Warby Parker(WRBY)2024-11-07 14:02Financial Performance - For the three months ended September 30, 2024, the company generated net revenue of 169.8 million in the same period of 2023[106]. - The gross profit for the three months ended September 30, 2024, was 4.1 million for the three months ended September 30, 2024, compared to a net loss of 17.3 million, up from 580.7 million, a 14.3% increase from 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 22.6 million or 13.3% compared to 305 from 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 284[142]. Cost and Expenses - Cost of goods sold increased by 87.6 million, while gross profit rose by 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 112.5 million in the same period of 2023[124]. - Selling, general, and administrative expenses decreased by 5.5 million decrease in stock-based compensation[138]. - Cost of goods sold 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 216.9 million as of December 31, 2023[152]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was 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 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 2.1 million in 2023[166]. - The company experienced a net increase in cash and cash equivalents of 7.4 million in 2023[163]. Debt and Financial Obligations - The 2024 Credit Facility consists of a 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].