Revolve(RVLV) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Co-Founder and Co-CEO Commentary Revolve Group's Co-CEOs highlight strong Q2 2025 performance with year-over-year growth in net sales and operating income, record adjusted EBITDA margin, and robust operating cash flow, while investing in long-term growth initiatives - The company achieved 9% year-over-year growth in net sales and 10% in operating income for Q2 2025, with adjusted EBITDA margin reaching a three-year high and operating cash flow a four-year high for the period[2] - The company sustained profitable growth and market share gains while investing in long-term drivers such as AI enhancements, new private label development, retail exploration, and category expansion[2] Second Quarter 2025 Financial Summary Revolve Group reported Q2 2025 net sales of $309 million (up 9%), gross profit of $167.1 million (up 9%), and adjusted EBITDA of $22.9 million (up 12%), despite a 35% net income decrease to $10 million, with operating cash flow significantly improving to $12.6 million Key Financial Summary | Metric | Q2 2025 (USD Thousands) | Q2 2024 (USD Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $308,971 | $282,456 | 9% | | Gross Profit | $167,062 | $152,606 | 9% | | Gross Margin | 54.1% | 54.0% | - | | Net Income | $10,011 | $15,377 | (35%) | | Adjusted EBITDA | $22,887 | $20,474 | 12% | | Net Cash Provided by Operating Activities | $12,620 | $(24,669) | NM | | Free Cash Flow | $9,607 | $(26,653) | NM | Operational Metrics As of June 30, 2025, Revolve Group's active customers (last 12 months) increased by 6% to 2.743 million, total orders grew 7% to 2.424 million, while average order value slightly decreased by 2% to $300 Key Operational Metrics | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Active Customers (Last 12 Months) | 2,743 | 2,577 | 6% | | Total Orders | 2,424 | 2,271 | 7% | | Average Order Value | $300 | $306 | (2%) | Detailed Second Quarter 2025 Results Additional Second Quarter 2025 Metrics and Results Commentary In Q2 2025, net sales and gross profit both increased by 9% year-over-year, with gross margin slightly up to 54.1% due to higher private label sales, while fulfillment and sales & distribution costs as a percentage of net sales decreased, indicating improved efficiency; however, net income and diluted EPS declined primarily due to other income shifting to other expenses (including foreign exchange losses and subsidiary disposal costs) and a higher effective tax rate, with both REVOLVE and FWRD segments showing net sales growth and international net sales growing faster than domestic - Gross margin was 54.1%, an increase of 4 basis points year-over-year, primarily reflecting a higher mix of private label net sales, partially offset by a lower mix of full-price sales[7] - Net income was $10 million, down from $15.4 million in Q2 2024, mainly due to a significant year-over-year decrease in other income and a higher effective tax rate[7] Detailed Q2 2025 Performance Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $309.0 Million | $282.5 Million | 9% | | Gross Profit | $167.1 Million | $152.6 Million | 9% | | Gross Margin | 54.1% | 54.0% | +0.1% | | Fulfillment Costs (% Net Sales) | 3.2% | 3.3% | -0.1% | | Sales & Distribution Costs (% Net Sales) | 17.4% | 17.9% | -0.5% | | Operating Income | $18.0 Million | $16.4 Million | 10% | | Other Expense (Income), Net | $2.9 Million (Expense) | $(4.3 Million) (Income) | -$7.2 Million (Shift to Expense) | | Effective Tax Rate | 33.7% | 25.7% | +8.0% | | Diluted EPS | $0.14 | $0.21 | (33%) | | REVOLVE Segment Net Sales | $268.4 Million | $245.5 Million | 9% | | FWRD Segment Net Sales | $40.6 Million | $36.9 Million | 10% | | Domestic Net Sales | $241.6 Million | $225.1 Million | 7% | | International Net Sales | $67.3 Million | $57.4 Million | 17% | Cash Flow and Balance Sheet In Q2 2025, net cash provided by operating activities was $12.6 million, with a six-month cumulative total of $57.8 million, representing a significant 321% year-over-year increase; free cash flow also improved substantially to $9.6 million for the quarter and $52.4 million for six months, while cash and cash equivalents increased 27% year-over-year to $310.7 million as of June 30, 2025, with the company remaining debt-free, and inventory decreased 6% to $221 million Cash Flow Summary | Metric | Q2 2025 (USD Thousands) | Q2 2024 (USD Thousands) | YoY Change (Q2) | Six Months 2025 (USD Thousands) | Six Months 2024 (USD Thousands) | YoY Change (6M) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $12,620 | $(24,669) | NM | $57,765 | $13,722 | 321% | | Free Cash Flow | $9,607 | $(26,653) | NM | $52,411 | $10,003 | 424% | - As of June 30, 2025, cash and cash equivalents totaled $310.7 million, a 27% increase from $244.7 million as of June 30, 2024, with the company's balance sheet remaining debt-free[14] - As of June 30, 2025, inventory was $221.0 million, a 6% decrease year-over-year[14] Stock Repurchases Revolve Group repurchased $1.7 million worth of Class A common stock, totaling 92,583 shares at an average cost of $18.78 per share, during Q2 2025, with $55.9 million remaining available under its $100 million stock repurchase program as of June 30, 2025 - In Q2 2025, the company repurchased $1.7 million of Class A common stock, totaling 92,583 shares at an average cost of $18.78 per share[8] - As of June 30, 2025, $55.9 million remained available under the company's $100 million stock repurchase program[8] Business Outlook & Recent Performance Results Since the End of the Second Quarter of 2025 Net sales for July 2025 increased by approximately 7% year-over-year, indicating continued business growth post-Q2 - Net sales for July 2025 increased by approximately 7% year-over-year[9] 2025 Business Outlook Revolve Group provides updated full-year and Q3 2025 guidance, considering current macroeconomic conditions, cost pressures, and potential headwinds to consumer spending, including tariffs, inflation, supply chain disruptions, and foreign exchange fluctuations, with the updated full-year 2025 gross margin outlook raised to 52.1% to 52.6% from the previous 50.0% to 52.0% - The outlook considers current macroeconomic conditions, cost pressures, and potential headwinds to consumer spending, including tariffs, inflationary pressures, supply chain disruptions, and foreign exchange fluctuations[11] 2025 Business Outlook Metrics | Metric | Updated FY 2025 Outlook | Prior FY 2025 Outlook | Q3 2025 Outlook | | :--- | :--- | :--- | :--- | | Gross Margin | 52.1% to 52.6% | 50.0% to 52.0% | 51.2% to 51.7% | | Fulfillment Expenses | 3.1% to 3.2% of Net Sales | 3.0% to 3.2% of Net Sales | 3.2% of Net Sales | | Sales & Distribution Expenses | 17.2% to 17.5% of Net Sales | 17.2% to 17.5% of Net Sales | 17.5% of Net Sales | | Marketing Expenses | 14.8% to 15.0% of Net Sales | 14.9% to 15.1% of Net Sales | 14.5% of Net Sales | | General & Administrative Expenses | $152 Million to $154 Million | $154 Million to $157 Million | $38.5 Million | | Effective Tax Rate | 28% to 29% | 27% to 28% | - | Corporate Information & Disclosures Conference Call Information Revolve Group management will host a conference call on August 5, 2025, at 4:30 PM ET/1:30 PM PT to discuss these results, with details including dial-in numbers, conference ID, and audio webcast/replay information available on the investor relations website - Revolve Group management will host a conference call on August 5, 2025, at 4:30 PM ET/1:30 PM PT to discuss these results[13] - The conference call will be audio webcast live and available for replay on the investor relations website investors.revolve.com[13][15] Forward-Looking Statements This press release contains forward-looking statements under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, concerning the company's growth prospects, market share expansion, business initiatives, and outlook for Q3 and full-year 2025, which are based on current expectations but involve risks and uncertainties that could cause actual results to differ materially, including economic conditions, tariffs, supply chain challenges, inflationary pressures, and geopolitical tensions, with no obligation for the company to update any forward-looking statements - All statements in this press release other than statements of historical or current fact are forward-looking statements, including but not limited to those regarding growth prospects, market share expansion, business initiatives, and the outlook for Q3 and full-year 2025[16] - Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations, including economic conditions, the impact of tariffs, supply chain challenges, inflationary pressures, war and conflict, and other risks disclosed in SEC filings[16] Use of Non-GAAP Financial Measures and Other Operating Metrics The company uses non-GAAP financial measures such as Adjusted EBITDA and Free Cash Flow in its press release and accompanying tables to supplement consolidated financial statements prepared in accordance with GAAP; management believes these non-GAAP measures provide meaningful supplemental information about the company's performance and liquidity by excluding certain expenses that may not be indicative of core operating performance, but they should not be considered a substitute for GAAP