Revolve(US:RVLV)2021-05-07 20:15Financial Performance - Gross margin increased to 54.0% in Q1 2021 from 48.6% in Q1 2020[106] - Adjusted EBITDA rose to $23,340,000 in Q1 2021 compared to $5,609,000 in Q1 2020[106] - Free cash flow improved to $32,473,000 in Q1 2021 from $7,530,000 in Q1 2020[106] - Total net sales for Q1 2021 were $178.9 million, up 22.5% from $146.1 million in Q1 2020, driven by a 9.4% increase in the number of customer orders[160] - Operating income rose to $21.2 million in Q1 2021, compared to $3.9 million in Q1 2020, reflecting improved operational efficiency[158] - Income before income taxes was $21.0 million for the three months ended March 31, 2021, compared to $4.0 million in 2020, with an effective tax rate of (6.1%)[168] Customer Metrics - Active customers decreased slightly to 1,477,000 in Q1 2021 from 1,528,000 in Q1 2020[106] - Total orders placed increased to 1,282,000 in Q1 2021, up from 1,172,000 in Q1 2020[106] - Average order value decreased to $256 in Q1 2021 from $259 in Q1 2020[106] - Active customers decreased during the period ended March 31, 2021, compared to the same period in 2020, due to reduced customer activity from the COVID-19 pandemic[124] - Total orders placed increased in the three months ended March 31, 2021, relative to the same period in 2020, due to increased demand following the easing of stay-at-home orders[126] - Average order value for the three months ended March 31, 2021, was essentially flat compared to the same period in 2020, as shifts in product mix were offset by a higher percentage of full price sales[129] Marketing and Expenses - Marketing expenses increased to $26.2 million in Q1 2021, up from $22.0 million in Q1 2020, as the company resumed investment in marketing initiatives[153] - General and administrative expenses were $19.9 million in Q1 2021, compared to $18.9 million in Q1 2020, with expectations for further increases to support growth[154] - Marketing expenses increased by $4.3 million, or 19.5%, to $26.2 million for the three months ended March 31, 2021, compared to $21.9 million in the same period in 2020[166] - General and administrative expenses rose by $1.0 million, or 5.3%, to $19.9 million for the three months ended March 31, 2021, from $18.9 million in 2020, with a decrease in percentage of net sales from 12.9% to 11.1%[167] Cash Flow and Liquidity - Cash and cash equivalents increased to $182.9 million as of March 31, 2021, from $146.0 million as of December 31, 2020[170] - Net cash provided by operating activities was $33.2 million for the three months ended March 31, 2021, compared to $8.1 million in the same period in 2020[177] - Net cash used in investing activities was $0.7 million for the three months ended March 31, 2021, compared to $0.6 million in 2020[181] - Net cash provided by financing activities was $4.3 million for the three months ended March 31, 2021, primarily from cash proceeds from the exercise of stock options[183] - The company has a line of credit providing up to $75.0 million in revolver borrowings, with no borrowings outstanding as of March 31, 2021[174] - Working capital increased to $199.4 million as of March 31, 2021, from $171.2 million as of December 31, 2020[170] - The company believes existing cash and cash equivalents will be sufficient to meet anticipated cash needs for at least the next 12 months, barring any unforeseen circumstances related to COVID-19[171] Market and Operational Insights - The company has focused on expanding its international presence, particularly in Europe, Australia, and Canada, while maintaining a core focus on the U.S. market[97] - The COVID-19 pandemic negatively impacted net sales starting in March 2020, but there was a recovery in demand in early 2021 due to easing restrictions and government stimulus[98] - The company has invested in technology and data analytics to optimize inventory management and enhance customer experience[94] - The contribution of owned brands to net sales is expected to remain lower than historical trends, adversely affecting overall gross margin[109] - Inventory management practices involve a data-driven approach to optimize merchandise assortment and fulfillment, but the company remains vulnerable to demand shifts[139] - The company has made capital investments in inventory, fulfillment centers, and logistics infrastructure to support growth and international expansion[141] Segment Performance - Financial results are influenced by performance across the two reporting segments, REVOLVE and FORWARD, as well as various geographic markets[142] - The REVOLVE segment accounted for 85.0% of net sales, generating $152.2 million in Q1 2021, a 22.2% increase from $124.5 million in Q1 2020[143] - The FORWARD segment represented 15.0% of net sales, with $26.7 million in Q1 2021, reflecting a 23.8% increase from $21.6 million in Q1 2020[144] - Net sales to international customers increased by 38.4%, reaching $35.6 million in Q1 2021, compared to $25.7 million in Q1 2020, contributing 19.9% of total net sales[145] - Cost of sales increased by 9.5% to $82.2 million in Q1 2021, but decreased as a percentage of net sales from 51.4% in Q1 2020 to 46.0% in Q1 2021[162] - Gross profit for Q1 2021 was $96.7 million, representing a gross margin of 54.0%, up from 48.6% in Q1 2020[158]