REVOLVE GROUP, INC. Dyskusja kierownictwa i analiza sytuacji finansowej i wyników działalności (formularz 10-Q)
Uwaga specjalna dotycząca informacji dotyczących przyszłości
This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any projections of earnings, net sales or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include, among others, the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "anticipate" or any other similar words. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with theSEC . Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, among others, the following:
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zmieniające się warunki gospodarcze i ich wpływ na popyt konsumencki oraz naszą działalność, wyniki operacyjne i sytuację finansową;
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nasza zdolność do skutecznego zarządzania lub utrzymania naszego wzrostu i efektywnego rozszerzania naszej działalności;
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nasza zdolność do utrzymania naszych obecnych klientów i pozyskania nowych klientów;
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nasza zdolność do utrzymania i zwiększenia naszej marży brutto i Skorygowanej marży EBITDA, środka finansowego niezgodnego ze standardami GAAP;
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nasza zdolność do reagowania na zmieniające się zapotrzebowanie konsumentów, wydatki i gusta oraz nasza zdolność do dokładnego i skutecznego angażowania się w analizy prognostyczne;
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wpływ pandemii COVID-19 i innych kryzysów zdrowotnych na naszą działalność, operacje i wyniki finansowe;
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nasza zdolność do utrzymania obecnych dostawców i marek oraz przyciągania nowych dostawców i marek;
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naszą zdolność do uzyskiwania i utrzymywania zróżnicowanych produktów wysokiej jakości odpowiednich marek w wystarczających ilościach od dostawców;
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our ability to obtain and maintain sufficient inventory at prices that will keep our business model profitable, and of a quality that will continue to retain existing customers and attract new customers;
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naszą zależność od zagranicznych dostawców i partnerów produkcyjnych, w szczególności w
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naszą zdolność do rozszerzenia naszej działalności w sposób wydajny i opłacalny;
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nasza zdolność do utrzymania i wzmocnienia naszej marki;
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naszą zdolność do optymalizacji, obsługi, zarządzania i rozbudowy naszej infrastruktury sieciowej oraz naszego centrum realizacji zamówień i kanałów dostaw;
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wzrost rynku produktów premium i produktów luksusowych, aw szczególności internetowego rynku produktów premium i produktów luksusowych;
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nasza zdolność do dokładnego prognozowania popytu na nasze produkty i naszych wyników operacyjnych;
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sezonowe wahania sprzedaży; I
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naszą zdolność do poszerzania naszej oferty produktów, w tym naszych własnych marek.
20 -------------------------------------------------------------------------------- Additional factors that could cause actual results to differ materially from our forward-looking statements are set forth in this report, including under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in our condensed consolidated financial statements and the related notes thereto. Forward-looking statements in this report speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference speak only as of the date of those documents. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
W niniejszym raporcie zwroty „my”, „nasz”, „nas”, „Firma” i „Revolve” odnoszą się do
Przegląd
REVOLVE 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. Through 20 years of continued investment
in technology, data analytics, and innovative marketing and merchandising
strategies, we have built a powerful platform and brand that we believe is
connecting with the next generation of consumers and is redefining fashion
retail for the 21st century.
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, beauty and home products from emerging,
established and owned brands. Through FWRD, we offer an assortment of curated
and elevated iconic and emerging luxury brands. REVOLVE has historically been
focused on the discovery of trend-driven, ready-to-wear styles, while FWRD has
been more heavily weighted toward the statement pieces in her wardrobe such as
shoes and handbags. We believe that FWRD provides our customer with a unique
destination for luxury products as her spending power increases and her desire
for fashion and inspiration remains central to her self-expression.
We believe our product mix reflects the desires of the next-generation consumer
and we optimize this mix through the selection of established brands that
resonate with our consumer, the identification and incubation of emerging brands
and the continued development of owned brands. The focus on emerging and owned
brands minimizes our assortment overlap with other retailers, supporting
marketing efficiency, conversion and sales at full price.
We have invested in our robust and scalable internally-developed technology
platform to meet the specific needs of our business and to support our
customers' experience. We use proprietary algorithms and 20 years of data to
efficiently manage our merchandising, marketing, product development, sourcing
and pricing decisions. Our platform works seamlessly across devices and analyzes
browsing and purchasing patterns and preferences to help us make purchasing
decisions, which when combined with the small initial orders for new products,
allows us to manage inventory and fashion risk. We have also invested in our
creative capabilities to produce high-quality visual merchandising that caters
to our customers by focusing on style with a distinct point of view rather than
on individual
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produkty. Połączenie naszej internetowej platformy sprzedaży i naszej wewnętrznej kreatywnej fotografii pozwala nam prezentować marki w wyróżniający się i przekonujący sposób.
