was $22,568,000, compared to $22,252,000 for the same period in 2021, reflecting a growth of 1.4%[100] - Adjusted EBITDA for the three months ended March 31, 2022, was $31,543,000, up from $23,340,000 in 2021, representing an increase of 35.3%[100] - Free cash flow for the three months ended March 31, 2022, was $52,727,000, compared to $32,473,000 in 2021, indicating a growth of 62.2%[105] - Net sales for the three months ended March 31, 2022, were $283.5 million, a 58.5% increase from $178.9 million in the same period in 2021[141] - Income before income taxes for the three months ended March 31, 2022, was $28.97 million, up from $20.98 million in 2021, with an effective tax rate of 22.1% compared to (6.1%) in 2021[153] Customer Engagement - Active customers reached 2,041,000 in Q1 2022, a 38.3% increase from 1,477,000 in Q1 2021[90] - Active customers increased during the period ended March 31, 2022, due to effective engagement and acquisition strategies, alongside easing restrictions in key regions[107] - Total orders placed in Q1 2022 were 2,156,000, up 68.1% from 1,282,000 in Q1 2021[90] - Total orders placed increased in the three months ended March 31, 2022, compared to the same period in 2021, driven by enhanced customer engagement and marketing efforts[110] - The number of orders placed by customers increased by 68.2%, and the average order value rose by 12.5% compared to the same period in 2021[144] Sales and Marketing - The REVOLVE segment generated $237.7 million in net sales for the three months ended March 31, 2022, a 56.2% increase from $152.2 million in 2021[126] - The FWRD segment achieved $45.8 million in net sales for the three months ended March 31, 2022, representing a 71.1% increase from $26.7 million in 2021[127] - The company plans to continue investing in marketing initiatives to capture consumer demand as economies reopen, despite potential short-term impacts on operating income[118] - Marketing expenses increased by 72.5% to $45.3 million, compared to $26.2 million in the same period in 2021, with marketing expenses as a percentage of net sales at 16.0%[149] Cost and Expenses - Cost of sales increased to $129.1 million, a 57.0% rise from $82.2 million in the same period in 2021, with cost of sales as a percentage of net sales decreasing to 45.5% from 46.0%[146] - Fulfillment expenses rose to $7.3 million, a 66.9% increase from $4.4 million in the same period in 2021, with fulfillment expenses as a percentage of net sales increasing to 2.6%[147] - Selling and distribution expenses increased by 86.5% to $46.6 million, up from $25.0 million in the same period in 2021, with selling and distribution expenses as a percentage of net sales rising to 16.4%[148] - General and administrative expenses rose to $26.8 million, a 35.0% increase from $19.9 million in the same period in 2021, with general and administrative expenses as a percentage of net sales decreasing to 9.5%[150] - General and administrative expenses increased by $4.2 million due to higher salaries, benefits, and operating expenses, but decreased as a percentage of net sales due to significant sales growth[152] Cash Flow and Liquidity - Cash and cash equivalents increased to $270.61 million as of March 31, 2022, from $218.46 million as of December 31, 2021, with working capital rising to $302.66 million[154] - Operating cash flow for the three months ended March 31, 2022, was $53.80 million, an increase from $33.21 million in the same period in 2021, primarily due to positive changes in working capital[163] - The company has a line of credit of up to $75 million, with no borrowings outstanding as of March 31, 2022[157] - The company believes existing cash and cash equivalents will be sufficient to meet anticipated cash needs for at least the next 12 months, although liquidity assumptions may prove incorrect[155] Strategic Initiatives - The company has expanded its international presence, offering localized shopping experiences in multiple countries since 2018, including recent expansions to Saudi Arabia in 2022[83] - The product mix has shifted back towards higher-margin categories, particularly dresses, which saw significant growth in Q1 2022[94] - The company continues to invest in its owned brand platform, expecting an increase in the mix of owned brand sales in 2022[94] - The company aims to increase the percentage of net sales from owned brands to enhance gross margin over time[121] Market Conditions - The impact of the COVID-19 pandemic remains uncertain, with potential effects on demand and operational results[84] - The company expects fulfillment and selling expenses to fluctuate in the short term due to increased costs and return rates, but anticipates long-term efficiencies from scale and automation[134][135] - The effective tax rate increased due to a decrease in excess tax benefits related to stock options[153] - The company has not engaged in any foreign currency hedging transactions, and foreign currency transaction gains and losses have not been material[178] - There have been no material changes in contractual obligations compared to the previous fiscal year[169]

(Exact Name of Registrant as Specified in Its Charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 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: 001-38927 REVOLVE GROUP, INC. Delaware 46-1640160 (State or Other Jurisdiction of Incorp ...

