wrby-20240331

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, 2024


☐			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 001-40825

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 13(a) of the Exchange 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 6, 2024, there were approximately 99,128,202 shares of the registrant's Class A common stock, and 19,734,125 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.	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Changes in Stockholders’ 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	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
Part II. Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
Signatures		35


	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	220,384	$	216,894
Accounts receivable, net	1,167		1,779
Inventory	56,450		62,234
Prepaid expenses and other current assets	18,116		17,712
Total current assets	296,117		298,619

Property and equipment, net	156,722		152,332
Right-of-use lease assets	129,561		122,305
Other assets	10,492		7,056
Total assets	$	592,892	$	580,312

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	26,699	$	22,456
Accrued expenses	43,200		46,320
Deferred revenue	21,240		31,617
Current lease liabilities	24,462		24,286
Other current liabilities	2,939		2,411
Total current liabilities	118,540		127,090

Non-current lease liabilities	156,988		150,171
Other liabilities	1,177		1,264
Total liabilities	276,705		278,525
Commitments and contingencies (see Note 9)
Stockholders’ equity:
Common stock, $0.0001 par value; Class A: 750,000,000 shares authorized at March 31, 2024 and December 31, 2023, 99,005,197 and 98,368,239 issued and outstanding at March 31, 2024 and December 31, 2023, respectively; Class B: 150,000,000 shares authorized at March 31, 2024 and December 31, 2023, 19,734,125 and 19,788,682 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively, convertible to Class A on a one-to-one basis	12		12
Additional paid-in capital	987,305		970,135
Accumulated deficit	(669,510)		(666,831)
Accumulated other comprehensive loss	(1,620)		(1,529)
Total stockholders’ equity	316,187		301,787
Total liabilities and stockholders’ equity	$	592,892	$	580,312


	Three Months Ended March 31,
	2024		2023
Net revenue	$	200,003	$	171,968
Cost of goods sold	86,544		77,177
Gross profit	113,459		94,791

Selling, general, and administrative expenses	118,586		107,221
Loss from operations	(5,127)		(12,430)

Interest and other income, net	2,556		1,879

Loss before income taxes	(2,571)		(10,551)
Provision for income taxes	108		261
Net loss	$	(2,679)	$	(10,812)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.02)	$	(0.09)
Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted	119,143,534		116,159,428

Other comprehensive loss
Foreign currency translation adjustment	$	(91)	$	(683)
Total comprehensive loss	$	(2,770)	$	(11,495)


	Three Months Ended March 31, 2024
	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2023	117,849	$	12	$	970,135	$	(1,529)	$	(666,831)	$	301,787
Stock option exercises	67	—		905		—		—		905
Restricted stock unit releases	563	—		—		—		—		—
Stock-based compensation	—	—		16,265		—		—		16,265
Other comprehensive loss	—	—		—		(91)		—		(91)
Net loss	—	—		—		—		(2,679)		(2,679)
Balance as of March 31, 2024	118,479	$	12	$	987,305	$	(1,620)	$	(669,510)	$	316,187


	Three Months Ended March 31, 2023
	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2022	115,339	12		$	890,915	$	(647)	$	(603,634)	$	286,646
Stock option exercises	109	—		1,415		—		—		1,415
Restricted stock unit releases	153	—		—		—		—		—
Stock-based compensation	—	—		19,780		—		—		19,780
Other comprehensive income	—	—		—		(683)		—		(683)
Net loss	—	—		—		—		(10,812)		(10,812)
Balance as of March 31, 2023	115,601	$	12	$	912,110	$	(1,330)	$	(614,446)	$	296,346


	March 31, 2024		December 31, 2023
Leasehold improvements	$	167,084	$	161,720
Computers and equipment	38,708		35,738
Furniture and fixtures	31,030		29,405
Capitalized software	25,004		23,750
Construction in process	20,596		17,555
	282,422		268,168
Less: accumulated depreciation and amortization	(125,700)		(115,836)
Property and equipment, net	$	156,722	$	152,332


