FIGS, Inc. ((FIGS)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for FIGS, Inc. conveyed a largely positive sentiment, underscoring the company’s record revenue achievements and robust growth in its core business segments. The call highlighted effective cost management strategies, though it also acknowledged challenges in non-scrubwear revenue, promotional impacts, and tariff-related cost pressures.
Record Revenue Achievement
FIGS, Inc. reported its largest revenue quarter in history, with net revenues increasing by 6% year-over-year to $152.6 million. This milestone underscores the company’s ability to drive sales and expand its market presence effectively.
Growth in Core Business Segments
The company’s core business segments, particularly scrubwear, experienced significant growth, posting an 8% gain. This marks the highest growth in the past seven quarters, with the U.S. business reaching a new quarterly sales record.
Strong Adjusted EBITDA Margin
FIGS demonstrated strong financial performance with an adjusted EBITDA margin improvement of 390 basis points year-over-year, reaching 12.9%. This improvement reflects the company’s effective expense management strategies.
International Expansion Success
International net revenues saw a remarkable increase of 20%, with successful growth in regions such as Mexico, Europe, Latin America, and the Middle East, highlighting FIGS’ strategic global expansion efforts.
Effective Expense Management
The company achieved significant cost efficiencies, particularly in logistics, reducing selling expenses as a percentage of net revenues from 25.6% to 22.6%, showcasing its commitment to maintaining financial discipline.
Strong Marketing and Brand Engagement
During Nurses Week, FIGS achieved approximately 900 million impressions, with film views increasing tenfold and social engagement rising fivefold year-over-year, demonstrating the effectiveness of its marketing strategies.
Non-Scrubwear Revenue Decline
Despite overall growth, non-scrubwear revenue decreased by 3%, impacted by a strategic shift in the marketing calendar and promotional strategy, indicating areas for potential improvement.
Promotional Strategy Impact
The company anticipates headwinds in the second half of the year due to planned reductions in promotional days, which may affect overall revenue growth rates.
Tariff Impacts and Cost Pressures
FIGS expects a 150 basis point pressure on gross margins for the year due to tariffs, with further impacts anticipated in 2026, highlighting ongoing cost challenges.
Softness in Canadian Market
The Canadian market continued to show softness, largely attributed to a pullback in promotional activity, suggesting a need for strategic adjustments in this region.
Forward-Looking Guidance
Looking ahead, FIGS expects fiscal 2025 top-line growth in the low single digits and an adjusted EBITDA margin range of 8.5% to 9%, despite anticipated tariff impacts. The company remains optimistic about its growth prospects, driven by product mix shifts and lower return rates.
In summary, the FIGS, Inc. earnings call highlighted a positive outlook with record revenue achievements and strong growth in core business segments. While challenges remain in non-scrubwear revenue and tariff-related cost pressures, the company’s effective cost management and strategic international expansion provide a solid foundation for future growth.