Revenue increased 10.3% to $153.2 million
Active customers increased 18.0% to 2.23
million
Warby Parker Inc. (NYSE: WRBY) (the “Company”), a
direct-to-consumer lifestyle brand focused on vision for all, today
announced financial results for the first quarter ended March 31,
2022.
"Our team has a lot to be proud of this quarter,” said
Co-Founder and Co-CEO Dave Gilboa. “We opened eight new retail
stores, expanded our eye exam capacity, launched four new eyewear
collections, scaled our vertically-integrated supply chain, and
continued to deliver above-and-beyond experiences to our customers,
who are spending more with us than ever before.”
“Despite a challenging macroeconomic backdrop, we continue to
grow faster than others in our industry. We believe our omnichannel
business model, compelling value proposition, and strong consumer
brand uniquely position us to capture market share for years to
come in both good and turbulent environments,” added Co-Founder and
Co-CEO Neil Blumenthal.
First Quarter 2022
Highlights
- Net revenue increased $14.2 million, or 10.3%, to $153.2
million compared to first quarter 2021 and increased 17.9% on a
3-year CAGR basis compared to the first quarter of 2019.
- Increased active customers 18.0% to 2.23 million year over
year.
- Average revenue per customer increased 11.2% year over year to
$249.
- Q1 2022 GAAP net loss of $34.1 million.
- Q1 2022 adjusted EBITDA(1) of $0.8 million and an adjusted
EBITDA margin of 0.5%.
- Opened 8 new stores during the quarter, ending the quarter with
169 stores.
- More than doubled revenue of our contact lens offering.
- Maintained 80+ Net Promoter Score.
First Quarter 2022 Financial
Results
For the first quarter of 2022, compared to the first quarter of
2021:
- Net revenue increased $14.2 million, or 10.3%, to $153.2
million. First quarter 2022 revenue was negatively impacted by
approximately $15.0 million in estimated lost sales due to the
Omicron variant, with disruption heightened in the last weeks of
December and continuing into the first quarter. The onset of
Omicron coincided with peak demand in the optical industry as
customers seek to utilize flexible spending dollars ahead of
December 31st expirations. Most orders placed in the last weeks of
December are delivered and recognized as revenue in the first
quarter, so the lower December sales negatively impacted revenue in
the first quarter, as did the continued impact of Omicron on store
traffic and demand.
- Active customers increased by 340,000, or 18.0%, to 2.23
million.
- Gross profit dollars increased 7.0% to $89.6 million.
- Gross margin was 58.5% compared to 60.3% in the prior year. The
decline in gross margin was primarily driven by the increased
penetration of contact lenses, which carry lower gross margins than
eyeglasses, reflecting Warby Parker’s strategy to grow its contact
lens offering, and a benefit of 25 basis points related to a tariff
rebate received in the first quarter of 2021, partially offset by
the scaling of progressive lenses and leverage from the Company’s
in-house optical laboratory network.
- Selling, general and administrative expenses (“SG&A”)
increased $42.6 million to $123.4 million, primarily driven by an
increase of $25.9 million in stock-based compensation expense and
related employer payroll taxes, partially offset by $0.3 million of
costs incurred in the first quarter of 2021 associated with our
direct listing. Excluding these expenses in both years, SG&A
increased $17.0 million to $96.2 million, on an adjusted basis(1).
On this basis, SG&A as a percentage of revenue increased 580
basis points to 62.8% from 57.0%, primarily due to increased
corporate overhead expenses, mostly related to costs we incurred to
operate as a public company, which we did not incur in Q1 2021, and
investments in our technology infrastructure, as well as an
increase in salary expense for our retail employees due to the
growth in our stores base. These costs were partially offset by
reduced costs of the Company’s Home Try-On program as volume
decreased for this program as the COVID-19 pandemic has progressed
and customers have returned to stores in larger numbers when
compared to Q1 2021.
- Net loss increased $37.1 million to $34.1 million, primarily as
a result of the increase in SG&A described above.
- Adjusted EBITDA(1) decreased $8.5 million to $0.8 million.
- Adjusted EBITDA margin(1) decreased 620 basis points to
0.5%.
- Warby Parker opened 8 new stores during the first quarter,
ending the quarter with 169 stores.
Balance Sheet Highlights
Warby Parker ended the first quarter of 2022 with $230.3 million
in cash and cash equivalents.
