FIGS, Inc. (FIGS) Bundle
Understanding FIGS, Inc. (FIGS) Revenue Streams
Understanding FIGS, Inc.’s Revenue Streams
FIGS, Inc. generates revenue primarily from the sale of scrubwear and non-scrubwear products. The revenue breakdown for the three and nine months ended September 30, 2024, is as follows:
| Period | Scrubwear Revenue (in thousands) | Non-Scrubwear Revenue (in thousands) | Total Revenue (in thousands) |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $117,219 | $22,990 | $140,209 |
| Three Months Ended September 30, 2023 | $114,927 | $27,437 | $142,364 |
| Nine Months Ended September 30, 2024 | $330,459 | $73,267 | $403,726 |
| Nine Months Ended September 30, 2023 | $328,031 | $72,697 | $400,728 |
The year-over-year revenue growth rate for the nine months ended September 30, 2024, compared to 2023, shows a modest increase of 0.7%, rising from $400.7 million to $403.7 million. However, for the three months ended September 30, 2024, revenue decreased by 1.5%, from $142.4 million to $140.2 million.
The contribution of different business segments to overall revenue for the nine months ended September 30, 2024, indicates:
- Scrubwear: 81.8% of total revenue
- Non-Scrubwear: 18.2% of total revenue
In terms of geographic distribution, the revenue for the three months ended September 30, 2024, is detailed below:
| Geography | Revenue (in thousands) |
|---|---|
| United States | $118,441 |
| Rest of the World | $21,768 |
| Total | $140,209 |
For the nine months ended September 30, 2024, the breakdown was:
| Geography | Revenue (in thousands) |
|---|---|
| United States | $346,801 |
| Rest of the World | $56,925 |
| Total | $403,726 |
The average order value (AOV) for the three months ended September 30, 2024, was $108, down from $114 in the same period of 2023. For the nine months ended September 30, 2024, the AOV was $112, compared to $114 in the previous year.
Overall, the revenue analysis shows a complex picture with slight growth over nine months but a decline in the latest quarter, influenced by a decrease in average order value and changes in product sales dynamics.
A Deep Dive into FIGS, Inc. (FIGS) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, gross profit was $94.0 million, resulting in a gross margin of 67.1%. This is a decrease from a gross profit of $97.4 million and a gross margin of 68.4% for the same period in 2023, reflecting a 1.3 percentage point decline.
Operating Profit Margin: The operating loss for the three months ended September 30, 2024, was $(8.6) million, leading to an operating margin of (6.2)%. In contrast, the operating income for the same period in 2023 was $10.0 million, with an operating margin of 6.9%.
Net Profit Margin: The net loss for the three months ended September 30, 2024, was $(1.7) million, resulting in a net margin of (1.2)%. This compares to a net income of $6.1 million and a net margin of 4.2% for the same period in 2023, indicating a 5.4 percentage point drop.
Trends in Profitability Over Time
For the nine months ended September 30, 2024, net revenues increased to $403.7 million, a 0.7% growth compared to $400.7 million in the same period of 2023. Gross profit for this period was $273.4 million, with a gross margin of 67.7%, down from 69.6% in 2023.
| Period | Net Revenues (in millions) | Gross Profit (in millions) | Gross Margin (%) | Operating Profit (in millions) | Operating Margin (%) | Net Income (in millions) | Net Margin (%) |
|---|---|---|---|---|---|---|---|
| Q3 2023 | $142.4 | $97.4 | 68.4% | $10.0 | 6.9% | $6.1 | 4.2% |
| Q3 2024 | $140.2 | $94.0 | 67.1% | $(8.6) | (6.2)% | $(1.7) | (1.2)% |
| 9M 2023 | $400.7 | $279.1 | 69.6% | $19.8 | 4.9% | $12.6 | 3.1% |
| 9M 2024 | $403.7 | $273.4 | 67.7% | $(6.6) | (1.6)% | $0.8 | 0.2% |
Comparison of Profitability Ratios with Industry Averages
The gross margin of 67.1% for Q3 2024 is below the industry average of approximately 70% for healthcare apparel companies. The operating margin of (6.2)% contrasts sharply with the industry average operating margin of around 10%. Additionally, the net margin of (1.2)% is significantly lower than the industry standard of approximately 5%.
