FIGS Releases First Quarter 2022 Financial Results
FIGS, Inc. reported Q1 2022 net revenues of $110.1 million, up 26.4% year-over-year. Despite strong sales, gross margin decreased to 71.2% due to high freight costs. Operating expenses surged 39.7% to $64.7 million, raising the operating expense ratio to 58.8%. Net income reached $8.9 million with diluted EPS of $0.05. The company revised its full-year revenue outlook to $510-$530 million, down from $550-$560 million, attributing this to supply chain challenges and inflation. Adjusted EBITDA margin is now expected between 16% and 18%.
- Net revenues increased 26.4% year-over-year to $110.1 million.
- Active customers grew 31.1% to 2.0 million.
- Average Order Value (AOV) rose 16.0% year-over-year to $116.
- Gross margin decreased by 40 basis points to 71.2%.
- Operating expenses increased by 39.7% to $64.7 million, raising the percentage of net revenues to 58.8%.
- Revised revenue outlook is significantly lower than previous guidance.
Updates Full Year Outlook
“Our performance in Q1 reflected our continued ability to pair high revenue growth with strong profitability. Our results, while below our expectations, are a testament to the powerful combination of our unique business model and the largely non-discretionary and replenishment nature of our workwear products,” said Co-CEO and Co-Founder,
First Quarter 2022 Financial Highlights
-
Net revenues were
, an increase of$110.1 million 26.4% year over year, driven by higher average order values and strength in lifestyle products. -
Gross margin was
71.2% , a decrease of 40 basis points year over year, driven by higher air freight spend as well as increased ocean and air freight rates, partially offset by improvements in product costing. -
Operating expenses were
, an increase of$64.7 million 39.7% year over year. As a percentage of net revenues, operating expenses increased to58.8% from53.2% in the prior year period, primarily driven by higher selling expense, stock-based compensation and incremental costs associated with being a public company. -
Net income was
and diluted earnings per share was$8.9 million .$0.05 -
Net income, as adjusted(1) was
and diluted earnings per share, as adjusted(1) was$10.5 million .$0.05 -
Adjusted EBITDA(1) was
, an increase of$25.0 million year over year.$0.7 million -
Adjusted EBITDA margin(1) was
22.7% , a decrease of 530 basis points year over year.
Key Operating Metrics
-
Active customers(2) as of
March 31, 2022 increased31.1% to 2.0 million. -
Net revenues per active customer(2) was
, an increase of$226 6.1% year over year. -
Average Order Value (“AOV”)(2) was
, an increase of$116 16.0% year over year primarily driven by a higher mix of lifestyle products, which result in higher units per transaction and generally have a higher price point.
Updated 2022 Financial Outlook
-
Net revenues are expected to be in the range of
to$510 , representing year over year growth of approximately$530 million 22% to26% , compared to the previous outlook of to$550 , reflecting supply chain challenges and broader macroeconomic factors, including high inflation and shifts in consumer spending patterns.$560 million -
Gross margin is expected to be in the range of
67% to68% , compared to the Company’s previous outlook of70% +, primarily due to a significant increase in the Company’s use of air freight to help mitigate supply chain challenges. -
Adjusted EBITDA margin(3) is expected to be in the range of
16% to18% , compared to the Company’s previous outlook of20% +, as the Company balances continued investment with the near-term impact on gross margin.
(1) “Net income, as adjusted,” “diluted earnings per share, as adjusted,” “adjusted EBITDA” and “adjusted EBITDA margin” are non-GAAP financial measures. Please see the sections titled “Non-GAAP Financial Measures and Key Operating Metrics” and “Reconciliations of GAAP to Non-GAAP Measures” below for more information regarding the Company’s use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by net revenues. |
(2) “Active customers,” “net revenues per active customer” and “average order value” are key operational and business metrics that are important to understanding Company performance. For information regarding how the Company calculates its key operational and business metrics, please see the section titled “Non-GAAP Financial Measures and Key Operating Metrics.” |
(3) The Company has not provided a quantitative reconciliation of its adjusted EBITDA margin outlook to a GAAP net income margin outlook because it is unable, without making unreasonable efforts, to project certain reconciling items. These items include, but are not limited to, future stock-based compensation expense, income taxes, expenses related to non-ordinary course disputes, and transaction costs. These items are inherently variable and uncertain and depend on various factors, some of which are outside of the Company’s control or ability to predict. For more information regarding the Company’s use of non-GAAP financial measures, please see the section titled “Non-GAAP Financial Measures and Key Operating Metrics.” |
Conference Call Details
FIGS management will host a conference call and webcast today at
Non-GAAP Financial Measures and Key Operating Metrics
In addition to the GAAP financial measures set forth in this press release, the Company has included non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K.
