FIGS, Inc. Reports Strong Earnings and Growth

FIGS, Inc. ((FIGS)) has held its Q3 earnings call. Read on for the main highlights of the call.

The latest earnings call from FIGS, Inc. paints a picture of robust financial health and strategic growth. The company reported significant revenue and margin improvements, driven by strategic product launches and international expansion. Despite facing challenges such as tariff headwinds and inventory buildup, FIGS demonstrated successful mitigation strategies, indicating a positive outlook for the future.

Record Quarterly Revenue Growth

FIGS, Inc. achieved a remarkable milestone with net revenues increasing by 8% year-over-year to $151.7 million. This represents the highest quarterly growth in the past two years, showcasing the company’s strong market position and effective business strategies.

Strong Gross Margin Performance

The company reported an impressive expansion in gross margin by 280 basis points to 69.9%. This improvement was driven by lower discounts, improved return rates, reduced duties, and decreased freight costs, reflecting the company’s operational efficiency.

Adjusted EBITDA Margin Improvement

FIGS saw a significant improvement in its adjusted EBITDA margin, which increased by 900 basis points to 12.4%. This reflects the company’s successful efforts in tariff mitigation and leveraging selling, general, and administrative expenses.

International Expansion

International sales grew by 12%, with FIGS expanding its market presence from 33 to nearly 60 markets by year-end. This expansion highlights significant opportunities for growth and underscores the company’s commitment to global market penetration.

Successful Product Launches

New product lines, including FORMx and FIBERx, have contributed to strong customer engagement and reduced return rates. These successful launches demonstrate FIGS’ ability to innovate and meet customer demands effectively.

Team USA Partnership for 2026 Winter Olympics

Continuing its partnership with Team USA, FIGS is set to enhance brand visibility and product innovation with the introduction of the FIBERx fabric. This collaboration underscores the company’s commitment to quality and innovation.

Strong Active Customer Growth

The number of active customers grew by 4% to nearly 2.8 million, with a trailing 12-month net revenue per active customer increasing by 2%. This growth indicates strong customer loyalty and satisfaction.

Tariff Headwinds

Despite the positive results, FIGS anticipates increased tariff pressures, with a 440 basis point impact expected in 2026. The company is actively working on mitigation strategies to address these challenges.

Inventory Buildup

Inventory levels increased by 23% year-over-year to $151.2 million, partly due to higher in-transit inventory. This raises concerns about potential excess stock, which the company will need to manage carefully.

Non-Scrubwear Growth Challenges

Growth in the non-scrubwear segment was modest, impacted by previous product launches and promotional comparisons. However, the segment performed according to plan, indicating stable performance.

Forward-Looking Guidance

Looking ahead, FIGS has increased its full-year revenue growth estimate to approximately 7% and adjusted EBITDA margin expectations to low double-digit levels. Despite ongoing tariff headwinds, the company remains optimistic about its business momentum and strategic inventory investments, supporting a positive outlook for the remainder of the year.

In summary, FIGS, Inc.’s earnings call reflects a strong performance and strategic growth initiatives. The company has demonstrated resilience in the face of challenges, with significant revenue growth, margin improvements, and successful product launches. With a positive outlook and strategic plans in place, FIGS is well-positioned for continued success.