FIGS, Inc.

Good afternoon. Thank you for attending the FIGS fourth quarter fiscal 2025 earnings conference call. My name is Cameron and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to your host, Tom Shaw, Senior Vice President at FIGS. You may proceed.

Good afternoon, thank you for joining us to discuss figs fourth quarter and full year 2025 results. which we released this afternoon, it can be found in our earnings press release and in the shareholder presentation posted to our investor relations website at our where pigs calm. presenting on today's call or treat a spear or co founder and chief executive officer and Sarah altred our chief financial officer as a reminder remarks on this call that do not concern past events are for looking statements. These may include predictions, expectations, or estimates, including about future financial performance, market opportunity, or business plans. Forward-looking statements involve risk and uncertainties, and actual results could differ materially. These and other risks are discussed in our SEC filings, including in our 10-K we filed today. Do not place undue reliance on forward-looking statements, which speak only as of today, in 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 the most comparable GAAP measures are included in our shareholder presentation. And now I'd like to throw the call to Katrina.

Thanks, Tom. Good afternoon, everyone, and thank you for joining us today. We are incredibly excited to have closed out 2025 with such a strong quarter. The culmination of clear strategic focus and disciplined execution that gained momentum throughout the year. Our vision is to be the leading premium healthcare uniform provider in the world by winning the hearts and minds of healthcare professionals. And we have never had greater conviction in the impact our brand can drive. Pigs reinvented scrubs and after 13 years, our product engine continues to lead and define the healthcare apparel category. In 2025, we delivered improvements across our product engine from function and fit to category expansion and merchandising. And we delivered even more wins through how we inspire our community beyond products. Over the past year, we created the most powerful combination of messaging, connection, and action in our company's history. This progress reflects the collective effort of an extraordinary team, one that we have fortified with exceptional talent, perspective, and heart. Simply put, I've never been prouder of or more energized by our tremendous leaders and partners. As we look closer at our results, Our Q4 performance was nothing short of remarkable. We knew we had an incredible foundation for success coming into the quarter with strong brand heat and operational momentum. We telegraphed these early trends during our prior earnings call, supported by the carryover success of our late Q3 breast cancer awareness campaign and continuing through our business as usual days ahead of the holiday season. Our growing success during these core selling days is one of the best signs of our overall health. For holiday, we fueled even more success through strong inventory positioning, newness across color and style, and impactful marketing, combining for results that dramatically exceeded expectations for the Black Friday, Cyber Monday period. And we are excited to keep this strong momentum going for the balance of the quarter as we sharpened our focus on full price selling. All told, Q4 net revenues grew at our strongest quarterly rate in more than four years, surging 33% and surpassing $200 million and a quarter for the first time in our history. This growth was driven by an impressive acceleration in active customers, jumping 5% sequentially and 9% year over year. At the same time, we experienced strong productivity gains across nearly every selling occasion. as well as record AOVs driven by healthy trends in AUR and UPT, a superlative quarter all around. Our Q4 performance punctuated full year net revenue growth that returned to double digits for the first time since 2022 and exceeded our initial outlook by nearly $90 million. We also had two other big milestones with scrubware crossing the half a billion dollar mark for the first time And our international business surpassing $100 million. Our success was not limited to the top line. Showing the power of our model, we paired soaring net revenue growth with strong profitability, over delivering our original full year adjusted EBITDA margin target by over 200 basis points. And we did this even while absorbing the impacts of tariffs and our Q4 action to write off pockets of older inventory. Finally, We built a record net cash and investment position of just over $300 million, even as we stayed on the offense with key investments across the company. It's important to reflect for a moment on how we reached this critical inflection point. The COVID pandemic created a truly unique environment where healthcare professionals were stretched beyond their limits. The need for scrubs was paramount and demand spiked. Once the pandemic eased, closets were stocked which we believe led to an overhang impacting demand. At FIGS, we navigated through these changes by calibrating our operational framework while doubling down on the game-changing products and brand connection that we knew healthcare professionals loved and that we were truly uniquely positioned to deliver. And with the COVID overhang now behind us, we're thrilled to see our strategies pay off and position us for even larger opportunities ahead. The structural advantages we see in healthcare remain firmly intact with the growing needs of an aging population, an