Warby Parker Inc (WRBY) Q2 2024 Earnings Call Highlights: Strong Revenue Growth and Strategic ...
Revenue: $188.2 million, up 13.3% year-over-year.
Gross Margin: Improved by 140 basis points to approximately 56%.
Adjusted EBITDA: $19.6 million, representing a 10.4% margin, up nearly 40% year-over-year.
Free Cash Flow: Generated $14 million in the quarter.
Retail Revenue Growth: Increased 17.8% year-over-year.
E-commerce Revenue Growth: Increased 4.4% year-over-year.
Store Count: Added 39 net new stores over the last 12 months, ending with 256 stores.
Active Customers: 2.4 million, an increase of 4.5% on a trailing 12-month basis.
Average Revenue per Customer: Grew 8.8% to $302.
Contact Lens Sales: Grew approximately 45% year-over-year, representing over 10% of revenue.
Eye Exam Revenue: Grew approximately 40% year-over-year, representing approximately 5% of revenue.
Cash Position: Approximately $238 million in cash, with an undrawn credit facility of $120 million.
Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Warby Parker Inc (NYSE:WRBY) reported a 13.3% year-over-year increase in net revenue, reaching $188.2 million.
The company achieved a 40% growth in adjusted EBITDA, amounting to $19.6 million, with a margin of 10.4%.
Retail revenue increased by 17.8% year-over-year, and e-commerce revenue grew by 4.4%, marking the highest quarterly growth since Q1 2021.
The company expanded its store count to 256, adding 39 net new stores over the past year, which contributed to retail growth.
Warby Parker Inc (NYSE:WRBY) raised its full-year guidance for both net revenue and adjusted EBITDA, expecting $72.5 million in adjusted EBITDA at the midpoint of its guidance.
Negative Points
Despite growth, the company faces challenges in the broader macroeconomic environment, maintaining a conservative stance on guidance.
Gross margin expansion is expected to moderate in Q3, with projections pointing to the midpoint of the mid-50s range.
Marketing spend increased, leading to a slight deleverage, with marketing expenses rising from 11% to 11.9% of revenue.
The company is still in the early stages of its eye care business, with only a small fraction of customers purchasing glasses and contacts with prescriptions from Warby Parker exams.
Warby Parker Inc (NYSE:WRBY) has yet to see significant pent-up demand in the optical category, with no major change in consumer trends year-to-date.
Q & A Highlights
Q: Can you provide insights on the health of the broader industry and the factors affecting your Q3 guidance? A: David Gilboa, Co-CEO, explained that while there hasn't been a significant change in industry trends, Warby Parker benefits from serving high-income consumers and essential eye health needs. Steve Miller, CFO, noted that Q3 guidance reflects a conservative stance, with expectations for consistent gross margins and marketing spend, while leveraging SG&A for margin expansion.
Q: How is Warby Parker driving awareness and differentiation in contacts and exams, and what are the expectations for optical lab efficiencies? A: Neil Blumenthal, Co-CEO, highlighted increased marketing investments and innovation, such as the Virtual Try-On tool, to attract and engage customers. The company continues to see productivity in contacts and expects ongoing efficiencies from its optical labs.
Q: What are the potential outcomes for gross margins if single-vision glasses continue to outperform, and how do you view long-term gross margin trends? A: Steve Miller, CFO, stated that product mix, particularly glasses growth, impacts gross margins. While the company is conservative in its projections, there could be upside if glasses growth exceeds expectations. Long-term, the focus remains on maintaining mid-50s gross margins.
Q: How are the new doctors impacting the business, and what is the penetration of major categories like progressives, exams, and contacts? A: David Gilboa, Co-CEO, noted that Warby Parker is in the early stages of expanding eye care services, with a focus on raising awareness. The company sees significant growth potential in exams and contacts, with current penetration below industry averages.
Q: How sustainable are the strong revenue per customer trends, and are there any signs of price sensitivity? A: David Gilboa, Co-CEO, reported encouraging trends in average revenue per customer, driven by new products and services. The company has not observed price resistance, as customers appreciate the value offered at various price points.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.