The Company uses “net income, as adjusted,” “diluted earnings per share, as adjusted,” “adjusted EBITDA” and “adjusted EBITDA margin” to provide useful supplemental measures that assist in evaluating its ability to generate earnings, provide consistency and comparability with its past financial performance and facilitate period-to-period comparisons of its core operating results as well as the results of its peer companies. The Company calculates “net income, as adjusted,” as net income adjusted to exclude transaction costs, expenses related to non-ordinary course disputes, stock-based compensation, including expense related to award modifications, accelerated performance awards and ambassador grants in connection with the IPO, and expense resulting from the retirement of the Company's previous CFO, and the income tax impact of these adjustments. The Company calculates “diluted earnings per share, as adjusted” as net income, as adjusted divided by diluted shares outstanding. The Company calculates “adjusted EBITDA” as net income adjusted to exclude: other income (loss), net; gain/loss on disposal of assets; provision for income taxes; depreciation and amortization expense; stock-based compensation and related expense; transaction costs; and expenses related to non-ordinary course disputes. The Company calculates “adjusted EBITDA margin” by dividing adjusted EBITDA by net revenues.
Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included below under the heading “Reconciliations of GAAP to Non-GAAP Measures.”
About FIGS
FIGS is a founder-led, direct-to-consumer healthcare apparel and lifestyle brand that seeks to celebrate, empower, and serve current and future generations of healthcare professionals. We create technically advanced apparel and products for healthcare professionals that feature an unmatched combination of comfort, durability, function, and style. We market and sell our products directly through our digital platform to provide a seamless experience for healthcare professionals.
Forward Looking Statements
This press release contains various forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are based on current management expectations, and which involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, such forward-looking statements. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking. These forward-looking statements generally are identified by the words “anticipate”, “believe”, “contemplate”, “continue”, “could”, “estimate”, “expect”, “forecast”, “future”, “intend”, “may”, “might”, “opportunity”, “outlook”, “plan”, “possible”, “potential”, “predict”, “project,” “should”, “strategy”, “strive”, “target”, “will” or “would”, the negative of these words or other similar terms or expressions. The absence of these words does not mean that a statement is not forward-looking. These forward-looking statements address various matters, including the Company’s ability to fuel profitable growth for the years to come and the Company’s outlook as to net revenues, gross margin and adjusted EBITDA margin for the full year ending
BALANCE SHEETS (In thousands, except share and per share data) |
||||||||
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As of |
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|||||
|
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|
|
|
|
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||
Assets |
|
(Unaudited) |
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
189,401 |
|
|
$ |
195,374 |
|
Restricted cash |
|
|
— |
|
|
|
2,056 |
|
Accounts receivable |
|
|
2,910 |
|
|
|
2,441 |
|
Inventory, net |
|
|
102,765 |
|
|
|
86,068 |
|
Prepaid expenses and other current assets |
|
|
11,257 |
|
|
|
7,400 |
|
Total current assets |
|
|
306,333 |
|
|
|
293,339 |
|
Non-current assets |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
7,719 |
|
|
|
7,613 |
|
Operating lease right-of-use assets |
|
|
17,248 |
|
|
|
— |
|
Deferred tax assets |
|
|
10,645 |
|
|
|
10,239 |
|
Other assets |
|
|
745 |
|
|
|
560 |
|
Total non-current assets |
|
|
36,357 |
|
|
|
18,412 |
|
Total assets |
|
$ |
342,690 |
|
|
$ |
