Financial Data and Key Metrics Changes - In Q4 2024, revenue reached $190.6 million, up 17.8% year-over-year, with retail revenue increasing 23.9% and e-commerce revenue increasing 5.3% [49] - For the full year 2024, revenue was $771.3 million, up 15.2% year-over-year, with retail revenue increasing 21.4% and e-commerce increasing 3% [49] - Adjusted EBITDA for Q4 was $13.8 million, representing a margin of 7.3%, compared to $9.4 million or 5.8% in the prior year [65] - Full year adjusted EBITDA was $73.1 million, with a margin of 9.5%, up from $52.4 million or 7.8% in 2023 [65] Business Line Data and Key Metrics Changes - Glasses revenue grew approximately 15% year-over-year in Q4 2024, up from 7% in Q4 2023, and 12% for the full year, up from 8% in 2023 [51] - Contacts and exams saw significant growth, with contacts increasing 30% and exams increasing 45% year-over-year in Q4 [51] - The insurance business expanded to cover over 30 million lives, enhancing customer acquisition and driving higher value purchases [21][22] Market Data and Key Metrics Changes - The U.S. optical market is estimated at $68 billion, with a significant portion of customers underserved due to structural barriers [12] - The incidence of myopia is rising, with projections indicating that over half of the world's population will need corrective vision by 2050 [12] Company Strategy and Development Direction - The company plans to open 45 new stores in 2025, focusing on existing markets to drive brand awareness [17][34] - Marketing spend will remain in the low teens as a percentage of revenue, with a focus on customer acquisition and brand awareness [15][71] - The company aims to enhance its omnichannel model and customer experience, including the introduction of AI-driven tools for personalized shopping [39][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining revenue growth and adjusted EBITDA margins, despite a conservative outlook due to macroeconomic conditions [68] - The company anticipates continued strong customer growth, driven by marketing investments and insurance partnerships [78][80] Other Important Information - The company generated $35 million in free cash flow in 2024, up from $7 million in 2023, and ended with approximately $254 million in cash [66] - The company plans to maintain gross margins in the mid-50s as a percentage of revenue, despite potential headwinds from tariffs [70] Q&A Session Summary Question: Customer acquisition initiatives and revenue growth balance - Management noted that customer acquisition efforts have led to six consecutive quarters of accelerating active customer growth, with expectations for continued strong growth in 2025 [78] Question: Impact of insurance partnership on customer acquisition - Management indicated that the integration with Versant Health is tracking positively and is expected to drive performance over the long term, with increasing contributions from insurance customers [82] Question: Traffic expectations and new store contributions - Management expects moderate improvement in store productivity and has not embedded specific traffic guidance but remains optimistic about overall trends [90] Question: Non-marketing SG&A expense leverage - Management believes that 100 to 200 basis points of adjusted EBITDA margin expansion is sustainable, with opportunities for future leverage in non-marketing SG&A [108] Question: Strategy regarding smart glasses - Management is closely monitoring the smart glasses market and believes they are well-positioned to enter this space if they choose to do so, leveraging their brand and distribution capabilities [112]

Financial Data and Key Metrics Changes - In Q4 2024, revenue reached $190.6 million, up 17.8% year-over-year, with retail revenue increasing 23.9% and e-commerce revenue increasing 5.3% [49] - For the full year 2024, revenue was $771.3 million, up 15.2% year-over-year, with retail revenue increasing 21.4% and e-commerce increasing 3% [49] - Active customers increased to 2.51 million, representing a 7.8% increase on a trailing 12-month basis [50] - Average revenue per customer rose to $307, up 6.8% year-over-year [50] - Adjusted EBITDA for Q4 was $13.8 million, with a margin of 7.3%, compared to $9.4 million or 5.8% in the prior year [65] - Full year adjusted EBITDA was $73.1 million, representing a margin of 9.5%, up from $52.4 million or 7.8% in 2023 [65] Business Line Data and Key Metrics Changes - Glasses revenue grew approximately 15% year-over-year in Q4 2024, up from 7% in Q4 2023, and 12% for the full year, up from 8% in 2023 [51][24] - Contacts and exams saw significant growth, with contacts increasing 36% year-over-year and exams growing 41% [51] - The insurance business expanded to cover over 30 million lives, enhancing customer acquisition and driving higher value purchases [21] Market Data and Key Metrics Changes - The U.S. optical market is estimated at $68 billion, with a significant