FIGS, Inc.(FIGS)Q2 2026 法說會逐字稿

Hello, everyone. Thank you for joining us, and welcome to the FIGS Second Quarter Fiscal 2026 Earnings Conference Call. (Operator provided instructions.) I will now hand the conference over to Tom Shaw, Senior Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us to discuss FIGS Second Quarter 2026 results, which we released this afternoon and can be found in our earnings press release and in the shareholder presentation posted to our Investor Relations website at ir.wearfigs.com. Presenting on today's call are Trina Spear, our Co-Founder and Chief Executive Officer; and Sarah Oughtred, our Chief Financial Officer. As a reminder, remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations or estimates, including about future financial performance, market opportunity or business plans. Forward-looking statements involve risks and uncertainties, and actual results could differ materially. These and other risks are discussed in our SEC filings, including in the 10-Q we filed today. Do not place undue reliance on forward-looking statements, which speak only as of today and which we undertake no obligation to update. Finally, we will discuss certain non-GAAP metrics and key performance indicators, which we believe are useful supplemental measures for understanding our business. Definitions and reconciliations of these non-GAAP measures to their most comparable GAAP measures are included in our shareholder presentation. And now I would like to turn the call over to Trina.

Thanks, Tom. Good afternoon, everyone, and thank you for joining us today. FIGS' strong broad-based momentum continued in Q2, highlighting the sustainability of our success and our truly unique positioning. Net revenues grew 29% to $197 million, beating our outlook and marking our third straight quarter with 25%-plus growth. Notably, this is the strongest sustained stretch of growth we have seen since 2021. What is most exciting is that our growth is coming from across our business rather than from just one part of it. We are seeing tremendous traction across the board—our channels, product categories, geographies and customer cohorts—driving a number of record highs for the brand. As examples, we have never sold more scrubwear in a single quarter than we did in Q2 and our three market expansion opportunities—international, TEAMS and Community Hubs—each achieved new highs. Our strength is seen in the metrics. Active customer growth surged 13% to 3.1 million. AOV hit its own record of $127 and purchase frequency continued to increase. This powerful combination drove net revenues per active customer to an all-time high for the brand of $229, surpassing even our COVID-era peak of $227. This success is the manifestation of everything we've been outlining in recent quarters and gives us even greater conviction in the growth opportunities that lie ahead. Just as impressive is our progress on profitability. Excluding the prior year portion of tariff refunds, adjusted EBITDA margin surged to 18.6%. Underlying that performance, our strong margin expansion was driven by efforts to increase full-price selling and improve returns, both strong indicators of brand health as well as overall expense leverage given our incredible top-line momentum. And finally, we have not only accelerated our share buyback efforts during the quarter, but just announced a new $100 million authorization, demonstrating the confidence we have in our brand, our strategy and the opportunity in front of us. With this strength, I want to take a moment to reiterate why we believe we are winning because I think it is an important context for everything that follows. It starts with brand differentiation. Technically advanced products are nonnegotiable for us, and we are extending our premium positioning and bringing even more impact and relevance to our product lineup from scrubs to the full layering system to solve needs of health care professionals. And what truly sets FIGS apart is our unique ability to drive connection and be part of the cultural conversation in health care in a way no one else is. This combination—product and storytelling—is incredibly powerful and hard to replicate. Second, we are building a durable foundation for growth, supported by sustained investments across our team, technology and customer acquisition. We have talked a lot about the growing sophistication of how we bring the brand and product to life, efforts designed for more than driving performance in a single year. They are about building the resiliency and agility to continue delivering elevated performance across top line, profitability and shareholder returns over the long run. And third, we are serving the best industry in the world. Health care touches everyone. Those needs are only growing as the demands of the profession are compounded by an aging population and growing focus on wellness. Health care and social assistance is projected to have the largest job growth and be the fastest-growing industry over the next decade, and we see this demand in our data. With an average of over 50,000 new jobs coming into the industry each month this year, the broader health care industry is serving as a powerful driver of overall job creation in the United States. These macro tailwinds, combined with the strong fundamentals of health care apparel, make this industry highly attractive. Unlike other apparel companies, we do not sell product that's driven by fad or prevent inventory risk. We sell nondiscretionary replenishment-driven uniforms that do not go out of style and that health care professionals need all year round. And because so many of them work in densely packed institutions wearing FIGS as a walking billboard, we benefit from a word-of-mouth dynamic that is very unique. Before I move on, I want to provide a quick update on our supply chain. I used the word resilience earlier in my remarks and it applies here too. U.S. Customs and Border Protection recently issued a withhold release order that currently prevents us from importing products into the United States from our partner in Jordan. Through COVID and the disruption in the Middle East, facing supply chain challenges is not new to us, and we have always been able to manage through them due to the strength and flexibility of the supply chain we've built. That remains true today. Our team is cross-functionally adapting our planning to mitigate disruption in the second half of the year. This includes leveraging capacity with our other strong existing partners and expediting their production. As a reminder, our high-volume, low-SKU-count footprint is a powerful differentiator that makes us highly attractive to the world's best suppliers. Most importantly, even with this challenge, we are able to raise our top- and bottom-line targets. We have not only passed through the upside of our Q2 results, we have also layered in increased expectations for the balance of the year. This is exactly the kind of agility that spotlights the strength of the foundation we have built, and it positions us for long-term execution and delivering great products to our community. Now let me share some of the progress we are most excited about across product, brand and market expansion. Starting with product. We are winning at the intersection of style, color, fabric and fit. On style, we are evolving choice for health care professionals, complementing our successful core styles with modern looks that combine functionality, design and comfort. Our scrub pants are a great example. Wider leg solutions continue to resonate strongly, and we're continuing to bring newness in this area, including new waistband options that debuted this quarter. This strategy reflects our unique merchandising flywheel in action. We launched limited edition options that generate excitement and a quick sell-through while driving greater interest in the core that represents the majority of our business. Color is always important at FIGS. It is woven into the DNA of our brand across both core and limited-edition styles. We are always listening to feedback, analyzing trends and responding quickly. Espresso is a great example. To say that our community was clamoring for this color was an understatement, and we heard them. So we responded with two separate launch moments this year, including a product drop just last week that sold out quickly, and we have used color