Earnings call transcript Q1 2023

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Operator

Thank you, and good morning, everyone.

Here with me today are Neil Blumenthal and Dave Gilboa, our co-founders and co-CEOs, alongside Steve Miller, Senior Vice President and Chief Financial Officer.

Before we begin we have a couple of reminders.

Our earnings release and slide presentation are available on our website at investors.waybyparker.com.

During this call and in our presentation we will be – will be making comments on the forward-looking nature. materially various expressed risks differ a implied may of result and results from or those as Actual uncertainties.

we revise Risk including For these more XX-K. or as as publicly session These filings on are on and expect of risks, of to statements. company's law, titled, the forward-looking update information please review forward-looking required annual information the assume company's Form about report obligation Factors, our the some May no based XXXX, latest statements SEC by X,

Additionally, financial in comparable be reconciliation measures A accordance discussing GAAP US morning's a to These we in certain will be GAAP. direct and release press for non-GAAP measures and of deck measures can measures. these website. financial our of substitute this addition prepared IR slide US non-GAAP financial items performance are found our available to in with most not on the

that to it I over And pass Neil to will with off. us kick

Neil Blumenthal

you that the this is off thank for across driving in XXXX encouraging as start the year and joining an last trends results results. first discuss of we late many morning Warby first operating our experienced XXXX to surpassed all accelerated Welcome, expectations. positive Parkers’ quarter business quarter, to

month. off the period to to revenue the normalized FSA a second X% for strong revenue half a to the more to XXXX. QX growth of XX% return $XXX compared highlighted our by of increased results late between in December, acceleration X% compared million forecasted shopping built were growth to range which and was QX in an

by marketing gains we and demand our are industry capturing optical focus growth and our the through expansion. has experience, on our face the share customer While product store impacted spend, been market to in pullback innovation pressures continues

along and sizable dollars corporate use adjusted growth, significant improvement actions a EBITDA leverage margins last to through year structure quarter. double-digit took the a cost fueled efficient of right-size combination of marketing our in we the midway revenue and with A more to

solid compared record helped for of EBITDA last QX a adjusted levels, our XXX% that pre-pandemic year of $XX levels. offset expected in was and realigning way, year e-commerce with process are $XX.X reaching second higher softness spend led guidance to last XXXX as million range. stores company million the final productivity average $X.X year. QX in with above in and we performance stages began of quarter a quarterly This with the represents By demand ago, channel the the million, marketing a of compared

six market. XX% or quarter eye quarter in opened stores offering include the one of number brought locations fleet. exams our first new the including stores of new end to eye at also capabilities, We All exam six which XXX

a we seen nice higher of we've eye of in increased by customer, offering exam revenue progressive stores number exam, have per As uptick and driven a penetration lenses. eye average both the revenue

fashion aimed and positive We also aspects have promote current cross glasses. the of and purchasing meant to are levels seen product traffic to the of two in bundling of capitalizing which at on programs, environment amplifying purchasing pair our lower responses

the e-commerce average strong increased we million of reduction the On $XXX, active $X.XX a in customers, spend was in this customers second the to revenue a marketing until trailing basis, year customers same in we ago. XX-month half in X.X% per with At time, up declines offsetting retail year. X.X% from customer gains lap

outlook be the industry our pleased year Parker Overall, start at about large. continue we optical and the Warby we for positive are and to the with to

the in steady have the see growth runway predictable care While $XX inflationary a continue patterns and changed we Warby the recent their market. pressure industry, long within for spending time are money and optical consumers to for billion how changes normally vision and and

new growth pricing, and brand and business combined attractive exceptional its awareness our return our continue gains. customer long-term greater store and the that with to base trajectory we'll market expect experiences exciting and to growing products We sustained share fuel

And made this to quarter. through Dave against over the walk growth with progress driver we've primary that, to our it I'll turn

Dave Gilboa

Good morning, everyone.

are Neil As in we with pleased the of QX just current positive outlined, environment. light we in delivered results financial the demand

While we our we the consumer some have cautious positive start seen trends with remain year, to forecast.

