figs-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number 001-40448

FIGS, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware			46-2005653
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
2834 Colorado Avenue, Suite 100 Santa Monica, CA			90404
(Address of principal executive offices)			(Zip Code)

(424) 300-8330

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.0001 par value per share

FIGS

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 1, 2025, there were 154,267,492 shares of the registrant’s Class A common stock, par value $0.0001 per share, outstanding and 8,283,641 shares of the registrant’s Class B common stock, $0.0001 par value per share, outstanding.

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		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	7
	Condensed Consolidated St atements of Sto ck holders' Equity	9
	Condensed Consolidated Statements of Cash Fl ows	10
	Notes to Condensed Consolidated Financia l Statements	11
Item 2 .	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3 .	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4 .	Controls and Procedures	30

PART II	OTHER INFORMATION
Item 1 .	Legal Proceedings	31
Item 1 A .	Risk Factors	32
Item 2 .	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3 .	Defaults Upon Seni or Securities	70
Item 4 .	Mine Safety Disclosures	70
Item 5 .	Other Information	70
Item 6 .	Exhibits	71
Signatures		72

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1955, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “forecast,” “predict,” “potential,” “strategy,” “strive” or “continue,” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, without limitation, statements regarding our future results of operations and financial position; our industry; business and macroeconomic trends; the impact of macroeconomic pressures; our use of ocean and air freight; the impact of and expectations related to global supply chain challenges; demand for our products; our expectations regarding the opening and success of retail stores; our plans regarding international expansion and our TEAMS business; our plans for evolving our sourcing capabilities and strategically refining our manufacturing base; product innovation; the impact of, and expectations related to, our transition to our new fulfillment center; our plans to open additional fulfillment facilities in the future; our transition away from a third party supplier in Jordan; the impact of conflict in the Middle East on our business; the impact of a future port-worker strike on our business; the impact of tariffs and trade policies on our business; our efforts to mitigate the impact of tariffs and trade policies on our business; the impact of future laws, regulations and executive orders on our business; our plans for the use of artificial intelligence; equity compensation; our share repurchase program; our marketing strategy; competition; market growth; our business strategy; and plans and objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the important factors discussed in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

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SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our Class A common stock. The principal risks and uncertainties affecting our business include the following:

•Our historical growth may not be sustainable or indicative of future results.

•If we fail to manage the expansion of our business effectively, our financial condition and results of operations may be adversely affected.

•We have not always been profitable and may not be profitable in the future.

•Our success depends on our ability to maintain the value and reputation of our brand.

•If we fail to attract new customers, retain existing customers, or fail to maintain or increase sales to those customers, our business, financial condition, results of operations and growth prospects will be harmed.

•If our marketing efforts are not successful, our business, financial condition, and results of operations could be harmed.

•Our business depends on our ability to maintain a strong community of engaged customers and ambassadors, including through the use of social media. We may not be able to maintain and enhance our brand if we experience negative publicity related to our marketing efforts or use of social media, fail to maintain and grow our network of ambassadors or otherwise fail to meet our customers’ expectations.

•If we do not continue to successfully develop and introduce new, innovative and updated products, we may not be able to maintain or increase our sales and profitability.

•The market for healthcare apparel is highly competitive.

•Our future success depends on the continuing efforts of our key employees and our ability to attract and retain highly skilled team members.

•We plan to expand into additional international markets over time, which will expose us to new and significant risks.

•Shipping is a critical part of our business and changes in, or disruptions to, our shipping arrangements have in the past and may in the future adversely affect our business, financial condition and results of operations.

•If we experience problems with our distribution center’s operational infrastructure, our ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies could be harmed.

•If we are unable to accurately forecast customer demand, manage our inventory and plan for future expenses, our results of operations could be adversely affected.

•Consumer confidence, shopping behavior, and spending have been and may continue to be negatively impacted by factors beyond our control, including supply chain disruptions, inflation, tariffs and other trade barriers, high interest rates, fear of recession or entry into a recession, geopolitical tensions and military conflicts, and healthcare workforce-related stress, which may adversely affect our business, financial condition and results of operations.

•Our reliance on a limited number of third-party suppliers to provide materials for and produce our products could cause problems in our supply chain and subject us to additional risks.

•Our ability to source and distribute our products, including our ability to do so profitably, is impacted by global trade policy.

•If proprietary, confidential or sensitive information or personal data about our customers is disclosed, or if we or our third-party providers are subject to real or perceived cyberattacks, our customers may curtail use of our website or mobile app, we may be exposed to liability and our reputation could suffer.

