Revolve Group Announces First Quarter 2024 Financial Results
"We delivered significant expansion of our gross margin and year-over-year efficiency in our variable logistics costs in the first quarter of 2024, which contributed to strong profitability and cash flow generation that further strengthened our balance sheet," said co-founder and co-CEO
"I am excited by our progress on key initiatives that further improves our foundation for profitable growth," said co-founder and co-CEO
First Quarter 2024 Financial Summary
|
|
Three Months Ended |
||||||||
|
|
2024 |
|
|
2023 |
|
|
YoY Change |
||
|
|
(in thousands, except percentages) |
||||||||
Net sales |
|
$ |
270,581 |
|
|
$ |
279,609 |
|
|
(3 %) |
Gross profit |
|
$ |
141,502 |
|
|
$ |
139,220 |
|
|
2 % |
Gross margin |
|
|
52.3 |
% |
|
|
49.8 |
% |
|
|
Net income |
|
$ |
10,873 |
|
|
$ |
14,172 |
|
|
(23 %) |
Adjusted EBITDA (non-GAAP financial measure) |
|
$ |
13,267 |
|
|
$ |
15,010 |
|
|
(12 %) |
Net cash provided by operating activities |
|
$ |
38,391 |
|
|
$ |
48,829 |
|
|
(21 %) |
Free cash flow (non-GAAP financial measure) |
|
$ |
36,656 |
|
|
$ |
47,681 |
|
|
(23 %) |
Operational Metrics
|
|
Three Months Ended |
||||||||
|
|
2024 |
|
|
2023 |
|
|
YoY Change |
||
|
|
(in thousands, except average order value and percentages) |
||||||||
Active customers (trailing 12 months) |
|
|
2,551 |
|
|
|
2,424 |
|
|
5 % |
Total orders placed |
|
|
2,223 |
|
|
|
2,278 |
|
|
(2 %) |
Average order value |
|
$ |
299 |
|
|
$ |
288 |
|
|
4 % |
Additional First Quarter 2024 Metrics and Results Commentary
- Trailing 12-month Active customers grew to 2,551,000 as of
March 31, 2024 , an increase of 5% year-over-year. -
Net sales were
$270.6 million , a year-over-year decrease of 3%, which reflects increased net sales at full price in the first quarter of 2024 that were more than offset by lower net sales at a markdown year-over-year. -
Gross profit was
$141.5 million , a year-over-year increase of 2%. - Gross margin was 52.3%, a year-over-year increase of 250 basis points that was driven by margin expansion in the REVOLVE segment. The increased gross margin primarily reflects a higher mix of net sales at full price in the first quarter of 2024 and lower inventory valuation adjustments as compared to the first quarter of 2023.
-
Net income was
$10.9 million , a year-over-year decrease of 23%, and included an insurance recovery of$2.8 million ($2.1 million , net of taxes) within other income, net. -
Adjusted EBITDA was
$13.3 million , a year-over-year decrease of 12% that primarily reflects higher general and administrative expenses in the first quarter of 2024 and increased marketing investment due to a shift in the timing of brand marketing investments year-over-year, partially offset by increased gross profit and efficiencies in selling and distribution costs year-over-year. -
Diluted earnings per share (EPS) was
$0.15 , a year-over-year decrease of 21%. EPS for the first quarter of 2024 included the insurance recovery mentioned above equivalent to approximately$0.03 per share.
Additional Net Sales Commentary
-
REVOLVE segment net sales were
$229.6 million , a year-over-year decrease of 1%. -
FWRD segment net sales were
$41.0 million , a year-over-year decrease of 15%. -
Domestic net sales were
$219.1 million , a year-over-year decrease of 3%. -
International net sales were
$51.5 million , also a year-over-year decrease of 3%.
Cash Flow and Balance Sheet
-
Net cash provided by operating activities was
$38.4 million and free cash flow was$36.7 million , further strengthening our balance sheet and supporting our commitment to enhance shareholder value through capital allocation. These cash flow metrics decreased 21% and 23%, respectively, versus the first quarter of 2023, when our cash flow benefited meaningfully from favorable working capital movements including a large reduction in inventory during the prior-year period. -
Stock repurchases were
$8.0 million for the first quarter endedMarch 31, 2024 , exclusive of broker fees and excise taxes. The company repurchased 530,007 shares of its Class A common stock during the first quarter at an average cost of$15.17 .$61.4 million remained available under the company's$100 million stock repurchase program as ofMarch 31, 2024 . -
Cash and cash equivalents: The strong cash flow generation has further strengthened our balance sheet and liquidity. Cash and cash equivalents as of
March 31, 2024 were$273.4 million , an increase of$28.0 million , or 11%, from$245.4 million as ofDecember 31, 2023 . Our balance sheet as ofMarch 31, 2024 remains debt free. The year-over-year decrease in cash and cash equivalents compared toMarch 31, 2023 primarily reflects significant cash flow generated from operations that was more than offset by$38.6 million in stock repurchases since we established our$100 million stock repurchase program inAugust 2023 . -
Inventory as of
March 31, 2024 was$201.8 million , an increase of$11.7 million , or 6%, fromMarch 31, 2023 .
