Earnings call transcript Q1 2023

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Operator

Good afternoon, and thank you for joining the FIGS’ First Quarter Fiscal 2023 Earnings Call. My name is Kate, and I will be the moderator for today’s call. [Operator Instructions]

I would now like to pass the call over to our host, Jean Fontana, Head of Investor Relations at FIGS.

You may proceed.

Jean Fontana

afternoon. Good and joining we discuss be Relations released our press for XXXX first found website call slide earnings which stockholder results, this release at today’s ir.wearfigs.com. you our FIGS’ to quarter in deck Thank on the Investor in afternoon, can

Presenting call Spear, are our Executive and Chief on Daniella Officer. Turenshine, today’s Officer; our Trina Co-Founder Chief Financial

including are predictions, this As that do estimates, events remarks expectations past see may on plans. call future market forward-looking reminder, performance, We a concern statements. business financial opportunity about or not or

results involve we differ are statements forward-looking on risks undertake not filings, we Forward-looking which and our speak encourage which update. uncertainties which statements, in These risks including Do and as place actual you other undue of today, the today review. XX-Q no filed could reliance and in only to SEC materially. obligation discussed we to

metrics believe That measures performance discuss most will key of indicators, are and comparable we reconciliations GAAP or today. submission understanding we which measures for the issued these measures of certain to Finally, slide cycle in non-GAAP the supplemental useful our non-GAAP included are deck business.

to Now, FIGS. turn to would call Spear, the of I Executive Chief Officer over like Trina

Trina Spear

Thank good everyone. you, and afternoon,

track exceeded on expectations to growth metrics. We achieve through We improved our delivered first are are across meaningfully pleased levels profitable strategy our disciplined that quarter key year-end. by that financial execution inventory of

brand our TAM. is FIGS our apparel iconic leadership while healthcare uncertain, and the will believe in industry remains environment an macro the position that I While we advance expanding

million of and revenues margin as We Net adjusted first quarter delivered XX.X% margin $XXX all gross expectations. which financial compared to of EBITDA last Touching highlights first on above the our X% year. quarter. were from to of XX.X%, the grew

increase was X% and LTM reactivation year. as due customers in lower frequency to per XX% customer in part quarter last active Our by during loyalty nearly customer reflected down X% rates revenue a well versus new AOV in driven customers. in record as to a strong fueled the by growth was as $XXX, decline

were want metrics market. Once While to and pressures performance deliver their International for solutions-based these also XX%, awareness as they them support our and through year-over-year, these unwavering their I metrics to efforts to well will back. innovation, subside I of each global were with our around of we revenue down continue to through team our to humans and initiatives, healthcare improve. loyalty thank as product by and macro believe continue our every to continued serving as commitment we strong driven professionals our expanding engagement awesome for growth advance we ahead day. thank across want giving our expectations. as advocacy brand our

continued system February, best-selling scrubs. to end we’ve call proprietary work products Since to engineered of with out the layering the our non-scrubs at build with our

Our exemplifies how customer launched professionals. healthcare address Jacket the that needs innovative of ContourKnit products feedback with recently features into distinct specific we transform

has Jacket in outerwear pieces Our one ContourKnit best-performing been our the history. of

will throughout the our have The assortment serving our roll showcases healthcare we sizes across around continue sizes commitment and professionals, fit extended to work in launched the see to in we acquisition encouraged on strength continue our offering we receiving size both December, and extended customer new we are As our notable feedback are extended by all offering. out we year. done to positive

colors favorite we Series FIGSXX: chance to Iconic our time. over marketing our XX-year anniversary, The campaign, our professionals back ones our their celebration bringing In injection launched giving grab most XX all a our healthcare at popular by Looking weeks initiatives. of of

inventory we them able great create is those discipline new rate. This of through these the example purchase around event while to FIGS at a Loyal to experience jumped healthcare move time. iconic our professionals maintaining the for how while were to first excitement opportunity discount and colors,

Although level and of customer remain saw height pandemic, of same during generated one that they we color excitement. our the the of not effective the traffic drivers demand recent of have launches the most

Women’s of work For Women’s Obstetrics Kilpatrick, co-founded Day, Sarah at for Cedars-Sinai done Research has the medicine Hospital. celebrated women’s She Gynecology Chair in we Differences. Sex CREWHS, Center and Dr. incredible and Health and in International

As Dr. donated have medical a and to we female celebrate CREWHS’ are proud achievement founder in proud research. toward to that organization, $XXX,XXX Kilpatrick’s especially

differentiator. illustrate community loyalty. In fostered this this attributes, across an including garners and comfort, has that industry-leading ranked remains recent Data to highest brand key on a third-party functionality, commitment to and enduring strength sentiment survey, brand Our several quality, FIGS a customer style. continues brand and

purchasing highest with who that from initial This quarter customers is one two three the the to repurchased than within companies. FIGS percentage [indiscernible] experienced also indicating of higher for their respondents. times prior aligns We other of intent data scrubs purchase

the continue goal and deliver experience versus the Our lead our furthers to to else. product is moat widens everyone and that

an provide our growth to like strategy. I’d end, on that update To

on are know, As laser-focused we innovation. you

Over customer layering functionality professionals last the system keep purposeful unique, product combining our our innovation, with engaged with scrubs brand comfort every our and this with is we non-scrubs cool, by years, our feedback. of while our playful and healthcare few informed with in We built data constant which and and DNA.