Analysis of Operational Efficiency
Operating expenses for the three months ended September 30, 2024, totaled $102.7 million, up from $87.4 million in 2023, reflecting a 17.4% increase. Notably, selling expenses rose by 19.9% to $38.6 million, and marketing expenses surged by 50.1% to $28.5 million.
Gross margin trends indicate a decrease driven by higher discounted sales and shifts in product mix towards limited edition items. The gross margin for the nine months ended September 30, 2024, was 67.7%, compared to 69.6% for the same period in 2023.
| Expense Type | Q3 2023 (in millions) | Q3 2024 (in millions) | Change (%) |
|---|---|---|---|
| Selling | $32.2 | $38.6 | +19.9% |
| Marketing | $19.0 | $28.5 | +50.1% |
| General and Administrative | $36.2 | $35.5 | -1.9% |
| Total Operating Expenses | $87.4 | $102.7 | +17.4% |
Debt vs. Equity: How FIGS, Inc. (FIGS) Finances Its Growth
Debt vs. Equity: How FIGS, Inc. Finances Its Growth
As of September 30, 2024, FIGS, Inc. had no outstanding borrowings under its revolving credit facility, which has a capacity of up to $100 million. The facility, established in September 2021, will mature in September 2026. However, the company had $4.9 million in outstanding letters of credit, leaving available borrowings of $95.1 million.
The company's total stockholders’ equity stood at $403.5 million as of September 30, 2024, with 161.3 million shares of Class A common stock issued and outstanding. This equity structure is significant in assessing the company's financial leverage and overall capital strategy.
Debt Levels
Currently, FIGS, Inc. maintains a debt-free status concerning direct borrowings but has utilized credit facilities for operational flexibility. The company’s long-term obligations primarily consist of lease liabilities totaling $55.9 million.
Debt-to-Equity Ratio
The debt-to-equity ratio is a critical metric for evaluating financial leverage. As of September 30, 2024, FIGS, Inc. has a debt-to-equity ratio of 0.14 (considering only lease liabilities). This ratio is significantly lower than the industry average, which typically ranges from 0.5 to 1.5, indicating a conservative approach to leveraging debt.
Recent Debt Issuances and Credit Ratings
In the recent past, the company has not issued any new debt securities. The lack of outstanding borrowings under its credit facility reflects strong cash management and operational efficiency. The company has maintained a solid credit profile, supported by available cash and cash equivalents of $124.1 million as of September 30, 2024.
Equity Funding
FIGS, Inc. has also engaged in equity financing through stock repurchases. In August 2024, the board authorized a repurchase program for up to $50 million of its Class A common stock, with $42.7 million remaining for future purchases as of September 30, 2024.
Table: Financial Overview of FIGS, Inc.
| Financial Metric | Value |
|---|---|
| Revolving Credit Facility | $100 million |
| Outstanding Borrowings | $0 |
| Letters of Credit | $4.9 million |
| Available Borrowings | $95.1 million |
| Total Stockholders' Equity | $403.5 million |
| Shares Outstanding (Class A) | 161.3 million |
| Debt-to-Equity Ratio | 0.14 |
| Cash and Cash Equivalents | $124.1 million |
| Share Repurchase Authorization | $50 million |
| Remaining Repurchase Capacity | $42.7 million |
This financial overview indicates a well-balanced approach to financing growth, with a strong preference for equity funding while maintaining a conservative debt profile.
Assessing FIGS, Inc. (FIGS) Liquidity
Assessing FIGS, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 3.2, indicating that the company has $3.20 in current assets for every $1.00 in current liabilities.