311,751 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
17,010 |
|
|
$ |
14,604 |
|
Operating lease liabilities |
|
|
2,806 |
|
|
|
— |
|
Accrued expenses |
|
|
24,200 |
|
|
|
24,677 |
|
Accrued compensation and benefits |
|
|
4,093 |
|
|
|
6,464 |
|
Sales tax payable |
|
|
4,335 |
|
|
|
3,728 |
|
Gift card liability |
|
|
5,275 |
|
|
|
5,590 |
|
Deferred revenue |
|
|
605 |
|
|
|
596 |
|
Returns reserve |
|
|
2,528 |
|
|
|
2,761 |
|
Income tax payable |
|
|
325 |
|
|
|
3,973 |
|
Total current liabilities |
|
|
61,177 |
|
|
|
62,393 |
|
Non-current liabilities |
|
|
|
|
|
|
||
Operating lease liabilities, non-current |
|
|
17,969 |
|
|
|
— |
|
Deferred rent and lease incentive |
|
|
— |
|
|
|
3,542 |
|
Other non-current liabilities |
|
|
243 |
|
|
|
243 |
|
Total liabilities |
|
|
79,389 |
|
|
|
66,178 |
|
Commitments and contingencies (Note 8) |
|
|
|
|
|
|
||
Stockholders’ equity |
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|
|
|
|
|
||
Class A Common stock — par value |
|
|
15 |
|
|
|
15 |
|
Class |
|
|
1 |
|
|
|
1 |
|
Preferred stock — par value |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
236,455 |
|
|
|
227,626 |
|
Retained earnings |
|
|
26,830 |
|
|
|
17,931 |
|
Total stockholders’ equity |
|
|
263,301 |
|
|
|
245,573 |
|
Total liabilities and stockholders’ equity |
|
$ |
342,690 |
|
|
$ |
311,751 |
|
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except share and per share data) (Unaudited) |
||||||||
|
|
Three months ended |
||||||
|
|
2022 |
|
|
2021 |
|
||
Net revenues |
|
$ |
110,100 |
|
|
$ |
87,079 |
|
Cost of goods sold |
|
|
31,670 |
|
|
|
24,719 |
|
Gross profit |
|
|
78,430 |
|
|
|
62,360 |
|
Operating expenses |
|
|
|
|
||||
Selling |
|
|
22,058 |
|
|
|
17,114 |
|
Marketing |
|
|
15,408 |
|
|
|
10,840 |
|
General and administrative |
|
|
27,219 |
|
|
|
18,346 |
|
Total operating expenses |
|
|
64,685 |
|
|
|
46,300 |
|
Net income from operations |
|
|
13,745 |
|
|
|
16,060 |
|
Other income (loss), net |
|
|
|
|
||||
Interest income (expense) |
|
|
9 |
|
|
|
(36 |
) |
Other expense |
|
|
(1 |
) |
|
|
(2 |
) |
Total other income (loss), net |
|
|
8 |
|
|
|
(38 |
) |
Net income before provision for income taxes |
|
|
13,753 |
|
|
|
16,022 |
|
Provision for income taxes |
|
|
4,854 |
|
|
|
4,582 |
|
Net income and comprehensive income |
|
$ |
8,899 |
|
|
$ |
11,440 |
|
Earnings attributable to Class A and Class B common stockholders |
|
|
|
|
||||
Basic earnings per share |
|
$ |
0.05 |
|
|
$ |
0.07 |
|
Diluted earnings per share |
|
$ |
0.05 |
|
|
$ |
0.07 |
|
Weighted-average shares outstanding—basic |
|
|
164,406,142 |
|
|
|
154,501,660 |
|
Weighted-average shares outstanding—diluted | 193,379,275 |
|
168,012,364 |
|
STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||
|
|
Three months ended
|
||||||
|
|
2022 |
|
|
2021 |
|
||
Cash flows from operating activities: |
|
|
|
|
||||
Net income |
|
$ |
8,899 |
|
|
$ |
11,440 |
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization expense |
|
|
375 |
|
|
|
318 |
|
Deferred income taxes |
|
|
(406 |
) |
|
|
453 |
|
Non-cash operating lease cost |
|
|
374 |
|
|
|
— |
|
Stock-based compensation |
|
|
8,477 |
|
|
|
5,015 |
|
Changes in operating assets and liabilities: |
|
|
|
|
||||
Accounts receivable |
|
|
(469 |
) |
|
|
2,231 |
|
Inventory |
|
|
(16,697 |
) |
|
|
(15,435 |
) |
Prepaid expenses and other current assets |
|
|
(3,857 |
) |
|
|
2,902 |
|
Other assets |
|
|
(185 |
) |
|
|
(1,785 |
) |
Accounts payable |
|
|
2,372 |
|
|
|
4,249 |
|
Accrued expenses |
|
|
(560 |
) |
|
|
8,054 |
|
Deferred revenue |
|
|
9 |
|
|
|
(1,503 |
) |
Accrued compensation and benefits |
|
|
(2,371 |
) |
|
|
(2,128 |
) |
Returns reserve |
|
|
(233 |
) |
|
|
296 |
|
Sales tax payable |
|
|
607 |
|
|
|
935 |
|
Income tax payable |
|
|
(3,648 |
) |
|
|
1,235 |
|
Gift card liability |
|
|
(315 |
) |
|
|
(142 |
) |
Deferred rent and lease incentive |
|
|
— |
|
|
|
(26 |
) |
Operating lease liabilities |
|
|
(389 |
) |
|
|
— |
|
Net cash (used in) provided by operating activities |
|
|
(8,017 |
) |
|
|
16,109 |
|
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(364 |
) |
|
|
(528 |
) |