raised feedback designed customers Our our waistband. was based Uman from recently launched a requesting Relaxed Jogger on

social media. seeing strong across feedback awesome are results We early and

example FREEx innovation attributes is Our from alternatives. of lightweight for anti-static another featuring water-repellent customer lighter-weight fabric resulting requests

this We from made which recycled offerings will upcycled utilizing and to solutions-based almost continue materials. is entirely our fabrication, build

expanding new to to our build is line, addresses We collection apparel to completely companies add represent left able healthcare and office-ready example categories which FIGSPRO traditional several Our TAM. that by from to we’re we’re specific the these yet fabrics Innovation FIGSPRO FIGSPRO demand new gap and our meet professionals. don’t of silhouettes and of the how plan like needs learn iterate another collections. which FREEx out

by the to portion greater percentage professional significantly of potential core about customers revenue sales, our expanded excited While addressing offerings. higher overall expect drive needs continue a to a are healthcare to high net scrubs our we with represent for active of we

our needs in beyond lifestyle professionals to healthcare Importantly, scrubs. address non-scrubs revenue their drive to illustrates their have ability us that entrusted

speak relentless will to and strategy. our innovation attributes. leadership product more throughout for Across our channels, intentional we support our align Jacket I of product We a will emphasize theme the product that the healthcare ContourKnit introduced highlights are launch communication brand campaign storytelling create being Without our showcase year. our [ph], attributes. Next, our was to of future and in product and the with marketing launches moments the first our community. doubt This our

creates in effect product innovation flywheel now. our stream of Our a business work

each professionals generate they maintained wearing and new in communities. us bigger, flywheel the latest reach spend base work we that how gets multiply. day have efficiency this as healthcare to our As This our loyal we FIGS, in is to enables effect to customers, new invest go our marketing to ways expect

consistent product us also the a around We’re It cadence marketing of communication more top among mind of education. delivering keeps healthcare community.

days, early stronger a to efficient evergreen on success enabling approach non-launch driving in is which marketing maintain us This showing spend. traffic is highly marketing

remains program frequent better strategy organic important to ambassador localized events influential growing We’ve by a of our employed America. across more hosting growth. Our this leverage North of ambassadors network an driver

these FIGS San Toronto, in events quarter, Seattle, include Day in Pride in Week and will Meet For the our Francisco. second Nurses event

Turning our product our as we and are database have offerings. has we we expanded grown by to seeing personalization, encouraged signs are the

communication tailoring we’re based personalization We’re their and building wants. single healthcare on and our every effectively strategies, our individual on professional needs to

certain translations our Lastly, and for we’re early we’re we’re driving Internationally, the out strategies, in of localization seeing rolling starting business. month. countries already non-English revenue stage this the benefits speaking

as our learnings, continue to We local grow market. build well within our upon each networks ambassador as early

Importantly, discipline as we’re maintaining build our regions. our presence investment we across

look and assortment. by in that queue. small revenue, this remain extremely of We business time. track a of methodical Within front maintain to With Today, professionals we healthcare opportunity Teams, grow opportunity on making million United believe almost and portion States, launch the we’re of this to experience this XXX our updated significant technology to elevate our the we approach customer over as we outside platform we our available barely in of have an a us. version are our is is we sure expand a energized

Turning to retail.

We first long-term professionals products Operationally, will and connect our making to open community healthcare to opportunity to our committed provide a other engage with great hubs. are fall. we for retail this our that to believe experience store stores and support We through will our on are that profitable track each investments growth.

and on the are project, progress provide our project our fulfillment greater to Daniella to we We reliability, speed details flexibility, across market distribution expect shortly. will update on an enhancement channel. drive which making

capability as vision our that the We build continuously on work our best-in-class and amazing ourselves to with we’re working next-level life. to bring chain always prided diversify our the supply help manufacturers. are with excited us of to supply chain, also strength partners we We’ve

a moderated macro expect In continue we closing, by challenging be growth and XXXX to uncertain environment. in to

While we see healthcare industry not that than has are other inflation. our professionals continue industries, healthcare to resilience to immune greater the

customers. loyalty focus with connections our We continue to building on strong and

the In business these to managing the to growth. in headwinds our deliver meantime, macro So, profitability. accelerated subside when well-positioned we’re future, continued we’re prudently, deliver us enabling

the apparel on-shift, healthcare our professionals opportunity toe. to better see continue and that and fuel tremendous their power disrupt our off-shift, the will of do and to believe feel landscape plan by we innovation, head industry of expand share Overall, with further combined great our healthcare the gains. look to helping TAM product jobs We and brand, market globally

debt. scale, profitability, sheet strong and no balance a with We have

come. We long-term flow sustainable for to years to expect our support cash profitable to generate free growth

With that, I’ll turn Daniella. the to over call

Daniella Turenshine

Good afternoon, everyone.

the deliver for to pleased first outperformance. are flow-through better-than-expected We quarter strong top-line results with of

we the our We expense making flow around to the and discipline exercising deliver for while remainder cash against positive expect of are free initiatives progress year. management,

compared million AOV. with QX in by revenues, Beginning review to X.X% orders, our by lower offset reflecting year, an $XXX.X partially increase begin quarter outlook. last results, financial first a I’ll $XXX.X our followed to with we million modestly net first-quarter grew of in

remains While trends professionals AOV XX% active globally. were welcome we than FIGS frequency increasing healthcare better were in Growth new year-over-year, customers robust, the brand as and they expected. to down

of continue more have come within see month customers after the our year purchased In brand who to to XX. the addition, last back not we

launches, of $XXX decline well core our This chain from scrubs [ph] benefited mix compares Turning in elevated supply to as disruptions largest one as QX an with shoe associated AOV, X.X% products. XXXX, which causing we to non-scrubber of saw product in out-of-stocks a of to the $XXX.

