FIGS, Inc.

Good afternoon, ladies and gentlemen, thank you for joining the second quarter fiscal 2023 earnings conference call. My name is Kate and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the call over to our host, Jean Fontana.

Good afternoon, and thank you for joining today's call to discuss FIGS second quarter 2023 results, which we released this afternoon and can be found in our earnings press release and in the stockholder presentation posted in our investor relations website at ir.warefigs.com. Presenting on today's call are Trina Spear, Chief Executive Officer and Co-Founder, and Daniela Ternschein, our Chief Financial Officer. As a reminder, remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations, or estimates, including about future financial performance, market opportunity, or business plans. Forward-looking statements involve risks and uncertainties, and actual results could differ materially. These and other risks are discussed in our SEC filings, including in the 10Q we filed today, which we encourage you to review. Do not place undue reliance on forward-looking statements which speak only as of today and which we undertake no obligation to update. Finally, we will discuss certain non-GAAP metrics and key performance indicators, which we believe are useful supplemental measures for understanding our business. Definitions and reconciliations of these non-GAAP measures to their most comparable GAAP measures are included in the stockholder presentation we issue today. Now I would like to turn the call over to Trina Spear, Chief Executive Officer of VIX.

Thanks, Jean. Welcome to our second quarter 2023 earnings call. Our strong second quarter results demonstrate the resilience of our business, outstanding execution against our strategic priorities, and operational excellence. We delivered 13% net revenue growth as compared to the second quarter last year, primarily due to the 21% increase in our active customer base as we continue to widen our market leadership position within the healthcare apparel industry. We generated strong profitability with Q2 adjusted EBITDA margin of 13.7% ahead of our nine to 10% margin expectation. And we delivered free cashflow of 29 million in the second quarter. In addition, inventory is down from peak levels and we are on track to reach our year end target of approximately 25 weeks of supply. The fundamentals of our business remain strong. We operate in a resilient and growing industry. We have the powerful combination of unmatched product innovation and brand authenticity. And our business model yields strong positive cashflow due to the non-seasonal replenishment nature of healthcare uniforms. Looking ahead, we believe that we are well positioned to deliver long-term profitable growth. First, we have ample room to further build our community and grow share wallet within the US. Second, we are highly encouraged by the opportunities we see in our international and teams businesses And third, we are just getting started in retail. Now I'll dive into our strategic growth pillars, beginning with our solutions-based product innovation. We believe that product innovation is one of the largest moats around our business. We have deep knowledge of the healthcare community. We have the design and technical capabilities to deliver best in class product. And we have the trust of the healthcare community to bring innovation that helps them do their jobs better each and every day. Our scrubs business drove over 80% of our net revenues in the second quarter, supported by the newness we continuously bring to market. In non-scrubs, the diversification of our product assortment across our layering system contributed to net revenue growth of 25%. Nearly 40% of our active customers purchased at least one non-scrub item, illustrating that our layering system resonates with our community. Our collaboration with New Balance and Footwear is a prime example of how we can serve this community in a way they've never experienced before. Our Rove shoe launched in the quarter is engineered for 24-7 protection, support and comfort for your feet. We also gave the New Balance 70s inspired 327 shoe an upgrade, featuring materials and functionality designed specifically for healthcare professionals. Both launches drove high sell-through rates and sold out in multiple colorways. Most recently, we made a bold entry into under-under scrubs with underwear for overachievers, making them available in all of our classic scrubs colors. Featuring smooth lines and no bunching or riding, they are not only comfortable, but also invisible under our scrubs. We have a strong pipeline of innovation across fabrications, categories, and styles that we believe will attract new customers and drive net revenue per active customer as we expand our TAM over the long term. Next, I will spend a few minutes on how we're building and connecting with the healthcare community. First, I'm happy to report that we delivered another incredible Nurses Week campaign, I Am a Nurse, putting the spotlight on how nurses are the backbone of our society. We call our Nurses Week our Super Bowl, as we love to celebrate our awesome community. We also launched our Innovate Beyond Your Imagination campaign, in early Q2 to highlight product innovation across FIGS Pro, our Free X Fabrication, our own Brace Scrub jumpsuit, which is our first print offering, and our New Balance collaborations, including our robe and our 327 shoes. These campaigns reflect storytelling, including our Innovation Lab concept, which showcase how product comes to life, both on shift and off, in a fun and unique way. These campaigns rallied our community as we've never seen before, with over 2 million views on our own Brave Free X video alone. The strong response to our marketing is evidenced by the 21% growth we saw in our active customer base in the second quarter compared to Q2 of last year. We acquired the