Revolve Group, Inc.

simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. At this time, I'd like to turn the conference over to Eric Randerson, Vice President of Investor Relations at Revolve. Thank you. You may begin.

Good afternoon, everyone, and thanks for joining us to discuss Revolve's first quarter 2025 results. Before we begin, I'd like to mention that we have posted a presentation containing Q1 2025 financial highlights to our investor relations website located at investors.revolve.com. I would also like to remind you that this conference call will include forward-looking statements, including statements related to our future growth, our inventory balance, our key priorities in operating and innovation initiatives, industry trends, the impact of changes in international trade policies and our plant mitigation efforts, our marketing events and our expected impact, partnerships and strategic acquisitions our physical retail stores and our outlook for net sales gross margin operating expenses and effective tax rate these statements are subject to various risks uncertainties and assumptions that could cause our actual results to differ materially from these statements including the risk mentioned in this afternoon's press release as well as other risks and uncertainties disclosed under the caption risk factors and elsewhere in our filings with the securities exchange commission including without limitation our annual report on Form 10-K for the year December 31, 2024, and our subsequent quarterly reports on Form 10-Q, all of which can be found on our website at investors.revolve.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA and free cash flow. We use non-GAAP measures in some of our financial discussions as we believe they provide valuable insights on our operational performance and underlying operating results. The presentation of this non-GAAP financial information is not intended to be considered in isolation or is a substitute for, or superior to, the financial information presented and prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures, as well as the definitions of each measure, their limitations, and our rationale for using them can be found in this afternoon's press release, and in our SEC filings. Joining me on the call today are our co-founders and co-CEOs, Mike Karanikoulis and Michael Mente, as well as Jesse Timmermans, our CFO. Along with our prepared remarks, we'll open the call for your questions. With that, I'll turn it over to Mike.