macro derived promotions, our again, addition, sales the higher expectations given with in a of line In from mix environment. were

basis partially airfreight promotions of Gross and offset at due to by compared lower expectations to primarily XX margin in duties. XX.X% for to was above XXXX. The increase year point mix utilization, QX higher QX last higher was QX our the XX.X% compared

in XX% expenses. XXXX. pulled million, representing due QX to operating to international was from to of Moving QX sales. basis incremental warehouse in costs increase of including Selling be basis revenues lesser associated $XX.X in was higher for net increase storage reflects largely XXX last impact duty third for to within expense point necessary This the XXX fulfillment, XX.X% help a compared and put subsidies a the degree, we year forward. To selling that in labor quarter expense place inventory point

XX% for representing $XX.X million, net QX XX.X% XXXX. in QX expense was Marketing to of revenues compared

maintain initiatives marketing to us while ad acquisition. a healthy spend Our customer new return driving on strong enabled

compensation, an such $XX.X to XXX. due G&A fees our we QX increase call methodology the revenues as implementation QX to net increase XXXX costs XXXX. with company Sarbanes-Oxley stock-based related was increase accrual expense QX donations, in million, associated in public was in representing including in XX.X% of for the in change professional discussed those to XX.X% The an charitable compared of

$X.XX in diluted Our income adjusted in $X.XX was and adjusted million, income $X.X of or QX respectively. for was income XXXX, and was QX. net EPS first net share diluted Adjusted million $X.XX compares $XX.X and to the in adjusted EPS quarter. diluted $X.X This EPS net million per

adjusted our to million for and EBITDA QX XX.X% Finally, margin $XX.X adjusted XX.X% for was compared EBITDA in of an XXXX. QX

end the Turning quarter. $XXX position, cash Inventory strong totaled million the cash million the quarter balance cash finishing with in sheet. and our a We of $XXX maintained first to at equivalents.

we and QX sequentially in on As inventory the through peak last XXXX. we to stated our expected call, remainder declined of

balance styles inventory an significant and at core hand, of our and seasonless inventory XX% colors is styles have on approximately comprised additional colors. therefore, doesn’t XX% always and Looking of risk. classic An obsolescence is upcoming in stock,

promotional progress activity good making weeks while the are We long-term brand. to around maintaining year-end XX getting by supply protect inventory our of discipline of toward to health

our XXXX. to outlook. with environment factors Moving we Consistent a last of remainder incorporate challenging our the through discussed the guidance quarter, macro assumptions

higher a continue of mix impact to result and headwinds trends these expect We frequency to promotional in sales.

long-term As and business to profitable, healthy we our headwinds, growth. in temporary manage to through we drive investments continue these remain we’ll make

For revenue to and be quarter, growth the X% we between net second expect XX%.

of gross due associated with margin to mix sales future product Event Nurses expect to a slightly launches. related XX% below mix We to Annual promotional higher and be Week our new

expect these utilization be offset year-over-year. to headwinds We lower airfreight partially by

to Due by the costs expenses. previously anticipated, we the fees expense operating in second at and quarter. approximately labor higher warehouse than Looking points basis utilization now storage selling to impact XXX associated expect we

to we G&A, For an leverage and stock-based personnel-related increase to continue due compensation expect year-over-year costs. in to

As result be quarter between second XX%. expect and EBITDA these to of a factors, we X% margin adjusted

full revenues to year, we the For and increase net X.X% X.X%. expect between

two half of look the at reasons. year, As second compares we tougher the for expect we

strong customer very difficult anticipating are and environment; a year. the we second, First, will lapping last adds we macro new be

most due marketing the of in product of launch shift calendars. challenged terms the timing to We revenue be expect to net in and growth year-over-year our QX

gross we the to QX now the year results. closer XX% through be pass for expect to margin We better-than-expected as

gross in the launches. of improve to promotional expect product timing We back margin due and sequentially half calendars to

to expense. Turning selling

relates associated timing the implementation with estimated project $XX this on and of it The million. of providing $XX succeeded between cost to this an the execution our project, remain As and we million update fulfillment are initiative.

the XXXX. we to of costs incur bulk in However, now expect these

shift, of timing with we of the extend Associated use end through this the storage to plan facilities XXXX.

the combined year now we XXXX associated XXX be basis costs addition XXX excess our full expense result, points. to fulfillment storage initial points a approximately for previous of selling costs As versus expectation in and from pressure basis expect to

to in future and stock-based part due growing innovation, as for expected with year, donations. as for still investments to our international an inventory and compensation, is the G&A deleverage businesses, full in accrual associated well our product increase Teams

our to methodologies a reminder, donations. last accrual G&A change benefit in for due a a reflected charitable year QX As for our XXX-basis-point

for of of expect between adjusted year now As these EBITDA based the our on a result be XXXX to XX%. and and margin factors we outperformance, QX full XX%

million retail year the of a of We approximately related investments store for significant $XX the to growth of expenditures capital for expect between project opportunities in fulfillment at million the and remain apparel $XX leader build-out. with clear reflects with remainder us. our software million $XX XXXX. being in This healthcare full front We

business term, to future free our positions cash sheet us costs, on ability and margin to we as our to headwinds. balance of and inventory. we focused have We prudently cost move generate remain believe line strong our Our healthy in flow a through some we we well invest as growth. macro sight return investments, Near and to transitory EBITDA rightsize past managing fulfillment high-teens-plus

session. the Q&A With that, to it over to will Operator? turn operator I off our kick

Operator

of Thank with you. Sandler. be line first Our Yruma Piper [Operator will Instructions] from question the Ed

Your line is now open.

