All right, thank you everybody for joining us at the Eighth Annual Future of the Consumer Conference here at TD Cowen. Very excited to be up here this morning with the Co-founder and CEO of FIGS, Trina Spear. Trina's an incredible entrepreneur, obviously created the most disruptive healthcare apparel company we've seen, a rocket ship in terms of revenue growth from zero to well over $500 million. And, Trina also sits on the board of Amer Sports, another company, we cover here at TD Cowen, and they're actually here today at the conference. Trina, you know, how would you describe the culture at FIGS? What's your long-term vision for the company? And, yeah, tell us a little bit about the purpose that you bring to what you do.
Thanks, John, and thanks for having me. Yeah, the culture of FIGS. So, you know, I think from the beginning, you know, when you're starting something from nothing, it's all about innovation, right? And creating something that hasn't existed in the world. And so innovation is at the heart of what we do, as we build products that are solutions-based for healthcare professionals. I think the second piece of our culture is around operational excellence and making sure that we deliver. This was super important, obviously, over our 11-year history, but also definitely during COVID, right? Where we had to kind of make sure that we were supplying healthcare apparel, scrubs, to the most important people we know on the planet, our awesome humans, our healthcare professionals.
And so, the culture, I think, is this perfect blend of innovation and creativity, mixed with, operational excellence and getting the job done. As it relates to our vision, we really, view ourselves as, building an iconic global brand for the next 100 years. You know, we do view ourselves as a leader in the space, right? Healthcare apparel is a $80 billion industry. It's $12 billion in the United States. And, you know, and no one was focused on healthcare professionals. No one was focused on, their needs, what they were wearing on shift and off shift. You know, and beyond that, what even the experience of being a healthcare professional looks like.
Our goal is really to change the experience, and we do that obviously through our products, but also through showcasing them in our marketing campaigns, as well as through our advocacy, where we are now on the Hill fighting for change and, through our Awesome Humans Bill, which is, with Congress. So a lot of our work around advocacy is part of that vision to change that experience.
Excellent. How many people in the room are familiar with FIGS?
Oh, great!
Almost 100%. A lot of brand awareness. No, it's, it's... I think when we're all at, you know, the doctor's office, the dentist, we can see you can see it in person now, and it feels like the brand is really scaling. It has a lot more opportunity. How are you feeling about the business within the current macro environment? And, you know, how is your core healthcare worker feeling right now?
Mm.
You know, there's a lot of noise in the macro, and, you know, as we head into the back to school, you do have a lot of students that are active customers. The back to school kinda summer season is heading into this. How are you feeling? How are your workers feeling?
Yeah, sure. So I think from a macro perspective, we've talked about, you know, two-thirds of our customers make less than $100,000. Inflation is definitely a factor. And kind of this COVID overhang is a factor as well, where healthcare professionals are kind of come out of this period, and now, you know, we're kind of showing up on a whole host of fronts. I think the most important thing is that we're controlling what we can control, right? We don't use the macro to cover our sins. And where that comes into play is really around product, and we've spent the last 18 months really working on our innovation and bringing, you know, really new fabrications, new categories to this group of people that haven't had it.
I don't know if you saw our Indestructible fabrication that we launched recently. Really, it's kind of an off-shift outside. It's really hitting home with veterinarians, which is an amazing part of our community. So, on the marketing front, kind of coupling our product with our storytelling to connect with this community in a bigger way. Then back to advocacy, like, I think there's a lot we can do to kinda change that sentiment a bit, and really show up for our community, in big ways. You know, at the end of the day, this is the fastest growing job segment, right? Healthcare jobs, over the next 10 years, it will be 45% of job gains, and we're already seeing that growth accelerate.
In January, healthcare jobs were about 70,000 additional. Last year, that average was about 58,000. And so it's great to see that more and more people are entering the workforce within healthcare, and that's definitely a driver in the future.
