Financial Data and Key Metrics Changes - Net revenue grew 15.2% year over year to $221.7 million, driven by a 20% increase in retail revenue [4][24] - Adjusted gross margin was 54.2%, slightly down from 54.6% in the previous year [29] - Adjusted EBITDA increased approximately 50% to $25.7 million, representing an adjusted EBITDA margin of 11.6% [4][32] Business Line Data and Key Metrics Changes - Glasses revenue grew 13% year over year, while contact lenses increased by 21% and eye exams surged by 41% [25][26] - Retail revenue accounted for 73% of total revenue, with a 20% year-over-year growth driven by new store openings [24][26] - The average revenue per customer rose 4.8% year over year to $320 [11][25] Market Data and Key Metrics Changes - Active customers reached 2.7 million, reflecting a 9.3% increase on a trailing 12-month basis [11][25] - The retail channel remains the primary growth engine, with strong customer acquisition through stores [11][12] - Contacts represented 11.5% of revenue, consistent with the prior quarter but below the industry average [21][26] Company Strategy and Development Direction - The company is entering its "third act," focusing on innovation through AI, including the development of AI glasses and enhanced customer experiences [6][8] - Plans to leverage partnerships with Google and Samsung to create intelligent eyewear [6][7] - The strategy includes expanding the retail footprint and enhancing the omnichannel experience while maintaining operational discipline [8][20] Management's Comments on Operating Environment and Future Outlook - Management noted a mixed shift in consumer behavior, particularly among younger customers, impacting average selling prices [4][40] - The company is taking a more conservative view on revenue for the remainder of the year due to current macroeconomic conditions [33][63] - Confidence remains in the long-term growth algorithm, with expectations for continued customer growth and EBITDA expansion [41][43] Other Important Information - The company completed a major system upgrade in its optical labs to support future growth and faster delivery times [9] - The decision to retire the Scout brand and Home Try-On program reflects a focus on aligning with customer preferences and simplifying operations [21][70] - The Pupils Project continues to provide free eyeglasses to students in need, expanding its reach significantly [22][23] Q&A Session Summary Question: Can you provide more details on the mix shift between single vision and progressives? - Management noted that younger consumers are more impacted by economic uncertainty, leading to a shift towards lower-priced frames, while progressive customers remain resilient [40] Question: How should we think about the growth algorithm moving forward? - The company maintains confidence in its long-term growth algorithm, expecting continued high growth and EBITDA expansion [41][43] Question: What is the early performance of the Target shop-in-shops? - Early performance is in line with expectations, and the company plans to continue expanding this initiative [53] Question: How is optometrist retention and recruitment tracking? - The company reports improved retention and recruitment of optometrists, aided by a strong employer reputation and supportive culture [58] Question: What impact has the sunset of the Home Try-On program had on e-commerce? - The company has seen strong growth in direct e-commerce purchases, offsetting the decline from the Home Try-On program [70]

Core Insights - Warby Parker Inc. reported quarterly earnings of $0.11 per share, exceeding the Zacks Consensus Estimate of $0.09 per share, and showing an increase from $0.05 per share a year ago, resulting in an earnings surprise of +22.22% [1] - The company generated revenues of $221.68 million for the quarter ended September 2025, which was 1.02% below the Zacks Consensus Estimate, but an increase from $192.45 million year-over-year [2] - Warby Parker's stock has underperformed, losing approximately 21.3% since the beginning of the year, contrasting with the S&P 500's gain of 15.6% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $223.19 million, and for the current fiscal year, it is $0.37 on revenues of $885.42 million [7] - The estimate revisions trend for Warby Parker was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Consumer Products - Staples industry, to which Warby Parker belongs, is currently ranked in the bottom 21% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Edgewell Personal Care, another company in the same industry, is expected to report quarterly earnings of $0.82 per share, reflecting a year-over-year change of +13.9% [9]

