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FIGS, Inc. (FIGS)·Q1 2025 Earnings Summary

Executive Summary

  • FIGS delivered Q1 2025 net revenues of $124.9M (+4.7% YoY) with a record $119 AOV and a return to U.S. growth; adjusted EBITDA margin was 7.2%, above management’s 5.5–6% target, though gross margin contracted 130 bps to 67.6% on mix and freight .
  • Versus S&P Global consensus, revenue beat ($124.9M vs $119.4M*) while diluted EPS was in line ($0.00 vs $0.00*) as lower margins and elevated selling costs offset top-line upside; adjusted EBITDA was $9.0M .
  • Management cut FY25 adjusted EBITDA margin guidance to 7.5%–8.5% from 9.0%–9.5% on U.S. tariff headwinds, while maintaining net revenue outlook of down low-single-digits vs 2024; tariff impact expected to phase in largely in 2H25 .
  • Strategic priorities remain intact: international expansion (Japan, South Korea), TEAMS B2B push, and Community Hubs (Houston opening and two more 2025 stores) to drive customer acquisition and omnichannel engagement .
  • Likely stock reaction catalysts: revenue beat and return to U.S. growth vs. the guide-down on FY25 margins due to tariffs and visibility on 2H pressure—management guided Q2 revenue approximately flat and Q2 margin above the prior-year 9% benchmark .

What Went Well and What Went Wrong

What Went Well

  • Return to growth with quality: Net revenues +4.7% YoY to $124.9M; U.S. net revenues +2.9% YoY, international +16.4% YoY; record AOV of $119 (+2.6% YoY), signaling brand strength and higher full-price mix .
  • Profitability better than plan: Adjusted EBITDA margin of 7.2% beat the 5.5–6% internal outlook despite higher investments; adjusted EBITDA $9.0M and free cash flow $7.9M .
  • Positive tone and conviction: “First quarter results were ahead of expectations… record AOV, and ultimately, a return to growth in the U.S.” — CEO Trina Spear .

What Went Wrong

  • Margin pressure: Gross margin fell 130 bps YoY to 67.6% on product mix and higher freight; selling expense rate rose with the new fulfillment center and outbound shipping; diluted EPS was $0.00 (vs $0.01 LY) as net income slipped to $(0.1)M .
  • FY25 margin guide cut: Adjusted EBITDA margin lowered to 7.5%–8.5% (from 9.0%–9.5%) due to tariffs; management expects most P&L impact in 2H25 .
  • Customer monetization: Net revenues per active customer declined to $208 (from $210), reflecting promotional strategy changes and category mix dynamics .

Financial Results

MetricQ1 2024Q4 2024Q1 2025 (Actual)Q1 2025 (Consensus)
Revenue ($M)$119.3 $151.8 $124.9 $119.4*
Gross Margin %~68.9% (derived: 130 bps higher than 67.6%) 67.3% 67.6% —
Adjusted EBITDA ($M)$13.0 $21.1 $9.0 —
Adjusted EBITDA Margin %10.9% 13.9% 7.2% —
Net Income ($M)$1.4 $1.9 $(0.1) —
Diluted EPS ($)$0.01 $0.01 $0.00 $0.00*
  • Note: Q1 2024 gross margin approximated using the disclosed 130 bps YoY contraction from 67.6% .
  • S&P Global consensus marked with * and described below.

Segment breakdown – Net Revenues

SegmentQ1 2024 ($000s)Q1 2025 ($000s)
United States103,070 106,019
Rest of World16,223 18,882
Total119,293 124,901
Scrubwear94,896 99,569
Non‑Scrubwear24,397 25,332

Key Performance Indicators

KPIQ1 2024Q1 2025
Active Customers (000s)2,597 2,696
Net Revenues per Active Customer ($)210 208
Average Order Value ($)116 119

S&P Global disclaimer: Values marked with * are retrieved from S&P Global consensus.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenues growth vs 2024FY 2025Down low-single-digits Down low-single-digits Maintained
Adjusted EBITDA MarginFY 20259.0%–9.5% 7.5%–8.5% Lowered
Net RevenuesQ2 2025—Approximately flat New
Adjusted EBITDA MarginQ2 2025—Above prior‑year 9% New
Tariff AssumptionsFY 2025—Baseline 10% in effect; 100–150 bps full‑year margin impact; largely 2H P&L timing New

