wrby-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2022


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

For transition period from to

Commission File Number 001-40825

Warby Parker Inc.

(Exact name of registrant as specified in its charter)


Delaware						80-0423634
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

233 Spring Street, 6th Floor East

New York, New York 10013

(646) 847-7215

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, $0.0001 par value per share

WRBY

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 ☒ No ☐

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 ☒ No ☐

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 7(a)(2)(B) of the Securities Act. ☐

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

As of May 12, 2022, there were approximately 95,293,318 shares of the registrant's Class A common stock, and 19,649,467 shares of the registrant’s Class B common stock outstanding.

Table Of Contents


		Page
Special Note Regarding Forward Looking Statements		2
Part I. Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income	4
	Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
Part II. Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

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Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of 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”), which statements involve substantial risk and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: our future results of operations and financial position, industry and business trends, business strategy, plans, market growth and our objectives for future operations.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors. These risks and uncertainties include our ability to manage our future growth effectively; our expectations regarding cost of goods sold, gross margin, channel mix, customer mix, and selling, general, and administrative expenses; planned new retail stores in 2022 and going forward; increases in component and shipping costs and changes in supply chain; our ability to compete successfully; our ability to manage our inventory balances and shrinkage; our ability to engage our existing customers and obtain new customers; the growth of our brand awareness; the effects of the ongoing COVID-19 pandemic; the effects of seasonal trends on our results of operations; our ability to stay in compliance with extensive laws and regulations that apply to our business and operations; our ability to adequately maintain and protect our intellectual property and proprietary rights; our reliance on third parties for our products, operation and infrastructure; our duties related to being a public benefit corporation; the ability of our Co-Founders and Co-CEOs to exercise significant influence over all matters submitted to stockholders for approval; the volatility in the trading price of our Class A common stock; the effect of our multi-class structure on the trading price of our Class A common stock; the increased expenses associated with being a public company; and the other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission on March 18, 2022. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

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Part I. Financial Information

Item 1. Financial Statements

Warby Parker Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(Amounts in thousands, except share data)


	March 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	230,324	$	256,416
Accounts receivable, net	830		992
Inventory	64,253		57,095
Prepaid expenses and other current assets	16,746		13,477
Total current assets	312,153		327,980

Property and equipment, net	121,253		112,195
Right-of-use lease assets	109,737		—
Other assets	1,523		471
Total assets	$	544,666	$	440,646

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	32,535	$	30,890
Accrued expenses	56,317		60,840
Deferred revenue	19,424		22,073
Current lease liabilities	18,518		—
Other current liabilities	1,948		4,301
Total current liabilities	128,742		118,104

Deferred rent	—		36,544
Non-current lease liabilities	132,824		—
Other liabilities	2,217		—
Total liabilities	263,783		154,648
Commitments and contingencies (see Note 9)
Stockholders’ equity:
Common stock, $0.0001 par value; Class A: 750,000,000 shares authorized at March 31, 2022 and December 31, 2021, 95,114,017 and 94,901,623 issued and outstanding at March 31, 2022 and December 31, 2021, respectively; Class B: 150,000,000 shares authorized at March 31, 2022 and December 31, 2021, 18,854,555 and 18,719,184 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively, convertible to Class A on a one-to-one basis	11		11
Additional paid-in capital	808,222		779,212
Accumulated deficit	(527,374)		(493,241)
Accumulated other comprehensive income	24		16
Total stockholders’ equity	280,883		285,998
Total liabilities and stockholders’ equity	$	544,666	$	440,646

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

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Warby Parker Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)

(Amounts in thousands, except share and per share data)


	Three Months Ended March 31,
	2022		2021

Net revenue	$	153,218	$	138,973
Cost of goods sold	63,572		55,192
Gross profit	89,646		83,781

Selling, general, and administrative expenses	123,386		80,760
(Loss) income from operations	(33,740)		3,021

Interest and other income, net	146		134

(Loss) income before income taxes	(33,594)		3,155
Provision for income taxes	539		144
Net (loss) income	$	(34,133)	$	3,011

Deemed dividend upon redemption of redeemable convertible preferred stock	$	—	$	(4,613)
Net loss attributable to common stockholders	$	(34,133)	$	(1,602)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.30)	$	(0.03)
Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted	114,103,766		53,946,980

Other comprehensive (loss) income
Foreign currency translation adjustment	$	8	$	(224)
Total comprehensive (loss) income	$	(34,125)	$	2,787

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

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Warby Parker Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity (Unaudited)

(Amounts in thousands)