That's a great segue into the next question I had, which was how can you talk to the growth you see in the healthcare workforce in the medium and long term? You know, there's. I think the workforce for you is pretty broad. It's medical, student, dental, you said veterinary.
Mm-hmm.
There's a lot of folks that fall in, that can be active customers of FIGS.
Yeah.
Maybe talk to you know, the wellness markets and the employment there, and how FIGS expects to acquire more consumers in these, in these areas?
Sure. Yeah, I mean, so fastest growing job segment, like I mentioned. And, you know, we're seeing a lot happening within concierge medicine, and to your point, within wellness, and that's across the veterinary space, aesthetics, fertility, you know, the list goes on. The One Medicals of the world, VEG, Kindbody, you're seeing all these kind of concierge clinics kind of popping up, and that industry is gonna be doubling by 2032 to about $15 billion, which is incredible. I mean, and that's really probably the biggest driver for our teams business. For those of you who don't know, our teams business is really how we're partnering with healthcare institutions and outfitting their teams, helping them brand and standardize and professionalize their workforce.
And so, it's exciting to see the growth, as all of us, right, laypeople, patients, we want more, you know, customized, personalized care. We don't wanna go to, you know, a hospital necessarily, or a dermatology office necessarily to get Botox, as an example. So, there's a lot happening in this space, and, you know, these institutions are turning to FIGS and saying: We want to partner with you. And, you know, and to your point about students, I mean, that's a huge growth area, where universities are looking to FIGS and saying: Hey, we wanna outfit our classes. And we believe the best thing is to bring on new healthcare professionals at the very beginning of their career.
I mean, it's really exciting, right, to be starting your career in healthcare, getting your first set of scrubs. It's a really impactful and important symbol of who you are and what you do and your identity, and for us to be a part of that at the beginning stage of that journey is great. The lifetime value of a healthcare worker is, I don't know, up $10,000s over the course of a 35-40-year career, and we look to be along that journey for that whole career. And so students is another huge area of focus, not just in our teams business, but also generally.
So FIGS has gross margins close to 70%. It enables you to invest significantly in marketing. There's other areas like fulfillment. What are the most important investments you're making in those areas right now for the long term?
Yeah. Yeah, I mean, as you mentioned, we have structurally advantaged gross margins. We have a structurally advantaged financial profile, as I would say, the purest and truest D2C company, digitally native company, in the space, in the consumer space. And I think it does enable us to connect with this community in authentic and meaningful way, and we do that across channels, across funnel. And I think we're really at the forefront of digital marketing in terms of that. I think this year, and we talked about it recently. Well, actually, we announced it. For those of you who don't know, we're the official outfitter for Team USA's medical team for Olympics in Paris 2024. Can I get a-
Whoo!
Okay. So this is really exciting. You know, no other brand has ever done that. And, you know, this is like 1970, right? Of like, before anyone had ever sponsored an athlete. This is the people doing the world's most important work, and whether you are literally on the field helping, the Olympians and the athletes, or all the medical professionals that helped along the way to get that athlete to get a gold medal one day, right, and what that looks like. So super exciting. We are investing a little bit more this year from a marketing standpoint, as this partnership has become, incredible and a, a super important part of, of where we're focused. So, yeah, we're able to do that. We have $259 million now on our... cash on our balance sheet.
We have no debt. We're an incredibly high cash flow generative business. And so we can make these investments, right? We can invest in the future of our brand. We can invest in the people we serve, and we can invest in our products. We say products, people, process, and so that's where we're focused, and it's super exciting.
You were a college tennis player. Can we expect to see you at the Olympics as a spectator?
Well, I will be there.
Okay, great.
I will be there, cheering our medical teams on.
Okay.
I think, yeah, tennis player. I play now more, which is good.
Good. You have a little bit more time than you did.
Well, not a lot.
Yes. You mentioned direct-to-consumer led, which obviously affords you a lot of advantages.
Yeah
... in terms of data on your active customers. Wondering how you use that data to drive repeat purchases, average order value, retention-
Yeah
...all that fancy stuff.
