Good afternoon and thank you for standing by. Welcome to the FIGS Second Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session and instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from FIGS. And as a reminder, this call is being recorded. Speaking on today's call will be Co-Chief Executive Officers, Heather Hasson and Trina Spear and Chief Financial Officer, Jeff Lawrence. I would now like to hand the conference over to Jeff Lawrence. Please go ahead.

Thanks, and good afternoon everyone. Thank you for joining today's call to discuss our second quarter results, which we released this afternoon and can be found on our website at IR.wearfigs.com. With me today on the call are the Co-Chief Executive Officers of FIGS, Heather Hasson and Trina Spear. I want to remind everyone that management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on current management expectations. These may include without limitation, predictions, expectations, targets or estimates, including regarding our anticipated financial performance, and actual results could differ materially from those mentioned. These forward-looking statements also involve substantial risks and uncertainties, some of which may be outside of our control that could cause actual results to differ materially from those expressed in or implied by such statements. These factors and uncertainties among others are discussed in our filings with the SEC. We encourage you to review these filings for discussion of these factors, including our quarterly report on Form 10-Q filed today and our earnings release furnished today, both of which are also available on the investor portion of our website, at IR.wearfigs.com. You should not place undue reliance on these forward-looking statements, which speak only as of today, and we undertake no obligation to update or revise them for any new information. This call will also contain certain non-GAAP financial measures, including net income as adjusted, diluted EPS as adjusted, adjusted EBITDA and adjusted EBITDA margin, which we believe are useful supplemental measures that assist in evaluating our ability to generate earnings, provide consistency and comparability with our past performance and facilitate period to period comparisons of our core operating results and the results of pure companies. This call will also discuss key performance indicators such as active customers and average order value, which we also believe are useful for understanding our business and performance. Reconciliations of these non-GAAP measures to the most comparable gap measures and definitions of these indicators are included in our quarterly report on Form 10-Q and in our earnings release. Lastly, information discussed on this call concerning our industry competitive position, and the markets in which we operate is based on information from third party sources and management estimates. Management estimates may also be derived from third party sources, as well as FIGS internal research and are based on our knowledge of our industry and assumptions we believe to be reasonable. These assumptions are also subject to uncertainty and risk, which could cause results to differ materially from those expressed in the estimates. Now, I would like to turn the call over to Heather Hasson, Co-Chief Executive Officer of FIGS.

Thank you, Jeff. And thank you all for joining our first earnings call. We are extremely pleased to have delivered such strong financial performance in our first quarter as a public company following a successful IPO. From starting out by selling scrubs out of the back of my car to now reaching quarterly revenue of over $100 million and 1.6 million active customers, I'm so thankful to our incredible community of healthcare professionals and the entire FIGS team. And we feel like we're just getting started. We begin every day at FIGS with the mission of celebrating, empowering and serving awesome humans. That's the name we use for healthcare professionals because that's what they are. For awesome humans, there are no timeouts, no rematches or better luck next times. There are people who give everything of themselves to curing diseases, saving lives and providing comfort. And we need more of them because humanity cannot survive without them. And because they enable us to live in a world where innovation is truly possible. So, our duty at FIGS is to do such a great job at celebrating, empowering and serving healthcare professionals that we inspire the next generation to become them. It's important to remember just how many lives FIGS can impact. The healthcare apparel industry is estimated to be $12 billion in the United States and $79 billion globally. And the healthcare sector is the largest and fastest-growing job segment in the United States, employing over 20 million healthcare professionals in 2020. So, the opportunity for FIGS is massive, and we succeeded by approaching it differently than others. We focused on three primary areas: changing the product, changing the distribution model, and creating a community. On the product side, we did away with the typical commoditized and uncomfortable scrubs that healthcare professionals previously had to wear. No more boxy v-neck tops and drawstring pants. Instead, we've redefined the industry by making exceptional products that are comfortable, technical, functional, and stylish. We do this through a combination of material science, fashion, and deep knowledge of what healthcare professionals truly need and want. And our products span from head to toe, both on shift and off shift, we're known for making intensely precise colors. And we've created the concept of color jobs and generated new color standards for the industry. For example, our signature bestselling color graphite is now a hospital standard color. And our proprietary FIONx fabric embodies our commitment to technical comfort, the concept that healthcare professionals can have access to products that are both technical and comfortable. Product innovation is the lifeblood of FIGS. And that will never change. We also reimagine the distribution model so the healthcare professionals working 12 or even 16 hours a day no longer need to go to a retail store to dig through racks of scrubs, located right next to bedpans and knee braces. What they deserve is a seamless direct-to-consumer experience that is digitally native and specifically caters to their unique needs. That's why we continue to invest to make the experience as customized and convenient as possible. Finally, we've created a community around the profession. Our 1.6 million active customers form a deep emotional connection with our brand, because we interact with them in an authentic and personalized way. And because we are so devoted to the profession. As an example, we want our awesome humans make history campaign as part of our IPO. This campaign, which we're continuing to run throughout the year, showcases the extraordinary achievements of our awesome humans. Campaigns like this not only help build our brand and accelerate a product launch, they also meet our mission by sharing with the world our awesome humans’ incredible stories, and inspiring the next generation to become them. Because this is the reason why we wake up every single day. So, with that, I'd like to turn the call over to Trina, my co-Founder and co-CEO, to provide an overview of Q2, and more about where we're heading.

