Warby Parker, Inc. Class A ((WRBY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Warby Parker’s recent earnings call painted a picture of a company riding on a wave of robust revenue growth and strategic expansion. The sentiment was largely positive, driven by strong business momentum in insurance and eye care, despite facing some challenges like lower margins in the contact lens category and weather-related impacts on guidance. Overall, the company’s achievements and growth strategies were highlighted as outweighing these concerns.
Record Revenue Growth
Warby Parker reported its highest revenue growth quarter since 2021, with a full-year revenue increase of over 15% and a fourth-quarter revenue rise of 17.8% year-over-year. This impressive growth underscores the company’s successful strategies and market appeal.
Expansion of Store Network
The company continued its aggressive expansion by opening 41 new stores in 2024, with plans to open 45 more in 2025. This includes a strategic partnership with Target to open five shop-in-shops, further enhancing its retail footprint.
Strong Growth in Insurance and Eye Exams
Warby Parker’s insurance business expanded significantly, with in-network coverage now reaching over 30 million lives. Additionally, eye exam revenue grew over 40% year-over-year, contributing to a higher average revenue per customer.
Improved Adjusted EBITDA Margin
The company reported an expansion in its adjusted EBITDA margin by approximately 170 basis points, with a 40% increase in adjusted EBITDA versus 2023, reflecting improved operational efficiency.
Positive Trends in E-commerce
For the first time since 2021, Warby Parker saw growth in its e-commerce revenue, with a 5.3% increase in Q4 and a full-year increase of 3%, indicating a successful digital strategy.
Continued Lower Gross Margin from Contact Lenses
While contact lenses contributed to gross profit dollars, they continue to have a lower gross margin percentage compared to other product categories, presenting a challenge in optimizing profitability.
Weather Impact on Q1 2025 Guidance
Recent weather conditions have impacted trends, leading to a cautious Q1 2025 guidance with estimated revenue growth of 12% to 13%, reflecting the company’s prudent approach to forecasting.
Forward-Looking Guidance
Looking ahead, Warby Parker plans to maintain its growth trajectory by opening 45 new stores in 2025 and scaling its insurance business. The company aims for 14% to 16% revenue growth with an adjusted EBITDA margin of approximately 11% at the midpoint, targeting an additional 150 basis points of margin expansion.
In summary, Warby Parker’s earnings call highlighted a company with strong growth momentum and strategic initiatives that are paying off. Despite some challenges, the overall sentiment was positive, with key takeaways including record revenue growth, expansion plans, and improved profitability metrics.