Net Revenues Growth of 20.9% YoY, Net Income of $4.9 million, and Adjusted EBITDA Margin of 17.6%, Ahead of Our Expectations

Heather Hasson Named Executive Chair; Trina Spear Becomes Sole Chief Executive Officer

FIGS, Inc. (NYSE: FIGS) (the “Company”), the direct-to-consumer healthcare apparel and lifestyle brand, today released its second quarter 2022 financial results and published a financial highlights presentation on its investor relations website at ir.wearfigs.com/financials/quarterly-results/.

Second Quarter 2022 Financial Highlights

• Net revenues were $122.2 million, an increase of 20.9% year over year, driven by an increase in orders as a result of strong retention of existing customers and new customer acquisition and, to a lesser extent, an increase in AOV.
• Gross margin was 70.6%, a decrease of 270 basis points year over year, driven by increased ocean and air freight rates, an increase in freight-in driven by higher utilization of more expensive air freight, and product mix shift.
• Operating expenses were $76.9 million, a decrease of 27.6% year over year. As a percentage of net revenues, operating expenses decreased to 62.8% from 105.0% in the prior year period, primarily driven by lower stock-based compensation expense.
• Net income was $4.9 million and diluted earnings per share was $0.03.
• Net income, as adjusted⁽¹⁾ was $6.3 million and diluted earnings per share, as adjusted⁽¹⁾ was $0.03.
• Adjusted EBITDA⁽¹⁾ was $21.5 million, a decrease of $5.3 million year over year.
• Adjusted EBITDA margin⁽¹⁾ was 17.6%, a decrease of 890 basis points year over year.

Key Operating Metrics

• Active customers⁽²⁾ as of June 30, 2022 increased 26.2% to 2.0 million.
• Net revenues per active customer⁽²⁾ was $227, an increase of 3.7% year over year.
• Average Order Value (“AOV”)⁽²⁾ was $109, an increase of 5.8% year over year primarily driven by higher units per transaction and average unit retail.

Comments from FIGS’ Co-Founder and Chief Executive Officer, Trina Spear:

“We are thrilled to deliver both net revenues and adjusted EBITDA results ahead of our expectations,” said Trina Spear, CEO and Co-Founder. “Our ability to achieve over 20% topline growth and sustain strong profitability in this difficult macro environment makes me more confident than ever in the long-term growth potential of our business.”

2022 Financial Outlook

• Maintaining Net revenues outlook in the range of $510 to $530 million, representing year over year growth of approximately 22% to 26%.
• Maintaining Adjusted EBITDA margin⁽³⁾ outlook in the range of 16% to 18%.

Changes to Leadership Titles

FIGS announced new titles for co-Chief Executive Officers, Heather Hasson and Trina Spear. Effective immediately, Ms. Hasson, who also serves as Chair of the Board of Directors, will assume the title of Executive Chair and continue to focus on developing product innovations for FIGS. Ms. Spear will be FIGS’ sole Chief Executive Officer, where she will continue to chart the Company’s strategic direction as well as oversee day-to-day operations.

“It’s been almost a decade since we founded FIGS to bring innovative products to the highly overlooked healthcare community and celebrate their incredible commitment to humanity,” said Ms. Hasson. “As Trina and I continue our partnership, today’s announcement formalizes a division of responsibility that naturally came about as we progressed during our first year as a public company. The clarity of title and roles will allow me to focus on product innovation, and I look forward to continuing to work alongside Trina, who has executed as a brilliant leader for FIGS for many years now.”

“Heather’s exceptional vision, creativity and deep understanding of the healthcare community led us to build FIGS into what it is today,” said Ms. Spear. “While our titles have changed, little else has, and I am excited to continue our partnership and shared mission to champion the healthcare community.”

Conference Call Details

FIGS management will host a conference call and webcast today at 2:00 p.m. PT / 5:00 p.m. ET to discuss the Company’s financial and business results and outlook. To participate, please dial 1-844-200-6205 (US) or 1-929-526-1599 (International) and the conference ID 917136. The call is also accessible via webcast at ir.wearfigs.com. A recording will be available shortly after the conclusion of the call until 11:59 p.m. ET on August 11, 2022. To access the replay, please dial 1-866-813-9403 (US) or +44-204-525-0658 (International) and the conference ID 972700. An archive of the webcast will be available on FIGS’ investor relations website at ir.wearfigs.com.

Non-GAAP Financial Measures and Key Operating Metrics

In addition to the GAAP financial measures set forth in this press release, the Company has included non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. The Company has also included “active customers,” “net revenues per active customer” and “average order value,” which are key operational and business metrics that are important to understanding Company performance. The Company calculates “active customers” as unique customer accounts that have made at least one purchase in the preceding 12-month period. The Company calculates “net revenues per active customer” as the sum of the total net revenues in the preceding 12-month period divided by the current period “active customers.” The Company calculates “average order value” as the sum of the total net revenues in a given period divided by the total orders placed in that period. Total orders are the summation of all completed individual purchase transactions in a given period.