portion of customers underserved due to structural barriers [13] - The incidence of myopia is rising, with projections indicating that over half of the world's population will need corrective vision by 2050 [12] Company Strategy and Development Direction - The company plans to open 45 new stores in 2025, focusing on existing markets to drive brand awareness [17][34] - Marketing spend is expected to remain in the low teens as a percentage of revenue, with a focus on customer-led growth [15][71] - The company aims to enhance its omnichannel model and customer experience, with a significant emphasis on retail growth [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining revenue growth and adjusted EBITDA margins, despite a conservative outlook due to macroeconomic conditions [68] - The integration of insurance partnerships is expected to drive long-term customer acquisition and revenue growth [84] Other Important Information - The company generated $35 million in free cash flow in 2024, up from $7 million in 2023, and ended with approximately $254 million in cash [66] - The company plans to maintain a disciplined approach to operating expenses, with expectations for adjusted SG&A to decrease as a percentage of revenue [71] Q&A Session Summary Question: Customer acquisition initiatives and revenue growth balance - Management noted that customer acquisition efforts have led to six consecutive quarters of accelerating active customer growth, with expectations for continued strong growth in 2025 [78] Question: Impact of insurance partnership on customer acquisition - Management indicated that previous integrations have shown increasing contributions over time, and early trends from the Versant integration are positive [82] Question: Traffic expectations and new store contributions - Management expects moderate improvement in store productivity and has not embedded a specific guide for traffic but remains optimistic about overall trends [90] Question: Non-marketing SG&A expense leverage - Management believes that 100 to 200 basis points of margin expansion is sustainable, with opportunities for future leverage in staffing and corporate expenses [109] Question: Strategy regarding smart glasses - Management is monitoring developments in the smart glasses market and believes they are well-positioned to enter this space if they choose to do so [112]

Q4 and Full-Year 2024 Earnings Report Speakers: DAVE GILBOA | Co-Founder & Co-CEO NEIL BLUMENTHAL | Co-Founder & Co-CEO STEVE MILLER | SVP & Chief Financial Officer Speakers: DAVE GILBOA | Co-Founder & Co-CEO NEIL BLUMENTHAL | Co-Founder & Co-CEO STEVE MILLER | SVP & Chief Financial Officer Forward-Looking Statements / Non-GAAP Financial Measures This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securitie ...

Group 1 - Warby Parker Inc. reported quarterly earnings of $0.01 per share, missing the Zacks Consensus Estimate of $0.03 per share, representing an earnings surprise of -66.67% [1] - The company posted revenues of $190.64 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.59%, compared to year-ago revenues of $161.86 million [2] - Warby Parker shares have lost about 1.9% since the beginning of the year, while the S&P 500 has gained 1.3% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.12 on revenues of $226.29 million, and $0.31 on revenues of $866.08 million for the current fiscal year [7] - The Zacks Industry Rank for Consumer Products - Staples is currently in the top 34% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Financial Performance - Q4 net revenue increased by $28.8 million, or 17.8%, to $190.6 million compared to Q4 2023[7] - Full year net revenue increased by $101.6 million, or 15.2%, to $771.3 million compared to full year 2023[7] - Full year GAAP net loss was $20.4 million, and Q4 GAAP net loss was $6.9 million[7] - Net revenue for Q4 2024 reached $190,643 thousand, a 17.8% increase from $161,855 thousand in Q4 2023[31] - The net loss for Q4 2024 was $6,877 thousand, a significant improvement compared to a net loss of $19,047 thousand in Q4 2023[31] Customer Metrics - Active Customers increased by 7.8% to 2.51 million on a trailing 12-month basis[7] - Average Revenue per Customer increased by 6.8% to $307[7] Profitability and Margins - Full year Adjusted EBITDA Margin increased by 1.7 points to 9.5%[7] - Gross margin for Q4 was 54.1%, up from 53.8% in the prior year[7] - Adjusted EBITDA for the year ended December 31, 2024, was $73,111 thousand, representing a 39.6% increase from $52,352 thousand in 2023[35] - The adjusted EBITDA margin improved to 9.5% in 2024, compared to 7.8% in 2023[35] - Gross profit for the year ended December 31, 2024, was $426,834 thousand, up 16.8% from $365,224 thousand in 2023[31] - The adjusted gross profit for the year ended December 31, 2024, was $427,899 thousand, compared to $366,291 thousand in 2023, reflecting a growth of 16.8%[43] Expenses - Selling, general, and administrative expenses increased to $112,542 thousand, accounting for 59.0% of revenue, compared to $108,635 thousand and 67.1% in Q4 2023[41] - The adjusted selling, general, and administrative expenses for the year ended December 31, 2024, were $405,174 thousand, compared to $358,618 thousand in 2023, indicating an increase of 12.9%[43] - Stock-based compensation expense for the year ended December 31, 2024, was $1,065 thousand, slightly down from $1,067 thousand in 2023[43] Future Outlook - The company plans to open 45 new stores in 2025, including five shop-in-shops at Target locations[14] - For 2025, the company expects net revenue of $878 to $893 million, representing approximately 14% to 16% growth[14] - Adjusted EBITDA for 2025 is projected to be approximately $97 million at the midpoint of the revenue range[14] - The company plans to continue investing in new product development and market expansion strategies to drive future growth[44] - The implementation of a new ERP system is expected to enhance operational efficiency and support future scalability[44] Cash Flow and Assets - Cash and cash equivalents at the end of 2024 were $254,161 thousand, reflecting an increase of 17.1% from $216,894 thousand in 2023[33] - Net cash provided by operating activities for the year ended December 31, 2024, was $98,744 thousand, up from $60,991 thousand in 2023[43] - Free cash flow for the year ended December 31, 2024, was $34,712 thousand, significantly higher than $7,320 thousand in 2023[43] - Total assets increased to $676,490 thousand in 2024, up 16.5% from $580,312 thousand in 2023[29] - Total liabilities rose to $336,417 thousand in 2024, an increase of 20.8% from $278,525 thousand in 2023[29] Inventory and Cost of Goods Sold - Inventory decreased to $52,345 thousand in 2024, down 15.9% from $62,234 thousand in 2023[29] - For the three months ended December 31, 2024, the cost of goods sold was $87,517 thousand, representing 45.9% of revenue, compared to $74,789 thousand and 46.2% in the same period of 2023[41] - Gross profit for the same period was $103,126 thousand, which is 54.1% of revenue, an increase from $87,066 thousand and 53.8% in Q4 2023[41]

Core Insights - Warby Parker Inc. reported solid growth in its Q3 results, indicating a positive performance in the affordable eyeglasses market in the United States and Canada [1] Company Overview - Warby Parker Inc. operates in the eyeglasses and related products sector, utilizing both retail stores and an ecommerce channel to reach customers [1] Financial Performance - The company released its Q3 results on November 7, showcasing strong growth metrics, although specific figures were not detailed in the provided content [1]

Financial Data and Key Metrics Changes - Warby Parker reported Q3 2024 net revenue of $192.4 million, reflecting a 13.3% year-over-year growth and a 250 basis points adjusted EBITDA margin expansion, the highest of the year [6][41] - Adjusted EBITDA for Q3 was $17.3 million, representing an adjusted EBITDA margin of 9%, compared to $11 million or 6.5% in the same period last year [41] - The company ended Q3 with approximately $251 million in cash and generated $13 million in free cash flow, marking the sixth consecutive quarter of positive free cash flow [42] Business Line Data and Key Metrics Changes - Retail revenue increased approximately 20% year-over-year, while e-commerce revenue grew by about 1% [31][22] - The glasses business grew approximately 10% year-over-year, driven by marketing investments and product innovation [14] - Contact lens sales grew approximately 35% year-over-year, accounting for almost 11% of total revenue, while eye exam revenue increased approximately 40% year-over-year, making up over 5% of revenue [27][28] Market Data and Key Metrics Changes - The company ended Q3 with 2.4 million active customers, a 5.6% increase on a trailing 12-month basis, with average revenue per customer growing by 7.5% to $305 [8][36] - Retail represented 70% of overall business, up from 67% in Q3 2023 [35] - The company opened 13 new stores in Q3, bringing the total to 269 stores, with plans to expand to over 900 stores in the long term [22][32] Company Strategy and Development Direction - Warby Parker is focused on expanding its omni-channel experience, leveraging both retail and e-commerce to drive growth [20] - The company aims to scale holistic vision care, with a strategic emphasis on increasing eye exam capabilities and contact lens sales [28][29] - The management is optimistic about the potential of smart glasses and plans to leverage advancements in AI to enhance customer engagement [55][57] Management's Comments on Operating Environment and Future Outlook - Management noted sequential momentum in customer growth and e-commerce velocity, with expectations for Q4 to be the strongest for active customer growth [50][64] - The company raised its full-year guidance, expecting