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FIGS, Inc. (FIGS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net revenues rose 4.8% to $151.8M; Adjusted EBITDA margin was 13.9% and diluted EPS was $0.01, with sequential improvement from Q3 driven by product newness and frequency, though year-over-year profitability compressed on fulfillment and shipping costs .
  • International was the standout: +45.2% YoY to $24.3M and reached 16% of quarterly net revenues, while non‑scrubwear rebounded sharply (+12.8% YoY), aided by improved footwear in‑stocks and underscrubs expansion .
  • 2025 outlook guides net revenues down low‑single digits and Adjusted EBITDA margin to 9.0–9.5% as management reduces promotional intensity to prioritize brand health and invests in international, TEAMS (B2B), and retail; Q1 net revenue expected approximately flat YoY and Q1 Adjusted EBITDA margin 5.5–6% .
  • Capital returns stepped up: share repurchase authorization increased by $50M to $100M total; FIGS repurchased ~9.3M shares for ~$45.4M in 2024; ending cash and short‑term investments totaled ~$245M with no debt, supporting investment and buybacks .

What Went Well and What Went Wrong

What Went Well

  • International acceleration: Q4 Rest of World net revenues +45.2% YoY; international reached an all‑time high 16% of net revenues, with planned Asia entries (Japan in Q2, South Korea later) and deeper localization ahead .
  • Non‑scrubwear rebound: +12.8% YoY in Q4 on footwear (NB 3447 zipper launch, better in‑stocks) and underscrubs (rib and waffle), with scrubwear positive for the third straight quarter; management highlighted “impactful flow of product newness driving repeat frequency” .
  • Strong cash generation and balance sheet: FY 2024 free cash flow $64.1M; year‑end cash and short‑term investments ~$245M; Board added $50M to repurchase authorization (now $100M), enabling opportunistic buybacks .

Quotes:

  • “We finished the year with solid momentum… powered by an impactful flow of product newness driving repeat frequency.” — CEO Trina Spear .
  • “We ended 2024 in a strong financial position… planning a reduction in promotions… expected to negatively impact near‑term top‑line but support longer‑term brand health.” — CFO Sarah Oughtred .

What Went Wrong

  • Margin pressure and operating cost headwinds: Gross margin contracted 20 bps YoY to 67.3% on mix; selling expense deleveraged on new fulfillment center ramp and elevated shipping; Adjusted EBITDA margin fell to 13.9% from 18.4% last year .
  • U.S. softness and acquisition challenges: U.S. net revenues were down 0.5% YoY; management noted headwinds in new customer acquisition and higher churn, necessitating increased upper‑funnel and personalization investments .
  • Promotional reset to weigh on near‑term growth: 2025 net revenues guided down low‑single digits as site‑wide promos are curtailed to protect brand positioning; Q1 commentary implies growth turning negative through quarter as stance changes .

Financial Results

Income Statement and EPS (Quarterly)

MetricQ4 2023Q3 2024Q4 2024
Net Revenues ($USD Millions)$144.9 $140.2 $151.8
Net Income ($USD Millions)$10.0 $(1.7) $1.9
Diluted EPS ($USD)$0.05 $(0.01) $0.01

Margins (Quarterly)

MetricQ4 2023Q3 2024Q4 2024
Gross Margin %—67.1% 67.3%
Net Income Margin %6.9% (1.2)% 1.2%
Adjusted EBITDA ($USD Millions)$26.6 $4.8 $21.1
Adjusted EBITDA Margin %18.4% 3.4% 13.9%

Segment and Geography (Q4 YoY)

CategoryQ4 2023Q4 2024YoY Change
U.S. Net Revenues ($USD Millions)$128.2 $127.5 (0.5)%
Rest of World Net Revenues ($USD Millions)$16.8 $24.3 45.2%
Scrubwear ($USD Millions)$112.0 $114.7 2.4%
Non‑Scrubwear ($USD Millions)$33.0 $37.2 12.8%

FY Results

MetricFY 2023FY 2024
Net Revenues ($USD Millions)$545.6 $555.6
Net Income ($USD Millions)$22.6 $2.7
Diluted EPS ($USD)$0.12 $0.02
Gross Margin %—67.6%
Adjusted EBITDA ($USD Millions)$86.0 $51.8
Adjusted EBITDA Margin %15.8% 9.3%
Free Cash Flow ($USD Millions)$84.6 $64.1

KPIs

KPIPeriodValue
Active Customers (000s)As of Dec 31, 20232,593
Active Customers (000s)As of Dec 31, 20242,670
Net Revenues per Active Customer ($)As of Dec 31, 2024$208
AOV ($, TTM basis)FY 2024$113
AOV ($, Q4 specific)Q4 2024$116

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / ActualChange
Net Revenues Growth vs 2023FY 2024Flat to +2% (Aug) +1.8% Actual Met prior range (Q2 guide)
Adjusted EBITDA MarginFY 20249.5–10% (Aug) ~8% (Nov update) ; 9.3% Actual Actual above Nov update, below Aug guide
Net Revenues Growth vs 2024FY 2025—Down low‑single digits New guide (lower YoY)
Adjusted EBITDA MarginFY 2025—9.0–9.5% New guide (flat to slight ↑ vs FY24)
Net Revenues YoYQ1 2025—Approximately flat YoY New intra‑quarter color
Adjusted EBITDA MarginQ1 2025—5.5–6% New intra‑quarter color
Effective Tax RateFY 2025—~45% (vs 81% in FY 2024) Structural improvement
Capital ExpendituresFY 2025—~$5M Lower vs FY 2024
Share Repurchase AuthorizationOngoing$50M (Aug 2024) Increased by $50M to $100M total Raised