We are pioneers of social media and influencer marketing, using social channels and cultural events designed to deliver authentic and aspirational, yet attainable, experiences to attract and retain Millennial and Generation Z consumers, and these efforts have historically led to higher earned media value than competitors. We complement our social media efforts through a variety of brand marketing campaigns and events, which generate a constant flow of authentic and inspiring content. Our social media and brand marketing strategy is combined with robust and sophisticated digital performance marketing activities and our proprietary brand ambassador program. Once we have attracted potential new customers to our sites, our goal is to convert them into active customers and then encourage repeat purchases. We acquire and retain customers through paid search/product listing ads, affiliate marketing, paid social, retargeting, our brand ambassador program, personalized email marketing and mobile "push" communications through our mobile applications. We have developed an efficient logistics infrastructure, which allows us to provide free shipping and returns to our customers inthe United States . We support our logistics network with proprietary algorithms to optimize inventory allocation, reduce shipping and fulfillment expenses and deliver merchandise quickly and efficiently to our customers. To date, we have primarily focused on expanding ourU.S. business and have grown internationally with limited investment and no physical presence. We began offering a more localized shopping experience, including free returns and all-inclusive pricing, beginning in 2018, for customers in theUK , the EU andAustralia , and further expanded toNew Zealand ,Singapore andCanada in 2020 andPoland ,Spain ,Switzerland and theUAE in 2021, andSaudi Arabia andMonaco in 2022. We have also sold our REVOLVE products on two large international marketplaces, Tmall Global inChina and Nykaa Fashion inIndia , beginning in 2020 and 2022, respectively. We intend to continue to invest in and develop international markets while maintaining our focus on the core U.S. market.
Kluczowe wskaźniki operacyjne i finansowe
Używamy następujących wskaźników do oceny postępów naszej działalności, podejmowania decyzji o tym, gdzie alokować kapitał, czas i inwestycje technologiczne oraz oceniać krótkoterminowe i długoterminowe wyniki naszej działalności.
Three Months Ended March 31,
2023 2022
(in thousands, except average order value and percentages)
Gross margin 49.8 % 54.5 %
Adjusted EBITDA $ 15,010 $ 31,543
Free cash flow $ 47,681 $ 52,727
Active customers 2,424 2,041
Total orders placed 2,278 2,156
Average order value $ 288 $ 288
Adjusted EBITDA and free cash flow are non-GAAP measures. See the sections
titled "-Adjusted EBITDA" and "-Free Cash Flow" below for information regarding
our use of Adjusted EBITDA and free cash flow and their reconciliation to net
income and net cash provided by operating activities, respectively.
Marża brutto
Gross profit is equal to our net sales less cost of sales. Gross profit as a
percentage of our net sales is referred to as gross margin. Cost of sales
consists of our purchase price of merchandise sold to customers and includes
import duties and other taxes, inbound freight costs, receiving costs, defective
merchandise returned from customers, inventory valuation adjustments, and other
miscellaneous shrinkage.
Gross margin is impacted by the mix of brands and categories of styles that we
sell on our sites. Gross margin on sales of owned brands is typically higher
than that for third-party brands. Gross margin is also affected by the
percentage of sales through the REVOLVE segment, which consists primarily of
emerging third-party, established third-party and owned brands, compared to our
FWRD segment, which consists primarily of established third-party
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marki. Asortyment towarów będzie się zmieniał w poszczególnych okresach i jeśli nie będziemy dokładnie prognozować popytu, może to niekorzystnie wpłynąć na nasz wzrost, marże i poziomy zapasów.
We review our inventory levels on an ongoing basis to identify slow-moving merchandise and use product markdowns to efficiently sell these products. We have maintained a high percentage of sales that occur at full price, which we believe reflects our data-driven merchandising strategy, customer acceptance of our merchandise and the sense of urgency we create through frequent product introductions in limited quantities. Gross margin is impacted by the mix of sales at full price and markdowns, as well as the level of markdowns. Certain of our competitors and other retailers report cost of sales differently than we do. As a result, the reporting of our gross profit and gross margin may not be comparable to other companies.