Ed Yruma

of looking Thanks how afternoon. just promos quarter, to the are your about of about wind closing that promotional wanted inventory? close out as – should And as that how gauge when you maybe some the would first, at inventory the ran good question. you guess get curve of the to guess, and through the kind going Hey, in the think alignment. success you for on update promotional first I the you kind we think taking you there of we inventory thanks to expect kind I forward, for of out? shape excess cadence in

really see balance you kind innovation of Reed as I of new a unfolding for then you. interesting had of on performances, Jacket. follow-up, Maybe just quarter, the know color you Thank how the more launched, that the guys year? you the some the Scrub and launched any SKUs you And in some

Daniella Turenshine

inventory your question. Thanks, Ed. I’ll with start

get of in quarter relates first by to of it inventory in looks first place more a our to really the at our quarter really initiatives priority as what do supply to and expected into as of position success like for weeks the big year-end. us, and the of have end getting we remainder curve is for was inventory promotions XX the and that normalized our So, the a the year,

uniform business. think just as a we’re reminder, a I

style. on It stock, is our classic doesn’t Our in out which core go and of always seasonless. site. are product our product colors, in styles of available XX% is always

confident the promotional and levels. disciplined we’re move at so, we’ll And rates sell-through products reasonable through

the for the focused on our with – really pace long the We’re right with balancing, to brand the protecting move through balance. term pace inventory

the And so, prior quarter. the we’re going We similar really we’ve we in have that did promotional done, to that to cadence to as continue keep a first year.

We’re planning into are second more to that times. these of mix do of that shift mindful into quarter as promotional being seeing we but some we’re the well,

our at work balance looking through inventory balance, we’re of really that the promotions. initiatives to outside And have doing we

seen times, flexible to with as our shorten normalize, times shipping which be planning. lead able has First, inventory to we’ve us our we’ve enabled more really been

we’re our that limited on purchasing shallow and buy launches FIGSXX the to Iconic in you consumer We’re saw exciting of updating in feel bringing the new like to more and really future, the Series. edition previous inventory ways back

that, with And Trina. it to I’ll turn over

Trina Spear

And Thanks, Daniella. thanks, for the question. Ed,

of They’re So, were Page cargo jackets, scrub Reed great terms Jacket, those additions. in eight the pockets. and

think about of resonated throughout we’ve and had I we’re excited most of that product super scrub launched. it’s really our we well community. one this jacket actually year a technical introductions with number that other our And

how first that healthcare and for with real we about To innovation the foremost think do really to products. Product innovation, premium point at And problems solving I about FIGS. about professionals. want reinforce it we is

what zippers, that’s scrub changing end. as to And as one waistband adding just this the you sometimes like classic our And on silhouettes. updating pockets simple jackets, is saw with

now right that our and new with end, the other seeing line. On it’s completely building businesses, you’re FIGSPRO

our on all these of going see more forward with to fabrication, seeing you’re and fronts. going You’re that FREEx

coordinates our at we perform customers to is products listening every lines, colorways, revenue our becomes creating that customers. best. from repeat part system, make of with reasons and our which is almost we XX% them that designed this all enable our their FIGS across to And comes And of our product the do accessories. our layering at of product across it’s and back to Everything one And intention.

And when our the able not they’re deliver our we and to by that amount innovation levels, newness think point, to to about customers. of we’re impacted inventory Daniella’s

saw new launches our with that site. brand, just whether favorites, they’re their buy the existed other and – whether product with Reed coming our our like our customers they’re core New we engage our or the to the back purchasing that jackets, Page you or on keep have launched, products

And so, are at differentiator as driven every XX/X, problems a day, where is XXX we by And solving and are. in that’s huge why year think possible. it’s comfortable, and FIGS we happening real about the us. most creative, innovation, way And it’s this functional for we days single a

Ed Yruma

Thanks so much.

Operator

Thank you.

Our will Xiao of Bank Alice be line next question of America. the from with

open. now is line Your

Alice Xiao

my purchase since taking the for question. Thanks you’ve of quarter-to-date please conversion you and and how also seen Can the – the Hi. quarter? end frequency on trends purchasing have trended AOV elaborate that customer

Daniella Turenshine

not of really, expectation but So, our the quarter’s it’s rate of an is aggregate. growth reflective quarter-to-date, QX guidance necessarily our performance in

the Given front off us, of our we’re and Week lot We of quarter, in guide. volume main cognizant of in kicking still actually have of today. event Nurses’ the that is a

trends So, intra-quarter we’re specifically not speaking today. to

Alice Xiao

really assortment around in percent that you. And more can customers? make what bit progress would is available Thank of quantifications any any helpful. you versus it. want And the a the what really more then percent signing team’s through up program? of business you currently about Like that talk Just be just Got available to quickly, mix? little

Trina Spear

Sure.

from there’s professionals opportunity Our healthcare us. front their their team’s massive receive today, but business receive of scrub, institution. of a in XX% smaller uniforms is

about And so, opportunity. really excited we’re this

practice. across schools going part a institutions med the more terms to our spas track upgrading enable of to FIGS It’s types hospitals and more incorporate of on in brand, participate to platform We’re concierge to to our assortment. availability clinics, be of private from to

medical Teams we’re that be the world. everything across teams So, the and help professionalize across about excited more we platform, standardize our and doing couldn’t U.S. to

Alice Xiao

Thank you.

