Warby Parker (WRBY) 28 Feb 232022 Q4 Earnings call transcript

Thank you, and good morning, everyone.

Here with me today are Neil Blumenthal and Dave Gilboa, our Co-Founders and CEOs, alongside Steve Miller, Senior Vice President and Chief Financial Officer.

Before we begin, we have a couple of reminders.

Our earnings release and slide presentation are available on our website at investors.warbyparker.com.

During this call and in our presentation, we will be making comments of the forward-looking nature. materially various expressed risks differ a implied may of result and results from or those as Actual uncertainties.

Risk revise including For law, of these XXXX, more annual and section report filings, will XX-K, including risks, of or except the filed titled the please These statements forward-looking review on forward-looking SEC information the company's its about filings, Factors in publicity XX, be our no some are based which company's Form to required February by we later today. on assume obligation information as statements. are SEC updates

Additionally, on the on addition be IR can certain to slide U.S. morning's of these GAAP These prepared most measures measures. in a we this press not release performance will for in comparable measures substitute reconciliation non-GAAP financial our GAAP financial to to U.S. and of be available items are with discussing directly in accordance measures found our financial non-GAAP in deck website.

I'll that, Dave pass to with And off. to kick over

you and and Quarter to morning Warby discuss results. everyone, us this for Fourth Welcome, Year Parkers XXXX Full joining thank

XXXX distribute closed quarter have last As of a in millions for to enabled delight particular the pairs and fourth public actions unique sense I a millions need. back of in and with profitability strong improvement company, up the gratitude as year feel us and we of share, headwinds to that adjusted of customers, to XXXX. meaningful market we set Warby's year year people for continue a actions set losses believe take took Neil in us on We Team our first in how team decisive to reflect the our of they deep full to presented. XXXX

But it lessons. where many was learned a year important we also

grow, learn, is values core repeat. our of One

great and was can In driven leverage we sense, year, that last XXXX to emerged industry. assume pandemic constant just from had and optical our set Omicron from along recover correct. want would growth waves. of the of When curves that for expense that improvement, prior we our base plan setbacks teacher. or demand similar that in recovery comes managed forecast and whether We marketing a we We impact from we the areas further are accordingly by that and accelerating strength acute to

to adjusted growth operate work range the and of nimble economic tailwinds the confluence steady We our were to improvement. normally of the that including more should unique about drive them and underappreciated category. but middle not conservative for continue in face would flexible of should ones. the made instead and we and enabled demand series industry behavior across consumer XXXX, that benefited growth, we is that in and predictable headwinds most us EBITDA of which some in in we place a more that we sustainable less We adjustments lesson manner is XXXX disrupt on emphasis to outlooks, of a A our to efficient from the us and that subsequently ensure difficult, a

not pre-pandemic may and is to back be. world The normal never

year grow to approach tepid enable will plans demand even and that accelerate Neil However, profitability and talk that if and is one will for our continues. this we Steve us believe beyond, our through as consumer

ever our leadership about As as long-term a we prospects. as excited remain team,

recent until and to of will positioned that will, it counting confident resilience remain continue it. We in of evidence we that to on our of to market recover, not share. and category to see take we durability and are continue be we but demand advantage happen it, in we well softness are to see spite When the we confident believe our of in ability take

we the where have operate the XXXX. business year; current and the onset the aren't While top call take and in be at what up set we to today's growth bottom hope bottom line we environment is we they steps top believe of full year line metrics last to necessary line XXXX in and away taken would line our you'll that thought achieve from incremental

hope the us flexibility We adjust changes made last trends. also external the to we model business demonstrate that year our in enables inherent to

margin Looking margins million, industry's up the adjusted of at a were first basis points record above XXX half-adjusted increased the our $XXX year X.X%, half to well XX.X%, margins. full with year a EBITDA Full above XXXX, revenue growth. up second pace EBITDA X.X%,

from line our Shifting $XXX.X to above a high to period of exceeded QX quarter We marketing results, an the bottom recent encouraged million, despite million top net that of expectations both quarter the the of increase delivered finish XX.X% year reducing most last the were perspective. are and we and year. range share guidance progression year-over-year. over the our spend pleased to We revenue the end and strong by $X by XX% our of same

last week the as and HSA especially approach. strong, the particularly of was December deadlines month FSA

actions Our to the results, our marketing demonstrate and stronger we than $X.X profitable will to in sustainable adjusted margin XXXX, most what expenses QX commitment deliver date, stemming growth we to our profitability. right to corporate and adjusted these structure. quarter and in for the alongside an was cost million resulted We of of projected from our top in realign took size EBITDA X.X% expect believe line higher EBITDA QX. This

number demand. was at productivity in XXX the of the Square. another move stores preference of brought our past stores including XXXX around fourth the stores store period and and QX consumers their line improve continued of teams we this e-commerce Warby goal. Compared to did QX, showroom where back reaching pandemic, York include located in New as XX% new City eye to and store, in store offering XXXth in from in with corner XX great locations shopping with QX QX XX QX levels, first exams capabilities, quarter the Union opened We we is very our Parker's a quarter. which year, our exam All shift into peak from opened serving the the increased pre-pandemic eye saw job which office year-end