Additional trend information regarding
Results Since the End of the First Quarter of 2024
Net sales in
2024 Business Outlook
Based on information available to us as of
|
Updated FY 2024 Outlook |
Prior FY 2024 Outlook |
Gross margin |
52.5% to 53.0% |
52.5% to 53.0% |
Fulfillment expenses |
3.3% to 3.5% of net sales |
3.3% to 3.5% of net sales |
Selling and distribution expenses |
17.8% to 18.0% of net sales |
17.8% to 18.0% of net sales |
Marketing expenses |
16% to 16.2% of net sales |
16% to 16.2% of net sales |
General and administrative expenses |
|
|
Effective tax rate |
24% to 26% |
24% to 26% |
|
|
|
|
Second Quarter 2024 Outlook |
|
Gross margin |
53.9% to 54.4% |
|
Fulfillment expenses |
3.4% of net sales |
|
Selling and distribution expenses |
18.0% of net sales |
|
Marketing expenses |
17.0% of net sales |
|
General and administrative expenses |
|
|
Conference Call Information
Forward-Looking Statements
This press release contains ''forward-looking statements'' within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements, including but not limited to statements regarding our outlook for the second quarter and full year of 2024. Forward-looking statements include statements containing words such as "expect," "anticipate," "believe," "project," "will" and similar expressions intended to identify forward-looking statements. These forward-looking statements are based on our current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to changing economic conditions and their impact on consumer demand and our business, operating results and financial condition; demand for our products; supply chain challenges; inflationary pressures; wars and conflicts in
Use of Non-GAAP Financial Measures and Other Operating Metrics
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in
The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.
We use these non-GAAP financial measures to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and when planning, forecasting, and analyzing future periods.
For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliation of Non-GAAP Financial Measures" included at the end of this release.
Definitions of our non-GAAP financial measures and other operating metrics are presented below.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income before other (income) expense, net; taxes; and depreciation and amortization; adjusted to exclude the effects of equity-based compensation expense and certain non-routine items. Adjusted EBITDA is a key measure used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of equity-based compensation, excludes an item that we do not consider to be indicative of our core operating performance.
Free Cash Flow
Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used in purchases of property and equipment. We view free cash flow as an important indicator of our liquidity because it measures the amount of cash we generate. Free cash flow also reflects changes in working capital.
Active Customers
We define an active customer as a unique customer account from which a purchase was made across our platform at least once in the preceding 12-month period. In any particular period, we determine our 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. We view the number of active customers as a key indicator of our growth, the reach of our sites, the value proposition and consumer awareness of our brand, the continued use of our sites by our customers and their desire to purchase our products.
Total Orders Placed
We define total orders placed as the total number of orders placed by our customers, prior to product returns, across our platform in any given period. We view total orders placed as a key indicator of the velocity of our business and an indication of the desirability of our products and sites to our customers. Total orders placed, together with average order value, is an indicator of the net sales we expect to recognize in a given period.
Average Order Value
We define average order value as the sum of the total gross sales from our sites in a given period, prior to product returns, divided by the total orders placed in that period. We believe our high average order value demonstrates the premium nature of our product assortment. Average order value varies depending on the site through which we sell merchandise, the mix of product categories sold, the number of units in each order, the percentage of sales at full price, and for sales at less than full price, the level of markdowns.
