FIGS Releases Fourth Quarter and Full Year 2023 Financial Results
2023 Net Revenues Growth of 7.9% YoY, Net Income of
Fourth quarter and full year 2023 financial results reflect a
Fourth Quarter 2023 Financial Highlights
-
Net revenues were
$144.9 million , flat year over year. The Reclassification negatively impacted net revenues by$4.7 million . - Gross margin was 67.5%, a decrease of 70 basis points year over year. The Reclassification negatively impacted gross margin by 100 basis points. Gross margin benefited from lower air freight utilization, improved ocean freight costs and a more favorable promotional mix, partially offset by product mix.
-
Operating expenses were
$83.6 million , a decrease of 12.5% year over year. As a percentage of net revenues, operating expenses decreased to 57.7% from 66.0% in the prior year due to a decrease in fulfillment costs associated with warehouse storage last year, lower brand marketing spend, and lower legal and insurance costs. -
Net income and net income, as adjusted(1) were
$10.0 million (or$0.05 in diluted earnings per share), an increase of$6.6 million year over year as compared to net income in the same period last year, and an increase of$1.8 million as compared to net income, as adjusted(1) in the same period last year. - Net income margin(2) was 6.9%, as compared to 2.3% in the same period last year.
-
Adjusted EBITDA(1) was
$26.6 million , an increase of$6.8 million year over year. - Adjusted EBITDA margin(1)(2) was 18.4%, as compared to 13.6% in the same period last year.
“Looking back on 2023, we delivered strong growth and profitability, reduced inventory levels by 33% and generated cash flow from operations of
Full Year 2023 Financial Highlights
-
Net revenues were
$545.6 million , an increase of 7.9% year over year, primarily driven by an increase in orders from existing and new customers and, to a lesser extent, an increase in AOV. - Gross margin was 69.1%, a decrease of 100 basis points year over year, primarily due to product mix shift and, to a lesser extent, higher duties and a higher mix of promotional sales, partially offset by lower air freight utilization and ocean freight rates.
-
Operating expenses were
$342.9 million , an increase of 8.2% year over year. As a percentage of net revenues, operating expenses increased to 62.8% from 62.6% in the prior year period due to higher general and administrative expenses, partially offset by lower marketing and selling expenses. -
Net income was
$22.6 million and diluted earnings per share was$0.12 . - Net income margin(2) was 4.1%, as compared to 4.2% in the same period last year.
-
Net income, as adjusted(1)was
$23.3 million and diluted earnings per share, as adjusted(1) was$0.13 . -
Adjusted EBITDA(1) was
$86.0 million or 15.8% of net revenues, as compared to$87.3 million or 17.2% of net revenues in the same period last year. -
Free Cash Flow(1)was
$84.6 million .
Full Year 2023 Key Operating Metrics
-
Active customers(3)as of
December 31, 2023 increased 13.0% year over year to 2.6 million. -
Net revenues per active customer(3)was
$210 , a decrease of 5.0% year over year. -
AOV(3)was
$115 , an increase of 2.7% year over year primarily driven by an increase in average unit retail and higher units per transaction.
Resignation of CFO and Appointment of Interim CFO
The Company’s Chief Financial Officer,
The Company has commenced a search for a new Chief Financial Officer. Starting on
2024 Financial Outlook
Net Revenues growth v. 2023 |
down mid single digits to flat |
|
|
Adjusted EBITDA Margin(4) |
11% to 12% |
(1) “Net income, as adjusted,” “adjusted EBITDA,” “adjusted EBITDA margin,” “diluted earnings per share, as adjusted” and “free cash flow” 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.
(2) “Net income margin” and “adjusted EBITDA margin” are calculated by dividing net income and adjusted EBITDA by net revenues, respectively.
(3) “Active customers,” “net revenues per active customer” and “average order value” are key operational and business metrics that are important to understanding the Company’s performance. Please see the sections titled “Non-GAAP Financial Measures and Key Operating Metrics” and “Key Operating Metrics” below for information regarding how the Company calculates its key operational and business metrics and for comparisons of active customers, net revenues per active customer and average order value to the prior year period.
(4) 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.
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.”
