FIGS - Earnings call 3 2023

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Operator

Good afternoon. Thank you for attending today's FIGS Third Quarter Fiscal 2023 Earnings Conference Call. My name is Cole and I'll be the moderator for today's call. [Operator Instructions]I would now like to pass the conference over to our host, Jean Fontana. Please go ahead.

Jean Fontana

you. Thank our thank XXXX today's this posted results, are can Relations found and ir.wearfigs.com.Presenting this FIGS' concern to afternoon Officer.As to for and be quarter release third which Financial a in call our you Investor remarks on on afternoon, stockholder statements. call joining discuss and in Good the press presentation are Co-Founder not Spear, our earnings forward-looking Chief we website Chief Turenshine, Executive events our that at call past do and Officer; today's Trina and Daniella reminder, released These may plans. financial or including business performance, about include future predictions, expectations or market opportunity estimates,

discuss key we included like useful over metrics GAAP reconciliations turn involve which their place are undue These only and which comparable these our stockholder in understanding to the Trina non-GAAP to filings, statements indicators, and I'd Chief could Definitions including of business. most performance as not and risks we non-GAAP results review. XX-Q today measures of undertake Do our actual differ update.Finally, and for no filed Spear, are we measures which FIGS. supplemental measures believe encourage SEC issued Forward-looking to call we today.Now Officer in the presentation materially. statements, will speak we certain of you obligation to we to today, and uncertainties are risks reliance and other discussed the forward-looking on which in Executive

Catherine Spear

Jean. for conference joining our us Good third you XXXX afternoon, call. for Thanks, quarter Thank everyone.

in active XX% number quarter. the added XX% would of new team their in our well their for EBITDA compared care net quarter. customers better-than-expected some our year revenues hard primarily work driven revenues nearly entire the from the prior to FIGS very growth the adjusted with for are We to delivered by another customers thank have devotion third I quarter. to period, to margin highlights as health grew as Net third community.Touching on record like pleased and

market are internationally the States, of gains we we XX%. in building demand driving share United the Beyond with record growth are

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are of of Looking ability performance quarter cash underscores we for ahead third an our adjusted quarter.Our free of third profitability, at speak as our to and $XX on our shortly.Turning EBITDA net raising objectives deliver flow highlights. business delivered EBITDA generated result, margin XX.X%, million expectations the a year revenue our to Daniella guidance, margin which will and we adjusted to our and full

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are our that untapped closing, Daniella's potential, of professionals on speak products, this I it's our care to professionals through what have our feel, while care of serve we was permanent and its of educated to branded that proud created health achievement, only and care results. much not about.In health first this location, proud purposeful space Community our so will incredibly review care to-date, the to try a dedicated kind, following purely have of financial we events is Hubs we become health are is first retail really enabling they and We will programming really accomplished professionals.In on which because topics to addition about

Daniella Turenshine

review to categories, sales outlook. outerwear. was last and mix higher average year's net partially toward a Overall, lapped QX retail benefit costs for everyone. decline strong of to in expense quarter, degree, XX.X% free to XXXX Trina, million, versus occurring September.Gross last discussion $XX.X in year The are Selling increase of including $XXX.X as basis QX the AOV. of of and brand year digital customers. period XX.X% in by QX by will nearly the international year. to offset Thanks, and UPT promotional storage guidance. of while third Non-scrubwear in AOV well mix lower compared to This XX.X% degree point to $XX in to was or the reached customers, increased orders net styles. well in year, of lower in pleased due normalizing financial saw product revenues third QX or duties by well globally begin XXX decline versus and adjusted XX.X% revenues elevated drive representing revised my reactivation by driven lesser and largely be to grew year in impacted higher EBITDA afternoon, by shift and AOV and our freight our XXX lesser basis among a was due to to quarter non-scrubwear XX.X% increased and representing We XXXX. third in our higher sale as expense were X% in AUR. to QX followed performance, and of as We from by product partially initiatives and again compared result costs.Moving XX.X% exceeded duties. I once awareness good We net have in for guidance a a the by strength higher expenses. mix to last reflecting another full was by mix XX.X% QX with To our This raising lesser was mix rates for last compared margin leverage Trina in fulfillment as last was our to was growth net pleased generating continues higher a sales footwear XX.X% this in offset sample in AOV. third higher a lapsed quarter to an a active the progress revenues cash higher shipping compared edition making strong XXXX, airfreight extent, increase expense utilization customers million, XX.X% transaction per million marketing within record certain existing during strong new compared million ongoing significant limited and quarter deliver as led XXXX. XX.X% promotions units as we related by stated, did footwear was priorities, efficiencies. mix offset as better a an revenues gross customers.As partially margin of same operating due XX.X% new strategic we our flow.For sales.Marketing to QX, QX a to was primarily QX point $XXX.X of to net increase to inventory grew unit to shift. primarily planned higher from fueled The revenues This expenses the we