	Redeemable Convertible Preferred Stock			Common Stock			Class A and Class B Common Stock				Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ (Deficit) Equity
	Shares	Amount		Shares	Amount		Shares		Amount
Balance as of December 31, 2020	54,042	$	506,510	53,944	$	5	—		—		$	127,179	$	109	$	(325,390)	$	(198,097)
Stock option exercises	—	—		64	—		—		—		157		—		—		157
Stock repurchases	(220)	(790)		(27)	—		—		—		—		—		(5,274)		(5,274)
Stock-based compensation	—	—		—	—		—		—		1,261		—		—		1,261
Other comprehensive income	—	—		—	—		—		—		—		(224)		—		(224)
Net loss	—	—		—	—		—		—		—		—		3,011		3,011
Balance as of March 31, 2021	53,822	$	505,720	53,981	$	5	$	—	$	—	$	128,597	$	(115)	$	(327,653)	$	(199,166)

Balance as of December 31, 2021	—	$	—	—	$	—	113,621		11		$	779,212	$	16	$	(493,241)	$	285,998
Stock option exercises	—	—		—	—		201		—		1,866		—		—		1,866
Restricted stock unit releases	—	—		—	—		147		—		—		—		—		—
Stock-based compensation	—	—		—	—		—		—		27,144		—		—		27,144
Other comprehensive income	—	—		—	—		—		—		—		8		—		8
Net loss	—	—		—	—		—		—		—		—		(34,133)		(34,133)
Balance as of March 31, 2022	—	$	—	—	$	—	113,969		$	11	$	808,222	$	24	$	(527,374)	$	280,883

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

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Warby Parker Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Amounts in thousands)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities
Net (loss) income	$	(34,133)	$	3,011
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	7,137		4,704
Stock-based compensation	27,144		1,261

Change in operating assets and liabilities:
Accounts receivable, net	163		83
Inventory	(7,147)		(2,027)
Prepaid expenses and other assets	(4,316)		(1,253)
Accounts payable	751		(627)
Accrued expenses	(2,158)		(2,088)
Deferred revenue	(2,654)		(9,418)
Other current liabilities	129		1,777
Deferred rent	—		1,302
Right-of-use lease assets and current and non-current lease liabilities	2,571		—
Other liabilities	2,217		(2)
Net cash used in operating activities	(10,296)		(3,277)
Cash flows from investing activities
Purchases of property and equipment	(16,060)		(8,686)
Net cash used in investing activities	(16,060)		(8,686)
Cash flows from financing activities
Proceeds from stock option exercises	180		157


Stock repurchases	—		(6,064)



Net cash provided by (used in) financing activities	180		(5,907)
Effect of exchange rates on cash	84		(194)
Net decrease in cash and cash equivalents	(26,092)		(18,064)
Cash and cash equivalents
Beginning of year	256,416		314,085
End of year	$	230,324	$	296,021
Supplemental disclosures
Cash paid for income taxes	$	34	$	131
Cash paid for interest	35		42
Non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses	$	4,241	$	3,824
Related party loans issued in connection with stock option exercises	—		13,827

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

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Warby Parker Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except share data)

1. Description of Business

Warby Parker Inc., a public benefit corporation founded in 2010 (together with its wholly owned subsidiaries, the “Company”), is a founder-led, mission-driven lifestyle brand that sits at the intersection of technology, design, healthcare, and social enterprise. The Company offers holistic vision care by selling eyewear products and providing optical services directly to consumers through its retail stores and e-commerce platform. For every pair of glasses or sunglasses sold, the Company helps distribute a pair of glasses to someone in need through its Buy a Pair, Give a Pair program. The Company is headquartered in New York, New York.

Direct Listing

On September 29, 2021, the Company completed a direct listing of its Class A common stock (the “Direct Listing”) on the New York Stock Exchange (“NYSE”). The Company incurred fees related to financial advisory services, audit, and legal expenses in connection with the Direct Listing which are recorded in selling, general, and administrative expenses of $0.3 million for the three months ended March 31, 2021.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared and are presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”). Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, these condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2021 and the related notes. The December 31, 2021 condensed consolidated balance sheet was derived from our audited consolidated financial statements as of that date. Our unaudited interim condensed consolidated financial statements include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements. There have been no significant changes in accounting policies during the three months ended March 31, 2022 from those disclosed in the audited consolidated financial statements for the year ended December 31, 2021 and the related notes, except for the adoption of new accounting pronouncements as noted under the heading

SEC Form 10-Q filed by Warby Parker Inc.