to tap into cultural moments, incorporating it into our Star Wars collaboration in Q2 and into our new collaboration with Marvel's Spider-Man, which launched this quarter timed with the movie's release and was a huge hit. On fabrication, we remain focused on delivering across the full spectrum of use cases, complementing our hallmark FIONx with FORMx and now our new FIBREx. FORMx continues to resonate and grow as a complement to our core offering, and we're super excited to build on the FIBREx story in the weeks ahead. And wrapping all of this together is fit. All new products are aligned with the fit work we have been driving the past few years, and we continue to be encouraged by the gains we are seeing through lower returns and positive customer feedback. On non-scrubwear, we remain focused on building out our layering system. We are winning here. Forty percent growth in the quarter was the highest we've seen in nearly four years. Non-scrubwear now represents nearly 20% of our business, and we believe it can mix even higher over time as we build out key areas, including underscrubs, lab coats, outerwear, footwear, medical-grade compression socks and jewelry. Health care professionals may wear uniform, but they're looking for ways to personalize and accessorize their look, which brings me to something we're incredibly excited to announce. As you may have seen from our recent social posts, we have acquired V Coterie, a long-time partner of ours on pins. V Coterie brings a broad range of pins, jewelry, charms and accessories dedicated to the health care community. These are not just any kinds of accessories. V Coterie's founder, Lynna Van Merkey, who we are excited to announce is now part of FIGS, is a former dentist and an incredible entrepreneur who has creatively married jewelry and health care in a way no one else has. While V Coterie is immaterial from a purchase standpoint, our community loves these products, and we believe this positions us to unlock meaningful growth opportunities in this category going forward. Ultimately, this is a great example of how we drive a greater share of wallet and expand consideration for our brand. Moving on to the brand side. We had a series of powerful moments throughout the quarter. And what I want to highlight most is how we're threading our support of this community across multiple efforts in real, impactful ways. Starting with Nurses Week. We are excited with our financial performance, though the bigger story was how we brought an authentic reflection of the experience of nurses to life. This work highlighted the multitude of challenges they face every day on the job while also celebrating their unwavering commitment to always putting their patients first, something that will never change. That work then carried forward in a profound way two weeks later when we took action against those very challenges at our Healthcare Human Rally in Washington, D.C. I previewed our plans on the last call and the actual event surpassed our expectations. This was our biggest advocacy effort to date with hundreds of awesome humans at the rally, more than 30 meetings with key members of Congress and triple-digit gains across key social measures. Together, we pushed forward on three critical priorities: passing the FIGS-created Healthcare Human Act, the first ever federal tax credit specifically for health care professionals; funding the Dr. Lorna Breen Act to provide mental health services specifically for health care professionals; and introducing the Speak FREE Act, protecting health care professionals' right to speak up when they have safety concerns for themselves or their patients. Noah Wyle was by our side again, and I could not be prouder of what this community showed up and did together. We then took these efforts a step further with the return of our FIGS retreat in June. We hosted nearly 80 health care professionals creating a space where they could recharge, care for themselves, connect through shared experiences and reenter around what matters most. This is a manifestation of our purpose and how we show up for our community, and we're making these important touch points a priority going forward. Our brand momentum has carried into Q3. We have already had a series of great product moments, including our Spider-Man collaboration, the return of espresso and the debut of V Coterie on our platform. And yesterday, we kicked off our back-to-school campaign with the latest chapter of Never Change, highlighting the lifelong learning journey through the eyes of residents. Turning to market expansion. Each of our three growth drivers delivered record net revenues. International delivered 67% growth with over 50 points of that growth coming from our existing comp markets. We now operate in 85 international markets, including 27 new markets opened year-to-date. As we become more efficient overall, we are increasing our investments in international brand building. We are finding more ways to localize and activate in-person moments, including our first Nurses Week event in Toronto. We are in the early innings of recruiting ambassadors and supporting user-generated content in key markets where that has outsized importance. We are ramping new search and social platforms, including LINE in Japan, Kakao in South Korea and Douyin in China, all highly relevant digital channels to accelerate local reach and impact. Looking at our TEAMS business, we continue to build momentum as we focus on strengthening relationships with existing institutions, growing our pipeline of future accounts and executing on our technology roadmap. As an example, we recently onboarded Bupa Dental Care, a division of the British United Provident Association, which is one of the largest private health care and insurance companies in the world. Our initial work here will focus on outfitting their nearly 400 dental centers across the U.K., demonstrating the type of reach and impact the channel can have both domestically and abroad. Supporting those efforts on the tech side, we continue to add functionality to our platform in Q2. We have additional work ahead on our roadmap, all designed with the same intention: make it as easy as possible to outfit a diverse range of health care workforces in FIGS and create unparalleled value in that experience. Community Hubs also delivered record results with both strong comp store performance and new-store contribution. Our in-store work remains focused on optimizing the assortment, going deeper in core colors and styles to serve the higher mix of new customers coming through the channel. Looking ahead, our team has signed four new leases for openings planned for later this year, including Fashion Square in Scottsdale, Tysons Corner outside of Washington, D.C., Valley Fair near San Jose, and Aventura Mall in Miami, each leveraging strong local healthcare communities. Our team is already hard at work securing locations for 2027 and beyond, and we cannot be more excited about where this channel is going. Before I hand it over to Sarah, I want to share one last but important point about what makes me feel so confident. In the past, I've spoken about what I believe to be the leading indicators that tell us where we are as a brand—search, website traffic, social followers and more. When these metrics inflected last year, we believe we started to turn the corner, and that's exactly what happened in the subsequent quarter with strong momentum across our business. And what's encouraging to me is that these leading indicators continue to grow, creating a fantastic pipeline for future engagement. And across the entire brand funnel from awareness to consideration to preference, we are seeing year-to-date improvement. Our brand is increasingly cutting through at a time when many others in the industry are treading water. Ultimately, we believe we are positioned to expand our leadership position in the industry and change the game for health care professionals in ways that no one else can, just as we have been doing for the past 14 years. In the near term, we see this through our strong outlook on both top and bottom lines. And in the long term, we know we're just getting started as there's so much additional opportunity and so much impact we can still have across the health care community. With that, I will turn it over to Sarah to walk through our financial results and full-year outlook.

