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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Revolve Group Inc | NYSE:RVLV | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.06 | 0.31% | 19.67 | 20.42 | 19.60 | 20.15 | 931,430 | 01:00:00 |
Revolve Group, Inc. (NYSE: RVLV), the next-generation fashion retailer for Millennial and Generation Z consumers, today announced financial results for the fourth quarter and full year ended December 31, 2019.
“We are proud to extend our long track record of achieving top-line growth and profitability, delivering net sales growth of over 20%, continued growth in profitability and exceptional cash flow in 2019,” said co-founder and co-CEO Michael Mente. “We are excited about our 2020 initiatives to continue building on the recent momentum in the Forward segment and International markets, while further investing in the core REVOLVE segment, including enhancing the owned brands platform and continuing to innovate in marketing, technology and customer experience,” added co-founder and co-CEO Mike Karanikolas.
Fourth Quarter and Full Year 2019 Financial Summary
Three Months Ended December 31,
Twelve Months Ended December 31,
2019
2018
% Change
2019
2018
% Change
(in thousands)
Net sales
$
147,556
$
127,723
16%
$
600,993
$
498,739
21%
Gross profit
$
78,103
$
69,156
13%
$
321,953
$
265,306
21%
Gross margin
52.9%
54.1%
53.6%
53.2%
Net income
$
8,405
$
7,699
9%
$
35,667
$
30,638
16%
Adjusted EBITDA (non-GAAP financial measure)
$
13,650
$
11,876
15%
$
55,605
$
46,495
20%
Net cash provided by (used in) operating activities
$
14,224
$
(1,382)
N/A
$
46,057
$
26,655
73%
Free cash flow (non-GAAP financial measure)
$
13,226
$
(2,762)
N/A
$
33,602
$
23,610
42%
Operational Metrics
Three Months Ended December 31,
Twelve Months Ended December 31,
2019
2018
% Change
2019
2018
% Change
(in thousands, except average order value)
Active customers
1,488
1,175
27%
1,488
1,175
27%
Orders placed
1,092
954
14%
4,715
3,710
27%
Average order value
$
282
$
274
3%
$
275
$
279
(1)%
Full Year 2019 Highlights
Segment Revenue Highlights
2020 Outlook
Based on information available as of February 25, 2020, we are providing the following outlook for the full fiscal year ending December 31, 2020:
Net Sales
$679 - $703 million
13% - 17% growth
Adjusted EBITDA
$56 - $61 million
1% - 10% growth
8.2% - 8.7% margin
Additional Full Year 2020 Outlook Assumptions
We have not reconciled our adjusted EBITDA outlook to GAAP net income because we do not provide an outlook for GAAP net income due to the uncertainty and potential variability of other expense, net, the provision for income taxes and non-routine items, which are reconciling items between adjusted EBITDA and GAAP net income. Because such items cannot be reasonably predicted, we are unable to provide a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure. However, such items could have a significant impact on GAAP net income.
Conference Call Information
Revolve Group management will host a call today at 4:30 pm ET / 1:30 pm PT to discuss today’s results in more detail. To participate, please dial (866) 393-4306 within the United States or (734) 385-2616 outside the United States approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 8389657. The conference call will also be accessible, live via audio broadcast, on the Investor Relations section of the Revolve Group website at investors.revolve.com. A replay of the conference call will be available online at investors.revolve.com. In addition, an audio replay of the call will be available for one week following the call and can be accessed by dialing (855) 859-2056 within the United States or (404) 537-3406 outside the United States. The replay ID is 8389657.
Forward-Looking Statements
This press release contains ‘‘forward-looking statements’’ within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements, including but not limited to statements regarding our future growth and our financial outlook for the full fiscal year 2020. Forward-looking statements include statements containing words such as “expect,” “anticipate,” “believe,” “project,” “will” and similar expressions intended to identify forward-looking statements. These forward-looking statements are based upon our current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to general economic conditions, our fluctuating operating results, seasonality in our business, our ability to acquire products on reasonable terms, our online business model, demand for our products, our ability to attract customers in a cost effective manner, the strength of our brand, competition, fraud, system interruptions, our ability to fulfill orders and other risks and uncertainties included under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission, including, without limitation, the final prospectus related to our initial public offering filed with the SEC on June 7, 2019 and the Annual Report on Form 10-K for the year ended December 31, 2019, which we expect to file with the SEC on or before February 26, 2019. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and Revolve Group, Inc. undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.