This industry's is in to X% compares growth The market optical rate growing historical to XXXX less of in XXXX X% the to projecting little overall between than Vision X.X% after a the to only contract X% Council XXXX. XXXX.

marketing strategic are investments to cost reducing spend up QX enhanced business double-digits in as by continue and clearly deliver industry market We in to normalize. outpacing company revenue our to management, year-over-year. with the accelerate the position with XX% despite conditions believe approach growth We the long-term profitability balancing disciplined

we and can't don't they and omnichannel are focus. who eye have exam. nearby of consumers of stores store new advancing Opening remains because aware it's a a get our us, Parker key reasons presence main have not from Two an purchased Warby

remain demand Stores efficient returns even with in capital current the compelling environment.

four-wall XX%. New generate in XX months adjusted stores strong back within line margins with to continue our EBITDA and pay target of

while integral stores holistic experience eye for through offering customers EyeCare a exam are and advancing ecosystem their stores that higher to find capabilities. our patients. sales And non-exam our more drive exam We to stores, seamless

exam of attracting glasses represents purchased customers channel prescription burgeoning store to location and new Industry-wide our and existing products to gateway our lenses while at and eye progressive offerings. ASP same the highest contact place our increase highest nearly takes margin and XX% are the of penetration

new one existing We urban strategic continued stores QX opening locations. in markets investment our and in in four stores in two in suburban a market including new five

we of total of XXXX, add stores to year. this we As on a XX the are track remainder look to

open while markets believe for fraction of we the in opportunity can of significant US. shops XX,XXX we US, existing penetration a small further Longer to stores representing in term, XXX-plus new a come still the years optical and the for

as XXX points was to year-over-year sales of our prescription an of in progressive XX.X% accelerator QX. store has eyeglass progressive. penetration have addition, to stores footprint basis In up units expanded act Progressive as

omnichannel in ever are our marketing exam. evolve reduction by growth impacted e-comm digital our Our of enhancing we by reorder contacts capability excited accessibility category in to virtual making a unique and remains easier it to and frame book our than continue eye spend experience trials increasing has experience disproportionately while to recommendations and been an or

Along offset also with conversion XXXX. per placing driving customer trends are higher in we lower to increased channel expansion revenue emphasis on an help and traffic

within in-store in We us. percentage of multiple customers products have the gains seen from purchasing conversion

verticals glasses business. Along core business with of we committed our our to other growing the are

revenue ago. This figure frequent represented versus still points year and up average with business contact cycle for well white order growth. XX% a basis its significant Our more space XX future the is represents opportunity industry of below X.X% QX of

is exam go majority another Eye of exams contacts now represents versus of this QX in area X.X% of the to glasses, add continue purchase eye X.X% growing to as new our continue year to focus year we on this capability we Our and business exam revenue stores. customers last or existing and vast to see both.

in with focused also While pleased intently we are with new seen two-pronged are growth driving increases we strategy. revenue per customer, on average a customer the we've

product new through organic expansion driven by and growth is first introductions. retail our The

acquisition stores largest our customer Our is vehicles. mouth new source of and of great customers word

with along customer second year, are traffic pickup In the difficult Fallon, Sun half new in plan, a and provide which expect reversible see with with we step should stronger five year. in unique tailwind comparisons business Jimmy the into heading marketing to overall past once eyewear collaboration the with wear launched a new retail next scale our of significant we this in spend We acquisitions e-commerce which the QX, store awareness generated expansion press collections in traffic.

levels With rebalanced Second and our in percent tactics, expect spend is linear revenue between now pre-pandemic creation including in TV the line a digits. ongoing brand investment in marketing. in as pre-pandemic like low digital remain and plan judicially with stores We through and SEM. double invest of e-comm different to strategic building marketing strategically and investment we channel programs mix demand SEO and to levels in to

to More both those and have at insurance, market. the mix we deliver XX% vision portion sustainable a in with steady even Insurance a enabling value. attracting customers these with levels for overall customers are seeing customers expect in growth. than pleased are of efficiency their with customer the leveraging to remains We opportunity big and marketing us and us new drive are of A our line us. better benefits new

their provider. spend others they a it's recognize out-of-pocket than still While were in-network Parker different that go at to if Warby to lower

make number a underway customers. of seamless our for have to insurance reimbursement efforts We more

paying than more just First, and saw ever checkout. with range who vision at apply net strong with those at QX, insurance relationships price benefits customers. benefits us, their those do their reimbursement continuing don't can plans. spend More from in-network growth than we seamlessly to contracted who of customers we In managed are care develop checkout their a apply