financial information, and the company provides reconciliations of these non-GAAP measures to the most directly comparable GAAP measures - The company refers to non-GAAP financial measures such as Adjusted EBITDA and Free Cash Flow in the press release[17] - The company uses these non-GAAP financial measures to evaluate operating performance, plan future operations, and make strategic decisions regarding capital allocation, providing meaningful supplemental information by excluding certain expenses that may not be indicative of core operating performance[19] - Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included at the end of this press release[20] Definitions of Non-GAAP Financial Measures and Other Operating Metrics This section defines Revolve Group's non-GAAP financial and operating metrics, where Adjusted EBITDA is net income adjusted for other (income) expense, taxes, depreciation, amortization, stock-based compensation, specific transaction costs, and non-recurring items, and Free Cash Flow is net cash provided by operating activities less purchases of property and equipment and capitalized software, while operational metrics like active customers, total orders, and average order value are defined as key indicators of company growth, business velocity, and product appeal - Adjusted EBITDA is a non-GAAP financial measure calculated as net income adjusted for other (income) expense, taxes, depreciation and amortization, stock-based compensation expense, certain transaction costs, and non-recurring items[22] - Free Cash Flow is a non-GAAP financial measure calculated as net cash provided by operating activities less purchases of property and equipment and capitalized software[23] - Active customers are defined as unique customer accounts that have made at least one purchase in the past 12 months; total orders are the total number of orders placed by customers in a given period; and average order value is total website sales divided by total orders in a given period[24][25][26] About Revolve Group, Inc. Revolve Group, Inc. (NYSE: RVLV) is a next-generation fashion retailer for Millennial and Gen Z consumers, offering a curated assortment of apparel, footwear, accessories, beauty, and home products through its two complementary segments, REVOLVE and FWRD, leveraging its dynamic platform to connect millions of consumers, thousands of global fashion influencers, and over 1,000 emerging, established, and owned brands - Revolve Group, Inc. is a next-generation fashion retailer for Millennial and Gen Z consumers[27] - The company sells merchandise through two complementary segments, REVOLVE and FWRD, with REVOLVE offering premium apparel, footwear, accessories, and beauty products from emerging, established, and owned brands, and FWRD offering a curated assortment of luxury brands[28][29] Contacts This section provides Revolve Group's investor relations and media contact information, including names, phone numbers, and email addresses - Investor Contact: Erik Randerson, CFA, Phone: 562.677.9513, Email: IR@revolve.com[30] - Media Contact: Jennifer Walker, Email: revolve@walkerdrawas.com[30] Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF INCOME The condensed consolidated statements of income present Revolve Group's financial performance for the three and six months ended June 30, 2025, and 2024, showing Q2 2025 net sales of $309 million and gross profit of $167.1 million, but net income decreased to $10 million and diluted EPS to $0.14, primarily due to increased other expenses and a higher effective tax rate Condensed Consolidated Statements of Income | Metric (USD Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $308,971 | $282,456 | $605,680 | $553,037 | | Cost of Goods Sold | $141,909 | $129,850 | $284,332 | $258,929 | | Gross Profit | $167,062 | $152,606 | $321,348 | $294,108 | | Total Operating Expenses | $149,059 | $136,171 | $288,657 | $268,345 | | Operating Income | $18,003 | $16,435 | $32,691 | $25,763 | | Other Expense (Income), Net | $2,913 | $(4,271) | $2,020 | $(9,592) | | Net Income | $10,011 | $15,377 | $21,417 | $26,250 | | Diluted Earnings Per Share | $0.14 | $0.21 | $0.30 | $0.37 | CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2025, Revolve Group's condensed consolidated balance sheets show total assets of $722.9 million, an increase from $665.5 million as of December 31, 2024, with cash and cash equivalents rising to $310.7 million and inventory slightly decreasing to $221 million, while total liabilities increased to $254.3 million, mainly due to higher accounts payable and return reserves, and total stockholders' equity grew to $468.6 million Condensed