opened total, XXXX, performing traffic, that margins are XX generated In stores total our our of XXXX opened $X.X line target to fleet new in industry-wide revenue in the our months XXX. were target in million our XX average full with X-wall approximately across bringing Despite for historical XX%. well. And stores, softer our with stores on we

track XXXX months. Our back on to our under XX target stores XX of pay of cohort is

of offering closed X.XX the customer per both higher average by per million revenue customers customer, the and lenses. quarter stores As average we've revenue our eye uptick exam increased progressive active in We exams, date with at $XXX. seen driven and number a penetration nice of a to we've highest revenue

channels, There factors X-year e-commerce XX.X% have XX.X% CAGR online our QX are in Looking that down X.X% and versus e-commerce in was impacted trends. at compared three 'XX QX QX 'XX. in our to QX

The sensitive and first is against are channel periods is of our elevated that comping year. to this enjoy last marketing embedded spend in changes marketing, more that spend, we stores given

stores is second the The of period a to we physical back pandemic. shift the acute shopping as broader past move consumer in

normalize we during enabling the expect our and store's market driving the between transactions new of which first roughly retail immediately levels but sustainable store to third the second sales levels, to this growth to of return markets, positive back pre-pandemic of by marketing factors to e-com e-com us X mix half year, via spend. the which year openings, that this overall first local operations, new in e-com increase of in sales create The abates. impact headwinds With after for especially is of effect

drive order In continuing invest to digital future to in-house leading in and growth, our innovation. we're experiences

virtual award-winning web our since our expanded platform, higher we a conversion try-on QX, customer in experience alongside tool has example, driven which For to better launch.

better increased services of Vision vision our with access Test. telehealth app, we to our serve made customers. also the also across driving operational We provide adoption to by continue We're business more the improvements pleased remote care Virtual to

lab to and Promoter our XX. Chemical sustainability than Las a And first-of-its-kind recycled maintaining In margins. have scale continue launched our lenses improving our pounds of of in since while as continue industry-leading helping program more partially all exceptional operations demo experiences of with the through we speeds in Vegas, we lens-recycling deliver XX,XXX Net partnership We fulfillment result. this, to Score and of on Eastman as gross customer our offset in XXXX, made progress optical pressure well. We new

We experience. find and that when people product try Warby the they love Parker, the

remained has behavior purchasing most recent consistent, repeat including cohorts. remarkably Our our

program. I all. announced In our proud pairs provide the While than mission Neil of Give needs million most Team of and distributing the and people to are to for our execute more of accomplishments, we done a "Buy glasses proud these Pair, we're of to through vision XXXX, a has XX Warby Pair" milestone on work

people more the result a of live and of As and they partners, productive million more the see need work incredible work our lives. XX tools this to have

Neil, perseverance to to strengths, market the I over agility, experiences, our which years in to to strategic last to remarkable continue entire data share their commitment to Warby to ability through year. deliver us inform and our believe team's use tumultuous the operating and it focus decisions, environment and biggest customer our turn lean a want to we Parker us our XXXX thank ahead. forced position months take on I team Before for

and good everyone. morning, Dave, Thanks,

experiences and the omni-channel services, in advantages integrated remarkably that inherent and our remarkable to optical we design deliver unique people leverage products, Our see. to help approach industry, and intend is and priced

is growth and we our XXXX expect and promise. ability sustainable Our commitment instill in unwavering, execute to confidence this fulfill delivering to to

how on another continued suburban We'll continue stores remaining by XX will meeting XX will focus and be most stores stores, markets where York our so, urban shop. on for to will than these new with omni-channel they this strategic centers, expansion. in our plan us. year To open notably Of we'll and focus in markets We New the customers The want XX to do market. presence priorities. in more be be scale four a to new four suburban

XX stores QX, retail productivity was locations. suburban In versus had a XXXX points that than higher our urban our

margins months. within target For new we'll and XX these X-wall continue XX paybacks to stores, XX%

existing innovation to rebound, and revenue the levels through to serve in we continues enhancements the customers growth and average e-commerce of drive channel drive productivity year. throughout expect our traffic continue We customer. from to XXXX stores We'll per improve to further and also as plan our

growth year, return While in e-commerce we're to in e-commerce plan half we HX. the down to to growth projecting of the be first