Financial Performance - Gross margin for Q3 2021 was 55.1%, slightly down from 55.3% in Q3 2020, while the nine-month gross margin was 55.0%, up from 51.5% in the same period last year[100]. - Adjusted EBITDA for Q3 2021 was $21.666 million, down from $24.025 million in Q3 2020, with a nine-month total of $80.409 million compared to $50.511 million in the previous year[100]. - Free cash flow for the three months ended September 30, 2021, was $1,340,000, down from $13,877,000 in the same period of 2020, indicating a significant decline of 90.3%[115]. - Net income for the three months ended September 30, 2021, was $16.7 million, down from $19.4 million in the same period in 2020, with an effective tax rate increase to 13.9% from 9.8%[160]. - For the nine months ended September 30, 2021, net sales increased by 48.1% to $651.6 million, driven by a 40.4% increase in orders and a 13.4% increase in average order value[161]. Customer Metrics - Active customers increased to 1.678 million in Q3 2021, up from 1.504 million in Q3 2020, while total orders placed rose to 1.830 million from 1.141 million year-over-year[100]. - Active customers increased during the period ended September 30, 2021, compared to the same period in 2020, driven by increased demand due to easing restrictions and government stimulus payments[118]. - Total orders placed increased in the three and nine months ended September 30, 2021, relative to the same periods in 2020, attributed to heightened demand from easing restrictions and stimulus payments[120]. Sales and Revenue - Net sales for the three months ended September 30, 2021, increased by 61.6% to $244.1 million compared to $151.0 million in the same period in 2020, driven by a 60.4% increase in the number of orders and a 19.0% increase in average order value[152]. - REVOLVE segment net sales increased by 56.4% to $204.2 million for the three months ended September 30, 2021, compared to $130.6 million in the same period of 2020[137]. - FWRD segment net sales increased by 94.8% to $39.9 million for the three months ended September 30, 2021, compared to $20.5 million in the same period of 2020[138]. - Net sales to customers outside of the United States increased by 49.0% to $45.6 million for the three months ended September 30, 2021, compared to $30.6 million in the same period of 2020[139]. Marketing and Expenses - The company plans to increase marketing investments to capture consumer demand as economies reopen, which may lead to higher marketing costs as a percentage of net sales[129]. - Marketing expenses increased by 148.4% to $47.0 million, representing 19.2% of net sales, driven by higher investments in customer acquisition and brand marketing initiatives[157]. - Selling and distribution expenses surged by 83.8% to $38.4 million, accounting for 15.7% of net sales, attributed to increased shipping and handling fees and a higher return rate[156]. - General and administrative expenses are expected to increase in the near term as the company plans to invest in its team to support future growth[147]. Inventory and Fulfillment - The company reduced inventory receipts significantly in 2020 due to COVID-19, impacting sales demand, but has since increased inventory purchases to meet recovering demand[134]. - The company expects fulfillment expenses to fluctuate in the short term due to increased return rates and input cost pressures[143]. - Fulfillment expenses for the three months ended September 30, 2021, were $5.8 million, a 38.9% increase, but decreased as a percentage of net sales to 2.4% from 2.8% in 2020 due to automation efficiencies[155]. Economic Impact and Future Outlook - The COVID-19 pandemic initially caused a significant decline in net sales starting in March 2020, but sales returned to growth in 2021 due to easing restrictions and government stimulus[94]. - The overall economic environment and consumer behavior significantly impact the company's business, with macroeconomic factors influencing customer spending patterns[125]. - The COVID-19 pandemic continues to pose risks to net sales and gross margins, with unpredictable long-term impacts[137]. - The company plans to use existing cash and cash equivalents to meet anticipated cash needs for at least the next 12 months, although liquidity assumptions may prove incorrect[172][175].

