Hi, everyone. Next up, we have a local company here, based out of Vancouver, KITS Eyecare. KITS trades on the TSX under the symbol KITX, and we have the co-founder with us and the COO, Joe Thompson.
Sure. You want to stay up here with me, and present the story? Good morning, everyone. You know, this is our second time at Small Cap Discoveries . It's one of our favorite conferences of the year. It's a short commute for us as well. Since we were here a year ago, our organic growth has continued at about the rate that we discussed a year ago, about 30%. We're happy to host our first ever KITS Investor Day two days ago at our optical lab just down the road on Broadway. If you didn't have a chance to be there, we'll catch you next time around. These are some newer slides.
We're gonna go through them pretty quickly here, and then save some time for questions, so just stop me at any time. So nothing great's ever built without a world-class team, and we're very fortunate, and we wanna start with the team, that we have that's deep in optical, e-commerce, and technology, very important for this category. And we have a number of folks from the team here today for the one-to-ones and to chat with you all. So let's get into it. You know, we, we've loved this category. As we—When we launched KITS in 2018, we loved the TAM. It's over $70 billion category, over 7 out of 10 adults require glasses or contact lenses to get through the day.
And, you know, as customers, we were frustrated at how broken the process still is. It's still way too costly, way too complex to get a pair of prescription glasses, and there's really no need for it. So to fix it, we set out to make eye care easy. And we knew, this mission has guided all of our decisions since we launched in November 2018. And so... Can you hear me okay? Yeah. And so to make eye care easy, we knew it wouldn't be by adding more stuff to the category, definitely not more stores. And what we found is, we could take 90% of the cost from making high-quality prescription glasses and pass all that savings on to customers.
We could 10X the selection with online versus brick-and-mortar, and with the precision automated manufacturing that we have in the lab, we could actually offer a more accurate prescription on single vision or digital progressive, and wrap that all with a great customer care team. And we felt confident that this recipe would give us an 80 NPS, Net Promoter Score, which would be the highest in the industry. The industry has about a 40-50 Net Promoter Score. But really, what got us out of our chair and building, was this movement to the customer of today in optical. The Millennial customer is now 28-43 years old, it's now the biggest segment in optical. It's probably the biggest segment in most categories. And it's changing the optical category in two ways. One, it's moving the category online rapidly.
This millennial cohort is not interested in the legacy infrastructure of brick-and-mortar stores. And two, it's moving the category to a new marketing medium. This cohort has said, "We're not interested in legacy media either, traditional TV or print. We wanna hear from influencers. We wanna hear from our friends on what an offering this is." And so nearly six years in, how are we doing? We're closing our eighth consecutive quarter at about 30% organic growth per quarter. All of those eight quarters are positive adjusted EBITDA. And interesting for us, and possibly what we're most excited about, is marketing as a percentage of revenue in that time, has actually declined.
And a key inflection point is that line you see on Q2 2022, when we completed our at-scale manufacturing lab here in Vancouver, and that really tipped the scales for us. Lower production, faster delivery, and since that time, our quarterly revenue is roughly doubled. So, you know, it might sound easy. You know, here's this category everyone forgot about, optical, prescription glasses, contact lenses. Easy. Build a brand, target the customer of the future, millennials, and grow. Well, there's a reason that so few companies get to scale in optical. It's because the hardest step is the first one. You have to build a complete infrastructure at scale. You have to build the whole foundation that will allow you to grow and grow profitably for years to come.
So we have some experience in this category, and that's what we did. On the foundation, there's four elements of it: There's the lab, there's the technology that powers it, the data that powers the customer interaction, and the people. On the infrastructure, we built to scale to start. So with the proceeds of the IPO, we went public on the Toronto Stock Exchange, January 2021. We built the most automated at-scale optical lab, we feel, in North America, possibly the world. And we built it so that we could grow into it. We're just using a fraction of the volume right now, and it's our view that we could scale easily to CAD 500 million revenue and above, with the facility, with the infrastructure that's been built. That saves us time.
These machines are all custom-made for us, take years to make and deliver, but it also means that the majority of the CapEx has already been deployed. There's the technology. This is another tricky category where, you know, it's not T-shirts. You can't just start up a Shopify website and be off and running. You have to build the whole thing from scratch, and so that's what we did. This infrastructure's been pressure tested across millions of transactions and hundreds of millions of dollars and gets better and better every day. Everything from payment to insurance to ingesting the prescriptions that we receive from customers, and often overlooked is the data infrastructure and the data warehouse behind it all. So 10 million unique data points come in every day.