ongoing focus on wellness and aesthetics, and an industry in need of support so that it can keep up with the outsized demands of both patients and the labor force. This dynamic was on full display with the January jobs report where the healthcare and social assistance industry powered nearly all the gains in the labor market with 130,000 jobs added. This all bodes well for strong, sustained demand for FIGS. Looking back, it's clear that we have expanded our leadership position, capitalizing on the opportunity to widen the moat and better unlock the powerful dynamics that have been there all along. We believe the onus is on us to sustain and extend this edge. Our strategic house framework governs how we operate our business and expand on our mission. Our success is measured against three strategic priorities product innovation, community engagement, and market expansion. A year ago on this call, we outlined a similar set of priorities designed to better serve our community. This continuity is intentional. It is shining through in our performance, and it reflects conviction that we remain on the right path forward. Let's now go deeper into these priorities and how we plan to measure progress in 2026. Starting with product innovation, our efforts in 2025 focused on building a repeatable and scalable product foundation. In practical terms, that meant adding discipline and focus across all facets of the product engine, delivering impactful newness, shortening development cycles, driving calendar rigor, and improving fit. We're excited to see wins across the board in all of these areas. In 2026, we plan to leverage that strong framework to up our game even more. First, we are elevating our core through fabric innovation. This year, we plan to have three fabric solutions in scrubware to address a range of needs. This starts with our hallmark Finex fabrication designed as our versatile everyday solution. We also added Formex in 2025 to emphasize stretch and comfort and have been encouraged by the growing love the community has shown for it. And in conjunction with the Winter Olympics, we introduced FiberX to emphasize structure and durability And we are excited to expand this line as we move deeper into the year. Second, we are continuing to build out the layering system. We have seen success in moving beyond scrubware with head-to-toe solutions, on-shift and off, and you will see expanded efforts this year in areas like underscrubs, outerwear, lab coats, compression socks, and loungewear. Finally, with a sharper strategic focus on long-term product planning, we are developing new categories for beyond 2026. We are excited with our team's efforts to develop a more robust integrated development process and are actively looking at several categories that can expand on our existing work to serve healthcare professionals in new and differentiated ways. Now onto community and engagement. Building real connection with healthcare professionals has always been at the heart of FIGS. It is why we exist and it is why we continue to lead this industry. In 2025, we created some of our most meaningful and memorable top of funnel moments to date. From our viral International Women's Day and Nurses Week campaigns, to our collaborations with Noah Wiley in Washington and at the Emmys, to our breast cancer awareness campaign, all which resonated deeply within our community. I highly encourage you to check out the sizzle reel linked in the shareholder presentation we issued today. to experience the incredible energy we've built across the brand throughout the year. We expect that momentum to continue in 2026 as we expand our reach and deepen the connections that matter most to our community. We are proud to begin the year by continuing our support of the Team USA medical team at the Winter Olympics, renewing our belief that it takes heart to build bodies that break records. We celebrated the awesome humans behind Lindsey Vonn's return to the world stage seven years in the making. Her journey reflected unmatched courage, grit, and perseverance, something the world saw firsthand, and served as a powerful reminder that no athlete ever stands alone. In moments of both triumph and challenge, it is the medical community that shows up with expertise, care, and heart. That is the community we are honored to stand alongside. That same perseverance lives in healthcare every single day. Healthcare professionals show up with purpose and humanity regardless of the outcome, through wins and losses, progress and setbacks. Their commitment to putting others first does not change, even when the work is hard or unseen. This truth anchors our upcoming Never Change campaign, which will guide our storytelling through 2026. We see Never Change as a natural evolution of our Where Do You Wear Figs campaign in 2025, which resonated deeply by capturing both the breadth of healthcare and the deeply personal journeys within it. Moving forward, we have designed our platform with greater flexibility so we can show up across more moments throughout the year that truly matter to our community. The first Never Change campaign focusing on women in medicine is scheduled to launch next week ahead of International Women's Day, and we could not be more excited. We are also continuing to expand how we activate and support our community. When we center the world on the impact made by healthcare professionals and tell their stories, we strengthen the long-term impact of our brand. You will see FIGS continue to show up across key moments in healthcare and be a leading force in advocating for them. Finally, we are investing in how we serve our customers more