Second, XXXX, point. further glasses expand we in core $XX core our we've business. launching Warby our Since intentionally plan maintained to price Parker

been $XXX and to frame while price constructions, collections structure offering, plan launch points new continues Our simple, to an affordable expand to incorporating our nearly XX integral proposition $XXX, value our $XXX, of And lens our innovative $XX more. has our types, introducing part attract our we customers. continue new and while pricing we'll and

saw we expansion, momentum Progressives' We also deepen product capabilities, brand exam growing mix, penetration eye building the XXXX and to through awareness. our in store plan within on increased

up leaving XXXX, purchases of As growth. of prescription December Progressives' approximately space for on glasses made significant white our total average, future industry-wide purchases XX.X% XX% but of

we'll continue and evolve Third, a position to vision expanding care company our our by insurance contacts, offering. eye exams, holistic as

in our X% that industry of year, customers of from purchase portion the increasing propensity lens to of to our and well X% sales contact us of approximately on remains this business given our the expand XX%, contact highest average. of our value these In glasses. replenishment XXXX. contact some XXXX, penetration Last customers the brings XX% go nature Yet to grew business to aim in below XXXX we'll

are increased exam of Progressives, occur eye exam XX% Revenue grew eye exams eyeglasses in eye an and the Industry-wide, sales underpenetrated business contacts $XX nearly market. our we XX% Like in eye year-over-year, billion where place. yet XXXX. exam takes from

driver revenue contacts. eyeglasses but not own eye its view for has as exams as we key also a stream, and So additive, only

to end of XX the a stores, approximately six eye the to we of to of new stores. anticipate eye XXX revenue exam from the another the stream locations this to PC fleet with addition new model, ending We In at XXXX year convert up year capabilities, providing our stores opening in stores plan exams bringing this XXX

patient's a of closer in services signs retinal way eye which innovative to at gives vision a to our We'll disease. continue detect early eye look providing the optometrists imaging, care lead to access like

contacts use to new in pursue unlock order and exam with customers vision we'll Our to offerings insurance benefits opportunities, us. to also make which it their continue for easier

up UnitedHealthcare, end Shield Employee currently the than select Cross such with employers lives Blue million and Warby number lives of year-over-year, through through from Program, Parker Electric. million This increased over General XXXX. is as in Blue network Federal XX.X Visions more XX% XX the at

use In customers XXXX, with to addition to as base customers their growing to this for possible make aim we'll in-network easy as in benefits of out-of-network us. it also

be will strategic XXXX in initiative customer further fourth investments. driving brand through new our growth lastly, And awareness and marketing

They efficient not offer also customer stores our tool. serve experiences highly for customers. Our acquisition us as great to enable only

are XX month We and locations driving significantly last New XX contribute combination penetration. and traffic the stores new increasing will physical at the to believe planned very year opened have openings market we conversion in following effective the for of the awareness. XXXX

We of serve spaces. striking and intentionally interior our our designed and to of representations brand our draw traffic stores the exterior to our

For first artist our space, and experience. Cody example, very into we last year, as shopping Created guests greet incorporated for our Andersonville walk by memorable X-foot Chicago store Hudson, sculptures. fun the the sculptures they creating a in

more traditional marketing to Speaking efforts.

consumers to to We marketing in off-line are invest reach drive programs new effective continuing and online and traffic.

we've of Since will digits, reducing we the drive top sustainable, half brought while half the seen And the lower spend it's compared a customer necessary of purposefully growth spend XXXX aim term. as the second of of approximately half XX% acquisition believe we back low our headwind driving be the first levels. come to costs revenue growth our to percent to profitable as a for XXXX, Over double line increased pre-pandemic down leverage. in XXXX, marketing half for second e-commerce over of XXXX, marketing channel, long to back spend especially to we

demographics, wear we and proven Progressives. in tend for awareness growth new to can amongst XX have consumers We older and drive example, who

We'll mix continue to While to awareness you'll campaigns and focus our see ever. deploy on industry. brand believe business, unique market delight eyewear us also as in front continue fuel a balanced this more ability and younger opportunity and our brand affinity. The we more power the growing of customers. continue partnerships, to and We the invest marketing plan launch and the in as collaborations, us year, Progressive tackle our feels to to our to us of to surprise exciting customers within differentiate large and

handing Alongside I call leadership to more pass and our want thank to inspired to further and impact also team, new over stakeholders. by Before And shareholder creating Dave, Warby. for building it I I'll value flexibility, in resilience, to the impacts their be I over Steve, to Team look to now like our forward momentum commitment our create milestones to XXXX. current drive reach on Steve. continue

This performance end to XXXX demand. versus full up million, quarter our came Thank year the year. XXXX encouraged guidance top in a in revenue year to marked by customer macroeconomic Jumping the you, our challenges average million, by that at better-than-expected We're Neil. right above of line finish for the over brought pressured of EBITDA representing adjusted increase ability course well the $XXX.X high per range and as in. Revenue fourth $XXX.X of the XX.X% industry as year to XX.X% year-over-year. our growth revenue

