Revolve Group Announces Second Quarter 2024 Financial Results

LOS ANGELES, Aug. 6, 2024 /PRNewswire/ -- Revolve Group, Inc. (NYSE:RVLV), the next-generation fashion retailer for Millennial and Generation Z consumers, today announced financial results for the second quarter ended June 30, 2024.

"I'm thrilled with our team's performance that fueled a strong second quarter, highlighted by a return to top-line growth and a more than doubling of our net income year-over-year," said co-founder and co-CEO Mike Karanikolas. "Key contributors to our strong results were significantly improved marketing efficiency and greater efficiency in our logistics costs, helped by the first year-over-year decrease in our return rate in more than three years." 

"It is gratifying to see our team's hard work on growth and efficiency initiatives deliver strong positive results on the top and bottom lines," said co-founder and co-CEO Michael Mente. "Beyond the numbers, we continue to make great progress on longer-term initiatives that we believe further reinforce our foundation for profitable growth in the years to come, including growing our active customer base, expanding our international presence, increasing our share of wallet through adjacent product categories, leveraging AI technology to even further elevate the customer experience, and exploring physical retail as a new way to connect with the next-generation consumer." 

Second Quarter 2024 Financial Summary

Operational Metrics

Additional Second Quarter 2024 Metrics and Results Commentary 

• Trailing 12-month Active customers grew to 2,577,000 as of June 30, 2024, an increase of 5% year-over-year. 
• Net sales were $282.5 million, a year-over-year increase of 3%. 
• Gross profit was $152.6 million, a year-over-year increase of 3%. 
• Gross margin was 54.0%, an increase of 7 basis points year-over-year, driven by margin expansion in the REVOLVE segment, which was partially offset by a year-over-year decline in the FWRD segment.      
• Net income was $15.4 million, a year-over-year increase of 111%.    
• Adjusted EBITDA was $20.5 million, a year-over-year increase of 97% that primarily reflects a year-over-year increase in net sales and gross profit combined with increased year-over-year efficiency in our marketing investment and selling and distribution costs, partially offset by year-over-year growth in general and administrative expenses in the second quarter of 2024 that outpaced our growth in net sales.   
• Diluted earnings per share (EPS) was $0.21, a year-over-year increase of 110%.                           

Additional Net Sales Commentary

• REVOLVE segment net sales were $245.5 million, a year-over-year increase of 4%.
• FWRD segment net sales were $36.9 million, a year-over-year decrease of 4%.   
• Domestic net sales were $225.1 million, a year-over-year increase of 1%
• International net sales were $57.4 million, a year-over-year increase of 13%, driven by growth in nearly all major regions.  

Cash Flow and Balance Sheet

• Net cash (used in) provided by operating activities was $(24.7) million in the second quarter and $13.7 million in the 6-month year-to-date period ended June 30, 2024 and free cash flow was $(26.7) million in the second quarter and $10.0 million in the 6-month year-to-date period. The reduced cash flow provided by operating activities year-over-year for the 6-month year-to-date period in 2024 primarily reflects growth in our inventory balance to support a return to top-line growth compared to a declining inventory balance in the first half of 2023 when we were focused on rebalancing our inventory position.       
• Stock repurchases were $1.9 million for the second quarter ended June 30, 2024, exclusive of broker fees and excise taxes. The company repurchased 118,998 shares of its Class A common stock during the second quarter at an average cost of $15.83 per share. $59.5 million remained available under the company's $100 million stock repurchase program as of June 30, 2024.
• Cash and cash equivalents: Cash and cash equivalents as of June 30, 2024 were $244.7 million, a decrease of $24.6 million, or 9%, year-over-year from $269.3 million as of June 30, 2023. Our balance sheet as of June 30, 2024 remains debt free. The year-over-year decrease in cash and cash equivalents compared to June 30, 2023 primarily reflects our cash flow generated from operations that was more than offset by $40.5 million in stock repurchases since we established our $100 million stock repurchase program in August 2023.
• Inventory as of June 30, 2024 was $234.3 million, an increase of $29.0 million, or 14%, from June 30, 2023.            

Additional trend information regarding Revolve Group's second quarter of 2024 financial results and operating metrics is available in the Q2 2024 Financial Highlights presentation available on our investor relations website:  https://investors.revolve.com/events-and-presentations/default.aspx 

Results Since the End of the Second Quarter of 2024

Net sales in July 2024 increased by a mid-single digit percentage year-over-year, a sequential improvement compared to the year-over-year trend reported for the second quarter of 2024.

2024 Business Outlook

Based on information available to us as of August 6, 2024, we are providing the following guidance for the full year ending December 31, 2024 and the third quarter ending September 30, 2024.

