FIGS(US:FIGS)2024-05-09 20:13markdown [Executive Summary](index=1&type=section&id=Executive%20Summary) FIGS achieved strong Q1 2024 results, improved momentum, and a raised full-year net revenues outlook [Q1 2024 Performance Highlights](index=1&type=section&id=First%20Quarter%202024%20Financial%20Highlights) FIGS reported Q1 2024 net revenues at the upper end of guidance, with improved momentum and customer growth - Improved momentum in business, especially repeat frequency trends, observed towards the end of Q1 and into Q2, attributed to new product innovation and storytelling campaigns[3](index=3&type=chunk) Q1 2024 Financial Highlights (YoY Change) | Metric | Q1 2024 Value | YoY Change | | :-------------------------------- | :------------ | :--------- | | Net Revenues | $119.3 million | -0.8% | | Gross Margin | 68.9% | -2.4% | | Operating Expenses | $81.7 million | -0.8% | | Net Income | $1.4 million | -$0.5 million | | Diluted EPS | $0.01 | Unchanged | | Net Income Margin | 1.2% | -0.4% | | Adjusted EBITDA | $13.0 million | -$3.1 million | | Adjusted EBITDA Margin | 10.9% | -2.5% | - Active customers increased **8.7%** year over year to **2.6 million** as of March 31, 2024[6](index=6&type=chunk) - Average Order Value (AOV) increased **1.8%** year over year to **$116**, primarily driven by an increase in average unit retail and higher units per transaction[6](index=6&type=chunk) [FY 2024 Financial Outlook](index=2&type=section&id=Financial%20Outlook) FIGS raises full-year net revenues outlook, revises adjusted EBITDA margin, and plans strategic marketing investments - Company is strategically ramping investments, predominantly in marketing, to further fuel growth across the business[3](index=3&type=chunk) - Expects to sustain strong free cash flow, which will help to support long term sustainable profitable growth[3](index=3&type=chunk) Full-Year 2024 Financial Outlook | Metric | Outlook | | :-------------------- | :---------- | | Net Revenues versus 2023 | -2% to +2% | | Adjusted EBITDA Margin | 9.5% - 10.5% | [Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of FIGS as a healthcare apparel brand and outlines important forward-looking statement disclaimers [About FIGS](index=3&type=section&id=About%20FIGS) FIGS is a founder-led, direct-to-consumer healthcare apparel brand serving professionals globally with advanced, stylish products - FIGS is a founder-led, direct-to-consumer healthcare apparel and lifestyle brand dedicated to improving the lives of healthcare professionals[12](index=12&type=chunk) - Creates technically advanced apparel and products that feature an unmatched combination of comfort, durability, function, and style[12](index=12&type=chunk) - Serves healthcare professionals in numerous countries across North America, Europe, Asia Pacific, and the Middle East, and healthcare institutions through its TEAMS platform[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This section details forward-looking statements, emphasizing inherent risks and uncertainties that may cause actual results to differ materially - Forward-looking statements are based on current management expectations and involve substantial risks and uncertainties that could cause actual results to differ materially[14](index=14&type=chunk) - Key factors that could cause actual results to differ include the Company's ability to maintain growth and profitability, brand value, attract/retain customers, success of marketing efforts, product development, market competitiveness, international expansion risks, supply chain disruptions, inventory management, macroeconomic trends, reliance on third-party suppliers, data security, and intellectual property rights[15](index=15&type=chunk) [GAAP Financial Statements](index=5&type=section&id=GAAP%20Financial%20Statements) This section presents FIGS' consolidated balance sheets, statements of operations, and statements of cash flows under GAAP [Balance Sheets](index=5&type=section&id=BALANCE%20SHEETS) FIGS reported increased total assets and liabilities as of March 31, 2024, driven by higher cash and inventory Balance Sheet Highlights (in thousands) | Item | March 31, 2024 | December 31, 2023 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Cash and cash equivalents | $155,328 | $144,173 | +$11,155 | | Inventory, net | $130,466 | $119,040 | +$11,426 | | Total current assets | $405,578 | $385,659 | +$19,919 | | Total assets | $510,938 | $473,209 | +$37,729 | | Total current liabilities | $71,825 | $57,292 | +$14,533 | | Total liabilities | $121,063 | $96,359 | +$24,704 | | Total stockholders' equity | $389,875 | $376,850 | +$13,025 | [Statements of Operations](index=6&type=section&id=STATEMENTS%20OF%20OPERATIONS) Q1 2024 saw a slight decrease in net revenues and gross profit, leading to reduced net income due to product mix shift Statements of Operations Highlights (Three months ended March 31, in thousands) | Item | 2024 | 2023 | YoY Change | | :-------------------------------- | :----- | :----- | :--------- | | Net revenues | $119,293 | $120,232 | -$939 | | Cost of goods sold | $37,156 | $34,556 | +$2,600 | | Gross profit | $82,137 | $85,676 | -$3,539 | | Total operating expenses | $81,694 | $82,379 | -$685 | | Net income from operations | $443 | $3,297 | -$2,854 | | Net income | $1,435 | $1,909 | -$474 | | Diluted earnings per share | $0.01 | $0.01 | Unchanged | - Gross margin decreased by **2.4%** year over year, primarily related to product mix shift[6](index=6&type=chunk) - Operating expenses as a percentage of net revenues remained consistent with the prior year period at **68.5%**, due to lower selling expenses (including storage costs) offset by higher general and administrative expenses (primarily investments in people)[6](index=6&type=chunk) [Statements of Cash Flows](index=7&type=section&id=STATEMENTS%20OF%20CASH%20FLOWS) FIGS achieved positive net cash from operating activities in Q1 2024, a significant improvement driven by favorable asset and liability changes Statements of Cash Flows Highlights (Three months ended March 31, in thousands) | Item | 2024 | 2023 | YoY Change | | :------------------------------------------ | :----- | :----- | :--------- | | Net cash (used in) provided by operating activities | $11,619 | $(2,881) | +$14,500 | | Net cash used in investing activities | $(474) | $(772) | +$298 | | Net cash (used in) provided by financing activities | $10 | $(245) | +$255 | | Net change in cash and cash equivalents | $11,155 | $(3,898) | +$15,053 | | Cash and cash equivalents, end of period | $155,328 | $155,877 | -$549 | [Non-GAAP Measures and Key Operating Metrics](index=2&type=section&id=Non-GAAP%20Measures%20and%20Key%20Operating%20Metrics) This section defines and reconciles non-GAAP financial measures and presents key operating metrics for performance evaluation [Non-GAAP Financial Measures Definitions](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Key%20Operating%20Metrics) This section defines FIGS' non-GAAP financial measures, including adjusted net income, EBITDA, and free cash flow, and their calculation - Non-GAAP measures provide useful supplemental information for evaluating earnings generation, consistency with past financial performance, and comparability with peer companies[9](index=9&type=chunk) - Net income, as adjusted, excludes transaction costs, non-ordinary course disputes, impairment of investments, stock-based compensation, ambassador grants, and CFO retirement expense, along with their income tax impacts[9](index=9&type=chunk)[10](index=10&type=chunk) - Adjusted EBITDA excludes other income/loss, gain/loss on asset disposal, income taxes, depreciation/amortization, stock-based compensation, transaction costs, and expenses related to non-ordinary course disputes[10](index=10&type=chunk) - Free cash flow is calculated as net cash (used in) provided by operating activities reduced by capital expenditures (purchases of property and equipment and capitalized software development costs)[10](index=10&type=chunk) [Reconciliations of GAAP to Non-GAAP Measures](index=8&type=section&id=RECONCILIATIONS%20OF%20GAAP%20TO%20NON-GAAP%20MEASURES) This section provides detailed reconciliations of GAAP to non-GAAP measures, including net income, adjusted EBITDA, and free cash flow [Net