Skorygowana EBITDA
To provide investors with additional information regarding our financial results, we have disclosed in the table above and elsewhere in this report Adjusted EBITDA, a non-GAAP financial measure that we calculate as net income before other income, net; taxes; and depreciation and amortization; adjusted to exclude the effects of equity-based compensation expense and certain non-routine items. We have provided below a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure. We have included Adjusted EBITDA in this report because it is a key measure used by our management and board of directors 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. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Skorygowana EBITDA jako narzędzie analityczne ma ograniczenia i nie należy jej rozpatrywać oddzielnie ani jako substytutu analizy naszych wyników zgodnie z GAAP. Niektóre z tych ograniczeń to:
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although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
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Skorygowana EBITDA nie odzwierciedla zmian ani zapotrzebowania na środki pieniężne na nasze potrzeby w zakresie kapitału obrotowego;
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Skorygowana EBITDA nie uwzględnia potencjalnie rozwadniającego wpływu wynagrodzenia opartego na kapitale własnym;
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Skorygowana EBITDA nie odzwierciedla płatności podatkowych, które mogą oznaczać zmniejszenie dostępnych nam środków pieniężnych;
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Skorygowana EBITDA nie odzwierciedla pewnych nierutynowych pozycji, które mogą oznaczać zmniejszenie dostępnych nam środków pieniężnych; I
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inne spółki, w tym spółki z naszej branży, mogą inaczej obliczać Skorygowaną EBITDA, co zmniejsza jej przydatność jako miary porównawczej.
Ze względu na te ograniczenia należy rozważyć Skorygowaną EBITDA wraz z innymi miarami wyników finansowych, w tym różnymi wskaźnikami przepływów pieniężnych, dochodem netto i innymi wynikami GAAP.
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Uzgodnienie Skorygowanej EBITDA do zysku netto za trzy zakończone miesiące
Three Months Ended March 31,
2023 2022
(in thousands)
Net income $ 14,172 $ 22,568
Excluding:
Other income, net (6,585 ) (516 )
Provision for income taxes 4,669 6,398
Depreciation and amortization 1,218 1,102
Equity-based compensation 1,278 1,491
Non-routine items(1) 258 500
Adjusted EBITDA $ 15,010 $ 31,543
(1) Non-routine items in the three months ended March 31, 2023 and 2022
relate to an accrual for a legal matter.
Wolne przepływy pieniężne
To provide investors with additional information regarding our financial
results, we have also disclosed in the table above and elsewhere in this report
free cash flow, 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 have provided below a reconciliation of free cash flow to net cash
provided by operating activities, the most directly comparable GAAP financial
measure.
We have included free cash flow in this report because it is a key measure used
by our management and board of directors, which we believe is an important
indicator of our liquidity because it measures the amount of cash we generate.
Free cash flow also reflects changes in working capital. Our working capital
fluctuates over time primarily as a result of the timing of our inventory
purchases to support growth, our effective tax rate and the timing of tax
payments, and changes in the level of merchandise that is returned by our
customers, which in turn impacts our return reserve. Accordingly, we believe
that free cash flow provides useful information to investors and others in
understanding and evaluating our operating results in the same manner as our
management and board of directors.
Free cash flow has limitations as an analytical tool and you should not consider
it in isolation or as a substitute for analysis of our results as reported under
GAAP. There are limitations to using non-GAAP financial measures, including that
other companies, including companies in our industry, may calculate free cash
flow differently. Because of these limitations, you should consider free cash
flow alongside other financial performance measures, including net cash provided
by operating activities, purchases of property and equipment and our other GAAP
results.
The following table presents a reconciliation of free cash flow to net cash
provided by operating activities, as well as information regarding net cash used
in investing activities and net cash provided by financing activities, for each
of the periods indicated:
Three Months Ended March 31,
2023 2022
(in thousands)
Środki pieniężne netto z działalności operacyjnej
Zakupy środków trwałych i wyposażenia
(1,148 ) (1,070 ) Free cash flow$ 47,681 $
52727
Net cash used in investing activities$ (1,148 )
(1.070 ) Środki pieniężne netto z działalności finansowej 161 USD 126 USD
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. We calculate the number of active customers on a trailing 12-month basis given the volatility that can be observed when calculating it on the basis of shorter periods thatmay 24 -------------------------------------------------------------------------------- not be reflective of longer-term trends; however, such a methodology may not be indicative of other short-term trends, such as changes in new customers. 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 brands, the continued use of our sites by our customers and their desire to purchase our products. We believe the number of active customers is a measure that is useful to investors and management in understanding our growth, brand awareness and market opportunity. Our number of active customers drives both net sales and our appeal to brands and partners. Active customers increased during the period endedMarch 31, 2023 compared to the same period in 2022 primarily due to our ability to engage with our existing customers and acquire new customers through our sales and marketing efforts.
Całkowita liczba złożonych zamówień
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. We believe that total orders placed is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. Total orders placed and total orders shipped in any given period may differ slightly due to orders that are in process at the end of any particular period. Total orders placed increased in the three months endedMarch 31, 2023 compared to the same period in 2022 primarily due to our ability to engage with our existing customers and acquire new customers through our sales and marketing efforts. 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. We believe that average order value is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. 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. Average order value was flat in the three months endedMarch 31, 2023 relative to the same period in 2022, primarily due to an increase in the price of products as a result of the increase in the cost of goods and other input costs, offset by a lower percentage of full price sales.