revenue between $765 million and $768 million, representing approximately 14% to 15% year-over-year growth [43] - Management expressed confidence in maintaining gross margin stability in the mid-50s percentage range despite challenges from increased hiring and new store openings [44][68] Other Important Information - The company has expanded its in-network insurance relationships, notably with Versant Health, which is expected to provide long-term revenue growth opportunities [12][77] - Warby Parker's marketing spend increased to 12.3% of revenue in Q3, reflecting a disciplined approach to customer acquisition [40][52] Q&A Session Summary Question: Can you elaborate on the drivers of sequential momentum and marketing efficiency? - Management observed sequential strength building since July, attributing it to disciplined marketing efforts and active customer growth [49][50] Question: How do you view the impact of tariffs and the opportunity for smart glasses? - Management has reduced exposure to Chinese goods and is confident in managing current tariff challenges. They are excited about the potential of smart glasses, particularly with advancements in AI [54][55] Question: What are the long-term implications of hiring optometrists on gross margin? - Hiring optometrists is viewed as a strategic investment to enhance customer acquisition, with expectations for gross margin to remain stable in the mid-50s [60][61] Question: How is the e-commerce channel performing and what are the expectations for 2025? - E-commerce is showing positive momentum, with expectations for growth as the company continues to enhance customer experience and marketing efforts [73][70] Question: What strategies are in place to raise awareness of in-network options? - The company focuses on training staff and partnering with insurance carriers to increase awareness of in-network benefits [80][81]

Core Insights - Warby Parker Inc. reported revenue of $192.45 million for the quarter ended September 2024, reflecting a year-over-year increase of 13.3% [1] - The company's EPS was $0.05, an improvement from $0.01 in the same quarter last year [1] - Revenue exceeded the Zacks Consensus Estimate of $189.45 million by 1.58%, while EPS met the consensus estimate [1] Financial Metrics - Active Customers reached 2.43 million, slightly above the average estimate of 2.42 million from four analysts [3] - Average Revenue per Customer was $305, which fell short of the estimated $307.31 [3] - The Store Count at the end of the period was 269, surpassing the average estimate of 267 [3] Stock Performance - Warby Parker's shares have increased by 20.1% over the past month, compared to a 3.2% increase in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Performance - For the three months ended September 30, 2024, the company generated net revenue of $192.4 million, an increase of 13.3% from $169.8 million in the same period of 2023[106]. - The gross profit for the three months ended September 30, 2024, was $104.9 million, resulting in a gross profit margin of 54.5%, slightly down from 54.6% in the prior year[106]. - The company reported a net loss of $4.1 million for the three months ended September 30, 2024, compared to a net loss of $17.4 million in the same period of 2023, indicating improved financial performance[106]. - Adjusted EBITDA for the three months ended September 30, 2024, was $17.3 million, up from $11.0 million in the same period of 2023, reflecting a margin increase to 9.0% from 6.5%[106][112]. - For the nine months ended September 30, 2024, net revenue reached $580.7 million, a 14.3% increase from $507.9 million in the same period of 2023[107]. - The gross profit for the nine months ended September 30, 2024, was $323.7 million, with a gross profit margin of 55.7%, up from 54.8% in the prior year[107]. - Net revenue for the three months ended September 30, 2024, was $192.4 million, an increase of $22.6 million or 13.3% compared to $169.8 million in the same period of 2023[133]. - Average Revenue per Customer increased to $305 from $284 year-over-year, driven by strong adoption of higher-priced products and bundling promotions[133]. - Active Customers grew by 5.6% compared to the prior year, contributing to the revenue increase[133]. - Net revenue increased by $72.8 million, or 14.3%, for the nine months ended September 30, 2024, compared to the same period in 2023, driven by an increase in Average Revenue per Customer to $305 from $284[142]. Cost and Expenses - Cost of goods sold increased by $10.5 million or 13.6% to $87.6 million, while gross profit rose by $12.1 million or 13.1% to $104.9 million[135]. - Gross margin slightly decreased by 10 basis points to 54.5% for the three months ended September 30, 2024, primarily due to lower-margin sales growth in contact lenses[137]. - Selling, general, and administrative expenses (SG&A) for the three months ended September 30, 2024, were $111.5 million, compared