Good morning. Thank you all for joining us. My name is Brian Nagel. I'm the Senior Equity Research Analyst here at Oppenheimer, covering consumer growth and e-commerce. This is our 25th annual Oppenheimer Consumer Growth and E-commerce Conference. We very much appreciate you all attending. I'm pleased to have with us our next presenting company, FIGS, and three of the company's senior executives: Trina Spear, Founder and CEO; Sarah Oughtred, CFO; and Tom Shaw, Senior Vice President of Investor Relations. Thank you all for joining us.
Thank you for having us, Brian.
We're going to structure this as an informal fireside chat with me asking questions and the FIGS team answering those questions. To the extent there are questions from the audience, just send them through the chat, and I'll be happy to work them into our conversation. I thought, Trina and Sarah, I thought we'd start, before diving into the specific operations of FIGS, I thought we'd start with just some maybe broader questions that are really topical for investors at this point. I would love to get your thoughts on, especially from your unique perspective, just the health of the consumer, particularly the target consumer for FIGS.
Sure. Thank you, Brian. I think it's important to note that we kind of went through this period during COVID, right, where we are serving healthcare professionals. We served them during a pretty unprecedented time during COVID and had an acceleration in our business. I think coming out of that, we were in a bit of a COVID overhang in 2023 and in 2024. We're really excited to see that we're coming out of that and looking to be in a more normalized period going forward. Healthcare professionals are the backbone of any functioning society and are needed around the world so that we could all live and have healthy lives. It's great to see that they're turning once again to FIGS for their uniforms so that they can go to work and do their jobs.
Our whole goal is to help health care workers look good and feel good and perform at their best. We do that with a broad product line across scrubwear, outerwear, underscrubs, footwear, to help our health care professionals go to work, at work, go from work, beyond shifts, off shifts, and really outfit them head to toe. We're starting to see, and we've now had three quarters of positive repeat frequency. We're starting to see our community come back more often to not only replenish their uniform, but also to buy other stuff and engage with us and engage with our product line and with our brand. We're really excited to see a more stabilized period and improving demand dynamics across the board.
Trina, I'd love to dive a little deeper into that. I mean, what do you think is helping to drive this improving demand dynamic? Is it more internal with what FIGS is doing, or is there an external element as well?
I think there's two things. I think, first off, there is an industry tailwind, right? Coming out of COVID is helping the industry. Health care professionals, they had stocked up during COVID and now have worked through that and now need to replenish in a more normalized way. In addition, there's a lot of things that we're doing as a company, broadening our product line. You saw that with the launch of FORMx, which is an entirely new fabric platform within our scrub wear assortment. Now we're going to be building off our silhouettes in FORMx, our color strategy in FORMx. That's really exciting. Similarly, within outerwear, you saw the launch of Float. That's a completely new fabric platform. Once again, building our strategies and business off of that. We're seeing UPT, AOV increases, right? People are adding more differentiated product to their cart.
They're also engaging with differentiated product, not just online, but also in our community hubs. Stores is a huge opportunity for us. We only have two in the U.S. We're launching a few more this year. We talked about Houston, which we're really excited about. That's our health care professionals are coming into the store. They're engaging not just with scrubwear, they're engaging with our outerwear, our underscrubs, our compression socks, our footwear. We have an amazing collaboration, as you know, with New Balance. That's really exciting to see because you're able to try on and feel and touch the product. Really, that's driving a lot of the demand as well.
That's very helpful. Again, sticking with this and recognizing you have guidance out there for the current year, 2025, but maybe, Sarah, just a view, if you guys were looking at this better demand dynamic start to take hold and then kind of recognizing the key components of your sales growth algorithm, what needs to continue to happen to get FIGS back to what we would consider kind of a normalized top-line growth algorithm?
Yeah, I think that our product innovation engine and our marketing engine behind it is really starting to work. We've sort of repositioned some things, and we're really seeing some great traction. What we need to continue to see is that acquiring new customers and growing our active customer base. We had grown the active customer base 3% in Q4, but we did see an inflection in that into Q1, where we actually grew our active customer base 4%. We're continuing to grow our market share, and that will grow our active customer base. Along with that, we've been growing our AOV, and that's really through a lot of the things that Trina spoke to that's working on the product side.
Together, those two pieces will really fuel our growth into the future, and we're seeing a lot of green shoots within both of those areas.
How should we think about kind of what we're playing for in terms of maybe not putting a specific timetable on it, but again, as we're seeing the top line come back to life, kind of what are we playing? What type of growth would you say that now FIGS is back to where it should be?