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Revolve Group, Inc.'s unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Income, and Cash Flows, for periods ending June 30, 2021, detailing financial position and performance Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $219,582 | $146,013 | | Inventory | $118,827 | $95,272 | | Total current assets | $389,621 | $276,925 | | **Total assets** | **$419,666** | **$305,752** | | **Liabilities & Equity** | | | | Accounts payable | $58,634 | $39,337 | | Returns reserve | $44,024 | $25,602 | | Total current liabilities | $155,218 | $105,688 | | Total stockholders' equity | $264,448 | $200,064 | | **Total liabilities and stockholders' equity** | **$419,666** | **$305,752** | Condensed Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $228,614 | $142,784 | $407,521 | $288,859 | | Gross profit | $127,218 | $72,071 | $223,883 | $143,021 | | Income from operations | $32,929 | $18,804 | $54,144 | $22,658 | | Net income | $31,538 | $14,236 | $53,790 | $18,392 | | Diluted EPS | $0.42 | $0.20 | $0.72 | $0.26 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $66,556 | $61,887 | | Net cash used in investing activities | ($1,253) | ($1,381) | | Net cash provided by financing activities | $8,217 | $25,315 | | **Net increase in cash and cash equivalents** | **$73,569** | **$85,354** | - The company's business operations and results improved in the first half of 2021 due to increased demand from easing stay-at-home orders, U.S. government stimulus, and vaccine rollouts, though future impact of COVID-19 variants remains uncertain[27](index=27&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and operational results, highlighting strong recovery and growth in H1 2021 driven by easing COVID-19 restrictions and consumer demand [Overview and COVID-19 Impact](index=21&type=section&id=Overview%20and%20COVID-19%20Impact) This section provides an overview of REVOLVE's business model and the impact of the COVID-19 pandemic on its operations and sales recovery - REVOLVE is a next-generation fashion retailer for Millennial and Generation Z consumers, operating through two segments: REVOLVE (premium apparel) and FORWARD (luxury brands), leveraging a proprietary technology platform, data analytics, and influencer marketing[81](index=81&type=chunk)[82](index=82&type=chunk) - After a material negative impact from COVID-19 in 2020, net sales returned to growth in Q1 and Q2 2021, driven by easing restrictions, U.S. government stimulus, and vaccine rollouts, though future demand remains uncertain due to new COVID-19 variants[88](index=88&type=chunk)[89](index=89&type=chunk) [Key Operating and Financial Metrics](index=23&type=section&id=Key%20Operating%20and%20Financial%20Metrics) This section presents key operating and financial metrics, including gross margin, Adjusted EBITDA, active customers, and average order value, for comparative periods Key Metrics Comparison | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Gross margin | 55.6% | 50.5% | 54.9% | 49.5% | | Adjusted EBITDA (in thousands) | $35,403 | $20,877 | $58,743 | $26,486 | | Active customers (in thousands) | 1,554 | 1,533 | 1,554 | 1,533 | | Total orders placed (in thousands) | 1,769 | 1,163 | 3,051 | 2,335 | | Average order value | $255 | $204 | $255 | $231 | Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $31,538 | $14,236 | $53,790 | $18,392 | | Other expense, net | $264 | $174 | $497 | $47 | | Provision for (benefit from) income taxes | $1,127 | $4,394 | ($143) | $4,219 | | Depreciation and amortization | $1,122 | $1,205 | $2,271 | $2,396 | | Equity-based compensation | $1,352 | $868 | $2,328 | $1,432 | | **Adjusted EBITDA** | **$35,403** | **$20,877** | **$58,743** | **$26,486** | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's operating results for the three and six-month periods ended June 30, 2021 and 2020 Comparison of Three Months Ended June 30, 2021 and 2020 | Metric | Q2 2021 | Q2 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $228,614 | $142,784 | $85,830 | 60.1% | | Gross Profit | $127,218 | $72,071 | $55,147 | 76.5% | | Marketing Expenses | $34,871 | $14,638 | $20,233 | 138.2% | | Income from Operations | $32,929 | $18,804 | $14,125 | 75.1% | - The **60.1% increase in net sales** for Q2 2021 was driven by a **52.1% increase in orders placed** and a **25.0% increase in average order value**, reflecting strong consumer demand recovery[148](index=148&type=chunk) Comparison of Six Months Ended June 30, 2021 and 2020 | Metric | H1 2021 | H1 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $407,521 | $288,859 | $118,662 | 41.1% | | Gross Profit | $223,883 | $143,021 | $80,862 | 56.5% | | Marketing Expenses | $61,099 | $36,588 | $24,511 | 67.0% | | Income from Operations | $54,144 | $22,658 | $31,486 | 138.9% | - The **41.1% increase in net sales** for H1 2021 was driven by a **30.7% increase in orders placed** and a **10.4% increase in average order value**[157](index=157&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's liquidity position and capital resources, including cash flows, working capital, and credit facilities Liquidity Position (in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $219,582 | $146,013 | | Working capital | $234,403 | $171,237 | - The company amended its credit agreement