was as expense, stock-based tax G&A fees.In offset is funnel balancing investments of We marketing to EPS spend continue basis maintain for disciplined change net $XX.X This our income charitable top and our for point or of approach net accrual as a representing XXXX. marketing profitability.G&A QX for per our of order in expense million our income revenues and as to million methodology QX optimize $X.XX was to XXXX the to XX.X% quarter. maintaining first compared to $X.XX million, of as sales to addition, and QX compares increase diluted income the return benefit to income higher was flex compared recall, in EPS was share net to in in million a in XXX Taking diluted in compensation last and QX you EPS professional payroll donations. due and to in $X.XX of diluted of net XXXX. may we bottom people, saw including adjusted bonus, $X.X $X.XX this of year, adjusted $X.X EPS a $X.X QX diluted in due Adjusted investment percentage partially million by and salaries, in XXXX. lower net The line, a XX.X% $X

Finally, of our was towards quarter moving last short-term our QX. end XX.X% more quarter levels in Inventory We compared declined million. QX of finished to with decline $XXX an again and EBITDA million the significant third for adjusted investments inventory EBITDA in XX.X% adjusted expect balance $XXX equivalents normalized made million We the and million of sheet. cash, the third progress for $XX.X the to to year. quarter QX cash in compared to XXXX.Turning $XXX margin XX% to at

was free to quarter.Moving million Lastly, in cash outlook, the flow line. starting our $XX top the with

We be the been have may third up demand some reflecting quarter. of pull expect quarter that given macro to outperformance growth uncertainty recognizing fourth the and ongoing there of low-single-digits, revenue forward net

the We the to quarter. year.Moving consumer, to expect macro margin on next continue gross the environment for half first least the fourth weigh into to of at

We expect mix.Looking a to by in better at selling freight be offset product shift promotional and costing expense.

quarters into XXXX.In incur addition, to which California shipping These expense relative our in first are as business, X impacted both costs higher expect start-up for extend growth million to duties carries approximately fulfillment costs we expect our enhancement selling of the to as we facility. that project. $X expected by higher our international We elevated currently distribute in given well products be expense from all initial

about margin X.X% quarter of of to result margin.Overall, third revenue delivered This of on outlook of apparel EBITDA remain health XX% we industry. and of our we growth what expect X.X% expectation factors, these are environment QX, from business to in XX.X% performance and quarter we of a we this our advance uncertain within as excited net EBITDA X.X% adjusted and the we XX%. now our of revenues and leadership XX.X% growth EBITDA approximately approximately adjusted for continue have really net XX%.Based care As long-term between macro potential adjusted our proud fourth XXXX better-than-expected expect up is and we position to the previous growth

have an strong healthy ample with balance no and We incredibly sheet cash flow. cash and debt generates our business model

will business as are that macro We we believe accelerated past term. in turn future to move our today the making will the Trina back to for performance discuss we long are we it where investments near-term investing drive challenges.I

Catherine Spear

dynamics lay for balance strong industry, that the our opportunity believe care of We conversion Daniella. FIGS.We products long-term begin professionals combined stated, investments position FIGS.As in the most Daniella across with leadership These I'll with groundwork flow deliver health growth our leverage product, ever to are the to for strategy care and scale sourcing span lifeblood and of health health apparel areas strong our the several Thanks, the our have evolution cash of will business. experienced. and and creates innovative the growth. we high-quality evolving significant sheet care multiyear