Yeah, I mean, I think there's a lot of opportunity ahead for us. We're still up against some promo strategy shifts. While the underlying business is doing well and we are seeing good growth rates in our what we would call business as usual and non-promo days, we're taking that opportunity to reset where we've been from a promo perspective. That's both how we want the brand to show up in the future and really just a function of where inventory has been. We've come out of a really high inventory position coming out of COVID and needed promo to clear that. There's a bit of a headwind underneath as well, just as we comp over some of these promo events. We do think that we can continue to grow the business. If you look at it this way, we have 2.7 million active customers.
Within the U.S., there's 22 million health care professionals and over 100 million health care professionals worldwide. There is a good runway for us to continue to build the brand and serve more health care professionals worldwide.
I want to talk again, a topic that's very top of mind, if you will, for investors at this point is trade and tariffs. I'd love to get your perspectives on what you're seeing on the tariff front, how FIGS is, so to say, dealing with tariffs and maybe mitigation efforts going forward as you see this continuing to unfold.
Yeah, I mean, I think we're in, as you know, a very fluid trade backdrop. I mean, I think we're evaluating this with the rest of the world and really looking to partner even more closely with our manufacturing partners around the world. I was just in Vietnam last week. A lot happening there. We're looking to offset this, right, offset this through our partnerships with our manufacturers. Also thinking about where else in the P&L we can offset. I'll let Sarah address that part. I think at the end of the day, we're building the company over the long run, right, and controlling what's in our control.
I think having relationships for over a decade now around the world, having this robust supply chain, having partners that are, it's amazing to see what FIGS means to them, right, because we're such a replenishment-driven business, because we're a non-seasonal business, because we have this really tight assortment where they're able to kind of manage their business as well and we are able to keep their lines moving. That's meaningful from a supply chain perspective and is a function not only of our scale and how long we've been around, but also a function of being a uniform company. That's really beneficial for us as we look to continue to navigate the tariff environment.
Trina, you talked about just having visit partners in Vietnam. Maybe talk more specifically, how are those conversations going? I mean, and how do you view, and Sarah to get you in the conversation too, but I mean, how do you view the potential mitigation efforts as this unfolds?
Yeah, sure. I think from a relationship perspective, like I said, we have incredible relationships with our partners, and they want to help share in this cost, right? This is a real cost. How do we partner together to make it work for everybody? Really with the goal of ensuring that our health care professionals, they're the last on the list, right, of who's going to take this on. At the end of the day, health care workers, we need them. We need to ensure that our products are affordable and accessible to them. That's where we're focused. Sarah, do you want to take the other part of the question?
Yeah. So just in terms of the mitigation efforts, we, as Trina said, have been actively working with our supplier base. We're also looking across the P&L at opportunities of where we can go after cost savings. We have set up a plan to really look at our inbound costs as well as outbound costs. We are making sure that we are continuing to invest in the business to drive growth and making sure that we're being selective with how we spend our dollars and just setting up for how we can be smart to offset some of these costs. At the same time, we have a fortress balance sheet. We have no debt, and we have a really significant amount of cash. That should help insulate us going forward.
That balance sheet gives us flexibility in terms of how we navigate this and how we may succeed versus other companies. We also have that to really help us manage whatever comes in the way of tariffs.
I'd love to talk just a bit about, and again, this would be more maybe for clients, investors that are not as familiar with FIGS, but just the competitive landscape. You're in a unique spot within retail and the customer you serve, but you're a big player in a, like you've mentioned, very fragmented space. How do you view competition across the space? Has there been any sort of, say, evolution in the competitive set over time?
I mean, I think that we've seen really two parts of the competitive landscape. There are the companies that came before FIGS that are really stuck in the strip mall. Before FIGS, health care professionals were shopping at, where you walk into a store, there would be a rack of black, a rack of navy. They would be selling medical supplies like bedpans and knee braces in the same place they were buying their uniforms. It was really a bad experience. Not only was the experience awful, but the product was not great. It was companies that were really buying fabric off a wall, putting somebody else's label on it. They were all licenses that they were then selling to these stores. I mean, that was the industry. We call it the anti-mode, right, because they're really stuck in that outdated world.
There are newer companies that have come behind FIGS that are really small, right, are subscale that have tried to copy what we do. We have not seen anything too interesting on that front. Our goal is really to continue to lead the way and continue to lead the industry. We have to be better and smarter and faster than everybody else as we look to serve our community in the most meaningful way. Our mission is to serve those who serve others. A part of that is sometimes really not even looking left or looking right because we are really defining what the future will be. We are defining what this industry will be. We are defining what the experience of being a health care professional will be.