Thanks, Heather. Before I get started, I just want to reiterate what Heather said about our awesome humans. They are why we show up and do what we do every day. We are so inspired by them, and we hope to make them proud. In terms of Q2, Jeff will walk you through our financial results in more detail shortly. But I'd like to give you a high-level overview first. As Heather said, Q2 was a very strong quarter for us reflecting the strength of our brand and the uniqueness of our business model. We had our first ever $100 million quarter with net revenues totaling $101 million, representing growth of 58%. We saw strong performance across the board, both in the U.S. and internationally. International grew to 7.9% of total net revenue compared to 2.9% in Q2 of 2020. Our total active customer base reached $1.6 million deeply loyal, awesome humans. It's important to remember that we see a compounding effect as new healthcare professionals join the FIGS community. This is a replenishment-driven business with healthcare professionals constantly needing to replace their uniforms. So, we add new customers to our community. They're likely to stay with us year after year throughout their careers. As a data point on that in 2020, 62% of our net revenues came from repeat purchasers. And we see that they become increasingly loyal over time, with net sales per active customer continuing to grow. But new customers don't only lead to retention and increased loyalty, we also see a multiplier effect from them. Because of the unique way that healthcare professionals interact with one another, often in densely packed healthcare institutions, word of mouth leads even more people wanting to purchase FIGS. This kind of organic customer acquisition is how we've been able to maintain such an efficient marketing spend, even as we've grown so rapidly. While our growth has been rapid, we've built a unique model to drive sustainable growth. Unlike other healthcare apparel companies, we don't have to pay fees to license our brand from someone else. And we don't have to give away a share of our revenue to third-party retailers. As a result, we have structurally advantaged gross margin, which reached 73.3% in Q2, and we grew adjusted EBITDA to $26.8 million in Q2 for an adjusted EBITDA margin of 26.5%. Part of what drove our Q2 performance were the many colors and style launches and other campaigns that we rolled out during the quarter. Something that is unique to FIGS. Our unique merchandising strategy is anchored by our 13 core scrub styles. Healthcare Professionals come back all year round to buy our core products. And when we launch limited edition colors and styles just about weekly, this newness drives excitement and traffic to our website. In Q2, we launched limited edition colors, pop red, chalk pink, slate, jade, hydro green, and shocking pink, which drove both new and repeat customers to our website. We launched bundled kits so that our awesome humans can get fully outfitted in one simple purchase, rather than having to buy each piece individually. We rolled out our high-waisted Zamora and yoga pants and added those styles to our core because they became our bestselling pants. And we look to build franchises around our bestselling styles. In line with our commitment to innovation, we launched our FIONLite fabrication, our new ultra-lightweight and sustainable fabrication, which is made with recycled poly. We made countless improvements large and small to our e-commerce platform to make FIGS experience even better. We added 110,000 new followers across all of our social platforms. And we celebrated Nurses Week with an integrated and multi-dimensional campaign that resulted in our best social engagement ever, generated sales that blew away our expectations, and that was instrumental to our revenue growth in Q2. Also, Heather talked about the Awesome Humans Make History campaign that we launched as part of our IPO. We're so proud of this campaign because it shares extraordinary achievements and stories of our awesome humans, and hopefully inspires the next generation to become them. Looking forward, we will continue to make investments throughout our business from product, e-commerce, data science, technology, supply chain, people and more, to keep growing and scaling sustainably. Most of our focus is in four key growth areas. First, we're focused on continuing to grow awareness of the FIGS brand as we believe there's a significant opportunity to attract new customers to our community. As we mentioned before, more customers in the FIGS ecosystem has a compounding effect as those customers interact with other healthcare professionals in densely packed environments. So, we plan to invest heavily in connecting with the healthcare community to increase our penetration of this large and growing market. Second, we're continuing to innovate on product and build out our lifestyle product offerings, so that we're truly meeting all of our healthcare professionals needs to work, at work, from work, on shift, off shift, head to toe. This is what our healthcare professionals want. And it also expands our TAM beyond the massive $79 billion global healthcare apparel market that already exists. Third, International remains a big opportunity for us. As I mentioned earlier, we grew International from 2.9% of net revenue a year ago to 7.9% in Q2, and we're still in only three markets outside of the U.S., Canada, the UK, and Australia. With the total addressable market expected to grow globally from an estimated $67 billion in 2020 to $86 billion in 2025, the International opportunity is an important one for us. Our mission is to celebrate, empower and serve as many healthcare professionals as we can. This means making FIGS a truly global brand. Finally, we're going to continue to leverage our unique advantages from a data perspective to bring new healthcare professionals into our community and ensure they stay with us for the entirety of their careers. By having a direct relationship with our customers, we have accessed hundreds of data attributes associated with millions of customer accounts. This enables us to improve our business in many ways. Because we know who our customers are at a granular level, we're able to interact and engage with them in more meaningful and individualized ways. And by understanding their buying patterns, we're able to make increasingly accurate predictions about the products that they're likely to buy, how often they're likely to buy them and the quantities they're likely to buy them in. So, by continuing to leverage our data capabilities, we can more easily acquire new customers, increase our retention and operate even more effectively. Of course, the best news for FIGS is that despite everything we've achieved so far, and how strong our brand has become, we still only have about a 3% market share in the United States. So, the opportunity is massive. And we remain confident that we have the team and resources in place to achieve over $1 billion in net revenue by 2025. And we're committed to making the investments needed to achieve this goal. With that, I will turn the call over to Jeff to provide additional detail on our Q2 results.

