figs-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 001-40448

FIGS, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware			46-2005653
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
2834 Colorado Avenue, Suite 100 Santa Monica, CA			90404
(Address of principal executive offices)			(Zip Code)

(424) 300-8330

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.0001 par value per share

FIGS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of July 31, 2024, there were 162,576,575 shares of the registrant’s Class A common stock, par value $0.0001 per share, outstanding and 8,283,641 shares of the registrant’s Class B common stock, $0.0001 par value per share, outstanding.

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TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolida ted Balance Sheets	6
	Condensed Consolidated Statements of Operations and Comprehensive Income	7
	Condensed Consolidated Statements of Stockholders’ Equity	9
	Condensed Consolidated Statements of Cash Flows	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	70
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	72
Item 6.	Exhibits	73
Signatures		74

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1955, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “forecast,” “predict,” “potential,” “strategy,” “strive” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, without limitation, statements regarding our future results of operations and financial position; our industry; business and macroeconomic trends; the impact of macroeconomic pressures; our use of ocean and air freight; the impact of and expectations related to global supply chain challenges; demand for our products; our expectations regarding the opening and success of retail stores; our plans for evolving our sourcing capabilities and strategically refining our manufacturing base; our fulfillment enhancement project and the impact of and timing for our transition to a new fulfillment center; our plans to open additional fulfillment facilities in the future; our intended transition away from a key third party supplier in Jordan; the impact of conflict in the Middle East on our business; equity compensation; our share repurchase program; our marketing strategy; competition; market growth; our business strategy; and plans and objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the important factors discussed in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while 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 an exhaustive 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.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

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SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our Class A common stock. The principal risks and uncertainties affecting our business include the following:

•Our historical growth may not be sustainable or indicative of future growth, and we expect our growth rate to slow over time.

•If we fail to manage the expansion of our business effectively, our financial condition and results of operations may be adversely affected.

•We have not always been profitable and may not be profitable in the future.

•Our success depends on our ability to maintain the value and reputation of our brand.

•If we fail to attract new customers, retain existing customers, or fail to maintain or increase sales to those customers, our business, financial condition, results of operations and growth prospects will be harmed.

•If our marketing efforts are not successful, our business, financial condition and results of operations could be harmed.

•Our business depends on our ability to maintain a strong community of engaged customers and ambassadors, including through the use of social media. We may not be able to maintain and enhance our brand if we experience negative publicity related to our marketing efforts or use of social media, fail to maintain and grow our network of ambassadors or otherwise fail to meet our customers’ expectations.

•If we do not continue to successfully develop and introduce new, innovative and updated products, we may not be able to maintain or increase our sales and profitability.

•The market for healthcare apparel is highly competitive.

•Our future success depends on the continuing efforts of our key employees and our ability to attract and retain highly skilled team members.

•We plan to expand into additional international markets over time, which will expose us to new and significant risks.

•Shipping is a critical part of our business and changes in, or disruptions to, our shipping arrangements have in the past and may in the future adversely affect our business, financial condition and results of operations.

•If we experience problems with our distribution and warehouse management systems, our ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies could be harmed.

•If we are unable to accurately forecast customer demand, manage our inventory and plan for future expenses, our results of operations could be adversely affected.

•Consumer confidence, shopping behavior and spending have been and may continue to be negatively impacted by factors beyond our control, including supply chain disruptions, inflation, high interest rates, fear of recession or entry into a recession, geopolitical tensions and military conflicts, and healthcare workforce-related stress, which may adversely affect our business, financial condition and results of operations.

•Our reliance on a limited number of third-party suppliers to provide materials for and produce our products could cause problems in our supply chain and subject us to additional risks.

•If proprietary, confidential or sensitive information or personal data about our customers is disclosed, or if we or our third-party providers are subject to real or perceived cyberattacks, our customers may curtail use of our website or mobile app, we may be exposed to liability and our reputation could suffer.

•Our quarterly results of operations have from time to time, and may in the future fluctuate, and if our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and securities analysts, the trading price of our Class A common stock may decline.

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•The dual-class structure of our common stock and voting agreement among us and our co-founders, Heather Hasson and Trina Spear, Tulco, LLC and Thomas Tull and certain related persons and trusts have the effect of concentrating voting control with Ms. Hasson, Ms. Spear and Mr. Tull, who together hold the majority of the voting power of our outstanding capital stock, which may limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.