Thanks, Trina. Our second quarter results were outstanding from top to bottom, building off a great Q1 with across-the-board wins and setting us up for a stronger second half of the year than our implied prior guide. FIGS is building a powerful ecosystem for the entire health care community, something that extends well beyond transactions. And this community in turn is instrumental in feeding back to the brand, giving what we believe is a very special and unique story in the broader consumer space. Let me first start with a recap of our incredible Q2 performance, which included a number of key records and multiyear highs that Trina outlined upfront. I'll then provide an update on our increased full-year guidance, including our current assessment of tariff-related impacts and our readiness to achieve our raised second-half expectations. On to the numbers, where Q2 net revenues increased 29% year-over-year to $196.6 million, outpacing our outlook, which called for growth in the low 20% range. Virtually all parts of our business are growing at strong rates as we look across categories, geographies and channels. We saw highly productive launch events and promotions during the period and continue to be incredibly encouraged by how we are performing during the business-as-usual selling days without specific brand activations. Active customer growth accelerated again to 13% year-over-year to reach 3.1 million, led by particular strength with customers coming back to the brand. Average order value increased 9% to $127, led by higher average unit retail due to early 2026 pricing actions and also driven by improved quality of sales that were supported by lower discount and return rates. Complementing these drivers, we are seeing improved purchase frequency. Together, these factors drove our trailing 12-month measure for net revenues per active customer 10% higher to a FIGS record $229. By category, scrubwear grew 27%, representing 82% of net revenues for the period. We continue to be pleased with the range of performance here with strong growth coming across both core franchises and limited-edition offerings. Color in particular was impactful with improved sequencing and newness also supporting core productivity. Non-scrubwear surged 40%, representing 18% of net revenues. Growth was broad-based, highlighted by underscrubs, where we saw an improved assortment across styles and fabrications as well as outerwear, which was driven by core product family extensions. We are positioned to add even more excitement and differentiation around both of these areas in the upcoming quarters. Accessories are another emerging opportunity with strength registered across diverse areas such as hair accessories, our bags assortment and compression socks. We are excited to unlock further growth with the full addition of the V Coterie jewelry assortment, which has already been a very productive part of our assortment. The overall cohesiveness of our product strategy across color, technically advanced scrubwear, expanded head-to-toe expansions and great storytelling is creating a powerful ecosystem and a real competitive advantage for FIGS. By geography, U.S. net revenues increased 22% to $158.7 million, while international net revenues increased 67% to $37.9 million. In the U.S., I would reiterate some of the leading indicators that Trina pointed out, both as key drivers of our Q2 business and also as bullish signs of what's to come. Strong gains registered across search and traffic are great starts, and we then see the added stickiness through ongoing traction across our social following, e-mail sign-ups and engagement rates. We also saw great signs across both new and returning customers. New customers are increasingly coming in at high values and holding that value in subsequent periods. Returning customer strength reflects high purchase frequency and customers moving into higher spending thresholds. International growth continues to reflect a strong balance between new and returning customers. For Q2, this included exceptional growth in Europe, Latin America and Mexico as well as meaningfully better performance in Canada, Australia and the Middle East. As we turn to margins, let me first provide some details on tariff refunds. Last quarter, we indicated that we had taken action to recover approximately $20.5 million paid under the IEEPA tariff. Based on initial receipts of $4.5 million in Q2, we assessed that the recovery of the remaining claims was probable and included the full benefit in our GAAP results. This resulted in a $15.4 million reduction to cost of goods sold, which related to tariffs expensed since the IEEPA tariffs were implemented in February 2025, including $7.9 million expensed in fiscal 2025 and $7.5 million expensed in the first half of fiscal 2026. In addition, we recognized an approximate $5.1 million reduction in the carrying value of our inventory balance for tariffs previously capitalized, which will be realized on the P&L as those goods are sold in future periods. Subsequently, we have received the full amount of the refund in Q3, which we expect will be recorded in cash with our future results. I'll further detail each of these impacts to results and our outlook in my commentary ahead. Looking at Q2 gross margin, we experienced an 820-basis-point improvement to 75.2%. This includes the 780-basis-point cumulative impact from the $15.4 million tariff refund. This core improvement, excluding the refunds, was primarily driven by the positive impacts from pricing and ongoing efficiency efforts, including product costing as well as better-than-expected performance from higher full-price selling and lower return rate. These gains more than offset the impact of higher non-IEEPA tariffs. Our selling expense for Q2 was $43.7 million, representing 22.2% of net revenues compared to 22.6% last year. The lower expense rate was driven by favorable outbound shipping rates as well as net-revenue leverage. Partially offsetting these efficiencies, we had