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Revolve Group, Inc. (RVLV)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered broad-based acceleration: net sales rose 14% YoY to $293.7M, gross margin expanded to 52.5% (+53 bps YoY), and diluted EPS more than tripled to $0.17; Adjusted EBITDA more than doubled YoY to $18.3M .
  • Performance significantly exceeded the company’s Q4 gross margin guidance (actual 52.5% vs prior guide 51.2%–51.5%), driven by FWRD margin improvement, higher full-price mix, and logistics/marketing efficiencies aided by a >2-pt YoY reduction in return rate .
  • Early 1Q25 trends: net sales up high-single digits YoY through Feb 18; Q1/FY25 outlook calls for stable-to-higher gross margins, continued logistics efficiencies, and marketing at ~15%, partly offset by higher G&A as RVLV invests in owned brands, AI, and physical retail; China tariffs are a partial headwind to REVOLVE segment margin .
  • Potential stock reaction catalysts: clear margin beat vs internal guidance; FWRD returning to growth with mix/margin recovery; strong int’l growth (+29% YoY); balanced FY25 cost framework with visible levers (owned brands, AI, physical retail), against tariff and higher G&A headwinds .

What Went Well and What Went Wrong

What Went Well

  • Broad-based growth: REVOLVE +15%, FWRD +11%, U.S. +11%, International +29% YoY; first time in ~2.5 years of double-digit YoY growth across both segments and geographies in the same quarter .
  • Margin and efficiency execution: gross margin 52.5% (above guidance), marketing investment fell to 14.8% of sales (–168 bps YoY), selling & distribution 16.5% (–129 bps YoY), fulfillment 3.2% (–27 bps YoY), helped by >2-pt YoY decline in return rate .
  • Strategic progress (AI, owned brands, physical retail): internal AI outperformed third-party tools, raising conversion and reach; owned brands foundation set (18% of REVOLVE FY mix) with more launches ahead; permanent Grove store opening in Fall 2025 builds brand reach and omnichannel flywheel .

What Went Wrong

  • Higher G&A vs expectations: Q4 G&A came in ~$6M above guidance, driven by $2.7M non-routine items (excluded from EBITDA) and higher stock-based comp; also includes ongoing investments in growth initiatives .
  • Working capital drag on FY24 cash flow despite stronger earnings; FY24 operating cash flow/free cash flow decreased YoY due to inventory/wc movements (though year-end inventory growth (+13%) was slightly below Q4 sales growth (+14%)) .
  • Tariff headwinds ahead: management expects new China tariffs to partially offset FY25 margin benefits (notably at REVOLVE), though mitigating actions and FWRD margin recovery should help at the consolidated level .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Net Sales ($USD Millions)$257.8 $283.1 $293.7
Gross Margin (%)52.0% 51.2% 52.5%
Net Income ($USD Millions)$3.5 $10.8 $11.8
Diluted EPS ($)$0.05 $0.15 $0.17
Adjusted EBITDA ($USD Millions)$8.5 $17.5 $18.3

Operating efficiency (where disclosed):

MetricQ3 2024Q4 2024
Marketing (% of Net Sales)14.0% 14.8%
Selling & Distribution (% of Net Sales)16.9% 16.5%
Fulfillment (% of Net Sales)3.3% 3.2%
G&A ($USD Millions)$33.9 $41.8

Segment net sales:

Segment Net Sales ($USD Millions)Q4 2023Q3 2024Q4 2024
REVOLVE$220.0 $243.4 $252.0
FWRD$37.8 $39.7 $41.8

Geography net sales:

Geography ($USD Millions)Q4 2023Q3 2024Q4 2024
United States$213.7 $222.7 $236.6
Rest of World$44.1 $60.5 $57.1

KPIs:

KPIQ4 2023Q3 2024Q4 2024
Active Customers (000s)2,543 2,628 2,668
Total Orders Placed (000s)2,022 2,200 2,172
Average Order Value ($)303 303 301

Note on estimates: S&P Global consensus (revenue, EPS) was unavailable at analysis time due to API limits; therefore “vs estimates” comparisons are not shown. We attempted to retrieve consensus but were unable to due to an S&P Global daily limit (IQ_EPS_EST_CIQ error) [SPGI error from GetEstimates].

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross MarginQ1 2025N/A52.2%–52.7% New
Fulfillment (% of Sales)Q1 2025N/A~3.2% New
Selling & Distribution (% of Sales)Q1 2025N/A~17.4% New
Marketing (% of Sales)Q1 2025N/A~14.9% New
G&A ($)Q1 2025N/A~$39.5M New
Gross MarginFY 2025N/A52.4%–52.9% New
Fulfillment (% of Sales)FY 2025N/A3.0%–3.2% New
Selling & Distribution (% of Sales)FY 2025N/A17.0%–17.2% New
Marketing (% of Sales)FY 202515%–16% (prior preliminary commentary) 14.9%–15.1% Slightly Lower
G&A ($)FY 2025N/A$155M–$158M New
Effective Tax RateFY 2025N/A24%–26% New

Additional color: Management flagged new China tariffs as a partial FY25 headwind (most relevant to REVOLVE), with FWRD margin recovery and full-price mix as offsets .