on March 23, 2021, extending the expiration to March 23, 2026, providing up to **$75.0 million in revolver borrowings**, with no outstanding borrowings as of June 30, 2021[171](index=171&type=chunk) - For the six months ended June 30, 2021, net cash from operating activities was **$66.6 million**, primarily driven by higher net income, while net cash from financing activities was **$8.2 million** from stock option exercises[176](index=176&type=chunk)[179](index=179&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, including interest rate, foreign currency, and inflation, noting no material impact on financial condition or operations - The company's primary market risks are identified as interest rate changes, foreign currency fluctuations, and inflation[189](index=189&type=chunk) - Interest rate risk is low due to short-term cash equivalents and no floating-rate debt, foreign currency risk is not significant as most sales are in U.S. dollars, and inflation has not materially affected operations[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms management's conclusion that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - Management concluded that as of June 30, 2021, the company's disclosure controls and procedures were effective to provide reasonable assurance that required information is recorded, processed, and reported in a timely manner[193](index=193&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[194](index=194&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section provides information on material pending legal proceedings, with further details available in Note 5 of the financial statements - The company settled a purported class action lawsuit related to employee wage-and-hour claims, with court approval on January 5, 2021, and payment during the first quarter of 2021[55](index=55&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks, including ongoing COVID-19 impacts, intense competition, reliance on consumer spending, inventory management, technology dependence, regulatory changes, and the dual-class stock structure - The COVID-19 pandemic continues to pose a significant risk, with potential impacts from changing consumer behavior, supply chain disruptions, and the possibility of reinstated business restrictions[199](index=199&type=chunk)[201](index=201&type=chunk) - The company faces intense competition from department stores, specialty retailers, and other eCommerce companies, which could lead to pricing pressure and affect market share[215](index=215&type=chunk)[219](index=219&type=chunk) - The dual-class stock structure concentrates approximately **90% of voting power** with the co-chief executive officers and their affiliates, allowing them to control all matters submitted to stockholders for approval[357](index=357&type=chunk) - Evolving privacy laws, such as GDPR in Europe and CCPA/CPRA in California, as well as changes in tracking technologies by companies like Apple, could increase compliance costs and adversely affect customer acquisition and marketing effectiveness[296](index=296&type=chunk)[297](index=297&type=chunk)[303](index=303&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on any unregistered sales of equity securities under the Securities Act of 1933, with the company reporting no such sales during the period - The company reported no unregistered sales of equity securities during the reporting period[374](index=374&type=chunk)

Financial Performance - Gross margin increased to 54.0% in Q1 2021 from 48.6% in Q1 2020[106] - Adjusted EBITDA rose to $23,340,000 in Q1 2021 compared to $5,609,000 in Q1 2020[106] - Free cash flow improved to $32,473,000 in Q1 2021 from $7,530,000 in Q1 2020[106] - Total net sales for Q1 2021 were $178.9 million, up 22.5% from $146.1 million in Q1 2020, driven by a 9.4% increase in the number of customer orders[160] - Operating income rose to $21.2 million in Q1 2021, compared to $3.9 million in Q1 2020, reflecting improved operational efficiency[158] - Income before income taxes was $21.0 million for the three months ended March 31, 2021, compared to $4.0 million in 2020, with an effective tax rate of (6.1%)[168] Customer Metrics - Active customers decreased slightly to 1,477,000 in Q1 2021 from 1,528,000 in Q1 2020[106] - Total orders placed increased to 1,282,000 in Q1 2021, up from 1,172,000 in Q1 2020[106] - Average order value decreased to $256 in Q1 2021 from $259 in Q1 2020[106] - Active customers decreased during the period ended March 31, 2021, compared to the same period in 2020, due to reduced customer activity from the COVID-19 pandemic[124] - Total orders placed increased in the three months ended March 31, 2021, relative to the same period in 2020, due to increased demand following the easing of stay-at-home orders[126] - Average order value for the three months ended March 31, 2021, was essentially flat compared to the same period in 2020, as shifts in product mix were offset by a higher percentage of full price sales[129] Marketing and Expenses - Marketing expenses increased to $26.2 million in Q1 2021, up from $22.0 million in Q1 2020, as the company resumed investment in marketing initiatives[153] - General and administrative expenses were $19.9 million in Q1 2021, compared to $18.9 million in Q1 2020, with expectations