Revolve(US:RVLV)2025-11-04 21:30Financial Performance - Gross margin for Q3 2025 was 54.6%, up from 51.2% in Q3 2024, while the nine-month gross margin increased to 53.6% from 52.5%[96] - Adjusted EBITDA for Q3 2025 reached $25,347,000, compared to $17,503,000 in Q3 2024, with a nine-month total of $67,533,000 versus $51,244,000[96] - Free cash flow for the nine months ended September 30, 2025, was $59,038,000, significantly higher than $16,174,000 for the same period in 2024, indicating a strong improvement in liquidity[111] - Net income for the three months ended September 30, 2025, was $21.2 million, compared to $10.8 million for the same period in 2024[146] - For the nine months ended September 30, 2025, net sales rose by $65.1 million, or 7.8%, to $901.3 million compared to $836.2 million in 2024[156] Customer Metrics - Active customers increased to 2,747,000 in Q3 2025, up from 2,628,000 in Q3 2024, with total orders placed rising to 2,300,000 from 2,200,000[96] - Active customers increased during the period ended September 30, 2025, compared to the same period in 2024, driven by enhanced engagement and new customer acquisition[113] - Total orders placed increased in the three and nine months ended September 30, 2025, compared to the same periods in 2024, reflecting successful sales and marketing efforts[115] Sales and Marketing - REVOLVE segment net sales increased by 4.6% to $254.6 million for the three months ended September 30, 2025, and by 8.2% to $777.5 million for the nine months ended September 30, 2025[131] - FWRD segment net sales increased by 3.2% to $41.0 million for the three months ended September 30, 2025, and by 5.3% to $123.8 million for the nine months ended September 30, 2025[132] - Net sales to customers in the United States increased by 3.9% to $231.4 million for the three months ended September 30, 2025, and by 6.8% to $712.3 million for the nine months ended September 30, 2025[133] - Net sales to customers outside of the United States increased by 6.1% to $64.2 million for the three months ended September 30, 2025, and by 11.6% to $189.0 million for the nine months ended September 30, 2025[134] - Total net sales for the three months ended September 30, 2025, were $295.6 million, compared to $283.1 million for the same period in 2024[146] Cost and Expenses - Operating expenses for the three months ended September 30, 2025, totaled $140.5 million, an increase from $130.6 million in the same period in 2024[146] - Marketing expenses increased to $40.4 million for the three months ended September 30, 2025, from $39.5 million in the same period in 2024[146] - General and administrative expenses for the three months ended September 30, 2025, rose by $4.6 million, or 13.7%, to $38.6 million, increasing as a percentage of net sales from 12.0% to 13.0%[154] Economic and Market Conditions - The company faced a total tariff rate of 37.5% on goods imported from China, which may adversely impact gross margins and customer demand if sustained[118] - The overall economic environment, including tariffs and inflation, significantly affects consumer behavior and spending patterns, which may impact future sales[117] - The company is monitoring inflation impacts and may adjust pricing strategies to mitigate effects, which could influence demand for products[181] Strategic Initiatives - The company has successfully expanded internationally with limited investment, offering products on platforms like Tmall Global and Nykaa Fashion[94] - The logistics infrastructure supports free shipping and returns in the U.S., optimized by proprietary algorithms to reduce costs and improve efficiency[93] - The company plans to continue investing in international markets while maintaining a focus on the core U.S. market[94] - The company emphasizes the importance of customer acquisition and retention, with a focus on cost-effective marketing strategies to drive growth[121] - The company is implementing strategies to mitigate the impact of heightened tariffs, including diversifying manufacturing sources and optimizing supply chains[120] Cash Flow and Financing - Cash and cash equivalents increased to $315.427 million as of September 30, 2025, from $256.600 million as of December 31, 2024, reflecting a growth of 23%[166] - Net cash provided by operating activities surged to $69.583 million for the nine months ended September 30, 2025, compared to $22.774 million in 2024, marking an increase of 206%[173] - The company has a line of credit providing up to $75 million in revolver borrowings, with no borrowings outstanding as of September 30, 2025[169] - A stock repurchase program of up to $100 million was authorized in August 2023, with repurchases based on market conditions[172] Taxation - The effective tax rate for the three months ended September 30, 2025, decreased to 25.2% from 25.6% in the same period in 2024[155] - The effective tax rate rose to 27.8% for the nine months ended September 30, 2025, up from 25.7% in 2024, primarily due to an increase in valuation allowance against deferred income tax assets[165]