Czynniki wpływające na nasze wyniki
Ogólne trendy gospodarcze
The overall economic environment and related changes in consumer behavior have a significant impact on our business. In general, positive conditions in the broader economy promote customer spending on our sites, while economic weakness, which generally results in a reduction of customer spending, may have a more pronounced negative effect on spending on our sites. Macro factors that can affect consumer confidence, shopping behavior and spending patterns, and thereby our near-term and long-term results of operations, include inflation levels, employment rates, business conditions, changes in the housing market, changes in the stock market, adverse developments affecting the financial services industry, the availability of credit,U.S. government stimulus payments, interest rates, foreign currency exchange rates, fuel, energy and raw material costs, supply chain challenges andRussia's war againstUkraine . In addition, during periods of low unemployment, we generally experience higher labor costs. The COVID-19 pandemic has also had and may continue to have a materially adverse impact on the macroeconomic environment inthe United States and substantially all of our target markets. 25 --------------------------------------------------------------------------------
Pozyskiwanie i utrzymanie klientów oraz wzrost świadomości marki
Our focus since inception has been on profitable growth, which has created our disciplined approach to acquiring new customers and retaining existing customers at a reasonable cost, relative to the contributions we expect from such customers. Failure to attract new visitors to our sites and convert them to customers would impact future net sales growth. If our marketing efforts do not connect with our customer or fail to cost-effectively promote our brand or convert impressions into new customers, our net sales growth and profitability will be adversely affected. Competition for social media and influencer-based marketing channels continues to increase, making it more difficult to differentiate ourselves and cost-effectively acquire customers. Furthermore, changes in the user experience on social media platforms, including a shift towards video and the level of recommended content as well as changes in privacy practices by third parties, may make it more difficult to gain customer awareness and cost effectively acquire and retain customers. Apple Inc. has imposed requirements for consumer disclosures regarding privacy practices, and has implemented an application tracking transparency framework that requires opt-in consent for certain types of tracking. This transparency framework was launched inApril 2021 and has made it more difficult and costly to acquire and retain customers. Additionally,REVOLVE Gallery , as well as short-term pop-up retail experiences. We plan to continue to conduct in-person events at varying levels of scale in the future and make opportunistic investments in marketing initiatives that could increase marketing as a percentage of net sales to levels in excess of historical levels for certain quarters or periods of time in the future. This incremental investment may not deliver a meaningful return in the short term and may adversely impact our operating income in the short term. Our success is impacted not only by efficient and profitable customer acquisition and growth in brand awareness, but also by our ability to retain customers and encourage repeat purchases. Existing customers, whom we define as customers in a year who have purchased from us in any prior year, have historically accounted for a greater share of active customers over time.
Mieszanka towarów
We offer merchandise across a variety of product types, brands and price points. The brands we sell on our platform consist of a mix of emerging third-party, established third-party (including iconic luxury brands) and owned brands. Our product mix consists primarily of apparel, footwear, accessories and beauty products. Our merchandise mix across our two reporting segments carry a range of margin profiles and may cause fluctuations in our gross margin. Shifts in our segment mix and our broader category merchandise mix may result in fluctuations in our gross margin from period to period.
Zarządzanie zapasami
We leverage our platform and technology to buy and manage our inventory,
including merchandise assortment and fulfillment center optimization. We utilize
a data-driven "read and react" buying process to merchandise and curate the
latest on-trend fashion. We generally make shallow initial inventory buys and
then use our proprietary technology tools to identify and re-order best sellers,
taking into account customer feedback across a variety of key metrics, which
allows us to manage inventory and fashion risk. To ensure sufficient
availability of merchandise, we generally purchase inventory in advance and
frequently before apparel trends are confirmed. As a result, we are vulnerable
to demand and pricing shifts and to suboptimal selection and timing of
merchandise purchases. In the normal course of business, we incur inventory
valuation adjustments, which impacts our gross margin. Moreover, our inventory
investments will fluctuate with the needs of our business. For example, entering
new categories will require additional investments in inventory. Shifts in
inventory levels may result in fluctuations in the percentage of full price
sales, levels of markdowns, merchandise mix, as well as gross margin. For
example, during the second quarter of 2022, consumer demand began to trend down
significantly, resulting in a significant increase in our inventory balance. We
believe we have made considerable progress in our efforts to balance our
inventory levels with the shift in demand,
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ale możemy nie być w stanie optymalnie dostosować naszej pozycji zapasów, co może mieć negatywny wpływ na nasze wyniki operacyjne.