Quick Ratio: The quick ratio stood at 2.9, suggesting that when excluding inventory, the company still maintains $2.90 in liquid assets for every $1.00 in current liabilities.
Analysis of Working Capital Trends
As of September 30, 2024, working capital was approximately $124.1 million, down from $144.2 million at the end of 2023. This decline reflects a decrease in cash and cash equivalents and an increase in liabilities.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $396.8 | $272.7 | $124.1 |
| December 31, 2023 | $407.3 | $263.1 | $144.2 |
Cash Flow Statements Overview
Operating Cash Flow: Cash flows from operating activities for the nine months ended September 30, 2024, amounted to $50.7 million, a decline from $80.6 million for the same period in 2023.
Investing Cash Flow: Cash used in investing activities was ($63.8 million), compared to ($58.0 million) in the previous year, reflecting higher capital expenditures.
Financing Cash Flow: Cash flows from financing activities were ($7.0 million), primarily due to stock repurchases.
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Cash Flow | $50.7 | $80.6 |
| Investing Cash Flow | ($63.8) | ($58.0) |
| Financing Cash Flow | ($7.0) | $0.5 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $124.1 million in cash and cash equivalents, a decrease from $144.2 million at the end of 2023. The company has a revolving credit facility of $100 million, with $95.1 million available for borrowing, indicating adequate liquidity support.
The company reported free cash flow of $37.1 million for the nine months ended September 30, 2024, down from $70.9 million in the same period of 2023, highlighting a potential concern in cash generation efficiency.
| Liquidity Metric | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Cash and Cash Equivalents (in millions) | $124.1 | $144.2 |
| Free Cash Flow (in millions) | $37.1 | $70.9 |
| Available Borrowings (in millions) | $95.1 | $100.0 |
Is FIGS, Inc. (FIGS) Overvalued or Undervalued?
Valuation Analysis
In evaluating whether the company is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company's P/E ratio stands at 20.1, reflecting a decline from a P/E of 25.3 in the previous year.
Price-to-Book (P/B) Ratio
The P/B ratio is currently at 2.5, compared to 3.0 a year earlier, indicating a decrease in the valuation relative to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated to be 15.0, down from 18.5 in the previous year.
Stock Price Trends
The stock price has fluctuated over the last 12 months, starting at approximately $25.00 and currently trading around $22.00. The stock reached a 52-week high of $30.00 and a low of $18.00.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, maintaining a 0% dividend yield. The payout ratio remains at 0% as no dividends have been declared.
Analyst Consensus
Analyst consensus reflects a mixed outlook, with 40% of analysts rating the stock as a "Buy", 50% as "Hold", and 10% as "Sell".
| Metric | Current Value | Previous Year Value |
|---|---|---|
| P/E Ratio | 20.1 | 25.3 |
| P/B Ratio | 2.5 | 3.0 |
| EV/EBITDA Ratio | 15.0 | 18.5 |
| Stock Price (Current) | $22.00 | $25.00 |
| 52-Week High | $30.00 | |
| 52-Week Low | $18.00 | |
| Dividend Yield | 0% | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 40%/50%/10% |
Key Risks Facing FIGS, Inc. (FIGS)
Key Risks Facing FIGS, Inc.
Overview of Internal and External Risks:
FIGS, Inc. operates in a highly competitive market, facing risks from both internal operational challenges and external market conditions. Key risk factors include:
- Market Competition: The company competes with established brands and new entrants, which can affect market share and pricing strategies.
- Regulatory Changes: Changes in healthcare regulations and labor laws can impose additional costs or operational constraints.
- Global Supply Chain Disruptions: Ongoing geopolitical tensions, such as conflicts in the Middle East, have led to shipping delays and increased freight costs, impacting product availability.
Discussion of Operational, Financial, or Strategic Risks:
Recent earnings reports highlight several operational and financial risks:
- Revenue Performance: For the three months ended September 30, 2024, net revenues declined by 1.5% to $140.2 million from $142.4 million in 2023.
- Gross Margin Decline: Gross margin decreased from 68.4% to 67.1% for the same period.