We base are with best-in-class our partners. supplier refining

we finally, position. mitigate is our flexibility chain. company this lead our optimize direction to working around business are right to more confident And that are moat as our our the advance supply to are risk.We we to geographically for times bring and leadership widen We diversifying the

global in Second, the in driving growth invest to care continue we international will apparel. to leader health become

the huge generation The capabilities, a upgrading platform markets.Third, for we technology in in their opportunity, strategy network this building Hub for to capture medicine. trend share area need the experience health to resources this and to new of are just jobs. initiatives capture brand industry go-to-market the on our we launch business innovation this We and an platform expanding uniforms Community next of consumerized in saving are when lacking. TEAMS retail them of is localization and and our year.Finally, and deploying our a TEAMS our we to strategy. existing time on building are care specialized growing in our where later ambassador We in will the do more track administrators, opportunity our their capture is To staff are seamless behind create one procuring see

retail are to successfully we We early profitably learn going talent our in right build the to out our from ensure place experience and have presence. and

for are build future, distribution we As the setting global for foundation we the network. a

and approach leverage project care in growth product XXXX brand up is see for community that, professionals our DC our we strong will to tremendous to other deliver Our we turn it XXXX.In long-term open with engage track product we authenticity, community, innovation, like Canadian health how employees values fulfillment conclusion, no over enhancement a we industry-leading shareholders.With profitable company to that balance plan track on our sheet to do to care health the them capitalize serve questions. from your through our keep and will professionals our industry. in heart take I we is what serving and at our company, advocacy.These Health on on tailwinds guides and to and the care everything our of scale are innovation, the how growing to the our are and opportunity for we how show operator the

Operator

from Piper Edward Instructions] first with Sandler. is [Operator Our Yruma question

Edward Yruma

margin. talked scrubs, shift on of the to bit on driver like I'd a Congrats on we've versus click more go to mix the result. lot the something of then that little guess I some newer coats, of a would performance further footwear?And maybe things about the a down I under non-scrub, you are there. gross a questions of investment products a to little first, like more distribution bit love Can assortment got center I little you as cadence. follow-up, talk your about lab evergreen know the like

wouldn't give quarters. mind we should us think maybe about over that quick you if just a coming So the on how update

Daniella Turenshine

Sure, of I gross about margin. drivers start the talking can

year-over-year driver biggest mix. To into by airfreight. some it duties. also offset ocean was edition the acceleration limited as better we So was into our also outperformance our non-scrubwear smaller expected both see in extent, promotional a a sales and but shift higher product shift, mix scrubwear. mix was and We And freight, saw that footwear, big again, than sample better both by in did

Catherine Spear

of innovation, continue our community. resonate see system terms in to we product And layering our with

And so we launched we in our with which that outerwear. saw quarter underwear, our the with

Our actually doing are [indiscernible] well. really

footwear with New collaboration Our Balance.

how about to And so well really they continue that's X these XX% health we non-scrubs under talked or you but get those new well drops, of are across we're core leverage to categories, scrubs -- as with of grow working styles business. build of replenishing seeing as focused and really total And of we the professionals need almost our it's within to these together. across out as and we're really little care match able what as scrubs and outerwear a the core. that bit our a build costing out scrubs, whether our and how to percent our engage outside we're back And our perspective, these is a we'll kind footwear, our see, from core things on.And

Daniella Turenshine

project. for investments fulfillment on enhancement question last your on And our

total costs of $X kind million. quarter.Looking cost about we're $XX million fourth million the project in expecting be we're to to still start-up $XX So XXXX, of expecting into

that So in $XX of place million $XX XXXX. million to taking

over result to believe us of but expecting that, some better going as experience selling do taking with reliability, million a fourth still about we're better the enable expecting a $XX of it's in that this of efficiency, term. of drive And customer the the in place we result in initiative, that As enhancement fulfillment pressure are capital long majority expenses a quarter. XXXX, to better