We have a robust data warehouse and business intelligence layer on top of that, which really powers every one of our teammates, every one of us, to be our own analyst. The team, every day, reviews over 200 real-time reports, and every day, the data that we collected from the previous day helps us create a better business for tomorrow. So we're really just getting started. As large language models become, you know, better and faster, this will become an increasingly competitive advantage. You have a chain of 100 brick-and-mortar stores. How do you know how many people came in, what they looked at in that brick-and-mortar store? You have no idea. But on an online platform, you can see it all, and it can power you to be better the next day.
The team we talked about right at the beginning, we're happy to have, in just under six years, grown to a team of over a hundred and fifty teammates. Important for us is that we're all owners in the business, so two-thirds of total employees, hourly employees, salary employees, everyone, are buying into our employee stock ownership plan and are owners of the company. That helps keep us all aligned and engaged, and we have a very high insider ownership, about 75%. Okay, so that's foundation. Foundation's been set. What are the growth plans to grow into that foundation? You know, we have, as you can imagine, we have a number of growth initiatives underway. We see no end in sight for continued organic growth in the years to come.
We'll touch on three: product, treating every customer as an influencer, and then our repeat profile and recurring revenue. This category really works when customers come back. Once you need vision correction, for myself, for many of you here, you need it for decades, often a lifetime. And so the best investment we can make is a mouth-watering, product for customers to wear each and every day, so that three, six, twelve months later, you know, as you're wearing these, eyeglasses, you know, ten, twelve hours a day, the product holds up. The quality is comparable with anything you'll find on the market, and so there's no shortcuts there. And we're continuing to build a deeper and deeper moat on product, within the KITS brand on both contact lenses, and on eyeglasses. We do not sacrifice on quality, selection, or affordability.
So we've cut the costs out. We've compromised none of the quality. We've been making glasses for many years. We have the best team on designing new frames, complete with hinges, high-quality lenses, high-quality Italian Mazzucchelli acetate, titanium, rimless, you name it, we have it. And coming up next, which, you know, we're still early days on, is our expansion into KITS-branded premium lenses. We've developed a Invisiblock blue light blocking lens that allows a customer to have all the comfort of blue light blocking for screen time, but without the yellow or blue tinge that you traditionally get on blue light glasses. And designer frames. Well, this is an interesting one. You're KITS, why are you selling Tom Fords or Ray-Bans or Oakleys?
If we want to make eye care easy for KITS, we just sell KITS, but we want to make eye care easy for everyone, and so for some customers, particularly insurance customers or even a customer ordering online for the first time, they want the comfort of that designer brand, and so we're expanding into more and more designer brands, Gucci, Tom Ford, Ray-Ban, Oakley, and you're still getting a KITS lens, KITS prescription lens. You're still paying a fraction what you would in a brick-and-mortar store. Still comes in a KITS box, delivered to you within one to two days, but this is a great way for customers to come into the online space. More to come there, but possibly the area where we're the most differentiated from what you typically hear from consumer companies is our approach to marketing.
Now, we feel like we have the low-cost infrastructure, we feel like we have the highest quality product, and we feel like we have the best value and convenience. Our KITS-branded glasses are all priced between CAD 28 and CAD 38, including a prescription lens. That's one-tenth of what you'll pay in a brick-and-mortar store. So if you're acquiring customers, and Facebook and Instagram is a prime area to acquire customers, it costs CAD 100-CAD 150 to acquire an optical customer on Facebook or Instagram. So why would we take all this work and just give it to Mark Zuckerberg? We flipped the approach, and we're investing as much as we can right back in the customer.
And we're, our view is that if we give a customer an unbelievable experience, then they'll tell everyone they know, and they'll come back again and again and again. And so when we launched glasses, an example is our First Pair Free program, where if you'd never made a transaction on KITS.com or KITS.ca, we gave you a pair of prescription glasses absolutely free. And of course, you know, nobody believed it. There was all kinds of online chatter. "Nothing's free in life. This can't be real. No way." But people were intrigued, and hundreds and hundreds of thousands of customers tried it. And, you know, they pressed a button. We, in our facility, we can manufacture. We can receive your order, manufacture, and ship it the same day.