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/TechnologyLeveraging AI for merchandising/marketing enhancements; internal AI search pilots Internal AI search deployed, projected 7-figure annual revenue lift; AI-expanded reach in performance channels AI-powered search live on REVOLVE; proprietary algorithms boosting recommendations, routing, inventory balance, and reducing returns Expanding scope and impact
Return Rate/LogisticsFirst YoY decrease in return rate in >3 years; logistics efficiencies >200 bps S&D improvement; lower return rate YoY each month; fulfillment –29 bps YoY >2-pt YoY return-rate decline; S&D 16.5%; fulfillment 3.2% Sustained improvement
Physical RetailExploring physical retail; Aspen momentum LA Holiday Shop pop-up; planning permanent LA store by mid-2025 Permanent store at The Grove opening Fall 2025; pop-up lifted new-customer acquisition, higher owned-brand mix Scaling presence
Product/AssortmentGrowth in adjacent categories (beauty, men’s, home) Strong rebound in dresses/apparel; improved site merchandising Premium essentials “Foundation Shop”; ski shop +850% YoY; adjacent zones driving engagement Broader use cases
International+13% YoY in Q2; improving service levels +20% YoY in Q3 across regions +29% YoY; profitability comparable to domestic after return-rate benefit Accelerating
Owned BrandsFoundation building; launches ahead Positive YoY growth; long-run mix potential; margin richer vs third-party 18% of REVOLVE FY mix; more 2025 launches; supports margin Set to expand

Management Commentary

  • “We finished the year with an outstanding fourth quarter… net sales increasing at a double-digit rate year-over-year across Revolve, FWRD, domestic and international.” – Co-CEO Mike Karanikolas .
  • “Marketing and logistics efficiency gains… a meaningfully reduced return rate… advancements in merchandising… and enhanced site navigation… set us up well for profitable growth.” – Co-CEO Michael Mente .
  • “Consolidated gross margin was 52.5% and came in well above our guidance range… primarily reflects meaningful margin improvement in our FWRD segment and increased mix from higher-margin REVOLVE.” – CFO Jesse Timmermans .
  • “AI served an important role in reducing our return rate… in a variety of instances, our internal solutions handily outperformed AI solutions from third-party technology vendors.” – Co-CEO Mike Karanikolas .
  • “We are very early in our physical retail journey… permanent store in Los Angeles slated to open in the fall [at The Grove].” – Co-CEO Michael Mente .

Q&A Highlights

  • Gross margin outlook/puts & takes: Gains from higher full-price mix and FWRD improvement; partial offset from new China tariffs; mitigating actions underway; FY25 guide implies ~+15 bps YoY at midpoint .
  • Return rates: Modeled flat in 2025 with opportunity to beat, after >2-pt YoY reduction in 2024; seasonal comps noted; category/geography mix contributed to 2024 improvement .
  • Mix and growth drivers: Expect growth led by orders/customers with slight AOV uptick; dresses up ~10% in Q4; beauty/men’s/home posted record sales .
  • International profitability: Gross margin similar to U.S.; higher shipping offset by lower returns, making contribution margin comparable .
  • Operating expenses: Marketing trending ~15% in FY25 given efficiencies and continued brand investment; G&A +10% in FY25 from owned brands, AI, and physical retail investments (incl. full-year Vauthier) .

Estimates Context

  • We attempted to fetch S&P Global consensus for Q4 2024 (revenue, EPS, EBITDA) and prior quarters for comparison, but the request failed due to an S&P Global daily limit. As a result, consensus comparisons are unavailable in this report (IQ_EPS_EST_CIQ error) [SPGI error from GetEstimates].
  • Notably, the company’s Q4 gross margin materially beat its own guidance range (52.5% actual vs 51.2%–51.5% prior guide), indicating an operational upside relative to internal expectations .

Key Takeaways for Investors

  • Quality beat vs internal guide: Gross margin outperformance and operating leverage (marketing/logistics) drove EPS and EBITDA upside; FWRD margin began to recover, enhancing consolidated profitability .
  • Momentum into 1Q25: High-single-digit sales growth through mid-February and stable-to-improving margin constructs provide early-year support; calendar (leap year comp) is a ~1-pt headwind .
  • Structural levers intact: Owned brands (richer margin), AI-driven conversion/marketing efficiency, physical retail halo, and international growth underpin a multi-year margin/GM expansion path despite tariffs .
  • Watch cost discipline: FY25 marketing ~15% sustains brand building; logistics efficiencies likely continue; G&A elevated near term as RVLV invests ahead of growth (owned brands, AI, store buildout) .
  • Returns and cash: WC improved into year-end (inventory growth slightly below Q4 sales growth), setting up better cash generation in 2025; balance sheet remains debt-free with $256.6M cash .
  • Risks: Tariffs (REVOLVE), macro volatility affecting discretionary demand, and execution risk on physical retail/owned brand scale-up; however, RVLV’s data/AI capabilities and brand reach are tangible offsets .

Appendix: Additional Details

  • Non-GAAP adjustments: Q4 included $2.7M non-routine items excluded from Adjusted EBITDA; includes $2.0M loss from shipment theft expected to be fully recovered via insurance .
  • Segment color: FWRD returned to growth (+11% YoY) with improving margin metrics and expanding pre-owned handbags (Renew nearly doubled YoY); REVOLVE remained the main growth/margin contributor .
  • International: +29% YoY with record NPS in 2024; profitability comparable to domestic given lower returns; supports continued marketing investment in key markets .

Sources: Q4 2024 8-K and Exhibit 99.1 press release (2/25/2025) ; Q4 2024 earnings call (2/25/2025) ; Q3 2024 8-K (11/5/2024) and call ; Q2 2024 8-K (8/6/2024) ; Grove store PR (2/25/2025) .