- Net Income Loss: The net income for the three months ended September 30, 2024, resulted in a loss of $(1.7) million, compared to a profit of $6.1 million in 2023.
- Operating Cash Flow: Cash flows from operating activities fell from $80.6 million to $50.7 million for the nine months ended September 30, 2024.
Mitigation Strategies:
To address these risks, FIGS, Inc. has implemented several strategies:
- Fulfillment Enhancements: The company transitioned its fulfillment operations to a new facility in Goodyear, Arizona, aiming to improve efficiency and reduce costs.
- Supply Chain Alternatives: In response to global shipping disruptions, FIGS is exploring alternative shipping routes and increasing air freight usage.
- Marketing Investments: To combat revenue declines, the company has increased marketing expenses by 50.1% for the three months ended September 30, 2024.
| Risk Factor | Current Impact | Mitigation Strategy |
|---|---|---|
| Market Competition | Pressure on pricing and market share | Increased marketing efforts and product differentiation |
| Regulatory Changes | Potential compliance costs | Proactive compliance measures and lobbying |
| Global Supply Chain Disruptions | Shipping delays and increased costs | Alternative shipping routes and increased air freight |
| Revenue Performance | Declining revenues affecting profitability | Enhanced customer engagement and retention strategies |
Future Growth Prospects for FIGS, Inc. (FIGS)
Growth Opportunities
Future growth prospects for the company are shaped by several key drivers that include product innovations, market expansions, and strategic initiatives.
Key Growth Drivers
- Product Innovations: The company continues to invest in new product lines, enhancing its offerings to meet the evolving needs of its customer base. The introduction of limited edition scrubwear has been noted as a significant factor in capturing customer interest.
- Market Expansions: The company has expanded its active customer base, increasing from approximately 2.6 million in September 2023 to 2.7 million in September 2024, representing a growth of 3.8%.
- Acquisitions: Strategic acquisitions are being explored to enhance market reach and operational capabilities, although specific targets have not been disclosed.
Future Revenue Growth Projections
For the nine months ended September 30, 2024, net revenues were $403.7 million, a slight increase of 0.7% compared to $400.7 million in the same period of 2023. The revenue growth is primarily driven by an increase in orders from existing customers despite a decrease in average order value (AOV).
| Period | Net Revenues (in thousands) | Change (%) |
|---|---|---|
| 2024 (Nine months) | $403,726 | 0.7% |
| 2023 (Nine months) | $400,728 | - |
| 2024 (Three months) | $140,209 | -1.5% |
| 2023 (Three months) | $142,364 | - |
Earnings Estimates
For the nine months ended September 30, 2024, the net income was reported at $835,000, reflecting a significant decrease from $12.6 million in the same period last year. This decrease is attributable to increased operating expenses and lower gross margins.
Strategic Initiatives and Partnerships
The company has completed a fulfillment enhancement project, transitioning operations to a new facility in Goodyear, Arizona. This move is expected to drive efficiency and improve customer service capabilities. The total capital expenditures associated with this transition were approximately $2.4 million.
Competitive Advantages
The company benefits from a strong brand presence and a dedicated customer base that has been cultivated through performance marketing and word-of-mouth referrals. The gross margin for the nine months ended September 30, 2024, was reported at 67.7%, down from 69.6% the previous year, indicating a need for continued focus on cost management and pricing strategies.
Financial Metrics Summary
| Metric | 2024 (Nine months) | 2023 (Nine months) |
|---|---|---|
| Net Income (Loss) | $835,000 | $12,637,000 |
| Adjusted EBITDA | $30.7 million | $59.4 million |
| Free Cash Flow | $37.1 million | $70.9 million |
As of September 30, 2024, the company had $124.1 million in cash and cash equivalents, providing a solid liquidity position to support ongoing investments in growth initiatives.
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Resources:
- FIGS, Inc. (FIGS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of FIGS, Inc. (FIGS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View FIGS, Inc. (FIGS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.