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Warby Parker Inc. (WRBY)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 net revenue rose 13.9% year over year to $214.5M, with adjusted EBITDA up 27.8% to $25.0M and margin expanding 130 bps to 11.7% .
  • Full-year 2025 guidance was raised: revenue to $880–$888M (14–15% YoY) and adjusted EBITDA to $98–$101M (11.1–11.4% margin) .
  • S&P Global consensus for Q2 was modestly beaten on revenue and normalized EPS; definitional differences in EBITDA (GAAP vs company-adjusted) matter for comparisons (see Estimates Context) [Values retrieved from S&P Global]*.
  • Management cited tariff mitigation, retail expansion, and AI-driven personalization (Advisor) as growth drivers; the Google intelligent eyewear partnership is a medium-term catalyst, while the CFO transition introduces near-term leadership risk .

What Went Well and What Went Wrong

What Went Well

  • Accelerating customer and monetization metrics: Active customers +9% to 2.60M and ARPC +4.6% to $316; adjusted EBITDA margin +130 bps YoY to 11.7% .
  • Retail and vision care momentum: Retail revenue +19.3% YoY; contacts +28% and eye exams +44% YoY; retail ~73% of mix, supported by new store openings (298 stores at quarter-end) .
  • Strategic product and AI initiatives: Launch of Advisor (AI-driven recommendations) with strong early traction; selective price increases absorbed with minimal conversion impact; progressives reached ~23% of units .

Management quotes:

  • “We launched Advisor, our personalized, AI-driven recommendation tool… which has strong early traction” — Co-CEO Dave Gilboa .
  • “We’re proud to deliver our eighth consecutive quarter of accelerating active customer growth alongside 130 basis points of year over year Adjusted EBITDA margin expansion” — CFO Steve Miller .

What Went Wrong

  • Reported gross margin declined to 53.0% (from 56.0% YoY), affected by $2.5M inventory write-downs tied to sunsetting Home Try-On, higher contacts mix, occupancy, and tariffs; adjusted gross margin was 54.3% .
  • One-time costs weighed on GAAP profitability: net loss of $1.8M includes $2.5M inventory write-downs and $1.3M restructuring costs .
  • E-commerce growth at the lower end in Q2 due to a slower April; management expects low-to-mid single-digit e-commerce growth for the year as Home Try-On winds down and digital tools scale .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$190.6 $223.8 $214.5
Net (Loss) Income ($USD Millions)$(6.9) $3.5 $(1.8)
Diluted EPS ($USD)$(0.06) $0.03 $(0.01)
Gross Margin (%)54.1% 56.3% 53.0%
Adjusted Gross Margin (%)54.2% 56.4% 54.3%
Adjusted EBITDA ($USD Millions)$13.8 $29.2 $25.0
Adjusted EBITDA Margin (%)7.3% 13.1% 11.7%
Cash from Operations ($USD Millions)$19.9 (Q4 only) $29.4 (Q1 only) $40.2 (Q2 only)
Free Cash Flow ($USD Millions)$2.2 (Q4 only) $13.2 (Q1 only) $23.9 (Q2 only)

Segment/Product and Channel KPIs (Q2 2025)

KPIQ2 2025
Active Customers (TTM, Millions)2.60
Average Revenue per Customer ($)$316
Retail Revenue Growth YoY (%)19.3%
E-commerce Revenue Growth YoY (%)2%
Retail Mix (% of Total Revenue)~73%
Contacts Share of Revenue (%)11.5%
Eye Exams Share of Revenue (%)6%
Glasses Revenue Growth YoY (%)~11%
Progressives Share of Rx Units (%)~23%
Stores (End of Period)298
Net New Stores in Quarter11

Q2 2025 Actual vs S&P Global Consensus (company-reported actuals and S&P normalized comparisons)

MetricActualConsensusSurprise
Revenue ($USD Millions)$214.5 $213.1*+$1.4M*
Primary EPS (S&P Normalized, $)0.0764*0.0721*+$0.0043*
EBITDA (S&P GAAP, $USD Millions)8.1*21.8*Miss (definition differs)*

Values retrieved from S&P Global*.

Non-GAAP/One-time items:

