Warby Parker’s Earnings Call: Growth Amid Challenges

Warby Parker, Inc. Class A ((WRBY)) has held its Q1 earnings call. Read on for the main highlights of the call.

Warby Parker’s recent earnings call revealed a positive sentiment, highlighting the company’s robust performance in revenue growth, profitability, and customer acquisition. Despite facing challenges such as tariffs and economic uncertainties, Warby Parker’s strategic initiatives, including store expansion and supply chain diversification, have positioned it well for future growth. However, external factors like tariffs and consumer sentiment remain concerns for the company.

Revenue Growth

Warby Parker reported a 12% year-over-year revenue growth, with Q1 2025 revenue reaching $223.8 million, marking an 11.9% increase from the previous year. This consistent growth reflects the company’s strong market position and effective business strategies.

Adjusted EBITDA Margin Expansion

The company achieved an adjusted EBITDA margin of 13.1%, representing nearly a 200 basis point expansion year-over-year. This improvement underscores Warby Parker’s focus on enhancing operational efficiency and profitability.

Positive GAAP Net Income

For the first time as a public company, Warby Parker reported a positive GAAP net income. This milestone highlights the company’s successful financial management and growth trajectory.

Active Customer Growth

Warby Parker experienced seven consecutive quarters of accelerating active customer growth, ending Q1 with 2.57 million active customers, an 8.7% increase year-over-year. This growth is a testament to the company’s effective customer acquisition strategies.

Store Expansion

In Q1, Warby Parker opened 11 new stores, the highest number for a first quarter, with plans to open 45 new stores in 2025. This expansion reflects the company’s commitment to increasing its physical presence and accessibility.

E-commerce Growth

E-commerce revenue saw a 5.5% year-over-year increase, achieving its highest quarterly growth since 2021. This growth highlights the company’s successful adaptation to digital retail trends.

Contact Lens and Eye Care Growth

Warby Parker reported a 25.1% growth in contact lens revenue and approximately 40% growth in eye care revenue year-over-year. These figures demonstrate the company’s expanding product offerings and market reach.

Tariff Impact

The company is facing increased tariff rates, with a 145% increase for China and 10% for the rest of the world, potentially impacting gross margins by 200 to 300 basis points for 2025. Warby Parker is addressing this by diversifying its supply chain and implementing selective price increases.

Moderate Revenue Outlook Adjustment

Warby Parker adjusted its full-year 2025 revenue growth estimate from 14-16% to 13-15%, reflecting a more conservative outlook due to increased uncertainty around consumer spending.

Weather Disruptions

Q1 operations were significantly impacted by weather disruptions, losing 68% more operational hours compared to the previous year. This challenge highlights the external factors affecting operational efficiency.

Forward-Looking Guidance

Looking ahead, Warby Parker projects net revenue of $869 million to $886 million for the full year, with an adjusted EBITDA margin of 10.5% to 11%. The company plans to continue investing in customer experience and acquisition, with marketing expenses expected to remain in the low-teens as a percent of revenue. Warby Parker is also expanding its omnichannel model and reducing its reliance on China for sourcing.

In summary, Warby Parker’s earnings call reflects a positive outlook, with strong performance in key areas despite external challenges. The company’s strategic initiatives and forward-looking guidance indicate a commitment to sustained growth and profitability.