Thanks Trina and Heather, and good afternoon everyone. I wanted to start by saying how honored I am to be part of such an amazing company and team. We have so much opportunity in front of us and I know we will continue to do great things we are truly just getting started. With that said, we are excited to share with you the results of our second quarter so let’s dive right in. Net revenues for Q2 were up 57.6% to $101.1 million, driven primarily by strong order growth from both new and existing customers. We also saw a 17% year over year increase in average order value or AOV to $103. It was driven by a favorable shift in product mix and an increase in units per transaction partly driven by the positive response to our launch of bundled item kits. We also noted a better than anticipated response from the healthcare community to our Nurses Week campaign. Quite simply the results from this campaign are the largest of the year or simply outstanding. Gross margin for Q2 increased 280 basis points year over year to 73.3% for the quarter. This improvement was primarily driven by a shift in sales mix away from lower margin products and a decrease in air freight expenses as we used more air freight in Q2 2020 due to the need to bring in extra inventory faster to meet incremental demand. Selling expense for Q2 was $19.2 million or 19% of net revenues, which was a 1.1 percentage point improvement compared to a year ago. This improvement was primarily driven by leverage within shipping, driven by an increase in our average order value. Marketing expense for Q2 was $15.5 million, or 15.3% of net revenues up 1.6 percentage points compared to a year ago. Marketing expense increased as a result of greater investment in performance marketing. We are proud of our continued ability to efficiently attract new customers to our brand. G&A increased to $71.5 million in Q2 compared to a year ago. This increase was primarily driven by higher stock-based compensation in connection with our IPO. We also invested more in personnel and hired key team members to bolster our capabilities as we move forward on our strategic initiatives. Our tax provision was $8.5 million for the quarter and was up from the prior year. The provision was unfavorably impacted by the increased stock-based compensation expense associated with the IPO. Net income and diluted earnings per share were both down year over year due to the aforementioned stock-based compensation expenses in connection with our IPO and an increase in taxes, offset in part by our outstanding operational results. Diluted EPS as adjusted was $0.08 in Q2 compared to $0.09 in the prior year. Diluted EPS as adjusted includes adjustments for IPO transaction costs, expenses related to non-ordinary course disputes, and stock-based compensation expenses in connection with our IPO as well as income tax impacts. Finally, our adjusted EBITDA for Q2 was $26.8 million up 54.5% over the prior year. The adjusted EBIT margin was 26.5%. We are very proud of our business and financial model and our ability to produce real and substantial cash flows. We believe that these non-GAAP metrics are important supplemental measures for understanding our results. And we again refer you to our 10-Q and our earnings release issued earlier today for the required disclosures and reconciliations. Moving on to the balance sheet. Our cash position at quarter end is strong with total cash and cash equivalents of $164 million. We have the capital to continue to invest and grow this amazing brand the right way. Before we get the guidance, we thought we'd share a bit about our investment philosophy here at FIGS. We're building this company for the long term, and with the healthcare community in mind. We do that by actively building capabilities in the things that matter the most to our brand and our mission. We're also mindful of the way we build those capabilities. For example, we want to own more of what's truly strategic while outsourcing more of other areas, and maybe most importantly, we will invest responsibly. Appropriate levels of return are the focus of everything that we do here at FIGS, and that discipline will continue into the future. While we acknowledge that we have built market-leading capabilities already, we will invest to stay ahead. With that as a backdrop and again recognizing the large and growing $79 billion global healthcare apparel market, I'll highlight the following investment areas going forward. First, you'll see continued deep investment in innovation particularly around our products. As mentioned earlier, on this call, we launched FIONLite, our new ultra-lightweight and sustainable fabrication, which is made with recycled poly. We will continue to bring innovation-first approach to all new development. You'll also see smart investments in marketing, both performance and brand marketing. We want to continue to drive brand awareness and convert more of those who are aware of the FIGS brand into active customers. Once we acquire them and bring them into our funnel, we endeavor to create loyal brand fans who not only replenish their scrubs frequently, but also explore our ever-growing set of lifestyle offerings. It is a flywheel we are incredibly proud of and one that we believe will flourish even more with continued investment. Of course, you can't do all this without investment in execution in the data and technology space. While we have already built some really dynamic and effective tools to help us analyze, act and drive more top-line growth. We know there's so much more we can continue to do over time in this important area. And we are committed to doing just that. Finally, people since our founding, we've attracted retained and motivated a group of leaders and team members who are simply the best. Human capital will remain a priority for us. We will continue to ensure we have the right folks at the table to help us achieve our long-term goals. We believe we have earned our competitive moat. But we are also big believers in investing to stay ahead, and we will continue to invest to win in the long run. Now let's move on to guidance. We are long-term focused here at FIGS. As a result, the financial guidance we share with you all will generally be longer-term in nature. Of course, dynamic businesses like ours will have some inevitable variability in certain periods, particularly as we ramp investments, but we will remain focused on building the brand the right way and aim to grow both revenues and profits responsibly over the long term. The metric you will hear us talk about most often are as follows; net revenues, gross margin and adjusted EBITDA. You will also hear us talk about KPIs such as active customers and average order value. We believe these measures to be very useful in understanding our business and our performance. And that is why you will hear us speak to them often. Having said that, I'll start with reiterating what Trina just spoke about a minute ago. We aim to be a billion dollar plus net revenue global brand in 2025. We are energized and excited by the challenge and are working hard every day to make it a reality. For full year 2021 specifically, we expect to earn net revenues of approximately $395 million. We will not be providing quarterly net revenue guidance. We currently anticipate providing 2022 annual net revenue guidance early next year. Before moving away from revenues. I'd like to remind everyone that we have a $4.2 million related party sale in Q3 of 2020 that we do not anticipate recurring in 2021. This will affect comparability between the back half of ’21 and 2020. One more call out relating to 2021. We currently expect that our effective tax rate for quarters three and four will be approximately 33% to 37%. Let's now transition to our margin expectations going forward. As you saw on the first half of 2021, our financial model is capable of producing outstanding growth. We also note that the first half of 2021 did not have many investments and expenses that we expect to incur in the back half of 2021. For example, the significant costs of being a public company. Expenses relating to human capital are also expected to be higher in the back half of 2021 as we continue to build our teams and capabilities. Finally, we shifted certain marketing spend from the first half, which we currently plan to accelerate in the back half of 2021. In addition to these call outs, we remain deeply engaged in ensuring that our supply chain continues to operate efficiently. While our operations team has done a wonderful job of managing the business to date, we acknowledge the dynamic and shifting macro supply chain challenges being experienced by almost all apparel companies as a result of the ongoing COVID-19 pandemic, particularly those who have supply chains in Asia. As a reminder, we have manufacturing partners across Asia and South America, and have exposure in countries such as Vietnam and Sri Lanka, which are experiencing a resurgence in COVID-19 due to the Delta variant. As a result, we currently expect that we would experience downward pressure on gross margin if, for example, we need to increase the airfreighting of products into the United States to ensure uninterrupted supply of the products we know that our customers love. We are currently unable to predict with certainty how long these pressures may persist, or the possible future impact on margins. We do hope that this color both on net revenues comparability and possible expense movements is helpful to the investing community. Let's now move to longer-term margin guidance. We believe that we can achieve annual gross margins of 70% or more over the next three fiscal years and annual adjusted EBITDA margins of 20% or more over that same time period. Our business and financial models are strong and resilient, and we believe we are capable of achieving these outstanding levels of profitability. We believe that this guidance that we are sharing today should provide the financial community with a very good sense on where we aim to go financially as a brand. And we will share more as appropriate in the future. Once again, we are very pleased with our financial results in Q2. And with that, we will turn it back to the operator to open it up for questions.