Conference Call Information

Revolve Group management will host a call today at 4:30 pm ET / 1:30 pm PT to discuss today's results in more detail.  To participate, please dial (888) 596-4144 within the United States or (646) 968-2525 outside the United States approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 2756104. The conference call will also be accessible, live via audio broadcast, on the Investor Relations section of the Revolve Group website at investors.revolve.com. A replay of the conference call will be available online at investors.revolve.com. In addition, an audio replay of the call will be available for one week following the call and can be accessed by dialing (800) 770-2030 within the United States or (609) 800-9909 outside the United States. The replay conference ID is 2756104.

Forward-Looking Statements

This press release contains ''forward-looking statements'' within the meaning of the safe harbor provisions of the U.S.  Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements, including but not limited to statements regarding our growth prospects and outlook for the third quarter and full year of 2024. Forward-looking statements include statements containing words such as "expect," "anticipate," "believe," "project," "will" and similar expressions intended to identify forward-looking statements. These forward-looking statements are based on our current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to changing economic conditions and their impact on consumer demand and our business, operating results and financial condition; demand for our products; supply chain challenges; inflationary pressures; wars and conflicts in  Ukraine/Russia, Israel/Gaza and the Middle East; other geopolitical tensions; our fluctuating operating results; seasonality in our business; our ability to acquire products on reasonable terms; our e-commerce business model; our ability to attract customers in a cost effective manner; the strength of our brand; competition; fraud; system interruptions; our ability to fulfill orders; the impact of public health crises on our business, operations and financial results; the effect of claims, lawsuits, government investigations, other legal or regulatory proceedings or commercial or contractual disputes; and other risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings with the Securities and Exchange Commission, or SEC, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2023 and our subsequent Quarterly Reports on Form 10-Q, including for the quarter ended June 30, 2024, which we expect to file with the SEC on August 6, 2024. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.

Use of Non-GAAP Financial Measures and Other Operating Metrics

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), we reference in this press release and the accompanying tables the following non-GAAP financial measures: Adjusted EBITDA and free cash flow.    

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

We use these non-GAAP financial measures to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and when planning, forecasting, and analyzing future periods.

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, please see the tables captioned "Reconciliation of Non-GAAP Financial Measures" included at the end of this release. We encourage reviewing the reconciliation in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items and may include other expenses, costs and non-recurring items.

Definitions of our non-GAAP financial measures and other operating metrics are presented below. 

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income before other (income) expense, net; taxes; and depreciation and amortization; adjusted to exclude the effects of equity-based compensation expense, certain transaction costs and certain non-routine items. Adjusted EBITDA is a key measure used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of equity-based compensation, excludes an item that we do not consider to be indicative of our core operating performance.

Free Cash Flow

Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used in purchases of property and equipment, and purchases of rental product. We view free cash flow as an important indicator of our liquidity because it measures the amount of cash we generate. Free cash flow also reflects changes in working capital.

Active Customers

We define an active customer as a unique customer account from which a purchase was made across our platform at least once in the preceding 12-month period. In any particular period, we determine our number of active customers by counting the total number of customers who have made at least one purchase in the preceding 12-month period, measured from the last date of such period. We view the number of active customers as a key indicator of our growth, the reach of our sites, the value proposition and consumer awareness of our brand, the continued use of our sites by our customers and their desire to purchase our products.

Total Orders Placed

We define total orders placed as the total number of orders placed by our customers, prior to product returns, across our platform in any given period.  We view total orders placed as a key indicator of the velocity of our business and an indication of the desirability of our products and sites to our customers. Total orders placed, together with average order value, is an indicator of the net sales we expect to recognize in a given period.

Average Order Value

We define average order value as the sum of the total gross sales from our sites in a given period, prior to product returns, divided by the total orders placed in that period. We believe our high average order value demonstrates the premium nature of our product assortment. Average order value varies depending on the site through which we sell merchandise, the mix of product categories sold, the number of units in each order, the percentage of sales at full price, and for sales at less than full price, the level of markdowns.

About Revolve Group, Inc.

Revolve Group, Inc. (NYSE:RVLV) is the next-generation fashion retailer for Millennial and Generation Z consumers. As a trusted premium lifestyle brand and a go-to online source for discovery and inspiration, we deliver an engaging customer experience from a vast yet curated offering of apparel, footwear, accessories, beauty and home products. Our dynamic platform connects a deeply engaged community of millions of consumers, thousands of global fashion influencers and more than 1,000 emerging, established and owned brands.

We were founded in 2003 by our co-CEOs, Michael Mente and Mike Karanikolas. We sell merchandise through two complementary segments, REVOLVE and FWRD, that leverage one platform. Through REVOLVE, we offer an assortment of premium apparel, footwear, accessories and beauty products from emerging, established and owned brands. Through FWRD, we offer an assortment of curated and elevated iconic and emerging luxury brands.  For more information, visit www.revolve.com.

Contacts:

Investors:

Erik Randerson, CFA

562.677.9513

[email protected]

Media:

Jennifer Walker

[email protected]      

 

 

 

 

 

 

 

 

 

 

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SOURCE Revolve Group, Inc.