Inwestycje w nasze operacje i infrastrukturę
We have made investments over time to grow our customer base, enhance our offerings and deliver best-in-class service to our customers. Over the long term, we expect to continue to make capital investments in our inventory, fulfillment centers, and logistics infrastructure as we grow our customer base, launch new brands, expand internationally and drive operating efficiencies. We believe these investments will yield positive returns in the long term; however, we cannot be certain that these efforts will grow our customer base or be cost-effective in the short term.
Segment i wyniki geograficzne
Our financial results are affected by the performance across our two reporting segments, REVOLVE and FWRD, as well as across the various geographies in which we serve our customers. The REVOLVE segment contributes to a majority of our net sales, representing 82.8% and 83.9% of our net sales for the three months endedMarch 31, 2023 and 2022, respectively. During the three months endedMarch 31, 2023 and 2022, REVOLVE generated$231.7 million and$237.7 million in net sales, respectively, representing a decrease of 2.6%. The net sales decrease in the three months endedMarch 31, 2023 , as compared to the same period in 2022, was primarily due to a higher proportion of returned merchandise, partially offset by an increase in the number of orders placed. The FWRD segment contributes to a smaller portion of our overall net sales, representing 17.2% and 16.1% of our net sales for the three months endedMarch 31, 2023 and 2022, respectively. During the three months endedMarch 31, 2023 and 2022, FWRD generated$48.0 million and$45.8 million in net sales, respectively, representing an increase of 4.8%. The net sales increase in the three months endedMarch 31, 2023 , as compared to the same period in 2022, was primarily due to an increase in average order value and the number of orders shipped, partially offset by a higher proportion of returned merchandise. Net sales to customers outside ofthe United States contributed to 18.9% and 16.1% of our net sales for the three months endedMarch 31, 2023 and 2022, respectively. During the three months endedMarch 31, 2023 and 2022, net sales to customers outside ofthe United States were$52.9 million and$45.6 million , respectively, representing an increase of 15.9%. Net sales to customers outside ofthe United States are impacted by various factors including import and export taxes, currency fluctuations and other macroeconomic conditions described in "-Overall Economic Trends" above. In addition, any weakening of a local currency versus theU.S. dollar results in our products becoming more expensive in that local currency, which has had, and may continue to have, a negative impact on demand for our products in the geographies that use such currency.
Sezonowość
Seasonality in our business has not historically followed that of traditional
retailers which typically experience concentration of net sales in the fourth
calendar quarter in connection with the holidays. We historically experienced
increased sales in the spring and summer months that have resulted in peak sales
during the second quarter of each fiscal year. We also historically experienced
lower activity in the first quarter of each year. Our operating income has also
been affected by these historical trends because many of our expenses are
relatively fixed in the short term. If our growth rates moderate over the
long-term, the impact of these seasonality trends on our results of operations
may become more pronounced. Our seasonality trends have also been impacted by
the COVID-19 pandemic and other unpredictable events such as the other
macroeconomic conditions described in "-Overall Economic Trends" above.
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Składniki naszych wyników operacyjnych
Net sales consist primarily of sales of women's apparel, footwear, accessories, home and beauty products. We recognize product sales at the time control is transferred to the customer, which is when the product is shipped. Net sales represent the sales of these items and shipping revenue when applicable, net of estimated returns and promotional discounts. Net sales are primarily driven by growth in the number of our customers, the frequency with which customers purchase and average order value.
Koszt sprzedaży
Cost of sales consists of our purchase price for merchandise sold to customers and includes import duties, net of drawback claims, and other taxes, inbound freight costs, receiving costs, defective merchandise returned from customers, inventory valuation adjustments, and other miscellaneous shrinkage. Cost of sales is primarily driven by the cost of the product, the number of total orders placed by customers, the mix of the product available for sale on our sites and transportation costs related to inventory receipts from our vendors. We expect our cost of sales to fluctuate as a percentage of net sales primarily due to how we manage our inventory and merchandise mix. We have recently experienced and may continue to experience an increase in the cost of goods due to an increase in the cost of materials. Fulfillment Expenses Fulfillment expenses represent those costs incurred in operating and staffing our fulfillment centers, including costs attributed to inspecting and warehousing inventories and picking, packaging and preparing customer orders for shipment. Fulfillment expenses also include the cost of warehousing facilities. We expect fulfillment expenses to fluctuate as a percentage of net sales due to pressure from increased costs such as wages and other input cost pressure, expansion of our fulfillment network footprint and capacity, and our customers' propensity to return merchandise, to be partially offset by operating efficiencies from increased scale as well as automation of the fulfillment center workflow.