2022 Outlook
For the full year 2022, Warby Parker is reiterating its outlook
and still expects:
- Net revenue of $650 to $660 million, representing growth of 20%
to 22% versus full year 2021. This outlook includes the impact of
approximately $15 million in lost sales, or 3 percentage points of
growth, related to the disruption caused by Omicron to the start of
the year.
- Adjusted EBITDA margin(1) of approximately 5.6% to 6.6%.
- 40 new store openings bringing total store count to 201.
“We delivered solid results in the first quarter and saw double
digit growth year over year, despite challenging pandemic
headwinds. In Q1, we were particularly proud to see our average
revenue per customer increase 11.2% year over year to $249 as our
active customer base grew 18% to 2.23 million customers,” said
Chief Financial Officer Steve Miller. “For the rest of the year, we
look forward to seeing our store fleet return to pre-pandemic
productivity levels while also realizing the benefits from the 35
new stores we opened in 2021, in turn driving accelerating revenue
growth and profitability.”
The guidance and forward-looking statements made in this press
release and on our conference call are based on management's
expectations as of the date of this press release and do not
incorporate future unknown direct or indirect impacts from further
resurgences in COVID-19.
(1) Please see the reconciliation of non-GAAP financial measures
to the most comparable GAAP financial measure in the section titled
“Non-GAAP Financial Measures” below.
Webcast and Conference
Call
A conference call to discuss Warby Parker’s first quarter 2022
results as well as second quarter and full year 2022 outlook is
scheduled for 8:00 a.m. ET today. To participate, please dial
844-200-6205 from the U.S. or 929-526-1599 from international
locations. The conference passcode is 634062. A live webcast of the
conference call will be available on the investors section of the
Company’s website at investors.warbyparker.com where presentation
materials will also be posted prior to the conference call. A
replay will be made available online approximately two hours
following the live call for a period of 90 days.
Forward-Looking
Statements
This press release and the related conference call, webcast and
presentation contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
These statements may relate to, but are not limited to,
expectations of future operating results or financial performance,
including expectations regarding achieving profitability and our
GAAP and non-GAAP guidance for the quarter ending June 30, 2022 and
the year ending December 31, 2022, and expectations regarding the
number of new store openings during the year ending December 31,
2022; management’s plans, priorities, initiatives and strategies;
and expectations regarding growth of our business. Forward-looking
statements are inherently subject to risks and uncertainties, some
of which cannot be predicted or quantified. In some cases, you can
identify forward-looking statements because they contain words such
as “anticipate,” “believe,” “contemplate,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,”
“predict,” “project,” “should,” “target,” “toward,” “will,” or
“would,” or the negative of these words or other similar terms or
expressions. You should not put undue reliance on any
forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results and will
not necessarily be accurate indications of the times at, or by,
which such performance or results will be achieved, if at all.
Forward-looking statements are based on information available at
the time those statements are made and are based on current
expectations, estimates, forecasts, and projections as well as the
beliefs and assumptions of management as of that time with respect
to future events. These statements are subject to risks and
uncertainties, many of which involve factors or circumstances that
are beyond our control, that could cause actual performance or
results to differ materially from those expressed in or suggested
by the forward-looking statements. In light of these risks and
uncertainties, the forward-looking events and circumstances
discussed in this press release may not occur and actual results
could differ materially from those anticipated or implied in the
forward-looking statements. These risks and uncertainties include
our ability to manage our future growth effectively; our
expectations regarding cost of goods sold, gross margin, channel
mix, customer mix, and selling, general, and administrative
expenses; planned new retail stores in 2022 and going forward;
increases in component and shipping costs and changes in supply
chain; our ability to compete successfully; our ability to manage
our inventory balances and shrinkage; our ability to engage our
existing customers and obtain new customers; the growth of our
brand awareness; the effects of the ongoing COVID-19 pandemic; the
effects of seasonal trends on our results of operations; our
ability to stay in compliance with extensive laws and regulations
that apply to our business and operations; our ability to
adequately maintain and protect our intellectual property and
proprietary rights; our reliance on third parties for our products,
operation and infrastructure; our duties related to being a public
benefit corporation; the ability of our Co-Founders and Co-CEOs to
exercise significant influence over all matters submitted to
stockholders for approval; the effect of our multi-class structure
on the trading price of our Class A common stock; and the increased
expenses associated with being a public company. Additional
information regarding these and other risks and uncertainties that
could cause actual results to differ materially from the Company's
expectations is included in our Annual Report on Form 10-K for the
year ended December 31, 2021, filed with the SEC on March 18, 2022.
