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Warby Parker Inc. (WRBY)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered double‑digit growth and first GAAP profitable quarter: net revenue $223.8M (+11.9% YoY) and diluted EPS $0.03; adjusted EBITDA margin expanded ~190 bps YoY to 13.1% .
  • Mixed vs estimates: revenue modestly missed S&P Global consensus ($223.8M vs $225.4M, −$1.6M)* while Primary EPS beat ($0.142 vs $0.112)*; company-reported diluted EPS was $0.03 .
  • FY25 guidance revised lower on tariff/macro uncertainty: revenue $869–$886M (from $878–$893M), adjusted EBITDA $91–$97M (10.5%–11.0% margin); Q2 guide $211–$214M revenue, $20–$22M adj. EBITDA .
  • Key catalysts: detailed tariff mitigation (supply chain reallocation, selective pricing, opex discipline), accelerating e‑commerce growth, and ongoing insurance integration and store openings; post‑quarter, announced Google partnership for AI‑powered eyewear .

What Went Well and What Went Wrong

What Went Well

  • Achieved first GAAP positive net income as a public company ($3.5M) driven by expense leverage on higher revenue .
  • Adjusted EBITDA margin expanded to 13.1% (+190 bps YoY) on non‑marketing SG&A leverage; e‑commerce posted highest quarterly growth since 2021 .
  • Active customers accelerated for the 7th straight quarter to 2.57M (+8.7% YoY), with average revenue per customer up 4.8% to $310; management emphasized strong customer acquisition efficiency and AI‑driven personalization roadmap (“excited about early test results”) .

Specific quotes:

  • “We opened 11 net new stores, exceeded profitability expectations, drove the highest e‑commerce growth we've seen since 2021…” — Co‑CEO Neil Blumenthal .
  • “We believe our brand’s strength, commitment to innovation…reinforce [our] ability to continue taking share…” — Co‑CEO Dave Gilboa .
  • “These results underscore our disciplined execution and our continued ability to scale sustainably.” — CFO Steve Miller .

What Went Wrong

  • Revenue slightly below consensus and modest gross margin contraction (56.3% vs 56.7% YoY) from contact lens mix and fixed cost deleverage from new stores; tariff uncertainty prompting more conservative FY guide .
  • FY25 revenue guidance reduced by ~1% at midpoint (to $869–$886M) and margin impact estimated at 200–300 bps from tariffs despite mitigation efforts .
  • Management cited increased volatility in consumer sentiment and weather disruptions (operational hours lost +68% YoY) affecting traffic patterns in early Q2 setup .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$200.0 $190.6 $223.8
Gross Margin % (GAAP)56.7% 54.1% 56.3%
Adjusted EBITDA ($USD Millions)$22.4 $13.8 $29.2
Adjusted EBITDA Margin %11.2% 7.3% 13.1%
Net Income - (IS) ($USD Millions)$(2.7) $(6.9) $3.5
Diluted EPS ($USD)$(0.02) $(0.06) $0.03
Cash from Operations ($USD Millions)$19.9 $19.9 $29.4
Free Cash Flow ($USD Millions)$5.5 $2.2 $13.2

Segment/KPI details:

  • Product mix and growth
    • Glasses revenue growth YoY: +9.1%
    • Contacts revenue growth YoY: +25.1%; share of revenue: 9.2% → 10.3%
    • Eye care (exams) growth YoY: ~+40%; share of revenue: 4.7% → 5.8%
KPIQ1 2024Q1 2025
Active Customers (TTM, Millions)—2.57 (+8.7% YoY)
Average Revenue per Customer ($)—$310 (+4.8% YoY)
Stores (Period End)236 (FY24 end) 287
Retail Productivity (%)—99.8%

Note: “—” indicates not disclosed in the referenced press materials for that prior period.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2025$878–$893M $869–$886M Lowered
Adjusted EBITDAFY 2025~$97M (~11% margin) $91–$97M (10.5%–11.0%) Lowered at low end
Gross Margin (commentary)FY 2025Mid‑50s % Tariffs impact ~200–300 bps Lowered outlook
Store OpeningsFY 202545 stores (incl. 5 Target) On track for 45 (incl. 5 Target) Maintained
Marketing SpendFY 2025Low‑teens % of revenue Low‑teens % maintained Maintained
Q2 RevenueQ2 2025—$211–$214M New
Q2 Adjusted EBITDAQ2 2025—$20–$22M (~10% margin midpt) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs & supply chainDiversifying sourcing; estimated 20–40 bps headwind; mid‑50s GM guided China sourcing ~20% of COGS; accelerating to <10% by YE; three‑pronged mitigation (supply shift, selective pricing, opex cuts); potential 200–300 bps GM impact Intensifying headwind; active mitigation
AI/technologyAI personalization plans; virtual try‑on penetration; smart glasses optionality Early positive tests in AI‑powered personalization; post‑quarter Google AI eyewear partnership announced Building momentum
Product performanceGlasses acceleration; progressives penetration; contacts +36% FY; exams +41% FY Glasses +9.1% YoY; contacts +25.1% (10.3% of rev); eye care ~+40% (5.8% of rev) Continued mix shift; holistic vision care tailwinds
Insurance integrationVersant in‑network lives >30M; utilization in line/ahead Positive early signs; insurance customers spend more and repeat more Solidifying multiyear tailwind
Channel mix & e‑commerceRetail 70% of business; e‑com +5.3% Q4; store density drives online halo Retail ~70%; e‑commerce +5.5% (best since 2021) Steady omni strength
Macro/trafficConservatism embedded; weather impacted Q1 setup Weather disruptions (+68% hours lost); cautious consumer sentiment; conservative guide Cautious stance maintained
Target shop‑in‑shopsAnnounced 5 locations; negligible near‑term P&L Opening in H2; similar format/economics; learnings to inform rollout Pilot progressing