And so the next day, here's this KITS box on their doorstep, and these customers are like: "No way. You know, last pair of prescription glasses I bought cost CAD 350, took two weeks, and I had to take three trips to the glasses store. And you're telling me you gave them to me for free, and you delivered them in a day or two, and I love them. The prescription's perfect. The quality is outstanding. What's the catch?" And our customer care team just said, "Well, the catch is tell everyone you know." And so we've evolved that First Pair Free program into an expansion on influencers and more and more investment into the customers and influencer. And when it works, oh, boy, it really works. I'll show one quick example.
This big box of glasses. Big box of glasses. We're gonna start looking. This is amazing, right? I've never [seen 'em] before . They reach out, they just want to send me some frames, some winter glasses. Look how fucking sick they're designed, and I'm keeping this just for info. This is kind of like a tissue paper. This is PR. This is not sponsored. I sent them my prescription, so I'm assuming these are prescriptions. Are you kidding? I love... Okay, well, I love these, so I'm good. I'm good. I love this. I love this large frame. Yes, they're fucking big, aren't they? There's so many things. This is going to be, like, my next pair of glasses. I've been dying for an oversized frame.
All right, I'll stop it there. It goes on and on. How do I get back to presentation again?
Control L.
Control L. All right. Sorry about that, so that—I mean, to invest in your customer as an influencer, and to partner with other influencers, you have to be willing to do two things. You have to be willing to take your whole product offering and just put it on display to be judged, either positively or negatively, and then you have to be willing to give up total control on how it's communicated. And, you know, we obviously didn't script that video. There's, you know, dozens just like it, that are all over TikTok or Instagram. But that's what customers and especially the customer of today, is digesting right now, and really, the only complaint that we got from that video was I posted it on LinkedIn. We're so happy with the performance.
I think, you know, 2.8 million views on that video, more than 500,000 likes, and the business just took off that morning. We had no idea she was gonna post it. We had a record day, a record week, a record month on glasses, drafting off of this influencer and others like it. And so I was so excited, I posted to LinkedIn. Well, the first call I got was from my mom, who said, "You know, you really need to talk to that young lady. She said the F word four times in that video, and that is not okay." And so you just have to be willing to just let go. So what came out of influencers and customers as an influencer?
You know, we said we're pretty committed to keep marketing as a percentage of revenue low. 12-14% is our target. And so that allows you to be present in the key channels. You have some exposure, but you really need scarcity. So you can't do a national campaign. So we said, "Okay, you know, how can we be thoughtful about reaching customers and starting this movement, without, you know, seeing marketing go to 20%, 25%, 30% of revenue, as you do with some other consumer categories?" And so the team came up with this concept, we're early days on. It's called Own This Town, where you go into a community, a city, and you put search advertising and search marketing in for, you know, four, six, eight weeks, depending on the size of the city.
You customize the approach, local influencers, maybe get the mayor involved, really make a big deal out of it to start the movement in that city and then go back to sustain levels after that. So we tested it in our backyard in Vancouver. It worked spectacularly well. We saw a tremendous lift, and the team has now identified 20 cities that we plan to roll out in the coming years. The other benefit, because you can focus your costs, you don't spend as much, and then you get the results, and you can retool, change the things that didn't work as well, dial up the things that really worked, and go on to the next market. So the next market starts shortly. We're super excited about this one.
And last, and certainly not least, is one of the crown jewels for us, which is our recurring customer. So every year, every quarter, over 60% of our revenue comes from repeat customers. We have an active vision-corrected customer base of about 900,000 customers, and growing. And it's great to start the year knowing, you know, we're targeting, you know, 25%-30% growth and still know that we can count on 60% of that revenue to come from repeat customers. We're going deeper into this area with more partnerships on insurance. We introduced a big one with Telus Health this year. It's been. It's off to a flying start. We have an autoship program where you can set it and forget it, for those folks that appreciate that.
And then we've introduced our KITS Plus Membership program, which just launched a month or so ago and is also off to a flying start. Okay, so the foundation is built for KITS for the next couple of years, probably five years or beyond. Growth is becoming a habit. How can that translate into shareholder value? Well, you know, we wanna look back a little bit on our recent performance to give us hints of what could come in the future. And so this chart is our KITS stock performance over the last twenty-four months compared to the S&P/TSX Composite. And, you know, we feel like we're just getting started, and the momentum will continue for us with a very consistent capital allocation formula. This was the case six years ago before we started the company.