This in XXXX from year-over-year X.X% with a increase customers, From customer finished we of perspective, X.XX X.X% ramping per customer increase increase few of a both by driven was $XXX, of sales. revenue year-over-year. of customer percentage active an continued representing grew factors, eye Progressive $XXX lens per million an mix average to and including our a exam business and revenue and average as in contact an increase

point also of substantial sold average Progressives product our total QX a growth. below up to XX%, $XXX. quarter category margin XXXX. in represented of This when price Progressives glasses gross is are XXXX, fourth products from XX.X% highest compared at runway market leaving XX.X% still of the and the approximately for well prescription highest starting

for higher the XX% that 'teens, our expected XX%. to in in earnings QX levels. September XXXX. consistent end XXXX mid-XXs than same with in approximately e-commerce the of also QX, X-year CAGR report that in came November, called This productivity to business be XXXX the and On that period we levels pleased versus we the anticipated trends of in We're at of anticipated call and observed QX XX% store the we the for store productivity rate moderately to we than third our our quarter the at achieved QX high in out for be higher exit above was

In XXXX revenue We're revenue forward back target months continued million more quarter. opened saw in this in XXXX, XX% improvement productivity look XXXX. a saw coincides front we which to in $X.X $XX.X stores with In pleased in XX%. with XX% million in down XXXX XXXX, our of spend of we marketing X.X% QX with line from of to X-wall QX, e-commerce margins or and XX progress of million versus drop from with to the half our in and revenue the the over retail XX.X% on $XX.X generated

overall pre-pandemic represented CAGR, From X-year from in XX% business in e-commerce a a observed with in On compares and XX% our business with XXXX, line mix e-commerce QX quarter, XX.X%, in and to the for in came at of in QX XX% fourth business down This expectations XXXX. perspective, levels. our line XX.X% QX.

we reached business. revenue productivity year, year. productivity stop and CAGR. full our plan store retail of to e-commerce the plan XX% e-commerce reporting store versus Instead, In our we relative we levels, to For on XXXX observed year and XXXX, versus X-year CAGR approximately XX% to in and last of speak XXXX a and last e-commerce X-year productivity store to both

on gross margin. Moving to

As frames, store range a labs, and of accounts including fully a for gross salaries, lenses, is build-outs. and costs, customer our depreciation rent, margin loaded the optical shipping, of reminder, optometrist store

for margin Our also our lab compensation and includes optometrists employees. expense optical gross stock-based

gross compensation. margin, excluding For I stock-based comparability, speaking will be to

in 'XX the at quarter deleverage is as walk contacts Expanding a of holistic and percentage gross offering the care margin came a our XX.X% scaling average were The gross of a a 'XX that from our of in customer. QX QX drivers margin core our year-ago lenses Fourth in compared continued number to decrease increasing in driver margin offering in through. driver I'll this contact revenue in of XX.X% to part of of adjusted growth X% per total key There gross the primary was in period. business. vision X%

While margin purchase are market. $XX.X dollars given of accounts other contact approximately a versus margin they a for the their purchase our product percent Contact categories, market and billion represent frequency lenses gross gross lower accretive XX% lenses cycle. optical to subscription-like higher have and

six in the regardless elements cost Next, and areas, same the remain stock two COG which year-over-year our our salaries, the The of deleverage gross represent optometry of saw portion revenue. margin of generally we which goods. retail more are fixed occupancy in of

over XX in the over XX months, added of to We net XX.X% XX, and to as XXXX going which store new stores build-outs. company naturally of December increase in count of and and rent revenue XX, course increase leads the the store base same total our stores XXXX, of an or XXX store from of full an revenue year-over-year, last period. from as XXXX, of retail December stores store depreciation XX% increase compares to growth year in XX.X% This growth XXX XX.X%

margin also and stores model. an We overall in optometry optometrists increase of or PC year-over-year on we the Corporation, pressure salaries new our significantly rollout saw as expanded hired from for gross downward Professional our

As of where stores from and stores from operated expense XXX with of XXXX. directly compared stores optometrist XXX engage therefore, These with both of salaries. end recognize we XXX to an the optometrist and revenue at XXXX, the end we exams

had and stores therefore, we independent independent recognizing conversion existing the an sales the from relationship converting a stores been our significant store PC ones an model, already of doctor. majority our are we are XX with doctor PC model The portion where of at product to

and alone PC these service near-term model, our the given convert headwind to gross we on we the As lower expect margin gross contact stores are than margins. glasses margins exam the a

long conversion recognize gives capabilities will our from exam that higher exam eye the eye expect enables it revenue, the in eye in investment in-store to benefit creative We and us term us to of exam customer experience, control as product in us purchase. result rates

factors dilutive to a few are these tailwinds margins. of portion accretive a Offsetting

from and gross a XX.X% scale highest glasses to of year continue is business, we XX.X% offering. for prescription which highest First, Progressives accounted up Progressives priced ago. our margin our business, our

XX% approximately for source we've discussed, Progressives As a lenses and sold as years view we penetration further lenses of progressive all account for growth to of of continued come.

continue orders portion in-sourced optical our we two and we at the in prescription glasses to labs that York of scale Nevada. New Secondly, owned

refund margin. are there many including benefits see As at improved turnaround NPS, our discussed, gross faster time, rates, in-sourcing orders we from and higher lower labs,