Hello, everyone, and thanks for joining us today. Our strong execution within a dynamic environment resulted in outstanding first quarter results, highlighted by double-digit top-line growth, 57% growth in operating income year-over-year, and 45 million in operating cash flow that further strengthened our balance sheet. What's more, our adjusted EBITDA margin increased by 160 basis points year over year, and cash and cash equivalents on the balance sheet exceeded 300 million. It's a great start to the year in an environment that has become progressively more uncertain than when we last spoke at the end of February. We achieved these strong results while continuing to invest in key foundations for long-term success, including advancing our AI technology and personalization capabilities, international expansion, building our brands, capturing a greater share of wallet among existing consumers, and developing new owned brands. With that introduction, I will begin by drilling deeper into our Q1 results, then I'll talk about the current environment and global tariff uncertainty before wrapping up with progress on our longer term objectives. Starting with Q1 results, our healthy top line performance illustrates that our strategic initiatives are working and that we are gaining market share during an uncertain time when industry peers with weaker foundations have dialed back investment plans. Net sales increased 10% year-over-year, driven by domestic and international net sales increases of 9% and 12% year-over-year, respectively. By segment, revolved net sales increased 11% and forward net sales increased 3% year-over-year, our second consecutive quarter of growth within a luxury market that remains challenged. we see considerable opportunity for further gains amidst the disruption in the luxury market as evidenced by the recent bankruptcy and liquidation of Canada's iconic premium department store chain, Hudson's Bay. Now, let's unpack the strong bottom line results highlighted by a 57% increase in operating income and a 45% increase in adjusted EBITDA year over year. In addition to our top-line gains, contributing to our strong growth and profitability was our brand strength that helped drive meaningful marketing efficiencies year-over-year, as well as our successful efforts to drive efficiencies in our global logistics operations. In fact, our product return rate decreased by nearly three points year-over-year in the quarter, yielding significant operating efficiencies and contributing to further elevation of the customer experience. As an illustration of our progress, our operating income margin and adjusted EBITDA margin were the highest for any first quarter in three years. Our profitable growth converted very strongly to generation of cash flows, which is a particular advantage in the current environment. We generated $45 million in operating cash flow in the first quarter, increasing our cash position by $44 million in just three months. Now, I'll address the recent slate of tariff announcements that have created a great deal of uncertainty for our entire sector. The macro environment is facing geopolitical and macroeconomic uncertainty, particularly with the implementation of significant and broad-based tariffs presenting considerable challenges for our sector. It's very challenging to operate in an environment when applicable tariffs can change almost daily, yet our team is engaged, collaborating with brands and other partners daily to mitigate the impacts, and we believe we are fully up to the challenge. Importantly, our leadership team has a strong track record for navigating times of extreme uncertainty coming out stronger on the other end. In our more than 20 years of operating our business, we have successfully navigated through turbulent cycles, including the global financial crisis and COVID-19, and we have emerged stronger as a result. In contrast to many fashion e-commerce peers, we have a profitable and cash-generative business, proven financial discipline, a strong balance sheet, and key competitive advantages that together with our strong team enable us to confidently invest in the large opportunity ahead of us. Beyond the numbers and despite the current macro challenges, I'm excited by our team's execution that has led to measurable progress on our strategic priorities. Before turning it over to Michael, I will briefly recap our progress. First, we continue to efficiently invest to expand our brand awareness, grow our customer base, and strengthen our connection with the next generation consumer. A powerful example is our eighth annual Revolve Festival held last month, which handily exceeded our expectations for delivering marketing impact consumer engagement and efficiency, as Michael will talk about in his remarks. We are also encouraged that year-over-year growth and trailing 12-month active customers and average revenue per active customer accelerated in the first quarter, even while we achieved marketing efficiency of 100 basis points year-over-year. Second, we continue to expand our international presence, where we have made excellent progress and further improving the experience for our international customers by reducing friction in foreign currency payment processing and product returns among many other service enhancements. In the first quarter, international net sales increased 12% year-over-year, despite currency headwinds in most regions, and what we hope is temporary weakness in Canada due to boycotts of US retailers in response to US policy. These very solid results further validate the underlying strength of our international business and growth opportunity. Beyond international, we are relentlessly focused on further elevating the experience for all customers. Since the beginning, the customer has been at the center of our focus, so I'm thrilled to report that in the first quarter, we achieved a modern record for our customer satisfaction score. Shipping efficiency is a great example of our continuous improvement in service levels. Customers love our two-day express shipping offered in the U.S. free of charge. What's truly incredible is that we now deliver more than a third of our U.S. shipments to customers in just one business day, free of charge, exceeding our two-day promise by a full day. The percentage of US packages we deliver to customers in only one business day has increased by six percentage points in the past three years, underscoring our progress and raising the bar to delight our loyal customers. And lastly, we continue to leverage AI and other technology to drive growth and efficiency. I'm excited to share that we have internally developed AI algorithms that we believe will drive efficiency and even further elevate the customer experience. Our internal data science team has developed AI technology algorithms that now automatically transcribe customer service phone calls, providing greatly increased visibility into agent performance and greater awareness of customer issues. It is early days, yet we are excited about the potential for increasing operating efficiency, as well as improved learning and training opportunities for our customer service teams. We are also continuing to leverage AI to refine our shopping experience and personalization capabilities. I'm excited to share that in collaboration with a third party, we are testing a new AI-powered styling feature that enables shoppers on Revolve to virtually style recommended items by mixing and matching styles from our vast assortment. Virtual styling is a powerful use case for AI technology that we believe has the potential to elevate product discovery, increase consumer engagement and loyalty, and advance our efforts to reduce product returns. To wrap up, we delivered a strong first quarter and continue to strengthen our foundation for profitable growth over the long term. I would like to thank our team for your hard work, for staying nimble, and for your dedication to exceeding our customers' expectations. We are in a very challenging environment, yet I'm confident that we have the organizational discipline to manage our way through the uncertainty and gain further market share in 2025 and beyond. Now, over to Michael.