FIGS, Inc. ((FIGS)) has held its Q1 earnings call. Read on for the main highlights of the call.
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FIGS, Inc. recently held its earnings call, revealing a blend of positive growth metrics and some challenges. The company showcased a strong revenue increase and customer engagement, yet faced hurdles such as gross margin contraction and tariff impacts. Despite these challenges, FIGS remains committed to strategic investments in its international expansion, TEAMS business, and retail presence, even amid a challenging macroeconomic environment.
Revenue Growth
FIGS reported a 5% year-over-year increase in Q1 revenue, reaching $124.9 million, surpassing expectations. This growth underscores the company’s ability to expand its market presence and attract more customers, even in a competitive landscape.
Adjusted EBITDA Margin
The adjusted EBITDA margin for the quarter was 7.2%, exceeding the target range of 5.5% to 6%. This achievement highlights FIGS’ operational efficiency and ability to manage costs effectively, even as it navigates external economic pressures.
Active Customer Growth
FIGS saw a 4% year-over-year growth in active customers, reaching 2.7 million. This increase indicates a growing customer base and strong brand loyalty, which are crucial for sustained revenue growth.
International Sales Increase
International sales rose by 16%, with notable performances in Mexico, Europe, and the Middle East. This growth reflects FIGS’ successful efforts in expanding its global footprint and tapping into new markets.
AOV Increase
The Average Order Value (AOV) increased by 3% to $119, marking a record high for the brand. This rise is attributed to a higher share of full-price sales and a favorable product mix, enhancing overall revenue.
TEAMS Business Expansion
FIGS has begun to see outbound orders for its TEAMS business, targeting large institutions and modern healthcare settings. This expansion represents a strategic move to diversify revenue streams and strengthen its position in the healthcare apparel market.
Strong Balance Sheet
The company maintains a robust balance sheet with $251.2 million in net cash and a debt-free structure. This financial strength provides FIGS with the flexibility to invest in growth opportunities and weather economic uncertainties.
Gross Margin Contraction
Gross margin contracted by 130 basis points to 67.6% due to higher freight expenses and promotional impacts. This contraction poses a challenge, but FIGS is focused on mitigating these effects through operational efficiencies.
Impact of Tariffs
Recently imposed tariffs have created cost pressures, impacting the adjusted EBITDA margin outlook for the year. FIGS is actively working to address these challenges through supply chain efficiencies and strategic investments.
Net Loss
The company reported a net loss of $0.1 million for the quarter, compared to a net income of $1.4 million last year. This shift highlights the financial pressures faced by FIGS, although it remains committed to returning to profitability.
Challenges in Canadian Market
FIGS is experiencing softening demand from Canadian customers due to tariff concerns. This challenge underscores the broader impact of global trade policies on the company’s operations.
Uncertain Macroeconomic Environment
The broader industry faces uncertainty with global trade policies and macroeconomic pressures. FIGS is navigating these challenges by focusing on strategic growth initiatives and maintaining financial resilience.
Forward-Looking Guidance
Looking ahead, FIGS plans to continue its growth trajectory by leveraging supply chain efficiencies and strategic investments in international markets, B2B teams, and retail expansion. Despite facing new tariffs, the company remains optimistic about mitigating potential impacts and sustaining its positive momentum.
In conclusion, FIGS, Inc.’s earnings call highlighted a mix of growth and challenges. The company demonstrated strong revenue and customer growth, while also addressing margin contractions and tariff impacts. With a focus on strategic investments and operational efficiencies, FIGS is well-positioned to navigate the uncertain macroeconomic environment and continue its expansion efforts.