It's the case now. It'll be the case six years from now, where our focus is on organic growth. And that's what we're talking about here today. There might be M&A opportunities that come up. If they do come up and they're interesting, of course, we'll look at them. But up until now, in our view, we've been our best investment, and so we're investing in more organic growth in the 25%-30% range. We're gonna focus on investments that drive long-term margin expansion. Namely, those are in the KITS brand, so more premium KITS frames, more KITS daily modality contact lenses. And we're gonna invest in long-term growth channels. The customer is really a really good long-term growth channel, especially when they come back again and again.
And we'll use debt as needed, and we'll pay it down quickly so that we don't dilute the stock. We've had one equity raise since we launched, and it was the IPO. That's it. So a little bit more background on the increase in revenue and how Adjusted EBITDA has been tracking. And no coincidence that once we completed the investment cycle of our lab and the launch of eyeglasses, we started with contact lenses, moved on to eyeglasses, that revenue started to increase and profit came along with it. And, you know, it's our view that working capital doesn't get nearly enough attention for most companies, but for a growth company, it's super important.
And so we use this data infrastructure that we have, the data warehouse, to power more efficiency on inventory. We grew revenue over 30% in 2023, and our inventory did not go up, hardly a dollar. So we're getting more turns on the inventory. We're using data, and one big inventory pool, to create cash, from that, and continue to pay down debt. And last, and certainly not least, you know, it's our view that a successful company should get more efficient as it grows. And so, you see the investment in our, the launch of our eyeglass business, and the buildup of our optical lab. Once that was complete, across the business, we've been getting more and more efficient across fulfillment, marketing, and remaining G&A. We expect that to continue.
So, so what's to come? We haven't put any guidance in the market, over the next three to five years. But, you know, but it's our view that if we execute well, we'll continue this path of 25%-30% organic growth for years to come, without being burdened by CapEx. So maybe that's a good place to stop and see if there's any questions that you all have. Oh, I'm sorry.
Thank you for your amazing information.
Sure. Yeah, and just for everyone, the question is just around the underserved market that's not insured. Right now, we don't have perfect data, but we do have some good data. In the U.S., roughly half of customers are covered, about 45%, covered by vision insurance. It's slightly higher in Canada. Insurance is, you know, anywhere from $200-$400, and it renews usually every two years. So what we did our own survey in Canada, and we found, despite the fact that there's a higher percentage of customers that have vision insurance, one out of two Canadians has delayed the purchase of a pair of eyeglasses just because of the cost. So for us, that's just absolutely unacceptable.
The cost of making high-quality prescription glasses should be CAD 20-CAD 30 cost of goods sold. And so for them to cost CAD 300-CAD 400 is just unacceptable. So we think there's, you know, a tremendous opportunity there and for... And it should impact roughly half of the population.
Can you speak, you know, on your building channels, especially after releasing on Shopify? How did the average order
You know, direct billing is off to a flying start. The way it works is, you know, you don't have to guess anymore. So if you do have insurance, you come on KITS.ca, you enter your plan number, and it will tell you, you know, "John Luca, you have CAD 300 to spend. It expires end of December." Total peace of mind, and then you can apply that in the checkout, so you have no out-of-pocket. So no guesswork, no waiting, and no out-of-pocket. And so we expect it to build gradually, but it, it's been off to a very strong start. We don't break out the specifics, but, you know, roughly speaking, average order values, you know, approximately double, margin much higher. And the Net Promoter Score, which is our North Star metric, is just- it's absolutely off the charts.
These customers are like, "Oh, my gosh, how did you make it that easy, for me to use my insurance?" Not a single piece of paperwork needed. We're super bullish on the opportunity. It is more Canadian-focused. We have a team working on expanding that to the U.S. We like to tinker in, and really work and optimize the process first, and then roll it out and spend against it once we've proven out the economics. And so we're feeling very confident about the economics now, and so we think it's now time to invest. We're gonna be very kind of reasonable with our expectations on it. It takes a little while to build with an insurance partner.
It doesn't happen immediately, but we think, you know, what works in Canada will work very well in the US. I got the sign. Thanks, everyone.
Last question.
Oh!
The influencer that you had shown in the video, what did that cost you to center those models?
So our total cost was just cost of goods sold. I think the team sent her five or six pairs, so probably, you know, CAD 100.
What did that do for you?
I think that week we were up incrementally CAD 200,000. So pretty good return on invested capital on that in that example. They're not all quite that good, but that's where we're headed. Thanks, Brady. Thanks, everybody.