to $112.5 million in the same period of 2023[124]. - Selling, general, and administrative expenses decreased by $1.0 million, or 0.9%, for the three months ended September 30, 2024, compared to the same period in 2023, primarily due to a $5.5 million decrease in stock-based compensation[138]. - Cost of goods sold increased by $27.2 million, or 11.8%, for the nine months ended September 30, 2024, but decreased as a percentage of revenue by 90 basis points, from 45.2% to 44.3%[143]. - Gross profit increased by $45.6 million, or 16.4%, for the nine months ended September 30, 2024, primarily due to the increase in net revenue[144]. Customer and Market Growth - The company had 2,431 active customers as of September 30, 2024, compared to 2,303 in the same period of 2023, indicating a growth in customer base[112]. - The total number of retail stores increased to 269 as of September 30, 2024, up from 227 in the previous year, enhancing market presence[112]. - The number of stores offering eye exams increased from 183 to 228 year-over-year, contributing to operational growth[137]. Cash Flow and Liquidity - As of September 30, 2024, the company had cash and cash equivalents of $251.0 million, up from $216.9 million as of December 31, 2023[152]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was $78.8 million, compared to $47.3 million for the same period in 2023[160][161]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $48.3 million, an increase from $41.1 million in the same period of 2023[162][165]. - Net cash provided by financing activities for the nine months ended September 30, 2024, was $3.8 million, up from $2.1 million in 2023[166]. - The company experienced a net increase in cash and cash equivalents of $34.1 million for the nine months ended September 30, 2024, compared to $7.4 million in 2023[163]. Debt and Financial Obligations - The 2024 Credit Facility consists of a $120.0 million five-year revolving credit facility, with an option to increase the amount by up to $55.0 million[156]. - The company is subject to a maximum consolidated senior net leverage ratio of 3:1 under its 2024 Credit Facility, applicable when total borrowings exceed $30.0 million[159]. Internal Controls and Compliance - Material weaknesses in internal controls were identified, specifically in IT general controls and financial reporting processes[180]. - The company has invested significantly in IT improvements and added resources to address identified material weaknesses[181]. - Key remediation measures include implementing a market-leading ERP system to enhance error prevention and detection[181]. - Expert SOX consultants have been engaged to assist in the development and testing of the control environment[181]. - Training sessions for control owners have been conducted to improve control design and execution[181]. - The company has incurred significant costs related to remediation efforts and anticipates additional time and expenses[181]. - There were no changes in internal control over financial reporting during the quarter ended September 30, 2024, that materially affected controls[184]. - The company cannot assure that current measures will fully remediate control deficiencies or prevent future weaknesses[182]. - Future changes in business conditions may render current controls inadequate[183]. - Any failure to maintain effective controls could harm operating results or lead to restatements of financial statements[183]. - The company continues to hire qualified accounting and financial reporting personnel with public company SOX experience[181]. Future Outlook - The company expects operating losses to continue in the foreseeable future as it invests in business expansion[153]. - Seasonal trends may cause fluctuations in quarterly results, impacting the predictability of business and operating results[151]. - The company expects fluctuations in cost of goods sold as a percentage of net revenue due to product mix and demand changes[128]. - The company does not believe that foreign exchange rates have a material effect on its business, financial condition, or results of operations[173].

Core Insights - Warby Parker Inc. reported quarterly earnings of $0.05 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.01 per share a year ago [1] - The company achieved revenues of $192.45 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 1.58% and up from $169.85 million year-over-year [2] - Warby Parker shares have increased approximately 34.5% year-to-date, outperforming the S&P 500's gain of 24.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.02 on revenues of $183.08 million, and for the current fiscal year, it is $0.26 on revenues of $760.76 million [7] - The estimate revisions trend for Warby Parker is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Medical - Products industry, to which Warby Parker belongs, is currently in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]