The first question comes from Adrienne Yih from Barclays. Please go ahead.

Good afternoon and congratulations on your IPO and your first quarter as a public company and the successes you've achieved. I have a question for each of you. Heather, can you tell me how much new innovation has been introduced into the system this year compared to last year, specifically regarding new product launches for the second half of the year? Trina, could you discuss your pricing strategy? Are you planning to implement normal annual price increases, and how do you approach that in a potentially inflationary environment? Jeff, I'm interested in your perspective on the trends. It seems like you experienced net benefits this quarter with reduced air. Should we expect even less air compared to last year as we move into the third quarter, and is this potentially offset by increased volumes due to competitive pricing? Thank you.

Thank you so much, Adrienne. This is Trina. In terms of our pricing strategy, we can start there. We really feel like our products are priced accurately. We use a lot of our data analytics to ensure that where we price it really makes sense for our healthcare community. We're not necessarily going to move our pricing because of any inflation that the environment is in. And I think we're constantly analyzing this from a data perspective to ensure that our pricing makes sense for this community. I would remind you also that our products are extraordinarily accessible and affordable. I think it's truly unique. Two-thirds of our customers make less than $100,000. And so, it is our goal to ensure that our products are not only the highest quality products in the industry, but also that they are affordable and accessible for our community. And Heather, do you want to talk about our newest strategy?

Sure. Hey Adrienne. In terms of product innovation, so things were centered around delivering functionals to the healthcare professionals at all times. We are going to continue to invest in material science, we're going to continue to invest in innovation around product probably beyond anything that anybody's ever seen. And I'm super excited about it and the team's very excited about it.

Adrienne, it's Jeff, on your third part of your one question. So, kudos to you. As far as gross margin again, we're guiding longer term there, fiscal year ’22 to ’24. You obviously saw the results we put up in Q2 well north of that. When you look at airfreight Q2 to Q2 last year, Q2 last year was right at the beginning of the pandemic, we were growing like crazy as we did again this quarter. And so, we did have more airfreight last year Q2 than we had Q2 this year. So again, we're not guiding specifically back half of this year on margins. But what I would tell you is, we've built a very robust and diversified supply chain network that not only has been able to keep up with our incredible rate of growth, but we believe that allowed us to risk manage pretty effectively as well. I think there are a lot of apparel companies out there that are worried about getting their products made. As we sit here today, we're really not worried about that. We believe we have the right partners in the right countries from a diversification perspective, that we don't have to worry that I think a lot of other apparel manufacturers have. I do think what we're concerned about, and I'll refer you back to my prepared remarks, we want to make sure that we can get them into the United States. Obviously, the COVID-19 pandemic continues to have just a lot of trouble and a lot of challenges being very dynamic. And so, as we looked at the back half of this year, we don't know for sure, which is why we didn't guide to as specifically. But we could see downward pressure on gross margin if we choose to airfreight in the products that we know our customers love. So, the good news for us all is we'll get to talk to you in another 90 days once Q3 shakes out. But I think really from a positive perspective, we believe we have the right supply chain partners in place. We think we're risk diversified enough. It's just about getting into the United States. And that will come potentially with an extra cost that we are more than willing to make for our healthcare community.

Totally makes sense. Best of luck.

Thank you.

Thanks, Adrienne.

Next question comes from the line of Bob Drbul from Guggenheim Securities. Your line is now open.

Hi, congratulations. Great quarter, congratulations on the IPO. I'm going to try and sneak in to Jeff, I'm sorry, I can't help myself. But the first one is, with the 17% increase in AOV, is that something that you expect to continue in coming quarters and in years? I don't know if you can talk about that longer term. And I guess the second quick question is, I think you mentioned the shift of marketing spend out of the first half in the second, I was wondering if you can just quantify that for us please? Thanks.

