Net revenue increased 16.3% year over year to
$200.0 million; Company raises outlook
Average Revenue per Customer increased 9.6%
year over year to $296
Warby Parker Inc. (NYSE: WRBY) (“Warby Parker” or the
“Company”), a direct-to-consumer lifestyle brand focused on vision
for all, today announced financial results for the first quarter
ended March 31, 2024.
“We entered 2024 with higher ambitions for delivering on our key
metrics and are proud of what the team accomplished in Q1–we drove
our highest revenue quarter growth since 2021, up 16.3% year over
year, while making significant progress to improve profitability,”
said Co-Founder and Co-CEO Neil Blumenthal.
“Earlier this year, we set out to reaccelerate both glasses and
active customer growth. We’re encouraged to see strength in
single-vision glasses as well as efficiencies across media
channels, driven by our team’s strong marketing execution. In Q2
and beyond, we’ll continue to invest in customer acquisition while
scaling our holistic vision care offering to drive higher customer
lifetime value,” added Co-Founder and Co-CEO Dave Gilboa.
First Quarter 2024
Highlights
- Net revenue increased $28.0 million, or 16.3%, to $200.0
million, as compared to the prior year period.
- GAAP net loss of $2.7 million.
- Gross margin increased 1.6 points to 56.7%, as compared to the
prior year period.
- Adjusted EBITDA(1) of $22.4 million and adjusted EBITDA
margin(1) of 11.2%.
- Net cash provided by operating activities of $19.9
million.
- Free cash flow of $5.5 million.
- Opened 8 net new stores during the quarter, ending Q1 with 245
stores.
First Quarter 2024 Year Over Year
Financial Results
- Net revenue increased $28.0 million, or 16.3%, to $200.0
million.
- Average Revenue per Customer increased 9.6% to $296. Active
Customers increased 3.2% to 2.36 million.
- Gross profit increased 19.7% to $113.5 million.
- Gross margin was 56.7% compared to 55.1%. The increase in gross
margin was primarily driven by faster growth in glasses, which is
our highest margin product, efficiencies in our owned optical
laboratories, and lower outbound customer shipping costs as a
percent of revenue, partially offset by increased doctor salaries,
as the number of stores offering eye exams grew, and sales growth
of contact lenses which are sold at a lower margin.
- Selling, general, and administrative expenses (“SG&A”) were
$118.6 million, up $11.4 million from the prior year, and
represented 59.3% of revenue, down from 62.3% in the prior year
period. The primary drivers of growth in SG&A spend were
investments in marketing and higher payroll-related costs from
growth in our retail team associated with store expansion,
partially offset by reduced stock-based compensation costs.
Adjusted SG&A(1) was $103.4 million, or 51.7% of revenue,
versus $87.2 million, or 50.7% of revenue in the prior year
period.
- GAAP net loss improved $8.1 million to $2.7 million, primarily
as a result of the increase in revenue described above.
- Adjusted EBITDA(1) increased $4.6 million to $22.4 million, and
adjusted EBITDA margin(1) increased 0.9 points to 11.2%.
Balance Sheet Highlights
Warby Parker ended the first quarter of 2024 with $220.4 million
in cash and cash equivalents.
2024 Outlook
For the full year 2024, Warby Parker is raising its guidance as
follows:
- Net revenue of $753 to $761 million, representing growth of
approximately 12.5% to 13.5% versus full year 2023.
- Adjusted EBITDA(1) of $70.0 million at the midpoint of our
revenue range, which equates to an adjusted EBITDA margin(1) of
9.2%.
- On track for 40 new store openings this year.
“Our Q1 results are evidence of the returns we are starting to
see from many of our recent investments. Going forward, we plan to
maintain a balanced approach to delivering both efficient growth
and incremental profitability,” said Chief Financial Officer Steve
Miller.
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.
(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 2024
results, as well as second quarter and full year 2024 outlook, is
scheduled for 8:00 a.m. ET on May 9, 2024. To participate, please
dial 833-470-1428 from the U.S. or 404-975-4839 from international
locations. The conference passcode is 976307. 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 growth
in our e-commerce channel, delivering stakeholder value, growing
market share, and our guidance for the quarter ending June 30, 2024
and year ending December 31, 2024; expectations regarding the
number of new store openings during the year ending December 31,
2024; 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; increases in component and shipping costs and changes in
supply chain; our reliance on our information technology systems
and enterprise resource planning systems for our business to
effectively operate and safeguard confidential information; our
ability to engage our existing customers and obtain new customers;
planned new retail stores in 2024 and going forward; an overall
decline in the health of the economy and other factors impacting
consumer spending, such as recessionary conditions, inflation,
government instability, and geopolitical unrest; our ability to
compete successfully; our ability to manage our inventory balances
and shrinkage; the growth of our brand awareness; our ability to
recruit and retain optometrists, opticians, and other vision care
professionals; the spread of new infectious diseases; 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 most recent reports filed with the
SEC on Form 10-K and Form 10-Q. 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 Customers is defined as unique customer accounts that
have made at least one purchase in the preceding 12-month
period.