Income and Diluted EPS Reconciliation](index=8&type=section&id=Net%20income%20reconciliation) Q1 2024 GAAP and adjusted net income were identical due to the absence of non-ordinary course dispute expenses Net Income and Diluted EPS Reconciliation (Three months ended March 31, in thousands) | Item | 2024 | 2023 | | :---------------------------------------------------- | :----- | :----- | | Net income | $1,435 | $1,909 | | Add (deduct): Expenses related to non-ordinary course disputes | — | $1,256 | | Income tax impacts of items above | — | $(707) | | Net income, as adjusted | $1,435 | $2,458 | | Diluted EPS | $0.01 | $0.01 | | Diluted EPS, as adjusted | $0.01 | $0.01 | [Adjusted EBITDA and Margin Reconciliation](index=8&type=section&id=Adjusted%20EBITDA%20reconciliation) Q1 2024 adjusted EBITDA decreased to **$13.0 million** from **$16.1 million**, with margin declining from **13.4%** to **10.9%** Adjusted EBITDA and Margin Reconciliation (Three months ended March 31, in thousands) | Item | 2024 | 2023 | | :------------------------------------ | :----- | :----- | | Net income | $1,435 | $1,909 | | Add (deduct): Other income, net | $(2,837) | $(1,071) | | Provision for income taxes | $1,845 | $2,459 | | Depreciation and amortization expense | $850 | $659 | | Stock-based compensation and related expense | $11,697 | $10,865 | | Expenses related to non-ordinary course disputes | — | $1,256 | | Adjusted EBITDA | $12,990 | $16,077 | | Net revenues | $119,293 | $120,232 | | Net income margin | 1.2% | 1.6% | | Adjusted EBITDA margin | 10.9% | 13.4% | [Free Cash Flow Reconciliation](index=9&type=section&id=Free%20cash%20flow%20reconciliation) FIGS achieved a positive free cash flow of **$11.1 million** in Q1 2024, a significant improvement from a negative **$3.7 million** in Q1 2023 Free Cash Flow Reconciliation (Three months ended March 31, in thousands) | Item | 2024 | 2023 | | :------------------------------------------ | :----- | :----- | | Net cash (used in) provided by operating activities | $11,619 | $(2,881) | | Less: capital expenditures | $(496) | $(772) | | Free cash flow | $11,123 | $(3,653) | [Key Operating Metrics](index=10&type=section&id=KEY%20OPERATING%20METRICS) This section presents key operating metrics such as active customers, net revenues per active customer, and average order value - Active customers are defined as unique customer accounts that have made at least one purchase in the preceding 12-month period[11](index=11&type=chunk) - Net revenues per active customer is the sum of total net revenues in the preceding 12-month period divided by the current period active customers[11](index=11&type=chunk) - Average order value is the sum of the total net revenues in a given period divided by the total orders placed in that period[11](index=11&type=chunk) Key Operating Metrics (As of/Three months ended March 31) | Metric | 2024 | 2023 | YoY Change | | :-------------------------- | :----- | :----- | :--------- | | Active customers (in thousands) | 2,597 | 2,390 | +8.7% | | Net revenues per active customer | $210 | $216 | -2.8% | | Average order value | $116 | $114 | +1.8% | [Additional Information](index=2&type=section&id=Additional%20Information) This section provides details for the conference call discussing Q1 2024 results and contact information [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) This section provides access details for the Q1 2024 financial results conference call and webcast - Conference call and webcast held on May 9, 2024, at **2:00 p.m. PT / 5:00 p.m. ET**[8](index=8&type=chunk) - Dial-in for participation: **1-833-470-1428** (US) or **1-404-975-4839** (International), Conference ID **292339**[8](index=8&type=chunk) - Webcast accessible at ir.wearfigs.com, with a recording available until **11:59 p.m. ET on May 16, 2024**[8](index=8&type=chunk) [Contacts](index=11&type=section&id=Contacts) This section lists contact information for investor relations and media inquiries for FIGS, Inc - Investors contact: Jean Fontana at **IR@wearfigs.com**[28](index=28&type=chunk) - Media contact: Todd Maron at **press@wearfigs.com**[28](index=28&type=chunk)