Earnings Call Themes & Trends

TopicQ-2 (Q2 2024)Q-1 (Q3 2024)Q4 2024 (Current)Trend
AI/Technology Initiatives—Announced $25M minority investment in OOG (AI education platform) Expect platform debut later this year; leverage “AG” for marketing/data/AI benefits Expanding and operationalizing
Supply Chain & FulfillmentTransitory fulfillment costs; new DC transition underway Completed transition to state‑of‑the‑art fulfillment; ramp costs pressured margins Selling expense deleveraged; pausing Canadian DC; focus on optimizing new domestic facility Optimization continues; costs still elevated
Promotions & Brand HealthNormal cadenceQ3 promos timing challenged; Olympics campaign spend elevated Planned reduction in site‑wide promos to prioritize brand; near‑term top‑line headwind Less promotional, brand‑centric
Product PerformanceLimited editions boosted mix (scrub/non‑scrub) Non‑scrubwear pressured by footwear inventory/pricing; scrubwear positive Non‑scrubwear rebound; footwear in‑stocks improved; scrubwear positive 3rd quarter Improving
International Expansion20+ markets; continued scaling Ongoing; strong base +45% YoY; plan entries into Japan (Q2) and South Korea; deeper localization Accelerating
TEAMS (B2B)—Building; foundation growing>20% growth in 2024; hiring outbound leader; building pipeline Scaling
Tariffs/Macro——Minimal direct China exposure on finished goods; immaterial impact in guidance Neutral
Legal/Non‑GAAPIPO‑related SBC and concluded litigation affect adjustments Similar Adjustments disclosed; SBC set to decline ~$13M in FY25 Clean‑up completed; lower SBC ahead

Management Commentary

  • Strategy and momentum: “Our fourth quarter results exceeded our expectations and were powered by an impactful flow of product newness driving repeat frequency… We intend to accelerate our strategic pillars… product innovation, deep connection… meeting our healthcare professionals where they are” — CEO Trina Spear .
  • Promotional reset and investment: “We are planning a reduction in our reliance on promotions, which we expect will negatively impact our near‑term top‑line performance but support the longer‑term health of the brand… announcing a $50 million increase in our share repurchase program.” — CFO Sarah Oughtred .
  • New fabric platform: “We were excited to launch a brand‑new fabrication called FORMx… exceptional hand feel, enhanced stretch… plan to methodically expand this platform throughout the year.” — CEO Trina Spear .
  • Channel priorities: “Execute our push into Asia… Japan in Q2 and South Korea later… build outbound TEAMS sales function… plan at least two new community hubs in back half of the year.” — CEO Trina Spear .
  • Balance sheet and capital allocation: “Cash, cash equivalents and short‑term investments of $245.1 million… capital expenditures ~$5 million in 2025… estimates effective tax rate closer to 45% vs 81% in 2024.” — CFO Sarah Oughtred .

Q&A Highlights

  • Customer acquisition and retention amid promotional reset: Management will invest in upper funnel, personalization, and targeted retention to offset acquisition/churn headwinds from reduced promos .
  • Supply chain optimization vs. Canadian DC: Focus shifted to optimizing current U.S. distribution facility; Canada DC paused to reduce complexity; still see savings opportunities over time .
  • Bridging Q4 outperformance to cautious FY25 guide: Q4 beat concentrated in December color launches and late promo; FY25 guide reflects lower active customer growth and lower promo intensity (few points headwind) .
  • Non‑scrubwear drivers and footwear in‑stocks: Footwear penetrations normalized; underscrubs and outerwear strong; NB 3447 zipper performed well .
  • Marketing cadence and leverage: Rate leverage expected vs Olympics; reinvestment into brand, funnel, international localization, and teams/community hub staffing .

Estimates Context

  • Wall Street consensus comparisons via S&P Global were unavailable at time of analysis due to an API limit error; therefore, explicit beats/misses vs consensus for Q4 2024 are not included. We will update with S&P Global consensus once accessible [functions.GetEstimates error].

Key Takeaways for Investors

  • International momentum and channel expansion are near‑term growth offsets to U.S. softness; watch Japan/Korea launches and TEAMS outbound build for FY26 impact .
  • The promotional reset is the key narrative pivot: near‑term growth headwind but brand health and margin tailwinds longer term; Q1 guide ~flat revenue and 5.5–6% Adjusted EBITDA margin sets baseline .
  • Mix dynamics matter: non‑scrubwear growth aids top line but can pressure gross margin; management expects gross margin roughly flat in FY25 as reduced promos offset mix .
  • Cost normalization should aid EBITDA as fulfillment ramp costs lap, SBC declines ~$13M, and marketing rates leverage vs Olympics; FY25 Adjusted EBITDA margin guided 9.0–9.5% (near FY24) .
  • Capital allocation remains supportive: $100M total repurchase authorization and ~$245M cash/short‑term investments with no debt provide flexibility to buy back stock and fund growth .
  • Inventory is healthier (down ~35% from two‑year highs; down 3% YoY), enabling reduced clearance and improved full‑price selling; inventory growth expected to modestly outpace revenue in 2025 as innovation/color launches scale .
  • Catalysts to watch: FORMx launch and fabric platform expansion, fit standardization marketing in 2H 2025, new community hubs, TEAMS outbound ramp, and international localization/entries — all pointing to a stronger FY26 setup .