Financial Performance - Net revenue for Q3 2025 reached $222 million, a 15.2% year-over-year growth compared to $192.447 million in Q3 2024[9, 53] - Adjusted EBITDA for Q3 2025 was $26 million, representing an 11.6% margin, compared to $17.308 million and 9.0% margin in Q3 2024[9, 53] - The company's full year 2025 outlook projects net revenue between $871 million and $874 million, representing approximately 13% year-over-year growth[30] - Full year 2025 adjusted EBITDA is projected to be between $98 million and $101 million, with an approximate 11.4% margin[30] - Q4 2025 net revenue is expected to be between $211 million and $214 million, representing approximately 11-12% year-over-year growth[32] - Q4 2025 adjusted EBITDA is projected to be between $18 million and $21 million, with an approximate 9.2% margin[32] Business Operations - Warby Parker has 313 stores as of September 30, 2025, including 5 stores in Canada[7, 24] - The company opened 15 net new retail stores in Q3 2025[24] - Warby Parker estimates a potential footprint of 900+ stores[25] - The company estimates that its sales represent approximately 1% of the $68 billion U S eyewear market[7]

Financial Performance - Net revenue increased by $29.2 million, or 15.2%, to $221.7 million compared to the prior year period[6] - Net income improved by $9.9 million to $5.9 million, reflecting higher revenue and operational efficiency[11] - Adjusted EBITDA rose by $8.4 million year over year to $25.7 million, with an Adjusted EBITDA Margin increase of 2.6 points to 11.6%[11] - For the full year 2025, net revenue is projected to be between $871 million and $874 million, representing approximately 13% growth[11] - Adjusted EBITDA for 2025 is expected to be between $98 million and $101 million, with an Adjusted EBITDA Margin of 11.3% to 11.6%[11] - Gross profit for the nine months ended September 30, 2025, was $359,536,000, up from $323,708,000 in 2024, indicating a growth of 11.1%[28] - The company reported a net income of $5,874,000 for the three months ended September 30, 2025, compared to a net loss of $4,072,000 in the same period of 2024[28] - Adjusted EBITDA for the three months ended September 30, 2025, was $25,745,000, with an adjusted EBITDA margin of 11.6%, compared to 9.0% in 2024[32] Customer Metrics - Active Customers grew by 9.3% to 2.66 million on a trailing 12-month basis, with Average Revenue per Customer increasing by 4.8% to $320[6] Expenses and Margins - Gross margin was 54.1%, slightly down from 54.5% in the prior year, primarily due to tariffs and increased shipping costs[6] - Selling, general, and administrative expenses (SG&A) were $116.4 million, representing 52.5% of revenue, down from 57.9% in the prior year[6] - Selling, general, and administrative expenses for the three months ended September 30, 2025, were $116,375,000, compared to $111,480,000 in the same period of 2024[28] - Adjusted selling, general, and administrative expenses for the nine months ended September 30, 2025, were $322,990,000, an increase of 6.9% from $302,166,000 in the same period of 2024[40] Cash and Liquidity - Warby Parker ended Q3 2025 with $280.4 million in cash and cash equivalents[11] - Cash and cash equivalents at the end of the period were $280,360,000, an increase from $254,161,000 at the beginning of the period[30] - The company experienced a net cash provided by operating activities of $87,531,000 for the nine months ended September 30, 2025, compared to $78,832,000 in 2024[30] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $87,531,000, an increase of 10.8% from $78,832,000 in the same period of 2024[40] - Free cash flow for Q3 2025 was $(1,516,000), a decrease from $13,059,000 in Q3 2024[40] Inventory and Assets - Inventory as of September 30, 2025, was $45,592,000, down from $52,345,000 as of December 31, 2024[26] - Total assets as of September 30, 2025, were $706,921,000, up from $676,490,000 as of December 31, 2024[26] - Total liabilities increased slightly to $337,296,000 as of September 30, 2025, compared to $336,417,000 at the end of 2024[26] Investments and Other Expenses - The company invested $19,490,000 in property and equipment during Q3 2025, compared to $14,223,000 in Q3 2024[40] - Stock-based compensation expense for Q3 2025 was $7,029,000, down 34.5% from $10,680,000 in Q3 2024[40] - The company incurred $2,456,000 in inventory write-downs for the nine months ended September 30, 2025, related to the Home-Try On program[41] - Charitable donations included a non-cash expense of $2,821,000 for the nine months ended September 30, 2025, compared to $2,196,000 in the same period of 2024[40] Future Plans - The company plans to open 45 new stores in 2025, including five shop-in-shops at select Target locations[11]