Yeah, Bob really appreciate being on the call today. So AOV first, we're not guiding AOV specifically as you can see, over the last year and a half, it's kind of slowly climbed the hill to $103 in Q2 of 2020. Now, part of that year over year was, we did have more masks, which are obviously lower price points. So, there's some of that in there. But we've also been able to really use the data and technology investments that we've made over the years to be smart about things like pricing, to be smart about getting our healthcare professionals to maybe add one more thing to their basket that they need for when they go back on shift for a midnight shift. So, we're being smart about it. I think we're building AOV the right way with kind of smart increases to AOV. I think as Trina mentioned earlier, we tried to remain really disciplined around taking price just for price sake, right. That's not who we are. We want to make sure that the value of the products really shine through, again to our healthcare community, they deserve it. Our products as you know, very accessible price points, but outstanding, outstanding value. We look at that. Going forward, again, not guiding specifically. But I'll go back to one of the things Heather said, we have this layering system that we've innovated around, and we continue to add lifestyle products that are just amazing. So, I think there's opportunity there. We're not guiding specifically. But we're proud of what we've been able to put up so far. And we'll continue to work at it hard. Bob, the second part of your question, again, was around what?

I think you said that you shifted some marketing spend out of the first half into the second half, I just wondered if you could quantify what that was the dollar number?

Yeah, so that was really just brand marketing. We're not putting a dollar amount to it. We got a lot of good and awesome brand exposure as part of our IPO that we didn't actually have to pay for. And we're just really excited about the promotions, and the not really promotion but the brand activity through social and through our community that we have for the back half of the year. So, we’re going to lean into that a little bit in the back half of 2021. So, you'll see that likely go up a little bit. But, again, for competitive reasons, we obviously can't talk about what that is. But again, we'll invest that responsibly and we feel good about where we're going.

Thanks, Jeff.

Thanks, Bob.

Next question comes from the line of Ed Yruma from KeyBanc. Your line is now open.

Hey, guys, thanks for taking the questions and congrats on the quarter and on the IPO process. Just a quick one for me, I guess firstly relates to marketing. And we've heard a lot of buzz about IDSA. And maybe how it's changing how people market as relates to some of these privacy issues. I guess any changes you're seeing in your marketing effectiveness? And then as a follow-up, it seems like you've had a lot of compelling product introduction during the quarter noted, like compression socks and some of the under scrubs. I guess, how would you characterize some of these newer products? And how they may be positively impacting the business? Thanks.

Sure, thanks Ed. So, first, if you look at the full picture of what we're doing in terms of a marketing standpoint. Our marketing efficiency is really best in class. I think we are light years ahead of other digitally native direct-to-consumer companies on this front. Big marketing as a percent of sales got about 15% for the quarter. If you think back over the past eight years, since we started the business, no one thought 100% digital e-commerce business could have that level of profitability, like ours, and spend only 15% on our marketing while growing 58% in a quarter. And so, why were we able to do that, I think it's because we have structural advantages built around the word-of-mouth dynamics, the replenishment dynamics in this business, where we don't have to rely as much on performance marketing to be successful. And so, I think what you've heard around iOS, and privacy issues, or Facebook algorithms changing, we're not really impacted like other companies on that front. If you think about word of mouth, for instance, healthcare professionals, as I discussed, they work in densely populated healthcare institutions. They're interacting with each other all the time, in the break room, in the coffee shop, in the lobby, in the hallway, in between patient visits, and they're looking, at what they're wearing. And that's essentially phrase like a walking billboard, no marketing is really necessary for that. And on the retention side, it costs far less to retain a customer than to acquire one. And we're a retention business. So, over 60% of our business in 2020 was from repeat purchasers. So, as we scale, we'll see more of our purchases come from repeat purchasers. And that is something that we are excited to see over time. And I think, that's I think of how we think about the marketing side and the marketing effectiveness. And to Jeff's point about the brand shift, right, I think where we're focused is on LTV, driving community engagement. What we see from that is that, as we make these investments, our LTV goes up. So, you might see some investments on the marketing side that are not going to pay off today. And that's okay. Right, you're going to see that over time, as we shift to really not focusing as much on that immediate gratification or that direct response and really make those LTV focused investments. And on the product introduction front, FIONLite, thought it was our new fabrication, really focused on sustainability, super lightweight material that we thought amazing response from that. Colors, we own color in this industry. And you saw a number of color launches that were extraordinarily successful around Nurses week too in particular, with pop red and chalk pink. And so, we're going to see this strategy around, we launched new colors, we launched new styles, our healthcare professionals are waiting to see what we're launching next. It sells out within a matter of hours, or days or weeks. And that's a really important part of our business.

Thanks so much.

Next question comes from the line of Lorraine Hutchinson from Bank of America. Your line is now open.

Thanks a lot. Good afternoon. Jeff, I just wanted to follow up on the sourcing question from earlier. It sounds like you're comfortable that you will get the product you need. But is there any way you could just kind of bracket the range of outcomes for the gross margin pressure in the back half?

Yeah, that's a great question. And listen, as much as we'd love to do it, it is just so dynamic and uncertain right now as we look to the back half of this year, as you can imagine, Lorraine. What I do know is that for a very long time, we have been able to produce gross margins that are fundamentally structurally advantaged. The right model for this community, a direct-to-consumer model that has just run really, really well and efficiently. And so, in doing part obviously, to the robust and sophisticated supply chain that we build among many facilities in many countries. So, we'd love to give you a number we really wanted to give you a number, but it is just so dynamic and shifting that, we gave you a number, we fear that it'd be wrong. So, and part of this is it also depends on how this does play out over the next 30, 90, 180 days. So, I think the important mark to know here is we're going to remain nimble. We're going to continue to lean on our best-in-class manufacturing partners and network that we built. And then we're confident that yes, we will get the product. As we sit here today, it's really about at least again, as we sit here and today and assess it, it's really about just getting it into the United States. And if we need to make that investment, again, to bring in more air, and obviously that would have a downward pressure for some period of time on gross margin, we will absolutely do that. And we will do that gladly because we know that the long-term profile of financials doesn't really change once we get past the other side of this pandemic.

