Warby Parker Inc.

Hello and thank you for your patience. Today's Warby Parker first quarter 2025 earnings call will begin in just a few moments time. Today's call will be hosted by Jacqueline Berkeley, Vice President of Investor Relations. And if you would like to ask a question on today's call, please do press star followed by one on your telephone keypad. Once again, today's call will begin momentarily. Thank you for your patience. Hello and welcome to today's Warby Parker first quarter 2025 earnings call. My name is Bailey and I will 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'd now like to pass the conference over to Jacqueline Berkeley, Vice President of Investor Relations. Please go ahead when you're ready.

Thank you and good morning, everyone. Here with me today are Neil Blumenthal and Dave Bilboa, 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 May 8, 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 Neal to kick us off.

Thanks, Jacqueline, and thank you all for joining us today. Our team delivered a strong start to 2025, driven by continued progress against Warby Parker's strategic priorities. We grew revenue 12% year over year, reflecting consistency in our two-year stack growth and delivered profitability above guidance with an adjusted EBITDA margin of 13.1%, marking nearly 200 basis points of year-over-year expansion. We also reached a significant milestone by achieving our first quarter of positive GAAP net income as a public company. This start to the year provides a solid foundation as we execute on our strategic initiatives for the remainder of the year and beyond. Key to this is our continued focus on customers, both customer experience and customer acquisition. We are pleased to have delivered seven straight quarters of accelerating active customer growth, and we intend to build off this momentum while continuing to benefit from strong retention, high-value repeat purchasing, and the power of our brand. Looking at the remainder of the year, we plan to continue investing in marketing in the low teens as a percent of revenue. while leveraging sophisticated analytics to optimize media spend. As some other advertisers pull back, we intend to capitalize on opportunities while keeping a close eye on demand signals and adjusting spend accordingly. We're pleased with the trends we are seeing within network insurance customers, and our version integration continues to ramp in line to slightly ahead of expectations. We'll also continue to lead with product innovation. So far this year, We've launched seven collections, including our first rimless collection. Reacting to customer demand, we also introduced a new premium light-responsive lens, which is exceeding expectations. We plan to drive further expansion in glasses and progressives growth by expanding exam coverage, designing and launching new frame collections, and introducing lens enhancements. We believe glasses growth will complement continued rapid growth from contacts and exams. and that our holistic range of products and services allows us to attract new customers and significantly increase their lifetime value. And finally, we'll further invest in scaling our industry-leading omnichannel model while delivering exceptional experiences. Our real estate and store teams opened more stores this quarter than in any prior Q1, a strong start to a year in which we expect to open more stores than ever. New stores are performing in line with our expectations while driving new customer acquisition and compelling returns. We are on track to open 45 new stores this year, including our previously announced Shop and Shops with Target, which will open in the second half of 2025. You'll also see us continue to innovate and invest in our online experience, which drove accelerated growth in our e-commerce channel in Q1. We are excited about early test results from our new AI-powered personalization features, which will roll out more broadly later this year. Steve and I also want to share the decisive actions we've already taken to mitigate the impact of higher tariffs before Steve discusses our financial performance and guidance in more detail. We've faced dynamic environments like this before, and each time we've proven our team's ability to adapt with speed and agility. whether it was managing through tariffs in 2019, the COVID-19 pandemic starting in 2020, or the recalibration of our cost structure in the years that followed. Our omnichannel model is resilient and has emerged stronger and more efficient each time. We are confident in the playbook that we're already leveraging, as well as the tenured team that we have in place to execute it. As we look ahead, we have three main priorities. To continue to serve our customers by delivering both exceptional value and service. Two, to continue investing in growth and executing on our strategic initiatives. And three, to actively mitigate the impact of tariffs and maintain a strong financial profile. Let me walk you through our plan to do so as well as the progress we've made to date. I'll start first with the adjustments we've already made to our supply chains. demonstrating its flexibility as well as the depth of our vendor relationships. For background, we operate a global diversified supply chain designed to optimize cost and speed while maintaining strict quality standards. Over the past several years, we've significantly enhanced our capabilities by expanding our supplier base and geographic reach while investing in our own U.S. optical labs. As input costs shift, or disruptions arise, we're well equipped to make rapid adjustments, and we've done so in recent weeks. As we've shared last quarter, approximately 20% of our CODs originate from China, down meaningfully in the past five years. More recently, we've accelerated this work, which we estimate will reduce our China sourcing by over half to less than 10% of CODs by year end. Every pair of Warby Parker glasses and sunglasses is designed in-house at our New York headquarters. We produce frames in various countries across Asia and Europe and purchase lenses from partners in Asia and the U.S. We've reallocated frame production away from our Chinese partners to other trusted partners in Europe and Asia and have a healthy balance of frame inventory in place. Many of our more complex lens types are purchased in real time. giving us the flexibility to shift production across a global network. We've already moved a significant portion of our lens sourcing out of China, primarily to U.S. partners. The speed and efficiency of this transition reflects the strength of our supplier relationships. In short, we've dramatically accelerated a multi-year supply chain diversification strategy that was already underway. Our vertically integrated direct-to-consumer model gives us enhanced control and visibility, and our longstanding vendor relationships, many over a decade, enable the speed and agility that continue to serve us well. And now I'll turn it to Dave to cover off on the remainder of our plan. Thanks, Neal.