Warby Parker(US:WRBY)2024-05-09 14:51Financial Data and Key Metrics Changes - Q1 2024 net revenue reached $200 million, a 16.3% increase year-over-year, with adjusted gross margin at 56.9%, up from 55.2% in Q1 2023 [7][29][34] - Adjusted EBITDA for Q1 was $22.4 million, representing an 11.2% margin, compared to $17.7 million or 10.3% in the same period last year [40] Business Line Data and Key Metrics Changes - Glasses drove approximately 70% of revenue growth in Q1, with overall glasses sales growing over 13% year-over-year, compared to an average growth of 8% in 2023 [10][29] - Retail revenue increased by 24.4% year-over-year, while e-commerce revenue grew by 1.8% [29] - Contact lens sales grew approximately 40% year-over-year, accounting for over 9% of revenue, while eye exam revenue also increased over 40% year-over-year, making up about 5% of revenue [24][25] Market Data and Key Metrics Changes - The company added 41 net new stores over the last 12 months, ending Q1 with 245 stores, a 20% increase from 204 stores at the end of Q1 2023 [30] - Retail represented 69% of overall business in Q1, compared to 64% in Q1 2023 [32] Company Strategy and Development Direction - The company is focused on expanding its store footprint, enhancing its marketing efforts, and scaling its eye exam business to drive growth and profitability [8][14] - Plans to add 40 new stores in 2024, with a long-term goal of reaching 900 stores [15] - The company is also investing in product innovation and collaborations to attract a more fashion-oriented consumer [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum in the business, despite ongoing macroeconomic challenges, and highlighted the importance of marketing and customer acquisition [18][48] - The company raised its full-year guidance for both net revenue and adjusted EBITDA based on strong Q1 performance [9][42] Other Important Information - The company announced an expanded relationship with Versant Health, which will bring an additional 15 million lives in network with Warby Parker [26] - The company is leveraging a universal eligibility check tool to help customers locate their in-network insurance coverage [27] Q&A Session Summary Question: Active customer growth momentum and long-term targets - Management noted that active customer growth is expected to continue increasing, driven by disciplined marketing investments and strong customer lifetime value [47] Question: Trends in customer traffic and pricing - Management acknowledged that while traffic has not fully rebounded, they are focused on marketing and managing expenses to gain market share [48] Question: Fixed versus variable cost mix and margin expansion - Approximately 60% of costs are variable, with expectations for margin expansion driven by glasses growth and improved store productivity [49] Question: Drivers of glasses penetration and customer acquisition - Management highlighted strong execution in product design, store openings, and marketing as key drivers of glasses penetration [53] Question: Productivity trends and marketing investments - Productivity fluctuated during the quarter, with the eclipse glasses campaign driving significant traffic and sales [58][59] Question: Update on insurance channels and customer shopping behavior - Management reported positive trends in insurance utilization, with in-network customers tending to spend more [73] Question: E-commerce trends and future acceleration - E-commerce is showing modest growth, with improvements in direct glasses purchases and plans to enhance the digital shopping experience [74]