The Company uses “net income, as adjusted,” “diluted earnings per share, as adjusted,” “adjusted EBITDA” and “adjusted EBITDA margin” to provide useful supplemental measures that assist in evaluating its ability to generate earnings, provide consistency and comparability with its past financial performance and facilitate period-to-period comparisons of its core operating results as well as the results of its peer companies. The Company calculates “net income, as adjusted,” as net income adjusted to exclude transaction costs, expenses related to non-ordinary course disputes, stock-based compensation, including expense related to award modifications, accelerated performance awards and ambassador grants in connection with the IPO, and expense resulting from the retirement of the Company's previous CFO, and the income tax impact of these adjustments. The Company calculates “diluted earnings per share, as adjusted” as net income, as adjusted divided by diluted shares outstanding. The Company calculates “adjusted EBITDA” as net income adjusted to exclude: other income (loss), net; gain/loss on disposal of assets; provision for income taxes; depreciation and amortization expense; stock-based compensation and related expense; transaction costs; and expenses related to non-ordinary course disputes. The Company calculates “adjusted EBITDA margin” by dividing adjusted EBITDA by net revenues.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included below under the heading “Reconciliations of GAAP to Non-GAAP Measures.”

About FIGS

FIGS is a founder-led, direct-to-consumer healthcare apparel and lifestyle brand that seeks to celebrate, empower, and serve current and future generations of healthcare professionals. We create technically advanced apparel and products for healthcare professionals that feature an unmatched combination of comfort, durability, function, and style. We market and sell our products directly through our digital platform to provide a seamless experience for healthcare professionals.

Forward Looking Statements

This press release contains various forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are based on current management expectations, and which involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, such forward-looking statements. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking. These forward-looking statements generally are identified by the words “anticipate”, “believe”, “contemplate”, “continue”, “could”, “estimate”, “expect”, “forecast”, “future”, “intend”, “may”, “might”, “opportunity”, “outlook”, “plan”, “possible”, “potential”, “predict”, “project,” “should”, “strategy”, “strive”, “target”, “will” or “would”, the negative of these words or other similar terms or expressions. The absence of these words does not mean that a statement is not forward-looking. These forward-looking statements address various matters, including expectations regarding long-term growth and the Company’s outlook as to net revenues and adjusted EBITDA margin for the full year ending December 31, 2022; the Executive Chair’s continued focus on developing product innovations; the CEO’s continued role in the Company’s strategic direction and day-to-day operations; the continued partnership of the Executive Chair and CEO; all of which reflect the Company’s expectations based upon currently available information and data. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected and you are cautioned not to place undue reliance on these forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: the impact of COVID-19 on the Company’s operations; the Company’s ability to maintain its recent rapid growth; the Company’s ability to maintain profitability; the Company’s ability to maintain the value and reputation of its brand; the Company’s ability to attract new customers, retain existing customers, and to maintain or increase sales to those customers; the success of the Company’s marketing efforts; the Company’s ability to maintain a strong community of engaged customers and Ambassadors; negative publicity related to the Company’s marketing efforts or use of social media; the Company’s ability to successfully develop and introduce new, innovative, and updated products; the competitiveness of the market for healthcare apparel; the Company’s ability to attract and retain highly skilled team members; risks associated with expansion into, and conducting business in, international markets; changes in, or disruptions to, the Company’s shipping arrangements; the Company’s ability to accurately forecast customer demand, manage its inventory, and plan for future expenses; the Company’s reliance on a limited number of third-party suppliers; the fluctuating costs of raw materials; the Company’s failure to protect its intellectual property rights; the fact that the operations of many of the Company’s suppliers and vendors are subject to additional risks that are beyond its control; and other risks, uncertainties, and factors discussed in the “Risk Factors” section of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 to be filed with the Securities and Exchange Commission (“SEC”), the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 10, 2022, and the Company’s other periodic filings with the SEC. The forward-looking statements in this press release speak only as of the time made and the Company does not undertake to update or revise them to reflect future events or circumstances.

The following table presents a reconciliation of net income, as adjusted and diluted earnings per share, as adjusted to net income, which is the most directly comparable financial measure calculated in accordance with GAAP:

The following table presents a reconciliation of adjusted EBITDA to net income, which is the most directly comparable financial measure calculated in accordance with GAAP:

Active customers as of June 30, 2022 and 2021, respectively, net revenues per active customer as of June 30, 2022 and 2021, respectively, and average order value for the three and six months ended June 30, 2022 and 2021, respectively, are presented in the following tables:

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005925/en/