•Our quarterly results of operations have from time to time, and may in the future fluctuate, and if our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and securities analysts, the trading price of our Class A common stock may decline.

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•The dual-class structure of our common stock, the voting agreement among us and our co-founders, Heather Hasson and Trina Spear, and certain related persons and trusts, and the stockholders agreement among us, Baron Capital Management, Inc. and BAMCO, Inc., may limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.

•We are a “controlled company” within the meaning of the rules of the New York Stock Exchange and, as a result, qualify for, and from time to time rely on, exemptions from certain corporate governance requirements. You do not have the same protections afforded to stockholders of companies that are subject to such requirements.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FIGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	As of
	March 31, 2025		December 31, 2024
Assets	(Unaudited)
Current assets
Cash and cash equivalents	$	90,008	$	85,645
Short-term investments	161,203		159,469
Accounts receivable	6,554		8,625
Inventory, net	131,577		115,759
Prepaid expenses and other current assets	10,369		13,268
Total current assets	399,711		382,766
Non-current assets
Property and equipment, net	34,119		35,274
Operating lease right-of-use assets	48,194		50,497
Deferred tax assets	10,648		11,643
Investment in equity securities	27,735		27,534
Other assets	1,907		2,073
Total non-current assets	122,603		127,021
Total assets	$	522,314	$	509,787
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	10,736	$	9,401
Operating lease liabilities	11,599		10,596
Accrued expenses	54,224		42,316
Accrued compensation and benefits	5,071		5,689
Sales tax payable	3,756		3,705
Gift card liability	9,305		9,604
Deferred revenue	1,959		4,612
Returns reserve	3,701		3,873
Income tax payable	618		346
Total current liabilities	100,969		90,142
Non-current liabilities
Operating lease liabilities, non-current	39,726		42,430
Other non-current liabilities	83		83
Total liabilities	140,778		132,655
Commitments and contingencies (Note 10)
Stockholders’ equity
Class A common stock — par value $0.0001 per share, 1,000,000,000 shares authorized as of March 31, 2025 and December 31, 2024; 154,070,851 and 154,003,352 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively	15		15
Class B common stock — par value $0.0001 per share, 150,000,000 shares authorized as of March 31, 2025 and December 31, 2024; 8,283,641 shares issued and outstanding as of March 31, 2025 and December 31, 2024	—		—
Preferred stock — par value $0.0001 per share, 100,000,000 shares authorized as of March 31, 2025 and December 31, 2024; zero shares issued and outstanding as of March 31, 2025 and December 31, 2024	—		—
Additional paid-in capital	317,173		312,622
Accumulated other comprehensive income (loss)	(24)		21
Retained earnings	64,372		64,474
Total stockholders’ equity	381,536		377,132
Total liabilities and stockholders’ equity	$	522,314	$	509,787

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FIGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)


	Three months ended March 31,
	2025		2024
Net revenues	$	124,901	$	119,293
Cost of goods sold	40,442		37,156
Gross profit	84,459		82,137
Operating expenses
Selling	32,678		28,459
Marketing	18,156		17,246
General and administrative	33,836		35,989
Total operating expenses	84,670		81,694
Net income (loss) from operations	(211)		443
Other income, net
Interest income	2,076		2,847
Other expense	(1)		(10)
Total other income, net	2,075		2,837
Net income before provision for income taxes	1,864		3,280
Provision for income taxes	1,966		1,845
Net income (loss)	$	(102)	$	1,435
Earnings attributable to Class A and Class B common stockholders
Basic earnings (loss) per share	$	—	$	0.01
Diluted earnings (loss) per share	$	—	$	0.01
Weighted-average shares outstanding—basic	162,465,988		169,923,479
Weighted-average shares outstanding—diluted	162,465,988		180,701,844

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FIGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	Three months ended March 31,
	2025		2024
Net income (loss)	$	(102)	$	1,435
Other comprehensive loss, net of tax
Unrealized loss on short-term investments, net of tax	(52)		(31)
Foreign currency translation adjustment	7		—
Total other comprehensive loss, net of tax	(45)		(31)
Total comprehensive income (loss)	$	(147)	$	1,404

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FIGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)
(Unaudited)


