On August 8, 2024, FIGS Inc (FIGS, Financial) released its 8-K filing detailing its financial performance for the second quarter of 2024. FIGS Inc is a healthcare apparel company that designs and sells scrubwear and non-scrubwear, including outerwear, underscrubs, footwear, compression socks, lab coats, loungewear, and other apparel. The company markets and sells its products primarily in the United States through its digital platforms.
Performance Overview
FIGS Inc reported net revenues of $144.2 million for Q2 2024, surpassing the analyst estimate of $136.30 million and reflecting a 4.4% year-over-year increase. This growth was driven by an increase in orders from existing customers, although it was partially offset by a decrease in average order value (AOV).
Despite the revenue growth, the company faced challenges with its gross margin, which decreased by 2.1% year-over-year to 67.4%. This decline was primarily due to a product mix shift related to the outperformance of limited edition scrubwear and non-scrubwear. Operating expenses also increased by 7.0% year-over-year to $95.7 million, driven by higher selling and marketing expenses, including costs associated with the transition to a new fulfillment center.
Financial Achievements and Challenges
FIGS Inc reported a net income of $1.1 million, or $0.01 per diluted share, which matched the analyst estimate of $0.01 per share but represented a decrease of $3.5 million year-over-year. The net income margin fell to 0.8% from 3.4% in the same period last year. Adjusted EBITDA was $12.9 million, down from $18.9 million in Q2 2023, with an adjusted EBITDA margin of 9.0%, compared to 13.7% in the previous year.
“Our strong second quarter performance shows that our investments are paying off,” said Trina Spear, Chief Executive Officer and Co-Founder. “Both net revenues and adjusted EBITDA margin exceeded our outlook, and we saw continued momentum in the business, including a positive year-over-year repeat frequency trend.”
Key Metrics and Financial Statements
Active customers increased by 6.1% year-over-year to 2.6 million as of June 30, 2024. However, net revenues per active customer decreased by 2.3% to $210, and AOV decreased by 1.7% to $113, primarily due to accounting reclassification between net revenues and selling expenses related to duty subsidies for international customers.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Revenues | $144.2 million | $138.1 million |
| Gross Margin | 67.4% | 69.5% |
| Operating Expenses | $95.7 million | $89.5 million |
| Net Income | $1.1 million | $4.6 million |
| Adjusted EBITDA | $12.9 million | $18.9 million |
Balance Sheet and Cash Flow
As of June 30, 2024, FIGS Inc reported total assets of $526.0 million, up from $473.2 million as of December 31, 2023. The company’s cash and cash equivalents stood at $131.8 million, with short-term investments of $136.7 million. Total liabilities were $124.3 million, compared to $96.4 million at the end of 2023.
Net cash provided by operating activities for the first six months of 2024 was $28.2 million, compared to $26.5 million in the same period last year. However, net cash used in investing activities increased to $40.8 million from $40.0 million in the previous year.
Share Repurchase Program
FIGS Inc announced a $50 million share repurchase program, reflecting the company’s confidence in its financial profile and long-term business outlook. The program allows for repurchases in the open market, through privately negotiated transactions, or other methods, subject to market conditions and other factors.
“We believe we have sufficient liquidity and cash flow generation to both invest internally for growth and also return value to our shareholders through a share repurchase program,” said Ms. Spear.
Conclusion
FIGS Inc’s Q2 2024 financial results highlight the company’s ability to grow its revenue base despite facing margin pressures and increased operating expenses. The announcement of a share repurchase program underscores management’s confidence in the company’s future prospects. Investors will be keen to see how FIGS Inc navigates its challenges and leverages its strengths in the coming quarters.
Explore the complete 8-K earnings release (here) from FIGS Inc for further details.
