Warby Parker Inc. plans to open 35 stores by the end of the year, bringing its total to 161.
Warby Parker reported third-quarter net revenue of 137.4 million, up 32 percent from the same quarter a year ago. Net loss totaled $91.1 million.
“Every day, we strive to design high-quality products, deliver remarkable customer experiences, and develop innovative technologies that help the world see. Our strong third quarter results reflect our commitment to achieving these goals while delivering ambitious, long-term sustainable growth,” said Co-Founder and Co-CEO Dave Gilboa.
“We’re incredibly proud of the milestones we achieved in Q3, from opening our second optical lab to going public via a direct listing–and being the first public benefit corporation to do so,” added Co-Founder and Co-CEO Neil Blumenthal. “As we look ahead, we remain laser focused on executing against our growth strategies by increasing our active customer base, expanding our retail footprint, and delivering innovative products and services that further our mission to inspire and impact the world with vision, purpose and style.”
Third Quarter 2021 Financial Results
For the third quarter of 2021, compared to the third quarter of 2020:
-Net revenue increased $33.3 million, or 32.0%, to $137.4 million.
-Active Customers increased by 395,000, or 23%, to 2.15 million.
-Gross profit dollars increased 24.5% to $79.7 million.
-Gross margin was 58.0% compared to 61.5% in the prior year, primarily driven by increased penetration of contact lenses versus the prior year, reflecting Warby Parker’s strategy to grow its contact lens offering. Gross margin also includes approximately 70 basis points of stock-based compensation expense related to the Company’s direct listing in 2021. In addition, gross margin for third quarter 2020 includes approximately 90 basis points of improvement related to a tariff rebate received.
-Selling, general and administrative expenses (“SG&A”) increased $66.3 million to $171.6 million, primarily driven by $65.0 million in stock-based compensation expense, $23.9 million in direct listing expenses, and $7.8 million in expense from a stock donation to the Warby Parker Impact Foundation.
Excluding these items, as well as $42.4 million of stock based compensation expense incurred in the third quarter of 2020, SG&A increased $12.0 million, on an adjusted basis. On this basis(1), SG&A as a percentage of revenue improved 590 basis points, from 60.5% to 54.6%, primarily as a result of net revenue growth outpacing SG&A expense growth as Warby Parker maintained disciplined management of its expense profile.
-Net loss increased $49.5 million to $91.1 million, primarily as a result of the increase in SG&A described above.
-Adjusted EBITDA(1) increased $5.8 million, or 106%, to $11.2 million.
-Adjusted EBITDA margin(1) increased 290 basis points to 8.1%.
-Warby Parker opened nine new stores during the quarter, bringing year-to-date openings to 28, and ended the quarter with 154 stores.
Due to the impact of COVID-19-related store closures last year, Warby Parker is making fiscal year 2021 financial comparisons against fiscal years 2020 and 2019. The consolidated statement of operations for the third quarter of 2019 is included in the tables at the end of this release for reference.
For the third quarter of 2021, compared to the third quarter of 2019:
-Net revenue increased $42.6 million, or 45%.
-Gross margin was 58.0%, compared to 60.0% in the prior period, primarily driven by an increased penetration of contacts in 2021 versus 2019, reflecting Warby Parker’s strategy to grow its contact lens offering. Gross margin also includes approximately 70 basis points of stock-based compensation expense related to the Company’s direct listing in 2021.
-SG&A increased $116.3 million to $171.6 million, primarily driven by $65.0 million in stock compensation expense, $23.9 million in direct listing expenses, and $7.8 million in expense from a stock donation to the Warby Parker Impact Foundation. Excluding these items, SG&A increased $20.2 million, on an adjusted basis. On this basis(1), SG&A as a percentage of revenue improved 320 basis points, from 57.8% to 54.6% primarily as a result of net revenue growth outpacing SG&A expense growth as Warby Parker maintained disciplined management of its expense profile.
-Net loss increased $92.5 million to $91.1 million, primarily as a result of the increase in SG&A described above.
-Adjusted EBITDA(1) increased $4.8 million, or 76% to $11.2 million.
-Adjusted EBITDA margin(1) increased 140 basis points to 8.1%.
“Our journey to becoming a public company has been incredibly fulfilling and exciting, and we are pleased to report strong financial performance in our first earnings report” said Chief Financial Officer Steve Miller. “Our financial model remains grounded in steady active customer growth, consistent customer retention, and compelling customer economics, which we believe provides the framework for sustainable growth with increasing profitability for years to come.”
Balance Sheet Highlights
Warby Parker ended the third quarter 2021 with $266.2 million in cash and cash equivalents.
Raises 2021 Outlook
For the fiscal year 2021, Warby Parker now expects:
-Net revenue of $539.5 million to $542.0 million, representing growth of 37% to 38% versus fiscal year 2020 and growth of 46% versus fiscal year 2019.
-Adjusted EBITDA margin(1) of approximately 4% to 5%.
-35 new store openings bringing total store count to 161.