Revolve Group, Inc. Q4 FY2024 earnings call

• Fourth quarter recap: Net sales $294M, +14% YOY; REVOLVE +15%, FWRD +11%. Gross margin up 50 basis points. Net income $12M, adjusted EBITDA $18M, +114% YOY.
• Full year 2024: Net sales growth improved, international net sales +14%, adjacent product zones (beauty, men's, home) saw double-digit growth. Profitability increased faster than net sales; logistics costs reduced by ~130 basis points, marketing spend reduced by ~130 basis points.
• 2025 Priorities: Expand brand awareness, grow assortment, expand international presence, enhance technology stack with AI.
• Merchandising: Improved site merchandising, success in premium essentials, beauty, men's, home categories.
• Brand Awareness: Marketing efficiency improved, successful events like Aspen New Year's Eve activation.
• Physical Retail: Excitement about LA permanent store, positive impact of pop-up shops on e-commerce and owned brand sales.
• Luxury Segment: FWRD investments paying off, average revenue per active customer up double digits, renewal of preowned handbags.

Net sales were $294 million, an increase of 14% year-over-year. The REVOLVE segment saw net sales increase 15% year-over-year, and the FWRD segment saw a 11% year-over-year increase. FWRD returned to growth for the first time in seven quarters. REVOLVE segment contributed a higher percentage to net sales growth due to its 15% increase, while FWRD's 11% growth also played a role in the overall results.

• Gross margin: Q1 2025 between 52.2%-52.7%, full year 2025 between 52.4%-52.9%.
• Fulfillment: Q1 2025 ~3.2% of net sales, full year 2025 3%-3.2%.
• Selling and distribution: Q1 2025 ~17.4% of net sales, full year 2025 17%-17.2%.
• Marketing: Q1 2025 ~14.9% of net sales, full year 2025 14.9%-15.1%.
• G&A: Q1 2025 ~$39.5M, full year 2025 $155M-$158M (10% YOY increase).
• Tax rate: Full year 2025 ~24%-26%.

• Market uncertainties that could impact actual results differing from forward-looking statements.
• Tariff impacts, particularly relevant to the REVOLVE segment.
• Supply chain challenges, including limited sourcing exposure to Canada and Mexico fulfillment.
• Disruptions such as wildfires that can temporarily impact demand and operations.

Q: Randy Konik of Jefferies asks about gross margin outlook and logistics margins.

A: Jesse Timmermans responds about gross margin drivers and logistics margins being comparable domestic and international.

Q: Oliver Chen with TD Cowen asks about average order value vs number of orders and physical retail plans.

A: Jesse Timmermans talks about orders and AOV growth, and Mike Karanikolas discusses physical retail opportunities.

Q: Jim Duffy of Stifel asks about January impact from wildfires and merchandising.

A: Jesse Timmermans addresses January softness and Michael Mente talks about merchandising in new categories.

Q: Nathan Feather of Morgan Stanley asks about FWRD growth and inventory.

A: Mike Karanikolas discusses FWRD momentum and inventory progress.

Q: Michael Binetti with Evercore ISI asks about February run rate and gross margin inputs.

A: Jesse Timmermans talks about February growth and gross margin factors.

Q: Mark Altschwager with Baird asks about customer acquisition costs and G&A.

A: Mike Karanikolas discusses marketing efficiencies and Jesse Timmermans talks about G&A investments.

Q: Anna Andreeva with Piper Sandler asks about quarter-to-date performance and Revolve Festival.

A: Jesse Timmermans mentions Q-to-date growth and Mike Karanikolas talks about Revolve Festival marketing.

Q: Jay Sole of UBS asks about AI opportunities and new projects.

A: Mike Karanikolas discusses AI projects and proprietary technology use.

Q: Dylan Carden with William Blair asks about return rate and category mix.

A: Mike Karanikolas talks about return rate reductions and category mix impacts.

Q: Ashley Owens with KeyBanc Capital Markets asks about gross margin tariffs and owned brands.

A: Mike Karanikolas discusses gross margin and owned brand mix plans.

Q: Lorraine Hutchinson with Bank of America asks about marketing guidance change.

A: Mike Karanikolas talks about marketing efficiencies leading to guidance change.

Q: Janine Stichter with BTIG asks about product categories and cash balance.

A: Jesse Timmermans talks about dress performance and cash balance opportunities.

Q: Matt Koranda with Roth Capital asks about G&A and margin expansion.

A: Jesse Timmermans addresses G&A related to store build-out and margin expansion potential.

Q: Simeon Siegel with BMO Capital Markets asks about owned brands and gross margin differential.

A: Michael Mente talks about owned brands perception and Jesse Timmermans discusses gross margin differential for owned brands.