the impact of supply chain investments and international mix. Marketing expense for Q2 was $28.5 million, representing 14.5% of net revenues, down from 15.2% last year. Following the higher planned marketing rate in Q1, our Q2 performance reflected the impact of net-revenue leverage as well as digital CAC efficiencies. At the same time, we continue to opportunistically invest across our business, including brand awareness initiatives internationally, our FIGS retreat activations and through expanded brand partnerships. G&A for Q2 was $40.4 million, representing 20.5% of net revenues compared to 22.8% last year. The lower G&A rate was primarily due to net-revenue leverage and lower stock-based compensation expense, partially offset by investments in our team. Inclusive of the tariff-refund benefit, our operating margin for Q2 was 17.9% compared to 6.5% last year. Net income for the quarter totaled $28.4 million or diluted EPS of $0.15 compared to net income of $7.1 million last year or diluted EPS of $0.04. Measuring adjusted EBITDA for the period, we have excluded the $7.9 million benefit of IEEPA tariff refunds that pertain to tariffs on goods sold in fiscal 2025. This resulted in adjusted EBITDA margin of 18.6% as compared to 12.9% in the same period last year. While Q2 adjusted EBITDA does include the benefit of the portion of the tariff refund attributable to goods sold in the year-to-date period, which contributed to our stronger performance, it aligns with how our forward-looking performance will be accounted for as impacted inventory is sold. On our balance sheet, we finished the quarter with net cash, cash equivalents and short-term investments of $296.3 million. Inventory decreased 12% year-over-year to $119.6 million, inclusive of the $5.1 million IEEPA-related inventory adjustment. Outside of these developments, we continue to drive greater efficiency here as we balance strategic buying with more proactive inventory management. We expect Q3 inventory will remain down double digits year-over-year given our supplier transitions, though remain confident in delivering our stronger top-line outlook. On the capital allocation side, share repurchases during the quarter under our ongoing repurchase program totaled approximately $24 million at a weighted average price of $11.94 per share. We have now repurchased approximately $81 million cumulatively since initiating the program nearly two years ago. Additionally, our Board of Directors authorized an additional increase of $100 million to our ongoing share repurchase program, bringing our total share repurchase capacity to $119 million. Finally, capital expenditures for the quarter were $2.6 million, continuing to reflect software capitalization and leasehold improvements with larger community hub-related outlays still planned later in the year. Now turning to our updated outlook. Our full-year 2026 net revenues are now expected to grow approximately 20%, ahead of our prior outlook of 14% to 16% growth. This includes both our stronger first-half momentum as well as higher expectations for the back half of the year. Embedded in this outlook, we are planning for Q3 net-revenue growth of approximately 20% year-over-year and Q4 net-revenue growth of approximately 10% year-over-year. This incorporates our comparison against improving performance as we move through the second half of fiscal 2025, including our 33% growth acceleration achieved last Q4. On to gross margin, we now expect our full-year GAAP gross margin to approximate 69.5%, inclusive of the tariff refund during the quarter and the expected benefit as impacted goods in inventory are sold during the second half of the year. The underlying gross-margin expectation is unchanged from our prior guide, which called for modest year-over-year full-year improvement from 66.5% in fiscal 2025. On the positive side, we see both our Q2 operating performance, coupled with the modest improvement relative to our prior expectations given the Section 301 tariffs that were implemented as of July 24. This new rate assumption of 12.5% compares to our prior global tariff assumption of 15% but with average costing and the timing of shipments, the benefit is minimal for the fiscal year. Largely offsetting these positives, we plan to use airfreight to expedite certain products. It is important to remind you of the gross-margin comparisons in the back half of the year. We continue to expect a year-over-year decline in Q3, followed by a large year-over-year improvement in Q4. While our Q4 gross-margin rate is planned to be the lowest of the year, it is still expected to remain well above the prior year in part due to the large inventory write-off comparison. Shifting over to SG&A. We expect better net-revenue leverage will play the largest factor overall, benefiting Q3 relative to Q4. We expect this to mean expense leverage across selling, marketing and G&A in the third quarter, though only on the marketing line during the fourth quarter. Overall, we have increased our full-year operating-margin outlook from between 7.8% and 8% to approximately 10.8% inclusive of refunds. We have also increased our full-year adjusted EBITDA margin outlook from between 13% and 13.2% to between 14.8% and 15%, inclusive of refunds associated with our first-half performance and sell-through expectations in the second half. This includes an expected Q3 adjusted EBITDA margin of approximately 14%, up from the 12.4% level in the prior year period. In summary, the FIGS brand is resonating more than ever, and we are executing against this opportunity exceptionally well in a dynamic operating environment. Our net-revenue growth guidance is nearly double our original outlook, while our profitability continues to inflect. We believe this demonstrates the growing resonance of our brand, the incredible execution of our team and the unique opportunity we have ahead to continue redefining expectations with the health care community. We are now happy to take your questions. Operator?