•We are a “controlled company” within the meaning of the rules of the New York Stock Exchange and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements. You do not have the same protections afforded to stockholders of companies that are subject to such requirements.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FIGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	As of
	June 30, 2024		December 31, 2023
Assets	(Unaudited)
Current assets
Cash and cash equivalents	$	131,811	$	144,173
Short-term investments	136,719		102,522
Accounts receivable	12,719		7,469
Inventory, net	119,294		119,040
Prepaid expenses and other current assets	16,697		12,455
Total current assets	417,240		385,659
Non-current assets
Property and equipment, net	35,266		24,864
Operating lease right-of-use assets	55,003		43,059
Deferred tax assets	16,300		18,291
Other assets	2,214		1,336
Total non-current assets	108,783		87,550
Total assets	$	526,023	$	473,209
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	19,910	$	14,749
Operating lease liabilities	11,749		8,230
Accrued expenses	21,610		7,906
Accrued compensation and benefits	4,104		7,312
Sales tax payable	3,217		3,149
Gift card liability	8,034		8,240
Deferred revenue	2,825		2,160
Returns reserve	3,514		2,989
Income tax payable	1,640		2,557
Total current liabilities	76,603		57,292
Non-current liabilities
Operating lease liabilities, non-current	47,532		38,884
Other non-current liabilities	183		183
Total liabilities	$	124,318	$	96,359
Commitments and contingencies (Note 9)
Stockholders’ equity
Class A Common stock — par value $0.0001 per share, 1,000,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 162,392,991 and 161,457,403 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	16		16
Class B Common stock — par value $0.0001 per share, 150,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 8,283,641 shares issued and outstanding as of June 30, 2024 and December 31, 2023	—		—
Preferred stock — par value $0.0001 per share, 100,000,000 shares authorized as of June 30, 2024 and December 31, 2023; zero shares issued and outstanding as of June 30, 2024 and December 31, 2023	—		—
Additional paid-in capital	337,447		315,075
Accumulated other comprehensive income (loss)	(47)		5
Retained earnings	64,289		61,754
Total stockholders’ equity	401,705		376,850
Total liabilities and stockholders’ equity	$	526,023	$	473,209

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FIGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Net revenues	$	144,225	$	138,132	$	263,518	$	258,364
Cost of goods sold	46,961		42,098		84,118		76,654
Gross profit	97,264		96,034		179,400		181,710
Operating expenses
Selling	36,934		33,739		65,393		64,896
Marketing	23,003		20,889		40,248		37,953
General and administrative	35,774		34,840		71,763		68,997
Total operating expenses	95,711		89,468		177,404		171,846
Net income from operations	1,553		6,566		1,996		9,864
Other income, net
Interest income	2,830		1,521		5,677		2,593
Other expense	—		(4)		(10)		(5)
Total other income, net	2,830		1,517		5,667		2,588
Net income before provision for income taxes	4,383		8,083		7,663		12,452
Provision for income taxes	3,283		3,501		5,128		5,961
Net income	$	1,100	$	4,582	$	2,535	$	6,491
Earnings attributable to Class A and Class B common stockholders
Basic earnings per share	$	0.01	$	0.03	$	0.01	$	0.04
Diluted earnings per share	$	0.01	$	0.02	$	0.01	$	0.04
Weighted-average shares outstanding—basic	170,393,480		167,423,656		170,158,479		167,100,292
Weighted-average shares outstanding—diluted	179,688,524		183,332,560		180,195,183		183,094,950

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FIGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Net income	$	1,100	$	4,582	$	2,535	$	6,491
Other comprehensive loss, net of tax
Unrealized loss on short-term investments, net of tax	(21)		(8)		(52)		(8)
Total other comprehensive loss, net of tax	(21)		(8)		(52)		(8)
Total comprehensive income	$	1,079	$	4,574	$	2,483	$	6,483

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FIGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
December 31, 2022	159,351,307	$	16	7,210,795	$	—	$	268,606	$	39,117	$	—	$	307,739
Issuance of Class A Common Stock upon vesting of Restricted Stock

SEC Form 10-Q filed by FIGS Inc.