The Company has also included herein “active customers,” “net revenues per active customer” and “average order value,” which are key operational and business metrics that are important to understanding Company performance. The Company believes the number of active customers is an important indicator of growth as it reflects the reach of the Company’s digital platform, brand awareness and overall value proposition. The Company defines an active customer as a unique customer account that has made at least one purchase in the preceding 12-month period. In any particular period, the Company determines the number of active customers by counting the total number of customers who have made at least one purchase in the preceding 12-month period, measured from the last date of such period. The Company believes measuring net revenues per active customer is important to understanding engagement and retention of customers, and as such, the value proposition for its customer base. The Company defines net revenues per active customer as the sum of total net revenues in the preceding 12-month period divided by the current period active customers. The Company defines average order value as the sum of the total net revenues in a given period divided by the total orders placed in that period. Total orders are the summation of all completed individual purchase transactions in a given period. The Company believes its relatively high average order value demonstrates the premium nature of its products. As the Company expands into and increases its presence in additional product categories, price points and international markets, average order value may fluctuate.
Active customers as of
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 that feature an unmatched combination of comfort, durability, function, and style. We share stories about healthcare professionals’ experiences in ways that inspire them. We create meaningful connections within the healthcare community that we created. Above all, we seek to make an impact for our community, including by advocating for them and always having their backs.
We serve healthcare professionals in numerous countries in
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 expectation regarding the impact of macroeconomic factors on its future performance; the Company's plans to reignite demand, including actions to rebuild momentum and reignite its word of mouth flywheel; the Company's expectation relating to its strategic initiatives and the long term potential of FIGS; the Company’s plans for a permanent Chief Financial Officer and expectations regarding the transition period, including
|
||||||
BALANCE SHEETS |
||||||
(In thousands, except share and per share data) |
||||||
|
As of |
|||||
|
2 023 |
|
2 022 |
|||
Assets |
|
|
|
|||
Current assets |
|
|
|
|||
Cash and cash equivalents |
$ |
144,173 |
|
$ |
159,775 |
|
Short-term investments |
|
102,522 |
|
|
— |
|
Accounts receivable |
|
7,469 |
|
|
6,866 |
|
Inventory, net |
|
119,040 |
|
|
177,976 |
|
Prepaid expenses and other current assets |
|
12,455 |
|
|
11,883 |
|
Total current assets |
|
385,659 |
|
|
356,500 |
|
Non-current assets |
|
|
|
|||
Property and equipment, net |
|
24,864 |
|
|
11,024 |
|
Operating lease right-of-use assets |
|
43,059 |
|
|
15,312 |
|
Deferred tax assets |
|
18,291 |
|
|
10,971 |
|
Other assets |
|
1,336 |
|
|
1,257 |
|
Total non-current assets |
|
87,550 |
|
|
38,564 |
|
Total assets |
$ |
473,209 |
|
$ |
395,064 |
|
Liabilities and stockholders’ equity |
|
|
|
|||
Current liabilities |
|
|
|
|||
Accounts payable |
$ |
14,749 |
|
$ |
20,906 |
|
Operating lease liabilities |
|
8,230 |
|
|
3,408 |
|
Accrued expenses |
|
7,906 |
|
|
