Revolve(US:RVLV)2025-08-05 20:30Financial Performance - Gross margin for Q2 2025 was 54.1%, slightly up from 54.0% in Q2 2024, while the six-month gross margin was 53.1% compared to 53.2% in the same period last year[97] - Adjusted EBITDA for Q2 2025 reached $22,887,000, an increase from $20,474,000 in Q2 2024, with a six-month total of $42,186,000 compared to $33,741,000 last year[97] - Net income for the three months ended June 30, 2025, was $10,011,000, down 34.5% from $15,377,000 in 2024[107] - Free cash flow for the three months ended June 30, 2025, was $9,607,000, compared to a negative $26,653,000 in 2024[112] - Net sales for the three months ended June 30, 2025, increased by $26,515 thousand, or 9.4%, to $308,971 thousand compared to $282,456 thousand in the same period in 2024[149] - For the six months ended June 30, 2025, net sales increased by $52,643 thousand, or 9.5%, to $605,680 thousand compared to $553,037 thousand in 2024[159] Customer Metrics - Active customers increased to 2,743,000 in Q2 2025, up from 2,577,000 in Q2 2024, indicating a growth in customer base[97] - Active customers increased during the period ended June 30, 2025, compared to the same period in 2024, driven by enhanced engagement and marketing efforts[114] Orders and Average Order Value - Total orders placed in Q2 2025 were 2,424,000, compared to 2,271,000 in Q2 2024, while total orders for the first half of 2025 were 4,732,000, up from 4,494,000 in the same period last year[97] - Average order value decreased slightly to $300 in Q2 2025 from $306 in Q2 2024, while the six-month average order value was $298 compared to $302 last year[97] - Average order value decreased in the three and six months ended June 30, 2025, primarily due to a shift in product mix[118] Sales Segments - REVOLVE segment accounted for 86.9% of net sales for Q2 2025, generating $268.4 million, a 9.3% increase from Q2 2024[134] - FWRD segment represented 13.1% of net sales for Q2 2025, with $40.6 million in sales, reflecting a 9.8% increase from Q2 2024[135] - Net sales in the United States contributed 78.2% of total net sales for Q2 2025, amounting to $241.6 million, a 7.4% increase from Q2 2024[136] - International sales accounted for 21.8% of net sales in Q2 2025, reaching $67.3 million, a 17.3% increase from Q2 2024[137] Cost and Expenses - The total tariff rate on goods imported from China reached 37.5%, impacting cost of sales and potentially customer demand[120] - The company expects cost of sales as a percentage of net sales to increase due to rising tariffs, particularly on products sourced from China[141] - Fulfillment expenses are anticipated to fluctuate as a percentage of net sales due to increased costs and expansion of the fulfillment network[142] - Marketing expenses are expected to rise in absolute dollars as the company scales, potentially increasing as a percentage of sales during certain periods[144] - General and administrative expenses are projected to increase in absolute terms to support business growth, with a long-term decline as a percentage of net sales[145] - Cost of sales for the three months ended June 30, 2025, rose by $12,059 thousand, or 9.3%, to $141,909 thousand, with a cost of sales percentage of net sales decreasing to 45.9% from 46.0%[151] - Selling and distribution expenses rose by $3,352 thousand, or 6.6%, to $53,794 thousand, accounting for 17.4% of net sales, a decrease from 17.9%[153] - Marketing expenses increased by $4,148 thousand, or 9.7%, to $47,109 thousand, maintaining a percentage of 15.3% of net sales[155] - General and administrative expenses increased by $4,832 thousand, or 14.4%, to $38,328 thousand, with the percentage of net sales rising to 12.4% from 11.9%[156] Strategic Initiatives - The company has successfully expanded internationally with limited investment, offering products on platforms like Tmall Global and Douyin in China[95] - The logistics infrastructure supports free shipping and returns in the U.S., optimized by proprietary algorithms to reduce costs and improve efficiency[94] - The focus on emerging and owned brands minimizes assortment overlap with other retailers, enhancing marketing efficiency and sales at full price[90] - The company utilizes a robust technology platform for data-driven merchandising, marketing, and inventory management, which aids in managing fashion risk[91] - Future growth is contingent on effectively managing customer retention and acquisition, as well as expanding product offerings and international markets[83] - The company is diversifying manufacturing sources outside of China and optimizing supply chain logistics to mitigate tariff impacts[121] - The overall economic environment, including tariffs and inflation, significantly affects consumer spending and company performance[119] - The company plans to increase marketing investments to enhance brand awareness and customer engagement, which may impact short-term operating income[125] Cash Flow and Capital Management - Cash and cash equivalents increased to $310.7 million as of June 30, 2025, up from $256.6 million at the end of 2024[169] - Operating cash flow for the six months ended June 30, 2025, was $57.8 million, significantly higher than $13.7 million for the same period in 2024[178] - Net cash used in investing activities was $7.0 million for the six months ended June 30, 2025, compared to $4.1 million in 2024[180] - The company authorized a stock repurchase program of up to $100 million for its Class A common stock in August 2023[175] - The line of credit provides up to $75.0 million in revolver borrowings, with no borrowings outstanding as of June 30, 2025[172] - Working capital increased to $387.4 million as of June 30, 2025, from $365.0 million at the end of 2024[169] - The company continues to monitor inflation impacts and may adjust pricing strategies to mitigate effects on demand[184]