(Operator provided instructions.) Your first question comes from the line of Bob Drbul with BTIG.

Congratulations on another stellar result. Got it. I guess the biggest question that I would love to just start with is when you look at new customer growth, returning customer growth, can you just talk us through what you think is working so well right now with the customer situation?

Sure. I think it goes back to our two North Stars, which are product and marketing. We have continued to deliver the best product that meets every need of a health care professional, and we're doing that head to toe across our layering system. We've continued to make steady improvements on our fit and on our function, bringing comfort, durability and style to our community. And on the second piece, around marketing, we continue to roll out incredible campaigns that are really resonating and going viral regularly within our community. You've seen that throughout the year with our Never Change campaign this year. I think that's driving new customers to the brand. The beautiful thing about our business is that so much is still driven by word of mouth. Every big customer is a walking billboard, acquiring that next customer for us, and that's truly a unique dynamic given the densely populated environment that health care professionals work in. In terms of the returning customer piece, this is a replenishment-driven industry. Health care professionals need their uniforms to go to work and do their job, and they're coming back over and over again for their Catarina top and Isabel wide-leg pants. They're coming back for their underscrubs and their scrub jackets and their compression socks and all of these different pieces they need. So it's been exciting to see the results for the quarter, and we really do feel like we're just getting started. We're definitely excited by what we're seeing in the business and what we're going to continue to execute on.