for further increases to support growth[154] - Marketing expenses increased by $4.3 million, or 19.5%, to $26.2 million for the three months ended March 31, 2021, compared to $21.9 million in the same period in 2020[166] - General and administrative expenses rose by $1.0 million, or 5.3%, to $19.9 million for the three months ended March 31, 2021, from $18.9 million in 2020, with a decrease in percentage of net sales from 12.9% to 11.1%[167] Cash Flow and Liquidity - Cash and cash equivalents increased to $182.9 million as of March 31, 2021, from $146.0 million as of December 31, 2020[170] - Net cash provided by operating activities was $33.2 million for the three months ended March 31, 2021, compared to $8.1 million in the same period in 2020[177] - Net cash used in investing activities was $0.7 million for the three months ended March 31, 2021, compared to $0.6 million in 2020[181] - Net cash provided by financing activities was $4.3 million for the three months ended March 31, 2021, primarily from cash proceeds from the exercise of stock options[183] - The company has a line of credit providing up to $75.0 million in revolver borrowings, with no borrowings outstanding as of March 31, 2021[174] - Working capital increased to $199.4 million as of March 31, 2021, from $171.2 million as of December 31, 2020[170] - The company believes existing cash and cash equivalents will be sufficient to meet anticipated cash needs for at least the next 12 months, barring any unforeseen circumstances related to COVID-19[171] Market and Operational Insights - The company has focused on expanding its international presence, particularly in Europe, Australia, and Canada, while maintaining a core focus on the U.S. market[97] - The COVID-19 pandemic negatively impacted net sales starting in March 2020, but there was a recovery in demand in early 2021 due to easing restrictions and government stimulus[98] - The company has invested in technology and data analytics to optimize inventory management and enhance customer experience[94] - The contribution of owned brands to net sales is expected to remain lower than historical trends, adversely affecting overall gross margin[109] - Inventory management practices involve a data-driven approach to optimize merchandise assortment and fulfillment, but the company remains vulnerable to demand shifts[139] - The company has made capital investments in inventory, fulfillment centers, and logistics infrastructure to support growth and international expansion[141] Segment Performance - Financial results are influenced by performance across the two reporting segments, REVOLVE and FORWARD, as well as various geographic markets[142] - The REVOLVE segment accounted for 85.0% of net sales, generating $152.2 million in Q1 2021, a 22.2% increase from $124.5 million in Q1 2020[143] - The FORWARD segment represented 15.0% of net sales, with $26.7 million in Q1 2021, reflecting a 23.8% increase from $21.6 million in Q1 2020[144] - Net sales to international customers increased by 38.4%, reaching $35.6 million in Q1 2021, compared to $25.7 million in Q1 2020, contributing 19.9% of total net sales[145] - Cost of sales increased by 9.5% to $82.2 million in Q1 2021, but decreased as a percentage of net sales from 51.4% in Q1 2020 to 46.0% in Q1 2021[162] - Gross profit for Q1 2021 was $96.7 million, representing a gross margin of 54.0%, up from 48.6% in Q1 2020[158]

Financial Performance - REVOLVE generated $580.6 million in net sales in 2020, serving approximately 1.5 million active customers and offering over 120,000 unique styles[32]. - Approximately 77% of net sales in 2020 were at full price, demonstrating the effectiveness of the data-driven merchandising model[23][34]. - The average order value was $236 in 2020, reflecting the focus on premium merchandise[32]. - Net sales and gross margins declined in 2020, with expectations that COVID-19 will continue to affect operating results for some time[103]. - The company experienced a material negative impact on product demand due to COVID-19, leading to cost reductions such as furloughs and pay cuts[84]. - The company anticipates challenges in accurately forecasting net sales and planning expenses due to the unpredictable nature of the pandemic and its impact on consumer behavior[102]. - Economic downturns and macroeconomic conditions may adversely affect consumer discretionary spending, impacting the company's operating results[88]. - The company has experienced a decline in its customer base due to the COVID-19 pandemic, increased competition, and business maturation, which may continue to adversely affect revenue growth[105]. Sales Channels and Marketing - In 2020, mobile sales accounted for 60.4% of total orders, highlighting the significant growth in digital channels[28]. - REVOLVE's marketing strategy drove 53% of traffic from free and low-cost sources in 2020, indicating effective brand awareness efforts[36]. - The company has over 7.5 million Instagram followers across its brands as of December 31, 2020, leveraging social media and influencer marketing to enhance brand awareness[54]. - The collective social media following of owned brands exceeded 4.4 million on Instagram as of December 31, 2020, representing a 47% increase from the previous year[38]. - Customer