2022 net revenue increased 10.6% to $598.1
million
Average revenue per customer increased 6.9%
year over year to $263
Warby Parker Inc. (NYSE: WRBY) (the “Company”), a
direct-to-consumer lifestyle brand focused on vision for all, today
announced financial results for the fourth quarter and full year
ended December 31, 2022.
“Our team’s accomplishments in 2022, Warby Parker’s first full
year as a public company, reflect our commitment to growing
sustainably while taking market share, delivering remarkable
customer experiences, and creating impact,” said Co-Founder and
Co-CEO Neil Blumenthal. “In the face of economic uncertainty and a
depressed consumer environment, we delivered strong Q4 results and
aim to bring that same momentum, powered by rigorous discipline,
into 2023.”
“As we enter a new year, our team continues to focus on aspects
of our business within our control, taking decisive action, and
delivering on our value proposition while positioning our brand to
continue to outpace industry growth. We’re committed to expanding
profitability while making strategic investments in areas of the
business that will drive brand awareness and create even more value
for our millions of customers,” added Co-Founder and Co-CEO Dave
Gilboa.
Fourth Quarter and Full Year 2022
Highlights
- Full year net revenue increased $57.3 million, or 10.6%, to
$598.1 million compared to full year 2021.
- Fourth quarter net revenue increased $13.6 million, or 10.2%,
to $146.5 million compared to fourth quarter 2021.
- Active Customers increased 3.6% to 2.28 million year over
year.
- Average Revenue per Customer increased 6.9% year over year to
$263.
- Q4 2022 GAAP net loss of $20.3 million, a decrease of $25.7
million from the fourth quarter of 2021.
- Q4 2022 adjusted EBITDA(1) of $8.6 million and an adjusted
EBITDA margin(1) of 5.8%, an increase of $15.0 million and 10.6
points from the fourth quarter of 2021.
- Second half of 2022 adjusted EBITDA margin(1) of 6.9%, a 4.7
point improvement over 2.2% in the first half of 2022.
- Opened 40 new stores during the year, ending 2022 with 200
stores.
- Contact lens revenue increased to 7.2% of our business in 2022,
up from 4.3% in 2021.
- Eye exam revenue increased to 2.9% of our business in 2022, up
from 1.7% in 2021.
Fourth Quarter 2022 Financial
Results
For the fourth quarter of 2022, compared to the fourth quarter
of 2021:
- Net revenue increased $13.6 million, or 10.2%, to $146.5
million.
- Active Customers increased by 78,000, or 3.6%, to 2.28
million.
- Gross profit increased 5.8% to $80.7 million.
- Gross margin was 55.1% compared to 57.4% in the prior year. The
decline in gross margin was primarily driven by an increase in
salary and benefit costs associated with optometrists as we scale
our eye exam offering across our fleet, to 150 exam locations, up
from 102 in the prior year period, the impact of the growth in the
Company's store count driving higher store occupancy and
depreciation costs, and the increased penetration of contact
lenses, which carry lower gross margins than eyeglasses, reflecting
Warby Parker’s strategy to grow its contact lens offering. This was
partially offset by leverage from the Company’s in-house optical
laboratory network and the scaling of higher margin progressive
lenses.
- Selling, general and administrative expenses (“SG&A”)
decreased $19.8 million to $102.4 million, or 69.9% of revenue,
primarily driven by lower marketing costs, as we have reduced our
online advertising spend and are leveraging our expanding retail
footprint to drive brand awareness, and lower stock-based
compensation costs, which represented 13.6% of revenue compared to
24.6% in Q4 2021. Adjusted SG&A(1) decreased from 67.3% to
55.6% of revenue.
- GAAP net loss decreased $25.7 million to $20.3 million,
primarily as a result of the decrease in SG&A described
above.
- Adjusted EBITDA(1) increased $15.0 million to $8.6
million.
- Adjusted EBITDA margin(1) increased 10.6 points to 5.8%.
Full Year 2022 Financial
Results
For the full year 2022, compared to the full year 2021:
- Net revenue increased $57.3 million, or 10.6%, to $598.1
million.