I mean, we have a really wide data set. I didn't really realize how wide of a data set we have until you talk to other companies, and it's just a function of being a digital company, right? Really knowing your customer. You know, our competitors in this space, these are all companies that don't even know the names of their customer. Imagine that, right? Not even knowing the name of your customer. What does the data set allow us to do? It allows us to understand who we're serving, getting people the right product at the right time, exactly when they're most likely to, you know, get what they need to go and do their job. And I think there's a lot of advantages, right?
And you've seen that in our average order value growth, right? Being able to cross-sell across our scrubs to our non-scrubs, being able to upsell to other products. Really, you know, looking at our entire product assortment. A 26-year-old nurse in Boston is different than a 56-year-old oncologist, male, in Houston. And what does that experience look like? What does that journey look like, and how do you use your data to really, you know, show the right products, like I said, to the right customer at the right time. And it's all about personalization and doing that in a really effective, efficient. And you see that in our marketing, right? Incredibly efficient from a marketing standpoint. And, you know, so that's kinda how we think about it.
So for those that have built a FIGS financial model or looked at ours, or hopefully you're not looking at other sell-side models, but FIGS gives us great data on active customers, average order value, backed into a lot of different productivity metrics-
Yeah
... which is, which is really nice as an analyst. How often do your core consumers replenish their scrubs, and what are you learning in some of the non-core scrubs categories? It's now becoming a much bigger portion of the revenue.
Sure. So I think, you know, as a uniform business, we have a lot of advantages, right? This is a replenishment-driven industry. Healthcare professionals come back over, and over, and over again to replenish their scrubs, and also buy other products from FIGS. And so what we've seen is that, you know, we're launching new products every single week, right? Whether that's within scrubs, whether that's outside of other categories, and that drives people back. And there's this flywheel, right? So we sell out of that launch or that new product, and then people are kinda coming back, buying that and buying the core. And so what we say is, pinnacle drives core, you know, and new categories drive our core business across category, and so it's a really exciting thing. And that's also happening with our repeat customers.
So there's this really interesting thing that happens within FIGS. Healthcare professionals are walking around in really densely populated healthcare institutions, and every FIGS customer is a walking billboard within a hospital, within a healthcare institution, acquiring that next customer for us without us paying for them. And so 70% of our revenue is from repeat customers, and over 60% of our traffic is organic. People literally hearing about FIGS from their colleagues, their peers, their friends, and that's an incredibly amazing dynamic that, you know, only really happens because of this word-of-mouth dynamic that happens within institutions.
You know, I do think, you know, it's, it is really a function of the industry we're in, but it's also a function of how we've built our merchandising model or the flywheel, as it relates to how we launch products and get people back.
How would you characterize the competitive environment and overall customer acquisition costs, the digital-
Mm-hmm
... side of search advertising, social advertising? Seems it's gotten more expensive. How are you approaching that now?
Sure. You know, we haven't really seen much change as it relates to the competitive landscape. I think we do view ourselves as pioneers in the space and the leaders in the industry. And you know, this industry was really outdated, for those of you who don't know. I mean, this was. These were wholesalers. They essentially were making product, you know, selling it to these 5,000 mom-and-pop stores across the country. You would walk into a store in a strip mall, there would be a rack of black, a rack of navy, a rack of white next to bedpans and knee braces and other medical supplies. I mean, that was the experience. But from a financial perspective, it was really, you know, it was, it was, it was really not great.
So you were giving 60% away to the retailer, and you were giving... A lot of these companies were licensees of other companies, so they were giving a, you know, royalty fee of 8%-12% to the license holder, and so that didn't leave much to really invest in a lot of the things we're talking about around marketing and product. So what we were able to do was, really, you know, we're about 20%-30% higher than the competitive, you know, the other players. But our product is about 10x, 5x-10x the quality, and you could even see that in the margins, right?