purchases using mobile devices have significantly increased, and the company expects this trend to continue, although challenges in integrating mobile applications may impact future growth[151]. Operational Efficiency - The company ships approximately 98% of orders on the same day if placed before noon Pacific Time, and offers free two-day shipping and free returns to customers in the United States[61]. - The company has invested in automation for its fulfillment operations, enhancing efficiency and scalability in response to customer demand[60]. - The fulfillment center, located in Los Angeles County, is critical for operations, and any capacity issues could lead to delays in order fulfillment and harm customer relationships[136]. - The company expects to incur higher capital expenditures for fulfillment center operations, which may be made in advance of expected sales that may not materialize[137]. - The company has implemented cost-cutting measures including salary reductions and furloughs due to the COVID-19 pandemic, but many of these measures have been reversed, with corporate employees now receiving at or above pre-COVID wages[149]. Technology and Data Analytics - The technology platform includes a database built over 18 years with hundreds of thousands of styles and millions of customer interactions, creating a strategic asset of hundreds of millions of data points[55]. - The proprietary technology infrastructure is highly scalable, supporting growth in customer demand and vendor relationships[56]. - The company relies on accurate data analytics for key performance metrics, and inaccuracies could harm its reputation and business operations[99]. - The company plans to invest significantly in upgrading its information technology systems to support growth, which may involve substantial capital expenditures and operational risks[210]. - The company is increasingly dependent on information technology, and any disruptions could materially adversely affect its operations and financial results[208]. Inventory and Supply Chain Management - The company does not have long-term agreements with manufacturers, allowing flexibility in its supplier network across various geographies[51]. - The company faces challenges in managing inventory effectively, as demand can change significantly, influenced by various factors including the pandemic and consumer trends[121]. - Due to COVID-19, the company reduced inventory receipts, leading to a significant decline in inventory balance, but plans to increase inventory purchases as consumer demand improves[128]. - The company faces risks related to sourcing and manufacturing, with potential price fluctuations impacting operating results, especially as it expands into new product categories[132]. - The company relies on third-party suppliers and manufacturers, and disruptions in their operations could negatively impact product availability and quality[139]. Competition and Market Risks - The company faces significant competition in the retail industry, which may pressure pricing and affect gross margins[98]. - Fluctuations in quarterly operating results may lead to stock price declines if results fall below analyst expectations[90]. - Changes in consumer preferences and fashion trends must be anticipated to avoid excess inventory or markdowns that could negatively impact profitability[87]. - The company acknowledges that negative publicity or customer complaints could severely impact consumer confidence and brand reputation[110]. - The company is pursuing international expansion and strategic acquisitions as part of its growth strategy[107]. Regulatory and Compliance Risks - The company is subject to payment-related risks, including potential increases in interchange fees and compliance with regulations, which could adversely affect operating results[152]. - The company faces risks related to compliance with product safety and labor laws, which could damage its reputation and result in increased costs[166]. - The company collects significant amounts of personal data, and non-compliance with privacy laws could adversely affect its reputation and result in monetary penalties[174]. - The EU's GDPR imposes penalties of up to €20 million or 4% of worldwide turnover for non-compliance, which could materially affect the company's financial results[177]. - The company faces significant political, legal, and economic risks in China, which could adversely affect its operations and financial condition[186]. Future Outlook and Strategic Initiatives - The company plans to grow international sales by localizing the shopping experience and leveraging its influencer network[45]. - The company aims to deepen customer relationships to improve revenue retention and increase wallet share through enhanced customer experience[43]. - The company is focused on expanding its product offerings and must react quickly to shifts in consumer preferences to maintain its competitive edge[126]. - The company anticipates that maintaining and enhancing brand relationships will require substantial investments, which may not yield successful outcomes[109]. - The company aims to introduce new products in traditional categories and expand into adjacent categories, though success may be limited by inexperience and competitive pressures[129].

