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FIGS, Inc. (FIGS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered broad-based strength: net revenues rose 8.2% to $151.7M, gross margin expanded 280 bps to 69.9%, diluted EPS hit $0.05, and adjusted EBITDA margin reached 12.4% .
  • FIGS raised full-year 2025 outlook to ~7.0% net revenue growth and ~10.3% adjusted EBITDA margin, citing momentum in scrubwear, U.S. demand, and “business-as-usual” selling days despite tariff headwinds .
  • Against S&P Global consensus, FIGS posted a significant beat on EPS ($0.05 vs $0.0178*) and revenue ($151.7M vs $142.5M*); standardized EBITDA came in slightly below consensus (actual $12.0M vs $12.4M*) while non-GAAP adjusted EBITDA was $18.9M .
  • Stock reaction catalysts: sequential outlook increase, stronger core demand without promotions, explicit tariff mitigation levers, and international expansion (Japan, South Korea, planned China on Tmall) .

What Went Well and What Went Wrong

  • What Went Well

    • Strong core execution: scrubwear +8.4% YoY to $127.0M; U.S. +7.5% YoY to $127.3M; AOV +5.6% YoY to $114; active customers +4% to 2.8M .
    • Gross margin resilience at 69.9% (+280 bps YoY) driven by lower discounts, improved returns processing, lower duties and freight; management emphasized momentum carrying into Q4 .
    • Raised FY’25 outlook on both top and bottom lines; CFO: “meaningfully increasing our expectations… despite tariff headwinds” .

  • What Went Wrong

    • Tariffs intensifying: management reiterated 20% (Vietnam) and 15% (Jordan) added tariffs; majority of headwinds still ahead in 2026 (~440 bps annualized unmitigated impact) .
    • Inventory climbed to $151.2M (+20% units YoY), reflecting deeper buys and higher in-transit timing; dollar growth expected to increase in Q4 due to tariffs .
    • International headline growth solid, but reduced promo days pressured Canada/Australia; standardized EBITDA (SPGI) slightly below consensus even as non-GAAP adjusted EBITDA outperformed internally .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Revenues ($USD Millions)$140.2 $152.6 $151.7
Diluted EPS ($USD)$(0.01) $0.04 $0.05
Gross Margin %67.1% (calc from $94.0/$140.2) 67.0% 69.9%
Adjusted EBITDA ($USD Millions)$4.8 $19.7 $18.9
Adjusted EBITDA Margin %3.4% 12.9% 12.4%
Net Income (Loss) Margin %(1.2)% 4.7% 5.8%
Operating Expenses ($USD Millions)$102.7 $92.3 $96.4
Operating Expenses % of Revenue73.2% 60.5% 63.6%
Actual vs S&P Global Consensus (Q3 2025)Consensus*Actual
Revenue ($USD)$142.46M*$151.66M
Primary EPS ($USD)$0.0178*$0.05
EBITDA ($USD) – SPGI standardized$12.38M*$11.96M (SPGI standardized)*/$18.85M Adjusted

Values with asterisks retrieved from S&P Global.

Segment Breakdown

SegmentQ3 2024Q2 2025Q3 2025
United States Net Revenues ($USD Millions)$118.44 $129.95 $127.34
Rest of World Net Revenues ($USD Millions)$21.77 $22.69 $24.32
Scrubwear Net Revenues ($USD Millions)$117.22 $127.42 $127.02
Non‑Scrubwear Net Revenues ($USD Millions)$22.99 $25.23 $24.65

KPIs

KPIQ3 2024Q2 2025Q3 2025
Active Customers (thousands)2,673 2,736 2,781
Net Revenues per Active Customer ($)$205 $208 $209
Average Order Value ($)$108 $117 $114

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenues Growth vs 2024FY 2025Up low‑single‑digits Up ~7.0% Raised
Adjusted EBITDA MarginFY 20258.5%–9.0% ~10.3% Raised
Gross Margin commentaryFY 2025Not specifiedExpect only modest YoY decline from 67.6% Improved outlook
Capital ExpenditureFY 2025Not specified~$7M (FY 2025 planned) New disclosure
Q4 Marketing RateQ4 2025Not specifiedRate to “meaningfully increase” to support 2026 Olympics New disclosure