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
Tariffs/Macro——Tariffs prompt FY25 margin cut; impact weighted to 2H; exploring mitigation (resourcing, shipping, expenses) Negative near-term
Supply chain & FulfillmentTransition drove transitory costs, higher opex Opex elevated; focus on scaling new DC Selling expense rate higher; multi-carrier and vendor negotiations to optimize Gradual improvement
International expansion—Int’l +45% YoY in Q4 16% growth; launching Japan (2Q) and South Korea (2H) Positive, building
TEAMS (B2B)——New leader hired; first outbound orders with a top healthcare company; building TEAMS tech and go-to-market Positive ramp
Retail/Community Hubs——Houston opening; two more stores in 2025; 40% of store customers new to FIGS; 30% become omnichannel Positive acquisition
Product/Innovation——FORMx fabric; new silhouettes (scrub leggings, wide‑leg pants) Positive
Marketing/BrandOlympics campaign in Q3 —Nurses Week & Women’s Month films went viral, supporting reactivation and engagement Positive brand equity

Management Commentary

  • “First quarter results were ahead of expectations, supported by customer growth, strong full‑priced selling, record AOV, and ultimately, a return to growth in the U.S.” — Trina Spear, CEO .
  • “Our updated 2025 outlook reflects the projected impact of the current tariff structure… we are determined to remain diligent and nimble… while continuing our steadfast focus of serving those who serve others.” — Sarah Oughtred, CFO .
  • Tariff strategy and pricing: Management is prioritizing internal cost mitigation (supply chain efficiencies, vendor negotiations, expense management) and views pricing as a last resort, given customer sensitivity and FIGS’ focus on affordability for healthcare professionals .
  • Channel strategy: Continued investment in international, TEAMS, and Community Hubs to widen the competitive moat and drive long‑term growth .

Q&A Highlights

  • Tariff mitigation and pricing stance: Company targets 100–150 bps FY25 margin impact from baseline tariffs and is pursuing cost levers (inbound/outbound shipping, supplier cost reduction, G&A discipline); pricing is not assumed in the outlook and would be used surgically, if at all .
  • Demand normalization: Management cited continued normalization post‑COVID; U.S. returned to growth; record AOV; reactivation efforts improving active customers; some softness in Canada tied to local tariff sentiment despite no direct applicability to FIGS products .
  • International: 16% growth in Q1, with strong performance in Mexico, Europe, Middle East; Japan launch planned in Q2 and South Korea in 2H; roadmap unchanged despite U.S. uncertainty .
  • TEAMS B2B push: Dedicated leader hired; first outbound enterprise orders booked; building technology and inventory capabilities to simplify large orders and expand into modernized care settings .
  • Fulfillment/Costs: New DC built for long‑term scale; multi‑year opportunities in carrier mix and vendor negotiations to reduce selling costs; Q2 margin expected above 9% before tariff impact phases in .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue beat by ~$5.5M ($124.9M vs $119.4M*); diluted EPS in line at $0.00* .
  • Forward snapshot: Management plans Q2 revenues approximately flat, with adjusted EBITDA margin above prior‑year 9%; S&P Global Q2 2025 consensus: revenue ~$144.2M*, EPS ~$0.019* (note: management’s planning approach reflects reduced promo periods and macro caution) .

S&P Global disclaimer: Values marked with * are retrieved from S&P Global consensus.

Key Takeaways for Investors

  • Quality beat on revenue with U.S. back to growth and record AOV, indicating healthier full‑price demand and brand strength .
  • Tariffs are the near‑term swing factor: FY25 adjusted EBITDA margin cut to 7.5%–8.5% (from 9.0%–9.5%), with impact largely in 2H, making execution on cost mitigation critical to outcomes .
  • Investment continues in growth vectors (international, TEAMS, Community Hubs) despite macro uncertainty—positive for medium‑term share gains and customer acquisition (40% of store customers new; 30% become omnichannel) .
  • Balance sheet strength (net cash & investments ~$251M) and positive free cash flow provide flexibility to invest and buffer volatility; $52M remains on buyback authorization .
  • Near‑term setup: Q2 revenue planned approximately flat and margin above 9% before tariff pressures intensify—watch for cadence of tariff flow‑through and expense offsets into 2H .
  • KPIs improving: Active customers +3.8% YoY; focus on reactivation and fit/product innovation (FORMx) supports engagement and AOV sustainability .
  • Risk monitors: Tariff policy evolution, freight/shipping costs, fulfillment scaling, promos reduction impact on 2H demand, and potential competitive pricing moves .