For gross and to adjusted provided compared in in calls came with XXXX the year. margin QX full last XX.X% XX% line year, and at guidance in our on QX

to Shifting gears SG&A.

for also our spend, like the salary general SG&A main includes our experience employees, Adjusted Home retail reminder, and corporate noncash stock-based customer program, Try-on including and onetime direct components: those headquarters, our business and costs a expense expense As excludes our marketing compensation listing. costs three overhead expenses. associated SG&A like with covering excludes

Adjusted as in headcount August included to year-over-year. of revenue. the SG&A reduce adjusted to or The was of XX.X to XX% spend leverage which we year, driven difficult the revenue implemented changes XX.X% in by The or structure decision last XX.X% a adjusted dropping our cost X.X This compares a of SG&A in of as revenue, points SG&A of We by that driven $XX.X the QX of remaining for the us came headquarters' of the decrease adjusted continued have from will XXXX these a EBITDA primary million to quarter at points improvement and of decrease believe our of revenue. categories. million that marketing points operating changes of set was spend margin fourth in later. quarter percent $XX.X discuss revenue range I a percentage XX.X% XX.X up across of for by driver drop

the the for the came million revenue of period quarter year-over-year revenue of year. and expect spend as and XX% percent changes XX.X% spend to points and 'XX reduced Since million of to we've remain expect or QX from marketing is This growth of at in down As last by optimize in quarter make to to XX% previously of revenue. nearly levels XXXX, Marketing same $XX.X a to marketing environment. X Marketing was same spend continue current outlined, year-over-year, it to over in lower revenue. the digits demand XX.X% a in made spend period. of to year first we the as this percent low the which double revenue compares $XX.X

basis, XX.X% an in year, versus million For net XXXX. revenue on full of $XXX.X in came the SG&A XX.X% a adjusted or as at percentage

of included X/X basis revenue. results X.X% full a XXXX XXXX, for an included half of less costs, adjusted year accounted public costs, versus HX revenue XX.X% of over for company of accounted XXXX, company Our XXX which improvement approximately XXXX, versus of of public just points. HX X% In which which of revenue than in SG&A represented XX%

At with We million for quarter, of to XX% approximately the position to us spend steps this approximately our necessary marketing operating these 'teens, million actions as third operating year. These difficult to and expect down environment, on pulled $XX percent well low full-time team revenue $X current taking in spend reductions, with and lead year. range of structure took along we end the million steps of our but XX these closer back to to the the including savings by or profitability several back actions corporate realign people in to the we increased of $XX savings believe bringing items. reduce this a spend XXXX, cost generated a

negative million ago $X.X of generated we In in of negative EBITDA the compares X.X% to or year EBITDA adjusted $X.X margin of had. an representing of adjusted quarter, to fourth EBITDA million, the now EBITDA. X.X%, adjusted adjusted revenue Turning which

by XXX margins our basis cost points to higher or than adjusted through of and took the midway half, adjust EBITDA actions X.X% we marketing structure year. expense corporate the the half Second driven first

cash, year our reflecting finished deploy sheet a balance the we balance $XXX in position, to continue Turning to will operations. growth million approximately deliberately support in We sheet. our now strong to with which

We also have $XXX of an we upsize undrawn million $XXX can million. credit to facility that

XXXX. to Turning

and prior specifics cadence our and in our we to Before and profitable of the I Therefore, again our of to as we the pandemic. project that quarterly into shape demand. be than expect the profitable that with out lower will which look QX QX least holiday was our QX XXXX, quarters QX point to of spend in quarter our outlook, HX to XXXX, results want modestly the we similar business line I with most get into FSA

revenue adjusted We expect than EBITDA. quarterly consistent more will that be

generated As sequential until we driven step December, expiration repeats. orders volume quarterly during the fulfilled late which revenue January, from the revenue and QX across up a seen are reminder, historically period the to have QX, a majority in by the cycle QX in and parity relative FSA higher of in of in QX then QX,

to guidance. Now

approximately While approximately to economic we broader consumer the revenue, million, which at XX%, a EBITDA $XXX in optical representing to X.X%, impact a year, a our range. by margin total continues XXX approximately mid-XXs year-end. year of full openings, equates as the store XX industry. the line we're of growth XXXX, count of landscape, for for to to top scenarios X% adjusted million by its midpoint the the adjusted of the bringing million our this Therefore, $XXX guidance encouraged entering of of on momentum are be range approximately range and for store EBITDA $XX.X behavior predict of new we're to Gross to challenging planning margin revenue guiding to our following: revenue percent

Looking at retail our channel.

