FIGS, Inc. ((FIGS)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for FIGS, Inc. presented a mixed outlook, highlighting both significant achievements and ongoing challenges. The company reported notable international growth and maintained a strong cash position, yet faced difficulties in customer acquisition and experienced pressure on gross margins. A strategic shift in promotional strategies is anticipated to impact near-term revenue negatively, but it is aimed at ensuring long-term brand health. Overall, the sentiment during the call was one of cautious optimism, with a focus on strategic adjustments for future growth.
Record Net Revenue Achievement
FIGS, Inc. announced a record net revenue of $555.6 million for the fiscal year 2024, marking a 2% increase year-over-year. This achievement underscores the company’s ability to maintain growth despite market challenges.
International Business Growth
The international segment of FIGS, Inc. saw impressive growth, with a 45% increase for the quarter. This growth now represents 16% of the company’s net revenues, marking an all-time high for the brand and highlighting the potential of international markets.
Strong Cash Position
The company concluded the year with over $245 million in net cash and investments, bolstered by a positive operating cash flow of approximately $81 million. This strong cash position provides a solid foundation for future investments and strategic initiatives.
Scrubwear and Non-Scrubwear Growth
FIGS, Inc. reported positive growth in scrubwear for the third consecutive quarter, alongside a strong rebound in non-scrubwear sales following a previous downturn. This indicates a broadening of the company’s product appeal.
Customer Acquisition Challenges
Challenges in customer acquisition were noted, with an increased rate of customers falling out of the active base. However, there was a positive trend of lapsed customers returning, suggesting potential for re-engagement strategies.
Gross Margin Pressure
The company experienced a contraction in gross margins due to shifts in product mix, with a full-year contraction of 150 basis points to 67.6%. This highlights the need for careful management of product offerings and pricing strategies.
Promotional Strategy Impact
A strategic decision to reduce site-wide promotions is expected to negatively impact top-line performance in 2025. This move is part of a broader strategy to enhance long-term brand health and reduce reliance on promotions.
Lower Active Customer Growth
Active customer growth was modest, with a year-over-year increase of only 3%. Additionally, net revenues per active customer decreased by 1%, indicating challenges in maximizing customer value.
Forward-Looking Guidance
Looking ahead to fiscal 2025, FIGS, Inc. provided guidance focusing on prioritizing and rebasing efforts while investing in growth opportunities. The company anticipates a low single-digit decline in net revenues, influenced by a reduction in promotional activities. Gross margins are expected to remain flat at approximately 67.6%, with adjusted EBITDA margins projected between 9% and 9.5%. The company plans to enhance brand awareness, customer engagement, and capitalize on international market growth, retail channels, and product innovations.
In summary, the earnings call for FIGS, Inc. reflected a sentiment of cautious optimism, with the company balancing significant achievements against ongoing challenges. Key takeaways include record net revenue, strong international growth, and a robust cash position, offset by customer acquisition difficulties and gross margin pressures. The strategic shift in promotional activities aims to fortify long-term brand health, with a focus on sustainable growth and innovation.