Thank you.

Thank you so much.

Next question comes from the line of Erinn Murphy from Piper Sandler. Your line is now open.

Great, thanks. Good afternoon and congratulations on a successful IPO. Trina, I wanted to follow up with you regarding the color jobs performance for the quarter. Could you share how many you launched this time last year? Do you think it helped drive repeat customers, or did it just lead to additional purchases from existing customers or new ones? Jeff, just to clarify the guidance, the 3.95 for the year suggests a low 20% revenue growth in the second half, which is below the mid-30% growth target in the long-term model. Is the 10-percentage point difference related to lapping last year's third-party sales? If so, is there one quarter that's more affected or is it distributed evenly across the second half? Please help us understand that shift. Thank you.

Sure. So, thank you, Erinn. It’s great to speak with you again. From a color drop perspective, we launched a similar amount of colors in Q2 2021 as we launched in Q2 2020. And they were extraordinarily successful this year. We're super excited to see the engagement around our color launches. I think, in terms of repeat versus new, it's a really exciting thing that we see yes, when we drop a new color, our biggest customers that are already in our community are super excited. They're the ones that know about it. But on those days of launch, we see a significant percent of our net revenue actually be new customers. And I think that's where you see that word-of-mouth dynamic, where you’re meeting the breakroom of FIGS just launched shocking pink and hydro green, did you see that? Oh, no, I didn't. Go to head out to our website wearfigs.com and check it out. So, we're super encouraged by that. It's very much the flywheel effect that you see in our business where not only do these drops bring excitement and newness to our community, but also drive new people to try us out.

Hey, Erinn, it’s Jeff. And your question on the net revenue guidance for 2021, 395 net revenues is the number and again long term, we have a goal of being a billion dollar plus net revenue brand in 2025. But related party sales that I noted earlier, did occur in Q3 of 2020. So, as you think about potentially how you might want to think about that, hopefully, that's helpful. I think also the guidance that we're giving you, the 3.95 is one we're comfortable with today. But it also acknowledges just the challenges generally, again, in the supply chain, in generally. Obviously, we always have an opportunity to outperform the guidance that we're comfortable giving you with today. And we will work really hard to try to do all that. But 395 net revenues is a number that we're comfortable with today. That's a 50% increase over 2020. And again, we're not just about revenue growth, we're about profitable revenue growth. So again, all those things kind of put together gets us real comfortable with that number for today.

And the one thing I would add to just to what Jeff said, I think, if you look at the full picture, we're experiencing very steep growth. We increased our net revenue 58% year over year. If you look at the first half of the year, there's always going to be some bumpiness around quarters. But we really look to look at longer period of times. If you look at the first half of 2020 versus the first half of 2021, we grew net revenues by almost 100%. And, as we mentioned in the prepared remarks, we see ourselves as having at least a billion dollars in net revenue by 2025. And, so we're super encouraged by the future long-term prospects of this business.

Thank you, both.

Next question comes from the line of Brian Nagel from Oppenheimer. Your line is now open.

Hi, good morning. I'm sorry, good afternoon. I too want to give my congratulations on a pretty nice quarter and your successful IPO. So, I'll ask them also to kind of show a couple questions together. And first off, just we talked a lot about the new product launches and the colors. Does the margin profile change with these product launches, or is it basically the same as what we're looking at in the aggregate of the company? And secondly, with respect to the supply chain. Because you have businesses more of a point of clarification, you talk about bringing product in by air, recognizing that reflects a lot of challenges happening the COVID crisis. But in normal times, how much you're afraid to use? Or would this really be an extraordinary boat?

Yeah Brian, thanks. I'll take the second part of that first, just around airfreight. We have very well-healed and sophisticated inventory planning capabilities. And in normal times, airfreight is something that, that’s more of an exception to the rule. Because normally, you're able to plan effectively, you put it on a boat, and with the lack of variability that we've seen, you generally get it in time, you don't have to worry about it. Obviously, COVID has offended that entire system. So, going forward, on the other side of the pandemic, again, given our inventory planning capabilities we have today, continued investments that we’ll do there, this is largely going to be ocean in the out years. I will also tell you, though, that if we get incremental demand that we didn't forecast, if we're launching injection color that we're really excited about, those might be decisions where we at least consider airfreighting kind of on the other side of the pandemic. On the product launches and gross margin kind of by product launches, like, the short answer is bigger than a breadbasket they have similar margin profiles. You got to remember, our underlying FIONx fabrication makes up the vast majority of both our core and our injection styles. So, we're really get the scaling effects there. And that really does kind of bleed through to having a similar margin profile.

Got it. Appreciate the color and congrats again. Thank you.

Thanks, Brian.

Next question comes from the line of John Kernan from Cowen & Company. Your line is now open.

Hi, all this is John Cardoso on for John Kernan. Congrats again on a great quarter coming out of the IPO and thanks for taking the questions. So, I guess the first question I have is, how has the competitive environment changed from I guess, when the pandemic started to now, as you've seen kind of rising brand awareness and kind of further established yourselves as a significant player in the market? And I'll have a follow up after that as well.

