Warby Parker(US:WRBY)2023-02-28 18:19Financial Data and Key Metrics Changes - For the full year 2022, revenue increased to a record $598 million, up 10.6% compared to the previous year, with adjusted EBITDA margins at 4.5% and a second half-adjusted EBITDA margin of 6.9%, up 470 basis points from the first half [10][34] - In Q4 2022, net revenue was $146.5 million, a 10.2% increase year-over-year, exceeding guidance by $2 million despite a 41% reduction in marketing spend [11][33] - Adjusted EBITDA for Q4 was $8.6 million, with an adjusted EBITDA margin of 5.8%, marking the most profitable Q4 to date [12][52] Business Line Data and Key Metrics Changes - The company opened 10 new stores in Q4, reaching a total of 200 stores, with store productivity improving to 88% of pre-pandemic levels [13][14] - Active customers increased to 2.28 million, with the highest average revenue per customer at $263, up 6.9% year-over-year [14][34] - Progressive lenses accounted for 21.7% of total prescription glasses sold in Q4 2022, up from 20.1% in Q4 2021, indicating growth potential in this category [35][45] Market Data and Key Metrics Changes - E-commerce represented 37% of overall business in Q4, down from 41% in Q4 2021, with a 3-year CAGR of 18.6% [38] - Contact lens sales grew 84% year-over-year, increasing from 4% of total business in 2021 to 7% in 2022, indicating a significant growth opportunity [26] - Revenue from eye exams increased 87% year-over-year, highlighting the potential in the eye exam market [27] Company Strategy and Development Direction - The company plans to open 40 new stores in 2023, focusing on suburban markets, with a target of maintaining 35% 4-wall margins and paybacks within 20 months [22][23] - Expansion of the core glasses business will continue, with nearly 20 new collections planned, including higher price point offerings [24][77] - The company aims to enhance its holistic vision care services, including expanding contact lens and eye exam offerings, to drive customer acquisition and retention [25][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term prospects despite current economic challenges, emphasizing the importance of sustainable growth [8][21] - The company anticipates a cautious approach to growth in 2023, with revenue guidance of approximately 8% to 10% and adjusted EBITDA margin of around 7.9% [56][58] - Management noted the importance of adapting to changing consumer behavior and the need for flexibility in operations [6][9] Other Important Information - The company has a strong balance sheet with approximately $209 million in cash and an undrawn credit facility of $100 million [53] - The company launched a lens-recycling program in partnership with Eastman Chemical, recycling over 20,000 pounds of lenses [18] - The company maintains an industry-leading Net Promoter Score of 80, reflecting strong customer satisfaction [18] Q&A Session Summary Question: Thoughts on adjusted EBITDA balance for the year and store openings - Management expects adjusted EBITDA to be more profitable in the first half of 2023 compared to the second half, aligning with pre-pandemic trends [64][65] - The company plans to open 40 new stores, focusing on suburban locations while maintaining disciplined capital allocation [66][67] Question: Update on contacts and Progressive pricing - The company reported strong growth in contacts and Progressive categories, with contacts growing over 80% year-over-year [68][69] Question: Insights on marketing spend and customer engagement - Management highlighted efficiency gains in marketing spend, reallocating dollars to the most effective channels and benefiting from lower media rates [82]