In its latest financial update, Revolve Group (RVLV, Financial) reported first-quarter revenue of $296.71 million, falling just shy of the anticipated $297.84 million. Despite this minor shortfall, the company showcased significant progress in a challenging economic landscape.
The co-founder and co-CEO highlighted the robust execution that led to a notable double-digit increase in revenue and a remarkable 57% rise in operating income compared to the previous year. Furthermore, the company generated $45 million in operating cash flow, which has contributed to a bolstered balance sheet.
The leadership emphasized the importance of ongoing investments in strategic initiatives to ensure sustained long-term growth. These efforts are deemed crucial, especially as competitors facing weaker financial positions are reducing their investment plans in response to current uncertainties.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 15 analysts, the average target price for Revolve Group Inc (RVLV, Financial) is $26.73 with a high estimate of $37.00 and a low estimate of $19.00. The average target implies an upside of 41.15% from the current price of $18.94. More detailed estimate data can be found on the Revolve Group Inc (RVLV) Forecast page.
Based on the consensus recommendation from 16 brokerage firms, Revolve Group Inc's (RVLV, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Revolve Group Inc (RVLV, Financial) in one year is $28.07, suggesting a upside of 48.2% from the current price of $18.94. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Revolve Group Inc (RVLV) Summary page.
RVLV Key Business Developments
Release Date: February 25, 2025
- Net Sales: $294 million in Q4, an increase of 14% year-over-year.
- REVOLVE Segment Net Sales: Increased 15% year-over-year in Q4.
- FWRD Segment Net Sales: Increased 11% year-over-year in Q4.
- Gross Margin: Increased by approximately 50 basis points year-over-year in Q4.
- Net Income: $12 million in Q4, more than tripled from $3 million in the prior year quarter.
- Adjusted EBITDA: $18 million in Q4, an increase of 114% year-over-year.
- Active Customers: 2.7 million, an increase of 5% year-over-year.
- Total Orders Placed: 2.2 million, an increase of 7% year-over-year.
- Average Order Value: $301, a decrease of 1% year-over-year.
- Fulfillment Costs: 3.2% of net sales, a decrease of 27 basis points year-over-year.
- Selling and Distribution Costs: 16.5% of net sales, a decrease of 129 basis points year-over-year.
- Marketing Investment: 14.8% of net sales, a decrease of 168 basis points year-over-year.
- Cash and Cash Equivalents: $257 million as of December 31, 2024, an increase of 5% year-over-year.
- Inventory: $229 million as of December 31, 2024, an increase of 13% year-over-year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revolve Group Inc (RVLV, Financial) reported a 14% year-over-year increase in net sales for the fourth quarter, marking the first double-digit growth across all segments and geographies in 2.5 years.
- The company achieved a more than doubling of net income and adjusted EBITDA year-over-year, with net income reaching $12 million and adjusted EBITDA increasing by 114%.
- Revolve Group Inc (RVLV) successfully reduced its return rate by over 2 percentage points year-over-year, contributing to significant marketing and logistics cost efficiencies.
- The company made meaningful advancements in AI technology, enhancing customer experience through AI-powered search algorithms and product recommendations.
- Revolve Group Inc (RVLV) saw strong growth in adjacent product zones, with beauty, men's, and home products each increasing by a healthy double-digit percentage year-over-year.
Negative Points
- Average order value decreased by 1% year-over-year, primarily due to product mix changes in the FWRD segment.
- General and administrative expenses were higher than expected, with a $6 million overage, partly due to non-routine costs and increased stock-based compensation.
- The company faced challenges in January due to wildfires in Los Angeles, which temporarily impacted demand and led to a pause in social media activity.
- Despite improvements, the inventory growth slightly outpaced net sales growth, indicating ongoing efforts to rebalance inventory levels.
- Revolve Group Inc (RVLV) anticipates potential impacts from new China tariffs, which could affect the REVOLVE segment's gross margin.
