8-K: FIGS Exceeds Q2 Expectations, Raises 2025 Outlook

FIGS, Inc. reported strong second quarter 2025 financial results, surpassing revenue and earnings expectations and increasing its full-year outlook.

Summary

• Net revenues for Q2 2025 reached $152.6 million, marking a 5.8% increase year-over-year.
• Scrubwear net revenues grew by 7.7% year-over-year to $127.4 million, while non-scrubwear net revenues decreased by 2.5% to $25.2 million.
• International net revenues saw significant growth, increasing by 19.8% year-over-year to $22.7 million, outpacing U.S. net revenue growth of 3.7% to $129.9 million.
• Gross margin was 67.0%, a slight decrease of 40 basis points year-over-year, primarily due to higher inventory reserves and tariffs, partially offset by higher duty drawback and a lower return rate.
• Operating expenses decreased by 3.5% year-over-year to $92.3 million, representing 60.5% of net revenues, down from 66.4% in the prior year.
• Net income surged to $7.1 million, or $0.04 in diluted earnings per share, compared to $1.1 million, or $0.01 per share, in the same period last year.
• Net income margin improved significantly to 4.7% from 0.8% year-over-year.
• Adjusted EBITDA increased by $6.8 million year-over-year to $19.7 million, with an Adjusted EBITDA margin of 12.9%, up from 9.0%.
• Active customers grew by 4.1% year-over-year to 2.74 million as of June 30, 2025.
• Average Order Value (AOV) increased by 3.5% year-over-year to $117, driven by higher average unit retail and lower return rates.
• Net revenues per active customer slightly decreased by 1.0% year-over-year to $208.

Sentiment

Score: 9

Explanation: The sentiment is overwhelmingly positive, driven by exceeding financial expectations, achieving record revenues, significant improvements in profitability metrics (net income, adjusted EBITDA, and their respective margins), strong customer growth, and an increased full-year outlook. Management commentary reinforces this positive performance and future confidence.

Positives

• Exceeded expectations on both top and bottom lines, achieving the largest revenue quarter in company history.
• Net revenues increased by 5.8% year-over-year to $152.6 million.
• Net income significantly increased to $7.1 million from $1.1 million in the prior year, with diluted EPS rising to $0.04 from $0.01.
• Net income margin improved substantially to 4.7% from 0.8%.
• Adjusted EBITDA increased by $6.8 million year-over-year to $19.7 million, with Adjusted EBITDA margin expanding to 12.9% from 9.0%.
• Operating expenses decreased by 3.5% year-over-year and as a percentage of net revenues, indicating improved cost management.
• Active customer base grew by 4.1% year-over-year to 2.74 million.
• Average Order Value (AOV) increased by 3.5% year-over-year to $117.
• International net revenues showed strong growth of 19.8% year-over-year.
• Full year 2025 outlook for both net revenues and Adjusted EBITDA margin has been increased.

Negatives

• Non-scrubwear net revenues decreased by 2.5% year-over-year to $25.2 million.
• Gross margin slightly decreased by 40 basis points year-over-year to 67.0%, primarily due to higher inventory reserves and tariffs.
• Net revenues per active customer decreased by 1.0% year-over-year to $208.

Risks

• Ability to maintain historical growth rates.
• Ability to maintain profitability.
• Ability to maintain the value and reputation of the brand.
• Ability to attract new customers, retain existing customers, and increase sales to those customers.
• Success of marketing efforts.
• Ability to maintain a strong community of engaged customers and Ambassadors.
• Potential negative publicity related to marketing efforts or use of social media.
• Ability to successfully develop and introduce new, innovative, and updated products.
• Competitiveness of the market for healthcare apparel.
• Ability to maintain key employees and attract and retain highly skilled team members.
• Risks associated with expansion into, and conducting business in, international markets.
• Changes in, or disruptions to, shipping arrangements.
• Successful operation of fulfillment operations.
• Ability to accurately forecast customer demand, manage inventory, and plan for future expenses.
• Impact of changes in consumer confidence, shopping behavior, and consumer spending on demand.
• Impact of macroeconomic trends on operations.
• Reliance on a limited number of third-party suppliers.
• Impact of global trade policy on sourcing and distribution.
• Fluctuating costs of raw materials.
• Ability to execute on B2B and retail growth strategies.
• Failure to protect proprietary, confidential, or sensitive information or personal customer data, or risks of cyberattacks.
• Failure to protect intellectual property rights.
• Operations of many suppliers and vendors are subject to additional risks beyond the company's control.