Operator

is question from Our with Goldman. next Brooke Roach

Brooke Roach

that you're and the into any any seeing or seen elaborate quarter to-date. hoping Trina, Have you in I the as third trends consumer or was resume brand you fourth you've behavior could on elasticity see changes you aggregate? through or and trends move are quarter changes as seen some loan how macro the demand changes in as changes of consumers price student any in engaging in repayments in with we

Catherine Spear

think I Yes, on. seeing Brooke. X we're -- there's dynamics Thanks, going of kind

for of we first that there stocking heightened were super time. was stimulus. scrubs is The in are were lot Interest that and and rates there during rates. that up obviously and our hangover was effect low There during see pandemic frequency one a of the experiencing a mainly the we need

health And normalize point, into beyond at so that we see and a we'll will X cadence spending care a low care year. a X normalized frequency.And know, you next see and as we'll health They're from they're over going look this pre-pandemic, buying repeat our time more believe professionals. believe year. like we But have professionals, do about $XXX sets that we, abnormally year about what to

buying they're to $X.XX us, with more $X.XX so about $XXX. like And a spending and year

dynamics uncertainty So second think repeat we quarter. headwind. this is with we the of able believe mentioned and new a in of we be piece and frequency customer this seen last a that do to that with will There's opportunity you've you the adds going that and we're But some offset is short-term macro loan lot environment. forward.The as happening think other student huge is still a

Brooke Roach

few can the of supply still year? the XX thinking targeting Daniella, quarters? And should comment by inventory cadencing on Are drawdown clear. over Very we you you the weeks rationalization? how further next about inventory be of end of

Daniella Turenshine

approximately track on supply still weeks of we're So at to deliver XX year-end.

core in above normalized weeks, to As XX and inventory to this able back colors. note, get styles is Important XX% to reminder, to to still which is our be a about of in classic expect we XX XXXX. slightly our of level

receipts with to maintaining progress rate all our of we further to style. at out of inventory fourth in on be we for quarter growth a third continue saw, and our the make there goes with integrity moving promotional through work goes right so and quarter never disciplined to pace the And to stock, us. of on much ahead to round, So expect in continue with the really out really think going quarter brand never you sell receipts.I we're the progress second focused year business. made and lower as strategy our of And the going planned minimal inventory we're

back weeks to Looking we that of would line kind going XX at in XX supply, forward. of expect grow we're into XXXX, to sales inventory when with

Operator

Our Dana next with Advisory question from Telsey Group. is Telsey

Dana Telsey

and I doing see opportunity going What Congratulations also efficient nice because be planning more marketing Trina, diversification see exactly? a would the the you going? that progress. lead just the forward? the how mentioned in are think you are secondly, to you then Where digital sourcing And opportunity. you margin spend And what do is gross do times you could driver? on marketing marketing, in

Catherine Spear

Thanks, Dana.

Okay.

we're new relationships us and and that really to help to do continuously it of leveraging continuously professionals So execute that supplier need perspective, form sourcing care our their comes of from our up strategy details new developing job a styles, game ideas people. solves really capabilities product from the their that on for and the health in comes bringing problems fabrication lens and

timely community where lead your we're It's believe lead focused.To a and our with times way. flexibility, need a they deliver about what we what and they point what And to create and want to optimization and lot respond us. being going so will the more seeing able to that's do of help that we're in deliver more times,

that we're get the to from excited sure, geographic to about geographies, so risk that diversify shifts we're manufacturing LatAm with East across And well. also through but for diversity.And times the sourcing making. Asia partners and So about Middle to talent and we're and we're aligning lead yes, the excited mitigate best-in-class to really better access also as to

is margin gross around unchanged. ethos Our

And our so this an focused maintaining strategy extremely unfolds, to going while on leveraging innovation rate. strong to drive margin be as we're core high-margin more

funnel to gains relates we're bottom and the driving gains to taking those top it strategy of investing of the our execute tax in on continuing and marketing, funnel. of As

across we driving some markets down.And we now take awareness, is into brand FIGS have the we so in points top well, cities family. of tax driving the health reach our of and in and gains professionals and U.S. international to stepping care now our And driving more see invest those as so the funnel, as what

we're to efficiency that's our -- able And so maintain that and seeing after why we're our quarter. quarter