Consolidated Balance Sheets | Metric (USD Thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $722,922 | $665,547 | | Cash and Cash Equivalents | $310,716 | $256,600 | | Inventory | $221,011 | $229,244 | | Total Current Assets | $614,179 | $561,088 | | Total Liabilities | $254,335 | $227,762 | | Total Stockholders' Equity | $468,587 | $437,785 | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $57.8 million from $13.7 million in the prior year, driven by working capital changes, while net cash used in investing activities rose to $7 million, and net cash used in financing activities decreased to $2.1 million, resulting in a net increase in cash and cash equivalents of $54.1 million and an ending balance of $310.7 million Condensed Consolidated Statements of Cash Flows | Metric (USD Thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Income | $21,417 | $26,250 | | Net Cash Provided by Operating Activities | $57,765 | $13,722 | | Net Cash Used in Investing Activities | $(7,011) | $(4,146) | | Net Cash Used in Financing Activities | $(2,098) | $(10,050) | | Net Increase in Cash and Cash Equivalents | $54,116 | $(712) | | Cash and Cash Equivalents at End of Period | $310,716 | $244,737 | SEGMENT INFORMATION In Q2 2025, both REVOLVE and FWRD segments reported net sales growth, with REVOLVE segment net sales increasing 9% to $268.4 million and FWRD segment net sales growing 10% to $40.6 million, leading to corresponding gross profit increases; geographically, domestic net sales grew 7% to $241.6 million, while international net sales increased 17% to $67.3 million Segment Net Sales and Gross Profit | Segment (USD Thousands) | Q2 2025 Net Sales | Q2 2024 Net Sales | Q2 2025 Gross Profit | Q2 2024 Gross Profit | | :--- | :--- | :--- | :--- | :--- | | REVOLVE | $268,421 | $245,535 | $149,940 | $137,895 | | FWRD | $40,550 | $36,921 | $17,122 | $14,711 | | Total | $308,971 | $282,456 | $167,062 | $152,606 | Geographical Net Sales | Geographical Region (USD Thousands) | Q2 2025 Net Sales | Q2 2024 Net Sales | Six Months 2025 Net Sales | Six Months 2024 Net Sales | | :--- | :--- | :--- | :--- | :--- | | United States | $241,623 | $225,057 | $480,866 | $444,190 | | Rest of World | $67,348 | $57,399 | $124,814 | $108,847 | | Total | $308,971 | $282,456 | $605,680 | $553,037 | KEY OPERATING AND FINANCIAL METRICS This section summarizes Revolve Group's key operating and financial metrics for the three and six months ended June 30, 2025, and 2024, including gross margin, adjusted EBITDA, free cash flow, active customers, total orders, and average order value, demonstrating strong growth in adjusted EBITDA and free cash flow, alongside increases in active customers and total orders Key Operating and Financial Metrics | Metric (Thousands, except AOV and Percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross Margin | 54.1% | 54.0% | 53.1% | 53.2% | | Adjusted EBITDA | $22,887 | $20,474 | $42,186 | $33,741 | | Free Cash Flow | $9,607 | $(26,653) | $52,411 | $10,003 | | Active Customers | 2,743 | 2,577 | 2,743 | 2,577 | | Total Orders | 2,424 | 2,271 | 4,732 | 4,494 | | Average Order Value | $300 | $306 | $298 | $302 | RECONCILIATION OF NON-GAAP FINANCIAL MEASURES This section provides detailed reconciliations of non-GAAP Adjusted EBITDA to net income and non-GAAP Free Cash Flow to net cash provided by operating activities for the three and six months ended June 30, 2025, and 2024, listing specific adjustments such as other expense, taxes, depreciation, stock-based compensation, transaction costs, and non-recurring items for Adjusted EBITDA, and purchases of property and equipment and capitalized software for Free Cash Flow Reconciliation of Adjusted EBITDA | Adjusted EBITDA Reconciliation (USD Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $10,011 | $15,377 | $21,417 | $26,250 | | Other Expense (Income), Net | $2,913 | $(4,271) | $2,020 | $(9,592) | | Provision for Income Taxes | $5,079 | $5,329 | $9,254 | $9,105 | | Depreciation and Amortization | $1,370 | $1,175 | $2,388 | $2,518 | | Stock-Based Compensation Expense | $2,304 | $2,094 | $5,057 | $4,653 | | Transaction Costs | $60 | $325 | $900 | $325 | | Non-Recurring Items | $1,150 | $445 | $1,150 | $482 | | Adjusted EBITDA | $22,887 | $20,474 | $42,186 | $33,741 | Reconciliation of Free Cash Flow | Free Cash Flow Reconciliation (USD Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $12,620 | $(24,669) | $57,765 | $13,722 | | Purchases of Property and Equipment | $(2,207) | $(1,047) | $(3,986) | $(2,782) | | Purchases of Capitalized Software | $(806) | $(937) | $(1,368) | $(937) | | Free Cash Flow | $9,607 | $(26,653) | $52,411 | $10,003 |