FIGS(US:FIGS)2022-05-13 01:30Financial Data and Key Metrics Changes - Net revenues increased by 26% year-over-year to $110 million, with an adjusted EBITDA margin of 23% [8][10][33] - Active customer base grew by 31% year-over-year to nearly 2 million, with trailing 12-month net revenues per active customer increasing by $13 to $226 [10][33] - Average order value (AOV) rose by 16% year-over-year to $116 [10][34] - Gross margin decreased by 40 basis points year-over-year to 71.2% due to increased airfreight usage and higher freight rates [36] - Net income for Q1 was $9 million, or $0.05 diluted EPS, with adjusted net income at $10.5 million [40] Business Line Data and Key Metrics Changes - Lifestyle business grew by 81% year-over-year, now representing 18% of net revenues, up from 12% [10] - International business increased by 59%, accounting for 8% of net revenues, up from 6% [10][28] Market Data and Key Metrics Changes - Searches for the term "scrubs" grew by 3% year-over-year, while searches for "FIGS" increased by 44% [17] - The company is targeting select cities for marketing campaigns, focusing on areas with a high concentration of healthcare professionals [26] Company Strategy and Development Direction - The company aims to achieve at least $1 billion in annual net revenue by 2025, focusing on product innovation and deepening customer connections [17][18] - Plans to increase airfreight usage to mitigate supply chain disruptions, despite the impact on gross margins [14][48] - Continued expansion into international markets, with a soft launch in seven new EU countries [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged supply chain disruptions and macroeconomic factors affecting customer spending, but remains confident in the business model's resilience [15][30] - The company revised its full-year revenue outlook to approximately $510 million to $530 million, reflecting supply chain challenges [44] - Anticipated gross margin for the year is now between 67% to 68%, down from previous expectations of over 70% [48] Other Important Information - The company ended the quarter with cash and cash equivalents of $189.4 million, allowing for strategic capital deployment [42] - Inventory increased to $102.8 million due to higher in-transit inventory and extended lead times [43] Q&A Session Summary Question: Impact of COVID pull forward vs. macro environment on customer spending - Management indicated that supply chain issues are the primary concern, with some impact from inflation and consumer spending shifts [58] Question: Details on air freight costs and gross margin outlook - Management expects an additional 300 to 400 basis points impact on gross margin due to increased air freight spend [60] Question: Changes in pricing strategy amid macro pressures - Management stated that there is no immediate need to increase prices, focusing instead on maintaining advantageous gross margins [63] Question: Update on sourcing and inventory impacts from lockdowns - Management confirmed no shutdowns in manufacturing but acknowledged transit delays affecting inventory availability [66] Question: Changes in consumer spending patterns and revenue cadence - Management noted that while macroeconomic factors are affecting spending, the impact on their business model is less severe compared to others [70] Question: Status of delayed color launches and their impact on Q1 sales - Management confirmed that the delayed color launch occurred in Q2, but some launches have been moved to the back half of the year [82] Question: Customer demographics among new customers - Management reported no significant changes in demographics among new customers compared to previous cohorts [92] Question: Optimal weeks of supply planning for inventory - Management indicated that planning depends on product type, with increased weeks of supply for core styles to meet demand [93] Question: Marketing strategy amid inventory delays - Management is focused on strategic marketing to maintain customer engagement despite inventory challenges [94]