In parallel, maintaining between customers quarter we in healthy of regardless, for out or of new and to all their introduce our look EBITDA they And a features easier adjusted network. that we will up if make driving to are margins. it plan expanding this benefits lastly, are faster growth balance and

to spend expect to expense media monitor rates from levels going and headquarters benefit more efficient at to and continue forward. align, current We marketing traffic stores both and carefully we trends lower with

flexible margin of our bottom these to plan and support a growth through EBITDA reinvest into portion to these of While being our portion long-term guidance XXXX, of savings by flow savings our in are for business will the line back objectives. we evidenced a adjusted

in now, pass the And to Steve our detail. to over call financial performance cover I'll more

Steve Miller

with our Neil to revenue January strong million improving revenue million. expiration of in Dave. $XXX generated late period range the Starting to December the $XXX with $XXX of and combined everyone. above up our store contributed Good year-over-year start to of end Thanks, high revenue, in performance million, recognized from and we XXXX. Deferred morning, FSA guidance strong XX.X%

From a approximately declined approximately of X% XX%, increased revenue revenue QX versus channel while e-commerce retail XXXX. perspective

represented by decline with XX% mix. by in marketing line spend marketing in an e-commerce For we revenue as pre-pandemic back spend expectations the our overall in business of and pre-pandemic levels low to quarter, in percent driven as XX% a reduction The bring revenue year-over-year, e-commerce teens. XX% of our in first the to intentional line and channel in compared with was XXXX our

we've to made We begin and e-commerce marketing year positive comping expect marketing in spend the this year-over-year. begin anniversary pullbacks in spend increase as to dollars of we HX revenue

stores in QX our of QX year-over-year. last an XX%, revenue approximately with Retail the XXX% increase increase We finished about to retail favorably compares versus an in of XXX which year. count was of stores, XXXX productivity XX store and same period XX%

revenue noting customers year ago, a X.XX period average the increased From we our an customer per as same increase a marketing to of our by finished spend. customers, quarter worth are X.X% increasing openings active rebalance and decreasing and where perspective, $XXX. follows we growth similar a retail in that customer e-commerce with million customers store the year-over-year X.X% to our pattern in in It's active driven versus growth active channel new revenue our

prescription approximately for of represented average was substantial XX%, QX including the total an XXXX, pleased factors business per continued We're increase by is increase average of runway and still of of sold and a XXXX. quarter XX.X% in first when from with exam to category revenue few both percentage up a mix, well lens customer, glasses driven our our compared contact Progressives XX.X% ramping in as below growth. This a leaving the of eye product which sales. in Progressive market

gross highest Progressives highest starting our at are and point also $XXX. margin product, price

holistic to make contact lenses X.X% Care contact only mix. to have customers. on eye QX glasses, our continue brand a one as to we exams into evolve glass increased X% XXXX our and business from to from offers Vision that XXXX, From QX move We progress of into

represent Over optical eye increased these sales eyecare our national X% and opportunities growth, and future revenue of business retailers. other as a the of to mix. both we remain for well approximately from large products, same X.X% Contacts of for versus period, underpenetrated has exams percent

and exams eye represent portion $XX of optical billion-plus contact billion As $XX a lenses the US each industry. reminder,

margin. gross to Moving on

a reminder, salaries, rent optometrist shipping, optical a store lenses, range customer accounts costs of labs, margin gross build-outs. our the depreciation including As for frames, of and store

lab optical gross includes optometrists, margin Our stock-based expense and also compensation for our employees.

comparability, speaking gross I excluding be stock-based will margin to For compensation.

vision period. large year First growth the into decrease The eye of compared adjusted and to margin, in expand segments holistic the as XX.X% care XX.X% year-over-year contact the lenses, we by and of driven exams ago gross quarter strong company, evolved a industry. optical was was into

revenue and term Expanding exams are As lower a allow a offering the gross our our margin customers' vision part us profiles eyeglasses, a contacts growing reminder, and eye accretive eye long gross average and holistic contact scaling driver customer. but to is medium of of dollars to our of over care key and than margin have care all needs. offering, core per serve

gross margin dollars. While and contact compared higher other subscription-like lenses have cycle are margin offerings, to purchase to a gross lower their purchase our percentage accretive frequency

