Revolve Group (RVLV) Q2 2024 earnings summary

Executive summary

• Net sales increased 3.2% year-over-year to $282.5 million in Q2 2024, with net income more than doubling to $15.4 million and adjusted EBITDA rising 97% to $20.5 million, driven by improved marketing, logistics efficiency, and lower return rates.

• Gross margin rose 7 basis points to 54.0%, and diluted EPS increased 110% year-over-year to $0.21.

• Active customers grew 5% year-over-year to 2.58 million, with international net sales up 13% and domestic up 1%.

• Operational efficiencies, including marketing and logistics, exceeded expectations and contributed to profitability.

• Continued investment in international expansion, AI technology, and physical retail, including the acquisition of Alexandre Vauthier.

Financial highlights

• Net sales: $282.5 million (+3.2% YoY); REVOLVE segment +4.4% YoY to $245.5 million, FWRD segment -4.3% YoY to $36.9 million.

• International net sales grew 13% YoY to $57.4 million; domestic net sales up 1% YoY to $225.1 million.

• Gross margin: 54.0% (+7 bps YoY); net income: $15.4 million (+111% YoY); EPS: $0.21 (+110% YoY).

• Adjusted EBITDA: $20.5 million (+97% YoY); active customers: 2.58 million (+5% YoY); average order value: $306, up from $301 YoY.

• Free cash flow was negative $26.7 million in Q2 2024, impacted by working capital changes; cash and equivalents at $244.7 million, no debt.

Outlook and guidance

• Q3 2024 net sales in July up mid-single digits YoY, continuing positive momentum.

• Q3 gross margin expected at 52.3%-52.5% (+70 bps YoY); full-year 2024 gross margin expected at 52.5%-53%.

• Marketing investment for Q3 at 15.2% of net sales; full-year guidance lowered to 15.3%-15.5%.

• G&A expense for full year 2024 raised to $135-$138 million, mainly due to the Alexandre Vauthier acquisition and AI investments.

• Management remains focused on profitable growth, customer acquisition, and international expansion amid macroeconomic uncertainty.