About
We were founded in 2003 by our co-CEOs,
Contacts:
Investors:
Erik Randerson, CFA
562.677.9513
IR@revolve.com
Media:
revolve@walkerdrawas.com
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
||||||||
(Unaudited) |
||||||||
(In thousands, except per share data) |
||||||||
|
||||||||
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net sales |
|
$ |
270,581 |
|
|
$ |
279,609 |
|
Cost of sales |
|
|
129,079 |
|
|
|
140,389 |
|
Gross profit |
|
|
141,502 |
|
|
|
139,220 |
|
Operating expenses: |
|
|
|
|
|
|
||
Fulfillment |
|
|
9,393 |
|
|
|
9,071 |
|
Selling and distribution |
|
|
48,438 |
|
|
|
51,458 |
|
Marketing |
|
|
41,379 |
|
|
|
38,343 |
|
General and administrative |
|
|
32,964 |
|
|
|
28,092 |
|
Total operating expenses |
|
|
132,174 |
|
|
|
126,964 |
|
Income from operations |
|
|
9,328 |
|
|
|
12,256 |
|
Other income, net |
|
|
(5,321) |
|
|
|
(6,585) |
|
Income before income taxes |
|
|
14,649 |
|
|
|
18,841 |
|
Provision for income taxes |
|
|
3,776 |
|
|
|
4,669 |
|
Net income |
|
$ |
10,873 |
|
|
$ |
14,172 |
|
Earnings per share of Class A and Class B |
|
|
|
|
|
|
||
Basic |
|
$ |
0.15 |
|
|
$ |
0.19 |
|
Diluted |
|
$ |
0.15 |
|
|
$ |
0.19 |
|
Weighted average number of shares of Class A and |
|
|
|
|
|
|
||
Basic |
|
|
70,919 |
|
|
|
73,370 |
|
Diluted |
|
|
71,523 |
|
|
|
74,379 |
|
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(Unaudited) |
||||||||
(In thousands, except share and per share data) |
||||||||
|
||||||||
|
|
|
|
|
|
|
||
|
|
2024 |
|
|
2023 |
|
||
Assets |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
273,416 |
|
|
$ |
245,449 |
|
Accounts receivable, net |
|
|
14,929 |
|
|
|
12,405 |
|
Inventory |
|
|
201,839 |
|
|
|
203,587 |
|
Income taxes receivable |
|
|
— |
|
|
|
1,625 |
|
Prepaid expenses and other current assets |
|
|
78,555 |
|
|
|
65,523 |
|
Total current assets |
|
|
568,739 |
|
|
|
528,589 |
|
Property and equipment (net of accumulated depreciation of |
|
|
8,151 |
|
|
|
7,763 |
|
Right-of-use lease assets |
|
|
36,819 |
|
|
|
36,440 |
|
Intangible assets, net |
|
|
1,879 |
|
|
|
1,875 |
|
|
|
|
2,042 |
|
|
|
2,042 |
|
Other assets |
|
|
2,398 |
|
|
|
2,172 |
|
Deferred income taxes |
|
|
30,005 |
|
|
|
30,005 |
|
Total assets |
|
$ |
650,033 |
|
|
$ |
608,886 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
56,000 |
|
|
$ |
47,821 |
|
Income taxes payable |
|
|
1,248 |
|
|
|
— |
|
Accrued expenses |
|
|
48,479 |
|
|
|
40,714 |
|
Returns reserve |
|
|
84,396 |
|
|
|
63,780 |
|
Current lease liabilities |
|
|
7,417 |
|
|
|
6,863 |
|
Other current liabilities |
|
|
28,787 |
|
|
|
30,442 |
|
Total current liabilities |
|
|
226,327 |
|
|
|
189,620 |
|
Non-current lease liabilities |
|
|
33,823 |
|
|
|
34,126 |
|
Total liabilities |
|
|
260,150 |
|
|
|
223,746 |
|
Stockholders' equity: |
|
|
|
|
|
|
||
Class A common stock, |
|
|
38 |
|
|
|
39 |
|
Class B common stock, |
|
|
33 |
|
|
|
33 |
|
Additional paid-in capital |
|
|
119,127 |
|
|
|
116,713 |
|
Retained earnings |
|
|
270,685 |
|
|
|
268,355 |
|
Total stockholders' equity |
|
|
389,883 |
|
|
|
385,140 |
|
Total liabilities and stockholders' equity |
|
$ |
650,033 |
|
|
$ |
608,886 |
|
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(Unaudited) |
||||||||
(In thousands) |
||||||||
|
||||||||
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
10,873 |
|
|
$ |
14,172 |
|
Adjustments to reconcile net income to net cash provided by operating |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
1,343 |
|
|
|
1,218 |
|
Equity-based compensation |
|
|
2,559 |
|
|
|
1,278 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
(2,524) |
|
|
|
(2,659) |
|
Inventories |
|
|
1,748 |
|
|
|
25,072 |
|
Income taxes receivable |
|
|
1,625 |
|
|
|
1,996 |
|
Prepaid expenses and other current assets |
|
|
(13,032) |
|
|
|
(4,925) |
|
Other assets |
|
|
(226) |
|
|
|
(442) |
|
Accounts payable |
|
|
8,179 |
|
|
|
(1,690) |
|
Income taxes payable |
|
|
1,248 |
|
|
|
2,368 |
|
Accrued expenses |
|
|
7,765 |
|
|
|
(2,747) |
|
Returns reserve |
|
|
20,616 |
|
|