(Operator provided instructions.) Your next question comes from the line of Brian Nagel with Oppenheimer.

So I would like to add my congratulations—a spectacular quarter here. Congrats.

Thank you, Brian.

I just want to follow up a bit on Bob's question. In the past, I think you talked about lapsed customers maybe being a point of weakness. It seems like that's a point of strength now. So what do you see with that customer base—those who had maybe shopped at FIGS before, went away, and they're coming back now? Is that becoming an incremental significant driver?

We're driving customer growth across several components. Customer growth is being driven from new customers, by lapsed customers that are coming back and also through the frequency of our returning customers. All three of those have been working for us now for several quarters. When we look at those lapsed customers, they are coming back at a good clip. That has been pretty consistent for us. We feel like we are providing the right product assortment and the right opportunity for them to continue to come back and be engaged in the brand. We believe that growth going forward will continue to come across all of those components.

That's helpful, Sarah. My follow-up question is just with regard to the tariff refund. A lot of consumer companies are discussing this topic. Clearly, a boost here in the GAAP results. Strategically, does receiving these refunds change how you think about doing business over the next few quarters?

We did get back $20.5 million, and we are in a very significant cash position. We're not earmarking it for anything specific. What we do every day is about improving the lives of health care workers and finding solutions to their problems. We will continue to invest back into our business to fuel our efforts toward that mandate. We're also going to continue to deliver returns for our shareholders; you saw that with our buybacks this quarter. I don't think, for us, it changes anything structurally. It just helps continue to deploy that cash in a really efficient way to drive future growth.

Congrats again.

(Operator provided instructions.) Your next question comes from the line of Brooke Roach with Goldman Sachs.

Trina, I'm curious if you could talk a little more about the strategic expansion of your business as you look to do this expansion into V Coterie and jewelry. What does this mean for your category and your TAM overall as you build upon all aspects of wardrobing the health care professionals?

Thank you, Brooke. We couldn't be more excited about the acquisition of V Coterie. V Coterie was founded by an incredible entrepreneur named Lynna, who now is a part of FIGS. She's our Head of Pins, Charms and Jewelry, and she's someone we've known for over seven years. She actually was a FIGS ambassador and has built an incredible company. This is about helping health care professionals personalize their uniforms and tell something about who they are and what they do. Charms, jewelry and pins are very personal and create a deep emotional connection between us and our community. We're helping health care professionals celebrate milestones like graduating nursing school, earning certifications, or working in an ICU. This is a TAM-creation opportunity. We're inventing TAM where this wasn't really part of the industry, and we're making it fun and cool. Even in the first month, we've seen a strong response and sold out of a number of key styles. We're moving fast to restock. Overall, health care is hard, and we bring the fun, which is so important. That's what we'll continue to do as we drive this connection with our community.

Sarah, maybe a follow-up. With adjusted EBITDA margins now guided at about 15%, do you think this is a new base from which you can grow as you move into 2027—especially as you cycle some of these tariff refunds and work through some elevated raw material and oil costs?

To ground that 15%, it does include the benefit of tariffs that were previously spent in Q1 and Q2. That is a benefit that needs to be considered. Offsetting that, we do have some additional airfreight that we're bringing in. I think it is a fairly clean base for us to continue to build off into the upcoming years. There are many different puts and takes, but that 15% does represent how we would be reporting our results for any future years as well.

(Operator provided instructions.) Your next question comes from the line of Matt Koranda with ROTH Capital.

Great job. AOVs really took a step up in the second quarter. Can you unpack some of the drivers in terms of pricing? Are consumers building bigger baskets? Or are we getting a better mix around the outerwear assortment and some of the higher ASP items?

Our AOV increased by 9% in the quarter, consistent with the growth we saw in Q1. A portion of that is driven by the pricing that we took in Q1. In addition, we're seeing the added benefit of lower discounts and improved returns. So that's been great to see as well. It isn't necessarily coming through UPT at this point, but we did expect that given the higher AURs with pricing. Overall, those expectations are beyond what we had originally thought when we took pricing, and we're really happy that there are other factors outside of pricing that are driving higher-quality growth within our AOV.

Okay. Helpful. Going forward, what's embedded in the sales growth outlook from an active customer standpoint? How should we think about higher engagement with existing customers versus new customers driving growth for the remainder of the year?

The growth in total revenue is coming from growth in our active customers, growth in orders per customer and growth in our net AOV. We would expect active customer growth to continue at a strong rate for the rest of the year. We also think AOV will continue because a lot of that is from pricing, which will continue for the rest of the year until it annualizes in Q1 of 2027. Regarding orders per customer, we've seen really good frequency come through. We're not planning for the same degree of frequency growth to continue, but that could be an opportunity if customers continue to engage the way they have been.

