FIGS — FIGS, Inc.

FIGS Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Revenues: Increased by 28% year-over-year to $159.9 million, exceeding expectations.
• Active Customers: Surpassed 3 million for the first time, with a 12% year-over-year growth.
• Average Order Value (AOV): Rose by 4% to $124, driven by higher average unit retail and favorable product mix.
• Gross Margin: Expanded modestly by 10 basis points to 67.7%.
• Operating Margin: Improved to 2.8% from a loss of 0.2% year-over-year.
• Adjusted EBITDA Margin: Increased to 8.7% compared to 7.3% last year.
• Net Income: Reported at $6.3 million, or diluted EPS of $0.03, compared to breakeven last year.
• Inventory: Increased by 6% year-over-year to $139.4 million, with a focus on reducing inventory days to approximately 200 by year-end.

2. Strategic Updates and Business Highlights

• Product Innovation: Continued focus on expanding scrubwear and non-scrubwear categories, with notable growth in underscrubs and outerwear.
• Brand Engagement: Successful campaigns, including the Nurses Week and collaborations (e.g., Star Wars collection), have enhanced brand visibility and connection with healthcare professionals.
• Market Expansion: International revenues grew by 50% year-over-year, with significant growth in established markets like Canada, France, and Germany.
• Community Hubs: Plans to open 4 new community hubs in the second half of 2026, with existing hubs exceeding performance expectations.
• Teams Business: Progress in building relationships with healthcare institutions and launching a Team store to streamline ordering.

3. Forward Guidance and Outlook

• Full Year 2026 Revenue Growth: Expected to be between 14% and 16%, up from a prior outlook of 10% to 12%.
• Q2 Revenue Growth: Anticipated to be in the low 20% range year-over-year.
• Gross Margin: Expected to show modest improvement for the full year, although Q2 may see a slight decline due to tariff pressures.
• Operating Margin: Increased guidance to between 7.8% and 8%.
• Adjusted EBITDA Margin: Updated outlook to between 13% and 13.2%.

4. Bad News, Challenges, or Points of Concern

• Tariff Pressures: Continued tariff impacts and rising freight costs due to oil price increases are expected to affect margins.
• Geopolitical Risks: Ongoing conflicts in the Middle East have led to slower growth in that region.
• Inventory Management: While inventory efficiency is improving, the company is still focused on strategic buys and maintaining stock levels of core products.
• Consumer Sensitivity: Some signs of consumer sensitivity to rising gas prices, particularly in the APAC region, could impact future spending.

5. Notable Q&A Insights

• Consumer Behavior: The company noted an acceleration in customer acquisition and retention, with strong performance across various income brackets.
• Teams Business Growth: The Teams segment is growing but is expected to take time to ramp up significantly.
• Pricing Strategy: The company successfully implemented price increases with less elasticity than anticipated, indicating strong brand value.
• Fabrication Strategy: FIGS is focused on innovation in fabric and fit, balancing core offerings with limited-time exclusives based on customer feedback.
• Community Engagement: The company is committed to advocacy efforts and has launched initiatives like the Austin Humans Foundation to support healthcare professionals.

Overall, FIGS demonstrated strong financial performance and strategic execution in Q1 2026, with positive momentum expected to continue, despite some external challenges.