Operator

question from Kernan John TD is Cowen. with next Our

John Kernan

very I and margin How see should It long-term on we macro. to sounds distribution. we like for business? line in guess a been think Gross think these structure stable expenses next some some selling of when G&A volatile had how about opportunities those are just we curious, some what the about was expenses, long for has fairly I has -- think leverage forward? on both about the term coming year margin expense going do items items? selling line the

Daniella Turenshine

Thanks, John.

we So to we continue margin. believe a that will get to high teens adjusted EBITDA

to think happen. different of components to the about think helpful of it's what needs I kind

spoke gross margin rate. really strong to our You

going system. margin. drive evolving also layering spoke about gross our we're greater innovation very and to that our continue supply expanding think I to deliver strong quality. Trina to We're chain

might so these a have for and see And really X some are of both years changes the business to better now lot positioning to from us longer gain we enable of that to time over going we positioned confidence selling. particularly be X making really, we a we're scale, we're and items, short-term to as efficiency the lot that term these also of fluctuations.But

we and may a the we with have In and So XXXX back, we as going once be expect a should cost see step move carry to we near can in our past does been.I really G&A to higher able and open quarter do But that and we to of we're related marketing a we but Canadian burdened in really to in we fulfillment believe savings invest think a significant term, to drive experience, expense. to behind going penetration are in plan a now. generation to duties we remain see selling customer do to And we future to that's addition we be leverage cost project higher taking over per XXXX, in expecting we leverage as cash costs, growth strong on right, XXXX. invest duty scale.In balance impact as short-term continue strong we expenses. DC sheet, time, our to have always but efficient higher international, have which shipping a flow just that shipping costs selling, expect

of so health our care. we really advantage global opportunities the across capture to want position And to take leadership

John Kernan

Understood.

with Or you be next year? Just I question the on Do should still Brooke's previous inventory? -- we one line be was it maybe cycling year-over-year expect inventory. follow-up on sales quick inventory think in down in grow to

Daniella Turenshine

I still get we'll supply. to that first to the in XX weeks of to XX be think working half,

Looking back is with half normalized we're that place. in of when grow more the to line see sales we in once expect into XXXX inventory would

Operator

Our Xiao next [ Bank with ] of from America. is Alice question

Jingyuan Xiao

to detail i.e., areas touch percent margins categories if X these AOV a I'm hoping contribution higher than then What for an of tend about And and TEAMS new the AOV customer since of as as AOV does TEAMS the summarize to categories both international benefit driving domestic? to more or provide you these then the to grow, get could are of given is well. each lower as does upon that, acquisition. the your both now? lastly, impacts orders? long-term And all bulk to be How international big those are sales

Daniella Turenshine

and TEAMS our at looking businesses. international So

TEAMS see AOV as also margin. in higher It does a carry generally contribution to the each larger higher orders. those, speaking So these a has of that AOV are we

And we do also more gross product, offset outbound below got discounts relatively margin at shipping see keep margin which core orders, for looking to benefits So pretty of gross margin, stable. they're bulk We but buying some of it's gross generally, these a in in efficiencies lot then our helps entirely inbound. today, is similar. higher and

marketing So no expense.

So drive TEAMS really contribution a From time. carries experience similar focused we're accretive opportunity see really lower slightly margin the customers. from standpoint.International keeping we perspective our international margin a contribution of lot for AOV, that today, but over today higher a on a to

marketing from perspective, a our as of the in and center we're Trina as And so efficient. duty we're a mentioned, that, subsidizing really we do to distribution lot California.From shipping expenses sell

open we expand to profitability that like as lot strong long network, the term so opportunity of international spoke of Canadian DC we have And XXXX, as better because our in fundamentals over we a a we today. we in see drive the to, distribution

Operator

Yih next is question Adrienne with from Barclays. Our

Adrienne Yih-Tennant

you is of kind a of you chain, know is to be back it Great. of for first question and store, it kind first this but be but you my is inventory?And the that Hub if of Community of inbound at of intended second like the of you up of Trina, with all behind ton one question kind supply like question the -- that manufacturing? Is any supply, I environment? my would metrics a how normal the core? the then Or on afternoon. really new to is doesn't restart manufacturing would My sound on much sort be kind products of -- can Daniella to you stand-alone about when press showroom breadth the kind box talk a have the would fully of store, new and intention you're kind of depth sounds you versus think more it it it? that it's manufacturing. there's released going of And When kind

