FIGS, Inc. (NYSE: FIGS) grabbed many eyeballs after reporting upbeat results for the second quarter of 2022. Its earnings beat in the quarter was 50% and the sales surprise stood at 3.6%. A rise in traffic to the company’s website hinted at the company’s impressive performance in the second quarter.
Shares of the $1.9-billion healthcare apparel company rose 3.3% in the extended trading session on Thursday. In addition to healthcare apparel, the California-based company manufactures a wide range of lifestyle products.
A Snapshot of FIGS’ Q2 Results
In the quarter, the company’s adjusted earnings were $0.03 per share, a cent above the consensus estimate of $0.02 per share. However, the bottom line declined 62.5% from the year-ago tally of $0.08 per share.
Revenues at $122.2 million surpassed the consensus estimate of $118 million. On a year-over-year basis, the top line grew 20.9%, driven by a 3.7% increase in net revenues per active customer and a 5.8% rise in average order value. Active customers were 2 million at Q2-end, reflecting an increase of 26.2% from the year-ago comparable period.
Further, the company noted that revenues of its scrubwear (healthcare apparel) products accounted for 85% of the total revenues in the second quarter. Non-scrubwear (lifestyle) revenues contributed 15% to the total revenues. Products launched in the quarter included outwear, footwear, and underscrubs.
Geographically, FIGS generated 92.3% of its total revenues in the second quarter from U.S. operations, and the rest 7.7% of sales were generated internationally.
The cost of revenue in the quarter was $35.9 million, up 33.1% year-over-year, while total operating expenses were down 27.6% to $76.9 million. Gross margin decreased 2.7 percentage points to 70.6%, due to unfavorable product mix and high air and ocean freight expenses.
The adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) decreased 19.8% year-over-year to $21.5 million in the quarter. The adjusted EBITDA margin was down 8.9 percentage points to 17.6%.
FIGS’ cash position was weak, as its cash and cash equivalents fell 13% from 2021-end to $170.2 million at the end of the second quarter of 2022. This cash balance included the impact of a net cash outflow of $26.5 million for operating activities and $1.7 million used on capital expenditure.
FIGS’ Projections for 2022
The company has reiterated its revenue projection of $510-$530 million for 2022. The guidance reflects a 22%-26% increase from the previous year.
The adjusted EBITDA margin is forecast to be 16%-18% (maintained) for the year.
Increase in Website Traffic Underpins FIGS’ Top-Line Strength
According to TipRanks, the total estimated visits to FIGS’ website surged 87.7% year-over-year in the second quarter of 2022. The surge in traffic clearly shows the popularity and demand for the products offered by the company. Learn how Website Traffic can help you research your favorite stocks.
Is FIGS a Good Investment?
A growing customer base, higher revenue per active customer, new product launches, and a strong footprint both domestically and internationally mirror the company’s solid prospects for the years ahead. However, a challenging macro environment, high freight expenses (both air and ocean), and a weak cash position are headwinds.
On TipRanks, the company has garnered seven Buy recommendations from analysts against three Hold and one Sell ratings. Analysts have a Moderate Buy consensus rating on the stock. Further, FIGS’ average price target of $15.20 suggests 37.68% upside potential from the current level.
For long-term investors, the current price level could be attractive for gaining exposure to the stock. It is worth mentioning here that shares of FIGS are down 58.8% year-to-date.
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