Our the of the be XXXX. store an store stores to our At productivity with we on end high to is low new X points. revenue productivity increase and similar cadence anticipate in we versus range, of high open XXXX XXXX guidance plan to range, opening based end low the flat. at At anticipate end both our XX our to X to

as XXXX. through of our pre-pandemic percent a aligning recall, midway you'll spend revenue marketing As began we levels with

to to last the spend expect which to we a half to This be as guiding and to XXXX. XX% quarter. X.X% we compares revenue, point be half the we the first of full e-commerce of Therefore, basis down half the percent quarter year sales in points to XXXX guidance spend XXXX, of noted. 'teens approximately adjustment approximately XXXX growth and EBITDA year as of after marketing in the adjusted half versus first returning XX% marketing basis X.X% midpoint second of With in the the For in the third in a XXX low first are of XXX expect to respect we improvement for second before versus represents XXXX our XXXX the anniversary for improvement margin, X.X%.

As our baseline our half on profitability. range as would on earnings indicated base we last use projected a which call that the reminder, guidance would XXXX we we second XXXX

long-term XX%, our in target vision remains the to of target meet and margins continue of needs care and XXXX our stores range long-term new top growth remain customers. below optometrists to hire open holistic as below to gross our expect We we as line

to a be respect long-term roughly digits compensation in percentage we XXXX. forecasting XX% compared with XXXX, outlook to Finally, stock-based XX% forecast for in starting our of both are Stock-based XXXX. as above net is years single revenue for our with of compensation low

a We majority compensation multiyear from performance-based result net stock still to normalize in based the approximately of of stock-based grants $XX.XX of targets to and which anticipate to As XXXX. $XXX.XX. price X% the XXXX, our beginning to on co-CEOs to in equity X% is best revenue

as between to QX QX of XXXX, growth adjusted trailing X% This XX% XXXX, million year-over-year. to to XXX% growth X% XX-day perspective, observed From to of mid-February, following: to QX which of to represents XXXX. retail compared line $XXX.X a in million, or bottom sequential line million basis we're EBITDA revenue approximately from X% guiding in we're growth productivity top an margin QX X%, to $XXX For $XX stores on represents guiding our million. to Through to we've XXXX $XX a XX% XXXX. the

with We the pre-pandemic to XXXX, our generated year the be in more our of expect of first progression where year. of we half the in with adjusted our second line the more adjusted versus trends EBITDA EBITDA of of in half the quarterly profitability majority generated the

the With are Operator, for pleased I that, please Q&A. your to Neil, questions. Dave, and take line open

Instructions]. [Operator

Tesley have Dana of we the question phone today lines first comes Group. The Tesley from from

proceed. may You

Nice to see the progress.

type of you balance continue first half about you go the in adjusted be As year you the second it going and to think forward? do Steve, mentioned, with this that EBITDA? how to about half Is think of the

right opened And and about then Neil, store and doing Dave house, like looks openings it terrific. Union it's the store my you you as near Square think

existing stores markets given the think openings, store of return And on been you past? the it the from versus markets? you in that what had As spend going new how about in do new think profile you're new

question, Dana. first the part for Thanks over the and I'll Dave we'll take for Neil to second the and part. kick then it

to pre-pandemic In year, -- the for question look EBITDA of to believe adjusted relates to that will it XXXX this cadence cadence years. terms the similar more as and we of your

EBITDA due will year, the of adjusted of more year. year, this to That we EBITDA last recognize second this year. business, to story to this half majority year we of be second the some adjustments generated the in than different half made of half first cost in we So expect the the adjusted our the where in of the

quarter QX will our and projecting strong QX years we're lowest So FSA so consistent into profitability prior little with demand in we less buying. bit where QX, spend be and profitability holiday in a QX, and

EBITDA business this would X% to almost of adjustments So that's EBITDA. in saw curve being in with from us year, made adjusted August, which incremental the of versus last approximately adjusted generate how to to our the main year really X% we the the HX half due second the year. cost really EBITDA allowed to describe go we change the We shape

there's example sort metrics, where of brand has entire the also accretive, great And going open example Fifth, these stores to bit at of slightly three that able our location real we're This Square our and chance able to our open to is that we're further flag. this this volume, on differences a found Lower I'll example. allocating And an we traffic, another a foot months estate a than we in get capital store Union of is does a that Dana, because Neil. corner is rent. touch less and an blocks higher XX little to for of X-wall we we're real exterior towards of there's excited how year while I'm run of you have visit so where, store sort XX stores a with look high XX%. of but margins were location. north, targets within paybacks fleet, significant strategy maybe this of

that here category, we that willing has So this a our and are at trade-off walk is customer of store for block, neighborhood and make Real people sort know to that that Estate base. Committee, a extra very deliberate

We be very year. continue to disciplined in retail our rollout this

to on markets locations. a really existing we'll markets and new lot but As continue more in we're focus of fill suburban a opening, open of sort bunch up

compare retail at we was XXXX. the of points and sort QX urban our and delta locations in X suburban percentage we about when to XXXX, productivity between As look

we will given that to to this expect narrow suburban of was time. take focused locations, locations over We But that year. on urban into opportunity advantage very journey lots have retail continue in our

Got it.

