FIGS(US:FIGS)2023-08-06 11:17Financial Data and Key Metrics Changes - The company reported a 13% increase in net revenues, reaching $138.1 million compared to $122.2 million in Q2 of the previous year, driven by a 21% growth in active customer base [29][12][28] - Adjusted EBITDA for Q2 was $18.9 million, resulting in an adjusted EBITDA margin of 13.7%, down from 17.6% in Q2-22 [33][12] - Gross margin for Q2 was 69.5%, slightly below the previous year's 70.6%, primarily due to product mix and higher promotional sales [30][12] Business Line Data and Key Metrics Changes - The scrubs business accounted for over 80% of net revenues, with non-scrubs contributing to a 25% growth in net revenue [14][12] - The team's business is growing rapidly, now tracking to approximately mid-single digits percentage of net revenues, primarily from inbound requests [8][12] Market Data and Key Metrics Changes - International net revenue increased by 52% compared to the same quarter last year, indicating successful localization strategies [5][12] - The company expanded its market presence by entering Mexico, the Philippines, and Saudi Arabia, with results exceeding expectations even without marketing support [6][12] Company Strategy and Development Direction - The company aims to maintain a disciplined promotional cadence while focusing on brand protection and long-term growth [3][12] - Plans to enhance the retail strategy include opening new stores in key healthcare markets, with a focus on community engagement [19][12] - The company is committed to product innovation and expanding its layering system to meet the diverse needs of healthcare professionals [14][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite macroeconomic challenges, emphasizing a focus on long-term strategies and disciplined expense management [28][12] - The outlook for the third quarter anticipates flat to low single-digit growth due to tough comparisons from the previous year [36][12] Other Important Information - The company is on track to normalize inventory levels, with a target of approximately 25 weeks of supply by year-end [13][12] - Free cash flow for Q2 was reported at $29 million, with expectations for positive cash flow to continue for the remainder of the year [34][12] Q&A Session Summary Question: What are the expectations for inventory in the third and fourth quarters? - Management indicated a significant reduction in inventory is expected in the third quarter, with a focus on bringing down receipts while still delivering new products [25][24] Question: What are the drivers behind average order value (AOV)? - AOV increased by 5.5% to $115, driven by a higher mix of team sales and the expansion of the layering system [29][26] Question: How is the company addressing consumer purchasing patterns? - Management noted that while new customer growth is strong, existing customers are taking longer between purchases, but when they do purchase, they are spending more [66][12] Question: What is the strategy for the team's business moving forward? - The team's business is expected to grow as the company enhances its platform and product offerings, allowing for a wider assortment beyond scrubs [95][12] Question: How does the company plan to manage promotional strategies? - The company plans to maintain a disciplined promotional approach, focusing on sustainable growth without relying heavily on promotions [75][12]