Warby Parker Inc. Q2 FY2025 earnings call

• Q2 2025 delivered strong results with revenue growth and adjusted EBITDA margin expansion, along with eighth consecutive quarter of accelerating customer growth. - Milestones included opening the 300th store in July and the first Target shop-in-shops in Illinois and Minnesota. The company also surpassed 20 million pairs of glasses distributed through the Buy Pair, Give a Pair program. - Partnered with Google to develop AI-powered intelligent eyewear for all-day use. - Retail revenue grew due to new store openings and growth of established stores. The company opened 11 new stores in Q2, entering new suburban markets. - Decided to sunset the home try-on program by the end of 2025 to reallocate resources towards brand awareness and customer acquisition. - Launched Warby Advisor, a personalized AI-driven recommendation tool within the app.

In Q2 2025, Warby Parker reported revenue growth of 14% year-over-year. Glasses revenue grew approximately 11% year-over-year, with progressives accounting for about 23% of prescription units sold. Contact lenses revenue increased 28%, with contacts making up 11.5% of revenue in Q2 2025 compared to 10.2% in Q2 2024. Eye exams revenue saw a 44% year-over-year growth, representing 6% of total revenue in Q2 2025 versus 4.8% in Q2 2024. Retail revenue grew 19% year-over-year, driven by new store expansion and growth of stores opened 12 months or more. The company opened 11 new stores in Q2, entering 6 new suburban markets and expanding presence in 5 existing ones.

• Raised full-year 2025 guidance: Net revenue is expected to be between $880 million and $888 million, representing approximately 14%-15% year-over-year growth. Adjusted EBITDA is projected to be $98 million to $101 million, with an adjusted EBITDA margin of 11.1%-11.4% and 170-190 basis points of year-over-year expansion. There are 45 new store openings, including 5 previously announced shop-in-shops within Target stores. - Q3 2025 guidance: Net revenue is expected to be between $223 million and $225 million, representing approximately 16%-17% year-over-year growth. Adjusted EBITDA is projected to be $24 million to $25.5 million, with an 11% margin at the midpoint of the range and 210 basis points of year-over-year expansion.

• Tariff-related uncertainties have impacted the business, requiring mitigation strategies such as shifting global supplier mix, selective price increases, and managing operating expenses.

Q: Brooke Roach of Goldman Sachs asked about the health of the eye care consumer and the magnitude of potential SG&A leverage.

A: Dave Gilboa noted the stability in the customer base and the ability to adapt in dynamic environments, while Steve Miller discussed adjusted SG&A leverage from areas like retail staffing, customer experience restructuring, and corporate expenses.

Q: Dana Telsey of Telsey Advisory Group inquired about the progress of the Google partnership, Target shop-in-shops, and the response to selective price increases.

A: Steve Miller talked about the potential of the Google partnership and progress made, Dave Gilboa shared positive reception of Target shop-in-shops and minimal impact of price increases on conversion and mix.

Q: Mark Altschwager of Baird asked about revenue growth acceleration and the Warby Advisor.

A: Steve Miller discussed omnichannel growth and the strong adoption of Warby Advisor, a personalized AI-driven recommendation tool.

Q: Oliver Chen of TD Cowen asked about Google partnership differentiation, insurance opportunity, and the mix of contacts and progressives.

A: Dave Gilboa talked about the differentiation of the Google partnership and insurance opportunity, while Steve Miller discussed contacts and progressives as long-term tailwinds for growth.

Q: Brandon Cheatham on behalf of Paul Lejuez asked about sunsetting the home try-on program and the timeline for Google AI glasses.

A: Dave Gilboa discussed reallocating resources from the home try-on program and the excitement about Google AI glasses progress with no specific timeline to share yet.