Revolve(US:RVLV)2025-05-06 20:30Financial Performance - Gross margin for Q1 2025 was 52.0%, slightly down from 52.3% in Q1 2024[90] - Adjusted EBITDA increased to $19,299,000 in Q1 2025 from $13,267,000 in Q1 2024, representing a growth of 45.5%[90] - Free cash flow rose to $42,804,000 in Q1 2025, compared to $36,656,000 in Q1 2024, an increase of 16.5%[90] - For the three months ended March 31, 2025, net sales increased by 9.7% to $296.7 million compared to $270.6 million in the same period in 2024[142] - Net income for the three months ended March 31, 2025, was $11.4 million, compared to $10.9 million in the same period in 2024[141] - For the three months ended March 31, 2025, the company reported income before income taxes of $15,581,000, an increase from $14,649,000 in the same period of 2024[150] Customer Metrics - Active customers reached 2,703,000 in Q1 2025, up from 2,551,000 in Q1 2024, marking a growth of 5.9%[90] - Total orders placed in Q1 2025 were 2,308,000, compared to 2,223,000 in Q1 2024, reflecting an increase of 3.8%[90] - Active customers increased during the period ended March 31, 2025, compared to the same period in 2024, driven by enhanced engagement and new customer acquisition[107] - Total orders placed increased in the three months ended March 31, 2025, compared to the same period in 2024, reflecting improved customer engagement[109] Sales and Revenue - The REVOLVE segment generated $254.4 million in net sales for the three months ended March 31, 2025, representing a 10.8% increase from $229.6 million in the same period of 2024[125] - Net sales in the REVOLVE segment rose by 10.8% to $254.4 million, while the FWRD segment saw a 3.3% increase to $42.4 million[143] - Net sales to customers in the United States accounted for 80.6% of total net sales, increasing by 9.2% to $239.2 million from $219.1 million[127] - Net sales to customers outside the United States increased by 11.7% to $57.5 million, representing 19.4% of total net sales[128] Cost and Expenses - Cost of sales increased by 10.3% to $142.4 million, representing 48.0% of net sales, up from 47.7% in the prior year[144] - Fulfillment expenses were relatively flat at $9.4 million, decreasing as a percentage of net sales to 3.2% from 3.5%[145] - Selling and distribution expenses increased by 3.1% to $50.0 million, accounting for 16.8% of net sales, down from 17.9%[146] - Marketing expenses rose by 2.5% to $42.4 million, representing 14.2% of net sales, down from 15.3%[148] - General and administrative expenses increased by 14.9% to $37.9 million, accounting for 12.8% of net sales, up from 12.2%[149] Tariffs and Manufacturing - Increased tariff rates on imported products, particularly from China, are expected to adversely impact gross margin in the near term[95] - The total tariff rate on goods imported from China reached 152.5%, which may increase costs and impact customer demand[113] - The company is diversifying manufacturing sources outside of China to mitigate the impact of heightened tariffs[114] - The merchandise mix may shift due to changes in customer demand and the impact of tariffs, potentially affecting gross margin[121] Cash Flow and Financing - Cash and cash equivalents as of March 31, 2025, were $300,831,000, up from $256,600,000 as of December 31, 2024[151] - Net cash provided by operating activities was $45,145,000 for the three months ended March 31, 2025, compared to $38,391,000 for the same period in 2024, reflecting an increase of 17.5%[158][160] - Net cash used in investing activities was $2,341,000 for the three months ended March 31, 2025, compared to $1,735,000 in 2024[162] - Net cash used in financing activities was $531,000 for the three months ended March 31, 2025, a significant decrease from $8,264,000 in the same period of 2024[164] - The company authorized a stock repurchase program of up to $100 million for its Class A common stock in August 2023, with no expiration date[157] - The line of credit provides up to $75 million in revolver borrowings, with no borrowings outstanding as of March 31, 2025[154] Operational Strategies - The company has expanded its international presence with limited investment, offering products on platforms like Tmall Global and Nykaa Fashion[88] - The logistics infrastructure supports free shipping and returns in the U.S., optimizing inventory allocation and reducing fulfillment costs[87] - The focus on emerging and owned brands minimizes assortment overlap with other retailers, enhancing marketing efficiency[83] - Investments in operations and infrastructure are expected to continue, focusing on inventory, fulfillment centers, and logistics to support growth[123] - The company continues to monitor inflation impacts and has implemented strategies to mitigate its effects, although these may adversely impact product demand[166] Challenges - The company faces challenges in customer acquisition and retention due to increased competition and changes in social media marketing dynamics[116] - Average order value decreased to $295 in Q1 2025 from $299 in Q1 2024[90] - Average order value decreased in the three months ended March 31, 2025, primarily due to a lower percentage of sales at full price[111]