Warby Parker Inc.

Thank you, and good morning, everyone. Here with me today are Neil Brumenter and Dave Gilbert, our co-founders and co-CEOs, alongside Steve Miller, Senior Vice President and Chair of Financial Offices. Before we begin, we have a couple of reminders. Our earnings release and slide presentation are available on our website at investors.warbybarker.com. During this call and in our presentation, we will be making forward 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 session titled Risk Factors, the Company's Latest Annual Reports on Form 10-K. These forward-looking statements are based on information as of May 9, 2023 and expect as required by law. 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 U.S. GAAP. A reconciliation of these items to the most direct comparable U.S. GAAP measures can be found in this morning's press release and our slide deck available on our IR website. And with that, I will pass it over to Neil to kick us off.

Welcome, and thank you all for joining this morning to discuss Warby Parker's first quarter 2023 results. 2023 is off to an encouraging start as many of the positive trends we experienced across our business late last year accelerated in the first quarter, driving operating results that surpassed expectations. E1 revenue increased 12% to $172 million compared to our forecasted range for revenue growth between 7% to 9% and an acceleration in growth compared to the second half of 2022. Q1 results were built off of a strong December, which was highlighted by the return to a more normalized FSA shopping period late in the month. While the optical industry continues to face demand pressures and our growth has been impacted by our pullback in marketing spend, we are capturing market share gains through our focus on the customer experience, product innovation, and store expansion. A combination of double-digit revenue growth along with the actions we took midway through last year to right-size our corporate cost structure and a more efficient use of marketing dollars fueled significant leverage and a sizable improvement to adjusted EBITDA margins in the quarter. Q1 adjusted EBITDA of $17.7 million represents a quarterly record for the company and was $17 million higher compared to last year and $2.7 million above our guidance range. By channel, stores led the way, with average productivity reaching 103% of Q1 2022 levels. This solid performance helped offset expected softness in e-commerce demand compared with a year ago, as we are in the final stages of realigning marketing spend with pre-pandemic levels, a process that began in the second quarter of last year. We also opened six new stores in the first quarter, including one new market. All six stores include eye exam capabilities. which brought the number of locations offering eye exams at quarter end to 155, or 76% of our fleet. As we've increased the number of stores offering eye exams, we have seen a nice uptick in average revenue per customer, driven by both eye exam revenue and a higher penetration of progressive lenses. We've also seen positive responses to our two bundling programs, which are aimed at capitalizing on lower traffic levels in the current environment, and meant to promote cross-product purchasing and amplifying the fashion aspects of purchasing a pair of glasses. On a trailing 12-month basis, average revenue per customer was $270, up 8.4% from a year ago. At the same time, we increased active customers 2.5% to 2.29 million, with strong gains in retail customers offsetting declines in e-commerce customers, until we lapped the reduction in marketing spend in the second half of this year. Overall, we are pleased with our start to the year, and we continue to be positive about the outlook for Warby Parker and the optical industry at large. While inflationary pressure and recent changes in how consumers are spending their time and money have changed the normally steady and predictable patterns in the optical industry, we continue to see a long runway for growth for Warby within the $76 billion vision care market. We expect that our attractive pricing, new and exciting products, and exceptional customer experiences combined with our growing store base and greater brand awareness will return the business to its long-term growth trajectory and continue to fuel sustained market share gains. And with that, I'll turn it over to Dave to walk through the progress we've made against our primary growth drivers this quarter.