Catherine Spear

Thank you.

place really their since with Hub, the that. about this apparel not also they no that so and but the excited so can to we're be the in it. health job, first then, uniform health So only more a connect professionals we to their been was about And created providing care ago. dream XX branded solely get for terms each And that other. It's store which do is of years we go about couldn't store world, really in say Community there's because had care excited

their couldn't think And understand more the fabrications. going able so able way with on, really mean, in different the that's why programming our be be is we're about so be to and try we're styles going the And to have size and about all to engage we're excited. community our is which they're going to -- our going more to I excited this it we or different community.I to products, learn

showroom. very is a be iconic iconic a the substores think for to and not time. brand large, plan our I It's long a very most long, brand largest,

the to and you our want we're the inventory work uniform so carry to you so wear opportunity.And we with want opening you we you you might leave next the what So that get tomorrow. need, have and can go store you need can and officially and to FIGS day provide new to that

L.A., detail by. please So you are in will future. providing if all the be we come in the But with you

Daniella Turenshine

On inventory, sustaining to so gross really your we're balance down inventory be while a our strong rate. such margin proud working on question

inventory to orders and newness the inventory going buys. fourth still just continue excitement to down it's bring going different to innovation shallower lowering to feel in think I very still work to to engagement.We're our that But bring important while and we're by our it's going to lower still quarter. new not balance going to drive core enable customers bringing and It's to down products, bringing have into us in XXXX. plan note receipts We in

Operator

with is question next from Our James. Rick Patel Raymond

Rakesh Patel

I'm hoping into deeper the international you could dig business.

launched new in year, in Or What think have And existing past have of markets? learned in? you've we the to of the a lot expect couple to your you markets doesn't? on about do what what more works, about then are more next you the pipeline you within countries years. focus going So you launch that as

Catherine Spear

Thanks, Rick.

Okay.

currency messaging, and is we're and localization that from really an products our are being localizing any our on learned out given even we've is really important. time, pay what check able to obviously, working. think our we're at what communications, When perspective, site our in currency I our international local So showing our strategies

and is think is we're well.I a other We're with the going from the we're demand is seen really is we're that seeing thing them seeing localization organically great opportunistic, and opening how dynamics. up countries think I exciting.So working what that word-of-mouth markets So right? we're the and being well the number and are really They of spending open that to that's markets planning been and about we different a that's we've great market tipping over telling to around really we're maybe not FIGS points to time, so and these demand and coming ago are that's seeing that their the over that and that brand been we're or other people back similar seeing really United in how States friends, weren't see. thing year even build on referrals even and in see marketing been very to are colleagues really engaging people and -- their the how

next up think beyond, to to continue as brand existing to awareness we that our be going continue going the ensure into invest going we're opportunistic I we're continue we're year brand. And so the and going behind see also open markets going to year. next that. But we and to grow, And to invest in we obviously as opportunistic.We're build be markets to new

Rakesh Patel

And for the can quarter? on events to expect cadence activations you or in I'm also you the curious if outlook in touch different year have you promotional mind. similar a fourth last if

Daniella Turenshine

our assumes events. So guidance around that promotional our we to maintain discipline continue

going events nimble in flexibility we really on strategies only typically every do just difficult brand, and we recognize first the important and on protecting seeing quarter. have And customer that our have what like-for-like but kind volume, for know, leaning DXC of the adjust on during inventory our in based kind event. we promotions this spend.So waiting based think focus been don't also our time. more customers as customer company really based that's we're of you to isn't on a ensure next our into As foremost the to that be position, to also we we're And always

to on the So to depending plan respond environment. we're going accordingly

Operator

question is next Drbul from Guggenheim. Bob Our with

Arian Razai

the you digital that Hubs. follow I the area care uptick any in you're or the to up is Because meaningful on Can Bob Arian is This about [indiscernible] heavy very I'm Razai effects wanted pretty community. for halo Drbul. area sure implying? on Community health Adrienne's question

environment? So I the players promotions also, about updates location. behind the ask or promotions I And just new wanted driven by to wanted Any understand macro? competitive the by what competition. solely the on was to Are

Catherine Spear

Sure.