I'll just add that days between purchase is coming down—people are coming back to us more because of our product and our brand, and because of normalization in the industry where people need their uniforms repeatedly. We're seeing success across new customers, repeat customers and AOV; it's really not one thing driving the success.

(Operator provided instructions.) Your next question comes from the line of Rick Patel with Raymond James.

Congrats on the strong results. I was hoping you could provide additional color around increasing frequency. Has the primary driver been customers coming back for core products like core scrubs? Or are they buying into the adjacent categories? Given your expanding offerings with new scrub fabrication and a widening non-scrub assortment, I'd love to better understand the primary driver of frequency and your expectations going forward.

The repeat dynamics make this industry so attractive. We've not only given the health care community what they need, but also what they want, which drives replenishment. Coming out of the COVID overhang, frequency has accelerated. You're seeing that in scrubwear, up 27% for the quarter, and in non-scrubwear, up 40% for the quarter. Think of the customer journey: they come in on core scrubs, then may add an underscrub, then replenish scrubwear, try a limited-edition drop, buy outerwear, and then come back for favorite tops and pants in new colors. As customers make more purchases, they end up buying even more over time and buying more non-scrubwear. That's the beauty of FIGS: we don't have to pay for people to come back; as they return, they become more loyal. We're obsessed with health care professionals, and they are obsessed with us. We'll continue to drive engagement, share their stories, show new products and convert them to lifelong FIGS lovers.

Can you also talk about your promotional strategy in the back half? Given the strong demand you're seeing on business-as-usual days, do you see room to pull back on discounts? Or do you think last year's calendar is a good proxy for what to expect this year?

We're always monitoring promotions. We continue to see outperformance on business-as-usual days, which gives us flexibility to pull back on promotions if it makes sense. For now, our plan reflects a similar cadence to last year. We're nimble and will continue to monitor the consumer and what levers we need to pull. For now, we plan according to the promos we did in second half last year—this includes our back-to-school event happening right now and our standard Black Friday/Cyber Monday cadence.

(Operator provided instructions.) Your next question comes from the line of Dana Telsey with Telsey Advisory Group.

Congratulations on the terrific results. Trina, as you think about activations and engagement—whether it's the Spider-Man movie or the Emmys slot you had last year—how do you think about the go-forward? Are there new activations coming? How does it relate to product? On your website, I see some accessories and jewelry. Should we see even more of this non-scrubwear going forward? How does it impact margins? And Sarah, on Jordan and getting product and freight expenses, how do you think of the arrival of product? Is there another region that replaces Jordan? Where does that fit into receipt of goods?

It's been incredible to see collaborations and activations resonate with our community. Our continued collaboration with Star Wars performed well. Our collaboration with Owala sold out very quickly, and Spider-Man exceeded expectations. We always have new ideas—our creative team is constantly thinking about what aligns with our brand and community and will excite people. V Coterie is another example of listening to our community and giving them what they want. We're excited about the second half of the year and beyond. We never run out of ideas.

Non-scrubwear does carry a lower gross margin. Right now, non-scrubwear is still under 20% of our business, so we are able to absorb that. As we think about margins longer term, profit expansion likely won't come from gross margins alone given some of this mix shift, but we see the opportunity to more than offset that through SG&A efficiencies to continue to expand profit margin in the years to come. Non-scrubwear is a great way for us to provide a full wardrobe for health care professionals, drive the top line and fortify our position. We can manage the whole economic profile in the out years.

(Operator provided instructions.) Your next question comes from the line of Adrienne Yih with Barclays.

I'll add my congratulations. It's nice to see the acceleration and inflection. This is three consecutive quarters north of 20%-25% revenue growth. You have the health care professional tailwind, active customer growth and RevPAC growing double digits. Why should we not think this is a new level of double-digit top-line growth? Can you speak to some of the marketing you did in Q4 and Q1 to build awareness? Are we seeing a halo or latent effect flowing through?

On marketing, we're really focusing on brand awareness and getting more of this community to know about us. Once people know about FIGS, they tend to love FIGS. We have 3.1 million active customers and a much larger potential market—around 140 million health care professionals globally—so we have a relatively low market share. We're focused on top-of-funnel campaigns to move people from awareness to consideration to preference to conversion. We'll continue to do that.

We haven't given an outlook for 2027, but we are coming out of Q4 with a 10% exit rate here. Throughout the year, we've continued to see really strong, broad-based metrics across all our drivers that give us conviction there's still plenty of growth ahead. We have the strategy to drive the growth we need—15% growth in 2025 and now guiding to 20% growth in 2026. Momentum continues and there are more opportunities for growth drivers to contribute a higher portion of that growth in 2027 and beyond.