Future Outlook

The company is increasing its full year 2025 outlook, now expecting low-single-digit net revenues growth compared to 2024 and an Adjusted EBITDA Margin between 8.5% and 9.0%. This increased confidence is driven by a heightened focus on reinvigorating the customer funnel and accelerating core business growth, alongside successful cost mitigation efforts.

Management Comments

• Trina Spear, CEO and Co-Founder: "We were encouraged to see our momentum continue in Q2, where strong execution drove our largest revenue quarter in our history and powered overall results ahead of expectations."
• Trina Spear, CEO and Co-Founder: "We delivered product merchandising actions that our community loves and impactful marketing that make our Awesome Humans feel truly seen."
• Trina Spear, CEO and Co-Founder: "Adding to this strategic focus, we also believe we are continuing to move further past the COVID overhang toward a more normalized purchasing and replenishment backdrop."
• Trina Spear, CEO and Co-Founder: "The result is top-line growth that when combined with our profitability, demonstrated the true power of our model in the quarter."
• Sarah Oughtred, CFO: "Our growing confidence is supported by our heightened focus on reinvigorating our customer funnel and accelerating growth in our core business."
• Sarah Oughtred, CFO: "Thoughtful action has positioned us to drive strong year-to-date demand, while also supporting decisive strategic actions as we continue to manage the business in this dynamic trade environment."
• Sarah Oughtred, CFO: "This overall revenue strength and early cost mitigation success give us confidence in raising our full year 2025 topand bottom-line outlooks."

Industry Context

The company's performance indicates a strong position within the healthcare apparel market, with management noting a continued move past the 'COVID overhang' towards a more normalized purchasing and replenishment environment. This suggests a broader industry stabilization and potential for sustained growth as healthcare professionals resume more regular purchasing patterns. The strong international growth also points to successful global expansion in the sector.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess against global benchmarks. However, the reported net income margin of 4.7% and Adjusted EBITDA margin of 12.9% for Q2 2025, along with the significant year-over-year improvements, suggest strong profitability within the direct-to-consumer apparel sector, especially given the specialized nature of healthcare apparel.

Stakeholder Impact

• Shareholders: Positive financial results, including increased net income and adjusted EBITDA, along with a raised full-year outlook, are likely to be viewed favorably, potentially leading to increased share price.
• Employees: Strong company performance and growth could lead to increased job security, potential for bonuses, and continued investment in employee development.
• Customers: Continued focus on product merchandising and impactful marketing aims to enhance customer satisfaction and engagement, reinforcing the brand's value proposition.
• Suppliers: Increased revenue and demand may lead to higher order volumes for suppliers, though the filing also notes risks related to reliance on a limited number of third-party suppliers and fluctuating raw material costs.

Next Steps

• FIGS management will host a conference call and webcast on August 7, 2025, at 2:00 p.m. PT / 5:00 p.m. ET to discuss the financial and business results and outlook.
• An archive of the webcast will be available on FIGS investor relations website at ir.wearfigs.com.

Key Dates

Recommendation

The company significantly exceeded Q2 2025 financial expectations, reporting its largest revenue quarter in history, substantial increases in net income and Adjusted EBITDA, and improved margins. Furthermore, management raised the full-year 2025 outlook for both revenue growth and Adjusted EBITDA margin, signaling strong confidence in continued performance. The growth in active customers and Average Order Value indicates healthy underlying business fundamentals. While there was a slight dip in non-scrubwear revenue and gross margin, the overall positive momentum, profitability, and optimistic forward guidance make this a compelling investment opportunity.

Keywords

healthcare apparel, medical scrubs, direct-to-consumer, DTC, financial results, earnings, revenue growth, EBITDA, active customers, average order value, Q2 2025, FIGS, NYSE: FIGS