And so that's a huge advantage when you're giving your community such a better product at an incredibly affordable price point, by the way. You know, our tops are about $38, our pants are about $48. This is incredibly affordable. But the quality that you're getting so that you can go to your job and perform at your best is night and day. And so as it relates to the competitive... What was the second part of the question? Sorry.
Customer acquisition costs.
Yeah, customer acquisition costs. So they've been stable since we've gone public, and I think, we've shared more of that information at that time. And so I think, what have we been able to do? So as we enter a market, take, like, our most penetrated market, which is probably Los Angeles, our CAC is probably the lowest - like, our CAC is the lowest in our markets where we're more penetrated. We're able to take those gains and invest in places that we're not yet at, right? So it's this domino effect. We go into a market, we're in a market, we get CAC gains, as this word-of-mouth takes off, right? As more people are talking about FIGS and acquiring customers for us, the CAC goes down. We're able to take those gains and invest in a new market.
Once again, as the word-of-mouth takes off and the brand awareness increases, our CAC goes down, and we're able to invest in the next market. So, that's how the marketing engine works, and it's really truly unique to a business like ours, where we're getting those. So we're not competing with everybody else and their mother who's selling. I don't wanna say, I know there's other companies here selling jeans and glasses, and you know, you're selling to everybody, right, in the world. That's a very competitive dynamic, right? You're competing with everyone on the internet. And we're really specific in who we're in who we're.
Yeah
... targeting and how we're serving them, and so that gives us a lot of advantage. Then we're able to invest in top-of-the-funnel marketing. What is top-of-the-funnel marketing? Like, what we're doing with the Olympics, right? That gives us that ability to invest in marketing, invest top-of-funnel, invest in storytelling, invest in awesome humans, which are healthcare professionals and their stories, and not be so focused on bottom-of-the-funnel conversion, although it's all related. You invest in top-of-funnel, you bring people through that journey to awareness, from awareness to consideration to conversion. So that's kinda how we think about marketing and CAC.
How are you thinking... Well, one, one thing I'd add on that is just that FIGS gives us a tremendous amount of data as analysts or investors-
Yeah
... in terms of their, your active customers, your marketing dollars for active customers.
Mm-hmm, mm-hmm.
You can build out a very detailed picture of what the company's doing from a, from a customer acquisition standpoint and retention standpoint.
The one thing I'll say to that, though, just to you know, the marketing spend, you kinda can't break it out vertically to, like, okay, what's brand marketing or what's top-of-the-funnel versus what's, like, the digital CAC? And so I think people say, "Oh, you're spending, you're needing to spend more to acquire that customer." But at the end of the day, we're making an intentional strategic decision to invest in more in marketing from a top-of-the-funnel perspective, because that tail is super long in terms of what that LTV will be when you do that, versus needing to spend more because CACs are higher.
Sure.
So that's a really important point that I think, I think everyone in this room probably understands, but just wanted to reiterate it.
Absolutely. Yeah, the returns you're earning from the marketing are certainly,
Yeah
... going through the model. So any learnings on the Century City store?
Community hub?
... you said, you said LA. It's, you know-
Yeah
... it's obviously your home market. It's one of your best markets. We know you're coming to Philadelphia soon. I grew up right outside of Philadelphia.
Oh, great.
I went to school, college there. I'm a big Philly person. Can we expect to see Rocky Balboa decked out in?
Yes
... FIGS at some point, a statue maybe? But yeah, the-
The plan
... the DTC piece of the business, what, any learnings from there?
Yeah, so it's... I mean, I think we all know, right? Omnichannel is important, and being with your customers in person, in a truly physical space is important. People wanna feel and touch and try on the product. And I think 80% of all consumer sales are still offline, in an in-person kind of format. So, you know, I think we're the largest digital-only brand in the world, with just one brand, with one physical location, and so this is really exciting, right? We're at the starting line of what's to come in terms of community hubs. And so we have our community hub in L.A.
