• Net Sales: $294 million in Q4, an increase of 14% year-over-year.
• REVOLVE Segment Net Sales: Increased 15% year-over-year in Q4.
• FWRD Segment Net Sales: Increased 11% year-over-year in Q4.
• Gross Margin: Increased by approximately 50 basis points year-over-year in Q4.
• Net Income: $12 million in Q4, more than tripled from $3 million in the prior year quarter.
• Adjusted EBITDA: $18 million in Q4, an increase of 114% year-over-year.
• Active Customers: 2.7 million, an increase of 5% year-over-year.
• Total Orders Placed: 2.2 million, an increase of 7% year-over-year.
• Average Order Value: $301, a decrease of 1% year-over-year.
• Fulfillment Costs: 3.2% of net sales, a decrease of 27 basis points year-over-year.
• Selling and Distribution Costs: 16.5% of net sales, a decrease of 129 basis points year-over-year.
• Marketing Investment: 14.8% of net sales, a decrease of 168 basis points year-over-year.
• Cash and Cash Equivalents: $257 million as of December 31, 2024, an increase of 5% year-over-year.
• Inventory: $229 million as of December 31, 2024, an increase of 13% year-over-year.

• Warning! GuruFocus has detected 4 Warning Signs with RVLV.

Release Date: February 25, 2025

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

Positive Points

• Revolve Group Inc (NYSE:RVLV) reported a 14% year-over-year increase in net sales for the fourth quarter, marking the first double-digit growth across all segments and geographies in 2.5 years.
• The company achieved a more than doubling of net income and adjusted EBITDA year-over-year, with net income reaching $12 million and adjusted EBITDA increasing by 114%.
• Revolve Group Inc (NYSE:RVLV) successfully reduced its return rate by over 2 percentage points year-over-year, contributing to significant marketing and logistics cost efficiencies.
• The company made meaningful advancements in AI technology, enhancing customer experience through AI-powered search algorithms and product recommendations.
• Revolve Group Inc (NYSE:RVLV) saw strong growth in adjacent product zones, with beauty, men's, and home products each increasing by a healthy double-digit percentage year-over-year.

Negative Points

• Average order value decreased by 1% year-over-year, primarily due to product mix changes in the FWRD segment.
• General and administrative expenses were higher than expected, with a $6 million overage, partly due to non-routine costs and increased stock-based compensation.
• The company faced challenges in January due to wildfires in Los Angeles, which temporarily impacted demand and led to a pause in social media activity.
• Despite improvements, the inventory growth slightly outpaced net sales growth, indicating ongoing efforts to rebalance inventory levels.
• Revolve Group Inc (NYSE:RVLV) anticipates potential impacts from new China tariffs, which could affect the REVOLVE segment's gross margin.

Q & A Highlights

Q: Can you provide more color on the gross margin outlook and the ability to increase the full price proportion of sales in the business? A: Jesse Timmermans, CFO: We see further opportunity for full price sales even on top of the healthy levels we exited 2024 with. The team continues to improve in bringing new styles and resonating merchandising, which supports this outlook. For FWRD, margins are improving, and we expect full price sales to continue positively impacting margins.

Q: What is the outlook for logistics, especially internationally, and how do international margins compare to domestic ones? A: Jesse Timmermans, CFO: International gross margins are relatively in line with domestic margins. While shipping internationally is more expensive, this is offset by a lower return rate internationally compared to domestic, resulting in comparable contribution margins.

Q: As comparisons get tougher, what are your thoughts on average order value relative to the number of orders, and how do you see physical retail evolving? A: Jesse Timmermans, CFO: We expect strong growth in customer numbers and orders, with a slight increase in average order value due to a higher full price mix. Michael Karanikolas, Co-CEO: Physical retail is a huge long-term opportunity. Our experiences with the Aspen store and pop-ups have been successful, and we see significant potential as a large portion of the apparel market remains offline.

Q: Can you size the impact of the January wildfires on Q1 performance? A: Jesse Timmermans, CFO: The wildfires had a definite impact, particularly in California and Los Angeles, and our pause on social media also affected nationwide sales. However, February has shown solid performance, helping to offset January's challenges.

Q: What are the new opportunities emerging from AI technology, and how is it impacting the business? A: Michael Karanikolas, Co-CEO: AI is rapidly evolving, and we have several exciting projects underway. We are leveraging AI for product discovery, site merchandising, and efficiency improvements. While it's too early to share specifics, we are optimistic about AI's potential to drive growth and efficiency.

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