Sure. So, from a competitive standpoint, the environment is very similar, actually, it’s what we've seen since we started. I think, no, there are really two types of competitors, right. There's the old school players that where there's two types, actually, there's the people that make product, companies that make products and they're really licensing its name from another type of company. And then they sell it to companies that sell the product retailers across the country. And so, in that outdated model, the companies that are selling their product to the retailer, they don't really understand the customer. They don't have any data on the customer. They don't even know their name. And then the retailer isn't selling it to the consumer. These are stores and strip malls and out of the way locations that close at 5 PM. As a healthcare professional, that often times is working 12 hours, 16-hour shifts, you get off shift at 7 PM, it's very difficult to travel to some out of the way store to get your scrubs. So, that's the way the industry existed for the last 100 years prior to us, disrupting it. I think newer companies have come on since we started out for us and have tried to kind of replicate what we've done. And I think what we've seen is that it's really, really hard to replicate. We've built a level of customer trust with our community that has taken about a decade to build. And brands are harder and harder to build. I think over the last 10 years, it was hard to build a brand over the next 10 years, it's going to be even harder. And customers are smart. Healthcare professionals are even smarter. And they want that authentic connection with a brand that stands for something that they can stand behind. And so, we're going to continue to show up for healthcare professionals and do things differently and be there as they actually are on the frontlines right now and our job is to support them in every way we can.

Understood. I guess just one quick follow up, can you comment kind of on current customer trends, effectiveness of your marketing efforts and kind of how that's flowed through to the customer acquisition costs kind of at the intersection of that?

We operate differently, and I believe that word of mouth has significantly contributed to our business without any associated costs. Our metrics for return on ad spend and customer acquisition cost are top-notch, which is something you rarely see in digitally native direct-to-consumer companies. This success stems from the interaction within our community and the strong dynamics of replenishment and customer retention in our business. Customers love our products and return on average every 98 days to replenish their uniforms, with over 60% of our net revenue coming from repeat buyers. We expect this trend to continue, highlighting a marketing efficiency that is uniquely ours.

Great, thanks again Heather, Trina, and Jeff, and congrats again.

Thank you.

Next question comes from the line of Lauren Schenk from Morgan Stanley. Your line is now open.

Okay, great. Thanks for taking my question. Just to follow up on sort of the implied back half guidance. Is there anything that you're seeing in July that's causing you to be more cautious? Or is this sort of holistically how you think the back half could play out just given some of the supply dynamics that you talked about? And then secondly, any color that you can share specifically on the cohort of customers that you acquired in the second quarter last year, sort of the COVID cohort, if you will, how has their retention trended versus previous cohorts as well as their LTVs? Thanks so much.

I believe it's crucial to acknowledge the macro challenges impacting everyone, which is why we are guiding $395 million. Demand remains extremely strong, and we have structural advantages in our supply chain. However, the current COVID situation poses a risk in getting products from Asia to the U.S. in the short term. We are dedicated to overcoming this issue to deliver our products to healthcare professionals, enabling them to look good, feel good, and perform their best. It's noteworthy that we have maintained robust growth throughout our history, as healthcare professionals consistently require uniforms, regardless of global circumstances, and they regularly need to replenish them. With an average career length of 36 years in this field, we are committed to supporting our community no matter the environment. We are confident in the guidance we've provided, with a focus on reaching a billion dollars by 2025. Regarding our customer cohorts, our retention for Q2 of 2020 compared to Q2 of 2021 has been consistent, and LTVs are trending positively, which is an important factor. While average order value is significant, our main focus is on annual spend and LTV, as these metrics reflect the long-term health of our business. Our healthcare professionals continue to return throughout their careers, and that's where our attention lies.

Great, thank you.

Next question comes from the line of Dana Telsey from Telsey Advisory Group. Your line is now open.

Good afternoon, and congratulations on the success of the IPO and solid results today. With a tremendous sales growth that you saw this quarter, how did the category mix shift adjust? Did anything move from that 82% core scrubs or 13% lifestyle and other? What did you see there? And is there any update on the penetration of men and women in terms of what you saw?

Sure, I think it's generally similar. Our business has grown quite rapidly over this period. Most of our scrubs business is increasing, our outerwear business is expanding, our compression sock business is doing well, and our under scrubs are also growing. The next shift aligns with what you observed earlier, and that's consistent across the board. The trends for women versus men appear to be in line with what you've seen in the past. We don't have any additional updates on that.

Yeah, the one thing I'd add to that, Dana that Trina mentioned is, lifestyle, proximately $11 million of sales in the quarter up 60% year over year. And the percent of sales up, even though we're selling a lot less masks than we did last year. So, the lifestyle, I think people should not sleep on the lifestyle aspect of this brand. We put a lot of investment in it. We're getting a lot of out of it. And we'll continue to make sure that we invest there.

Got it. And then just on the marketing side, is there anything in the second half on events or things that will be new this year that wasn't there last year that we should note?

Yeah, I mean, really, for competitive reasons, we really won’t speak to specific brand campaigns in the back half. But I'm looking across the table at Heather, she's super excited. She loves to share a lot of this with you. But we won't today. But I can tell you that it'll continue to excite the healthcare community. It will continue to increase awareness of our wonderful brand. And listen, we know that once we get folks aware of our brand, and we get them into our funnel, they become loyal fans. You remember from our IPO, if you come and you buy from us, 50% of the time you come back and buy again within 12 months. So, while that's a phenomenal stat compared to anybody that we compete with, we also look at that that other 50% in used data to figure out how can we get it to 60% or 70%. So, we're super excited about it. We've got really cool brand things coming your way. But we're not going to let Heather talk to you about it today.

Thank you, congratulations.

Thanks, Dana.

Next question comes from the line of Michael Binetti from Credit Suisse. Your line is open.

Hey, guys thanks for taking all our questions here. And I'll add my congrats on the IPO in the quarter. I do have a couple just. It's hard for us to find companies with EBITDA margins in the low 20s or what you guys call 20 plus, that have gross margins 70 plus. So, I know you talked about some of the priorities on the investments, but can you crosswalk us from you've been pretty consistently delivering in the mid to high 20s range in the last few quarters. Can you crosswalk us to over whatever, you know, next year or two takes you to the lower end of a 20 plus range from here with the groceries that you described? And then I guess, as we think about the growth algorithm from here, how much do you think comes from selling to higher growing numbers of healthcare professionals entering the franchise versus expanding in the closets of the healthcare pros that you have but more importantly, from non-healthcare workers, you pointed to lifestyle? But that's the real TAM expander, is if you start to break into closets of non-healthcare. Maybe any financial metrics you could tell us what are some early indicators that you see in making headway with that customer?

