FIGS, Inc. (NYSE: the numbers) caught many eyes after announcing upbeat results for the second quarter of 2022. Its earnings topped 50% in the quarter and the sales surprise came in at 3.6%. An increase 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 Thursday’s extended trading session. In addition to healthcare apparel, the California-based company manufactures a wide range of lifestyle products.
An overview of Q2 results from FIGS
During the quarter, the company’s adjusted earnings were $0.03 per share, one cent above the consensus estimate of $0.02 per share. However, net income was down 62.5% from the previous year’s total of $0.08 per share.
Revenue of $122.2 million beat the consensus estimate of $118 million. On an annual basis, revenue increased by 20.9%, driven by a 3.7% increase in net revenue per active customer and a 5.8% increase in average order value. Active customers were 2 million at the end of the second quarter, an increase of 26.2% over the comparable period of the previous year.
Additionally, the company noted that revenue from its scrubwear (healthcare apparel) products accounted for 85% of total revenue in the second quarter. Non-scrabwear (lifestyle) revenue contributed 15% of total revenue. Products launched during the quarter included outerwear, footwear and underwear.
Geographically, FIGS generated 92.3% of its total revenue in the second quarter from its operations in the United States, and the remaining 7.7% of sales were generated internationally.
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 by 2.7 percentage points to 70.6%, due to an unfavorable product mix and high air and ocean freight spending.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 19.8% year-over-year to $21.5 million in the quarter. Adjusted EBITDA margin decreased by 8.9 percentage points to 17.6%.
FIGS’ cash position was weak as its cash and cash equivalents fell 13% from the end of 2021 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 for capital expenditures.
FIGS projections for 2022
The company reiterated its revenue forecast of $510-530 million for 2022. The forecast reflects a 22-26% increase over the prior year.
Adjusted EBITDA margin is expected at 16%-18% (maintained) for the year.
Increased Website Traffic Underpins FIGS Revenue Strength
According to TipRanks, the total number of estimated visits to the FIGS website jumped 87.7% year-over-year in the second quarter of 2022. The increase in traffic clearly shows the popularity and demand for products offered by the company. Find out how Website Traffic can help you find your favorite stocks.
Is FIGS a good investment?
A growing customer base, higher revenue per active customer, new product launches and a strong presence both domestically and internationally reflect the company’s strong prospects for years to come. However, a difficult macroeconomic environment, high transportation costs (both air and sea) and a weak cash position are headwinds.
On TipRanks, the company garnered seven analyst buy recommendations against three hold and one sell rating. Analysts have a moderate buy consensus rating on the stock. Additionally, FIGS’s average price target of $15.20 suggests an upside potential of 37.68% from the current level.
For long-term investors, the current price level could be attractive to gain exposure to the stock. It is worth mentioning here that FIGS shares are down 58.8% since the start of the year.
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