City, [ also Century a ], Mall, City within as central. And really our relates So it's that Hub City and are Mall. health like it in care in central hospitals One number from to located Kindbody actually Medical It's Century miles few to clinics Century like Community of a there's others.

stores. much they that did and we have you of help so will DXC lot where strategy and as around our will so next forward Hub to customers know, figure live analysis where data as a out our So -- company, put they where us where that we a around and where to work.And and utilizing be going to decide to our go put that to our Community

to to halo and ways Stores profitable are and as really digital billboards able our the So important. drive think your digital point, they is many I in well. are business

retailers omnichannel across effect see and around how and uniform retailers the lot seen your you of and much then understanding benefits. what next an business out on have try off. There's metrics they a what other AOVs after online there's shop omnichannel Other the a than store, figure size, lot the You in having and there both it to repeat of out you online. your of -- kind different higher they of also online see relates can that.And you so as time

next everybody advocating as widen we're quality. our customers, new doing time. X/XX the to else. really them. moat we it that since a we engaging and rate.We're be for between well.As time how size to look landscape, change perspective, seen adding so and the much moat? with haven't we're over From we're continuing elevated And customers it our talked to see we new about record competitor last our continues We're innovation, competitive to relates us We're The this widening closest at about product the

else.And I are environment, us million standing what everybody a in and is, they cash. we're do we we going the lot have And the moat we're think given between -- continue so during remain and leader still. back of to invest pulling space $XXX companies And and this of widening given in to doing the are this

community. the most We widening in between We're most continuing and moat over have no We're for authentic purpose-driven really investments the in else debt. that up to making the show that in so smart way we most us investments, way everybody and -- cash. generating meaningful are and our time,

Operator

is next Matt from with Our question MKM. ROTH Koranda

Matthew Koranda

versus adds market? any new any the cohorts acquiring, the how you've in sort consumer, of of customer many differences specific your cetera? domestic product on et the from been versus quarter, terms that full And propensity, the off-price mix, price versus just on there core notable came in breakdown AOVs, core Just international just then new of

Daniella Turenshine

quarter. the think customer But new to continuing adds, we that I in pleased speaks that international, also within to our more And to we're opportunity the it's to domestic year-over-year. our at growth with U.S. looking penetrate brand just customers have really continue and that great that new add saw the So we see is really the to grow awareness.

the offset acquiring. board AOV, frequency. customers our that lower the they similar spending We're been to seeing we and lot in what to patterns we've customers today. So by Otherwise, adding between we've customers seen continue higher occupations. pretty a we've that similar of across some the our not see We're healthy X.We're a difference in new of that repeat. the of terms we're seeing look Obviously, seeing new spoken on yes, the mix on about

Matthew Koranda

Great. store Okay. strategy. then on And the just

we of I obviously, it's ask on I but first be the more brand that a I a this growth sort wanted in achieve metrics specifically we point a been you the would of I know, or wanted had but are beacon? sort expect different that. your point just kind should given with think Are that asked of store in finer put ROI ways, just that And thinking X-wall on of How of with these at the about to sort question. one, understanding to early, it's to just the strategy? stores driver view

Catherine Spear

whether a person within across with doing States. And cities I also between lot be in Yes. what to I what X-wall Community also there's why I doing Hubs synergies we're of an a our driver a of doing we're United Hubs that's profitability. brand that look EBITDA to a Community growth and There institution what will is mean we're unlock our within community with the digitally. definitely We And think think about having It's identifier. going X-hour have is lot Community we're every more. connection.It's them what we retail much be that Hubs, time person, And that up we it's community about our whether they that events this that transaction, and pop-up calling community FIGS. that about it's diehard not lines about programming activations, our in alignment cares us. about. aligns our shop, They're our whether want for in show and and with it's waiting mobile experiences, of it's it's fanatical more and just

in And drive there drive get lot not so and shop we're store, going what are time. Hubs.It's how with as to going a to dynamics just of then FIGS what are And over et is really TEAMS be the There's and to return to do Community online, to digital. walk cetera. only It's store continue doing going in that you business this team. going that teams say, we to beneficial for also with our you do hey, drive I my going the

with to in this how And how so really engage continue And see we're excited us roll to our we're to out. continues community to see excited person. really we

Operator

question Nagel is Brian with next from Our Oppenheimer.