Good morning, everyone. As Neil just outlined, we are pleased with the positive financial results we delivered in Q1 in light of the current demand environment. While we have seen some positive consumer trends to start the year, we remain cautious with our forecast. The Vision Council is projecting the overall optical market to contract a little less than 1% in 2023 after only growing 0.5% in 2022. This compares to the industry's historical growth rate of 3% to 5% between 2011 to 2019. We are clearly outpacing the industry with revenue up double digits in Q1, despite reducing marketing spend by 35% year over year. We believe our approach to balancing long-term strategic investments in the business with disciplined cost management position the company to accelerate growth and continue to deliver enhanced profitability as market conditions normalize. Opening new stores and advancing our omnichannel presence remains a key focus. Two of the main reasons consumers who are aware of Wolby Parker have not purchased from us is because we don't have a store nearby and they can't get an eye exam. Stores remain capital efficient with compelling returns even in the current demand environment. New stores continue to pay back within 20 months and generate strong four-wall adjusted EBITDA margins in line with our target of 35%. And stores are integral to advancing our holistic eye care ecosystem through their eye exam capabilities. We find that exam stores drive higher sales than non-exam stores, while offering a more seamless experience for our customers and patients. Industry-wide, nearly 80% of prescription glasses are purchased at the same location an eye exam takes place, and our store channel represents the gateway to increased penetration of progressive lenses, our highest ASP and highest margin product, while attracting new and existing customers to our burgeoning contacts offerings. We continued our strategic investment in stores in Q1, opening five new stores in existing markets and one in a new market, including four suburban and two urban locations. As we look to the remainder of 2023, we are on track to add a total of 40 stores this year. Longer term, we believe we can open 900 plus stores in the U.S., a significant opportunity for further penetration of new and existing markets for years to come, while still representing a small fraction of the 48,000 optical shops in the U.S. In addition, stores act as an accelerator of progressive sales. As our store footprint has expanded, so have progressives. Progressive penetration was up 210 basis points year over year to 22.9% of prescription eyeglass units in Q1. Our omni-channel experience remains unique in our category, and while e-comm growth has been disproportionately impacted by a reduction in marketing spend, We are excited to continue to evolve our digital experience by increasing accessibility and capability of our virtual try-ons, enhancing frame recommendations, and making it easier than ever to reorder contacts or book an eye exam. Along with channel expansion, we are also placing an increased emphasis on driving conversion and higher revenue for customer to help offset lower traffic trends in 2023. We have seen gains in in-store conversion in the percentage of customers purchasing multiple products from us. Along with our core glasses business, we are committed to growing the other verticals of our business. Our contacts business with its more frequent order cycle represented 7.7% of T1 revenue, up 70 basis points versus a year ago. This figure is still well below the industry average of 20% and represents significant white space opportunity for future growth. Our growing eye exam business is another area of focus this year as we continue to add this capability to new and existing stores. Eye exams now represent 3.8% of revenue in Q1 versus 2.1% last year, and we continue to see the vast majority of our exam customers go on to purchase glasses, contacts, or both. While we are pleased with the increases we've seen in average revenue per customer, we are also intently focused on driving new customer growth with a two-pronged strategy. The first is through organic growth driven by our retail expansion and new product introductions. Our largest source of new customers is word of mouth, and stores are great customer acquisition vehicles. We expect to see retail customer acquisition scale in step with our store expansion plan, which, along with the pickup in e-commerce traffic in the second half of this year once we are past the difficult marketing spend comparison, should provide the overall business with a stronger tailwind heading into next year. In Q1, we launched five new eyewear collections in a new, unique, reversible sunwear collaboration with Jimmy Fallon's which generated significant press, awareness, and traffic. Second is strategic investment in marketing. We plan to strategically and judiciously invest in demand creation and brand building through different tactics, including ongoing investment in linear TV and digital programs like SEO and SEM. With our channel mix between stores and e-com now rebalanced to pre-pandemic levels, we expect marketing spend as a percent of revenue to remain in line with pre-pandemic levels in the low double digits. We are pleased with the marketing efficiency we are seeing, and at these levels, expect to drive steady and sustainable new customer growth. Insurance remains a big opportunity for us, both in attracting new customers and enabling us to deliver even better value. More than 60% of our customers have Vision Insurance, a mix in line with the overall market. A portion of those customers are leveraging their benefits with us, while others recognize that their out-of-pocket spend is still lower at Warby Parker than if they were to go to a different in-network provider. We have a number of efforts underway to make insurance reimbursement more seamless for our customers. First, we are continuing to develop contracted reimbursement relationships with a range of managed vision care plans. In Q1, we saw strong growth from in-network insurance customers. More customers than ever can seamlessly apply their benefits with us, paying just their net price at checkout, and those who do spend more than those who don't apply their benefits at checkout. In parallel, we plan to introduce new features this quarter that will make it faster and easier for all of our customers to look up their benefits regardless if they are in or out of network. And lastly, we are maintaining a healthy balance between driving growth and expanding adjusted EBITDA margins. We continue to carefully monitor expense levels, both at headquarters and stores, to align with current traffic trends. and we expect to benefit from lower media rates and more efficient marketing spend going forward. While a portion of these savings will flow through to our bottom line, evidenced by our adjusted EBITDA margin guidance for 2023, we are being flexible and plan to reinvest a portion of these savings back into the business in support of our long-term growth objective. And now, I'll pass the call over to Steve to cover our financial performance in more detail.