26,164 |
|
Accrued compensation and benefits |
|
7,312 |
|
|
3,415 |
|
Sales tax payable |
|
3,149 |
|
|
3,374 |
|
Gift card liability |
|
8,240 |
|
|
7,882 |
|
Deferred revenue |
|
2,160 |
|
|
2,786 |
|
Returns reserve |
|
2,989 |
|
|
3,458 |
|
Income tax payable |
|
2,557 |
|
|
— |
|
Total current liabilities |
|
57,292 |
|
|
71,393 |
|
Non-current liabilities |
|
|
|
|||
Operating lease liabilities, non-current |
|
38,884 |
|
|
15,756 |
|
Other non-current liabilities |
|
183 |
|
|
176 |
|
Total liabilities |
|
96,359 |
|
|
87,325 |
|
Commitments and contingencies |
|
|
|
|||
Stockholders’ equity |
|
|
|
|||
Class A common stock — par value |
|
16 |
|
|
16 |
|
Class B common stock — par value |
|
— |
|
|
— |
|
Preferred stock — par value |
|
— |
|
|
— |
|
Additional paid-in capital |
|
315,075 |
|
|
268,606 |
|
Accumulated other comprehensive income |
|
5 |
|
|
— |
|
Retained earnings |
|
61,754 |
|
|
39,117 |
|
Total stockholders’ equity |
|
376,850 |
|
|
307,739 |
|
Total liabilities and stockholders’ equity |
$ |
473,209 |
|
$ |
395,064 |
|
|
||||||||||||||||
STATEMENTS OF OPERATIONS |
||||||||||||||||
(In thousands, except share and per share data) |
||||||||||||||||
|
Three months ended |
|
Year ended |
|||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
|
(unaudited) |
|
|
|
|
|||||||||||
Net revenues |
$ |
144,918 |
|
|
$ |
144,898 |
|
|
$ |
545,646 |
|
|
$ |
505,835 |
|
|
Cost of goods sold |
|
47,058 |
|
|
|
46,050 |
|
|
|
168,683 |
|
|
|
151,375 |
|
|
Gross profit |
|
97,860 |
|
|
|
98,848 |
|
|
|
376,963 |
|
|
|
354,460 |
|
|
Operating expenses |
|
|
|
|
|
|
|
|||||||||
Selling |
|
28,057 |
|
|
|
37,649 |
|
|
|
125,149 |
|
|
|
118,449 |
|
|
Marketing |
|
20,129 |
|
|
|
21,428 |
|
|
|
77,094 |
|
|
|
77,692 |
|
|
General and administrative |
|
35,446 |
|
|
|
36,511 |
|
|
|
140,675 |
|
|
|
120,653 |
|
|
Total operating expenses |
|
83,632 |
|
|
|
95,588 |
|
|
|
342,918 |
|
|
|
316,794 |
|
|
Net income from operations |
|
14,228 |
|
|
|
3,260 |
|
|
|
34,045 |
|
|
|
37,666 |
|
|
Other income, net |
|
|
|
|
|
|
|
|||||||||
Interest income |
|
2,281 |
|
|
|
880 |
|
|
|
6,775 |
|
|
|
1,708 |
|
|
Other expense |
|
(2 |
) |
|
|
(502 |
) |
|
|
(13 |
) |
|
|
(647 |
) |
|
Total other income, net |
|
2,279 |
|
|
|
378 |
|
|
|
6,762 |
|
|
|
1,061 |
|
|
Net income before provision for income taxes |
|
16,507 |
|
|
|
3,638 |
|
|
|
40,807 |
|
|
|
38,727 |
|
|
Provision for income taxes |
|
6,507 |
|
|
|
247 |
|
|
|
18,170 |
|
|
|
17,541 |
|
|
Net income |
$ |
10,000 |
|
|
$ |
3,391 |
|
|
$ |
22,637 |
|
|
$ |
21,186 |
|
|
Earnings attributable to Class A and Class B common stockholders |
|
|
|
|
|
|
|
|||||||||
Basic earnings per share |
$ |
0.06 |
|
|
$ |
0.02 |
|
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
Diluted earnings per share |
$ |
0.05 |
|
|
$ |
0.02 |
|
|
$ |
0.12 |
|
|
$ |
0.11 |
|
|
Weighted-average shares outstanding—basic |
|
169,361,975 |
|
|
|
166,181,027 |
|
|
|
168,065,721 |
|
|
|
165,268,185 |
|
|
Weighted-average shares outstanding—diluted |
|
182,000,733 |
|
|
|
180,892,774 |
|
|
|
182,412,965 |
|
|
|
187,547,474 |
|
|
|
||||||||
STATEMENTS OF CASH FLOWS |
||||||||
(In thousands) |
||||||||
|
Year ended D ecember 31, |
|||||||
|
2023 |
2022 |
||||||
Cash flows from operating activities: |
|
|
||||||
Net income |
$ |
22,637 |
|
$ |
21,186 |
|
||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
||||||
Depreciation and amortization expense |
|
2,942 |
|
|
1,924 |
|
||
Deferred income taxes |
|
(7,320 |
) |
|
(732 |
) |
||
Non-cash operating lease cost |
|
2,863 |
|
|
2,381 |
|
||
Stock-based compensation |
|
45,799 |
|
|
37,458 |
|
||
Accretion of discount on available-for-sale securities |
|
(1,678 |
) |
|