Earnings Call Themes & Trends

TopicQ1 2025 MentionsQ2 2025 MentionsQ3 2025 Current PeriodTrend
Tariffs/MacroUpdated FY outlook due to tariffs; prudence amid trade changes Raised FY outlook; dynamic trade environment Explicit tariffs at 20% (VN), 15% (JO); majority of impact ahead in 2026 (~440 bps) Intensifying but mitigated
Promotional cadenceLower mix of promotional sales aided margins Reset strategy underway Reduced promo days; BAU days accelerating each quarter Normalizing, productive
Product performanceRecord AOV; full‑price selling Scrubwear +7.7% YoY Core scrubwear strength; looser fits; color cadence; ARCHTECT socks launch Improving core mix
International+16.4% YoY; broad presence +19.8% YoY; go broad/deep build Launches in Japan/South Korea; planned China (Tmall) in Q4 Expanding footprint
Supply chain/returnsHigher freight; DC ramp costs Fulfillment optimization; carrier mix Returns processing improvement; inbound optimization; shorter lead times Operational gains
PricingNot specifiedNot specifiedNo 2025 price increases; pricing a potential 2026 lever Cautious/defensive
Community Hubs (retail)Not specified2 hubs3 new stores (NY, Houston, Chicago), strong new‑to‑brand and omnichannel lift Scaling
TEAMS (B2B)Platform presence Building foundationsUpgraded tech; accretive profitability; wider capabilities Structurally building

Management Commentary

  • CEO: “Our third quarter was highlighted by top and bottom line results that exceeded our internal expectations, including the strongest revenue growth over the past two years… We are the clear leaders in the space and believe our actions will compound the fundamental drivers… over the long term.”
  • CFO: “We are meaningfully increasing our expectations with full year net revenues now expected to increase approximately 7.0% and adjusted EBITDA margin now expected above the high end of our original outlook despite tariff headwinds.”
  • Strategy: International “go broad/go deep” expansion and China debut on Tmall planned for Q4; three new Community Hubs opening in NY, Houston, Chicago; TEAMS upgraded to become “employee store” with stipends/gifting and international support .

Q&A Highlights

  • Gross margin durability vs tariffs: Q3 69.9% aided by lower discounts, improved returns, and inbound optimization; 2026 tariffs could be ~440 bps headwind, offset by efficiency levers .
  • Pricing stance: No pricing action in 2025; healthcare affordability considerations; pricing remains an optional lever for 2026 if needed .
  • AOV and customer health: AOV up 6% to $114; repeat frequency and reactivations up; customer cohorts performing across income levels as post‑COVID overhang eases .
  • Q4 acceleration drivers: Strong BAU days, balanced new colors/styles supporting core, inventory availability; marketing rate to increase for Olympics support .
  • Inventory build: Higher in‑transit timing and deeper buys; unit growth expected to moderate while dollars increase due to tariffs; targeted promos/write‑offs to work down pockets .
  • TEAMS economics: Accretive overall profitability; lower gross margin (discounting) but favorable opex via outbound shipping and marketing efficiencies .

Estimates Context

  • EPS and revenue materially beat S&P Global consensus: $0.05 vs $0.0178* EPS; $151.7M vs $142.5M* revenue .
  • SPGI standardized EBITDA slightly below consensus ($12.0M actual vs $12.4M* estimate), while FIGS’ non‑GAAP adjusted EBITDA was $18.9M; highlight metric definition differences for investor interpretation .
  • Consensus coverage: 10 EPS estimates; 9 revenue estimates; target price consensus $8.78 (8 estimates)*. Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Momentum in core scrubwear and U.S. demand with reduced promotions suggests durable top‑line without sacrificing brand equity; BAU days accelerating each quarter .
  • Raised FY’25 outlook and double‑digit Q3 adjusted EBITDA margin indicate effective cost and tariff mitigation; watch for Q4 tariff step‑up and seasonal non‑scrubwear mix drag .
  • International expansion (Japan/South Korea, China via Tmall) and TEAMS platform upgrades open structural growth avenues beyond DTC, with retail Hubs strengthening omnichannel engagement .
  • Gross margin resilience has multiple levers (discounts, returns processing, freight, inbound optimization); pricing remains a 2026 option if tariffs persist .
  • Inventory is elevated to support demand and newness; expect moderation in units but higher dollars in Q4 due to tariffs—watch working capital and cash conversion .
  • Near‑term trading: Positive setup into Q4 on BAU momentum and updated guide; medium‑term thesis hinges on scaling international/TEAMS/Hubs while absorbing tariff headwinds with operational efficiencies .