	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
December 31, 2023	161,457,403	$	16	8,283,641	$	—	$	315,075	$	61,754	$	5	$	376,850
Issuance of Class A Common Stock upon vesting of Restricted Stock	325,466	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		11,611		—		—		11,611
Stock option exercises	19,002	—		—	—		10		—		—		10
Net income	—	—		—	—		—		1,435		—		1,435
Other comprehensive loss, net of tax	—	—		—	—		—		—		(31)		(31)
March 31, 2024	161,801,871	$	16	8,283,641	$	—	$	326,696	$	63,189	$	(26)	$	389,875


	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
December 31, 2024	154,003,352	$	15	8,283,641	$	—	$	312,622	$	64,474	$	21	$	377,132
Issuance of Class A Common Stock upon vesting of Restricted Stock	634,937	—		—	—		—		—		—		—
Repurchases of Class A Common Stock	(567,607)	—		—	—		(2,688)		—		—		(2,688)
Stock-based compensation	—	—		—	—		7,239		—		—		7,239
Stock option exercises	169	—		—	—		—		—		—		—
Net loss	—	—		—	—		—		(102)		—		(102)
Other comprehensive loss, net of tax	—	—		—	—		—		—		(45)		(45)
March 31, 2025	154,070,851	$	15	8,283,641	$	—	$	317,173	$	64,372	$	(24)	$	381,536

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FIGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three months ended March 31,
	2025		2024
Cash flows from operating activities:
Net income (loss)	$	(102)	$	1,435
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense	1,999		850
Deferred income taxes	995		251
Non-cash operating lease cost	2,303		1,761
Stock-based compensation	7,239		11,611
Accretion of discount and accrued interest on available-for-sale securities	(1,113)		(1,376)
Changes in operating assets and liabilities:
Accounts receivable	2,078		2,056
Inventory	(15,818)		(11,426)
Prepaid expenses and other current assets	2,899		198
Other assets	166		(711)
Accounts payable	1,303		6,407
Accrued expenses	12,406		6,214
Accrued compensation and benefits	(618)		(2,983)
Sales tax payable	51		243
Gift card liability	(299)		(593)
Deferred revenue	(2,653)		(276)
Returns reserve	(172)		(282)
Income tax payable	272		1,256
Operating lease liabilities	(1,701)		(3,016)
Net cash provided by operating activities	9,235		11,619
Cash flows from investing activities:
Purchases of property and equipment	(1,310)		(496)
Purchases of available-for-sale securities	(54,624)		(41,278)
Maturities of available-for-sale securities	53,951		41,300
Other investing activities	(201)		—
Net cash used in investing activities	(2,184)		(474)
Cash flows from financing activities:
Repurchases of Class A Common Stock	(2,688)		—
Proceeds from stock option exercises and employee stock purchases	—		10
Net cash (used in) provided by financing activities	(2,688)		10
Net increase in cash and cash equivalents	4,363		11,155
Cash and cash equivalents beginning of period	$	85,645	$	144,173
Cash and cash equivalents end of period	$	90,008	$	155,328
Supplemental disclosures:
Property and equipment included in accounts payable and accrued expenses	$	70	$	3,997

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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FIGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. DESCRIPTION OF BUSINESS

FIGS, Inc., a Delaware corporation (together with its wholly-owned subsidiary FIGS Canada, Inc. unless the context requires otherwise, the “Company”), was founded in 2013 and is a founder-led, direct-to-consumer healthcare apparel and lifestyle brand company. The Company designs and sells scrubwear and non-scrubwear, such as outerwear, underscrubs, footwear, compression socks, lab coats, loungewear and other apparel. The Company markets and sells its products primarily in the United States. Sales are primarily generated through the Company’s digital platforms.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company has prepared the accompanying condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The condensed consolidated financial statements include the accounts of FIGS, Inc. and the wholly-owned subsidiary, FIGS Canada, Inc. All intercompany transactions and balances have been eliminated in consolidation. The Company's fiscal year ends on December 31. Certain reclassifications have been made to prior-year amounts to conform to the current presentation. Certain information and footnote disclosures normally included in the Company’s annual audited financial statements and accompanying notes have been condensed or omitted in these accompanying interim condensed consolidated financial statements and footnotes. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2025.

In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position, results of operations, and cash flows. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods presented. Key estimates relate primarily to the valuation of stock-based compensation. Actual results could differ from those estimates.