We call them community hubs because it's not just the transactional experience, it's about connecting with your colleagues, connecting with us as a brand, learning about our products, learning about what we do. And when you're there, it's, you know, we're really becoming the third place. You're at home, you're at work, you're at the FIGS community hub, which is really exciting. And what we've seen in L.A. is that 40% of our customers are new. This is our most penetrated market. This is a... You know, we, we are born and raised in Los Angeles, and so, it's incredibly exciting to see that, you know, there are people that had not ever, you know, shopped with us before. And now they're doing that in person, because trying on the product is super important, and that's awesome.
We're opening Philly in the next number of months this summer, which we're incredibly excited about. You're all invited. I keep telling the list is getting longer and longer. You're all invited. But Philly is an incredible market. One in six doctors are trained in Philly. It's an incredible place to learn how to be a healthcare professional. And so back to our students initiative and where we're focused, this is very much in line with what we're doing. We've learned a lot, actually, from our first space. It's a little too small, it's about 1,000 sq ft. And so our space in Philly is about 4,000 sq ft.
And so we really feel as though it's a great space, because we have an upstairs part that we can do community programming and speaker series, and really engage with our community. And then you could also, you know, see the full product assortment, and engage with kinda all aspects of the brand.
Excellent. Where's the store gonna be in Philly? Downtown Philly or-
Walnut Street.
Walnut.
Walnut Street.
Yeah, place to be.
Place to be.
Long-term targets of the company, you know, coming out of the IPO, centered around $1 billion in top-line target.
Mm-hmm.
You're a little more than halfway there. Like, what's the process of getting to a billion, and what does the company look like as we start to scale there?
Yeah, sure. So I think, you know, you know, we're really focused... Obviously, our core business in the United States is in e-com, is really, we're investing in that, and that's a part of, you know, where we're investing from, all aspects of channels, across social, across out-of-home, strategic partnerships, which we're seeing more of with what we're doing with the Olympics. And then, you know, non-scrubs. So non-scrubs, like I mentioned, I think at the IPO, you know, everyone's like: "Oh, I don't know if we can get outside of scrubs." Now, it's over 20% of our business is outside of scrubs, right? So that's everything that healthcare professionals are wearing to work, at work, from work, on shift, off shift, head to toe, under scrubs, outer wear.
We have our Contour Knit jacket, which is, like, a really awesome piece that you're wearing over your scrubs. It's a little bit tighter fitting. If you want something a little bit looser, you can get our fleece, our Sweater Knits, our Packable Puffers, our Compression Socks. We have a shoe collaboration with New Balance, which is killer. Scrub caps, all, you know, the gamut. It's great. And so our community is really engaging with the full, we call it our layering system, you know. We've really become kind of a lifestyle brand for the community. And then on top of that, international, right? We're early days still. I mean, we're in 33 markets, but you know, I would say 30 of them launched in the last year, right?
So, it's really exciting to see the growth there, about 40% in the quarter, year-over-year, if you take out the duty subsidy piece. And so that was great to see, and Mexico, Philippines are incredibly strong. We're really just in Europe; we're nowhere in Asia outside of the Philippines, so really exciting to see where we go next as it relates to international. Teams, I talked a little bit about teams, which is how we partner with institutions. That's a really exciting growth lever. We haven't you know, given that, those growth stats out yet, but you know, this is where the industry is headed as it relates to concierge medicine and wellness. And we're right there at the forefront, leading the way with those partnerships.
Then finally, retail, which I just talked about with our community hub. You know, a lot that we're working on, a lot of exciting growth to come, and opportunity as we head to $1 billion in sales.
Excellent. You mentioned international, so maybe we could center a question around international.
Mm.
What's your goals for international? What are you seeing? You talked about-
Mm
... you know, the Philippines and Asia, a few markets in Europe, but, like, how do we think about you building that business? What investments do you need to make?
