Le Lézard
Classified in: Business, Covid-19 virus
Subjects: ERN, ERP

Revolve Group Announces Second Quarter 2022 Financial Results


LOS ANGELES, Aug. 3, 2022 /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, 2022.

"We delivered strong results in the second quarter, highlighted by record net sales that increased 27% year-over-year, gross margin expansion to record levels for a second quarter, and continued strong growth in active customers," said co-founder and co-CEO Mike Karanikolas.  "We delivered these results despite macroeconomic conditions that became more challenging as the quarter progressed, creating cost pressures that impacted profitability, and also contributed to a moderating year-over-year growth trend in net sales in June that has continued into the third quarter."

"Over our nearly 20 years of operating history, we believe we have demonstrated a unique track record for outperforming the competition in times of disruption and volatility,  and we have complete confidence in our team's ability to continue to execute through even the most challenging circumstances," said co-founder and co-CEO Michael Mente.  "I'm excited about our future and believe that our strong team, data centric culture, entrepreneurial spirit, operational excellence, and strong connection with the next-generation consumer position us to gain further market share in the months and years ahead."  

Second Quarter 2022 Financial Summary



Three Months Ended June 30,



2022



2021



YoY Change



(in thousands, except percentages)

Net sales


$

290,054



$

228,614



27 %

Gross profit


$

162,242



$

127,218



28 %

Gross margin



55.9

%



55.6

%



Net income


$

16,273



$

31,538



(48 %)

Adjusted EBITDA (non-GAAP financial measure)


$

26,878



$

35,403



(24 %)

Net cash (used in) provided by operating activities


$

(29,352)



$

33,347



NM

Free cash flow (non-GAAP financial measure)


$

(30,798)



$

32,830



NM

 

NM - Not Meaningful


 

Operational Metrics



Three Months Ended June 30,



2022



2021



YoY Change



(in thousands, except average order value and percentages)

Active customers (trailing 12 months)



2,165




1,554



39 %

Total orders placed



2,243




1,769



27 %

Average order value


$

303



$

255



19 %

Additional Second Quarter 2022 Metrics and Results Commentary

Additional Net Sales Commentary

Cash Flow and Balance Sheet

Additional trend information regarding Revolve Group's second quarter of 2022 financial results and operating metrics is available in the Q2 2022 Financial Highlights presentation available on the company's investor relations website:  https://investors.revolve.com/events-and-presentations/default.aspx 

Results Since the End of the Second Quarter of 2022

Net sales in July 2022 increased approximately 10% year-over-year amidst an increasingly uncertain macroenvironment with inflation at a 40-year high and U.S. consumer sentiment reaching a record low in the second quarter and against a more elevated prior-year comparison than we faced in the first half of 2022.  We believe our recent results illustrate our continued market share gains, reinforcing our competitive advantages and that our brands are resonating with next-generation consumers.

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) 330-2454 within the United States or (240) 789-2714 outside the United States approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 3102771.  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 (647) 362-9199 outside the United States. The replay conference ID is 3102771.

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 expected future effective tax rate.  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  economic conditions and their impact on consumer demand and our business, operating results and financial condition;  the continued impact of the COVID-19 pandemic on our business, operations and financial results; demand for our products; supply chain challenges; inflation; Russia's war against Ukraine; 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; 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, 2021 and our subsequent Quarterly Reports on Form 10-Q, including for the quarter ended June 30, 2022, which we expect to file with the SEC on August 3, 2022.  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 GAAP measures, please see the tables captioned "Reconciliation of Non-GAAP Financial Measures" included at the end of this release.