Investment in Equity Securities

The Company holds an investment in equity securities in a privately held company, consisting of equity securities without readily determinable fair values. This investment is recorded at its carrying value, which is cost less impairment, if any, adjusted to fair value upon observable orderly transactions for identical or similar investments of the same issuer. The investment is reviewed periodically for impairment. Any adjustment to the carrying value of this investment, including gains and losses, is recorded in other income, net in the Company’s condensed consolidated statements of operations. Gains and losses on investments in equity securities will be included as an adjustment to reconcile net income (loss) to net cash provided by operating activities in the Company’s condensed consolidated statements of cash flows.

Variable Interest Entities

The Company determines at the inception of each arrangement whether an entity in which it has made an investment in, or which it has other variable interests in, is considered a variable interest entity (“VIE”). The Company will consolidate VIEs when it determines that it is the primary beneficiary. A primary beneficiary of a VIE has the power to direct activities that most significantly affect the economic performance of the VIE, and has the obligation to absorb the majority of their losses or benefits. If the Company is not the primary beneficiary of a VIE, the Company accounts for the

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investment or other variable interests in a VIE in accordance with other applicable GAAP. Periodically, the Company assesses whether any changes in interest or relationship with a VIE affects the determination of whether the entity is a VIE and, if so, whether the Company is the primary beneficiary. The Company has no investments or other variable interests for which it is the primary beneficiary.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses valuation techniques that are based upon observable and unobservable inputs. Observable inputs are developed using market data such as publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Short-term Investments

The Company holds short-term investments in U.S. government debt securities and corporate debt securities. The Company’s short-term investments mature within 12-months or less and are classified as current assets on the Company’s condensed consolidated balance sheets and have been classified and accounted for as available-for-sale securities. The Company determines the appropriate classification of its investments at the time of purchase and reevaluates their classification at each balance sheet date.

The Company’s available-for-sale investments in debt securities are carried at fair value with unrealized gains and losses, net of taxes, reported within accumulated other comprehensive income in stockholders’ equity. Available-for-sale debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses, with any allowance for credit losses recognized as a charge in other expense on the Company’s condensed consolidated statements of operations. The Company did not record any credit losses on its available-for-sale debt securities in any of the periods presented. The Company determines gains or losses on the sale or maturities of short-term investments using the specific identification method and gains or losses are recorded in other income on the Company’s condensed consolidated statements of operations.

Inventory, Net

Inventory consists of finished goods and is accounted for using an average cost method. Inventory is valued at the lower of cost or net realizable value. The Company records a provision for excess and obsolete inventory to adjust the carrying value of inventory based on assumptions regarding future demand for the Company’s products.

Lower of cost or net realizable value is evaluated by considering obsolescence, excessive levels of inventory, deterioration, and other factors. Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolescence, or impaired inventory. Excess and obsolete inventory is charged to cost of goods sold.

The Company’s allowance to write down inventory to the lower of cost or net realizable value was not material as of March 31, 2025 and 2024.

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Share Repurchases

Shares repurchased pursuant to the Company’s share repurchase program are retired and reflected as a reduction of the par value of Class A common stock within stockholders’ equity on the Company’s condensed consolidated balance sheets.

Direct costs incurred on share repurchases are recorded as part of the cost basis of each repurchase. The excess of cost basis over the par value of shares repurchased is recorded as a reduction to additional paid-in capital.

Revenue Recognition

The Company recognizes revenues in accordance with Financial Accounting Standards Board (“FASB”) ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”). Revenue is recognized in an amount that reflects the consideration expected to be received in exchange for products. To determine revenue recognition for contracts with customers within the scope of ASC 606, the Company recognizes revenue from the commercial sales of products and contracts by applying the following five steps (i) identify the contract(s) with a customer; (ii) identify the performance obligations of the contract(s); (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract(s); and (v) recognize revenue when (or as) the Company satisfies the performance obligations.

The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the good or services it transfers to the customer. The Company recognizes revenue at a point in time when it satisfies a performance obligation and transfers control of the products to the respective customers, which occurs when the goods are transferred to a common carrier. Shipping and handling costs associated with outbound freight incurred to transfer a product to a customer are treated as a fulfillment activity, and as a result, any fees received from customers are included in the transaction price for the performance obligation of providing goods to the customer.

The Company generally provides refunds for goods returned within 30 days from the original purchase date. A returns reserve is recorded by the Company based on the historical refund pattern. The returns reserve in the condensed consolidated balance sheets was $3.7 million and $3.9 million as of March 31, 2025 and December 31, 2024, respectively.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. The Company records deferred revenue when it receives payments in advance of the transfer of the goods to a common carrier. The amounts recorded are expected to be recognized as revenue within the 12 months following the balance sheet date and, therefore, are classified as current liabilities in the condensed consolidated balance sheets.