I'm actually on my way right after this to Washington, DC, to fight for health care professionals' rights and get on better pay and better training and safety, mental health support. That's a big part of our advocacy pillar. Advocacy is a huge part of what we do, a huge part of the brand, and really, once again, differentiates us from everybody else. You have to have the best products, which we do, the best brand and marketing and showcasing health care professionals, the best of them back to them. Fighting for them from an advocacy perspective is part of it as well. I would say over the last few years, even as we've been in this COVID overhang, we actually widened the moat, right, between us and everybody else.
Our goal over the next 10 years and beyond is to do that even further and be the brand, a global iconic brand for this community. I think we're on our way. It is about doing things that others probably do not think are as important because the return on that is not seen right away. It is about being an authentic brand and serving people in all of these different ways. We are super excited. We are actually going to Washington, DC with Noah Wyle from The Pitt. If you have not seen The Pitt, I am doing a plug now for TV shows. It is on HBO. Check it out. It really showcases the experience of being a healthcare worker and what that is all about and how at times that is really hard. We get to be that brand that shows up for them during those hard moments.
That's very helpful. I also want to talk about there's been some, I'd say, investment in the business over the past several quarters, particularly on the distribution side. Maybe we could just kind of update where we are on those investments. The benefits we're starting to see now, this new, more innovative or, I guess, advanced would probably be a better word, distribution infrastructure, kind of where we go from here.
Yeah, I can take that, Trina. We, in 2024, moved our distribution center. We had outgrown our previous distribution center, and we have moved into a much larger state-of-the-art facility and put investment behind that. That distribution center will allow us to scale to $1 billion. It is state-of-the-art. We have invested in robotics that will help us scale to our peak promo levels and efficiently run the day-to-day. We had incurred some one-time costs in 2024 to make that transition. We do have some inefficiencies as we started out operating in this new facility. As each month goes on, we are improving and seeing the efficiencies come. It will take a bit of time in terms of how we will get back to the same cost structure as before.
That is largely just due to the fixed cost structure of having a lower capacity right now and having the opportunity to ramp into it. We do believe that we can get our selling costs back to a more comparable level to 2023, probably by 2026 or 2027, and be able to leverage after that. That is really just driven by how quickly we can scale our revenue and increase capacity at the new facility.
Sarah, maybe we can discuss it. There are facilities you're opening to some point. I wanted to talk about your international expansion as well. Are you looking at similar type distribution investments outside the United States as well?
If and when we do open another distribution center, we do not need to have it as an owned model like we have this one. We think that there is opportunity as we scale international to potentially evaluate a 3PL option. It would not have the same investment profile. There would be some small upfront to manage the transition, and a small CapEx buildout, but nothing to the extent of the facility that we have done now. We will continue to evaluate as part of our roadmap in 2026 where an additional facility might make sense. For international, how that could benefit our P&L is reduction in duties, shorter shipping time to customers, which would then come with efficiencies as well. There are some good benefits there. We just need to focus this year on optimizing and tuning the distribution center that we have.
A next step would be to evaluate a potential international 3PL location.
That's perfect. That's a good segue to, I know Trina had mentioned before, some international growth. I guess I want to think, how has FIGS International has been a big piece of the story. How do you view continued expansion outside the United States? Then importantly, how do you balance that with the business domestically? The United States is still young. I mean, how do you balance this focus on international and domestic?
Sure. I think we're really pleased to see the growth from an international perspective. We're in now 34 countries. We just launched Japan last week, right? I was in Vietnam. I'm like, where are we in the world? We just launched Japan, which is super exciting. I think we've talked about how we've been localizing market by market, and that's really exciting. As an example, in the Middle East, we have a huge job with holes for your stethoscope, really localizing the product to the market as well as our marketing and really understanding the nuances within each market as we look to really be a global brand for the health care community. We're well on our way. Our products are resonating. Our brand is resonating in markets like Australia, Mexico, the Philippines, now hopefully Japan. That's really exciting to see.
There is so much of the world that we still have not even gotten to. Also, I think it has been surprising in some markets like Mexico or the Philippines where the purchasing power is not as high. To see the growth in that market and the growth of the healthcare community really engaging with FIGS, a premium brand in that way, is also really exciting. There is a lot more to do, a lot more to build. We are just digital. We only have two stores in the U.S. We are only digital in all of these different countries. That is also a huge opportunity over time to have pop-ups and stores and community hubs around the world. It is early days and exciting to see what we have been able to achieve in the markets that we are in.