As billion and $XX.X a reminder, market contact sales. represented in estimated a approximately lenses XX%, account an for retailer typical optical of XXXX

year-over-year fixed cost the that our of more linked gross continued two care. which of optometrist salaries areas represent experienced also directly We occupancy our deleverage, margin goods, eye to portion retail and are expansion into in

in led store to an build-outs. from naturally store rent, and growth store count in Our has depreciation increase

rollout continued optometry pressure on as PC saw in also year-over-year, optometrists our our Professional an stores the or Corporation for model. and increase overall we downward salaries, hired margin We a gross of from new

operated the therefore, revenue XX% of recognize directly optometrist quarter at an optometrist we and the where represents XXX and engage employed last of with we from As XX from both salaries. a PC first end of stores, year-over-year XXXX, and increase QX stores, year. the with exam This exams end

and rates. believe exam stores where the the sales, benefit been in ongoing to conversion are over this doctor. customer an stores portion of We we greater ones in-store the existing PC will term model eye our we business as exam and new doctor independent are converting control long Many store, capabilities, conversion therefore, product from XX PC relationship the benefit our from already significant with of an had a recognizing we at revenue independent experience, model higher investment

few a partially these to offset are to that accretive tailwinds margin effects. act There dilutive

first from and year approximately for of First, gross Progressives to the a scale we continue our up highest XX.X%, prescription is In accounted highest-priced quarter, XX.X% progressive business, margin our business. ago. which

portion two New the orders continue prescription our we scale in-sourced and owned to that labs optical we our Nevada. Secondly, glasses at in York of

benefits We result rates along continued refund net in to expect scores, margin gross our higher times. continued facilities lower turnaround faster scaling of promoter these with and

to Shifting gears SG&A.

SG&A or includes main Home spend As retail the SG&A in non-cash revenue, overhead quarter like costs stock-based and three business customer general marketing expense and components: Adjusted of of compared $XX.X revenue. XXXX adjusted X.X% experience of compensation including SG&A the down $XX.X expenses. QX a first reminder, XX.X% excludes SG&A salary our or our for expense. Adjusted when million XX.X% million was Try-on to corporate headquarters, our program covering employees;

benefits was structure primary lower XX.X% revenue, XX.X% drivers revenue. of at last period in million of down which year-over-year, or of million $XX.X our the the adjusted came revenue The in last spend for in growth compares August adjustments implemented revenue SG&A, a cost of as This decrease $XX.X same percentage to quarter of in is year. the from and Marketing were marketing spend XXXX the lower from year. XX.X% QX of XX% in we year-over-year. costs to and Marketing

adjusted first or EBITDA margin This In compares which EBITDA. adjusted representing significant in million, the drive lower the improvement EBITDA growth and to of in underscores EBITDA a even to quarter adjusted to $XX.X XX.X%, revenue commitment million now Turning of environment. ago profitable our of an year period. ability $X.X of year-over-year adjusted we demand X.X% generated

will and we to to strong cash, now the operations. position a our $XXX.X finished quarter sheet support reflecting balance continue which million in Turning deliberately with deploy balance our We sheet. growth to

We of also million million $XXX have an $XXX than undrawn credit of that other upsize can for we credit facility to million. $X letters

we maintaining At the outlook. this XX. year time, call our February to earnings guidance on on outlined our QX full we're Now

as at our million to line XX Gross million equates our of of expect mid-XXs approximately store representing $XX.X a top XX%, revenue margin new the margin range. a revenue, net EBITDA adjusted XXXX, openings, year-end. to range store EBITDA percent midpoint XXX approximately guidance of bringing by X% X.X%, $XXX million adjusted $XXX growth approximately in of the revenue of to total we still which to of For approximately count

be above both stock-based for multiyear percentage majority to compensation to of as are forecasting compared still forecast $XXX.XX. in $XX.XX and stock grants XX% result low-single-digits to XXXX. is XXXX. net Stock-based range of as equity performance-based from years the net revenue with which X% of targets still our a compensation co-CEOs invest of in We roughly XXXX to the We in a of XXXX, X% in of long-term anticipate compensation stock-based based is our XX% price late the on to normalize to revenue

guiding growth we're following: X% quarter, to second the to $XXX revenue X%. to or the net respect approximately million million revenue $XXX.X to of With of

and retail perspective, EBITDA versus EBITDA bottom-line we've For to adjusted $XX million, XX% between $XX.X to From XX-day X% XXXX of approximately of QX margin productivity to-date, X%. million representing trailing to a guiding XXX%. we're adjusted observed

progression trends last be our the our XXXX our of in adjusted quarterly As profitability noted on the with generated adjusted call, of the line expect we of where in the of EBITDA year. second more we year to versus half our first pre-pandemic of the with the majority EBITDA in generated more half

that, With Dave I Q&A. pleased Operator, are the open your line please to questions. and take Neil, for

Operator

[Operator Dana open. your line Group. first Telsey comes from is Instructions] now question Our Telsey from Dana,