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 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. 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. 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. (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, home and beauty 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
IR@revolve.com

Media:
Meghan Murray-Merriman
meghan.murraymerriman@revolve.com

 

REVOLVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)




Three Months Ended June 30,



Six Months Ended June 30,




2022



2021



2022



2021


Net sales


$

290,054



$

228,614



$

573,552



$

407,521


Cost of sales



127,812




101,396




256,899




183,638


Gross profit



162,242




127,218




316,653




223,883


Operating expenses:













Fulfillment



7,910




5,309




15,200




9,676


Selling and distribution



51,967




32,139




98,553




57,116


Marketing



51,921




34,871




97,171




61,099


General and administrative



31,164




21,970




57,999




41,848


Total operating expenses



142,962




94,289




268,923




169,739


Income from operations



19,280




32,929




47,730




54,144


Other (income) expense, net



(1,813)




264




(2,329)




497


Income before income taxes



21,093




32,665




50,059




53,647


Provision for (benefit from) income taxes



4,820




1,127




11,218




(143)


Net income


$

16,273



$

31,538



$

38,841



$

53,790


Earnings per share of Class A and Class B
   common stock:













Basic


$

0.22



$

0.44



$

0.53



$

0.75


Diluted


$

0.22



$

0.42



$

0.52



$

0.72


Weighted average number of shares of Class A and
   Class B common stock outstanding:













Basic



73,312




72,387




73,289




72,085


Diluted



74,635




74,422




74,720




74,228


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)




June 30,



December 31,




2022



2021


Assets







Current assets:







Cash and cash equivalents


$

237,856



$

218,455


Accounts receivable, net



7,814




4,639


Inventory



208,503




171,259


Income taxes receivable



6,820




3,375


Prepaid expenses and other current assets



57,019




42,114


Total current assets



518,012




439,842


Property and equipment (net of accumulated depreciation of $11,591 and $9,347
   as of June 30, 2022 and December 31, 2021, respectively)



9,048




8,946


Right-of-use lease assets



15,783




6,566


Intangible assets, net



1,321




1,212


Goodwill



2,042




2,042


Other assets



3,256




2,746


Deferred income taxes



19,059




19,059


Total assets


$

568,521



$

480,413


Liabilities and Stockholders' Equity







Current liabilities:







Accounts payable


$

60,087



$

54,345


Income taxes payable



96




?


Accrued expenses



43,019




33,899


Returns reserve



69,793




49,296


Current lease liabilities



3,962




3,766


Other current liabilities



22,829




18,916


Total current liabilities



199,786




160,222


Non-current lease liabilities



12,522




3,177


Total liabilities



212,308




163,399


Stockholders' equity:







Class A common stock, $0.001 par value; 1,000,000,000 shares
   authorized as of June 30, 2022 and December 31, 2021;
   40,726,954 and 40,276,417 shares issued and outstanding as of June 30, 2022
   and December 31, 2021, respectively



41




40


Class B common stock, $0.001 par value; 125,000,000 shares authorized
   as of June 30, 2022 and December 31, 2021; 32,597,119 and
   32,956,904 shares issued and outstanding as of June 30, 2022 and December 31,
   2021, respectively



33




33


Additional paid-in capital



106,843




103,590


Retained earnings



249,296




213,351


Total stockholders' equity



356,213




317,014


Total liabilities and stockholders' equity


$

568,521



$

480,413


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)




Six Months Ended June 30,




2022



2021


Operating activities:







Net income


$

38,841



$

53,790


Adjustments to reconcile net income to net cash provided by operating
   activities:







Depreciation and amortization



2,305




2,271


Equity-based compensation



2,886




2,328


Changes in operating assets and liabilities:







Accounts receivable



(3,175)




(2,741)


Inventories



(37,244)




(23,555)


Income taxes receivable



(3,445)




(1,524)


Prepaid expenses and other current assets



(14,905)




(11,301)


Other assets



(510)




(2,236)


Accounts payable



5,742




19,297


Income taxes payable



96




757


Accrued expenses



9,120




7,241


Returns reserve



20,497




18,422


Right-of-use lease assets and current and non-current
   lease liabilities



324




(406)


Other current liabilities



3,913




4,213


Net cash provided by operating activities



24,445




66,556


Investing activities:







Purchases of property and equipment



(2,516)




(1,253)


