Warby Parker Inc.

a 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'd now like to pass the call over to Jacqueline Berkeley, Head of Investor Relations. So please go ahead when you're ready.

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 company's latest annual report on Form 10-K. These forward-looking statements are based on information as of February 27, 2025, and except 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 our non-GAAP measures to the most directly 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'll pass it over to Dave to kick us off.

Thank you, Jacqueline, and good morning, everyone. In 2024, we set ambitious goals for ourselves and we're proud to report that our team delivered, punctuated by a strong Q4, our highest revenue growth quarter since 2021. For the full year, we drove revenue growth above 15% and expanded adjusted EBITDA margins by approximately 170 basis points, while making meaningful progress against our long-term strategic initiatives and delivering millions of pairs of glasses to people in need. We achieved our second consecutive year of accelerated revenue growth by opening 41 new stores and maintaining our industry-leading unit economics while driving positive e-commerce growth for the first time since 2021. This growth was primarily driven by improved customer and glasses growth, which we expect will be the core drivers of our business for years to come. We set out to fuel brand awareness and affinity by investing in marketing spend, and we saw active customer growth accelerate in every quarter last year. We committed to expanding insurance and our holistic vision care strategy, and we significantly increased in-network lives while growing contacts and exams by 36% and 41%, respectively. We accomplished all this while maintaining an unwavering focus on profitable, sustainable growth, resulting in a 40% increase in adjusted EBITDA versus 2023. We believe this execution lays a strong foundation for the years ahead, and gives us confidence in our 2025 plan as we look to build on this momentum. This month, we celebrated 15 years since our founding when we set out to demonstrate that business and impact can go hand in hand. From day one, we sought to provide vision for all while delivering exceptional customer experiences at great value. And today, that remains at the heart of everything we do. The Warby Parker of today is who we aspire to be 15 years ago. and we have even more conviction in our vision than ever before. As we think about our next 15 years and beyond, we believe there are tremendous tailwinds in our category. The incidence of myopia continues to rise rapidly, and it's estimated that by 2050, over half of the world's population will need corrective vision, presenting both a profound responsibility and tremendous opportunity. And while the US market remains large at an estimated $68 billion, We believe its customers are largely underserved because of structural barriers, limited innovation, complex pricing, and inadequate customer service. Despite lower than usual growth in the optical industry over the last few years, our team has proven that our brand, product assortment, omnichannel offering, and value proposition resonate across all market conditions. And we believe we are as well positioned as ever to continue taking share and leading with innovation for years to come. In 2025, we plan to sustain and expand the momentum we have built over the last few quarters. We expect to continue to drive strong top line and adjusted EBITDA growth by investing further in customer acquisition, opening more stores than ever, scaling our insurance business, introducing products that offer unbeatable value, and delivering exceptional customer experiences. Now Neil and I will cover our 2025 strategic priorities before Steve goes into more detail on our Q4 and 2024 results and our 2025 financial plan. I'll start first with marketing spend. We plan to drive more customer-led growth in 2025 by continuing to invest efficiently in both brand awareness and customer acquisition. We believe our strategic marketing investments in 2024 drove growth across several key dimensions, including customers, glasses, retail traffic, and e-com. And these strong results give us confidence to scale marketing spend in 2025 while maintaining it in the low teens as a percent of revenue. Throughout 2024, we were able to invest efficiently across a variety of channels as our team evaluated different messages and tactics. In 2025, we plan to leverage an enhanced data-driven media mix model to make real-time optimizations. We see significant opportunities to scale spend across channels, and we're excited to have even more advanced analytics to inform these decisions. Stores remain our largest and most efficient drivers of customer growth. Our 45 openings planned for this year, up from 41 in 2024, skew towards existing markets, and we believe the additional market density will help drive awareness. One trend we observed throughout 2024 was that e-com growth was highest in many of our largest retail markets, reinforcing our confidence that overall market growth benefits from store density and therefore greater brand awareness. We continue to find that our happy customers are our best marketing channel, and the more of them we have in a market, the better it is for growth across channels. Last year, we saw encouraging results from more intentional media to drive local store awareness through campaigns that included direct mail and localized digital ads. We will look to do more of that this year. This not only helps to drive