Just any Progressive and update how it for thinking about contacts pricing, lastly, on you're XXXX? on

Yes.

in contacts lots are and that year-over-year north seeing strength we and customers purchase contacts product trends has category. strong category buy us Warby customers that and where Warby, on to we to substantial glasses-only to in repeat That to also really is us. first but and those in dynamics purchasing noted attracting that purchase see So see contacts. very only from saw see encouraged to not really customers, the XX% behavior portion and get from classes purchase them of those customers then different from contacts who a by is to business existing the contact exams in progressive were our those a their to Parker of feedback than we're a and our both continue enable new converting we're We growth excited the contacts there; also also go customers of

glasses, who get us, not valuable. buy And valuable we're over first become buy finding that more But an contacts transaction. those more exam only that with from and customers even are holistic time, they

So one that after they than spend of customers. as shows months, much glasses-only our more as XX materials the X.Xx slides our in

progresses. excited a serve demographic. mix more to to our roll retail prescription we as of that to to tend to increase versus overall to And be the product percentage expect be in year our out percentage continue stores, This we are able of past transactions of more category so continue Similarly, and excited by that and we continue that was that stores see higher online Progressives customers. Progressives we

you. Thank

question next Baird. Mark from Your Altschwager comes from

a It period. that to last when from XX% year, guiding like for quarter. sequential through the I Omicron you're first disruption you about that's That's, lift sales pre-COVID. below look key So the does the FSA in had think, but seasonality a bit more

talk terms you you more key affected that bit of if could what customer wondering this in period So approach. engagement around saw that about how a year, FSA your

think productivity that you correctly. I out numbers if strong called I some heard in February,

you've of the broadly, the more holistic initiatives business what of the then affected has historically? the and seasonality other expansion offering seen And versus

by XXXX. Vision the to more and your they're projections that when Council, of of and little the of on for early That down impacts said, us. Mark, disruptions the X.X% be to few sort years. believe approximately there that last be that's seasonality, thanks question. over a where period consistency sort given more a see predictability, more entering We similar pre-pandemic, industry at to will projecting of It's being overall should especially in we're sort the sort exciting look years we

to it building our continue as as margin one approaching care predictability nice the see our we guidance does growth exams to sort we're advance. well. sustainable things our business in as of eye So eye is while expanding with of out grow some want under that scheduled cautiousness we But increased philosophy support of about

some see read close if more shouldn't into year, anything we strength the which did we too expiration FSA much predictable short-term that around the learned we in was behavior encouraging. trends. last year to And But

And in so we're term. caution short proceeding with the

to in the it spend our rebalancing to as just is year-over-year other of the of to factor mind marketing keep mind in relates change a keep factor Mark, sequential percent And -- as revenue. the other

quarter, on marketing direct is e-com a year-over-year, level that having marketing impact we report spend channel. downward in the approximately our year-over-year. XX% QX our similar in see of in we'll on is down and spend When So a QX, trend

into And what so as well. we're baking results our that's

And quick the product front. a on follow-up

today? contextualize you styles do that collection bit $XX you have price core was balance expect core. I'm if nice price the to and points. I that expanding wondering more. evolve expand You're the could do go? as how the How curious unique you that expect have you Where many and point mix currently that You higher you between price the to a

We And pricing our so at and charge value -- $XXX, for we're points. competitors know, known across -- distribution more how of find fraction to $XX, year. price We new sort we're So point as frames able we launching lenses whether of $XXX. that those X,XXX XX and to for deliver exceptional you launch collections. what $XX can you'll and do of that, philosophy is a around continue general continue of it's have SKUs charge. a to our price new now sort roughly $XXX, collections anticipate see this we

things relationships that nice we're our with customers calendar. is beholden the to the about direct of One not fashion having

created will of given model. and direct-to-consumer sort it optical have having away in So, thoughtful our products to New we're at take maintain when newness, really to fulfillment Sloatsburg, York large introduce an labs apparel need data across color our sort have we our our customer the Vegas merchandising retailer. And to of We'll to team both existing years just that central of think when new and our about similarly, we us shops is think two to new launch every we the thanks for biggest And newness. Las beloved but sort collections disposal, able the to and customers. our day styles over impact and the sort be our planning that it's also single ways inventories around in customers inventory, enables of we've like on also continue don't we styles, focused that on

Thanks again.