Koszty sprzedaży i dystrybucji
Selling and distribution expenses consist primarily of shipping and other transportation costs incurred delivering merchandise to customers and from customers returning merchandise, merchant processing fees, and customer service. We expect selling and distribution expenses to fluctuate as a percentage of net sales reflecting pressure from elevated return rates due to consumer behavior, investments in international markets to offer hassle-free returns as well as increases in shipping costs, including the impact of fuel prices incurred through variable surcharges from our shipping partners, partially offset by efficiencies realized from optimized shipping methods.
Wydatki marketingowe
Marketing expenses consist primarily of targeted online performance marketing
costs, such as paid search/product listing ads, affiliate marketing, paid
social, retargeting, search engine optimization, personalized email marketing
and mobile "push" communications through our mobile applications. Marketing
expenses also consist of investment in brand marketing channels, including
events, payments to influencers and other forms of online and offline marketing
such as our brand ambassador program. Marketing expenses are primarily related
to growing and retaining our customer base and building the REVOLVE and FWRD
brands. In 2021 and 2022, we increased our level of investment in marketing to
maximize our opportunities to capture consumer demand as economies reopened.
During the first quarter of 2023, we reduced the level of investment in both
brand marketing activations and performance marketing campaigns by reducing the
number of large-scale events and gaining efficiencies in marketing investments.
Over the long term, we expect marketing expenses to increase in absolute dollars
as we continue to scale our business, and may fluctuate as a percentage of sales
depending on net sales volume, the level of marketing investment in a particular
period and the competitive environment. We may make opportunistic investments in
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marketing initiatives that may increase marketing as a percentage of net sales
to levels in excess of historical levels for certain quarters or periods of time
in the future.
Koszty ogólnoadministracyjne
General and administrative expenses consist primarily of payroll and related benefit costs and equity-based compensation expense for our employees involved in general corporate functions, as well as costs associated with the use by these functions of facilities and equipment, such as depreciation, rent and other occupancy expenses. Over the long-term, we expect general and administrative expenses to continue to increase moderately in absolute dollars to support business growth with general and administrative expenses as a percentage of net sales declining over the long-term as we leverage our investments and as our business scales.
Inne dochody netto
Other income, net consists primarily of interest income on our money market funds and interest expense and other fees associated with our line of credit. For the three months endedMarch 31, 2023 , other income, net also includes$5.1 million of insurance proceeds related to a legal matter.
Wyniki operacji
The tables below set forth our results of operations for the periods presented
and express the relationship of certain line items as a percentage of net sales
for those periods. The period-to-period comparison of financial results is not
necessarily indicative of future results.
Three Months Ended March 31,
2023 2022
(in thousands)
Net sales $ 279,609 $ 283,498
Cost of sales 140,389 129,087
Gross profit 139,220 154,411
Operating expenses:
Fulfillment expenses 9,071 7,290
Selling and distribution expenses 51,458 46,586
Marketing expenses 38,343 45,250
General and administrative expenses 28,092 26,835
Total operating expenses 126,964 125,961
Income from operations 12,256 28,450
Other income, net (6,585 ) (516 )
Income before income taxes 18,841 28,966
Provision for income taxes 4,669 6,398
Net income $ 14,172 $ 22,568
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Three Months Ended March 31,
2023 2022
Net sales 100.0 % 100.0 %
Cost of sales 50.2 % 45.5 %
Gross profit 49.8 % 54.5 %
Operating expenses:
Fulfillment expenses 3.2 % 2.6 %
Selling and distribution expenses 18.4 % 16.4 %
Marketing expenses 13.7 % 16.0 %
General and administrative expenses 10.1 % 9.5 %
Total operating expenses 45.4 % 44.5 %
Income from operations 4.4 % 10.0 %
Other income, net (2.4 %) (0.2 %)
Income before income taxes 6.8 % 10.2 %
Provision for income taxes 1.7 % 2.3 %
Net income 5.1 % 7.9 %
Porównanie trzech zakończonych miesięcy
Three Months Ended March 31, Change
2023 2022 $ %
(dollars in thousands)
Net sales $ 279,609 $ 283,498 $ (3,889 ) (1.4 %)
The decrease in net sales for the three months ended March 31, 2023 , as compared
to the same period in 2022, was primarily due to a higher proportion of returned
purchases, partially offset by a 5.7% increase in the number of orders placed by
customers.
Net sales in the REVOLVE segment decreased 2.6% to $231.7 million in the three
months ended March 31, 2023 compared to net sales of $237.7 million in the same
period in 2022. Net sales in the FWRD segment increased 4.8% to $48.0 million in
the three months ended March 31, 2023 as compared to net sales of $45.8 million
in the same period in 2022.