Operator

Thank you.

Kernan with the question Our of from TD next line be John Cowen. will

line is now open. Your

John Kernan

fulfillment changes on target congrats margin? expenses high-teens on since Thanks for in but path of Excellent. to to first related inflation lot Daniella, giving came a are quarter. back XXs. Obviously, been original some Previously, pretty you you can costs. that in to the detail talk selling my a taking nice of question, inventory and us there’s specific the EBITDA out, it the and adjusted that was

high wondering of margin? Just should we how that EBITDA think – think about the about teens to sequencing adjusted back path

Daniella Turenshine

Definitely.

So, expansion we see based on today, what term. longer the to believe have opportunity over significant margin we drive EBITDA we

about, factors. we in seeing we’re from so, spoke as a pressure And XXXX, few

transitory mix seeing sell-through purchased we’re basis pressure, combination of related to and gross to last the inventory First, year. margin promo that freight of hundred couple due also points of we

of XXX pressure basis points mostly fees. Secondly, storage we’re from seeing approximately selling excess

the fulfillment Moving to the incremental going excess but away. bulk to costs have million to do of project, in enhancement $XX the million XXXX, go related are $XX we largely to fees storage

will is more in said, So, and a net-net, business normalized state. cash-generative that pressure see some XXXX. All core in highly profitable, fulfillment XXXX replenishment-driven, we our in high-margin, being versus

today. lot we to a going gross expense do as XX%, future, that And over to we’re creating we but our accelerate further going looking sales. net the margin short-term growth, longer G&A around going continue normalize we leverage fundamentals able marketing to approximate aim is from of where and keep is expect of Selling There’s XX% into remain we in to beyond. be are strong. of are to that XXXX also to business at to pressure, term, And expect the impacts the

in confident our ability ultimately, right to long strong we’re term we do ensure our is today, the and profile a so. the So, feel for decisions making goal profitability while sustaining to that really really

Unidentified Analyst

on helpful. talk costs. could retention you relatively a said flat marketing acquisition sales. you percent Trina, Daniella to of That’s maybe, keeping and customer just And as expenses Excellent. plan has

per terms active where and marketing in just customer curious trends, little it bit I’m year-over-year. from like ticked a So, near-term expense was of marketing looks down it

what Thanks. an from you’re seeing acquisition retention curious and and perspective. spend marketing just a So,

Trina Spear

mean, I been it’s think really I encouraging. Yes.

the last of customer over seen our acquisition You’ve and it’s incredibly strong. number quarters, trends

dynamics think I about that similar always – true. remain talked we’ve the same to be

number word How right? that trend of do our levels Every to billboard, drives that for that acquiring us. mouth, next what And customers? years. XX% a don’t walking mainly acquire is of the our the that’s traffic customer that of efficiency fixed customer seen business. – It’s That’s replenishment a we many of organic. thing you’ve we the over last nature is over the is that And our second have

so, for of And our first XX% customers the almost are repeat acquiring time. that we’re not

what so, we its more call efficient. And as paradigm those right, two really paradigm we a that where can scale, dynamics and would as we drive shift, flipping head, on more we grow, become

down, Now, around But way a if we digital been sales, to keep pull of a that wanted our percent goal XX% is at company, as that marketing as to to to we which direct-to-consumer Daniella’s could. almost point off. XXX% our drive haven’t many able

more more customers efficient a at do and to family. professionals proud ability are – and such at our acquiring keep while we FIGS level healthcare bringing So, it of the into

Unidentified Analyst

Got it. you. Thank

Operator

Thank you.

with next will from of line Goldman Sachs. Roach the question Our Brooke be

Your open. now line is

Brooke Roach

past? are they back or brand innovation that it that customers in Trina, in you was afternoon, saw now? the the about wondering for the specific new types was in the rates they you What to of that And thank drivers reactivation engaging Good of the could record promotional didn’t our talking start any if those and brought taking by question. I activity quarter. you

Trina Spear

Yes.

has our been frequency extended a is bit. function of think a I repeat it

I customers a function And and time it’s you’re more show little bit little FIGS, come so, more a a they’re they things. time And between They’re where spending that shop that are seeing a spending leaving of not up, purchase before think right? it’s few back and bit again. do just

what’s a professionals as It’s our healthcare definitely coming driving from engage promotion to driving of A are We single customers and that our as and with the happening – stronger we’ve we much in week, every really the height. our pressures macro a the see driving innovation. customers us. how more back. we’re much normalizes customers to engage good bit how function acquisition. excitement The and environment It’s that just see never long given an given you in level, products feel inflation we time, acquiring. exciting going over subside on and bringing in to customer is, given bigger Its over traffic. macro we’re position been perspective, back the seeing given we’re It’s launch that on be side, position, the and it’s as really it our but run base

You you see as normalizing we’ve it is the see the it frequency reactivation, in as seen and as well.

