Figs Inc. (New York Stock Exchange: Figure) grabbed a lot of attention after reporting strong Q2 2022 results. Earnings for the quarter were over 50%, and unexpected sales were his 3.6%. The company’s increased traffic to his website hints at the company’s impressive performance in the second quarter.
Shares of the $1.9 billion healthcare apparel company rose 3.3% in Thursday’s extended trading session. In addition to healthcare apparel, the California-based company manufactures a wide range of lifestyle products.
Snapshot of second quarter results in chart
The company posted adjusted earnings of $0.03 per share in the fourth quarter, beating consensus expectations of $0.02 per share by 1 cent. However, earnings were down 62.5% from his $0.08 per share the year before.
Revenue of $122.2 million exceeded consensus expectations of $118 million. Year-over-year, the top line he increased by 20.9%. This was driven by a 3.7% increase in net revenue per active customer and a 5.8% increase in average order value. Active customers were 2 million at the end of the second quarter, up 26.2% year-on-year.
Additionally, the company noted that scrubwear (healthcare apparel) product revenue accounted for 85% of total revenue in the second quarter. Non-scrubwear (lifestyle) revenue contributed 15% of total revenue. Products launched this quarter include outerwear, footwear and underscrubs.
Geographically, FIGS generated 92.3% of its total revenue in the second quarter from operations in the United States, with the remaining 7.7% of sales generated internationally.
Fourth quarter cost of revenue was $35.9 million, an increase of 33.1% year-over-year. Meanwhile, total operating expenses were down 27.6% to $76.9 million. Gross margin decreased 2.7 points to 70.6% due to an unfavorable product mix and higher air and sea freight costs.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 19.8% year-over-year to $21.5 million in the fourth quarter. His adjusted EBITDA margin fell 8.9 points to 17.6%.
At the end of the second quarter of 2022, FIGS’ cash position weakened as cash and cash equivalents declined 13% from the end of 2021 to $170.2 million. This cash balance included the impact of his $26.5 million net cash outflow from operating activities. He spent $1.7 million on capital expenditures.
Illustration forecast for 2022
The company has reiterated its 2022 revenue forecast of $510 million to $530 million. This guidance reflects a year-over-year increase of 22% to 26%.
Adjusted EBITDA margin is expected to be 16% to 18% (remaining) for the full year.
Increased site traffic underpins FIGS top-line strength
According to TipRanks, estimated total traffic to the FIG website surged 87.7% year-over-year in the second quarter of 2022. The surge in traffic clearly shows the popularity and demand for the products offered by the company. See how website traffic can help you research your favorite stocks.
Are FIGS a good investment?
A growing customer base, higher revenue per active customer, new product launches and a strong domestic and international footprint reflect the company’s solid outlook for the next few years. The environment, high shipping costs (both air and sea) and weak cash positions are headwinds.
On TipRanks, the company has 7 buy recommendations from analysts for 3 hold and 1 sell rating. Analysts have a medium buy consensus rating for the stock. Additionally, FIGS’ average price target of $15.20 suggests a potential upside of 37.68% from current levels.
For long-term investors, current price levels may be attractive for gaining exposure to equities. It’s worth mentioning here that the FIGS share is down 58.8% year-to-date.
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