- Active Customers increased by 78,000, or 3.6%, to 2.28
million.
- Gross profit increased 7.3% to $341.1 million.
- Gross margin was 57.0% compared to 58.8% in the prior year. The
decline in gross margin was primarily driven by the increased
penetration of contact lenses which are sold at a lower margin than
glasses, reflecting Warby Parker’s strategy to grow its contact
lens offering, increases in store occupancy costs as a percent of
revenue primarily due to increased depreciation and rent expense as
we grew our store base to 200 stores, and an increase in salary and
benefit costs associated with optometrists as we scale our eye exam
offering across our fleet, to 150 exam locations, up from 102 in
the prior year period. This was partially offset by the scaling of
higher margin progressive lenses and leverage from the Company’s
in-house optical laboratory network.
- SG&A decreased $9.1 million to $452.3 million, or 75.6% of
revenue, primarily driven by a decrease in stock-based compensation
and related payroll taxes and professional costs incurred in 2021
related to the Company’s direct listing. Adjusted SG&A(1)
increased $32.5 million to $348.5 million primarily driven by
higher compensation costs, primarily from growth in our retail
workforce, increased insurance costs related to operating as a
public company, and increased depreciation and amortization costs,
mainly related to capitalized software and office build-outs. These
decreases were partially offset by a reduction in marketing
expenses and Home Try-On program costs. Adjusted SG&A remained
flat as a percent of revenue.
- GAAP net loss decreased $33.9 million to $110.4 million,
primarily as a result of the increase in gross profit and the
decrease in SG&A described above.
- Adjusted EBITDA(1) increased $2.3 million to $27.2
million.
- Adjusted EBITDA margin(1) of 4.5% was flat as compared to 2021,
however, the second half of 2022 adjusted EBITDA margin(1) was
6.9%, a 4.7 point improvement over 2.2% in the first half of
2022.
Balance Sheet Highlights
Warby Parker ended 2022 with $208.6 million in cash and cash
equivalents.
2023 Outlook
For the full year 2023, Warby Parker is providing the following
guidance:
- Net revenue of $645 to $660 million, representing growth of 8%
to 10% versus full year 2022.
- Adjusted EBITDA(1) of approximately $51.5 million, or adjusted
EBITDA margin(1) of approximately 7.9%.
- 40 new store openings bringing the total projected store count
at year end to approximately 240.
“We are pleased with our strong fourth quarter performance, in
particular the profitability expansion we were able to achieve with
an adjusted EBITDA margin of 2.2% in the first half of 2022 up to
6.9% in the second half despite economic headwinds,” said Chief
Financial Officer Steve Miller. “Our 2023 outlook reflects our
team’s commitment to maintaining discipline across the topline and
bottomline while continuing to invest in our omnichannel business
model, for example by opening 40 new stores. As we work to capture
greater market share while providing vision for all, we’re as
committed as ever to delivering value to shareholders,” said Chief
Financial Officer Steve Miller.
The guidance and forward-looking statements made in this press
release and on our conference call are based on management's
expectations as of the date of this press release.
(1) Please see the reconciliation of non-GAAP financial measures
to the most comparable GAAP financial measure in the section titled
“Non-GAAP Financial Measures” below.
Webcast and Conference
Call
A conference call to discuss Warby Parker’s fourth quarter and
full year 2022 results, as well as first quarter and full year 2023
outlook, is scheduled for 8:00 a.m. ET today. To participate,
please dial 844-200-6205 from the U.S. or 929-526-1599 from
international locations. The conference passcode is 045225. A live
webcast of the conference call will be available on the investors
section of the Company’s website at investors.warbyparker.com where
presentation materials will also be posted prior to the conference
call. A replay will be made available online approximately two
hours following the live call for a period of 90 days.
Forward-Looking
Statements
This press release and the related conference call, webcast and
presentation contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
These statements may relate to, but are not limited to,
expectations of future operating results or financial performance,
including expectations regarding achieving profitability,
delivering stakeholder value, growing market share, and our GAAP
and non-GAAP guidance for the quarter ending March 31, 2023 and
year ending December 31, 2023; expectations regarding the number of
new store openings during the year ending December 31, 2023;
management’s plans, priorities, initiatives and strategies; and
expectations regarding growth of our business. Forward-looking
statements are inherently subject to risks and uncertainties, some
of which cannot be predicted or quantified. In some cases, you can
identify forward-looking statements because they contain words such
as “anticipate,” “believe,” “contemplate,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,”
“predict,” “project,” “should,” “target,” “toward,” “will,” or
“would,” or the negative of these words or other similar terms or
expressions. You should not put undue reliance on any
forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results and will
not necessarily be accurate indications of the times at, or by,
which such performance or results will be achieved, if at all.
Forward-looking statements are based on information available at
the time those statements are made and are based on current
expectations, estimates, forecasts, and projections as well as the
beliefs and assumptions of management as of that time with respect
to future events. These statements are subject to risks and
uncertainties, many of which involve factors or circumstances that
are beyond our control, that could cause actual performance or
results to differ materially from those expressed in or suggested
by the forward-looking statements. In light of these risks and
uncertainties, the forward-looking events and circumstances
discussed in this press release may not occur and actual results
could differ materially from those anticipated or implied in the
forward-looking statements. These risks and uncertainties include
our ability to manage our future growth effectively; our
expectations regarding cost of goods sold, gross margin, channel
mix, customer mix, and selling, general, and administrative
expenses; planned new retail stores in 2023 and going forward; an
overall decline in the health of the economy and other factors
impacting consumer spending, such as recessionary conditions,
inflation and government instability; increases in component and
shipping costs and changes in supply chain; our ability to compete
successfully; our ability to manage our inventory balances and
shrinkage; our ability to engage our existing customers and obtain
new customers; the growth of our brand awareness; the effects of
the ongoing COVID-19 pandemic or a future outbreak of disease or
similar public health concern; the effects of seasonal trends on
our results of operations; our ability to stay in compliance with
extensive laws and regulations that apply to our business and
operations; our ability to adequately maintain and protect our
intellectual property and proprietary rights; our reliance on third
parties for our products, operation and infrastructure; our duties
related to being a public benefit corporation; the ability of our
Co-Founders and Co-CEOs to exercise significant influence over all
matters submitted to stockholders for approval; the effect of our
multi-class structure on the trading price of our Class A common
stock; and the increased expenses associated with being a public
company. Additional information regarding these and other risks and
uncertainties that could cause actual results to differ materially
from the Company's expectations is included in our most recent
reports filed with the SEC on Form 10-K and Form 10-Q. Except as
required by law, we do not undertake any obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future developments, or otherwise.
Additional information regarding these and other factors that
could affect the Company’s results is included in the Company’s SEC
filings, which may be obtained by visiting the SEC's website at
www.sec.gov. Information contained on, or that is referenced or can
be accessed through, our website does not constitute part of this
document and inclusions of any website addresses herein are
inactive textual references only.
Glossary
Active Customer is defined as a unique customer that has made at
least one purchase of any product or service in the preceding
12-month period.
Average Revenue per Customer is defined as net revenue for a
given period divided by the number of Active Customers as of the
end of that same period.
Non-GAAP Financial
Measures
We use adjusted EBITDA, adjusted EBITDA margin, adjusted net
income, adjusted earnings per share, adjusted cost of goods sold
(“adjusted COGS”), adjusted gross profit, and adjusted selling,
general, and administrative expenses (“adjusted SG&A”) as
important indicators of our operating performance. Collectively, we
refer to these non-GAAP financial measures as our “Non-GAAP
Measures.” The Non-GAAP Measures, when taken collectively with our
GAAP results, may be helpful to investors because they provide
consistency and comparability with past financial performance and
assist in comparisons with other companies, some of which use
similar non-GAAP financial information to supplement their GAAP
results.
Adjusted EBITDA is defined as net income (loss) before interest
and other income, taxes, and depreciation and amortization as
further adjusted for asset impairment costs, stock-based
compensation expense and related employer payroll taxes,
amortization of cloud-based software implementation costs, non-cash
charitable donations, and non-recurring costs such as restructuring
costs, major system implementation costs, and direct listing or
other transaction costs. Adjusted EBITDA margin is defined as
adjusted EBITDA divided by net revenue.
Adjusted net income (loss) is defined as net income (loss)
adjusted for stock-based compensation expense and related employer
payroll taxes, non-cash charitable donations, and non-recurring
costs such as restructuring costs, major system implementation
costs, and direct listing or other transaction costs, and as
further adjusted for estimated income tax on such adjusted
items.
Adjusted earnings (loss) per share is defined as adjusted net
income (loss) divided by adjusted weighted average shares
outstanding.
Adjusted COGS is defined as cost of goods sold adjusted for
stock-based compensation expense and related employer payroll
taxes.
Adjusted gross profit is defined as net revenue minus adjusted
COGS.
Adjusted SG&A is defined as SG&A adjusted for
stock-based compensation expense and related employer payroll
taxes, non-cash charitable donations, and non-recurring costs such
as restructuring costs, major system implementation costs, and
direct listing or other transaction costs.
The Non-GAAP Measures are presented for supplemental
informational purposes only. A reconciliation of historical GAAP to
Non-GAAP financial information is included under “Selected
Financial Information” below.
We have not reconciled our adjusted EBITDA margin guidance to
GAAP net income (loss) margin, or net margin, or adjusted EBITDA
guidance to GAAP net income (loss) because we do not provide
guidance for GAAP net margin or GAAP net income (loss) due to the
uncertainty and potential variability of stock-based compensation
and taxes, which are reconciling items between GAAP net margin and
adjusted EBITDA margin and GAAP net income (loss) and adjusted
EBITDA, respectively. Because such items cannot be reasonably
provided without unreasonable efforts, we are unable to provide a
reconciliation of the adjusted EBITDA margin guidance to GAAP net
margin and adjusted EBITDA guidance to GAAP net income (loss).
However, such items could have a significant impact on GAAP net
margin and GAAP net income (loss).
About Warby Parker
Warby Parker (NYSE: WRBY) was founded in 2010 with a mission to
inspire and impact the world with vision, purpose, and
style–without charging a premium for it. Headquartered in New York
City, the co-founder-led lifestyle brand pioneers ideas, designs
products, and develops technologies that help people see, from
designer-quality prescription glasses (starting at $95) and
contacts, to eye exams and vision tests available online and in its
200 retail stores across the U.S. and Canada.
Warby Parker aims to demonstrate that businesses can scale, do
well, and do good in the world. Ultimately, the brand believes in
vision for all, which is why for every pair of glasses or
sunglasses sold, they distribute a pair to someone in need through
their Buy a Pair, Give a Pair program. To date, Warby Parker has
worked alongside its nonprofit partners to distribute more than 10
million glasses to people in need.
Selected Financial Information
Warby Parker Inc. and
Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except
share data)
December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
208,585
$
256,416
Accounts receivable, net
1,435
992
Inventory
68,848
57,095
Prepaid expenses and other current
assets
15,700
13,477
Total current assets
294,568
327,980
Property and equipment, net
138,628
112,195
Right-of-use lease assets
127,014
—
Other assets
8,497
471
Total assets
$
568,707
$
440,646
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
20,791
$
30,890
Accrued expenses
58,222
60,840
Deferred revenue
25,628
22,073
Current lease liabilities
22,546
—
Other current liabilities
2,370
4,301
Total current liabilities
129,557
118,104
Deferred rent
—
36,544
Non-current lease liabilities
150,832
—
Other liabilities
1,672
—
Total liabilities
282,061
154,648
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value; Class A:
750,000,000 shares authorized at December 31, 2022 and 2021,
96,115,202 and 94,901,623 shares issued and outstanding as of
December 31, 2022 and 2021, respectively; Class B: 150,000,000
shares authorized at December 31, 2022 and 2021, 19,223,572 and
18,719,184 shares issued and outstanding as of December 31, 2022
and 2021, respectively, convertible to Class A on a one-to-one
basis
12
11
Additional paid-in capital
890,915
779,212
Accumulated deficit
(603,634
)
(493,241
)
Accumulated other comprehensive income
(647
)
16
Total stockholders’ equity
286,646
285,998
Total liabilities and stockholders’
equity
$
568,707
$
440,646
Warby Parker Inc. and
Subsidiaries
Consolidated Statements of
Operations (Unaudited)
(Amounts in thousands, except
share and per share data)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2020
2022
2021
2020
Net revenue
$
146,493
$
132,892
$
112,837
$
598,112
$
540,798
$
393,719
Cost of goods sold
65,842
56,641
47,659
257,050
223,049
161,784
Gross profit
80,651
76,251
65,178
341,062
317,749
231,935
Selling, general, and administrative
expenses
102,361
122,146
70,295
452,265
461,410
287,567
Loss from operations
(21,710
)
(45,895
)
(5,117
)
(111,203
)
(143,661
)
(55,632
)
Interest and other (loss) income, net
1,382
105
529
1,307
(347
)
(97
)
Loss before income taxes
(20,328
)
(45,790
)
(4,588
)
(109,896
)
(144,008
)
(55,729
)
Provision for income taxes
(77
)
112
(287
)
497
263
190
Net loss
$
(20,251
)
$
(45,902
)
$
(4,301
)
$
(110,393
)
$
(144,271
)
$
(55,919
)
Deemed dividend upon redemption of
redeemable convertible preferred stock
$
—
$
—
$
—
$
—
$
(13,137
)
$
—
Net loss attributable to common
stockholders
$
(20,251
)
$
(45,902
)
$
(4,301
)
$
(110,393
)
$
(157,408
)
$
(55,919
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.18
)
$
(0.41
)
$
(0.08
)
$
(0.96
)
$
(2.21
)
$
(1.05
)
Weighted average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
115,713,915
112,501,252
53,671,842
114,942,019
71,249,257
53,033,936
Warby Parker Inc. and
Subsidiaries
Consolidated Statements of
Cash Flows (Unaudited)
(Amounts in thousands)
Year Ended December
31,
2022
2021
2020
Cash flows from operating activities
Net loss
$
(110,393
)
$
(144,271
)
$
(55,919
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
31,864
21,551
17,763
Stock-based compensation
98,032
107,148
44,913
Non-cash charitable contribution
3,770
7,757
—
Asset impairment charges
1,647
317
614
Change in operating assets and
liabilities:
Accounts receivable, net
(451
)
(392
)
517
Inventory
(11,794
)
(18,624
)
(10,020
)
Prepaid expenses and other assets
(10,287
)
(6,887
)
(67
)
Accounts payable
(7,943
)
(11,114
)
5,898
Accrued expenses
2,748
9,486
16,604
Deferred revenue
3,583
(4,478
)
7,288
Other current liabilities
537
579
763
Deferred rent
—
8,547
2,149
Right-of-use lease assets and current and
non-current lease liabilities
7,385
—
—
Other liabilities
1,672
(1,613
)
2,255
Net cash provided by (used in) operating
activities
10,370
(31,994
)
32,758
Cash flows from investing activities
Purchases of property and equipment
(60,181
)
(48,513
)
(20,070
)
Net cash used in investing activities
(60,181
)
(48,513
)
(20,070
)
Cash flows from financing activities
Proceeds from stock option and warrant
exercises
456
20,035
1,330
Employee tax withholding remitted in
connection with exercise or release of equity awards
—
(2,532
)
Proceeds from repayment of related party
loans
91
31,612
945
Proceeds from shares issued in connection
with ESPP
2,744
—
—
Repurchase of stock
—
(8,085
)
—
Issuance of Series F redeemable
convertible preferred stock, net of issuance costs
—
—
124,717
Issuance of Series G redeemable
convertible preferred stock, net of issuance costs
—
—
118,944
Payment for Tender Offer
—
(18,031
)
—
Borrowings from Credit Facility
—
—
30,900
Repayment of Credit Facility
—
—
(30,900
)
Net cash provided by financing
activities
3,291
22,999
245,936
Effect of exchange rates on cash
(1,311
)
(161
)
37
Net (decrease) increase in cash and cash
equivalents
(47,831
)
(57,669
)
258,661
Cash and cash equivalents
Beginning of year
256,416
314,085
55,424
End of year
$
208,585
$
256,416
$
314,085
Supplemental disclosures
Cash paid for income taxes
$
536
$
356
$
230
Cash paid for interest
184
150
466
Cash paid for amounts included in the
measurement of lease liabilities
29,647
—
—
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued expenses
3,968
4,158
3,150
Related party loans issued in connection
with stock option exercises
$
—
$
13,827
$
—
Warby Parker Inc. and
Subsidiaries
Reconciliation of GAAP to
Non-GAAP Measures (Unaudited)
The following table reconciles adjusted
EBITDA and adjusted EBITDA margin to the most directly comparable
GAAP measure, which is net loss:
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
(unaudited, in
thousands)
(unaudited, in
thousands)
Net loss
$
(20,251
)
$
(45,902
)
$
(110,393
)
$
(144,271
)
Adjusted to exclude the following:
Interest and other loss, net
(1,382
)
(105
)
(1,307
)
347
Provision for income taxes
(77
)
112
497
263
Depreciation and amortization expense
8,919
6,371
31,864
21,643
Asset impairment charges
138
180
1,647
317
Stock-based compensation expense(1)
20,052
32,945
98,655
110,543
Non-cash charitable donations(2)
500
—
3,770
7,757
Transaction costs(3)
—
—
—
28,262
Amortization of cloud-based software
implementation costs(4)
151
—
247
—
ERP implementation costs(5)
518
—
687
—
Restructuring costs(6)
—
—
1,535
—
Adjusted EBITDA
$
8,568
$
(6,399
)
$
27,202
$
24,861
Adjusted EBITDA margin
5.8
%
(4.8
)%
4.5
%
4.6
%
(1)
Represents expenses related to the
Company’s equity-based compensation programs and related employer
payroll taxes, which may vary significantly from period to period
depending upon various factors including the timing, number, and
the valuation of awards granted, vesting of awards including the
satisfaction of performance conditions, and the impact of
repurchases of awards from employees. For the three and twelve
months ended December 31, 2022, the amount includes $0.2 million
and $0.6 million of employer payroll costs, respectively,
associated with releases of RSUs and option exercises. For the
three and twelve months ended December 31, 2021, the amount
includes $1.8 million and $3.4 million of employer payroll costs,
respectively, associated with releases of RSUs and option
exercises.
(2)
Represents charitable expense recorded in
connection with the donation of 178,572 shares of Series A common
stock in August 2021 and 178,572 shares of Class A common stock in
May 2022 to the Warby Parker Impact Foundation, and a donation of
34,528 shares of Class A common stock to third-party charitable
donor advised funds.
(3)
Represents (i) costs directly attributable
to the preparation for our Direct Listing and (ii) expenses
incurred in connection with the cash tender offer completed in June
2021.
(4)
Represents the amortization of costs
capitalized in connection with the implementation of cloud-based
software.
(5)
Represents internal and external
non-capitalized costs related to the implementation of our new
Enterprise Resource Planning (“ERP”) system which is expected to be
live in 2023.
(6)
Represents employee severance and related
costs for our restructuring plan that was executed in August
2022.
Warby Parker Inc. and
Subsidiaries
Reconciliation of GAAP to
Non-GAAP Measures (Unaudited)
The following table reconciles adjusted
EBITDA and adjusted EBITDA margin to the most directly comparable
GAAP measure, which is net loss:
Six Months Ended
June 30, 2022
December 31, 2022
(unaudited, in
thousands)
Net loss
$
(66,299
)
$
(44,094
)
Adjusted to exclude the following:
Interest and other loss, net
(108
)
(1,199
)
Provision for income taxes
586
(89
)
Depreciation and amortization expense
14,605
17,259
Asset impairment charges
412
1,235
Stock-based compensation expense(1)
54,244
44,411
Non-cash charitable donations(2)
3,270
500
Amortization of cloud-based software
implementation costs(3)
—
247
ERP implementation costs(4)
—
687
Restructuring costs(5)
—
1,535
Adjusted EBITDA
$
6,710
$
20,492
Adjusted EBITDA margin
2.2
%
6.9
%
(1)
Represents expenses related to the
Company’s equity-based compensation programs and related employer
payroll taxes, which may vary significantly from period to period
depending upon various factors including the timing, number, and
the valuation of awards granted, vesting of awards including the
satisfaction of performance conditions, and the impact of
repurchases of awards from employees. For both the six months ended
June 30, 2022 and December 31, 2022, the amount includes $0.3
million of employer payroll costs associated with releases of RSUs
and option exercises.
(2)
Represents charitable expense recorded in
connection with the donation of 178,572 shares of Class A common
stock in May 2022 to the Warby Parker Impact Foundation, and a
donation of 34,528 shares of Class A common stock to third-party
charitable donor advised funds.
(3)
Represents the amortization of costs
capitalized in connection with the implementation of cloud-based
software.
(4)
Represents internal and external
non-capitalized costs related to the implementation of our new
Enterprise Resource Planning (“ERP”) system which is expected to be
live in 2023.
(5)
Represents employee severance and related
costs for our restructuring plan that was executed in August
2022.
Warby Parker Inc. and
Subsidiaries
Reconciliation of GAAP to
Non-GAAP Measures (Unaudited)
The following table presents our non-GAAP,
or adjusted, financial measures for the periods presented as a
percentage of revenue. Each cost and operating expense is adjusted
for transaction costs, stock-based compensation expense and related
employer payroll taxes, non-cash charitable donations, ERP
implementation costs, and restructuring costs.
Reported
Adjusted
Reported
Adjusted
Three Months Ended
December 31,
Three Months Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
2022
2021
2022
2021
2022
2021
2022
2021
(unaudited, in
millions)
(unaudited, in
millions)
(unaudited, in
millions)
(unaudited, in
millions)
Cost of goods sold
$
65.8
$
56.6
$
65.6
$
56.4
$
257.1
$
223.0
$
256.1
$
221.9
% of Revenue
44.9
%
42.6
%
44.8
%
42.5
%
43.0
%
41.2
%
42.8
%
41.0
%
Gross profit
$
80.7
$
76.3
$
80.8
$
76.5
$
341.1
$
317.7
$
342.0
$
318.9
% of Revenue
55.1
%
57.4
%
55.2
%
57.5
%
57.0
%
58.8
%
57.2
%
59.0
%
Selling, general, and administrative
expenses
$
102.4
$
122.1
$
81.5
$
89.4
$
452.3
$
461.4
$
348.5
$
316.0
% of Revenue
69.9
%
91.9
%
55.6
%
67.3
%
75.6
%
85.3
%
58.3
%
58.4
%
Net (loss) income
$
(20.3
)
$
(45.9
)
$
0.5
$
(9.0
)
$
(110.4
)
$
(144.3
)
$
(3.7
)
$
1.8
% of Revenue
(13.8
)%
(34.5
)%
0.4
%
(6.8
)%
(18.5
)%
(26.7
)%
(0.6
)%
0.3
%
* Numbers in the table above may not foot
due to rounding.
Warby Parker Inc. and
Subsidiaries
Reconciliation of GAAP to
Non-GAAP Measures (Unaudited)
The following table reflects a
reconciliation of each non-GAAP, or adjusted, financial measure to
its most directly comparable financial measure prepared in
accordance with GAAP:
Three Months Ended December
31,
Year Ended
December 31,
2022
2021
2022
2021
(unaudited, in
thousands)
(unaudited, in
thousands)
Cost of goods sold
$
65,842
$
56,641
$
257,050
$
223,049
Adjusted to exclude the following:
Stock-based compensation expense(1)
195
223
905
1,145
Adjusted cost of goods sold
$
65,647
$
56,418
$
256,145
$
221,904
Gross profit
$
80,651
$
76,251
$
341,062
$
317,749
Adjusted to exclude the following:
Stock-based compensation expense(1)
195
223
905
1,145
Adjusted gross profit
$
80,846
$
76,474
$
341,967
$
318,894
Selling, general, and administrative
expenses
$
102,361
$
122,146
$
452,265
$
461,410
Adjusted to exclude the following:
Stock-based compensation expense(1)
19,857
32,723
97,750
109,398
Non-cash charitable donations(2)
500
—
3,770
7,757
Transaction costs(3)
—
—
—
28,262
ERP implementation costs(4)
518
—
687
—
Restructuring costs(5)
—
—
1,535
—
Adjusted selling, general, and
administrative expenses
$
81,486
$
89,423
$
348,523
$
315,993
Net loss
$
(20,251
)
$
(45,902
)
$
(110,393
)
$
(144,271
)
Provision for income taxes
(77
)
112
497
263
Loss before income taxes
(20,328
)
(45,790
)
(109,896
)
(144,008
)
Adjusted to exclude the following:
Stock-based compensation expense(1)
20,052
32,945
98,655
110,543
Non-cash charitable donations(2)
500
—
3,770
7,757
Transaction costs(3)
—
—
—
28,262
ERP implementation costs(4)
518
—
687
—
Restructuring costs(5)
—
—
1,535
—
Adjusted provision for income taxes(6)
(219
)
3,846
1,546
(765
)
Adjusted net income (loss)
$
523
$
(8,999
)
$
(3,703
)
$
1,789
Deemed dividend upon redemption of
redeemable convertible preferred stock
—
—
—
(13,137
)
Adjusted net income (loss) attributable to
common stock
$
523
$
(8,999
)
$
(3,703
)
$
(11,348
)
Adjusted weighted average shares -
diluted
116,614,309
112,501,252
114,942,019
71,249,257
Adjusted diluted loss per share
$
—
$
(0.08
)
$
(0.03
)
$
(0.16
)
(1)
Represents expenses related to the
Company’s equity-based compensation programs and related employer
payroll taxes, which may vary significantly from period to period
depending upon various factors including the timing, number, and
the valuation of awards granted, vesting of awards including the
satisfaction of performance conditions, and the impact of
repurchases of awards from employees. For the three and twelve
months ended December 31, 2022, the amount includes $0.2 million
and $0.6 million of employer payroll costs, respectively,
associated with releases of RSUs and option exercises. For the
three and twelve months ended December 31, 2021, the amount
includes $1.8 million and $3.4 million of employer payroll costs,
respectively, associated with releases of RSUs and option
exercises.
(2)
Represents charitable expense recorded in
connection with the donation of 178,572 shares of Series A common
stock in August 2021 and 178,572 shares of Class A common stock in
May 2022 to the Warby Parker Impact Foundation, and a donation of
34,528 shares of Class A common stock to third-party charitable
donor advised funds.
(3)
Represents (i) costs directly attributable
to the preparation for our Direct Listing and (ii) expenses
incurred in connection with the cash tender offer completed in June
2021.
(4)
Represents internal and external
non-capitalized costs related to the implementation of our new ERP
system which is expected to be live in 2023.
(5)
Represents employee severance and related
costs for our restructuring plan that was executed in August
2022.
(6)
The adjusted provision for income taxes is
based on long-term estimated annual effective tax rates of 29.46%
in 2022 and 29.94% in 2021. The Company may adjust its adjusted tax
rate as additional information becomes available or events occur
which may materially affect this rate, including impacts from the
rapidly evolving global tax environment, significant changes in our
geographic mix, merger and acquisition activity, or changes in our
business outlook.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230227006007/en/
Investor Relations: Brendon Frey, ICR
Investors@warbyparker.com
Media: Lena Griffin lena@derris.com
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