Use of Non-GAAP Financial Measures and Other Operating Metrics
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), we reference in this press release and the accompanying tables the following non-GAAP financial measures: adjusted EBITDA, free cash flow and adjusted diluted earnings per share.
The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.
We use these non-GAAP financial measures to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and when planning, forecasting, and analyzing future periods.
For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned “Reconciliation of Non-GAAP Financial Measures” included at the end of this release.
Definitions of our Non-GAAP financial measures and other operating metrics are presented below.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income before other expense, net, taxes, depreciation and amortization, adjusted to exclude the effects of equity-based compensation expense and certain non-routine items. Adjusted EBITDA is a key measure used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of equity-based compensation, excludes an item that we do not consider to be indicative of our core operating performance.
Free Cash Flow
Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by (used in) operating activities less net cash used in capital expenditures. We view free cash flow as an important indicator of our liquidity because it measures the amount of cash we generate. Free cash flow also reflects changes in working capital.
Adjusted Diluted Earnings per Share
Adjusted diluted earnings per share is a non-GAAP financial measure that we calculate as diluted earnings (net loss) per share adjusted to exclude the per share impact of the issuance and repurchase of Class B common stock as part of our initial public offering.
Active Customers
We define an active customer as a unique customer account from which a purchase was made across our platform at least once in the preceding 12-month period. In any particular period, we determine our number of active customers by counting the total number of customers who have made at least one purchase in the preceding 12-month period, measured from the last date of such period.
Total Orders Placed
We define total orders placed as the total number of customer orders placed by our customers across our platform in any period.
Average Order Value
We define average order value as the sum of the total gross sales from our sites in a given period divided by the total orders placed in that period. We believe our high average order value demonstrates the premium nature of our product. Average order value varies depending on the site through which we sell merchandise.
About Revolve Group, Inc.
Revolve Group, Inc. (RVLV) is the next-generation fashion retailer for Millennial and Generation Z consumers. As a trusted, premium lifestyle brand, and a go-to online source for discovery and inspiration, we deliver an engaging customer experience from a vast yet curated offering of apparel, footwear, accessories and beauty styles. Our dynamic platform connects a deeply engaged community of millions of consumers, thousands of global fashion influencers, and hundreds of emerging, established and owned brands.
We were founded in 2003 by our co-CEOs, Michael Mente and Mike Karanikolas. We sell merchandise through two differentiated segments, REVOLVE and FORWARD, that leverage one platform. Through REVOLVE we offer a highly curated assortment of full-price premium apparel and footwear, accessories and beauty products from emerging, established and owned brands. Through FORWARD we offer an assortment of iconic and emerging luxury brands. For more information, visit www.revolve.com.
REVOLVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Three Months Ended December 31,
Years Ended December 31,
2019
2018
2019
2018
Net sales
$
147,556
$
127,723
$
600,993
$
498,739
Cost of sales
69,453
58,567
279,040
233,433
Gross profit
78,103
69,156
321,953
265,306
Operating expenses:
Fulfillment
4,499
3,920
19,413
13,292
Selling and distribution
20,895
17,794
87,706
70,621
Marketing
21,602
18,924
89,141
74,394
General and administrative
20,471
17,836
77,595
65,201
Total operating expenses
67,467
58,474
273,855
223,508
Income from operations
10,636
10,682
48,098
41,798
Other expense, net
278
156
931
631
Income before income taxes
10,358
10,526
47,167
41,167
Provision for income tax
1,953
2,827
11,500
10,529
Net income
8,405
7,699
35,667
30,638
Less: Net loss attributable to non-controlling interest
—
—
—
47
Net income attributable to Revolve Group, Inc.
