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Warby Parker Posts Strong Q3 Results; Shares Up 9%

Shares of eyeglasses manufacturer Warby Parker (WRBY) jumped 9% on November 12 driven by robust third-quarter results and gained another 1% during the extended trading session. This was WRBY’s first earnings announcement as a public company following its listing on the New York Stock Exchange.

In addition, the company also raised its FY2021 revenues guidance above the analyst expectations.

Markedly, shares of the Direct-to-Consumer (DTC) eyewear company with the current market capitalization of $6.5 billion have jumped 620% since its IPO on September 29. (See Warby Parker stock charts on TipRanks)

Q3 EPS Beats Impressively

Driven by strong active customer growth and consistent customer retention, the adjusted earnings of $0.03 per share significantly exceeded the analysts’ expectations of a loss of $0.36 per share. The company reported earnings of $0.01 per share in the prior-year period.

Furthermore, net revenues jumped 32% year-over-year to $137.4 million, exceeding consensus estimates of $133.02 million. The company’s active customers grew 23% year-over-year to 2.15 million during the quarter.

However, gross margins declined 350 bps year-over-year to 58% due to higher penetration of contact lenses, and stock-based compensation expense.

Positively, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin improved 290 basis points to 8.1%.

Warby Parker Raises FY2021 Guidance

Based on robust Q3 results, management raised the financial guidance for FY2021.

The company now forecasts net revenue to grow in the range of $539.5 million to $542 million, indicating a 37% and 38% growth against the consensus estimate of $538.7 million. Furthermore, the company plans to open 35 new stores, taking the total store count to 161.

CEO Comments

Co-Founder and Co-CEO, Neil Blumenthal, commented, “We’re incredibly proud of the milestones we achieved in Q3, from opening our second optical lab to going public via a direct listing–and being the first public benefit corporation to do so.”

Looking ahead, he added, “We remain laser focused on executing against our growth strategies by increasing our active customer base, expanding our retail footprint, and delivering innovative products and services that further our mission to inspire and impact the world with vision, purpose and style.”

Wall Street’s Take

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 5 Buys and 3 Holds. The average Warby Parker price target of $62.63 implies 7.35% upside potential to current levels.

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