The Company does not have significant contract balances other than deferred revenue, the allowance for sales returns and liabilities related to its gift cards. The Company recognized revenues of $4.6 million during the three months ended March 31, 2025 related to the deferred revenue balance that existed at December 31, 2024. The Company recognized revenues of $1.6 million during the three months ended March 31, 2025 related to redemptions from the gift card liability balance that existed at December 31, 2024. The Company recognizes estimated gift card breakage revenues under the redemption recognition method in proportion to actual gift card redemptions, over the period that remaining gift card values are redeemed. The Company does not have significant contract acquisition costs.

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The following table presents the disaggregation of the Company’s net revenues for the three months ended March 31, 2025 and 2024 (in thousands):


	Three months ended March 31,
	2025		2024
By geography:
United States	$	106,019	$	103,070
Rest of the world	18,882		16,223
	$	124,901	$	119,293
By product:
Scrubwear	$	99,569	$	94,896
Non-Scrubwear	25,332		24,397
	$	124,901	$	119,293

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disclosure of disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. This ASU is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on its condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. ASU 2024-03 requires disclosure on an annual and interim basis, in the notes to the condensed consolidated financial statements, of disaggregated information about specific categories underlying certain income statement expense line items. This ASU is effective for public companies with annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The amendments in this update should be applied on a prospective basis, but can also be applied retrospectively. The Company is currently evaluating the effects adoption of this guidance will have on its condensed consolidated financial statements.

Recently Adopted Accounting Pronouncement

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities with a single reportable segment to provide all disclosures required by this standard and all existing segment disclosures in Topic 280 on an interim and annual basis, including new requirements to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within the reported measure(s) of a segment's profit or loss, the amount and composition of any other segment items, the title and position of the CODM, and how the CODM uses the reported measure(s) of a segment's profit or loss to assess performance and decide how to allocate resources. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, applied retrospectively with early adoption permitted. The Company adopted ASU 2023-07 effective January 1, 2024. Refer to Note 13 of these condensed consolidated financial statements for segment disclosures.

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3. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The Company’s cash equivalents consist of money market funds and highly liquid investments with original maturities of 90 days or less from the date of purchase. The Company classifies cash equivalents and short-term investments within Level 1 or Level 2 of the fair value hierarchy.

The following tables present the Company’s cash equivalents and short-term investments by significant investment category and fair value level as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Level 1:
Money market funds	$	34,630	$	—	$	—	$	34,630
U.S. government securities	99,992		35		(4)		100,023
Level 2:
Corporate paper	61,179		6		(5)		61,180
Total	$	195,801	$	41	$	(9)	$	195,833


	December 31, 2024
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Level 1:
Money market funds	$	34,267	$	—	$	—	$	34,267
U.S. government securities	98,716		81		(2)		98,795
Level 2:
Corporate paper	60,669		16		(11)		60,674
Total	$	193,652	$	97	$	(13)	$	193,736

There have been no transfers of assets between fair value levels during the periods presented. The carrying values of other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

4. INVESTMENT IN EQUITY SECURITIES

The Company holds an investment in equity securities of a privately held company (the “Investment”). The Investment is considered a VIE in which the Company is not the primary beneficiary, as the governance structure of this entity does not allow the Company to direct the activities that would significantly affect the economic performance of the investment. There are currently no future funding commitments to the Investment. The Investment is recorded at fair value on a non-recurring basis and evaluated for impairment at each reporting period. The estimation of fair value for the Investment requires the use of significant unobservable inputs, such as the issuance of new equity, and as a result, the Company deems these assets as Level 3 financial instruments within the fair value measurement framework.

There have been no cumulative upward adjustments or cumulative downward adjustments to the Investment, including impairment, as of March 31, 2025. There were no sales of equity securities during the three months ended March 31, 2025. The Investment is accounted for using the measurement alternative. The carrying value of the Investment as of March 31, 2025 is $27.7 million, inclusive of transaction costs.

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5. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Trade	$	5,310	$	6,636
Other	1,244		1,989
	$	6,554	$	8,625

6. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Inventory deposits	$	346	$	670
Prepaid expenses	4,184		5,724
Prepaid taxes	4,903		5,874
Other	936		1,000
	$	10,369	$	13,268

7. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Furniture and fixtures	$	2,270	$	2,204
Office equipment	1,369		1,311
Machinery and equipment	19,352		19,179
Computer equipment	7,506		7,216
Software and website design	11,303		9,985
Leasehold improvements	5,451		5,271
Capital projects in progress	1,580		2,821
Vehicles	109		109
Total property and equipment	48,940		48,096
Less: accumulated depreciation and amortization	(14,821)		(12,822)
Property and equipment, net	$	34,119	$	35,274

Depreciation and amortization expense for the three months ended March 31, 2025 and 2024 was $2.0 million and $0.9 million, respectively.