third highest number of new customers in our company's history, leaning into creative optimization strategies. This is a strong positive indicator for the future growth of our business. Our highly efficient marketing engine combined with our discipline around first-order profitability enables us to maintain marketing spend at 15% of net revenues on an annual basis. As we discussed in the past, we are making advances in elevating personalization capabilities in marketing, as well as our online shopping experience and our mobile app. We expect these initiatives to drive traffic more efficiently and increase conversion rates. turning to advocacy, which truly sets our brand apart. We further our commitment to the healthcare community with the launch of our first of its kind, FIGS Advocacy Hub, an online experience for our community to learn about the most important policy developments affecting them and where they can advocate for real change through FIGS. The launch of our Advocacy Hub was supported by a multi-page ad in the New York Times highlighting the challenges being experienced by healthcare workers and how our awesome humans bill would help solve them. Our advocacy hub is truly unique and enables us to leverage our two and a half million active customers to create one of the largest bases of grassroots advocates that we know of. We could not be prouder to be leading this effort. Turning to international. International net revenue increased 52% compared to the second quarter last year, demonstrating our ability to build our brand outside of the US. We are encouraged by the success of our localization strategies, such as our Canadian Ambassador event. As we deepen our presence in the 13 international markets we've previously entered, we also recognize that there's a growing demand for FIGS across a number of other countries that we don't serve today. In response to the strong organic traffic trends we saw on our site, we made figs available in Mexico, the Philippines, and Saudi Arabia during the second quarter. Results have far exceeded our expectations, even before investing any marketing dollars to support these countries. We are excited to advocate our marketing engine to fuel further growth in these markets. We will also leverage our demand insights to determine additional countries that may provide meaningful growth opportunities for our brand. We have only scratched the surface on building our international presence and plan to strike the appropriate balance of top line growth and profitability as we do so. Moving on to our team's business. which is where we sell directly to hospitals and healthcare institutions. Teams is growing fast and tracking to approximately a mid-single digit percentage of net revenues. Notably, this growth has come almost entirely from inbound requests. Our Teams business continues to see demand across universities, private practices, staffing agencies, and hospital departments, as well as concierge clinics, which is an area of focus for us that I'll briefly touch on. People no longer want a one-size-fits-all approach to their health. They want the kinds of smaller, more individualized concepts that are popping up across all areas of healthcare that focus on prevention and proactive measures. Whether it's veterinary care or dental or physical therapy or aesthetics, people are demanding more accessible, regular, and specialized care, and it's changing the landscape of healthcare. Just as healthcare is branching out, becoming more specialized, localized, and consumerized, so too is the experience of the healthcare professional. Just like lay people are demanding more from their providers, providers are demanding more from their partners. FIGS is their ultimate partner in helping make them look good, feel good, and perform at their best. At branding their businesses, our logo is a symbol of professionalism, style, and technology. And at supporting their endeavors to pave the future of healthcare. To that end, we are on track to launch an updated version of our team's technology platform later this year that will support the growth of this business. The platform enhancements are focused on expanding our product assortment to our team's customers, improving the administrator experience, and expanding payment capabilities. Given the significant tailwinds created by the evolution of healthcare, we are developing a more robust strategic plan to accelerate growth in teams. Next, I will provide an update on our retail strategy. Along with continued progress towards opening our first permanent store in Century City this fall, we have also signed a store lease for a 4,000 square foot location on Walnut Street in Philadelphia, which we plan to open in the first half of next year. The store, located within two miles of five healthcare institutions, will have a dedicated space to host events for our healthcare community. Philadelphia is an ideal choice for a second location as a leading market for healthcare education, where one in every six doctors in the U.S. has been trained. It has the fourth highest number of healthcare professionals in the U.S. and is one of our most under-penetrated markets. We are excited to be meeting our community where they are and delivering a meaningful experience and environment like they've never seen before. In conclusion, we are pleased with our second quarter results and how we continue to build our FIGS community of healthcare professionals. We have assembled a best in class executive team that has a proven ability to not only advance our strategic priorities, but also to remain nimble as we continue to navigate an uncertain environment. We believe that our sustained competitive advantages of unmatched product innovation, brand authenticity, and scale position us well to meet our long-term objectives. With that, I'll turn the call over to Daniela to discuss our financials and our outlook. Good afternoon, everyone.