Brooke Roach

us maybe the gross within in quarter. Daniella. a outperformance airfreight quantification Great. that year. benefit for the And for air a updated help you. understand of is then think was question I embedded the XQ? Thank airfreight driver quantify Daniella, Can XX% in you this margin perhaps mentioned some what guide margin of as recapture freight gross you the in And then

Daniella Turenshine

Yeah.

was year-over-year we we the year-over-year. air of anticipating the So, freight It utilization first as better expected, It from than in was also are came one better benefits expected. – to see quarter.

utilization. drive freight air to continuing so, lower And

not in we’re But all at reminder, much through product bringing inbound via air we a what our doing really XXXX, freight was balance. today. that selling product in is As that’s in air are already freighted

that our XX% for air We’ve benefit time. in continued that expect we inclusive freight lower over from below kind year. see gross of guide utilization So, just incorporated full margin the of to

Brooke Roach

Great. Thanks. it on. pass I’ll

Operator

Thank you.

with will question next Koranda from ROTH/MKM. be Matt of line the Our

is Your open. now line

Matt Koranda

the taking afternoon. good for Thanks guys, Hey, questions.

big you get discuss the from that that active users how go-forward mean see I to angle. is for pool want Curious quantify the to a pull could I does maybe a – maybe just reengagement Just on efficiency different what And if qualitatively at from. maybe the marketing lapsed basis? or could you have

Daniella Turenshine

before, a been to definitely been – is record it’s we’ve spoke as So, number reactivations. of Trina what seeing,

have in on messaging content waiting people see Definitely, back we purchase, providing kind as who bit marketing those drive a XX. customers of coming between them in XX, the of longer, and they’re side, see them on focused them our strategies and so, expand XX, with those back the days our increase we customer trends And base an frequency to as little we through personalization site. and in we’re targeting month and to

And those more it’s to continue future drive us time. over an the in so, reactivations definitely to of for opportunity

Matt Koranda

then on Okay. the inventory And just if more I one Great. could.

weeks the mentioned toward still of goal year. You the end is the XX

you through just it kind going us kind be whatnot around Week cadence year? or for if drop Is expect set level of to of some to chunkier promotions a the the the set Are terms there? level Nurses of get like on of just curious there Just steady could what us to rest in maybe there. periods of

Daniella Turenshine

we and kind XX weeks decline as ton before from sequential of kind we of quarter of peak future here. to And first terms inventory, planned our to a to of choppiness lot So, pretty decline. do lumpiness a There of the in just the but expect by supply a we’ve isn’t it was speak and to discussed, a of year-end, there purchases isn’t get to then.

Matt Koranda

you. leave I’ll it Great. there. Thank Okay.

Operator

Thank you.

Our Bob question will Guggenheim. with Drbul be next of line from the

Your line is now open.

Bob Drbul

Hi.

me. Just two questions for

far bit seeing? can then I seeing one you you’ve second the pressures? is, the what first on elaborate that question little in more so have international you you’re growth And any a takeaways, learned are competitive is, change The that Thanks. with

Trina Spear

Sure. Thanks, Bob.

right? doing that. you’re copying competition one lines. favorite believe really competition, It’s our and I as think about sign healthy, my we competition is if So, a jobs, wouldn’t worth doing of exist, didn’t we something But be that

stay are we place there’s for and plan number But First one the also brand space? remaining on to we as in integrity and the believe to one How decades only innovation. to apparel for product FIGS healthcare foremost, that remain I in first come. ahead? do and seat plan How spot evolving

ahead years terms of light in We’re product research, production. development, our innovation, competition of and

working can We’ve been with manufacturing extraordinary. the years fit, that the professionals our on XX have functionality, so partners and stay we increase healthcare agile, style, for we

Secondly, is passionate I’m this and something point about. that

scale. the have We

and times our the XX We bigger our larger alone marketing are than is revenue. than DXC budget competitor, closest

we’ve we finally, all brand calls, means have this that resources years. but intangible continuously for areas have is brand love. Third, smarter And this business. of our get is we’re this what what And faster, love, we on profitable. built better, XX across We’ve mentioned to

can’t replicated by a It competitor. any in day be

Our relationship is brand our and unmatched. deep, with our trust community is

the human healthcare. a healthcare We’re brand tapped in it has space to the means what apparel that only in be into

I it in the think quarter. saw the growth relates to international, As you

with markets actually But great which just professionals about It’s feel We and our the that’s excited way seeing in the and something they non-English-speaking in countries, you’re the healthcare about we month, localize about our translations about isn’t and markets, continue to progress for communicate we’re also coming we want how talked this that in and really that around super to localization in world in, and communicate that as we’re across about. we’re going translation. to engage.

we’re is just for And priority and so, getting us, big a started. this

We talk about penetration.

share market in XX% have We the U.S.

We have, a internationally. that mean, fraction I of

we’re so, to with And we connecting a and the have of huge outside us, XXX healthcare ahead professionals runway U.S. keep of excited the million

Bob Drbul

you. Thank

Operator

you. Thank

Dana Telsey of be will the from question with next Advisory line Group. Telsey Our

open. now Your line is

Dana Telsey

Good the and nice progress. afternoon, see to

terms Thank think supply improved that fulfillment I inventory the with margins? of go the cost? guideposts in be you. should either it far lead you the mean chain. Trina, for then or we supply how think you you? looking it forward, along you along diversifying as in As the the about mentioned enhancement And whether will what program, Daniella are chain, manage What How where way will to or

Trina Spear

Thanks, Dana.