Sarah, I think there was another part to the question if you want to take that.
Yeah. I mean, how we balance international versus U.S. growth. I mean, the way that we've structured, we have an international leader, and we're building out the international team to really be able to focus on any of the localization and nuances that are needed to really grow these international markets. That's where we're investing, is building that out and looking at we've seen really great growth by just opening up these markets using the same playbook that we did to open the U.S. Now the work is really focused on localization, and we'll need local teams to help us with that. That's what we're setting up. We have the opportunity to both grow more markets and open more markets as well as really increase market share in the markets that we're in. That's what we're set up to do.
You'll see Japan come on this year, Korea come on this year as new markets. We will continue to share as we open future markets as well.
As you talk with these markets, Trina mentioned the 34 markets and some of the more recent additions. What's the typical investment? I mean, for FIGS to go into a new market, how should we think about the investment needed to do that?
Yeah. It is some investment, but it is not significant as we enter through e-commerce and we are able to leverage the platforms that we have. Through Shopify and Global-e, that does allow us to turn on any country that we want. Where the investment comes is really the rate in which we turn on digital marketing, performance marketing to go after acquisition. That has been our practice. As we enter more complex markets like Asia, we are investing in some market research to make sure that we are understanding the needs of that health care professional, our positioning. There is some investment there. We would also make some small investments into building out ambassador networks so that we have that local knowledge, that person that is going to be spreading word on our brand. None of these are massive investments.
We can scale the rate of that digital marketing. We have some flexibility on that as well as we monitor sort of sales in each of those regions. We are profitable in all of our international regions, which is really exciting. Over time, we have the opportunity to improve our profitability as those businesses scale. As I mentioned before, depending on where we place any future supply chain networks, that will also create favorability as well in the international profitability.
Let's talk a bit about the teams business. I know this has been a growing focus, if you will, for FIGS, but maybe discuss teams and how this is becoming a potentially new, more powerful driver of growth for the company.
Yeah. Teams is a really exciting opportunity. You're seeing within concierge medicine this massive focus on more personalized medicine. You have your, I don't know, Brian, if you have yet your medical records on your phone, but everyone's kind of looking to just go around the corner from where they live and get their blood taken, their Botox infill, eggs frozen, their dog taken care of, and preventative medicine, their genetics testing. There is a really huge push where concierge medicine is going to be growing from about $15 billion- $30 billion over the next decade. These groups, these health care institutions are looking to partner with FIGS to help them brand and standardize their teams. That is really exciting for us, right? We are the leader in the space.
Having that partnership like VEG, for instance, VEG has over 100 hospitals now. It is a veterinary emergency hospital. They are adding about 25 new hospitals a year. They have over 10,000 employees. All of those team members are now in FIGS, which is exciting. There is more to come on that front. We are building out our outbound sales force to not only just over the last decade plus, these institutions have come to us from an inbound perspective. We have taken their order, and that is great. We have built amazing technology to serve them very well. The future is not just doing that, but also going outbound, right, and finding these institutions that are very much aligned with us and with our brand and are looking to outfit their teams in the best product.
is so much more to come in terms of where we go from here. Teams is an exciting new business for the company. We will have much more to talk about in the future there.
Is there any way to size the sort of as you get teams going and now able to much better cater to these type of customers you described, the expansion, the TAM, if you will, for FIGS?
Yeah. I mean, it's about like if we take that $12 billion industry number for the U.S., it's about 15%, 85% of health care professionals buy their own scrubs. 15% are bought by the employer, the administrator. If you were to take that 15%, you could say that's kind of the TAM for the U.S. Globally, actually, B2B or institutions buying for their team is actually much bigger than that 15%. It's higher. Teams actually internationally is a really exciting opportunity as well. There's a lot of synergies there. I think if you, but back to this point around concierge medicine, it's growing so fast that these TAM numbers are kind of outdated in a way because medicine is changing. Even take fertility, right, and egg freezing. That is a new-ish industry that's just blowing up, right? Similarly, right, within aesthetics and cryo.
These are newer industries that are going to be completely different two, five, 10 years from now. Looking at the TAM today is not really an appropriate or is not fully representing what this will be in the future.
I know time's going to start to wind down. There's a couple more topics I wanted to discuss. I think we touched on this already, but the expanse of the product line beyond traditional scrubs or health care. Maybe talk about that. Is this really geared towards further outfitting an existing customer, or are you bringing a new customer into the FIGS family?