Dana Telsey

you nice rate, Progressive the guidance Thank do firm you the gave for expect of to see of with Fallon do it drive given traffic? big on do do you. And you're Progressive, above Thank you. seemed what How eye Steve business to seeing a how contact the you quarter, the sales guidance to collaborations? improvement exams, and morning, progress. growth you second the to the the those more lenses, the the everyone. very impact and When part Jimmy get that seem sales gross to opportunity in the drive see was see for Good year contacts expect margin the on And us – growth do And you forward? the the lastly, with revenue when going improvement to, this quarter? percentage rate industry how

Steve Miller

Dana, will this the question, Steve. for the and is Dave respond the Hi, of have part or then the related Neil collaboration. the I'll take part Sure. Thanks question to second of first question. we'll to

it and projected haven't think guidance for QX, given mix projecting business product categories. specific Progressive about how for relates contacts around specific to As we we

units. percent prescription possible on drivers of reported and Eye percent a have the business proportion percent of fact to the understand as it's Progressive after of as possible as so contact a growing glasses it's growth care so to understand percentages. what our rates We what a and revenue, of revenue, these our our account growth for, the proportion

in very as uptake contact We lenses, newer a we're from one but well we've continue to seen quite a the to one which some for both which time positive to us to basis exams, lenses, zone. offered are anywhere as or zone percentage two eye relatively improvement we've point see in two products year-over-year on typically progressive

to continue numbers. And report our consistency to so as I would these anticipate on we business see in mix,

And all runway in strong can so excited these of for about growth amplify are color the how and we provide we categories.

a Progressive just a likewise, account market a business, for in very contact business, XX% billion exams, very of XX%, portion our business. our of and lenses of so the a our small small and portion market market billion-plus of eye roughly $XX $XX-plus XX%

growth categories. that about us perspective from these tailwinds remain that across to we a accrue So will product the excited

in across color categories. product QX the that's so specific providing these we would versus that guidance And provide

Neil Blumenthal

viewed energize We've And then elevate lifestyle Parker Warby being brand able to you and collaborations and thoughtful that help front, our do Fallon. collaboration see with the have can continue collaboration a always interesting expect us second brand. as and the to on Jimmy to

these reversible first second Flippies, one fun the was then Spinnies, one sunglasses. was The and

continue energize I attention on things impact a sales And has do the lot drove wouldn't brand. of us excitement, trajectory. characterize a sort to and it while see you'll That they that said gained activate the as and one of meaningful our being to

and quarter past collaboration hop a hip the group. So of icon also a had A$AP we artist Nast, who's with fashion this A$AP part

and a that We launch. XXXX Ricci writer, And exciting campaign also had featured had Christin Jeremy and O'Hare. a we Henry really Eikenberry spring

us brand. elevate you'll of see So do to fun to things sort continue really the

the and New the We in also museum is of launched York right history street of a in the Blue-Footed store we that call on natural here from upper west museum across the it Manhattan. side Booby the

and fun in the The brand store sort Blue-Footed the Booby our component – is store store world it believe most of walk optical eyewear been a come encourage mascot to and check and it's of into to sort of everyone sort of sort of you and the we and out. unofficial it's the

Dana Telsey

you. Thank

Neil Blumenthal

Yeah.

Operator

you. Thank

from line question your from next Cowen. now Oliver comes Chen is Our open. Oliver, TD

Oliver Chen

May, of curious know Hi environment. seeing nice look to better-than-expected within the productivity Neil, we're Steve, I Dave and what and assumptions for expect at were also that some a to led as your aspects was the you what I April wanted some about, quarter, guidance quarter more we cautious and store there.

Second be question on the market, think What more reacceleration the for catalyst long-term do broadly. you might back optical trends? to

third last And question, growth. active and customer

spend, do given be still that single-digit then, low to back lot. reaccelerate the marketing growth after the the in half? of a Thanks lapping you expect and Just it

Steve Miller

Sure. Thanks question. I'll of first part take the Oliver. the

above to the And XX% productivity maintain with we e-comm pulled higher that by it In than expectations projected. marketing we year-over-year. fact plus spend moderately back were in driven despite we terms largely line by performance our retail able on expectations, declines coming in the in was first of relatively quarter

would I point the to drivers. as those

customer, and lenses larger AOV. customers elevate -- at from up either X% an of introduced which bundling year-over-year a over nice a all story gets been per services has some saw exam which customer additional We active a to growth new revenue of products products, quite buys or eye price which there's increase provide which us for glasses and also effect are part in a time. contact We our where

remarks the trends in to last XX% that our to the productivity year seen productivity the relates XXX%. is quarter-to-date store range activity, store we've number of it we've quarter-to-date, seen store same prepared As versus of we gave period that part as

saw QX XX%. out call, we productivity approach earnings a that, out Omicron we the on we fact our as April almost called As store of were reminder, covered