8,405
7,699
35,667
30,685
Less: Repurchase of Class B common stock upon corporate conversion
—
—
(40,816
)
—
Net income (loss) attributable to common stockholders
$
8,405
$
7,699
$
(5,149
)
$
30,685
Earnings (net loss) per share of Class A and Class B common stock:
Basic
$
0.12
$
0.12
$
(0.09
)
$
0.47
Diluted
$
0.12
$
0.11
$
(0.09
)
$
0.44
Weighted average Class A and Class B common shares outstanding:
Basic
68,921
41,936
57,294
41,936
Diluted
71,947
44,810
57,294
44,584
REVOLVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except unit, share and per share data)
December 31,
2019
2018
Assets
Current assets:
Cash and cash equivalents
$
65,418
$
16,369
Accounts receivable, net
4,751
5,337
Inventory
104,257
102,220
Income taxes receivable
761
—
Prepaid expenses and other current assets
24,155
15,227
Total current assets
199,342
139,153
Property and equipment, net
14,734
5,907
Intangible assets, net
240
564
Goodwill
2,042
2,042
Other assets
642
731
Deferred income taxes, net
15,290
13,677
Total assets
$
232,290
$
162,074
Liabilities and Members'/Stockholders' Equity
Current liabilities:
Accounts payable
$
29,813
$
20,219
Income taxes payable
470
917
Accrued expenses
19,399
18,398
Returns reserve
35,104
29,184
Other current liabilities
16,740
13,538
Total current liabilities
101,526
82,256
Members' equity:
Class T Preferred Units, no par value—zero and 23,551,834 units authorized, issued and outstanding as of December 31, 2019 and December 31, 2018, respectively.
—
15,000
Class A Common Units, no par value—zero and 41,936,219 units authorized, issued and outstanding as of December 31, 2019 and December 31, 2018, respectively.
—
3,548
Stockholders' equity:
Class A common stock, $0.001 par value; 1,000,000,000 and zero shares authorized as of December 31, 2019 and December 31, 2018, respectively; 14,009,859 and zero shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively.
14
—
Class B common stock, $0.001 par value; 125,000,000 and zero shares authorized as of December 31, 2019 and December 31, 2018, respectively; 55,069,124 and zero shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively.
55
—
Accumulated members' equity
—
61,270
Additional paid-in capital
74,018
—
Retained earnings
56,677
—
Total members'/stockholders' equity
130,764
79,818
Total liabilities and members’/stockholders’ equity
$
232,290
$
162,074
REVOLVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Year Ended December 31,
2019
2018
Operating activities:
Net income
$35,667
$30,638
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
3,952
2,867
Equity-based compensation
2,067
1,400
Deferred income taxes, net
(1,613)
(3,768)
Changes in operating assets and liabilities:
Accounts receivable
586
361
Inventories
(15,623)
(26,046)
Income taxes receivable
(761)
3,708
Prepaid expenses and other current assets
1,662
(3,356)
Other assets
89
(517)
Accounts payable
9,594
2,365
Income taxes payable
(447)
917
Accrued expenses
1,001
5,579
Returns reserve
5,920
10,179
Other current liabilities
3,963
2,328
Net cash provided by operating activities
46,057
26,655
Investing activities:
Purchases of property and equipment
(12,455)
(3,045)
Net cash used in investing activities
(12,455)
(3,045)
Financing activities:
Proceeds from initial public offering, net of underwriting discounts paid
57,077
—
Repurchase of Class B common stock upon corporate conversion
(40,816)
—
Repayment of line of credit
—
(15,100)
Payment of deferred offering costs
(1,834)
(2,521)
Proceeds from the exercise of stock options, net
752
—
Net cash provided by (used in) financing activities
15,179
(17,621)
Effect of exchange rate changes on cash and cash equivalents
268
(208)
Net increase in cash and cash equivalents
49,049
5,781
Cash and cash equivalents, beginning of period
16,369
10,588
Cash and cash equivalents, end of period
$65,418
$16,369
