Warby Parker Inc.

Hello and welcome to the Warby Parker Incorporated 4Q25 earnings conference call. My name is Harry and I will be coordinating your call today. All lines will remain in listen only mode during the presentation portion of the call and there will be an opportunity for Q&A after management's prepared remarks. You can enter the queue for questions by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two to exit the queue. Please note that in the interest of taking as many of your questions as possible, the company respectfully asks that you limit yourself to one question and then one follow-up if needed. I will now hand the call over to Jacqueline Berkeley, Head of Investor Relations, to begin. Please go ahead.

Thank you, and good morning, everyone. Here with me today are Neil Blumenthal and Dave Gilboa, our co-founders and co-CEOs, alongside Adrian Mitchell, Chief Financial Officer, and Josh Truppo, Vice President of Financial Planning and Analysis. 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 the 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 26, 2026, and except as required by law, we assume no obligation to publish, 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.

Thanks, Jacqueline, and good morning, everyone. Thank you for joining us today to discuss our fourth quarter and fiscal 2025 results and our outlook for 2026. 2025 was an eventful year, and one that we're proud of. We took decisive actions that enabled us to continue delighting customers, to invest in innovation, and position Warby Parker for long-term success, all while delivering sustainable growth. We drove double-digit revenue growth each quarter, meaningfully expanded adjusted EBITDA, and reported our first full year of positive net income, even as we navigated tariffs in a dynamic consumer backdrop. Looking ahead, 2026 will be an exciting year for Wargby Parker. We continue to see tremendous runway in scaling our existing growth initiatives, from opening more stores to driving progressives growth to increasing insurance penetration. We'll speak to these and other core business drivers shortly. This year, we also plan to introduce our first AI glasses in partnership with Google and Samsung, which we expect will unlock significant new TAM and enable us to take advantage of the biggest technology shift in our lifetime. These devices will bring the world's most advanced AI to glasses designed for all-day wear. Over the last 16 years, we have reimagined how people shop for eyewear, bringing together great design, exceptional value, and an unparalleled customer experience underpinned by technology, innovation, and customer obsession. Over time, we've seen how this powerful combination has drawn consumers to our brand and helped us capture market share. Today, we believe the optical industry is in a period of transition. While the core eyewear category remains large and more stable than most consumer sectors, we have seen more volatility in demand and transient softness than usual in the post-pandemic era, including during some periods over the last year. Our confidence remains in the long-term durability and attractiveness of the category given the increasing health need that it serves, but we are planning conservatively for the near term given recent trends. At the same time, enthusiasm for smart glasses is accelerating with clear proof points of consumer eagerness to embrace these new devices, serving as a demand catalyst independent of trends in the broader eyewear category. We believe we're well positioned to continue taking market share regardless of macro conditions, and given our inherent advantages as a tech-enabled brand, believe we are in a better position than the rest of our category to successfully navigate and capitalize on the transition from traditional eyewear to intelligent eyewear. This gives us a great deal of confidence in our 2026 plan, and as we enter Warby Parker's third act. Acts one and two were about pioneering the direct-to-consumer brand, then evolving into a holistic eye care provider and omnichannel retailer. Act three is all about AI. We plan to introduce new products like AI glasses while also leveraging AI across the organization to drive productivity and enhance the customer experience. With that, let's turn to results. In fiscal 2025, we delivered 13% revenue growth, driven by 47 new store openings, the most ever in a single year, high single-digit customer growth, and mid-single-digit average revenue per customer growth. We believe this performance reflects continued market share gains. We drove healthy unit volumes, average selling price, and customer growth, while prescription glasses units declined 6% industry-wide, according to the Vision Council. And while much of the category relied on significant price increases, we mitigated the impact of tariffs while preserving our unmatched value proposition and maintaining prices on the vast majority of our offerings, including our $95 prescription glasses. We believe our innovative designs, value proposition, and seamless omnichannel experience position us well to continue gaining share in any market condition. We also expanded profitability. Full year adjusted EBITDA was $95 million, up 30% year over year, driven by leverage in non-marketing SG&A expense. We also achieved our first full year of net income profitability and generated $44 million in free cash flow. We delivered these results while continuing to invest in our long-term strategic initiatives and strengthen the foundation of our operations. We implemented changes that mitigated the impact of tariffs, demonstrating the flexibility of our supply chain and the resilience of our team. In addition, we streamlined our operations by sunsetting our home try-on program and completed several infrastructure upgrades in our labs and across our tech stack to support future growth and prepare us for our AI glasses launch. Turning to the fourth quarter. In the quarter, revenue grew 11% and adjusted EBITDA margin was 7.2%, roughly in line with last year. As we shared on our last call, our guidance assumed that the trends we saw in September and October would continue through the end of the year. However, in December, we saw a slowdown in our one-year and two-year growth trends with softness concentrated in our 25 to 34-year-old consumer cohort, while our older progressive customer remained more resilient. We experienced softer retail traffic and contact lens growth slowed, which pressured our e-commerce channel. As a result of this, fourth quarter adjusted EBITDA came in below our expectations. While we are not satisfied with that outcome, we responded quickly and incorporated learnings directly into our 2026 plan. Trends improved early in the first quarter before being impacted by historic winter weather. Looking ahead, we remain as excited as ever about the opportunity in our core business and the role we expect AI glasses to play in expanding our addressable market and growth potential beyond traditional eyewear. Today, we represent approximately 1.3% share of the $70 billion U.S. eyewear market, and that does not include any future spend in AI glasses. While the market is large, we believe many customers remain underserved by a category that has not prioritized innovation, customer experience, and transparency. While the category has relied largely on price increases, our team has proven that our brand, product assortment, omnichannel offering, and value proposition resonate well with consumers across market conditions. As we look to 2026, our strategy emphasizes scaling the drivers of our core business to accelerate growth while preparing the organization for the launch of AI Glasses. We're prioritizing expanding access across our omnichannel platform, increasing insurance penetration, and continuing to elevate the customer experience as we scale. We believe these investments position Warby Parker for sustained market share gains and long-term profitable growth. In 2026, we're also taking a disciplined and measured approach to our guidance, given the macroeconomic trends that remain outside of our control while staying focused on the initiatives we can control. While the Vision Council projects the total eyewear market to be down this year, we are committed to delivering low double-digit revenue growth and 130 basis points of adjusted EBITDA margin expansion. This guidance does not include any potential revenue from AI glasses, but it does include the operating expenses and capital investments required for launch. We are investing thoughtfully and from a position of strength. We look forward to sharing more about our launch plans in the months ahead. Before I turn it over to Neil, let me take a moment to talk about Q1. As many of you know, the country has faced historic winter storms and cold weather to start the year, and we are not immune to those impacts. Our high concentration of stores on the East Coast, which are among our highest volume stores, has presented a challenge early in the year, resulting in store closures and lower traffic. Adrian will provide further details later in the call when reviewing guidance. And with that, I will turn it over to Neil to walk through our 2026 plan.