|
10,544 |
|
Right-of-use lease assets and current and non-current |
|
|
(128) |
|
|
|
534 |
|
Other current liabilities |
|
|
(1,655) |
|
|
|
4,110 |
|
Net cash provided by operating activities |
|
|
38,391 |
|
|
|
48,829 |
|
Investing activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
(1,735) |
|
|
|
(1,148) |
|
Net cash used in investing activities |
|
|
(1,735) |
|
|
|
(1,148) |
|
Financing activities: |
|
|
|
|
|
|
||
Proceeds from the exercise of stock options, net of |
|
|
(145) |
|
|
|
161 |
|
Repurchases of Class A common stock |
|
|
(8,119) |
|
|
|
— |
|
Net cash (used in) provided by financing activities |
|
|
(8,264) |
|
|
|
161 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(425) |
|
|
|
755 |
|
Net increase in cash and cash equivalents |
|
|
27,967 |
|
|
|
48,597 |
|
Cash and cash equivalents, beginning of period |
|
|
245,449 |
|
|
|
234,724 |
|
Cash and cash equivalents, end of period |
|
$ |
273,416 |
|
|
$ |
283,321 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid during the period for: |
|
|
|
|
|
|
||
Income taxes, net of refund |
|
$ |
1,599 |
|
|
$ |
255 |
|
Operating leases |
|
$ |
2,254 |
|
|
$ |
1,795 |
|
Supplemental disclosure of non-cash activities: |
|
|
|
|
|
|
||
Lease assets obtained in exchange for new operating lease liabilities |
|
$ |
1,994 |
|
|
$ |
20,452 |
|
|
||||||||
SEGMENT INFORMATION |
||||||||
(Unaudited) |
||||||||
|
||||||||
The following table summarizes our net sales and gross profit for each of our reportable segments (in thousands): |
||||||||
|
||||||||
|
|
Three Months Ended |
|
|||||
Net sales |
|
2024 |
|
|
2023 |
|
||
REVOLVE |
|
$ |
229,589 |
|
|
$ |
231,653 |
|
FWRD |
|
|
40,992 |
|
|
|
47,956 |
|
Total |
|
$ |
270,581 |
|
|
$ |
279,609 |
|
|
|
|
|
|
|
|
||
Gross profit |
|
|
|
|
|
|
||
REVOLVE |
|
$ |
127,672 |
|
|
$ |
120,236 |
|
FWRD |
|
|
13,830 |
|
|
|
18,984 |
|
Total |
|
$ |
141,502 |
|
|
$ |
139,220 |
|
|
|
|||||||
|
|
|||||||
The following table lists net sales by geographic area (in thousands): |
|
|||||||
|
|
|||||||
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
$ |
219,133 |
|
|
$ |
226,716 |
|
Rest of the world |
|
|
51,448 |
|
|
|
52,893 |
|
Total |
|
$ |
270,581 |
|
|
$ |
279,609 |
|
|
||||||||
KEY OPERATING AND FINANCIAL METRICS |
||||||||
(Unaudited) |
||||||||
|
||||||||
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands, except average order value and percentages) |
|
|||||
Gross margin |
|
|
52.3 |
% |
|
|
49.8 |
% |
Adjusted EBITDA |
|
$ |
13,267 |
|
|
$ |
15,010 |
|
Free cash flow |
|
$ |
36,656 |
|
|
$ |
47,681 |
|
Active customers |
|
|
2,551 |
|
|
|
2,424 |
|
Total orders placed |
|
|
2,223 |
|
|
|
2,278 |
|
Average order value |
|
$ |
299 |
|
|
$ |
288 |
|
|
||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
||||||||
(Unaudited) |
||||||||
|
||||||||
A reconciliation of non-GAAP Adjusted EBITDA to net income for the three months ended |
||||||||
|
||||||||
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Net income |
|
$ |
10,873 |
|
|
$ |
14,172 |
|
Excluding: |
|
|
|
|
|
|
||
Other income, net |
|
|
(5,321) |
|
|
|
(6,585) |
|
Provision for income taxes |
|
|
3,776 |
|
|
|
4,669 |
|
Depreciation and amortization |
|
|
1,343 |
|
|
|
1,218 |
|
Equity-based compensation |
|
|
2,559 |
|
|
|
1,278 |
|
Non-routine items(1) |
|
|
37 |
|
|
|
258 |
|
Adjusted EBITDA |
|
$ |
13,267 |
|
|
$ |
15,010 |
|
|
|
(1) |
Non-routine items in the three months ended |
A reconciliation of non-GAAP free cash flow to net cash provided by operating activities for the three months ended |
||||||||
|
||||||||
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Net cash provided by operating activities |
|
$ |
38,391 |
|
|
$ |
48,829 |
|
Purchases of property and equipment |
|
|
(1,735) |
|
|
$ |
(1,148) |
|
Free cash flow |
|
$ |
36,656 |
|
|
$ |
47,681 |
|
Net cash used in investing activities |
|
$ |
(1,735) |
|
|
$ |
(1,148) |
|
Net cash (used in) provided by financing activities |
|
$ |
(8,264) |
|
|
$ |
161 |
|
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SOURCE