— |
|
||
Changes in operating assets and liabilities: |
|
|
||||||
Accounts receivable |
|
(603 |
) |
|
(4,425 |
) |
||
Inventory |
|
58,936 |
|
|
(91,908 |
) |
||
Prepaid expenses and other current assets |
|
(572 |
) |
|
(4,483 |
) |
||
Other assets |
|
(79 |
) |
|
(197 |
) |
||
Accounts payable |
|
(6,192 |
) |
|
6,315 |
|
||
Accrued expenses |
|
(18,657 |
) |
|
1,487 |
|
||
Accrued compensation and benefits |
|
3,897 |
|
|
(3,049 |
) |
||
Sales tax payable |
|
(225 |
) |
|
(354 |
) |
||
Gift card liability |
|
358 |
|
|
2,292 |
|
||
Deferred revenue |
|
(626 |
) |
|
2,190 |
|
||
Returns reserve |
|
(469 |
) |
|
697 |
|
||
Income tax payable |
|
2,557 |
|
|
(3,973 |
) |
||
Operating lease liabilities |
|
(2,660 |
) |
|
(2,071 |
) |
||
Other non-current liabilities |
|
7 |
|
|
(67 |
) |
||
Net cash (used in) provided by operating activities |
|
100,915 |
|
|
(35,329 |
) |
||
Cash flows from investing activities: |
|
|
||||||
Purchases of property and equipment |
|
(16,348 |
) |
|
(5,348 |
) |
||
Purchases of available-for-sale securities |
|
(150,139 |
) |
|
— |
|
||
Maturities of available-for-sale securities |
|
49,300 |
|
|
— |
|
||
Purchases of held-to-maturity securities |
|
— |
|
|
(500 |
) |
||
Net cash used in investing activities |
|
(117,187 |
) |
|
(5,848 |
) |
||
Cash flows from financing activities: |
|
|
||||||
Proceeds from capital contributions |
|
— |
|
|
479 |
|
||
Proceeds from stock option exercises and employee stock purchases |
|
916 |
|
|
3,043 |
|
||
Tax payments related to net share settlements on restricted stock units |
|
(246 |
) |
|
— |
|
||
Net cash provided by financing activities |
|
670 |
|
|
3,522 |
|
||
Net decrease in cash, cash equivalents, and restricted cash |
|
(15,602 |
) |
|
(37,655 |
) |
||
Cash, cash equivalents, and restricted cash, beginning of period |
$ |
159,775 |
|
$ |
197,430 |
|
||
Cash and cash equivalents, end of period |
$ |
144,173 |
|
$ |
159,775 |
|
R
ECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
(Unaudited)
The following table presents a reconciliation of net income, as adjusted to net income, which is the most directly comparable financial measure calculated in accordance with GAAP, and presents diluted earnings per share (“EPS”), as adjusted with diluted EPS:
|
Three Months Ended D ecember 31, |
|
Year Ended D ecember 31, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands, except share and per share data) |
||||||||||||||
Net income |
$ |
10,000 |
|
$ |
3,391 |
|
|
$ |
22,637 |
|
|
$ |
21,186 |
|
|
Add (deduct): |
|
|
|
|
|
|
|
||||||||
Transaction costs |
|
— |
|
|
— |
|
|
|
— |
|
|
|
145 |
|
|
Expenses related to non-ordinary course disputes(1) |
|
— |
|
|
4,671 |
|
|
|
1,256 |
|
|
|
10,128 |
|
|
Stock-based compensation expense in connection with the IPO and other(2) |
|
— |
|
|
— |
|
|
|
290 |
|
|
|
— |
|
|
Other(3) |
|
— |
|
|
500 |
|
|
|
— |
|
|
|
500 |
|
|
Income tax impacts of items above |
|
— |
|
|
(350 |
) |
|
|
(847 |
) |
|
|
(2,808 |
) |
|
Net income, as adjusted |
$ |
10,000 |
|
$ |
8,212 |
|
|
$ |
23,336 |
|
|
$ |
29,151 |
|
|
Diluted EPS |
$ |
0.05 |
|
$ |
0.02 |
|
|
$ |
0.12 |
|
|
$ |
0.11 |
|
|
Diluted EPS, as adjusted |
$ |
0.05 |
|
$ |
0.05 |
|
|
$ |
0.13 |
|
|
$ |
0.16 |
|
|
Weighted-average shares used to compute Diluted EPS, as adjusted |
|
182,000,733 |
|
|
180,892,774 |
|
|
|
182,412,965 |
|
|
|
187,547,474 |
|
(1) Exclusively represents attorney's fees, costs and expenses incurred by the Company in connection with the Company's now-concluded litigation against
(2) Includes certain stock-based compensation expense in connection with the IPO, including expense related to accelerated performance awards and associated payroll taxes and costs.