Except as required by law, we do not undertake any obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future developments, or otherwise.
Additional information regarding these and other factors that
could affect the Company’s results is included in the Company’s SEC
filings, which may be obtained by visiting the SEC's website at
www.sec.gov. Information contained on, or that is referenced or can
be accessed through, our website does not constitute part of this
document and inclusions of any website addresses herein are
inactive textual references only.
Glossary
Active Customer is defined as a unique customer that has made at
least one purchase of any product or service in the preceding
12-month period.
Average Revenue per Customer is defined as net revenue for a
given period divided by the number of Active Customers as of the
end of that same period.
Non-GAAP Financial
Measures
We use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net
income, Adjusted earnings per share, Adjusted cost of goods sold
(“Adjusted COGS”), Adjusted gross profit, and Adjusted selling,
general, and administrative expenses (“Adjusted SG&A”) as
important indicators of our operating performance. Collectively, we
refer to these non-GAAP financial measures as our “Non-GAAP
Measures.” The Non-GAAP Measures, when taken collectively with our
GAAP results, may be helpful to investors because they provide
consistency and comparability with past financial performance and
assist in comparisons with other companies, some of which use
similar non-GAAP financial information to supplement their GAAP
results.
Adjusted EBITDA is defined as net income (loss) before interest
and other income (loss), taxes, and depreciation and amortization
as further adjusted for stock-based compensation expense and
related employer payroll taxes, and non-recurring costs such as
direct listing or other transaction costs. Adjusted EBITDA margin
is defined as Adjusted EBITDA divided by net revenue.
Adjusted net income is defined as net income (loss) adjusted for
stock-based compensation expense and related employer payroll
taxes, and non-recurring costs such as direct listing or other
transaction costs, and as further adjusted for estimated income tax
on such adjusted items.
Adjusted earnings per share is defined as Adjusted net income
(loss) divided by weighted average shares outstanding.
Adjusted COGS is defined as cost of goods sold adjusted for
stock-based compensation expense and related employer payroll
taxes.
Adjusted gross profit is defined as net revenue minus Adjusted
COGS.
Adjusted SG&A is defined as SG&A adjusted for
stock-based compensation expense and related employer payroll
taxes, and non-recurring costs such as direct listing or other
transaction costs.
The Non-GAAP Measures are presented for supplemental
informational purposes only. A reconciliation of historical GAAP to
Non-GAAP financial information is included under “Selected
Financial Information” below.
We have not reconciled our Adjusted EBITDA margin guidance to
GAAP net income (loss) margin, or Net Margin, because we do not
provide guidance for GAAP Net Margin due to the uncertainty and
potential variability of stock-based compensation and taxes, which
are reconciling items between GAAP Net Margin and Adjusted EBITDA
margin. Because such items cannot be reasonably provided without
unreasonable efforts, we are unable to provide a reconciliation of
the Adjusted EBITDA Margin guidance to GAAP Net Margin. However,
such items could have a significant impact on GAAP Net Margin.
About Warby Parker
Warby Parker (NYSE: WRBY) was founded in 2010 with a mission to
inspire and impact the world with vision, purpose, and
style–without charging a premium for it. Headquartered in New York
City, the co-founder-led lifestyle brand pioneers ideas, designs
products, and develops technologies that help people see, from
designer-quality prescription glasses (starting at $95) and
contacts, to eye exams and vision tests available online and in
more than 160 retail stores across the U.S. and Canada.
Warby Parker aims to demonstrate that businesses can scale, do
well, and do good in the world. Ultimately, the brand believes in
vision for all, which is why for every pair of glasses or
sunglasses sold, they distribute a pair to someone in need through
their Buy a Pair, Give a Pair program. To date, Warby Parker has
worked alongside its nonprofit partners to distribute more than 10
million glasses to people in need.
