FIGS, Inc. Signals Renewed Growth In 2026 Outlook

FIGS, Inc. ((FIGS)) has held its Q4 earnings call. Read on for the main highlights of the call.

FIGS, Inc. delivered a notably upbeat earnings call, underpinned by a sharp re‑acceleration in growth and improving customer metrics. Management balanced this optimism with candor about tariff‑driven gross‑margin pressure and one‑time inventory charges, but emphasized a strengthened balance sheet and a clear strategic roadmap into 2026.

Record Q4 Net Revenue Surge

FIGS posted a standout fourth quarter, with net revenue jumping 33% year over year to $201.9 million and surpassing the $200 million mark for the first time. The quarter was fueled by strong holiday demand, especially over Black Friday and Cyber Monday, signaling robust brand momentum.

Full-Year Revenue Recovery and Milestones

For fiscal 2025, net revenue climbed 14% to a record $631.1 million, confirming a solid recovery after a slower period. Scrubwear exceeded $0.5 billion in annual sales and international revenue topped $100 million, underscoring both core strength and overseas traction.

Customer Base and Engagement Expansion

Active customers reached about 2.9 million, up 9% year over year and 5% sequentially, marking a new company high. Revenue per active customer rose 4% to $216, supported by healthier new and resurrected cohorts and better retention.

Improved Purchase Economics

Purchase quality improved as average order value in Q4 increased 9% to $126, driven by both higher prices and more items per basket. FIGS also saw meaningful gains in order frequency, suggesting deeper engagement from its professional customer base.

Profitability Progress and Strong Cash Position

On profitability, full‑year adjusted EBITDA margin expanded to 11.8% from 9.3%, highlighting better operating leverage. The company closed the year with $26.7 million of Q4 adjusted EBITDA and a record $300.8 million in cash and investments, giving it ample strategic flexibility.

Category and Geographic Expansion

Scrubwear remained the growth engine, up 35% in Q4 and accounting for 77% of revenue, while non‑scrubwear grew 26% with underscrubs, outerwear and compression socks adding diversification. International revenue surged 55% in Q4 to $37.7 million, as FIGS nearly doubled its country footprint to 58 in 2025 and targets more than 80 in 2026.

Strategic Product Innovation and Marketing Wins

Management spotlighted new fabric platforms such as FIONx, FORMx and FIBREx, along with a deeper layering and category roadmap to keep collections fresh. High‑profile campaigns around major global events and healthcare‑focused moments strengthened top‑of‑funnel awareness and reinforced word‑of‑mouth among medical professionals.

Constructive 2026 Outlook

Looking ahead, FIGS guided to 10–12% revenue growth in 2026, approaching roughly $700 million, with Q1 expected to grow in the low‑20% range. The company also projects adjusted EBITDA margin to rise to 12.7–12.9% and operating margin to 7.6–7.9%, signaling confidence in continued profitable growth.

Retail & B2B Progress

FIGS continued to expand beyond its online roots, ending the year with five community hubs after opening three in Q4 and planning four more for the second half of 2026. These locations are beating sales expectations and are expected to be profitable in their first year, while the TEAMS B2B platform, still small, is being built for scalable growth.

Gross Margin Contraction and Tariff Headwinds

Despite the strong top line, Q4 gross margin fell 440 basis points to 62.9% and full‑year gross margin slipped to 66.5%, pressured by tariffs and the absence of last year’s duty benefits. Management is modeling a conservative 15% global tariff and an incremental roughly 280 basis‑point headwind for 2026 if no mitigation occurs.

Inventory Build and Write-Off

Inventory ended the year at $128 million, up 11% year over year and 7% on a unit basis, as FIGS positioned for demand and new markets. The company also took a $5.6 million write‑off for broken and aged inventory built up over multiple years, aiming to clean up legacy quality and aging issues.

Q4 Adjusted EBITDA Margin Slightly Down vs Prior Year

Q4 adjusted EBITDA margin came in at 13.2%, modestly below 13.9% in the prior‑year period. The decline reflected the inventory write‑off and tariff and freight dynamics, partially offset by improved operating efficiency elsewhere in the business.

Tariff and Policy Uncertainty

Management highlighted ongoing uncertainty around tariff policy, including changing rates in sourcing markets, as a key variable for 2026 profitability. By assuming a blanket 15% tariff rate, FIGS is baking in a cautious cost outlook that could ease if trade conditions improve or mitigation efforts succeed.

International and New Market Investment Costs

Rapid geographic expansion brings higher upfront costs, with new markets typically unprofitable in their first year due to heavier marketing and selling expenses. FIGS is accepting this near‑term drag in exchange for building a broader global base that can contribute meaningfully over time.

TEAMS Mix and Margin Dynamics

The TEAMS B2B channel remains a single‑digit share of total revenue and carries a lower gross margin due to wholesale pricing. However, management expects it to enhance overall profitability as it scales, given lower operating expense intensity per dollar of revenue.

No Share Repurchases during Period

Despite a sizable cash balance and $52 million still authorized under its share‑repurchase program, FIGS chose not to buy back stock during the period. Management indicated that buybacks remain an opportunistic tool rather than a steady capital‑return commitment at this stage.

Forward-Looking Guidance and Strategic Priorities

The 2026 guide calls for double‑digit revenue growth, margin expansion and modestly higher gross margin even after factoring in substantial tariff headwinds. With capex around $17 million, targeted inventory reduction, four more community hubs and a strong cash position, FIGS is positioning for continued active‑customer growth and disciplined investment.

Overall, the earnings call painted a picture of a company transitioning from recovery to renewed growth, supported by product, channel and geographic expansion. While tariffs and initial losses in new markets remain real headwinds, FIGS’ record revenue, growing customer base and rising profitability give investors reason to expect durable momentum into 2026.