(3) Includes other than temporary impairment of held-to-maturity investments.
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, and presents adjusted EBITDA margin with net income margin, which is the most directly comparable financial measure calculated in accordance with GAAP:
|
Three Months Ended D ecember 31, |
|
Year Ended D ecember 31, |
|||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
|
(in thousands, except margin) |
|||||||||||||||
Net income |
$ |
10,000 |
|
|
$ |
3,391 |
|
|
$ |
22,637 |
|
|
$ |
21,186 |
|
|
Add (deduct): |
|
|
|
|
|
|
|
|||||||||
Other income, net |
|
(2,279 |
) |
|
|
(378 |
) |
|
|
(6,762 |
) |
|
|
(1,061 |
) |
|
Provision for income taxes |
|
6,506 |
|
|
|
246 |
|
|
|
18,170 |
|
|
|
17,541 |
|
|
Depreciation and amortization expense(1) |
|
814 |
|
|
|
638 |
|
|
|
2,942 |
|
|
|
1,924 |
|
|
Stock-based compensation and related expense(2) |
|
11,562 |
|
|
|
11,197 |
|
|
|
47,757 |
|
|
|
37,533 |
|
|
Expenses related to non-ordinary course disputes(3) |
|
— |
|
|
|
4,671 |
|
|
|
1,256 |
|
|
|
10,128 |
|
|
Adjusted EBITDA |
$ |
26,603 |
|
|
$ |
19,765 |
|
|
$ |
86,000 |
|
|
$ |
87,251 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net Revenues |
$ |
144,918 |
|
|
$ |
144,898 |
|
|
$ |
545,646 |
|
|
$ |
505,835 |
|
|
Net income margin(4) |
|
6.9 |
% |
|
|
2.3 |
% |
|
|
4.1 |
% |
|
|
4.2 |
% |
|
Adjusted EBITDA Margin |
|
18.4 |
% |
|
|
13.6 |
% |
|
|
15.8 |
% |
|
|
17.2 |
% |
(1) Excludes amortization of debt issuance costs included in “Other income, net.”
(2) Includes stock-based compensation expense, payroll taxes, and costs related to equity award activity.
(3) Exclusively represents attorney's fees, costs and expenses incurred by the Company in connection with the Company's now-concluded litigation against
(4) Net income margin represents net income as a percentage of net revenues.
The following table presents a reconciliation of free cash flow to net cash (used in) provided by operating activities, which is the most directly comparable financial measure calculated in accordance with GAAP:
|
Year ended D ecember 31, |
|||||||
|
2023 |
|
2022 |
|||||
|
(in thousands) |
|||||||
Net cash (used in) provided by operating activities |
$ |
100,915 |
|
|
$ |
(35,329 |
) |
|
Less: capital expenditures |
|
(16,348 |
) |
|
|
(5,348 |
) |
|
Free cash flow |
$ |
84,567 |
|
|
$ |
(40,677 |
) |
K
EY OPERATING METRICS
(Unaudited)
Active customers as of
|
As of |
|||||
|
2023 |
2022 |
||||
|
(in thousands) |
|||||
Active customers |
|
2,593 |
|
2,294 |
||
|
As of |
|||||
|
2023 |
2022 |
||||
Net revenues per active customer |
$ |
210 |
$ |
221 |
||
|
Year ended
|
|||||
|
2023 |
2022 |
||||
Average order value |
$ |
115 |
$ |
112 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240228179038/en/
Investors:
IR@wearfigs.com
Media:
press@wearfigs.com
Source: