Net revenue increased 11.0% year over year to
$166.1 million
Average Revenue per Customer increased 9.2%
year over year to $277
Raises full year 2023 outlook
Warby Parker Inc. (NYSE: WRBY) (“Warby Parker” or the
“Company”), a direct-to-consumer lifestyle brand focused on vision
for all, today announced financial results for the second quarter
ended June 30, 2023.
“We delivered another quarter of double-digit revenue growth and
strong adjusted EBITDA margin expansion,” said Co-Founder and
Co-CEO Dave Gilboa. “The work we’ve done realigning our expense
structure is enabling us to balance improving profitability with
reinvesting in the business to drive sustained market share gains
long term.”
“Our stores are playing an increasingly important role in
attracting new consumers to our brand and extending the reach and
availability of our holistic vision offering,” added Co-Founder and
Co-CEO Neil Blumenthal. “Equally important, our stores continue to
generate strong margins and high returns on capital even as the
optical industry has recently experienced demand headwinds. We
opened 13 new stores in the second quarter, remain on track to open
40 new stores this year, and believe we have the potential to reach
at least 900 locations over time.”
Second Quarter 2023 Year Over Year
Highlights
- Net revenue increased $16.5 million, or 11.0%, to $166.1
million.
- GAAP net loss improved $16.2 million to $15.9 million.
- Adjusted EBITDA(1) increased $8.2 million to $14.2 million and
adjusted EBITDA margin(1) improved 4.5 points from 4.0% to
8.5%.
Second Quarter 2023 Year Over Year
Financial Results
- Net revenue increased $16.5 million, or 11.0%, to $166.1
million.
- Average Revenue per Customer increased 9.2% to $277. Active
Customers increased 1.2% to 2.28 million.
- Gross profit increased 5.0% to $90.6 million.
- Gross margin was 54.6% compared to 57.7% in the prior year
period. The decline in gross margin was primarily driven by the
increased penetration of contact lenses, which carry lower gross
margins than eyeglasses; an increase in salary and benefit costs
associated with optometrists as we scale our eye exam offering
across our fleet, to 169 exam locations, up from 127 in the prior
year period; and the impact of the growth in store count driving
higher store occupancy and depreciation costs.
- Selling, general and administrative expenses (“SG&A”) was
65.5% of revenue, down from 79.2% of revenue in the prior year
period, reflecting a decline of $9.6 million to $108.9 million,
primarily driven by lower stock-based compensation and reduced
marketing costs, partially offset by increased technology costs
related to the implementation of our new ERP system. Adjusted
SG&A(1) decreased to $86.8 million, or 52.2% of revenue, down
from $88.5 million, or 59.2% of revenue in the prior year
period.
- GAAP net loss decreased $16.2 million to $15.9 million,
primarily as a result of the decrease in SG&A described
above.
- Adjusted EBITDA(1) increased $8.2 million to $14.2 million and
adjusted EBITDA margin(1) improved 4.5 points to 8.5%.
- Opened 13 new stores during the quarter, ending Q2 with 217
stores.
Balance Sheet Highlights
Warby Parker ended the second quarter of 2023 with $212.7
million in cash and cash equivalents.
2023 Outlook
For the full year 2023, Warby Parker is revising guidance to be
as follows:
- Net revenue of $655 to $664 million, representing growth of
9.5% to 11.0% versus full year 2022.
- Adjusted EBITDA(1) of approximately $52 million, or adjusted
EBITDA margin(1) of 7.9%.
- On track for 40 new store openings this year.
“We are pleased to build upon our early success this year and
deliver another quarter of outperformance, both from a topline and
adjusted EBITDA perspective,” said Chief Financial Officer Steve
Miller. “Given our better than anticipated results in the first
half of 2023, we are raising our full year guidance. While growth
for the broader optical industry remains slow, our proven ability
to capture market share despite these difficult operating
conditions gives us confidence.”
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 second quarter 2023
results, as well as third quarter and full year 2023 outlook, is
scheduled for 8:00 a.m. ET today. To participate, please dial
833-470-1428 from the U.S. or 404-975-4839 from international
locations. The conference passcode is 514708. 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 and growth
in our e-commerce channel, delivering stakeholder value, growing
market share, and our guidance for the quarter ending September 30,
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; increases in component and shipping costs and changes in
supply chain; our reliance on our information technology systems
and enterprise resource planning systems for our business to
effectively operate and safeguard confidential information; our
ability to engage our existing customers and obtain new customers;
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; our ability to compete successfully; our
ability to manage our inventory balances and shrinkage; the growth
of our brand awareness; our ability to recruit and retain
optometrists, opticians, and other vision care professionals; a
resurgence of COVID-19 or the spread of new infectious diseases;
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 margin, 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 major system
implementation 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 major system implementation 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 gross margin is defined as adjusted gross profit
divided by net revenue.
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 major system implementation 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
more than 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 13
million glasses to people in need.
Selected Financial
Information
Warby Parker Inc. and
Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except
share data)
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
212,656
$
208,585
Accounts receivable, net
1,177
1,435
Inventory
59,833
68,848
Prepaid expenses and other current
assets
14,377
15,700
Total current assets
288,043
294,568
Property and equipment, net
143,606
138,628
Right-of-use lease assets
122,355
127,014
Other assets
7,705
8,497
Total assets
$
561,709
$
568,707
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
23,772
$
20,791
Accrued expenses
42,759
58,222
Deferred revenue
18,953
25,628
Current lease liabilities
22,598
22,546
Other current liabilities
2,351
2,370
Total current liabilities
110,433
129,557
Non-current lease liabilities
147,748
150,832
Other liabilities
1,466
1,672
Total liabilities
259,647
282,061
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value; Class A:
750,000,000 shares authorized at June 30, 2023 and December 31,
2022, 97,142,756 and 96,115,202 issued and outstanding at June 30,
2023 and December 31, 2022, respectively; Class B: 150,000,000
shares authorized at June 30, 2023 and December 31, 2022,
19,398,920 and 19,223,572 shares issued and outstanding as of June
30, 2023 and December 31, 2022, respectively, convertible to Class
A on a one-to-one basis
12
12
Additional paid-in capital
933,786
890,915
Accumulated deficit
(630,371
)
(603,634
)
Accumulated other comprehensive loss
(1,365
)
(647
)
Total stockholders’ equity
302,062
286,646
Total liabilities and stockholders’
equity
$
561,709
$
568,707
Warby Parker Inc. and
Subsidiaries
Consolidated Statements of
Operations (Unaudited)
(Amounts in thousands, except
share and per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net revenue
$
166,093
$
149,624
$
338,061
$
302,842
Cost of goods sold
75,458
63,277
152,635
126,849
Gross profit
90,635
86,347
185,426
175,993
Selling, general, and administrative
expenses
108,865
118,428
216,086
241,814
Loss from operations
(18,230
)
(32,081
)
(30,660
)
(65,821
)
Interest and other income (loss), net
2,281
(38
)
4,160
108
Loss before income taxes
(15,949
)
(32,119
)
(26,500
)
(65,713
)
Provision for income taxes
(24
)
47
237
586
Net loss
$
(15,925
)
$
(32,166
)
$
(26,737
)
$
(66,299
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.14
)
$
(0.28
)
$
(0.23
)
$
(0.58
)
Weighted average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
116,792,223
114,679,892
116,477,573
114,393,420
Warby Parker Inc. and
Subsidiaries
Consolidated Statements of
Cash Flows (Unaudited)
(Amounts in thousands)
Six Months Ended June
30,
2023
2022
Cash flows from operating activities
Net loss
$
(26,737
)
$
(66,299
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
18,424
14,605
Stock-based compensation
37,792
53,908
Non-cash charitable contribution
600
3,270
Asset impairment charges
650
412
Amortization of cloud-based software
implementation costs
826
—
Change in operating assets and
liabilities:
Accounts receivable, net
259
89
Inventory
9,048
(13,704
)
Prepaid expenses and other assets
1,301
(2,385
)
Accounts payable
2,148
1,461
Accrued expenses
(11,619
)
(8,367
)
Deferred revenue
(6,684
)
(3,762
)
Other current liabilities
(21
)
233
Right-of-use lease assets and current and
non-current lease liabilities
1,614
3,985
Other liabilities
(206
)
1,930
Net cash provided by (used in) operating
activities
27,395
(14,624
)
Cash flows from investing activities
Purchases of property and equipment
(24,610
)
(31,869
)
Net cash used in investing activities
(24,610
)
(31,869
)
Cash flows from financing activities
Proceeds from stock option exercises
843
228
Proceeds from shares issued in connection
with employee stock purchase plan
1,124
1,754
Net cash provided by financing
activities
1,967
1,982
Effect of exchange rates on cash
(681
)
(302
)
Net change in cash and cash
equivalents
4,071
(44,813
)
Cash and cash equivalents, beginning of
period
208,585
256,416
Cash and cash equivalents, end of
period
$
212,656
$
211,603
Supplemental disclosures
Cash paid for income taxes
$
326
$
297
Cash paid for interest
110
62
Cash paid for amounts included in the
measurement of lease liabilities
17,530
13,858
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued expenses
$
3,351
$
3,579
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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
unaudited (in
thousands)
unaudited (in
thousands)
Net loss
$
(15,925
)
$
(32,166
)
$
(26,737
)
$
(66,299
)
Adjusted to exclude the following:
Interest and other loss, net
(2,281
)
38
(4,160
)
(108
)
Provision for income taxes
(24
)
47
237
586
Depreciation and amortization expense
9,284
7,694
18,424
14,605
Asset impairment charges
255
186
650
412
Stock-based compensation expense(1)
18,164
26,867
38,030
54,244
Non-cash charitable donation(2)
600
3,270
600
3,270
Amortization of cloud-based software
implementation costs(3)
463
—
826
—
ERP implementation costs(4)
3,639
—
4,042
—
Adjusted EBITDA
14,175
5,936
31,912
6,710
Adjusted EBITDA margin
8.5
%
4.0
%
9.4
%
2.2
%
(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, and vesting of awards including the satisfaction of
performance conditions. For the three months ended June 30, 2023
and 2022, the amount includes $0.2 million and $0.1 million,
respectively, of employer payroll costs associated with releases of
RSUs and option exercises. For the six months ended June 30, 2023
and 2022, the amount includes $0.2 million and $0.3 million,
respectively, of employer payroll costs associated with releases of
RSUs and option exercises.
(2) Represents charitable expense recorded in connection with
the donation of 56,938 shares of Class A common stock to charitable
donor advised funds in June 2023 and 178,572 shares of Class A
common stock in May 2022 to the Warby Parker Impact Foundation.
(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.
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 stock-based compensation expense and related employer payroll
taxes and ERP implementation costs, if applicable.
Reported
Adjusted
Reported
Adjusted
Three Months Ended June
30,
Three Months Ended June
30,
Six Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
2023
2022
2023
2022
(unaudited, in
thousands)
(unaudited, in
thousands)
(unaudited, in
thousands)
(unaudited, in
thousands)
Cost of goods sold
$
75,458
$
63,277
$
75,162
$
63,042
$
152,635
$
126,849
$
152,141
$
126,379
% of Revenue
45.4
%
42.3
%
45.3
%
42.1
%
45.2
%
41.9
%
45.0
%
41.7
%
Gross profit
$
90,635
$
86,347
$
90,931
$
86,582
$
185,426
$
175,993
$
185,920
$
176,463
% of Revenue
54.6
%
57.7
%
54.7
%
57.9
%
54.8
%
58.1
%
55.0
%
58.3
%
Selling, general, and administrative
expenses
$
108,865
$
118,428
$
86,758
$
88,526
$
216,086
$
241,814
$
173,908
$
184,770
% of Revenue
65.5
%
79.2
%
52.2
%
59.2
%
63.9
%
79.8
%
51.4
%
61.0
%
Net (loss) income
$
(15,925
)
$
(32,166
)
$
4,553
$
(1,398
)
$
(26,737
)
$
(66,299
)
$
11,408
$
(5,744
)
% of Revenue
(9.6
)%
(21.5
)%
2.7
%
(0.9
)%
(7.9
)%
(21.9
)%
3.4
%
(1.9
)%
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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(unaudited, in
thousands)
(unaudited, in
thousands)
Cost of goods sold
$
75,458
$
63,277
$
152,635
$
126,849
Adjusted to exclude the following:
Stock-based compensation expense(1)
296
235
494
470
Adjusted cost of goods sold
$
75,162
$
63,042
$
152,141
$
126,379
Gross profit
$
90,635
$
86,347
$
185,426
$
175,993
Adjusted to exclude the following:
Stock-based compensation expense(1)
296
235
494
470
Adjusted gross profit
$
90,931
$
86,582
$
185,920
$
176,463
Selling, general, and administrative
expenses
$
108,865
$
118,428
$
216,086
$
241,814
Adjusted to exclude the following:
Stock-based compensation expense(1)
17,868
26,632
37,536
53,774
Non-cash charitable donation(2)
600
3,270
600
3,270
ERP implementation costs(3)
3,639
—
4,042
—
Adjusted selling, general, and
administrative expenses
$
86,758
$
88,526
$
173,908
$
184,770
Net loss
$
(15,925
)
$
(32,166
)
$
(26,737
)
$
(66,299
)
Provision for income taxes
(24
)
47
237
586
Loss before income taxes
(15,949
)
(32,119
)
(26,500
)
(65,713
)
Adjusted to exclude the following:
Stock-based compensation expense(1)
18,164
26,867
38,030
54,244
Non-cash charitable donation(2)
600
3,270
600
3,270
ERP implementation costs(3)
3,639
—
4,042
—
Adjusted provision for income taxes(4)
(1,901
)
584
(4,764
)
2,415
Adjusted net income (loss)
$
4,553
$
(1,398
)
$
11,408
$
(5,784
)
Adjusted weighted average shares -
diluted
117,352,024
114,679,892
117,260,647
114,393,420
Adjusted diluted earnings (loss) per
share
$
0.04
$
(0.01
)
$
0.10
$
(0.05
)
(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, and vesting of awards including the satisfaction of
performance conditions. For the three months ended June 30, 2023
and 2022, the amount includes $0.2 million and $0.1 million,
respectively, of employer payroll costs associated with releases of
RSUs and option exercises. For the six months ended June 30, 2023
and 2022, the amount includes $0.2 million and $0.3 million,
respectively, of employer payroll costs associated with releases of
RSUs and option exercises.
(2) Represents charitable expense recorded in connection with
the donation of 56,938 shares of Class A common stock to charitable
donor advised funds in June 2023 and 178,572 shares of Class A
common stock in May 2022 to the Warby Parker Impact Foundation.
(3) Represents internal and external non-capitalized costs
related to the implementation of our new ERP system.
(4) The adjusted provision for income taxes is based on
long-term estimated annual effective tax rate 29.46% in both 2023
and 2022. 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/20230808923866/en/
Investor Relations: Jaclyn Berkley Brendon Frey
investors@warbyparker.com
Media: Lena Griffin lena@derris.com
Warby Parker (NYSE:WRBY)
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