Cost of Sales
Three Months Ended March 31, Change
2023 2022 $ %
(dollars in thousands)
Cost of sales $ 140,389 $ 129,087 $ 11,302 8.8 %
Percentage of net sales 50.2 % 45.5 %
The increase in cost of sales for the three months ended March 31, 2023 , as
compared to the same period in 2022, was primarily due to an increase in the
volume of merchandise sold. The increase in cost of sales as a percentage of net
sales was primarily due to a lower percentage of full price sales.
Fulfillment Expenses
Three Months Ended March 31, Change
2023 2022 $ %
(dollars in thousands)
Fulfillment expenses $ 9,071 $ 7,290 $ 1,781 24.4 %
Percentage of net sales 3.2 % 2.6 %
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-------------------------------------------------------------------------------- Fulfillment expenses for the three months endedMarch 31, 2023 were higher as compared to the same period in 2022, primarily due to an increase in the number of units processed. The increase in fulfillment expenses as a percentage of net sales was primarily due to customers returning a higher proportion of their purchases, higher wages for fulfillment staff and the expansion of our fulfillment network footprint and capacity.
Koszty sprzedaży i dystrybucji
Three Months Ended March 31, Change
2023 2022 $ %
(dollars in thousands)
Selling and distribution
expenses $ 51,458 $ 46,586 $ 4,872 10.5 %
Percentage of net sales 18.4 % 16.4 %
The increase in selling and distribution expenses for the three months ended
March 31, 2023 , as compared to the same period in 2022, was primarily due to an
increase in the number of orders shipped. Shipping and handling costs increased
$3.6 million and other selling expenses increased $1.3 million for the three
months ended March 31, 2023 as compared to the same period in 2022. The increase
in selling and distribution expenses as a percentage of net sales was primarily
due to customers returning a higher proportion of their purchases and higher
shipping rates as compared to the comparative period in the prior year.
Marketing Expenses
Three Months Ended March 31, Change
2023 2022 $ %
(dollars in thousands)
Marketing expenses $ 38,343 $ 45,250 $ (6,907 ) (15.3 %)
Percentage of net sales 13.7 % 16.0 %
The decrease in marketing expenses for the three months ended March 31, 2023 , as
compared to the same period in 2022, was due to reduced investment in both brand
marketing activations and performance marketing campaigns driven by fewer
large-scale events and efficiencies in marketing investments. As a result, we
experienced a decrease of $3.5 million in performance marketing expense and a
decrease of $3.4 million in brand marketing expense.
Koszty ogólnoadministracyjne
Three Months Ended March 31, Change
2023 2022 $ %
(dollars in thousands)
General and administrative
expenses $ 28,092 $ 26,835 $ 1,257 4.7 %
Percentage of net sales 10.1 % 9.5 %
The increase in general and administrative expenses for the three months ended
March 31, 2023 , as compared to the same period in 2022, was due to a $1.0
million increase in salaries and related benefits and equity-based compensation
expense and a $0.3 million increase in other operating expenses. The increase in
general and administrative expenses as a percentage of net sales was driven by
growth in general and administrative expenses combined with the slight decline
in net sales.
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Income Taxes
Three Months Ended March 31,
2023 2022
(dollars in thousands)
Income before income taxes $ 18,841 $ 28,966
Provision for income taxes 4,669 6,398
Effective tax rate 24.8 % 22.1 %
Wzrost efektywnej stopy podatkowej za okres trzech miesięcy zakończony
Płynność i zasoby kapitałowe
Poniższa tabela przedstawia nasze środki pieniężne i ich ekwiwalenty, należności i kapitał obrotowy na wskazane daty:
As of
March 31, 2023 December 31, 2021
(in thousands)
Cash and cash equivalents $ 283,321 $ 234,724
Accounts receivable, net 8,080 5,421
Working capital(1) 355,069 337,131
(1)
Kapitał obrotowy dla wszystkich przedstawionych powyżej okresów zdefiniowany jest jako aktywa obrotowe pomniejszone o zobowiązania krótkoterminowe.
As ofMarch 31, 2023 , the majority of our cash and cash equivalents was held for working capital purposes. We believe that our existing cash and cash equivalents, cash flows from operations and available borrowing capacity under our line of credit will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, our liquidity assumptions may prove to be incorrect and we could exhaust our available financial resources sooner than we currently expect. We may seek to borrow funds under our line of credit or raise additional funds at any time through equity, equity-linked or debt financing arrangements. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the "Risk Factors" section of this report. We may not be able to secure additional financing to meet our operating requirements on acceptable terms or at all.