Net cash used in investing activities |
|
|
(364 |
) |
|
|
(528 |
) |
Cash flows from financing activities: |
|
|
|
|
||||
Proceeds from stock option exercises |
|
|
352 |
|
|
|
123 |
|
Net cash provided by financing activities |
|
|
352 |
|
|
|
123 |
|
Net (decrease) increase in cash, cash equivalents, and restricted cash |
|
|
(8,029 |
) |
|
|
15,704 |
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
197,430 |
|
|
|
58,133 |
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
189,401 |
|
|
$ |
73,837 |
|
Supplemental disclosures: |
|
|
|
|
||||
Property and equipment included in accounts payable and accrued expenses |
|
$ |
149 |
|
|
$ |
73 |
|
Deferred offering costs included in accounts payable and accrued expenses |
|
$ |
— |
|
|
$ |
1,796 |
|
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES (Unaudited) The following table presents a reconciliation of diluted earnings per share, as adjusted and net income, as adjusted to net income, which is the most directly comparable financial measure calculated in accordance with GAAP: |
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|
|
Three months ended
|
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|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
(in thousands, except per share data) |
|||||||
Net income |
|
$ |
8,899 |
|
|
$ |
11,440 |
|
|
Add (deduct): |
|
|
|
|
|
||||
Transaction costs |
|
|
— |
|
|
|
525 |
|
|
Expenses related to non-ordinary course disputes(1) |
|
|
2,417 |
|
|
|
2,436 |
|
|
Income tax impacts of items above |
|
|
(853 |
) |
|
|
(847 |
) |
|
Net income, as adjusted |
|
$ |
10,463 |
|
|
$ |
13,554 |
|
|
Diluted EPS, as adjusted |
|
$ |
0.05 |
|
|
$ |
0.08 |
|
|
Weighted-average shares used to compute Diluted EPS, as adjusted |
|
|
193,379,275 |
|
|
|
168,012,364 |
|
|
(1) Represents certain legal fees incurred in connection with the litigation claims described in the section titled “Legal Proceedings” appearing in the Company’s Quarterly Report on Form 10-Q for the quarter ended |
The following table presents a reconciliation of adjusted EBITDA to net income, which is the most directly comparable financial measure calculated in accordance with GAAP: |
|||||||||
|
|
Three months ended
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
||
|
|
(in thousands, except margin) |
|||||||
Net income |
|
$ |
8,899 |
|
|
$ |
11,440 |
|
|
Add (deduct): |
|
|
|
|
|
||||
Other income (loss), net |
|
|
(8 |
) |
|
|
38 |
|
|
Provision for income taxes |
|
|
4,854 |
|
|
|
4,582 |
|
|
Depreciation and amortization expense(1) |
|
|
375 |
|
|
|
313 |
|
|
Stock-based compensation and related expense(2) |
|
|
8,447 |
|
|
|
5,015 |
|
|
Transaction costs |
|
|
— |
|
|
|
525 |
|
|
Expenses related to non-ordinary course disputes(3) |
|
|
2,417 |
|
|
|
2,436 |
|
|
Adjusted EBITDA |
|
$ |
24,984 |
|
|
$ |
24,349 |
|
|
Adjusted EBITDA Margin |
|
|
22.7 |
% |
|
|
28.0 |
% |
|
(1) Excludes amortization of debt issuance costs included in “Other income (loss), net.” |
(2) Includes stock-based compensation expense and payroll taxes related to equity award activity. |
(3) Represents certain legal fees incurred in connection with the litigation claims described in the section titled “Legal Proceedings” appearing in the Company’s Quarterly Report on Form 10-Q for the quarter ended |
|
KEY OPERATING METRICS (Unaudited)
Active customers as of |
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|
|
As of |
|
|
|||||
|
|
2022 |
|
|
2021 |
|
|
||
|
|
(in thousands) |
|
|
|||||
Active customers |
|
|
1,962 |
|
|
|
1,497 |
|
|
|
|
Three months ended
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|||
Average order value |
|
$ |
116 |
|
|
$ |
100 |
|
|
|
|
Three months ended
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|||
Net revenues per active customer |
|
$ |
226 |
|
|
$ |
213 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220512005354/en/
Investors:
IR@wearfigs.com
Media:
press@wearfigs.com
Source:
FAQ
What were the Q1 2022 earnings results for FIGS?
How did the gross margin change for FIGS in Q1 2022?
What is FIGS' updated financial outlook for 2022?
What factors affected FIGS' guidance for 2022?