William Dossett

Nagel. Dossett quarter. Brian for A This William is on nice

this excuse ask understand the guidance quarter, sales better. So me to to for going but and back about just near-term

on elaborate demand And to quarter? have been throughout quarter? this you You have what may any QX. what indicated on the you that? in cause degree tracks also idea seen there us the may -- affected how QX that have to a or may could And give pull forward Could you

Daniella Turenshine

outperformance. third to saw of the quarter with what related we the and kind So

as our for full we're your expectations. macro associated that. We sale outperformed repeat our the year this with to do time planned Can sample some So the pull-forward uncertain guidance majority raised environment. believe But beat pass you second question? through really a the discussed, was in we potentially and of there second really proud year

William Dossett

the for yes. tracked throughout And quarter? any how -- demand Just just idea

Daniella Turenshine

Yes. Thank you.

expectation in I think QX quarter I growth aggregate. asking. what what to of So looking necessarily not fourth an really see more reflective rate for of for expect quarter, you're the It's guidance the of is is the at we our think And quarter-to-date. we're what seeing

changed As a We launch reminder, do like-for-like our we calendar. don't events.

Friday, strained. to front it's income lot happening especially Cyber and cognizant with lot our a we want can to our volume what's guiding in quarter think extrapolate at we're hard left we level period us in Monday in consumer, Black event, our of full be our a kind So of as just the have that the there's be just period.I upcoming given also of that to

all thinking potential taking outlook. of And discussed into QX that our we that in pull-forward account about to addition so the we're when

William Dossett

next is question that's a gross Yes, margins. My gross on on -- question very margin was to a previous helpful. follow-up

this just mix a since shift you to that just in or it shift?And expectations Just freight a how change Is the temporary more better did laid QX, product product noted then shift, looking by out mix. sustainable in you last mix would be all promotional August? offset and

quantity you those least So just gross wondering if impacts directionally? could margin, of the at size to

Daniella Turenshine

the some on our also So lower gross we contain mix was we was expectations into mix and margin expected edition quarter, strong the gross -- in footwear, margin cite of by looking which outerwear which a We about shift within generally of mix rate as of August.I'd and at a that a both from shift into bit say did different margin. gross shift non-scrubwear. sale, product mostly what the little spoke biggest the really our performance was are what year-over-year, categories did our of an limited the from That third sample impact had for driven impact outperformance more scrubwear.

I our promotional continue will quarter, saw products. mix mix. biggest was by impact, and simultaneously we're And non-scrubwear similar gross at third scrubwear, think we're how as expecting shift through more the better rate really that, inventory with followed we rate.Looking we're the a in be by brand mix. into noncore to to the edition pace product the quarter on we we limited what our dynamics, focused promotional and offset strong to fourth and continue Product mix through all really freight margin and inventory while to also move the related continue to protecting move to deliver going at

William Dossett

And one item, if last I then housekeeping may.

structure you can any compensation If expense to Just your term? discuss longer there's changes? look how within at share-based

Daniella Turenshine

Definitely.

nonrecurring. within we have our that's compensation it really So some stock-based of today, portion

of is XXXX. term, compensation at And then at XXXX. our have the going a longer of stock-based so looking off portion end portion another off roll to the And end roll executive of we'll

we stock-based QX sales of which see sales. start we more to So normalized our as as by current a XXXX, will a percent expect a percentage about be comp of of to rate half

Operator

this at are the There in time. further questions no queue

So the I'll to any the pass team remarks. for back closing management conference

Jean Fontana

us Thank to forward we much joining you and you soon. look for seeing so again

Operator

concludes your for call. Thank you conference That participation. today's

You line. may your disconnect now

FIGS (FIGS) 2 Nov 232023 Q3 Earnings call transcript