Źródła płynności
Since our inception, we have financed our operations and capital expenditures primarily through cash flows generated by operations, private sales of equity securities, the incurrence of debt, the net proceeds we received through our IPO, as well as proceeds received from the exercise of stock options.
Linia kredytowa
OnMarch 23, 2021 , we amended and restated our existing credit agreement to, among other things, extend the expiration date fromMarch 23, 2021 toMarch 23, 2026 . The line of credit provides us with up to$75.0 million aggregate principal in revolver borrowings, based on eligible inventory and accounts receivable less reserves. Borrowings under the credit agreement accrue interest, at our option, at (1) a base rate equal to the highest of (a) the federal funds rate, plus 0.50%, (b) the prime rate and (c) an adjusted LIBO rate determined on the basis of a one-month interest period, plus 1.00%, or (2) an adjusted LIBO rate, subject to a floor of 0.00%, in each case, plus a margin ranging from 0.25% to 0.75% per year in the case of base rate loans, and 1.25% to 1.75% per year in the case of LIBO rate loans. No borrowings were outstanding as ofMarch 31, 2023 andDecember 31, 2022 . Our obligations under the credit agreement are secured by substantially all of our assets. The credit agreement also contains customary covenants restricting our activities, including limitations on our ability to sell assets, engage in mergers and acquisitions, enter into transactions involving related parties, obtain letters of credit, incur indebtedness or grant liens or negative pledges on our assets, make loans or make other investments. Under these covenants, we are 32 -------------------------------------------------------------------------------- prohibited from paying cash dividends with respect to our capital stock. We were in compliance with all financial covenants as ofMarch 31, 2023 andDecember 31, 2022 . Uses of Cash Our short-term and long-term liquidity requirements primarily arise from operating costs such as merchandise purchases, compensation and benefits, lease obligations, marketing and other expenditures necessary to support our business growth. Historical Cash Flows Three Months EndedMarch 31, 2023 2022
Środki pieniężne netto z działalności operacyjnej
Środki pieniężne netto wykorzystane w działalności inwestycyjnej
(1,148 ) (1,070 )
Środki pieniężne netto z działalności finansowej 161 126
Środki pieniężne netto dostarczone przez działalność operacyjną
Cash from operating activities consists primarily of net income adjusted for certain non-cash items, including depreciation, equity-based compensation, and the effect of changes in working capital and other activities. For the three months endedMarch 31, 2023 , we generated$48.8 million of operating cash flow as compared to$53.8 million for the same period in 2022. The decrease in our operating cash flow was primarily due to lower net income adjusted for certain non-cash items, partially offset by a positive impact from changes in working capital.
Our primary investing activities have consisted of purchases of property and equipment to support our fulfillment centers and our overall business growth and internally developed software for the continued development of our proprietary technology infrastructure. Purchases of property and equipment may vary from period-to-period depending on the timing and extent of the expansion of our operations.
Środki pieniężne netto wykorzystane w działalności inwestycyjnej wyniosły
Środki pieniężne netto dostarczone przez działalność finansową
Na naszą działalność finansową składają się przede wszystkim wpływy z realizacji opcji na akcje oraz pożyczki i spłaty związane z istniejącą linią kredytową, tam gdzie ma to zastosowanie.
Środki pieniężne netto z działalności finansowej wyniosły
Zobowiązania kontraktowe
As ofMarch 31, 2023 , our principal contractual obligations consist of obligations under operating leases for office and fulfillment facilities. There have been no material changes in our contractual obligations and commitments as compared to the contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2022 , filed with theSEC onFebruary 23, 2023 . 33 --------------------------------------------------------------------------------
Inflacja
We have been impacted by high levels of inflation in recent periods resulting in part from various supply chain disruptions, increased shipping and transportation costs, increased merchandise and labor costs and other disruptions caused by the COVID19 pandemic and general economic and market conditions. We continue to monitor the impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions. These mitigating actions may adversely impact demand for our products. Furthermore, if costs were to become subject to significant incremental inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
Krytyczne zasady rachunkowości i szacunki
Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
Nie było żadnych istotnych zmian w naszych kluczowych zasadach rachunkowości i szacunkach w porównaniu z kluczowymi zasadami rachunkowości oraz znaczącymi osądami i szacunkami ujawnionymi w naszym raporcie rocznym na formularzu 10-K za rok obrotowy zakończony
Najnowsze komunikaty księgowe
Patrz Nota 2, Istotne zasady rachunkowości, do naszego skróconego skonsolidowanego sprawozdania finansowego zamieszczonego w innym miejscu niniejszego raportu, aby uzyskać informacje dotyczące ostatnio wydanych oświadczeń księgowych.
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