personally and meaningfully. Our D2C model has always kept us close to our community, and we will continue to test, learn, and refine our personalization efforts this year to create more relevant and thoughtful experiences. We are also excited to keep evolving the FIGS app, which we are positioning as our most elevated digital experience built to drive the ultimate engagement within our healthcare community. Our third strategic priority centers around market expansion. We are proud to have reached a record 2.9 million active customers globally in 2025. But no, that's still just a fraction of the global healthcare community. As we drove the bulk of last year's success in our core businesses, we were also making important strides in our three market expansion opportunities. International, our team's B2B business, and community hub. Starting with international, where we continue to execute our go deep and go broad strategy for market development. This framework prioritizes how and where we invest in areas like community engagement and localization. while also leveraging technology for more efficient market expansion. And the success of this strategy was on full display in Q4, with international net revenue growth accelerating to the highest level in more than two years, at 55% year over year. With our go deep markets, our strategy spans some of our more established markets, as well as those with higher market potential. Key markets like Canada, Australia, Mexico and the UK are further along the journey as we look to match the incredible brand experience established in the United States. Other countries with high potential are earlier in development. We're investing strategically there to build awareness and consideration. Examples include South Korea and China, both of which we were excited to enter in Q4. And while we're taking a longer term view of success, we are encouraged by the early signs across the broader Asia Pacific region. With our go-broad markets, we are leveraging newly developed e-commerce functionality to accelerate market entry strategies. These improved capabilities are designed to drive efficiency and localization at a regional level, opening untapped opportunities to serve more markets and redefine expectations. These efforts were instrumental in nearly doubling our total market reach in 2025 to 58 countries. highlighted by new launches across the Middle East and Africa, as well as Latin America. As we look to 2026, we expect to surpass 80 total markets, led by a deeper focus across Europe and Asia Pacific, planned in the first half of the year. Moving on to teams. In 2025, we took a great foundation and positioned it for scale through new leadership, investments in our team, and the development of our Go Forward strategy. This strategy centers on building deeper relationships with healthcare organizations and operating as an even more embedded partner to help them invest in their teams. We are prioritizing higher impact growth accounts and with more resources in focus, we are seeing early success. In 2026, we're excited to roll out the next evolution of our team store experience. This platform is designed to give organizations greater flexibility and functionality to purchase in ways that work best for their teams, delivering a seamless, self-serve experience for administrators and employees. Importantly, this functionality will also expand access to the FIGS assortment and support our international teams customers, which we expect will unlock meaningful new growth opportunities over time. Finally, on community hubs. We ended 2025 with a flurry, expanding our small fleet of retail locations to five, following openings in New York, Houston, and Chicago in Q4. As we strive to meet healthcare professionals where they are, we continue to see hubs having an early impact in reaching new customers, driving higher LTV, and expanding the impact of our ecosystem. Our first focus this year is to continue optimizing our five existing hubs. These efforts include further refining assortments, store flow and fixtures, standardizing in-store operations, and driving thoughtful community activations. We are also implementing a store development engine to help drive how we strategically map out, design, and build our future community hubs. Leveraging these dynamics, we plan to expand our presence by opening our next four locations in the second half of 2026. Overall, we are in a powerful position to harness our brand's momentum, build on our strengthened executional foundation, and confidently pursue the opportunities that lie ahead. These actions position us to approach $700 million in revenue this year, a great stepping stone to our $1 billion aspiration and beyond. We also plan to continue rebuilding our bottom line while continuing to invest. This means at least holding our adjusted EBITDA rate in 2026, even adjusting for last year's inventory write-off, inclusive of this year's Olympic spend, and assuming tariff impacts remain in effect. Importantly, This margin target is substantially higher than the commitment indicated on our last call. And finally, our capital allocation plans will continue to prioritize growth opportunities across the business while leveraging our ongoing share buyback program to be opportunistic and help offset stock dilution. In closing, we entered 2026 with a clear sense of direction and purpose, confident in the progress we've made and the foundation we've built We've remained deeply grateful for the opportunity to serve a community that continues to inspire our work every day. With that, I'll turn the call over to Sarah to review our results in our 2026 financial plan.