Net cash used in investing activities



(2,516)




(1,253)


Financing activities:







Proceeds from the exercise of stock options, net



368




8,217


Net cash provided by financing activities



368




8,217


Effect of exchange rate changes on cash and cash equivalents



(2,896)




49


Net increase in cash and cash equivalents



19,401




73,569


Cash and cash equivalents, beginning of period



218,455




146,013


Cash and cash equivalents, end of period


$

237,856



$

219,582


Supplemental disclosure of cash flow information:







Cash paid during the period for:







Income taxes, net of refund


$

14,608



$

610


Operating leases


$

2,504



$

2,776


Supplemental disclosure of non-cash activities:







Lease assets obtained in exchange for new operating lease liabilities


$

11,481



$

1,440


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)


The following table summarizes our net sales and gross profit for each of our reportable segments (in thousands):




Three Months Ended June 30,



Six Months Ended June 30,


Net sales


2022



2021



2022



2021


REVOLVE


$

244,729



$

188,788



$

482,469



$

340,948


FWRD



45,325




39,826




91,083




66,573


Total


$

290,054



$

228,614



$

573,552



$

407,521
































Gross profit













REVOLVE


$

140,825



$

107,531



$

274,518



$

191,744


FWRD



21,417




19,687




42,135




32,139


Total


$

162,242



$

127,218



$

316,653



$

223,883


 

The following table lists net sales by geographic area (in thousands):




Three Months Ended June 30,



Six Months Ended June 30,




2022



2021



2022



2021


United States


$

240,909



$

185,380



$

478,784



$

328,665


Rest of the world



49,145




43,234




94,768




78,856


Total


$

290,054



$

228,614



$

573,552



$

407,521


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

KEY OPERATING AND FINANCIAL METRICS

(Unaudited)




Three Months Ended June 30,



Six Months Ended June 30,




2022



2021



2022



2021




(in thousands, except average order value and percentages)


Gross margin



55.9

%



55.6

%



55.2

%



54.9

%

Adjusted EBITDA


$

26,878



$

35,403



$

58,421



$

58,743


Free cash flow


$

(30,798)



$

32,830



$

21,929



$

65,303


Active customers



2,165




1,554




2,165




1,554


Total orders placed



2,243




1,769




4,399




3,051


Average order value


$

303



$

255



$

296



$

255


 

REVOLVE GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)


A reconciliation of non-GAAP Adjusted EBITDA to net income for the three and six months ended June 30, 2022 and 2021 is as follows:




Three Months Ended June 30,

Six Months Ended June 30,




2022



2021



2022



2021




(in thousands)


Net income


$

16,273



$

31,538



$

38,841



$

53,790


Excluding:













Other (income) expense, net



(1,813)




264




(2,329)




497


Provision for (benefit from) income taxes



4,820




1,127




11,218




(143)


Depreciation and amortization



1,203




1,122




2,305




2,271


Equity-based compensation



1,395




1,352




2,886




2,328


Non-routine items(1)



5,000




?




5,500




?


Adjusted EBITDA


$

26,878



$

35,403



$

58,421



$

58,743


 

(1)

Non-routine items in the three and six months ended June 30, 2022 relate to an accrual for a pending legal matter.

 

A reconciliation of non-GAAP free cash flow to net cash provided by operating activities for the three and six months ended June 30, 2022 and 2021 is as follows:




Three Months Ended June 30,



Six Months Ended June 30,




2022



2021



2022



2021




(in thousands)


Net cash (used in) provided by operating activities


$

(29,352)



$

33,347



$

24,445



$

66,556


Purchases of property and equipment



(1,446)




(517)




(2,516)




(1,253)


Free cash flow


$

(30,798)



$

32,830



$

21,929



$

65,303


Net cash used in investing activities


$

(1,446)



$

(517)



$

(2,516)



$

(1,253)


Net cash provided by financing activities


$

242



$

3,900



$

368



$

8,217


 

SOURCE Revolve Group, Inc.


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