Financial Data and Key Metrics Changes - The company reported a 4% year-over-year increase in net sales, reaching $296 million, with Adjusted EBITDA rising 45% to $25 million, marking the highest ever for a third quarter [6][30] - Consolidated gross margin improved to 54.6%, an increase of 347 basis points year-over-year, significantly exceeding guidance [9][31] - Free cash flow more than tripled year-over-year, increasing by $43 million, or 265%, for the nine months ended September 30 [10][34] Business Line Data and Key Metrics Changes - Revolve segment net sales increased by 5%, while Forward segment net sales grew by 3% year-over-year [8][30] - Sales of beauty, men's, and home products saw a healthy double-digit percentage increase year-over-year [12] - The owned brand penetration of Revolve segment net sales increased year-over-year for the third consecutive quarter, contributing to higher gross margins [23][70] Market Data and Key Metrics Changes - Domestic net sales increased by 4%, while international net sales rose by 6% year-over-year [30] - The Middle East and Europe showed strong performance, with Mainland China net sales increasing over 50% year-over-year [12] - Active customers increased by 5% year-over-year, with total orders placed reaching 2.3 million, also a 5% increase [30] Company Strategy and Development Direction - The company is focusing on brand investments, expanding owned brands, and physical retail development as key growth drivers [18][26] - The competitive environment in luxury retail is viewed as an opportunity, with the company planning to capture market share amid challenges faced by competitors [20][21] - The company is leveraging AI technology to enhance operational efficiency and drive growth across various functions [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties, supported by a strong financial foundation and operational excellence [16][40] - The outlook for gross margin in Q4 2025 is expected to be between 53.1% and 53.6%, indicating a year-over-year increase [37] - Management remains optimistic about the potential for international growth and the impact of new owned brand launches [12][70] Other Important Information - The company has no debt and reported cash and cash equivalents of $315 million, a 25% year-over-year increase [34] - The tariff landscape remains fluid, but the company has made significant progress in mitigating tariff exposure [35][80] Q&A Session Summary Question: Can you size the benefit from the improved markdown algorithm? - Management noted that the markdown margin optimization was the largest driver of gross margin improvement, with positive impacts from promotional strategy shifts and an increase in full-price sales [42][43] Question: What are the trends in October compared to Q3? - October showed mid-single-digit growth, which is encouraging given tougher comparisons, and management is optimistic about the holiday season [46][47] Question: What is the outlook for average order value (AOV)? - AOV is expected to continue increasing slightly due to price increases, with a mix shift impacting overall results [50][51] Question: How is the company addressing higher return rates? - Higher return rates were attributed to mix shifts and higher average unit retail prices, with ongoing efforts to improve return rates in the future [73][74] Question: What is the contribution margin from international sales compared to the U.S.? - The contribution margin gap is closing, with ongoing optimization efforts in last-mile shipping and localized customer experiences [67] Question: What is the expected impact of tariffs going forward? - Management does not anticipate incremental headwinds from tariffs, with potential net benefits from mitigation efforts [79][80]

Financial Data and Key Metrics Changes - The company reported a revenue of $12 billion, operating in four countries: the U.S., Canada, UK, and Ireland [2] - The total addressable market (TAM) for home goods in these countries exceeds $500 billion, indicating significant growth potential [7] Business Line Data and Key Metrics Changes - The company has developed a proprietary logistics network of approximately 25 million square feet, which includes fulfillment centers and transportation terminals [4] - The logistics capabilities are tailored for heavier, bulkier items, which differentiates the company from general e-commerce players focused on lighter packages [12][13] Market Data and Key Metrics Changes - The home goods category is described as cyclical, with current market conditions being relatively flat after a decline [10] - The company believes it can gain market share even in a down market due to its unique model and execution [11] Company Strategy and Development Direction - The company aims to be the go-to destination for all home goods, leveraging its technology, supplier network, and logistics capabilities [5][7] - The strategy includes expanding its brand portfolio with specialty retail brands and a luxury platform, while also exploring brick-and-mortar stores [6] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the cyclical nature of the home goods market but remains optimistic about gaining market share [10][11] - The company is focused on maintaining operational efficiency while pursuing growth, targeting a 10% adjusted EBITDA margin in the future [47] Other Important Information - The company has closed its German operations to focus on more promising markets like Canada and the UK [44][45] - The company plans to open new physical retail locations in Atlanta and New York, building on the success of its Chicago store [42][40] Q&A Session Summary Question: How does the company view the current category and its market share? - The company sees the home goods category as cyclical but believes it can gain share in both down and up markets due to its execution and model [10][11] Question: What investments have been made in the logistics network? - The company has built an expansive logistics capability since 2015, focusing on the unique needs of heavier, bulkier items [12][13] Question: How does the company balance pricing and promotions? - Promotions are primarily funded by suppliers, and the company aims to optimize pricing to grow gross profit dollars while maintaining margins [19][20] Question: What is the strategy for supplier advertising? - Supplier advertising has grown from 1% to 1.5% of revenue, with expectations for continued growth as the company improves its advertising tools [21][22] Question: How does the company align its various brands? - The company ensures that its brands do not compete directly with each other, leveraging its logistics and technology to provide a unique shopping experience [26][28] Question: What are the learnings from the Chicago store? - The Chicago store has been successful, creating a positive halo effect in the region, and the company plans to apply these learnings to future store openings [40][41] Question: What is the current international strategy? - The company is focusing on Canada, the UK, and Ireland, with no plans to expand further into Europe after closing its German operations [44][45]