Workflow
Warby Parker(WRBY) - 2024 Q4 - Earnings Call Transcript
WRBYWarby Parker(WRBY)2025-02-27 21:45
Filings
Slide

Financial Data and Key Metrics Changes - In Q4 2024, revenue reached 190.6million,up17.8190.6 million, up 17.8% year-over-year, with retail revenue increasing 23.9% and e-commerce revenue increasing 5.3% [49] - For the full year 2024, revenue was 771.3 million, up 15.2% year-over-year, with retail revenue increasing 21.4% and e-commerce increasing 3% [49] - Adjusted EBITDA for Q4 was 13.8million,representingamarginof7.313.8 million, representing a margin of 7.3%, compared to 9.4 million or 5.8% in the prior year [65] - Full year adjusted EBITDA was 73.1million,withamarginof9.573.1 million, with a margin of 9.5%, up from 52.4 million or 7.8% in 2023 [65] Business Line Data and Key Metrics Changes - Glasses revenue grew approximately 15% year-over-year in Q4 2024, up from 7% in Q4 2023, and 12% for the full year, up from 8% in 2023 [51] - Contacts and exams saw significant growth, with contacts increasing 30% and exams increasing 45% year-over-year in Q4 [51] - The insurance business expanded to cover over 30 million lives, enhancing customer acquisition and driving higher value purchases [21][22] Market Data and Key Metrics Changes - The U.S. optical market is estimated at 68billion,withasignificantportionofcustomersunderservedduetostructuralbarriers[12]−Theincidenceofmyopiaisrising,withprojectionsindicatingthatoverhalfoftheworld′spopulationwillneedcorrectivevisionby2050[12]CompanyStrategyandDevelopmentDirection−Thecompanyplanstoopen45newstoresin2025,focusingonexistingmarketstodrivebrandawareness[17][34]−Marketingspendwillremaininthelowteensasapercentageofrevenue,withafocusoncustomeracquisitionandbrandawareness[15][71]−Thecompanyaimstoenhanceitsomnichannelmodelandcustomerexperience,includingtheintroductionofAI−driventoolsforpersonalizedshopping[39][41]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedconfidenceinsustainingrevenuegrowthandadjustedEBITDAmargins,despiteaconservativeoutlookduetomacroeconomicconditions[68]−Thecompanyanticipatescontinuedstrongcustomergrowth,drivenbymarketinginvestmentsandinsurancepartnerships[78][80]OtherImportantInformation−Thecompanygenerated68 billion, with a significant portion of customers underserved due to structural barriers [12] - The incidence of myopia is rising, with projections indicating that over half of the world's population will need corrective vision by 2050 [12] Company Strategy and Development Direction - The company plans to open 45 new stores in 2025, focusing on existing markets to drive brand awareness [17][34] - Marketing spend will remain in the low teens as a percentage of revenue, with a focus on customer acquisition and brand awareness [15][71] - The company aims to enhance its omnichannel model and customer experience, including the introduction of AI-driven tools for personalized shopping [39][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining revenue growth and adjusted EBITDA margins, despite a conservative outlook due to macroeconomic conditions [68] - The company anticipates continued strong customer growth, driven by marketing investments and insurance partnerships [78][80] Other Important Information - The company generated 35 million in free cash flow in 2024, up from 7millionin2023,andendedwithapproximately7 million in 2023, and ended with approximately 254 million in cash [66] - The company plans to maintain gross margins in the mid-50s as a percentage of revenue, despite potential headwinds from tariffs [70] Q&A Session Summary Question: Customer acquisition initiatives and revenue growth balance - Management noted that customer acquisition efforts have led to six consecutive quarters of accelerating active customer growth, with expectations for continued strong growth in 2025 [78] Question: Impact of insurance partnership on customer acquisition - Management indicated that the integration with Versant Health is tracking positively and is expected to drive performance over the long term, with increasing contributions from insurance customers [82] Question: Traffic expectations and new store contributions - Management expects moderate improvement in store productivity and has not embedded specific traffic guidance but remains optimistic about overall trends [90] Question: Non-marketing SG&A expense leverage - Management believes that 100 to 200 basis points of adjusted EBITDA margin expansion is sustainable, with opportunities for future leverage in non-marketing SG&A [108] Question: Strategy regarding smart glasses - Management is closely monitoring the smart glasses market and believes they are well-positioned to enter this space if they choose to do so, leveraging their brand and distribution capabilities [112]