FIGS (FIGS) Q3 2024 earnings summary

Executive summary

• Q3 2024 net revenues were $140.2M, down 1.5% year-over-year, mainly due to lower average order value and U.S. softness, partially offset by record international and TEAMS (B2B) growth.

• Gross margin declined to 67.1% from 68.4% year-over-year, impacted by higher discounts, product mix shifts, and promotional timing.

• Operating expenses rose 17.4% year-over-year, driven by increased marketing (notably the Olympics campaign) and fulfillment center transition costs.

• Net loss was $(1.7)M (diluted EPS $(0.01)), compared to net income of $6.1M (EPS $0.03) in Q3 2023; adjusted EBITDA was $4.8M (3.4% margin), down from 17.2%.

• Completed transition to a new automated fulfillment center and announced a $25M minority investment in OOG, Inc., an AI-powered healthcare education platform.

Financial highlights

• Net revenues: $140.2M (down 1.5% year-over-year); gross margin: 67.1% (down 1.3 percentage points); adjusted EBITDA: $4.8M (3.4% margin); net loss: $(1.7)M.

• Scrubwear revenue grew 2% and represented 84% of net revenues; non-scrubwear declined 16%.

• Free cash flow for Q3 was $18.4M and $37.1M year-to-date; cash, equivalents, and short-term investments totaled $281.7M at quarter end.

• Operating expenses: $102.7M (73.2% of net revenues, up from 61.5%); marketing expense was $28.5M (20.3% of net revenues), up from 13.4% last year.

• Net revenues per active customer: $205 (down 3.3%); AOV: $108 (down 5.3%); active customers up 4% to 2.7M.

Outlook and guidance

• Full-year 2024 net revenues expected to be down 1% to flat versus 2023; adjusted EBITDA margin guidance is approximately 8%.

• Full-year gross margin expected to be 150–170 bps lower than prior year.

• FY25 expected to benefit from normalization of marketing and elimination of $13M in transition costs.

• The company believes existing cash, cash flows, and available credit will be sufficient for at least the next 12 months.