with where the partners innovation, this our in As We’re advantage supply really foundation right? are foremost, and chain, we’re focused? first lifeblood. opportunity new That’s focused, it the and really of relates taking lay to supply to we

scale, focused across are country, already around can best partnerships on really of make but also we how our also we consistency, building world. we the on further the diversifying just and We’re partnerships around and not new process that product around with the our reliability have and in and suppliers system the flexibility, layering deepening

don’t As know way we have you initiative. And any – it to this if that. the project, relates on other I on Daniella, I fulfillment terms our of points to are think, in

Daniella Turenshine

Yes.

the to us centers potential think improve distribution customer and and It’s set for future. foundation the the in distribution reliability internationally going going to to East fulfillment enable we as the us for think expansion ultimately for Coast it’s drive in enhancement future I initiative, about really the or also flexibility experience.

lot but we’ll over enable so, that as and going benefits to long there’s sure into it way to a the the our relates to And we’re providing efficiency be of and also deeper the run, it’s to drive customers, experience to project. scale, that along you update we as get

Dana Telsey

thing. one Just last

and note anything the of looking to the go-forward? the at quarter that lifestyle or product rate you. this Thank the non-scrubs growth on non-scrubwear, versus in past, On there

Trina Spear

our tied mean, non-scrubs I view that together. think our they’re I business around is Yes. all

holistic entire layered. actually layering view system. really a and intentional have It’s meant to be around We the

So, our another. competing with complementing really categories aren’t They’re each one other. really

by being someone’s uniform. add they part value So, of

know as out, it’s non-scrubs, it’s you supporting all uniform, we each think but it really, break other. So, I and scrubs not the about

wearing on And a our So, vest FIGS, underscrub, also FIGS you’re full over our toe. set you’re our you’re time our hope if scrubs, not off you’re or wearing you’re most system layering to wearing shift, of wearing that just jacket. a wearing likely shift, head is the or

third, you see our other these total, some – fourth goal fluctuate in as known for but over that’s with And right? think their of pieces. or The so, that I especially our that’s coming you’re the the we’re I known remaining for categories getting that seeing. and and And a much what intention, add only customers, second, back other their the they’re would scrubs, growth, repeat as in these known of healthy thing percentage is is might we’re we’re purchase our time,

are just buying XX% first-time customers, scrub. the Our them of

quarter. why growth you’re of in that rate the kind seeing that’s So,

Daniella Turenshine

saw – high Dana, new a just we really of we launch. I XXXX, we add, non-scrubber a at a year, would strong some to in on reminder, of were stock last balance of percentage as kind also core and had also normally out as products, QX scrubwear our

on bit there’s year-over-year going little So, a as well. of comps

Dana Telsey

Thank you.

Operator

you. Thank

will Patel with question next of Raymond be James. line Our the Rick from

now open. is line Your

Rick Patel

has you around assume the to but congrats was continues at now. Can stretch it Good the on month afternoon, reflect Does about that strong guidance XX and it’s longer? you. it or stabilized, execution. a Thank around longer talk about days, does trend believe this frequency replenishment the IPO, time I trends?

Daniella Turenshine

between we as continues frequency quarter. discussed, the purchases to pressured macro the be by but has So, bit a last that stabilized days from environment,

XX it’s as has are kind this metric, customers that think inherently that that just and and higher the important of I a cycle. extend to portion of purchase coming we that seeing customers back more increase And up. reactivating that’s life their here reactivation note going drive that is metric that months, we’ve after been customers to

I of for term. from the lot opportunity think here, there’s drive to over us longer a frequency higher

innovation we’re discussed, product our system. really on we’ve and layering focusing As expanding

taking through We’re higher really and value. to messaging education engagement marketing amplifying strategies well as drive communication, through personalized product tailored steps as our through

we’re And so, still in early these initiatives.

in lot the our factoring a improve not lot to upside for this over a into we’re of but guide long from So, of term. opportunity here, us

Rick Patel

behavior expectations of consumer you the What’s versus your as talk business and about about takes puts the the to also AOV? mix during times? the Can for we outlook way for right think promotional consider

Daniella Turenshine

what’s the we’re higher and we, customers to three of is I And layering flat I be of into continuing continuing UPT think, spoke more that to really over the purchase see So, next our expect and for to quarters. great AOV, we’re it metric as about, we higher think as expand kind drive remainder system.

we a going the near term long continue over ultimately, up gives in drive promotional mix. ability and us to confidence our from term, future. lower is here the be seeing the However, UPT in in as are AOV that by higher pressured it But that to to AUR

Rick Patel

very Thanks much.

Operator

Thank you.

Oppenheimer. be line Nagel Brian from of next Our will question with the

Your is now open. line

Brian Nagel

Good afternoon. Congrats on the Hi. nice progress.

regard shipping question of – a just costs. bit a question first with my So, my and first to follow-up. But

gross air plan the XXXX. then how ultimate now guidance also reliance for sort the to QX update as and gross some either before, of I XXXX Daniella, the to then we’re just to and costs, broadly, say, above the further we about saw mean, margin either margin path But you think we commentary through – then track on mentioned maybe in If less benefits lower getting but disruptions beyond shipping FIGS? freight shipping year. the So, should

Daniella Turenshine

Yes.

inbound we rates. better driving discussed, we both as inventory are brought air air ocean was lower rates largely continuing and freight utilization. seeing we’re sell in through and and in, we’re at So, XXXX to also XXXX, ocean that for higher In air,

net-net, we’re so, seeing a year-over-year. freight utilization benefit And in air

basis into higher by recapture long but be to mix couple pressure, do term. hundred bit freight promo think into we a we offset look points also margin freight, there’s gross being looking ocean the But still further we’ll future, of XXXX, rates. that That’s able as from both the of over a

