Revolve(US:RVLV)2022-05-03 21:02Financial Performance - Gross margin for Q1 2022 was 54.5%, up from 54.0% in Q1 2021[90] - Adjusted EBITDA for Q1 2022 was $31,543,000, compared to $23,340,000 in Q1 2021, representing a year-over-year increase of 35.5%[90] - Free cash flow for Q1 2022 was $52,727,000, an increase of 62.3% from $32,473,000 in Q1 2021[90] - Net income for the three months ended March 31, 2022, was $22,568,000, compared to $22,252,000 for the same period in 2021, reflecting a growth of 1.4%[100] - Adjusted EBITDA for the three months ended March 31, 2022, was $31,543,000, up from $23,340,000 in 2021, representing an increase of 35.3%[100] - Free cash flow for the three months ended March 31, 2022, was $52,727,000, compared to $32,473,000 in 2021, indicating a growth of 62.2%[105] - Net sales for the three months ended March 31, 2022, were $283.5 million, a 58.5% increase from $178.9 million in the same period in 2021[141] - Income before income taxes for the three months ended March 31, 2022, was $28.97 million, up from $20.98 million in 2021, with an effective tax rate of 22.1% compared to (6.1%) in 2021[153] Customer Engagement - Active customers reached 2,041,000 in Q1 2022, a 38.3% increase from 1,477,000 in Q1 2021[90] - Active customers increased during the period ended March 31, 2022, due to effective engagement and acquisition strategies, alongside easing restrictions in key regions[107] - Total orders placed in Q1 2022 were 2,156,000, up 68.1% from 1,282,000 in Q1 2021[90] - Total orders placed increased in the three months ended March 31, 2022, compared to the same period in 2021, driven by enhanced customer engagement and marketing efforts[110] - The number of orders placed by customers increased by 68.2%, and the average order value rose by 12.5% compared to the same period in 2021[144] Sales and Marketing - The REVOLVE segment generated $237.7 million in net sales for the three months ended March 31, 2022, a 56.2% increase from $152.2 million in 2021[126] - The FWRD segment achieved $45.8 million in net sales for the three months ended March 31, 2022, representing a 71.1% increase from $26.7 million in 2021[127] - The company plans to continue investing in marketing initiatives to capture consumer demand as economies reopen, despite potential short-term impacts on operating income[118] - Marketing expenses increased by 72.5% to $45.3 million, compared to $26.2 million in the same period in 2021, with marketing expenses as a percentage of net sales at 16.0%[149] Cost and Expenses - Cost of sales increased to $129.1 million, a 57.0% rise from $82.2 million in the same period in 2021, with cost of sales as a percentage of net sales decreasing to 45.5% from 46.0%[146] - Fulfillment expenses rose to $7.3 million, a 66.9% increase from $4.4 million in the same period in 2021, with fulfillment expenses as a percentage of net sales increasing to 2.6%[147] - Selling and distribution expenses increased by 86.5% to $46.6 million, up from $25.0 million in the same period in 2021, with selling and distribution expenses as a percentage of net sales rising to 16.4%[148] - General and administrative expenses rose to $26.8 million, a 35.0% increase from $19.9 million in the same period in 2021, with general and administrative expenses as a percentage of net sales decreasing to 9.5%[150] - General and administrative expenses increased by $4.2 million due to higher salaries, benefits, and operating expenses, but decreased as a percentage of net sales due to significant sales growth[152] Cash Flow and Liquidity - Cash and cash equivalents increased to $270.61 million as of March 31, 2022, from $218.46 million as of December 31, 2021, with working capital rising to $302.66 million[154] - Operating cash flow for the three months ended March 31, 2022, was $53.80 million, an increase from $33.21 million in the same period in 2021, primarily due to positive changes in working capital[163] - The company has a line of credit of up to $75 million, with no borrowings outstanding as of March 31, 2022[157] - The company believes existing cash and cash equivalents will be sufficient to meet anticipated cash needs for at least the next 12 months, although liquidity assumptions may prove incorrect[155] Strategic Initiatives - The company has expanded its international presence, offering localized shopping experiences in multiple countries since 2018, including recent expansions to Saudi Arabia in 2022[83] - The product mix has shifted back towards higher-margin categories, particularly dresses, which saw significant growth in Q1 2022[94] - The company continues to invest in its owned brand platform, expecting an increase in the mix of owned brand sales in 2022[94] - The company aims to increase the percentage of net sales from owned brands to enhance gross margin over time[121] Market Conditions - The impact of the COVID-19 pandemic remains uncertain, with potential effects on demand and operational results[84] - The company expects fulfillment and selling expenses to fluctuate in the short term due to increased costs and return rates, but anticipates long-term efficiencies from scale and automation[134][135] - The effective tax rate increased due to a decrease in excess tax benefits related to stock options[153] - The company has not engaged in any foreign currency hedging transactions, and foreign currency transaction gains and losses have not been material[178] - There have been no material changes in contractual obligations compared to the previous fiscal year[169]