8-K: FIGS Inc. Reports Mixed 2024 Results, Boosts Share Repurchase Program by $50 Million

FIGS, Inc. announces its Q4 and full-year 2024 financial results, showing slight revenue growth but decreased profitability, and increases its share repurchase authorization by $50 million.

Summary

• FIGS, Inc. released its fourth quarter and full year 2024 financial results on February 27, 2025.
• Net revenues for Q4 2024 increased by 4.8% year-over-year to $151.8 million, driven by increased orders from existing customers.
• Full year 2024 net revenues grew by 1.8% to $555.6 million, also primarily due to increased orders from existing customers.
• The company's scrubwear revenues increased by 2.4% in Q4 and 1.2% for the full year, while non-scrubwear revenues increased by 12.8% in Q4 and 4.5% for the full year.
• U.S. net revenues decreased slightly in both Q4 and the full year, while international net revenues saw significant growth.
• Gross margin decreased in both Q4 and the full year, primarily due to product mix shifts.
• Operating expenses increased, impacting net income and adjusted EBITDA.
• Net income for the full year was $2.7 million, with a net income margin of 0.5%.
• Adjusted EBITDA for the full year was $51.8 million, with an adjusted EBITDA margin of 9.3%.
• The company increased its share repurchase authorization by $50 million.
• FIGS anticipates low-single-digit revenue growth and an adjusted EBITDA margin of 9.0% to 9.5% for 2025.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While revenue growth is positive, decreased profitability and a cautious outlook for 2025 temper the overall tone. The share repurchase program provides a slight positive signal.

Positives

• Q4 results exceeded expectations, driven by product newness and repeat frequency.
• International net revenues showed strong growth.
• The company has a strong balance sheet and cash flow.
• FIGS increased its share repurchase program, indicating confidence in its financial position.
• Active customers increased 3.0% year-over-year to 2.7 million.

Negatives

• Net income and adjusted EBITDA decreased year-over-year.
• Gross margin decreased due to product mix shifts.
• Operating expenses increased as a percentage of net revenues.
• U.S. net revenues decreased slightly.
• The company anticipates a reduction in reliance on promotions, which is expected to negatively impact near-term top-line performance.

Risks

• The company's ability to maintain historical growth rates is uncertain.
• Maintaining profitability is a key risk.
• The company faces risks related to brand reputation and marketing efforts.
• Competition in the healthcare apparel market could impact results.
• Reliance on a limited number of third-party suppliers poses a risk.
• Macroeconomic trends and consumer spending habits could affect demand.
• The company's ability to accurately forecast customer demand and manage inventory is crucial.

Future Outlook

FIGS anticipates low-single-digit revenue growth and an adjusted EBITDA margin of 9.0% to 9.5% for the full year 2025.

Management Comments

• Trina Spear, CEO, stated that the fourth quarter results exceeded expectations and were powered by product newness driving repeat frequency.
• Trina Spear, CEO, mentioned that overall 2024 financial results were mixed, but they look forward to the industry and company normalizing coming out of the COVID overhang.
• Sarah Oughtred, CFO, commented that the company ended 2024 in a strong financial position that will support their efforts to take decisive actions in 2025.
• Sarah Oughtred, CFO, mentioned plans to invest in emerging channels and brand marketing, while reducing reliance on promotions.

Industry Context

The announcement reflects the challenges faced by many direct-to-consumer brands as they navigate post-pandemic market conditions, including increased operating costs and shifting consumer behavior. The focus on international growth and product innovation aligns with industry trends to expand market reach and maintain competitiveness.

Comparison to Industry Standards

• Comparing FIGS to similar apparel companies like Lululemon or Nike, FIGS' revenue growth of 1.8% for the year is significantly lower than the growth rates of these larger, more established brands.
• Lululemon, for example, has consistently reported double-digit revenue growth in recent years.
• FIGS' adjusted EBITDA margin of 9.3% is also lower than Lululemon's, which typically exceeds 20%.
• However, FIGS' focus on a niche market (healthcare professionals) and its direct-to-consumer model differentiate it from these broader apparel companies.
• The increase in share repurchase authorization is a common practice among publicly traded companies with strong cash positions, aiming to return value to shareholders, similar to actions taken by companies like Apple or Microsoft.

Stakeholder Impact

• Shareholders may be impacted by the decreased profitability and the share repurchase program.
• Employees may be affected by the company's plans to invest in emerging channels and reduce reliance on promotions.
• Customers may see changes in product offerings and promotional activities.
• Suppliers may be impacted by the company's efforts to manage inventory and plan for future expenses.

Next Steps

• The company plans to accelerate its strategic pillars to drive long-term sustainable and profitable growth.
• FIGS intends to invest in emerging channels and opportunities across brand and marketing.
• The company plans a reduction in its reliance on promotions.
• The company will continue to execute its share repurchase program.

Key Dates