Brian Nagel

That’s very helpful.

it. noise question And also sorry But I have you background a can hear second if about the and follow-up. the

one, size as the customer looking So, that with seen regard engagement it. to if help at happening, is you this better more could you’ve recently, I maybe you’re guess

products how do seeing think to well are of been? tied these you’re mean, has I new is side? this timing? innovation it And big of Or some it’s – you this more then with a shift you launching also, correspond the on

Trina Spear

Yes.

talk happening within our then about, bit that and what’s are more happening broadly I’ll community healthcare you environment what’s think think consumers with the for professionals. a I as impacting about both

have continues Consumers save the are know environment challenged. is in you and telling and spent as are happening their moved are checks they’re savings, So, us and consumers to stimulus macro pressure. creating through layoffs be – inflation mode across additional economists their industries,

taken end, fighting healthcare fog are back we’re and about the work. entering a them. they’re is buying healthcare we’re global dynamics to And pandemic a us XXXX, a medicine. of and but COVID the Since Those is on give factors on lot professionals, has impacting other you lifting community’s meaningful the of reenergized new that’s getting been our is what toll customer era community healthcare that our the a environment know, are And that seeing confidence within our behavior. there and,

hospital And run, as are the attractive and including we to talking a they discussed, wages, industry. in to over and incredibly income, uptick – as in are healthcare they’re and the purposeful, customer as healthcare base jobs wages been of And an discussed, number growing CEOs going day. an levels. job stable hiring, their staffing long zooming incredible it’s and factors, there’s incredibly professionals stable administration the due a every and out, We’re fastest-growing need be be segment to an continue to for has there

bigger – out the that’s the So, zooming picture. of kind

point, time. on of that that’s standpoint, evolving the kind a from a layering is of And then product how to over everything your environment top do we marketing from standpoint,

Brian Nagel

I you. Thank appreciate it.

Operator

Thank you.

Our line next be KeyBanc Zatzkin the question with from of Capital Noah will Markets.

Your line now is open.

Unidentified Analyst

Noah. for This [indiscernible] Hi. on is

updates quick and guess, around Could Any longer are for about one upcoming locations? you other store future term business Just how potential first expand that a approach the in maybe omnichannel I more any evaluating you an early XQ? presence? thinking me. retail to on opening And that’s

Trina Spear

question. for Thanks the

permit We are store track first our this fall. to on opening

As in and experiencing we’ve we’ve seen with are They with love our want to our experience and our pop-ups FIGS and had feel past, in us obsessed touch activations that healthcare products. the and professionals person.

activation learn lines pop-up to want around They It’s we have about physical five-hour or block more that our brand. with any we’ve why the done.

excited. really we’re so, And

our open we a in to opening future. we’re that excited have really more and plan We’re store the

much one fact today all future, The We’ll opportunity of DTC this give we you the only of right? more top us. $X.X over is in teams, billion on revenue, layer of so channel channel, that on international with retail, on on But layer our going have top net in top that front is forward. layer details there

Unidentified Analyst

you. Thank

Operator

Thank you.

of will Yih line with Adrienne next question the be Our from Barclays.

is now open. Your line

Adrienne Yih

you Thank much. very

questions. if visibility quick acquisition. first the how in customer extended on us sizing. on guess wondering is I’m much aided two of you it one I with has new Just share can kind

$XX XXXX? equally pretty of in million by now we much. going my should excess storage the $XX offset this XQ fees, guess of then expect and XQ should and year? Daniella, expense negated is really XXXX, XQ then, we that that on XXX to spread kind excess was be And so to moving of XQ, in million question the is And I between fulfillment over storage into assume wash XXXX, the the that Thanks just XXX to modeling total

Trina Spear

a to sizing, this the coming. long extended was release For time

to XXL XXL bring to professionals. to excited healthcare super our We’re

few X% in sizing. customers really new of extended seeing a only incorporated And our engaging styles. We’re we’ve

in and healthcare but core to of continue to over that’s that excited few do really our and brand we’re system, we’re the everybody, and of and for assortment our campaign, wear to time. was bring and styles, the everybody – the aim So, it humans all across really for just we It’s is is brand world addition and our that’s inclusive healthcare are community FIGS. what in to about. this going that layering all FIGS goal, full the to not a give them our all where awesome we because most it’s But be all professionals,

Daniella Turenshine

questions expenses. the with third first in trickling incremental well. it expenses as And XX to move $XX fulfillment half to costs the the to in of from past fulfillment expense between seeing bulk And on into and the fulfillment of and mostly basis spoke the spread of incremental the be basis the in XXX basically, points, points excess we the the million enhancement incur so benefit differential XXXX, call about your the enhancement as the the of in expecting into we’re points relates now in $XX quarter XXX basis XXX a initiatives, some seeing storage we XXXX our that in are points million are and now will we XXXX, basis project

Operator

currently in no questions time. There additional Thank are you. at registered this the queue

closing for remarks. now pass to I So, Trina will the call

Trina Spear

for great next a joining Thank you us. you and on so We call much. night. look updating Thank you have to our you hope forward all

Operator

the First Quarter Fiscal for XXXX concludes earnings That your call. participation. you FIGS Thank

your You lines. disconnect may now

FIGS (FIGS) 4 May 232023 Q1 Earnings call transcript