April we from retail one view year. comps as So last of tougher our

give what to ranged April range comp. to wanted and over into XX% quarter, we're from XXX% as that we're that that is we're for seeing course the color of lap have numbers informing we so, seeing there early to the the May And starting again guidance QX. our strong And

Dave Gilboa

thanks, Oliver. And

Just the your about, And provide second going catalysts. to get industry question what's data. to

As we have into really, look clear that data, last at optical category for continued was the the year a abnormal year it's trends industry and largely those XXXX.

some in So bit of benefits. a consumer more we a more have behavior this spending line past consumer utilization seen category. seen was and with FSA insurance sign in the expected also of higher regular in times behavior year We've category, of the vision expectations more maybe

got we the too who glasses anything will was exams bought it's can't many much future. And activity back couple weight or learned some over delay consumers category of in exams point we last do that our people to a there years short-term trend. indefinitely. in and XXXX, place that, purchases if when category That on at of the But a expect we not in the cycle said lot glasses in expect

well over a prior And for people the every category activity pandemic of now. in new seen we the average, pair have glasses to of kind X.X a year bought muted On years.

rebound counting we're a So this not year. on major

to of relates for benefit until turn the rest resilience reflected I the not for year, headwinds growth kind signs some of our the of certainly do of customer confident and are Vision the kind we that's to the industry expect of a we and maintaining when And guidance active a are category caution believe projecting, in tailwinds. that And fairly but durability level as see rebound. what of disproportionately is that cautious of in this and And is Council outlook, our QX year. we major

Neil Blumenthal

And this Oliver, a Neil. is to add just little,

customer right, expect we've or been not in the we where On where be active the historically future. growth, to is this

of XX% strong our an our down up that's e-commerce, given and as year-over-year U.S. is probably We through channel, there's in most count store are both know we increase strength retail more happening retail across with adjustment alignment than sort seeing all of everything highs X%, off as think you revenue retail quite from of XXXX which been e-commerce in XX% that real continue seems of better right in across categories categories a been me. to the channel

you at a Council look that optical the the particular -- in from perspective mean, contract look XX% the perspective. if at they eyewear you XX% online data, a last Vision from projected if sales market I units year market is eyewear and

of of So We we the our marketing the given then comping this right customer continue And quarter, half back year. channel to accelerate year. sort both that perspective. from creation we'll outperform end of the our we believe on the spend that channel up should is in and demand see half but spend back down XX% active positive growth our e-commerce

Oliver Chen

job regards. Very helpful. that. Best on Nice

Neil Blumenthal

you. Thank

Operator

Thank you.

Yruma from We Sandler. our comes from Edward. have question next Edward Piper

Edward Yruma

for margin? and importantly any you're of the those moving price kind on to frames impressions from guess more some you've the you first, noticed pieces in sales going the guys. I of roll gross frames. to higher early may of announced margin gross perspective Hey, I maybe know more helped good higher premium price morning I Thanks these to a the started any that all last taking some line I call have given some how of context guess, question. much out. kind point have as point

value environment, the of Thanks. pulled the would marketing but the you price frames? spend, obviously guys you I then competitive point kind e-comm deliberately have guess on for assess And back second know of kind how I environment particularly

Neil Blumenthal

frames seen and mean, year higher so one guidance. in point our some full we're your why much our margin Thanks the price a reasons for it's options, I of nice gross question. of On confident uptick. we've lens

puts increase. eyewear to well. takes higher for of similarly But those as have margins and are continue there sales higher we ASPs as As which sort to some drive exams tend you and products, know contacts and sort of

Dave Gilboa

e-comm the on And environment. question then the around

sites. been a sites has anything as believe pandemic kind real business we There from against if frames. well and can is believe lower is the we case, of been stores. a shopping data, e-commerce That's and that certainly our offering that in Neil omni-channel are always the where there other for As the look quality are pretty category up experience impact e-comm we into back the And shift mentioned, the haven't holding that from online. other the glasses shop at category unparalleled the is consumers seen places the we and in competitive that the those category but really we customer price selling have

Edward Yruma

Thank you.