Management Commentary

  • Strategic priorities: “Serve customers…invest in growth…actively mitigate tariffs and maintain a strong financial profile.” — Co‑CEO Neil Blumenthal .
  • Pricing strategy: “Targeted…price adjustments…still delivering exceptional value…entry $95 price point maintained.” — Co‑CEO David Gilboa .
  • Tariff mitigation scale: “Gross impact ~$45–$50M…we believe we will mitigate the substantial majority, if not all.” — CFO Steve Miller .
  • E‑commerce and AI: “Highest quarterly growth since 2021…excited about early test results from new AI‑powered personalization features.” — Co‑CEO Neil Blumenthal .
  • Insurance value: “Insurance customers…spend more…select progressives at a higher rate…and return more frequently.” — Co‑CEO David Gilboa .

Q&A Highlights

  • Guidance conservatism: Management lowered FY revenue growth (13%–15% vs 14%–16%) reflecting macro/tariff uncertainty and potential elongation of purchase cycles; March ended strong; April variability improved into May .
  • Margin cadence: Expect similar shape to last year (highest margin Q1, lowest Q4); confident in sustaining 100–200 bps annual adj. EBITDA expansion long term .
  • Tariff buckets: Mitigation from supply reallocation, selective pricing, and opex cuts; aggregate plan targets offsetting ~$45–$50M impact; did not break out per bucket .
  • E‑commerce trajectory: Strength in traffic/conversion; contacts online channel; AI‑driven recommendations aiding purchase without home try‑on .
  • Target shop‑in‑shops: 5 stores in H2; Warby staff and systems; modeled similar unit economics; incremental to stand‑alone growth .

Estimates Context

MetricS&P Global Consensus*Actual
Revenue (Q1 2025, $USD Millions)$225.37*$223.78
Primary EPS (Q1 2025, $)$0.1119*$0.1423*; Company diluted EPS $0.03
EBITDA (Q1 2025, $USD Millions)$27.81*S&P EBITDA actual $14.94*; Company adjusted EBITDA $29.21

Interpretation:

  • Revenue was a modest miss vs consensus; EPS beat on S&P “Primary EPS” basis, while company’s GAAP diluted EPS printed $0.03. Consensus EBITDA definitions may differ from company’s adjusted EBITDA; on company‑reported basis, adjusted EBITDA exceeded consensus. Values retrieved from S&P Global.*

FY 2025 consensus context:

  • Revenue: $873.1M*; EBITDA: $100.0M*; Primary EPS: $0.369*; Target Price: $22.17*.

Key Takeaways for Investors

  • Mix and omnichannel strategy working: glasses, contacts, and exams all growing; retail remains ~70% of mix with e‑commerce re‑accelerating, supported by AI personalization and store density halo .
  • Margin playbook intact despite tariffs: non‑marketing SG&A leverage drove Q1 flow‑through; management targets 100–150 bps adj. EBITDA expansion in FY25 even under tariff headwinds .
  • Near‑term setup: Q2 revenue/EBITDA guide embeds mitigation phasing; watch gross margin trajectory (−200–300 bps potential for FY), pricing elasticity, and insurance utilization ramp .
  • Strategic catalysts: Target pilot, Versant integration, accelerated supply chain diversification, and post‑quarter Google XR partnership expand optionality and narrative beyond near‑term macro/tariff caution .
  • Estimate implications: Modest revenue trimming and margin pressure likely; however, adj. EBITDA execution could support upward revisions if mitigation outperforms and pricing/mix holds. Values retrieved from S&P Global.*
  • Trading lens: Balance conservative FY guide and tariff risks against improving unit economics, cash generation ($13.2M FCF in Q1), and first GAAP profitable quarter; catalysts include mitigation updates and Q2 delivery vs guide .