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8. ACCRUED EXPENSES

Accrued expenses consisted of the following (in thousands):


	March 31, 2025		December 31, 2024
Accrued inventory	$	37,046	$	27,697
Accrued shipping	8,740		6,087
Accrued selling expenses	34		—
Accrued legal expenses	482		800
Accrued marketing expenses	5,495		4,081
Other accrued expenses	2,427		3,651
	$	54,224	$	42,316

9. FINANCING ARRANGEMENTS

On September 7, 2021, the Company, as borrower, entered into a credit agreement with Bank of America, N.A. for a $100.0 million revolving credit facility, including capacity to issue letters of credit (the “2021 Facility”). The 2021 Facility is secured by substantially all assets of the Company and its material subsidiaries, subject to customary exceptions. The 2021 Facility has a maturity date of September 7, 2026 (“2021 Facility Maturity Date”). As of March 31, 2025, the Company had letters of credit aggregating to $4.9 million outstanding under the 2021 Facility and available borrowings of $95.1 million. As of March 31, 2025, the Company had no outstanding borrowings under the 2021 Facility. Borrowings under the 2021 Facility are payable on the 2021 Facility Maturity Date. Borrowings bear interest at either (a) the Eurodollar Rate (as defined in the 2021 Facility) plus 1.125% or (b) the Base Rate (as defined in the 2021 Facility) plus 0.125%. The interest rate for undrawn amounts is 0.175%. Costs associated with entering into the 2021 Facility were not material.

On February 27, 2023, the Company entered into a first amendment (the “First Amendment”) to the 2021 Facility. The First Amendment amends the Credit Agreement to replace the London interbank offered rate (“LIBOR”) with a term rate based on the Secured Overnight Financing Rate (“SOFR”), together with certain administrative changes to facilitate such replacement. Except as amended by the First Amendment, the remaining terms of the Credit Agreement remain in full force and effect.

10. COMMITMENTS AND CONTINGENCIES

Taxes on Remote Sellers

The Company is subject to state laws or administrative practices with respect to the taxes on remote sellers. In accordance with ASC 450, Contingencies, the Company recorded $1.5 million within sales tax payable on the Company’s condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024, as an estimate of contingent sales tax payable.

Inventory Purchase Obligations

Inventory purchase obligations as of March 31, 2025 were approximately $52.7 million. These inventory purchase obligations can be impacted by various factors, including the timing of issuing orders and the timing of the shipment of orders.

Legal Contingencies

Legal claims may arise from time to time in the normal course of business, the results of which may have a material effect on the Company’s accompanying condensed consolidated financial statements.

The putative securities class action filed in November 2022 against the Company and certain of its executive officers and directors in the United States District Court for the Central District of California was dismissed with prejudice by the court in January 2025 with judgment against the plaintiffs entered by the court on February 13, 2025. Plaintiffs have

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filed a notice of appeal from that dismissal and briefing on the appeal is ongoing. The related derivative suits against the Company and certain of its executive officers and directors are currently pending.

The Company intends to vigorously defend against such claims. The Company has determined that any potential loss is neither probable nor reasonably estimable and an accrual has not been recorded.

11. INCOME TAXES

The tax provision for interim periods is determined using an estimate of the Company's annual effective tax rate, adjusted for discrete items arising during interim periods.

For the three months ended March 31, 2025 and 2024, the Company's effective tax rate was 105.5% and 56.3%, respectively. The Company’s effective tax rate differed from the U.S. statutory tax rate primarily due to state taxes and limitations on the deductibility of officer compensation.

For the three months ended March 31, 2025 and 2024, the Company recorded income tax expense of $2.0 and $1.8 million, respectively.

12. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share (“basic EPS”) and diluted earnings (loss) per share (“diluted EPS”) attributable to common stockholders is calculated in conformity with the two-class method required for participating securities: Class A and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to twenty votes per share. Each share of Class B common stock is convertible at any time at the option of the stockholder into one share of Class A common stock.

Basic EPS attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted EPS attributable to common sto

SEC Form 10-Q filed by FIGS Inc.