Selected Financial Information
Warby Parker Inc. and
Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)
(Amounts in thousands, except share data)
March 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
230,324
$
256,416
Accounts receivable, net
830
992
Inventory
64,253
57,095
Prepaid expenses and other current
assets
16,746
13,477
Total current assets
312,153
327,980
Property and equipment, net
121,253
112,195
Right-of-use lease assets
109,737
—
Other assets
1,523
471
Total assets
$
544,666
$
440,646
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
32,535
$
30,890
Accrued expenses
56,317
60,840
Deferred revenue
19,424
22,073
Current lease liabilities
18,518
—
Other current liabilities
1,948
4,301
Total current liabilities
128,742
118,104
Deferred rent
—
36,544
Non-current lease liabilities
132,824
—
Other liabilities
2,217
—
Total liabilities
263,783
154,648
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value; Class A:
750,000,000 shares authorized at March 31, 2022 and December 31,
2021, 95,114,017 and 94,901,623 issued and outstanding at March 31,
2022 and December 31, 2021, respectively; Class B: 150,000,000
shares authorized at March 31, 2022 and December 31, 2021,
18,854,555 and 18,719,184 shares issued and outstanding as of March
31, 2022 and December 31, 2021, respectively, convertible to Class
A on a one-to-one basis
11
11
Additional paid-in capital
808,222
779,212
Accumulated deficit
(527,374
)
(493,241
)
Accumulated other comprehensive income
24
16
Total stockholders’ equity
280,883
285,998
Total liabilities and stockholders’
equity
$
544,666
$
440,646
Warby Parker Inc. and
Subsidiaries Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands, except share and per share
data)
Three Months Ended March
31,
2022
2021
Net revenue
$
153,218
$
138,973
Cost of goods sold
63,572
55,192
Gross profit
89,646
83,781
—
—
Selling, general, and administrative
expenses
123,386
80,760
Loss from operations
(33,740
)
3,021
Interest and other income, net
146
134
(Loss) income before income taxes
(33,594
)
3,155
Provision for income taxes
539
144
Net (loss) income
$
(34,133
)
$
3,011
Deemed dividend upon redemption of
redeemable convertible preferred stock
—
(4,613
)
Net loss attributable to common
stockholders
$
(34,133
)
$
(1,602
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.30
)
$
(0.03
)
Weighted average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
114,103,766
53,946,980
Warby Parker Inc. and
Subsidiaries Condensed Consolidated Statements of Cash Flows
(Unaudited) (Amounts in thousands)
Three Months Ended March
31,
2022
2021
Cash flows from operating activities
Net (loss) income
$
(34,133
)
$
3,011
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
7,137
4,704
Stock-based compensation
27,144
1,261
Change in operating assets and
liabilities:
Accounts receivable, net
163
83
Inventory
(7,147
)
(2,027
)
Prepaid expenses and other assets
(4,316
)
(1,253
)
Accounts payable
751
(627
)
Accrued expenses
(2,158
)
(2,088
)
Deferred revenue
(2,654
)
(9,418
)
Other current liabilities
129
1,777
Deferred rent
—
1,302
Right-of-use lease assets and current and
non-current lease liabilities
2,571
—
Other liabilities
2,217
(2
)
Net cash used in operating activities
(10,296
)
(3,277
)
Cash flows from investing activities
Purchases of property and equipment
(16,060
)
(8,686
)
Net cash used in investing activities
(16,060
)
(8,686
)
Cash flows from financing activities
Proceeds from stock option exercises
180
157
Stock repurchases
—
(6,064
)
Net cash provided by (used in) financing
activities
180
(5,907
)
Effect of exchange rates on cash
84
(194
)
Net decrease in cash and cash
equivalents
(26,092
)
(18,064
)
Cash and cash equivalents
Beginning of year
256,416
314,085
End of year
$
230,324
$
296,021
Supplemental disclosures
Cash paid for income taxes
$
34
$
131
Cash paid for interest
35
42
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued expenses
4,241
3,824
Related party loans issued in connection
with stock option exercises
$
—
$
13,827
Warby Parker Inc. and
Subsidiaries Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
The following table reflects a
reconciliation of Adjusted EBITDA to net loss, the most directly
comparable financial measure prepared in accordance with GAAP:
Three Months Ended March
31,
2022
2021
(unaudited, in
thousands)
Net loss
$
(34,133
)
$
3,011
Adjusted to exclude the following:
Interest and other income, net
(146
)
(134
)
Provision for income taxes
539
144
Depreciation and amortization expense
7,137
4,704
Stock-based compensation expense(1)
27,377
1,261
Transaction costs(2)
—
278
Adjusted EBITDA
$
774
$
9,264
Adjusted EBITDA margin
0.5
%
6.7
%
(1) Represents expenses related to the Company’s equity-based
compensation programs, which may vary significantly from period to
period depending upon various factors including the timing, number,
and the valuation of awards granted, vesting of awards including
the satisfaction of performance conditions, and the impact of
repurchases of awards from employees. The amount includes $0.2
million of employer payroll costs associated with the release of
RSUs and option exercises for the three months ended March 31,
2022.