Core Insights - Warby Parker reported a strong third quarter for 2025, with net revenue growth accelerating to 15.2% year over year, reaching $221.7 million [6][20][21] - The company experienced a 9.3% increase in active customers, totaling 2.66 million on a trailing 12-month basis, and average revenue per customer rose by 4.8% to $320 [6][20][21] - Net income improved significantly to $5.9 million, an increase of $9.9 million compared to the previous year [6][20][21] Financial Performance - Net revenue increased by $29.2 million, or 15.2%, compared to the prior year period, reaching $221.7 million [6][20] - Active customers grew by 9.3% to 2.66 million, while average revenue per customer increased by 4.8% to $320 [6][20] - Gross margin was reported at 54.1%, slightly down from 54.5% in the prior year, primarily due to tariffs, increased shipping costs, and sales growth of contact lenses [6][20] - Selling, general, and administrative expenses (SG&A) were $116.4 million, up $4.9 million from the prior year, but represented a lower percentage of revenue at 52.5% compared to 57.9% [6][20] Profitability Metrics - Adjusted EBITDA increased by $8.4 million year over year to $25.7 million, with an adjusted EBITDA margin of 11.6%, up 2.6 points from the previous year [6][20] - The company ended the quarter with $280.4 million in cash and cash equivalents, and year-to-date net cash provided by operating activities was $87.5 million [6][20] Strategic Initiatives - Warby Parker plans to innovate through AI, including the development of AI glasses, to enhance customer experience and drive productivity [2][3] - The company is on track to open 45 new stores in 2025, including five shop-in-shops at select Target locations [6][20]

Group 1 - The S&P 500 is reaching new all-time highs, prompting a shift in investment focus towards under-recognized small- and mid-cap stocks [1] - Small-cap stocks are considered less flashy compared to large-cap tech stocks that are currently popular due to AI narratives [1] - The analyst has extensive experience in covering technology companies and advising seed-round startups, providing insights into current industry trends [1]

Core Insights - Warby Parker is evolving from a discount direct-to-consumer (DTC) brand to operating physical eyeglass shops across the United States, indicating a shift in its business model and market positioning [1]. Company Overview - Warby Parker is no longer perceived solely as a discount brand, suggesting a potential change in consumer perception and brand strategy [1]. Industry Context - The expansion of Warby Parker into physical retail locations reflects broader trends in the eyewear industry, where DTC brands are increasingly establishing a physical presence to enhance customer experience and brand visibility [1].

Core Viewpoint - TimesSquare Capital Management's "U.S. Small Cap Growth Strategy" reported a gross return of 11.28% and a net return of 11.02% for Q2 2025, underperforming the Russell 2000 Growth Index which returned 11.97% [1] Group 1: Company Performance - Warby Parker Inc. (NYSE:WRBY) achieved a one-month return of 0.60% and an impressive 88.09% increase in value over the last 52 weeks, closing at $27.01 per share with a market capitalization of $3.294 billion on September 10, 2025 [2] - Warby Parker reported a 14% year-over-year revenue increase in Q2 2025, indicating strong financial performance [4] Group 2: Strategic Partnerships and Market Position - Warby Parker announced a partnership with Google to develop AI-powered glasses, which contributed to a 22% increase in its stock price during the quarter [3] - The company is positioned as a value-oriented retailer in the consumer sector, focusing on both brick-and-mortar and online sales channels [3] Group 3: Hedge Fund Interest - As of the end of Q2 2025, 34 hedge fund portfolios held shares of Warby Parker, a decrease from 38 in the previous quarter, indicating a decline in hedge fund interest [4]