Operator

your have Brooke our from is question Sachs. Goldman comes Brooke, now next open. line from Roach We

Brooke Roach

Good you question. morning for taking and thank our

you XXX to begin that opportunity to XXXX? year, of rearview the line in in EBITDA back Thank can improvement profit cycle to reacceleration initiatives the algorithm margin now the top the a the you see improve get Do to the in early you. As long-term year adjusted half into margin the mirror? then of XXX per of basis from year, and to are to to back pace speak last we these initiatives growth need to points expansion

Steve Miller

question. your Hi Brooke, you for Steve. this is Thank

pattern to of the previous look year this terms similar years. we more to part the In question, anticipate of adjusted first the EBITDA of

our April, time of of the to of corporate top in really year So the the majority structure began attributable last reductions spend we cost cost of HX the back the built the May generated in to frame. our pullback year, in we some marketing made we EBITDA adjusted on that directly half in

the the in but year, every quarter given of be As EBITDA margin this we HX, EBITDA we to think our with adjusted HX profitable that this add color incremental we'll is majority guide be about year that versus plan we've year generate of last X.X% EBITDA as from margins versus to mid-Xs certainly this we adjusted in our last line year. year, up the adjusted

adjusted some get As we'll of we XXX it like year. continuing EBITDA committed top that that, margin relates improvement, to that to every it's ability adjusted basis to margin back XXX unclear be. there for confident But line XX% drive we'd actually We're are an back EBITDA level. incremental get growth the frame regardless at to see point to of maintain to improvement certainly time when points add to our will

expect would So, year. I continue see that this beyond to

Brooke Roach

more you Parker? And quarter? What Thanks, Steve. Can you're in out-of-network on benefit of Thank one how the you. will And a Warby implementing anticipating at that some context initiatives follow-up. could as result ask revenue you just shop patients the if that? insurance are insurance that this provide help I

Dave Gilboa

a who to and have use integrations Last the we XX% insurance this consumers be to pipeline Parker go Warby and speak we Sure. benefits, growing become by expand through usage direct large able year, number of of network. employers. can we'll we broader retail on Care enabling we're our doctors Brooke, Vision eye find in of both managed that, integrations in-network expanded footprint in insurance carriers our out of a will we're or we And our we network as to additional subsequent focused live attractive their whether of insurance and partner, and both year that calls. more that

and And making easier use to costs their we're check to piloting understand a also customers consumers, also us still been out-of-network for eligibility simpler net enable only it checkout some then, on out-of-pocket out and are have to who at customers for pay benefits direct with their their integrations network that benefits. of focused

we tend are new of percentage that us. insurance, we to higher their using use so see with our find who customers benefits a And insurance do that customers

are to with attract so, And value. who also already get a and more to shopping then it's us Parker both new way Warby customers people enable to even

And have by speak really and impact to we we the to initiatives excited that having are year. those are the in of later this so, that some place

Brooke Roach

pass much. on. very you, I’ll it Thank

Operator

you. Thank

Altschwager comes Baird. your line Mark, next now. Mark from is Our from question

Mark Altschwager

of Good question. for Thanks quick for A taking morning. ones couple Great. my me.

a margin materially First, or Steve, do you see impacted progress roughly this factors rate good to a through number the that and you to outlined year, takes run puts of is of on range guess, XX% quarter medium the changing I think any this short gross margin. term? we the about as gross the

Steve Miller

gross the takes puts forward. perspective, of and acceleration relative And think sales. safe contact consistency going to can be picture, So, of in margin full is always it the the eye from There across given for a are i.e. mid-XXs. assume quarters would exam that which sales, the guidance acceleration lens year we've change various I to be modeling the

picture. people more the that offers we which eyeglasses a adoption couple consumer of a view which Neil to depending incenting bundle fashion the referenced, that with experimenting as to are device medical of purchases We to involve could a see purchase accessory the versus affect on degree

which versus that continuing margin optical overall as excited our add to improvement to lab about relates cost very we're the We network, brings to outsourcing to it structure. gross capacity are in-sourcing our also

see absent those view I might to consistent we quarter that one think in we over there course the low be as But the year. continued this number the margin leverage -- the safe would the in with it items inflection of XXs providing so points, a gross meaningful assumption And some reported any mid-XXs. of so