(2) Represents costs directly attributable to the preparation
for our Direct Listing.
Warby Parker Inc. and
Subsidiaries Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
The following table presents our non-GAAP,
or adjusted, financial measures for the periods presented as a
percentage of revenue. Each cost and operating expense is adjusted
for transaction costs and stock-based compensation expense and
related employer payroll taxes.
Reported Three Months
Ended March 31,
Adjusted Three Months
Ended March 31,
2022
2021
2022
2021
(unaudited, in
thousands)
(unaudited, in
thousands)
Cost of goods sold
$
63,572
$
55,192
$
63,337
$
55,192
% of Revenue
41.5
%
39.7
%
41.3
%
39.7
%
Gross profit
$
89,646
$
83,781
$
89,881
$
83,781
% of Revenue
58.5
%
60.3
%
58.7
%
60.3
%
Selling, general, and administrative
expenses
$
123,386
$
80,760
$
96,244
$
79,221
% of Revenue
80.5
%
58.1
%
62.8
%
57.0
%
Net (loss) income
$
(34,133
)
$
3,011
$
(4,356
)
$
3,289
% of Revenue
(22.3
) %
2.2
%
(2.8
) %
2.4
%
Warby Parker Inc. and
Subsidiaries Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
The following table reflects a
reconciliation of each non-GAAP, or adjusted, financial measure to
its most directly comparable financial measure prepared in
accordance with GAAP:
Three Months Ended March
31,
2022
2021
(unaudited, in
thousands)
Cost of goods sold
$
63,572
$
55,192
Adjusted to exclude the following:
Stock-based compensation expense(1)
235
—
Adjusted cost of goods sold
$
63,337
$
55,192
Gross profit
$
89,646
$
83,781
Adjusted to exclude the following:
Stock-based compensation expense(1)
235
—
Adjusted gross profit
$
89,881
$
83,781
Selling, general, and administrative
expenses
$
123,386
$
80,760
Adjusted to exclude the following:
Stock-based compensation expense(1)
27,142
1,261
Transaction costs(2)
—
278
Adjusted selling, general, and
administrative expenses
$
96,244
$
79,221
Net (loss) income
$
(34,133
)
$
3,011
Provision for income taxes
539
144
(Loss) income before income taxes
(33,594
)
3,155
Adjusted to exclude the following:
Stock-based compensation expense(1)
27,377
1,261
Transaction costs(2)
—
278
Adjusted provision for income taxes(3)
1,861
(1,405
)
Adjusted net (loss) income
$
(4,356
)
$
3,289
Less: undistributed adjusted net income
attributable to participating securities
—
(4,613
)
Adjusted net loss attributable to common
stock
$
(4,356
)
$
(1,324
)
Weighted average shares - diluted
114,103,766
53,946,980
Adjusted diluted loss per share
$
(0.30
)
$
(0.03
)
(1) Represents expenses related to the Company’s equity-based
compensation programs, which may vary significantly from period to
period depending upon various factors including the timing, number,
and the valuation of awards granted, vesting of awards including
the satisfaction of performance conditions, and the impact of
repurchases of awards from employees. The amount includes $0.2
million of employer payroll costs associated with the release of
RSUs and option exercises for the three months ended March 31,
2022, of which zero and $0.2 million is included in COGS and
SG&A, respectively, for the three months ended March 31, 2022.
(2) Represents costs directly attributable to the preparation for
our Direct Listing. (3) The adjusted provision for income taxes is
based on long-term estimated annual effective tax rates of 29.94%.
The Company may adjust its adjusted tax rate as additional
information becomes available or events occur which may materially
affect this rate, including impacts from the rapidly evolving
global tax environment, significant changes in our geographic mix,
merger and acquisition activity, or changes in our business
outlook.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220515005062/en/
Investor Relations: Brendon Frey, ICR
Investors@warbyparker.com
Media: Lena Griffin lena@derris.com
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