Group 1 - The U.S. vision care market has shown consistent behavior from higher income customers, indicating a stable demand despite external challenges [1][2] - The company experienced challenges in April due to tariff announcements, which significantly impacted consumer sentiment [1][2] - From May onwards, the company has reported strong and steady growth, suggesting a recovery from the April downturn [1]

Financial Data and Key Metrics Changes - The company has experienced strong and steady growth since May, following challenges in April due to tariff announcements, with consistent repeat purchase behavior observed [3][4] - The company expects to deliver higher growth in the second half of 2025, with strong traffic in stores, apps, and website [5][6] - The company aims to expand EBITDA consistently by 100 to 200 basis points, targeting a long-term EBITDA margin of 20% [6][29] Business Line Data and Key Metrics Changes - The company operates around 300 stores and plans to open approximately 45 new stores this year, with a long-term goal of over 900 standalone stores in North America [10][11] - The densification strategy in suburban and urban markets is expected to drive growth, particularly in established markets like New York and Chicago [11][12] - The eye care business is still in early stages, with hundreds of optometrists employed and a focus on increasing awareness of eye exams offered in stores [18][20] Market Data and Key Metrics Changes - The competitive landscape remains stable since the company's launch in 2010, with no significant new entrants taking meaningful market share [8][9] - The company continues to outperform the market and expects gradual consolidation among independent optometry practices [9] Company Strategy and Development Direction - The company is focusing on creative marketing strategies to drive growth and expand its market presence [6][7] - The partnership with Target for shop-in-shop locations is yielding positive results, with plans for further expansion [13][14] - The company is investing in technology and AI, including a partnership with Google to develop smart glasses, which is seen as a transformative opportunity [32][35][49] Management's Comments on Operating Environment and Future Outlook - Management expresses confidence in the health of the consumer and the company's ability to navigate external challenges, including tariffs [4][5] - The company anticipates sustained demand trends and is optimistic about achieving a 17% growth momentum in the second half of 2025 [41][42] - There is a strong focus on increasing brand awareness and customer acquisition through marketing efforts [15][44] Other Important Information - The company has made strategic pricing adjustments in response to tariffs but has not seen significant pushback from customers [24][26] - The company is committed to providing exceptional value, maintaining competitive pricing for its products [25][27] Q&A Session Summary Question: Outlook for the U.S. Vision Care Market - Management noted consistent customer behavior and strong growth since May, despite challenges in April due to tariffs [3][4] Question: Expectations for the Second Half of 2025 - Management expects consistent growth and strong traffic across all platforms, feeling confident about the upcoming period [5][6] Question: Competitive Landscape - The competitive landscape has not materially changed, with expectations for gradual consolidation among independent practices [8][9] Question: Store Strategy and Expansion - The company plans to open around 45 new stores this year and sees significant opportunities for growth in existing markets [10][11] Question: Eye Exam Growth - Awareness is key for increasing eye exam growth, with efforts underway to inform customers about new store locations and services [19][20] Question: Insurance Partnerships - The company is expanding its insurance partnerships and sees significant growth potential in this area [23] Question: Pricing Actions and Elasticity - Management has not seen significant pushback from customers regarding recent pricing adjustments and remains committed to offering exceptional value [24][26] Question: Tariff Impact Mitigation - Management believes they have fully mitigated the impact of tariffs through strategic pricing and supply chain adjustments [28][29] Question: Smart Glasses Initiative - The partnership with Google aims to develop innovative smart glasses that integrate AI for enhanced user experience [32][35] Question: Core Growth Rate for Single Vision Glasses - The company continues to see strong growth in its glasses business, with expectations for continued expansion [39][40]