We're doing both. We've got to do it. We really have amazing loyal customers. FIGS, we have this diehard fanatical community that's obsessed with us. And we're obsessed with them. What else? How can we serve them in more ways, right? The core uniform, their scrub wear, super important. They need jackets and fleeces and vests. They need under scrubs and compression socks and shoes. They need scrub caps and all of these different products to go out and do their job and do it well. Health care professionals spend about $550 a year on their uniforms. Our revenue per customer is about $210. Taking that share, more of that share of wardrobe is super important and a huge opportunity. We're focused on it, right?
We're focused on that what we would call repeat frequency, how often health care professionals are coming back. Over time, you'll see that number 210 move up, or we look to see that move up. That will show how we're taking that share of wardrobe. And that's all about a focus on retention, right, and repeat customers. On the other side, getting new health care professionals into the FIGS family is super important. There's 140 million health care professionals around the world. We have 2.7 million active customers, right? So massive opportunity to get more and more health care professionals into FIGS. I do think community hubs is a big part of that. We haven't talked about stores too much. Take our most penetrated market, which is Los Angeles. You say, oh, wow. How many more new customers are there in Los Angeles?
Forty percent of our sales or 40% of the customers that have bought within Century City, our community hub in Century City, are new customers, right? There are people that just do not shop online. They want to feel and touch and try on the product. That is a huge opportunity, right? Having a physical presence where people can come in and experience the brand in person is great. We are focused on the full community and really look to see more and more healthcare professionals join what we are doing at FIGS. That is a really exciting opportunity in the future.
Trina, let's mention quickly the community hubs. I know I visited now a few times the facility in Los Angeles. We visited with an analyst in Philly. I think you mentioned a moment ago Houston. How should we think about kind of the growth in these community hubs and maybe some indications of ongoing success there?
Yeah. I mean, so we're opening Houston, and there's more to come. I think, like I said, I think we really feel as though it's important for the brand to have a physical presence and have people kind of come in and try and feel and touch our new fabrications. FORMx is a perfect example of this. FORMx is a new fabric platform within our scrubwear. FORMx is actually performing better in our stores than it is on our site, right? That's just a testament to people being able to feel and touch and see the product firsthand in person. That's really exciting. In terms of we're learning a lot, right? Century City is a little too small. It's about 1,000 sq ft. Philly is bigger. It's 4,000 sq ft. It has two floors, and that's really great.
Houston's going to be somewhere in between, right? It's like Goldilocks. We're finding the right format, the right locations in the best cities around the U.S. and eventually around the world. I think we're in a perfect position from that perspective where the brand is there, the product is there. Now having this additional channel where you can come, and it's very much like a destination. We're within a few miles of the largest healthcare institutions. Take Rice Village. The amount of healthcare professionals in Rice Village in Houston is incredible. You have MD Anderson. You have Texas Medical Center. I mean, it's huge. Having that place where people can come is game-changing. So much more to come in this front, but exciting days.
Last question, I think probably mostly for Sarah. We mentioned before the fortress balance sheet, the huge cash position that FIGS enjoys. I mean, I guess how should we be thinking of your capital deployment and uses of excess capital here?
Yeah. We have no debt. We are a profitable business that generates good cash flow. That has resulted in a $251 million cash balance. How we think about capital allocation is, first and foremost, using that cash to invest in the business and drive growth. We have talked about some of those investments that we are making this year to, yeah, really just invest in growth to scale this business. That is first and foremost, investing into the business. We had talked about the distribution center. That was a fairly large capital outlay that we had in 2024. We talked about how we likely would not need to make the same level of investment. In terms of other capital projects, we have talked about our real estate strategy where we are opening up community hubs. We will be deploying to open community hubs.
We will open three this year. We're very much still in the test and learn phase at this point. With those data points, we will decide how quickly and how many stores we will open. We will be able to fund that ourselves with our current cash position. In terms of our share buyback program, we had authorized a first buyback in August of last year. To date, we had invested $48 million in buying back shares, which was great to see. We're continuing to evaluate the appropriate times for buying back shares in the future to give returns to investors in that way as well. Right now, with that cash position and that fortress balance sheet, that gives us flexibility. It also gives us flexibility in terms of how we manage through the upcoming tariff environment.
We do feel well insulated and positioned for what may come our way in the future, leading on that financial position.
Great. We appreciate you participating, Trina, Sarah, Tom. Thank you very much. Congrats on the ongoing success here. We look forward to watching the business continue to grow and scale and flourish.
Thanks for having us, Brian. Thanks, everyone.
Thank you so much, Brian. Thanks, everyone.