Kits Eyecare (KITS) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenue of $37.9 million (CAD 38 million), up 26% year-over-year, with Canadian revenue up 47% and glasses revenue up 41.7%.

• Net income reached $0.2 million ($0.01/share), reversing a $1.2 million loss last year; seventh consecutive quarter of positive Adjusted EBITDA, with margin at 3.5%.

• Customer base expanded to nearly 1 million, with over 875,000 active customers and 64% of revenue from returning customers.

• Strong network effects, operational leverage, and economies of scale drove efficiency and growth across both contact lens and eyeglasses segments.

• Record repeat revenue of $24.0 million in Q2 2024, up $5.5 million year-over-year.

Financial highlights

• Gross profit reached $12.4 million (32.8% margin), up 25.2% year-over-year; net income: $0.2 million ($0.01/share).

• Adjusted EBITDA: $1.3 million (3.5% margin), up from $0.5 million (1.7% margin) last year.

• Positive cash flow of $1.1 million in Q2; cash and equivalents at quarter end: $19.3 million.

• Marketing expense as a percent of revenue declined to 13.4% in Q2 2024; fulfillment expenses dropped to 11.2%.

• Average order value increased by over 21% year-over-year to CAD 182; revenue from new customers reached a record $13.8 million.

Outlook and guidance

• Q3 2024 revenue guidance set at $39 million–$41 million, implying 25%–32% year-over-year growth.

• Targeting 3%–5% adjusted EBITDA margin for Q3.

• Focus on gross margin expansion by targeting higher margin customers and reducing promotions.

• Continued investment in product innovation, technology, and partnerships expected to drive future growth.

• Growth to be funded from cash flow, supported by a healthy balance sheet.