• Q4 Revenue: $190.6 million, up 17.8% year-over-year.
• Full Year 2024 Revenue: $771.3 million, up 15.2% year-over-year.
• Retail Revenue Growth: 23.9% year-over-year in Q4; 21.4% for the full year.
• E-commerce Revenue Growth: 5.3% year-over-year in Q4; 3% for the full year.
• Active Customers: 2.51 million, up 7.8% year-over-year.
• Average Revenue per Customer: $307, up 6.8% year-over-year.
• Glasses Growth: 15% year-over-year in Q4; 12% for the full year.
• Contacts Growth: 30% year-over-year in Q4; 36% for the full year.
• Exams Growth: 45% year-over-year in Q4; 41% for the full year.
• Store Count: 276 stores, up from 237 at the end of 2023.
• Adjusted Gross Margin: 54.2% in Q4; 55.5% for the full year.
• Adjusted SG&A: $103 million or 54% of revenue in Q4.
• Adjusted EBITDA: $13.8 million in Q4; $73.1 million for the full year.
• Free Cash Flow: $35 million in 2024.
• Cash Position: Approximately $254 million at year-end.
• 2025 Revenue Guidance: $878 million to $893 million, 14% to 16% growth year-over-year.
• 2025 Adjusted EBITDA Guidance: $97 million, approximately 11% margin.
• 2025 Store Openings: 45 new locations, including 5 shop-in-shops with Target.

• Warning! GuruFocus has detected 2 Warning Sign with WRBY.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Warby Parker Inc (NYSE:WRBY) achieved its highest revenue growth quarter since 2021, with a 17.8% year-over-year increase in Q4 2024.
• The company expanded its adjusted EBITDA margins by approximately 170 basis points, reflecting a focus on profitable growth.
• Warby Parker Inc (NYSE:WRBY) opened 41 new stores in 2024 and plans to open 45 more in 2025, indicating strong retail expansion.
• The integration of Versant Health expanded in-network coverage to over 30 million lives, enhancing the insurance business.
• The company reported strong growth in its contact lens and eye exam businesses, with contacts growing 36% and exams 41% year-over-year.

Negative Points

• Despite positive growth, the e-commerce revenue only increased by 5.3% year-over-year in Q4 2024, indicating slower growth compared to retail.
• The optical industry has experienced lower than usual growth, presenting challenges for market expansion.
• The company faces a potential 20 to 40 basis point headwind from tariffs, impacting gross margins.
• Warby Parker Inc (NYSE:WRBY) is maintaining a conservative stance on guidance due to broader macroeconomic uncertainties.
• The Target partnership is still in its early phases, with only five shop-in-shops planned, contributing minimally to 2025 revenue.

Q & A Highlights

Q: Can you discuss how customer acquisition initiatives, including marketing, new stores, and the Target partnership, will impact revenue growth moving forward? A: David Gilboa, Co-CEO, explained that Warby Parker has invested in customer acquisition through various activities such as store openings, insurance integrations, and media investments. This has resulted in six consecutive quarters of accelerating active customer growth. The company expects significant growth from customer acquisition in 2025, with a balanced approach between customer growth and average revenue per customer.

Q: How is the Versant Health insurance partnership affecting customer acquisition in 2025? A: David Gilboa noted that prior integrations have shown increased contribution per member over time. Early trends with Versant are positive, tracking in line or ahead of previous integrations. The partnership is expected to drive performance in 2025 and is seen as a long-term opportunity for customer acquisition and revenue growth.

Q: What are your thoughts on traffic and the contribution of new stores to total revenue growth? A: Steve Miller, CFO, stated that the company is modeling moderate improvement in store productivity and low single-digit growth in e-commerce. The Target partnership is expected to add a moderate amount of top-line growth, with more significant contributions anticipated in the following year. The new stores are expected to maintain consistent productivity levels with a target of 35% four-wall margins and payback within 20 months.

Q: Can you elaborate on the drivers of non-marketing SG&A expense leverage contributing to adjusted EBITDA margin expansion? A: Steve Miller explained that the company expects sustainable margin expansion of 100 to 200 basis points annually. Leverage will come from efficiencies in staffing at retail stores, customer experience teams, and corporate expenses. The company plans to benefit from these efficiencies to achieve a 150-basis point target for adjusted EBITDA margin in 2025.

Q: What is Warby Parker's strategy regarding AI, personalization investments, and smart glasses? A: David Gilboa mentioned that Warby Parker is closely monitoring developments in wearables and smart glasses. The company believes it has complementary capabilities and assets to enter the space if desired, leveraging its brand strength, design capabilities, and omnichannel distribution. The company is excited about the potential role it could play as the market develops.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.