Mark Altschwager

And guess net then stores on I on but give it you other some two I quarter? the quarter one color basis. in six clarification. you believe this the point that I of you. was Thank stores helpful. could us if Very you a like X% right closed additional have just that opened that looks

it generally course And just that openings I of is does year, targeting the the And net? over of versus pace gross imply more the in acceleration pretty for year. think healthy a the XX

color helpful. just would So, more Thank any on you. plans your be there

Neil Blumenthal

gross very bricks-and-mortar The The in XX with real general. are our much we is sort our this on closed Thanks quarter frankly, in line for that a stores philosophy basis. so much Sure. new stores question. on strategy estate two and the of

so the rewards continue. short-term that the deal was we of increase we of substantially. lease it stayed store experimental were as closed case, very on an which In investment for that renew experiment, view low-risk do. and potential a we covered didn't didn't rent an off which for because build-out the this in places. And lot This the that was stores was low-capital and going it really and ended in lease us rent it landlord high sort the was a to of One with often we percentage to make sense a

of that a there flooding the that that wasn't to The violation damage be some lease closed was manner. going was landlord namely we other timely store and repaired in water in the

proceed But year. plan. of payback. on in We'll margins line four-wall general, with performance this opened and we our stores XX-month Store XX% our retail And open continues cohort continues last XX XX year. in target and to rollout to consistent be

Mark Altschwager

again. Thanks

Operator

Thank you.

line from open. We your Mark, question Mark now Mahaney from have our last is Evercore.

Mark Mahaney

me? you hear can Hello. sorry, I'm

Neil Blumenthal

you. we hear Now, can

Mark Mahaney

the both the overall terms talk Two able general levels just of low specialists? questions stores the super eye could or record within lows, you've challenges please. unemployment for in the environment for and for And of about the in being any you hire people exam store had to

eye then out And your a in margins. unlock to of rolling such of great the revenue and seems productivity be terms of secondly, capability terms for business exam gross in

and retrofit more done learnings you've you that have accelerate exam allowed thank either As of out you rollout or stores? the capabilities build-out eye of have this within figured more to the you. the

Neil Blumenthal

questions. Thanks the so much for

to We attrition able the a actually environment on company we things And great pride employer the across and at more retain and work Warby attract in ourselves of that that we be lot is brand. sort found talent. seen to our continue we've of decline the Parker one invest So, recently.

So are every neighbors need for sometimes think unemployment though where sometimes that we shopping our impacts is be our that staffed low of stores overall environment, that center then centers low shopping poorly business manufacturing next us traffic we in our from facilities And unemployment close to to environment to this super even staff to a and door impacts part to able actually in most example. our we're corporate this early. may

last before. that less is expand our that the to continue to year and EyeCare agree But than business we bit we're We opportunity exciting. year little a the seeing of really did sort

All lens of of we see to at contact for fleet exam. one can stores, we back to how imaging. training new And build suite, for areas exam least our or our retrofit removal additional sort if existing continue we at of not and rooms similarly, and some to tend retinal insertion go

existing and a exam doctor. opened store an business example also a Dr. that down stores. before a.m. it and in past we drive how store was recently So was weekend the there right to eye the an our sort help this was before arrived just patient of out there offering we the Thomas leverage eye great opened. fantastic And our example store for of XX and additional can and was this to that I Wynwood our was Tina store visiting added Miami exam

Steve Miller

as margin we in it differences commentary which offer also where mix do non-eye to given are with It some dovetails see versus exams of gross stores that the we've margin accretive. some eye we for relates exams product

products. penetration our So have times black more at Blue also higher Light lenses and are protect starting stores the which that penetration photochromic a the in dark help exams have that charge of higher There's lenses of sun higher of there's price to and point also eye for we mix a are a glasses progressive which margin certain those highest eyes highest gross lenses which the from of go the day.

able purchase. to the product the addition capture to getting in there's an customer because actually making high order And exam conversion to serve being so a a and from rate

there basket would that examples quite purchased elements of the the are at and are so out of look progressive call customers higher three and you what margin chronic Blue effect. actually If which Light

Mark Mahaney

you, Steve. Thank Okay.

Steve Miller

Thanks, Mark.

Operator

Thank you, now the will back management hand closing remarks. for I to the floor team

Neil Blumenthal

to Just for so morning want all to earnings you much. look forward all this you our thank participating call. speaking with on and next Thanks

Operator

concludes you. Thank gentlemen, call. you for today's joining. and Ladies this Thank

your disconnect lines. now may You

Warby Parker (WRBY) 9 May 232023 Q1 Earnings call transcript