awareness with new customers, but also longtime customers who think of Warby Parker as an online-only business. Due in part to these efforts, we drove an improvement in traffic throughout the year, including an acceleration in Q4. Earned media continues to be a powerful driver of awareness. with 2024 initiatives like our Solar Eclipse campaign and Emma Chamberlain collaboration generating significant press, in-store traffic, and brand engagement. These high-impact moments reinforce the power of our brand and our ability to connect with customers in clever, meaningful ways. Strong retention and repeat purchasing patterns further validate the power of our brand, with revenue retention rates of approximately 50% over 24 months and greater than 100% over 48 months for our 2020 cohort. Our insurance business serves as a powerful complement to our traditional customer acquisition channels, expanding access to new customers while driving higher value purchases and repeat purchasing. 2024 was a transformative year for our insurance business. With the successful integration of Versant Health, we expanded our in-network coverage to over 30 million lives. unlocking a significant opportunity to serve more customers utilizing their vision care benefits at Warby Parker. We believe this expansion not only strengthens our position in the market, but also sets the stage for long-term growth as we scale utilization and see average revenue per member increase. While it is still early days, we are seeing promising trends from Versant members. Utilization is tracking in line with or slightly ahead of prior carrier integrations, And it is already attracting a higher percent of new customers than our non-insurance business. Insurance customers continue to be some of our highest value customers, spending more on their initial purchases, selecting progressive lenses at a higher rate, and returning more frequently. As we move into 2025, we'll focus on scaling existing integrations while driving greater awareness across their member bases. In parallel, we continue to think there's an opportunity to educate customers about using their out-of-network benefits at Warby Parker. Right now, we estimate around 60% of our customers have vision insurance, and most out-of-network plans cover an average of $100 reimbursement for a pair of glasses or contacts, meaning that these customers often pay $0 out of pocket for their eyewear purchase at Warby Parker. Our next strategic priority is driving further growth in glasses. building on our momentum in both single vision and progressives. In 2024, glasses grew approximately 12% year over year, up from 8% the prior year, driven by continued growth in progressives, the expansion of complex lens types and enhancements, as well as an acceleration in single vision lenses, which represent the majority of our prescription eyewear business. Progressives overall still only represent approximately 22% of our prescription glasses sold in 2024, And we believe there's a significant opportunity to increase penetration over time. At the same time, it was encouraging to see the acceleration in single vision lenses throughout 2024, and in particular in Q4. This year, we'll look to build upon that momentum by deploying targeted media spend to drive glasses units. As a leader in style and innovation, we plan to introduce nearly 20 frame collections this year. new styles and colorways to expanding sizing and novel constructions each collection reflects our commitment to delivering newness and curation to our customers who come to us as a style and variety authority in the industry our direct-to-consumer model paired with our own in-house design team makes us uniquely positioned to gather and react to customer feedback because of this we can offer a tighter more curated assortment that our competitors and focus on building out franchise styles with new sizes, colors, and materials. As an example, earlier this month, we launched our first ever rimless assortment starting at $195 and available in a variety of lens shapes. Our customers frequently requested rimless styles, and we worked diligently to ensure we could introduce this intricate and complex construction that met our quality standards at a price point far below most other retailers and optical shops. Since launching in 2010, we've intentionally maintained our $95 price point, which remains a key part of our value proposition and represents the majority of sales today. While we intend to continue offering accessible pricing, we plan to expand our $145, $175, and $195 offerings in our recently introduced $125 price point. We also plan to continue expanding our lens options to give customers even more choice in 2025. Last year, we had success expanding our sun lens offerings, introducing the ability to customize polarized lens colors and add anti-reflective coatings alongside our core enhancements like anti-fatigue, blue light, and light responsive, which contributed to an increase in average revenue per customer. Progressives are closely tied to store expansion as progressives penetration is higher in our retail channel and with insurance customers. In addition to being efficient customer acquisition vehicles, our stores are integral to advancing our goal of providing holistic eye care. Consistent with the last couple of years, every new store that we open in 2025 will include eye exam capabilities. Industry-wide, approximately 75% of prescription glasses are purchased at the same location an exam takes place. And now, I'll turn it over to Neal to talk through our channel and holistic vision care strategies.