Financial Performance - Gross margin for Q3 2020 was 55.3%, an increase from 53.6% in Q3 2019[107] - Adjusted EBITDA for Q3 2020 was $24.025 million, compared to $14.438 million in Q3 2019, reflecting a significant year-over-year increase[107] - Free cash flow for Q3 2020 was $13.877 million, up from $7.448 million in Q3 2019[107] - Net sales for the three months ended September 30, 2020, decreased by 2.0% to $151.036 million compared to $154.197 million in the same period in 2019[159] - For the nine months ended September 30, 2020, net sales decreased by 3.0% to $439.895 million compared to $453.437 million in 2019[169] - Net income for the three months ended September 30, 2020, increased to $19.438 million, compared to $9.559 million in the same period in 2019[168] Customer Metrics - Active customers reached 1.504 million in Q3 2020, an increase from 1.438 million in Q3 2019[107] - Active customers decreased sequentially in the third quarter of 2020 compared to the second quarter of 2020 due to a decline in new customers[123] - Existing customers account for a greater share of active customers over time, emphasizing the importance of customer retention[136] Sales and Orders - Total orders placed in Q3 2020 were 1,141, slightly down from 1,194 in Q3 2019[107] - Total orders placed decreased in the three and nine months ended September 30, 2020 compared to the same periods in 2019, attributed to reduced demand from the COVID-19 pandemic[125] - Average order value decreased to $232 in Q3 2020 from $275 in Q3 2019[107] - The average order value decreased to $232 from $275, and the number of orders placed by customers decreased by 4.4%[159] Impact of COVID-19 - The COVID-19 pandemic has negatively impacted net sales, with significant declines starting in mid-March 2020[99] - The company implemented cost-cutting measures in response to the pandemic, including reducing payroll costs and deferring non-essential capital expenditures[99] - The contribution of owned brands to net sales is expected to be adversely affected for at least the remainder of 2020 due to work restrictions impacting design and development[113] - The company experienced a decline in discretionary consumer spending for apparel merchandise due to the pandemic's impact on disposable income and consumer confidence[131] - The overall economic environment and changes in consumer behavior significantly impact the company's business operations and results[130] Cost Management - The company is focused on preserving liquidity and managing cash flow while adjusting its cost structure to align with top-line demand[130] - The company has reduced capital expenditures in response to the COVID-19 pandemic, impacting long-term growth strategies[141] - Marketing expenses have been reduced due to the impact of COVID-19, but the company plans to return to historical investment levels in the near future[153] - General and administrative expenses were reduced during the pandemic but are expected to increase as a percentage of net sales if restrictions are reimposed[154] Inventory and Merchandise - Inventory purchases were sequentially increased in response to improving consumer demand trends during the second and third quarters of 2020[101] - Inventory management strategies include shallow initial buys and data-driven re-ordering to mitigate fashion risk[140] - The merchandise mix shift due to COVID-19 is expected to adversely impact overall gross margin in the near term[138] Segment Performance - REVOLVE segment net sales decreased by 3.6% to $130.6 million for the three months ended September 30, 2020, compared to $135.4 million in the same period of 2019[143] - FORWARD segment net sales increased by 9.0% to $20.5 million for the three months ended September 30, 2020, compared to $18.8 million in the same period of 2019[144] - Net sales to customers outside the United States increased by 17.8% to $30.6 million for the three months ended September 30, 2020, compared to $26.0 million in the same period of 2019[146] Cash Flow and Liquidity - Net cash provided by operating activities increased to $76.2 million for the nine months ended September 30, 2020, compared to $31.8 million in 2019, primarily due to favorable changes in working capital and increased net income[188] - Cash and cash equivalents increased to $158.7 million as of September 30, 2020, compared to $65.4 million as of December 31, 2019[179] - Working capital increased to $142.9 million as of September 30, 2020, compared to $97.8 million as of December 31, 2019[179] - The company had $15.0 million outstanding on its line of credit as of September 30, 2020, with a weighted-average interest rate of 1.5%[183] Inflation and Economic Conditions - The company does not believe inflation has materially affected its business or financial condition[203] - The company continues to monitor inflation impacts to minimize effects through pricing strategies, productivity improvements, and cost reductions[203] - There is a risk that significant inflationary pressures could harm the company's financial condition and results of operations if costs cannot be offset by price increases[203]