Warby Parker Inc.

Good morning. My name is Bethany and I'll be your conference operator today. At this time, I would like to welcome everyone to the Warby Parker third quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star two. Thank you. I would now like to introduce your host, Tina Romani, Vice President and Investor Relations.

Thank you, and good morning, everyone. Here with me today are Neil Blumenthal and Dave Gilboa, our co-founders and co-CEOs, alongside Steve Miller, Senior Vice President and Chief Financial Officer. Before we begin, we have a couple of reminders. Our earnings release and slide presentation are available on our website at investors.warbyparker.com. During this call and in our presentation, we will be making comments of a forward-looking nature. Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties. For more information about some of these risks, please review the company's SEC filings, including the section titled Risk Factors, in the prospectus filed by the company in connection with its direct listing. These forward-looking statements are based on information as of November 12, 2021, and we assume no obligation to publicly update or revise our forward-looking statements. Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of these items to the nearest U.S. GAAP measure can be found in this morning's press release and our slide deck available on our IR website. With that, it's my pleasure to turn the call over to Neil to kick things off.

Thanks, Tina, and good morning, everyone. After 11 years as a private company, we're excited to host our first earnings call on the heels of a strong quarter and a successful direct listing. We'd like to start by highlighting Team Warby. Our talented and engaged team continues to thrive while demonstrating strength and resilience during this challenging pandemic. One of the highlights of Dave and my careers was celebrating our direct listing alongside Team Warby, both inside the New York Stock Exchange and virtually across the US and Canada. The pride that all of us felt was palpable. Through everyone's hard work and shared commitment to doing good, Team Warby will continue to have an outsized impact on our customers, our shareholders, and the communities we serve. As we reflect on our business today, we're grateful to operate in a large and growing market. According to the Vision Council, the U.S. optical market is roughly $42 billion with an incremental $100 billion internationally and with expectations for robust growth at a rate greater than GDP. With over half a billion in revenue, we still represent only 1% of the U.S. market, underscoring the tremendous opportunity we have ahead. We started Warby Parker in 2010 because we were frustrated consumers, frustrated by the high and opaque price of glasses and an antiquated shopping experience. Since our founding, we've pioneered ideas, designed products, and developed technologies that help people see. We design and sell prescription glasses starting at $95 and offer a range of convenient and affordable vision care products and services like eye exams and contacts across our more than 150 retail stores, our website, and our apps. By selling directly to our customers and cutting out the middleman, we are able to deliver exceptional value and remarkable customer service while maintaining high gross margins. This is best reflected in our net promoter score. which has remained above 80 throughout our history. And we have not seen similar customer satisfaction industry-wide. We believe that the large incumbent players, which make up half of the total market, are structurally disadvantaged. And the other half of the market, independent optical shops and optometric practices, are not well positioned to make the financial and technological investment required to innovate and create the exceptional customer experiences consumers now expect. Happy customers fuel our growth. We ended the quarter with 2.15 million active customers, an increase of 23% versus last year, and still a fraction of the nearly 200 million adults in the U.S. using some form of vision correction. Our direct-to-consumer model not only enables us to better serve our customers, but also helps us manage crises like a pandemic. Our omnichannel approach enabled us to grow last year thanks to our robust e-commerce presence. and our vertical integration has allowed us to avoid inventory shortages and long lead times encountered by other brands and retailers. Of course, our ability to serve our customers is dependent on a highly engaged team, and Team Warby is deeply committed to providing vision to all. In Q3, we publicly launched the Warby Parker Impact Foundation, which we created to accelerate the work of our Buy a Pair, Give a Pair program, Warby Parker was incredibly proud to authorize up to 1% of the company's outstanding shares for future grants to the foundation or other like-minded charitable organizations. And our work providing glasses to those in need is having a dramatic impact. We are excited to share the results of a three-year clinical study highlighting the impact of our free glasses distribution program in Baltimore City Public Schools. In September, JAMA Ophthalmology published a study from Johns Hopkins University investigating the effect glasses have on a student's performance in school. Overall, gains for students who received glasses were equivalent to adding two to four months of education onto the school year. And for students in the lowest quartile or those participating in special education, wearing glasses had an impact that equated to four to six months of additional learning. The study proved what we've seen firsthand through our Buy a Pair, Give a Pair program in U.S. schools, that a single pair of glasses can significantly improve a child's ability to learn and succeed in school. Our focus on mission and our stakeholder-centric ethos are just two of the reasons we're excited and proud to come to work each day. In every decision we make, we take our customers, employees, the community, our partners, our shareholders, and the environment into account. And across our corporate, customer experience, optical lab, and retail teams, we recruit and retain highly engaged, highly motivated individuals who are excited to connect their work back to our mission. We view this focus on impact as a form of long-termism. One of the examples that brings this to life was our approach to store closures in 2020. At the start of the pandemic, we were one of the first national retailers to close all of our stores because it was the right thing to do to protect our employees and our customers. Not only was it the right thing to do from a safety perspective, but it was also the right business decision. Fast-forwarding to today, we believe we aren't facing the same labor shortages that many retailers are facing because of our employer brand and the goodwill we've fostered over the years. Our long-term approach to building Morby Parker can best be described as one of sustainable growth. This is a phrase you'll be hearing from us a lot. And by that, we mean our focus on scaling our business and compounding high growth rates, not just for the next couple of quarters or years, but for many years and decades to come. It's the philosophy we use to guide our strategic investments that we believe will lead to meaningful long-term growth, profitability, and impact. As we look to Warby Parker's future, we could not be more excited. And now I'll pass it over to my co-CEO and co-founder, Dave, to walk through some of the growth strategies we'll leverage in Q4 and beyond.