	March 31, 2024		December 31, 2023
Product and fulfillment	$	9,854	$	8,786
Payroll related	8,143		13,575
Marketing	7,120		6,619
Legal	4,297		1,638
Retail related	3,224		2,800
Charitable contributions	3,193		4,458
Professional services	1,963		2,159
Other	5,406		6,285
Total accrued expenses	$	43,200	$	46,320


	Class A	Class B	Class C
Common stock outstanding	98,859,389	19,619,507	—
Employee stock options – outstanding	553,226	1,536,136	—
Restricted stock units – outstanding	3,338,953	1,630,332	—
Performance stock units – outstanding	—	4,397,688	—
Employee stock plans – available	30,392,983	—	—
Shares of Class A common stock issuable upon conversion of all outstanding Class B common stock, options, RSUs, and PSUs	27,183,663	—	—
Total common stock – outstanding or issuable	160,328,214	27,183,663	—
Shares authorized	750,000,000	150,000,000	150,000,000
Common stock authorized and available for future issuance	589,671,786	122,816,337	150,000,000


	Number of Stock Options	Weighted Average Exercise Price		Weighted average contractual term (years)	Aggregate intrinsic value
Balance at December 31, 2023	2,156,273	$	7.20	4.0	$	16,541
Granted	—	—
Exercised	(66,911)	12.84			155
Forfeited	—	—
Balance at March 31, 2024	2,089,362	$	7.02	3.7	$	15,498

Exercisable as of March 31, 2024	2,089,362	$	7.02	3.7	$	15,498
Vested as of March 31, 2024	1,925,250	5.96		3.4
Unvested as of March 31, 2024	164,112	$	19.45	7.5


	Number of Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested as of December 31, 2023	3,050,028	$	24.05
Granted	1,633,572	13.83
Forfeited	(31,327)	17.57
Released	(562,734)	19.29
Vested and not yet released	(26,742)	31.53
Unvested as of March 31, 2024	4,062,797	$	20.60


Tranche	Number of PSUs	Stock Price Hurdle
1	549,712	$	47.75
2	549,710	$	55.71
3	549,712	$	63.67
4	549,710	$	71.63
5	549,712	$	79.59
6	549,710	$	87.55
7	549,712	$	95.50
8	549,710	$	103.46


	Three Months Ended March 31,
	2024		2023
Operating lease expense	$	8,091	$	7,436
Variable lease expense(1)	196		743
Net lease expense	$	8,287	$	8,179


	Operating Leases(1)
2024	$	25,788
2025	36,724
2026	38,651
2027	35,766
2028	31,030
Thereafter	45,311
Future minimum lease payments	213,270
Impact of discounting	31,820
Present value of lease payments	$	181,450


	Three Months Ended March 31,
	2024			2023
Active Customers (in thousands)	2,361			2,287
Store Count(1)	245			204
Adjusted EBITDA(2) (in thousands)	$	22,378		$	17,738
Adjusted EBITDA margin(2)	11.2		%	10.3		%


	Three Months Ended March 31,
	2024			2023
	(in thousands)
Net loss	$	(2,679)		$	(10,812)
Adjusted to exclude the following:
Interest and other income, net	(2,556)			(1,878)
Provision for income taxes	108			261
Depreciation and amortization expense	10,583			9,140
Asset impairment charges	399			395
Stock-based compensation expense(1)	14,315			19,866

Amortization of cloud-based software implementation costs(2)	1,073			363
ERP implementation costs(3)	—			403
Other costs(4)	1,135			—
Adjusted EBITDA	$	22,378		$	17,738
Adjusted EBITDA margin	11.2		%	10.3


	March 31, 2024
Weighted average remaining lease term (years)	5.6
Weighted average discount rate	5.1	%

SEC Form 10-Q filed by Warby Parker Inc.