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest
$ —
$87
Income taxes, net of refund
$14,324
$9,673
REVOLVE GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
The following table summarizes our net sales and gross profit for each of our reportable segments (in thousands):
Three Months Ended December 31,
Twelve Months Ended December 31,
Net sales
2019
2018
2019
2018
REVOLVE
$
125,230
$
110,960
$
527,251
$
433,548
FORWARD
22,326
16,763
73,742
65,191
Total
$
147,556
$
127,723
$
600,993
$
498,739
Gross profit
REVOLVE
$
68,951
$
62,725
$
292,042
$
241,061
FORWARD
9,152
6,431
29,911
24,245
Total
$
78,103
$
69,156
$
321,953
$
265,306
The following table lists net sales by geographic area (in thousands):
Three Months Ended December 31,
Twelve Months Ended December 31,
2019
2018
2019
2018
United States
$
123,188
$
107,814
$
502,882
$
409,320
Rest of the world
24,368
19,909
98,111
89,419
Total
$
147,556
$
127,723
$
600,993
$
498,739
REVOLVE GROUP, INC. AND SUBSIDIARIES
KEY OPERATING AND FINANCIAL METRICS
(Unaudited)
(In thousands, except average order value and percentages)
Three Months Ended December 31,
Twelve Months Ended December 31,
2019
2018
2019
2018
(in thousands, except average order value and percentages)
Gross margin
52.9
%
54.1
%
53.6
%
53.2
%
Adjusted EBITDA
$
13,650
$
11,876
$
55,605
$
46,495
Free cash flow
$
13,226
$
(2,762
)
$
33,602
$
23,610
Active customers
1,488
1,175
1,488
1,175
Total orders placed
1,092
954
4,715
3,710
Average order value
$
282
$
274
$
275
$
279
REVOLVE GROUP, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)
A reconciliation of non-GAAP adjusted EBITDA to net income for the three and twelve months ended December 31, 2019 and 2018 is as follows (in thousands):
Three Months Ended December 31,
Twelve Months Ended December 31,
2019
2018
2019
2018
(in thousands)
Net income
$
8,405
$
7,699
$
35,667
$
30,638
Excluding:
Other expense, net
278
156
931
631
Provision for income tax
1,953
2,827
11,500
10,529
Depreciation and amortization
1,236
658
3,952
2,867
Equity-based compensation
522
536
2,067
1,400
Non-routine items (1)
1,256
—
1,488
430
Adjusted EBITDA
$
13,650
$
11,876
$
55,605
$
46,495
(1)
Non-routine items in the three and twelve months ended December 31, 2019 primarily relate to legal settlements. Non-routine items in the twelve months ended December 31, 2018 primarily relate to our entity restructuring and our initial public offering.
A reconciliation of non-GAAP free cash flow to cash provided by operating activities for the three and twelve months ended December 31, 2019 and 2018 is as follows (in thousands):
Three Months Ended December 31,
Twelve Months Ended December 31,
2019
2018
2019
2018
(in thousands)
Net cash provided by (used in) operating activities
$
14,224
$
(1,382
)
$
46,057
$
26,655
Purchases of property and equipment
(998
)
(1,380
)
(12,455
)
(3,045
)
Free cash flow
$
13,226
$
(2,762
)
$
33,602
$
23,610
Net cash used in investing activities
$
(998
)
$
(1,380
)
(12,455
)
(3,045
)
Net cash provided by (used in) financing activities
$
612
$
(741
)
15,179
(17,621
)
A reconciliation of non-GAAP adjusted diluted earnings per share to diluted earnings (net loss) per share for the three and twelve months ended December 31, 2019 and 2018 is as follows (in dollars):
Three Months Ended December 31,
Twelve Months Ended December 31,
2019
2018
2019
2018
Class A
Class B
Class B
Class A
Class B
Class B
Earnings (net loss) per share — diluted
$
0.12
$
0.12
$
0.11
$
(0.09
)
$
(0.09
)
$
0.44
Repurchase of Class B common stock, net
—
—
—
0.59
0.59
—
Adjusted earnings per share — diluted
$
0.12
$
0.12
$
0.11
$
0.50
$
0.50
$
0.44
View source version on businesswire.com: https://www.businesswire.com/news/home/20200225005949/en/
Investors: Erik Randerson, CFA 562.677.9513 IR@revolve.com
or
Media: Kendall Sargeant kendall.sargeant@revolve.com
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