Thank you, Mike. I'll let Trina speak shortly, but first, regarding the total addressable market, I’ll address the second question. We believe there are several ways to broaden our total addressable market. In the U.S. alone, the total addressable market for healthcare apparel is $12 billion, and it's $79 billion worldwide. This figure doesn’t account for non-healthcare markets, regardless of the type of workwear. So, it’s clearly an opportunity for us and a long-term prospect. Our immediate focus is on the opportunity we have now, considering we only hold a 3% market share. However, we also see potential for TAM expansion beyond just non-healthcare apparel, which we view as a longer-term goal. We are examining lifestyle products such as under scrubs, socks, sports bras, and leggings and continue to invest in these areas. When it comes to TAM expansion, we are looking at both of these aspects, and neither is included in the $12 billion figure. Regarding the transition from historical EBITDA margins to our projections for the next three fiscal years, there are a couple of factors to consider. First is the cost associated with being a public company, as I mentioned earlier. Second, it's related to human capital, which involves building teams and enhancing our capabilities in marketing, supply chain, and data analytics. We have the necessary capital to invest and recognize the need for incremental investments to achieve our ambitious long-term goals, which makes us confident. Additionally, there are always unforeseen factors, especially if we enter other categories. That’s the overview regarding our transition, and I’ll ask Trina if she has anything to add, or if Heather wants to discuss the total addressable market further.

Yeah, the only thing I would add is that the $12 billion TAM for the United States is $79 billion TAM globally really doesn't include many of the lifestyle offerings that we have for our healthcare community. And so, the way we think about our TAM expansion and creating TAM every day here is really about outfitting our healthcare professionals with all of the lifestyle offerings. They are from head to toe, to work, at work, from work, on shift, off shift, this is really about the healthcare professionals’ entire uniform, this layering system that we've referred to. And so, that's how we think about that in terms of and then I would just add on the are we growing the expanding the closet, right? I think that's what our layering system does, and the repeat customers that come back over and over again, but also having more and more of a healthcare community. Once again, we have a 3% market share of that full belly, not even including kind of how we think about TAM. But we have a 3% market share in the U.S. of that $12 billion number. So, we have a long runway in front of us.

To expand on what Trina and Jeff mentioned, our layering system represents all our healthcare products. We view it as a fresh perspective on the uniform. FIGS established what the uniform means. Our layering system encompasses our complete ecosystem of products, designed to meet all our customers' needs. As Trina highlighted, it caters to both on-shift and off-shift requirements, as well as everything in between. The assortment includes under scrubs, scrubs, and jackets specially designed for the temperature demands of hospital environments, addressing all necessary aspects. These items are designed to function together in various combinations. They can be mixed and matched in countless ways, which is the essence of our business and fundamental to our company’s identity.

Okay. Next question comes from line of Brooke Roach from Goldman Sachs. Your line is now open.

Hi, good afternoon. And thanks so much for taking our question. Trina, the brand continues to show very strong international momentum. Can you talk to the geographies where you're seeing the most success? And perhaps your plans for driving that growth over time? And for Jeff, a lot of commentary so far on the call today on investing to build that growth momentum as a brand for the long term. Could you perhaps help us understand how you're thinking about the cadence of investing into those four big buckets of investment that you talked to? Thank you.

Thank you, Brooke. As we noted, we recognize that international markets present a significant opportunity. The market outside the United States is valued at $67 billion, and we aim to become a global brand serving healthcare professionals worldwide. While we can't precisely attribute specific growth to different factors, we are currently established in Canada, Australia, and the UK, and we are seeing strong progress in all these markets. Over the past year, we have increased our international revenue from 2.9% to 7.9% of our total net revenues without entering new countries. This growth is very promising. It's important to understand our strategy regarding international expansion. Unlike many companies that rapidly open operations in numerous countries, we are taking a careful and strategic approach to entering new markets. We focus on customizing the experience by localizing currency and language, and we actively seek local ambassadors to help expand our brand in a strategic manner. International operations will continue to be an exciting part of our business, and we look forward to our next steps in this area.

Hey, Brooke, it's Jeff. Thanks for the question. On the second one, yeah, listen, we're super excited and energized by our goal of being a billion dollar plus net revenue brand in 2025. And as we think about the cadence of those investments, I first again anchor you to our long-term margin guidance that we gave just earlier today. 70% plus gross margins annually over those next three fiscal years and 20% plus on adjusted EBITDA over that same time period. So, part of the answer is regardless of any variability or bounce around, we still think and we are very comfortable with those. I'd anchor you there. When we think about the areas of investment, and we talked a lot about this today, so I won't go too deep into it. You've got product, you've got brand, you've got tax, you've got people. There's probably less variability, those kinds of happen when they happen and you build them, kind of at the rate and pace that makes sense. The one that could be a little bit more of a different cadence could be around supply chain operations, right. As you think about potentially adding additional facilities in the future. Obviously, we just talked about international. That's one that could be maybe a little bit more variable in the future. But again, I think the punch line here is structurally advantage margins, we think both we have and we’ll be able to keep those over the next three fiscal years. And again, we're really confident when we get to this billion dollars plus net revenue goal.

And there are no further questions at this time, I will now turn the call over back to Trina for closing remarks.

Well, thank you all so much for joining us for our first ever quarter. We really look forward to connecting again in November for our third quarter earnings call. Thank you again.

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