Sure. So I think, you know, from an international standpoint, we're very focused on localization. And localization means a lot of different things to us. Localization from, obviously, a website perspective. You know, if you're, if you're on a website and it's not in your language, kind of a problem, right? So, gotta be that language, currency, and then products, right? Like, how are we merchandising the site that, for any given market? How are we aligning our message and our marketing, to your holidays, to, your culture, what's going on in your world? And so really, focused there, market by market, in ensuring that, the message and, and how we're connecting with our community, whether you're in Paris or in Munich or in Kentucky, that it really speaks to you.
I do think that we have a really awesome brand in that way, that our brand does speak to healthcare professionals. There's 140 million healthcare professionals around the world, and they had this awful experience where no one was showing up for them and caring for them. And we're able to do that, and, and, and it's FIGS is resonating globally. And we're still early days, right? We're still early days as it relates to international. A lot more work to do. We're just getting started. And yes, goals in terms of entering new markets is important, but really building out the markets we're in. We have an incredible ambassador program. We have 450 ambassadors, all basically in the U.S. and in Canada.
We are building out our ambassador program globally, because the best representation for FIGS is people on the ground, in hospitals across the world, talking about who we are, what we do, and how we can help you and your job. So that's a really exciting thing and an area that we are investing in.
Well, FIGS sounds like an exciting place to work. What areas are you hiring in? How are you building out the team?
Sure. Yeah, I mean, clearly we're building out... You know, we talked about our three growth levers. We are hiring around those areas, as well as within product, within marketing, within technology. You know, I always use the Bezos quote, like, "You gotta focus on how to make your beer taste better," right? We focus on how to make our beer taste better, which is how to make our scrubs look good and feel good, so you can perform at your best. And so, we are really excited about the future of the business. We're investing in the areas that will lead to the highest return on that capital. And, you know, yeah, it's exciting time to be at FIGS.
Final question is just on the marketing side, the storytelling. You're stepping up marketing spend this year. What are you learning from, I think, particularly around the upper funnel, like you talked about earlier, what are you learning about, you know, active customers, retained customers, like-
Yeah
... customers you want to acquire?
Yeah, I mean, I think that, you know, top-of-the-funnel marketing and storytelling is, is a luxury that many brands don't have, right? It's like... And I think that, you know, it's what really is the ethos of our company, is telling stories about awesome humans. And so we were the first company to put healthcare professionals on billboards in Times Square, and it changes the mindset, right? It's a paradigm shift of who you look up to, right? You're looking up to- we all look up to celebrities and athletes, Serena Williams and Tom Brady, and, they're amazing. I don't know if anyone's watching the French Open. It's pretty good. Amazing athletes, right? But what about the people saving lives? Who's focused on them, and how do we inspire the next generation to become them?
And that's where top of the funnel and storytelling gets really interesting, is where you change the conversation, you change the, you know, you change the mindsets. And so that's what we're doing with our campaigns. That's what we're doing with how we tell stories around our product, around our people. And so, yes, that drives a few things. It drives new customers to join the FIGS family, and it drives repeat customers, right? People come back more when they feel what we call ourselves as a love brand, when you feel that you are connected to our brand in an authentic way, which authenticity is, you know, Gen Z, Gen Alpha, I don't know if any... Any Gen Z and Gen Alpha in the room? Maybe not, right? We're all a little past that. Oh, yay!
Gen Z-er.
Thank you for joining us.
A whole Gen Z-er.
You are, you are our future.
Yeah.
And so, you know, that is, you know, you're driving the future. And what do you care about? You care about authenticity. You care about, connecting with a brand in an authentic way that understands you and what you care about, and the values you stand for. And so we care about what, you know, we care about what our community cares about, and we have incredibly strong values around integrity, around our products, and, and how we talk, speak to our community. And so, yes, that drives new customers, active customers, replenishment, AOV. Any metric under the sun that you could look at, that we're looking at obsessively, is driven by authentic, connection and, you know, community.
Well, it's been amazing. Thank you, Trina.
Thank you, John.
Thanks, everybody, for coming. As you can see, this is a great story. It's been a rocket ship, the last, you know, five or six-