Cowen. from Thank you. now Chen We Oliver have

and David quarter. Hi Steve. Neil, Nice

marketing spend, in remarkable there. driven efficiency it's the Regarding you've been the terms of

as marketing are that forward, what you performance As with that when you're things seeing out we and look of terms in of effectiveness marketing interplays you getting customer monitoring what acquisition you're grow and stores?

and see elaborate an younger why. would to that you mentioned you opportunity to ahead on and what increase love question, second you customers, A

customer And retention. value you're lot sounds acquisition might lifetime happen more on the question, to product what to a question, relative offering third it like the assortment, earlier with value and/or

achieved yes, front. the coming areas. the from on of some Thanks, It's marketing few Oliver. gains we've And that excited to we've been see really efficiency a

So we've allocated channels. the can direct-to-consumer spend, customers we get back working constantly strategies. brand, around tactics and our and dollars most as we And one we to those is what's that from on pulled optimize a our signals not, as and efficient what's immediate

The rates have second that is declined. media

we're for customers that for more dollars same dollars. ads SEM or the spending the same video for so reaching And or display we're

a us lot customers. capital-efficient in of vein excitement A$AP and collection We younger younger the with amongst of we're around Nast, think And great I interesting has that new enabled creative really also collabs. that a finding the our lot a done ensure generate and new dollars did collab amplify great reaching I of we're a fits with rapper collaborations then of lots spending and One that to way. example, products new efficiency just a those just front job excitement got on the our recent collections, that messaging just demos. team as generated which promote in to press

now We you. Stanley. Straton Alex of have Morgan Thank

I the growth. divergence to the on your between of input get store kind wanted recent just

sitting at guys kind I understand trying path growth XX%. think and about to over at X% gap you of that and total revenue, sitting I and then think, it's XX% the per XX%. a customer just about back how X% to are at versus active revenue customer and I'm the thinking potential

difference growth mix. growth at by Sure. up company XX% The store up explained Thank and you growth versus for at is question. total level your really terms the of the channel channel level in XX% of of

driven marketing of really X%, quarter in year-over-year. that click X/X fact by in the the business were by our over down point; we ways, growth, XX.X% was this recent retail channel; year, dropped revenue XX% at with most X/X revenue many e-com in store growing while e-commerce, split that's that we've have a to retail, into growth, the XX%, by spend the approximately, we if full line So with up course double XX%

pressure look if is of to way retail company the channels, growth directly growth, pre-pandemic in growth rebalancing understand levels. related of between So spend total our both the our healthy marketing at with you e-com line in very bridge to under the growth

roughly thinking that average of our and terms active were year-over-year X.X% in almost customer revenue terms how up customers up active In of growth, per we're about customer X%.

being more versus appreciation our price by growth So of customers. driven

a We active terms moderate of expect see profile although our are that growth of we to a trend thematic in terms coming in projecting from year, in uptick per continue growth consistent year-over-year and this very average customer. customers revenue

growth customers hope some I as customer. commentary versus active bridge thinking walk growth average helps channels that to it through So kind from and across per how we're relates about of to revenue how

your And just Alex. Thanks, question other targets. of get the around part how we to back growth longer-term our

industry. is was volumes abnormally market the that year counsel with data, prescription declined, which XXXX. and category, the last heels abnormal indicates transaction that data optical market clear for As that that of glasses comes the an at declined we year industry consistent across those on look the it's strong an other Vision

steady the extreme category So predictable we return. over expect in become our normally and time, will swings will behavior less that these and

XX% average, the to headwinds instead is over growing will estimated going of ever Myopia we provide recent myopic, grow sell than of XX% on time, year. study that's that world we've by been and offerings time. important Over more believe over see XXXX. people these the And help become world. but category is A tailwinds around and to experiencing the that will products currently that that, last the growth that services

guidance that our to by terms and and set in that will expecting all vision we're remain for XXXX. some us behavior counting at on and we've for not growth now building will category foundation we're abate, abnormal we believe but our the care expectations long-term this holistic in our omni-channel provide that for period, are seen mission of enable so our energized to And up

Final Citi. from the Paul line comes Lejuez question from on

any a quantify I additional of could other spend expenses tweaks I marketing top Paul. XXXX. on to bit This on making our is just then the to you you're you little thinking SG&A for wondering SG&A Cheatham or line marketing And if growth in savings. was impact from dig spend? wanted do to expense is Brandon how reduced the think that in much

to an that total It's that spend. make There's while Sure. focus And closer relates specific we top marketing we're pre-pandemic line still driving we're at to with is what the is had revenue profitability XX%. this by spend year-over-year. What dropped by it dollar it low back dollar we for sure but to certainly our know bringing from been XX%, marketing growth science quantify grew we to teens incremental marketing spend levels, impact almost is. as really do where tough year, XX.X% to to

a of nice of can acquisition costs, that's that is marketing on is really big that low-teens with to line drop terms customer we our seeing and deleverage levels pre-pandemic customer what profitably in But in about we're making or in percentage story spend EBITDA talked continue Neil coincided marketing grow. while our sure acquisition to we're in reflected bringing a with growing, incremental previously, costs growing and In our we've adjusted basis. our part spend seen what we're drop as focused

it. Thank good you, luck. and Got

final Thank like turn remarks. it any for I back Dave you. to would to

for all morning you Thank the in and listening questions. for thoughtful this

us and strategic in progress We next our opportunity sharing be continue priorities forward to to on our excited against about front call. look of the

today's conclude call. That does all Thank joining. you for

lovely disconnect You now a day. have may your and lines,