Average Revenue per Customer is defined as the sum of the total
net revenues in the preceding 12-month period divided by the
current period Active Customers.
Non-GAAP Financial
Measures
We use adjusted EBITDA, adjusted EBITDA margin, adjusted cost of
goods sold (“adjusted COGS”), adjusted gross margin, adjusted gross
profit, adjusted selling, general, and administrative expenses
(“adjusted SG&A”), and free cash flow 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, taxes, and depreciation and amortization as
further adjusted for asset impairment costs, stock-based
compensation expense and related employer payroll taxes,
amortization of cloud-based software implementation costs, non-cash
charitable donations, and non-recurring costs such as restructuring
costs, major system implementation costs, charges for certain legal
matters, and transaction costs. Adjusted EBITDA margin is defined
as adjusted EBITDA divided by net revenue.
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 gross margin is defined as adjusted gross profit
divided by net revenue.
Adjusted SG&A is defined as SG&A adjusted for
stock-based compensation expense and related employer payroll
taxes, non-cash charitable donations, and non-recurring costs such
as restructuring costs, major system implementation costs, charges
for certain legal matters, and transaction costs.
Free Cash Flow is defined as net cash provided by operating
activities minus purchases of property and equipment.
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, or adjusted EBITDA
guidance to GAAP net income (loss) because we do not provide
guidance for GAAP net margin or GAAP net income (loss) 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 and GAAP net income (loss) and adjusted
EBITDA, respectively. 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 and adjusted EBITDA guidance to GAAP net income (loss).
However, such items could have a significant impact on GAAP net
margin and GAAP net income (loss).
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 our
245 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 Company believes in
vision for all, which is why for every pair of glasses or
sunglasses sold, it distributes a pair to someone in need through
its Buy a Pair, Give a Pair program. To date, Warby Parker has
worked alongside its nonprofit partners to distribute more than 15
million glasses to people in need.
Selected Financial
Information
Warby Parker Inc. and
Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except
share data)
March 31, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
220,384
$
216,894
Accounts receivable, net
1,167
1,779
Inventory
56,450
62,234
Prepaid expenses and other current
assets
18,116
17,712
Total current assets
296,117
298,619
Property and equipment, net
156,722
152,332
Right-of-use lease assets
129,561
122,305
Other assets
10,492
7,056
Total assets
$
592,892
$
580,312
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
26,699
$
22,456
Accrued expenses
43,200
46,320
Deferred revenue
21,240
31,617
Current lease liabilities
24,462
24,286
Other current liabilities
2,939
2,411
Total current liabilities
118,540
127,090
Non-current lease liabilities
156,988
150,171
Other liabilities
1,177
1,264
Total liabilities
276,705
278,525
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value; Class A:
750,000,000 shares authorized at March 31, 2024 and December 31,
2023, 99,005,197 and 98,368,239 issued and outstanding at March 31,
2024 and December 31, 2023, respectively; Class B: 150,000,000
shares authorized at March 31, 2024 and December 31, 2023,
19,734,125 and 19,788,682 shares issued and outstanding as of March
31, 2024 and December 31, 2023, respectively, convertible to Class
A on a one-to-one basis
12
12
Additional paid-in capital
987,305
970,135
Accumulated deficit
(669,510
)
(666,831
)
Accumulated other comprehensive loss
(1,620
)
(1,529
)
Total stockholders’ equity
316,187
301,787
Total liabilities and stockholders’
equity
$
592,892
$
580,312
Warby Parker Inc. and
Subsidiaries
Consolidated Statements of
Operations (Unaudited)
(Amounts in thousands, except
share and per share data)
Three Months Ended March
31,
2024
2023
Net revenue
$
200,003
$
171,968
Cost of goods sold
86,544
77,177
Gross profit
113,459
94,791
Selling, general, and administrative
expenses
118,586
107,221
Loss from operations
(5,127
)
(12,430
)
Interest and other income, net
2,556
1,879
Loss before income taxes
(2,571
)
(10,551
)
Provision for income taxes
108
261
Net loss
$
(2,679
)
$
(10,812
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.02
)
$
(0.09
)
Weighted average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
119,143,534
116,159,428
Warby Parker Inc. and
Subsidiaries
Consolidated Statements of
Cash Flows (Unaudited)
(Amounts in thousands)
Three Months Ended March
31,
2024
2023
Cash flows from operating activities
Net loss
$
(2,679
)
$
(10,812
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
10,583
9,140
Stock-based compensation
14,048
19,780
Asset impairment charges
399
395
Amortization of cloud-based software
implementation costs
1,073
363
Change in operating assets and
liabilities:
Accounts receivable, net
612
473
Inventory
5,784
4,442
Prepaid expenses and other assets
(2,913
)
(657
)
Accounts payable
3,327
(921
)
Accrued expenses
(108
)
(7,826
)
Deferred revenue
(10,377
)
(6,744
)
Other current liabilities
528
119
Right-of-use lease assets and current and
non-current lease liabilities
(263
)
988
Other liabilities
(87
)
(97
)
Net cash provided by operating
activities
19,927
8,643
Cash flows from investing activities
Purchases of property and equipment
(14,437
)
(12,385
)
Investment in optical equipment
company
(2,000
)
—
Net cash used in investing activities
(16,437
)
(12,385
)
Cash flows from financing activities
Proceeds from stock option exercises
91
81
Net cash provided by financing
activities
91
81
Effect of exchange rates on cash
(91
)
(662
)
Net change in cash and cash
equivalents
3,490
(4,323
)
Cash and cash equivalents, beginning of
period
216,894
208,585
Cash and cash equivalents, end of
period
$
220,384
$
204,262
Supplemental disclosures
Cash paid for income taxes
$
69
$
97
Cash paid for interest
76
50
Cash paid for amounts included in the
measurement of lease liabilities
10,400
10,849
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued expenses
$
4,582
$
2,957
Warby Parker Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
The following table reconciles adjusted EBITDA and adjusted
EBITDA margin to the most directly comparable GAAP measure, which
is net loss:
Three Months Ended March
31,
2024
2023
(unaudited, in
thousands)
Net loss
$
(2,679
)
$
(10,812
)
Adjusted to exclude the following:
Interest and other income, net
(2,556
)
(1,878
)
Provision for income taxes
108
261
Depreciation and amortization expense
10,583
9,140
Asset impairment charges
399
395
Stock-based compensation expense(1)
14,315
19,866
Amortization of cloud-based software
implementation costs(2)
1,073
363
ERP implementation costs(3)
—
403
Other costs(4)
1,135
—
Adjusted EBITDA
$
22,378
$
17,738
Adjusted EBITDA margin
11.2
%
10.3
%
(1)
Represents expenses related to the
Company’s equity-based compensation programs and related employer
payroll taxes, which may vary significantly from period to period
depending upon various factors including the timing, number, and
the valuation of awards granted, and vesting of awards including
the satisfaction of performance conditions. For the three months
ended March 31, 2024 and 2023, the amount includes $0.3 million and
$0.1 million, respectively, of employer payroll taxes associated
with releases of RSUs and option exercises.
(2)
Represents the amortization of costs
capitalized in connection with the implementation of cloud-based
software.
(3)
Represents internal and external
non-capitalized costs related to the implementation of our new
Enterprise Resource Planning (“ERP”) system.
(4)
Represents other non-recurring costs,
including charges for certain legal matters.
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
stock-based compensation expense and related employer payroll
taxes, non-cash charitable donations, and non-recurring costs such
as restructuring costs, major system implementation costs, charges
for certain legal matters, and transaction costs.
Reported
Adjusted
Three Months Ended March
31,
Three Months Ended March
31,
2024
2023
2024
2023
(unaudited, in
thousands)
(unaudited, in
thousands)
Cost of goods sold
$
86,544
$
77,177
$
86,300
$
76,979
% of Revenue
43.3
%
44.9
%
43.1
%
44.8
%
Gross profit
$
113,459
$
94,791
$
113,703
$
94,989
% of Revenue
56.7
%
55.1
%
56.9
%
55.2
%
Selling, general, and administrative
expenses
$
118,586
$
107,221
$
103,380
$
87,150
% of Revenue
59.3
%
62.3
%
51.7
%
50.7
%
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,
2024
2023
(unaudited, in
thousands)
Cost of goods sold
$
86,544
$
77,177
Adjusted to exclude the following:
Stock-based compensation expense(1)
244
198
Adjusted cost of goods sold
$
86,300
$
76,979
Gross profit
$
113,459
$
94,791
Adjusted to exclude the following:
Stock-based compensation expense(1)
244
198
Adjusted gross profit
$
113,703
$
94,989
Selling, general, and administrative
expenses
$
118,586
$
107,221
Adjusted to exclude the following:
Stock-based compensation expense(1)
14,071
19,668
ERP implementation costs(2)
—
403
Other costs(3)
1,135
—
Adjusted selling, general, and
administrative expenses
$
103,380
$
87,150
Net cash provided by operating
activities
$
19,927
$
8,643
Purchases of property and equipment
(14,437
)
(12,385
)
Free cash flow
$
5,490
$
(3,742
)
(1)
Represents expenses related to the
Company’s equity-based compensation programs and related employer
payroll taxes, which may vary significantly from period to period
depending upon various factors including the timing, number, and
the valuation of awards granted, and vesting of awards including
the satisfaction of performance conditions. For the three months
ended March 31, 2024 and 2023, the amount includes $0.3 million and
$0.1 million, respectively, of employer payroll taxes associated
with releases of RSUs and option exercises.
(2)
Represents internal and external
non-capitalized costs related to the implementation of our new ERP
system.
(3)
Represents other non-recurring costs,
including charges for certain legal matters.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240509394560/en/
Investor Relations: Jaclyn Berkley, Head of Investor Relations
Brendon Frey, ICR investors@warbyparker.com
Media: Ali Weltman ali@derris.com
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