Can you give a comparative metric on brand awareness today versus a year ago? And Trina, rank order the next three to five years' drivers—comp growth, international, non-scrubwear, TEAMS, retail store rollout—where do you see the biggest upside?

In terms of brand awareness, we've seen several-point improvement year-to-date across all metrics—unaided awareness, awareness and consideration. We attribute that to the brand's creative storytelling connecting with health care professionals. We think there's still opportunity to increase all of those and have the right strategy to go after that.

Ranking the drivers: the biggest opportunity right now is international—it's growing fast and we're seeing huge potential across Mexico, the EU, LatAm and resurging markets like Canada and Australia. Next, I'm very excited about Community Hubs. We only have five stores today; to be performing strongly with that footprint and scaling thoughtfully is a massive opportunity. Finally, TEAMS is very exciting as we win large institutions—Bupa Dental Care is an example—and that channel can reach many people and drive substantial revenue. All these channels are still early stages but are very promising.

(Operator provided instructions.) Your next question comes from the line of Ashley Owens with KeyBanc Capital Markets.

Digging in on Jordan since that's been a big source of production. First, how many weeks or months of Jordan-sourced core product do you already have sitting in the U.S. distribution center? Second, what's the realistic timeline to fully re-source that volume to other countries such as Vietnam? How confident are you that you can keep those core styles in stock to support the strong demand you're seeing?

Good question. The challenge we're facing isn't new to us. Through COVID and disruptions in the Middle East, we've faced similar issues, and the strength and flexibility of the supply chain we've built over 14 years has allowed us to thrive. To mitigate this WRO disruption, our team has worked cross-functionally to leverage capacity with other strong partners and expedite their production. We were already in the process of de-risking certain products and launches given the conflict in the Middle East, which you saw in the disclosures last quarter. We've mitigated the vast majority of the challenge. We're a supplier dream because of our high-volume, low-SKU-count business and replenishment model, which pays off now: we can be nimble and move capacity to meet the needs of our community. Even with this, we're still raising our top- and bottom-line outlook. We are highly confident in executing to a second-half and full-year plan above what we communicated three months ago.

Follow-up: because you are airfreighting some product, is that airfreight cost effectively the full offset to the tariff benefit and expectations? Or are there expectations embedded that this persists through the second half? And lastly on TEAMS with the Bupa Dental Care win, does this signal TEAMS is starting to hit an inflection? What would the reorder cadence look like for an account of that size?

I'll map that as best I can. Our updated adjusted EBITDA guide relative to our old guide picks up the refund related to the first half and the portion of refunds in inventory that will be realized in the second half. That's over 100 basis points of improvement. We are flowing through the benefit of Q2, we've raised the back half of the year, and we're flowing that through. There is some offset from airfreight as well as opportunities to reinvest the flow-through back into the business where we see the ability to continue to drive growth. So we are passing through the benefits and continuing to reinvest where appropriate. Regarding TEAMS, wins like Bupa Dental Care are exactly the type of accounts that show the channel can have meaningful reach and recurring revenue potential, but cadence will vary by customer as we roll out and then replenish stock for institutional programs.

(Operator provided instructions.) Your last question comes from the line of Nathan Feather with Morgan Stanley.

Congrats as well. On international marketing strategy: as you've scaled rapidly, how are you balancing global marketing and the brand halo from the U.S. versus building awareness and consideration in individual markets? Are you staffing up localized teams?

It comes back to our go-broad and go-deep strategy, which is working. In our go-deep markets—Canada, Australia, the U.K. and Mexico—we do full-funnel marketing and localize the brand with engaging activations. That awareness translates to lower-funnel efficiency. On the go-broad side, we are testing and focusing more on lower-funnel channels and building ambassador communities. As markets scale, they can earn the right to become go-deep markets. In higher-potential markets like China, Japan, South Korea, France and Germany, we're investing more in upper-funnel to drive brand awareness because we see the impact. We're localizing as they scale. Our creative storytelling is our secret sauce globally and it's working at both local and global levels. We're profitable in almost every market we're in, and these efforts are paying off.

We have reached the end of the Q&A session. I will now turn the call back to Trina Spear, CEO, for closing remarks.

Thank you so much. Fun fact: there are now more searches for FIGS than there are for scrubs, and that's when you know you are on your way to owning a category like Kleenex, Band-Aid or Jacuzzi—that is where we're headed. We're going to continue to execute at the highest level, and thank you so much for joining us.

This concludes today's call. Thank you for attending. You may now disconnect.