  • Inventory write-downs: $2.456M tied to Home Try-On sunset; restructuring/legal costs add’l $1.341M; adjusted metrics exclude stock-based comp and specific non-recurring items .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue ($USD Millions)FY 2025$869–$886 $880–$888 Raised
Adjusted EBITDA ($USD Millions)FY 2025$91–$97 (~10.5–11.0%) $98–$101 (11.1–11.4%) Raised
New Stores (units)FY 202545 incl. 5 Target shop-in-shops 45 incl. 5 Target shop-in-shops Maintained
Gross Margin (Adjusted)FY 2025N/A (mid-50s implied)Mid-50s; Q2 adjusted GM as reference Maintained (qualitative)
Net Revenue ($USD Millions)Q3 2025N/A$223–$225 New
Adjusted EBITDA ($USD Millions)Q3 2025N/A$24–$25.5; ~11% margin at midpoint New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/Technology InitiativesFoundation for innovation; FY25 build on execution “Highest e-commerce growth since 2021”; tech-enabled operations Launch of Advisor (AI recs); Google partnership progress; AI glasses vision Increasing strategic focus
Supply Chain/TariffsTariff noted as risk in outlook Mitigating majority of tariffs assumed in guidance Supplier mix shifts; selective pricing; tariffs moderating; EBITDA uplift Mitigation improving
Retail Expansion/Densification276 stores; 41 adds in 2024 287 stores; 11 net adds in Q1 298 stores; 11 net adds; Target shop-in-shops begin Accelerating footprint
Product PerformanceGlasses outperformed; higher margin product mix ARPC up; balanced product growth Glasses ~11% YoY; contacts +28%; exams +44%; progressives ~23% of Rx Broad-based strength
Insurance/Versant IntegrationInsurance growth noted Continued network expansions Versant ramp in line/ahead; insurance customers higher spend & frequency Positive tailwind
Home Try-OnLegacy e-comm driver; no changeNo changeProgram to sunset; drives $2.5M write-down; reallocating spend Strategic pivot
LeadershipStableStableCFO stepping down Oct 1; interim PFO/PAO role to Co-CEO Transition risk

Management Commentary

  • “We’re only one‑third of the way to our long‑term opportunity of more than 900 stand‑alone stores… underscoring the significant white space ahead” — Co-CEO Dave Gilboa .
  • “Adjusted gross margin came in at 54.3%… year over year decrease driven by tariffs, contacts growth, and increased doctor headcount/occupancy, partially offset by higher priced lenses/frames and selective price increases” — CFO Steve Miller .
  • “We’ve decided to sunset [Home Try-On]… confident we can serve customers through stores, leading digital experience, and proprietary AI-powered technology” — Co-CEO Neil Blumenthal .
  • “We believe glasses are the perfect form factor to leverage AI… we’re thrilled to partner with Google” — Co-CEO Dave Gilboa ; “Google commits up to $150M including an equity investment” — Google partnership PR .

Q&A Highlights

  • Macro and trajectory: Despite April choppiness, sequential trends improved May–July; management confident in mid-to-high teens growth with rapid adaptation vs peers .
  • SG&A leverage: Non-marketing adjusted SG&A delivered ~300 bps of leverage YTD; continued efficiency from staffing optimization, AI-enabled CX and disciplined corporate spend .
  • Google partnership and distribution: Targeting all-day wear AI glasses; Warby’s 300+ stores and clinical capabilities are key to fitting/measurement; large TAM expansion envisioned .
  • Insurance tailwind: Versant/MetLife integration ramping; insurance customers spend more and repeat more frequently; multiyear utilization growth expected .
  • Home Try-On wind-down: Costs reallocated to awareness/acquisition with higher ROI; strengthened direct online purchases aided by Advisor .

Estimates Context

  • Q2 2025: Revenue beat (+$1.4M vs $213.1M*) and normalized EPS beat (+$0.0043*), per S&P Global; EBITDA comparison shows a “miss” vs EBITDA consensus due to definitional differences (S&P GAAP EBITDA vs company-reported adjusted EBITDA of $25.0M) . Values retrieved from S&P Global*.
  • Forward quarters: Q3 2025 consensus revenue ~$224.5M* with EPS ~$0.09*; Q4 2025 consensus revenue ~$213.2M* with EPS ~$0.05*; company guides Q3 revenue $223–$225M and adjusted EBITDA $24–$25.5M, implying ~11% margin . Values retrieved from S&P Global*.
  • Implications: Street likely raises FY25 EBITDA on tariff mitigation and SG&A leverage; gross margin mid‑50s and contacts/exams mix may cap near-term further margin expansion, though ARPC and progressives mix support sustained profitability .

Key Takeaways for Investors

  • Guidance raise signals stronger H2 execution; watch Q3 revenue $223–$225M and EBITDA $24–$25.5M for validation of non‑marketing SG&A leverage narrative .
  • Narrative pivot: AI‑enabled omnichannel (Advisor) plus insurance tailwinds and retail densification drive customer growth and ARPC; Home Try‑On sunset should enhance marketing ROI .
  • Margin watch: Adjusted gross margin mid‑50s achievable amid tariffs; pricing actions and premium lens/progressives mix offset contacts/occupancy headwinds .
  • Category runway: Contacts (11.5% of mix vs ~20% industry) and progressives (~23% units) present multi‑year mix/pricing accretion, largely retail-driven .
  • Strategic optionality: Google partnership (up to $150M commitment) positions WRBY for AI glasses; medium‑term TAM expansion and brand differentiation potential .
  • Risk monitor: CFO transition (effective Oct 1) with interim finance leadership; execution continuity emphasized by management .
  • Store economics intact: Mature stores average ~$2.2M revenue with ~35% four‑wall margins; continued expansion into underpenetrated suburban markets supports growth durability .

Values retrieved from S&P Global*.