Conference Transcript - FIGS 2026-06-09

Brian Nagel, Analyst — Oppenheimer

Morning. Thank you everyone for joining us. So my name is Brian Nagel. I'm a senior equity research analyst here at Oppenheimer covering consumer growth and e-commerce. So today is day two of our 26th annual Oppenheimer Consumer Growth and E-commerce Conference. Again, thank you everyone for joining us. So I'm very pleased to have with us our next presenting company, FIGS, and three of the company's top executives, founder and CEO, Trina Spear, CFO, Sarah Autred, and Investor Relations Tom Shaw. So thank you all for joining us. We very much appreciate it. Thank you for having us Brian. So we're going to structure this as an informal fireside chat with me asking questions and the FIGS team responding to those questions. To the extent there are questions in the audience, just send them in the chat and I'll be happy to work them into our conversation. So I thought we'd start before we dive into the specifics of the FIGS in the FIGS business model. I would love just to hear, given kind of a theme we're having in our conference here, the health of the consumer. Clearly, FIGS serves a unique consumer, a much more resilient consumer. But Trina and Sarah, I'd love to hear kind of your thoughts on the consumer right now and to what extent the consumer backdrop is either headwind, tailwind for FIGS business.

Trina Spear, CEO

Sure. I think when we think about the overall consumer out in the world, I do think there's a lot happening from inflation and different macro pressures and oil prices, et cetera. I think for us, what's really unique is that we serve the healthcare professional and every healthcare professional, every FIGS customer actually has a job today. And this is, you know, you're looking at the jobs reports every month, all the job gains are coming from healthcare. And so that's a really important thing to note. I think the other thing is that, you know, these are, it's a really stable job. It's a, you know, wages are increasing and healthcare professionals are the backbone of any functioning society. And there's a huge shortage, right? Whether in the U.S. or any country around the world, you need doctors and nurses right now so that you can, you know, operate your hospital and treat patients. And so that's, you know, some of the dynamics that are true in our industry. You know, I think, you know, we're not completely immune to all the things happening overall, but this is, you know, healthcare jobs. This industry has grown through every recession over the past 100 years. This industry is expected to be the fastest growing job segment over the next decade plus. And so we feel really good about our position, not only in terms of who we're serving, but also how we continue to lead this industry as we move forward. And so it's ours to execute on, it's ours to continue to deliver on, But we feel as though we are in that leadership position and we're going to continue to drive and innovate and, you know, show up for the health care community in every single way we can.

Brian Nagel, Analyst — Oppenheimer

That's very helpful. So shifting much more to the specifics of FIGS, I think one of the most compelling aspects of the story lately has been this, what I consider to be a significant sales reacceleration. we saw essentially start to take, start to take shape, you know, maybe midway through, uh, last year, and then it's very much continued here into 26 with your, your recently reported first quarter results. So I'd love to just dive into this, you know, what, as you look back, you know, that sale, that sales growth reacceleration, uh, you know, really what has driven that? And then how do you think about, you know, the factors going forward and the, and the sustainability of the sales

Trina Spear, CEO

reacceleration? Yeah, I mean, I think that, you know, first and foremost, like what we've been doing for the last 13, 14, 15 years, but really over the last even two to three years is build out our product assortment, right, and really be the leader in terms of building and creating product that solves problems for healthcare professionals. That's first and foremost what we've done, and you're seeing that kind of, all that work come to fruition. The second thing that we've done is really build out our marketing engine. We've now put out some of the most engaged campaigns that we've seen in our history. We have millions of views on our films and, you know, whether it was for Nurses Week or International Women's Month. And so it's a really important part of what we do. And so you're seeing that come to fruition. But I think, you know, the other thing that's important to note is just how the industry has shifted. You know, our business, we were selling scrubs to healthcare professionals during a global pandemic, and you saw an acceleration in our business in 2020, 2021, and 2022. From there, you saw kind of this COVID overhang in 23, 24, and a large part of 25. And so what has happened when you, you know, in the last Q4 and in Q1 is really a normalization of this industry. For the first time ever, people are able to see, investors are able to see not only what this industry is made of, given we're really the only public company in the space, but also what FIGS is made of. And so, you know, 33% growth in Q4, to your point, 28% in Q1. We said that the trends are continuing in Q2 when we had our earnings call. And so, you know, we're excited about, you know, this more normalized period. We're excited about our performance and our ability to deliver and our ability to deliver, not just to deliver on revenue growth, but also to, you know, see the leverageability of, of our P&L. And you're seeing that all the way down to the bottom line. And so, um, you know, much more to come in terms of how we're going to continue to, uh, you know, change and lead this industry. Um, but it's an exciting time.

Brian Nagel, Analyst — Oppenheimer

The train is to dive a little deeper there. So it's something, you know, we've written a lot about, and I know you've talked about, but when we can just, again, just how broad-based, you know, this sales acceleration has been. And the point you've made, your team has made, is it has not been one product. It's not been one region. So maybe we can discuss that a little further again. So that helps, I think, the market understands that this is likely sustainability here.

Trina Spear, CEO

Yes, such a great point, Brian. You know, I think it's across our scrubware and non-scrubware. It's across all of our different growth levers from international. So scrubware grew, and correct me if I'm wrong, there, 27%. Non-scrubware, 31%. International, 50%. Our team's business is growing. Our community hub's business is growing. Across all countries are growing and are profitable. This is truly unique. This is very broad-based. Everyone wants to point to this. What was the one thing that is driving this. This is across categories. It's across regions. It's across channels. And that's what gives us a lot of confidence and the ability to continue to perform and continue to deliver. And I think, you know, it's a testament to the brand strength. It's a testament to what we mean to this community. And it's a testament to our team. We have the best leadership team that we've had in our history across product marketing, obviously finance, Sarah Altrad, CFO, best in the game. We have a really strong team that is so bought in to this mission and to showing up every day for the healthcare community that deserves it. These are people that are saving lives and helping patients and curing diseases and are there with your family and many of us during our most trying hours. These are the people that are the backbone of any functioning society and we get to be the brand that gets to serve them and so um you know you're seeing it broad-based because it's all coming from this super diehard loyal community that's obsessed as obsessed with us as we are obsessed with them um and so that's what i think is is truly unique

Brian Nagel, Analyst — Oppenheimer

as well does there maybe like shift you and talk about we talked here you know about this this the sales acceleration and the the broad-based nature the sustained nature how we how should we think about you know from a profitability standpoint you know so something we point out in our work a lot of that you'll figs still operates well below your prior peak you know operating margins or EBITDA margins so as you're looking at the sales growth engine really getting going here how should we think about how this should manifest itself in the profitability either

Sarah Oughtred, CFO

currently or over time yeah when we look back at some of those historical adjusted EBITDA levels You know, we were at 15.7% in 2023. You know, keep in mind that we are a different business today, and we've made some really incredible shifts to continue to reach healthcare professionals. And so, you know, we've made shifts to expand our business globally. That has some implications. We've made some shifts to expand our fabrication, expand into non-scrubware. but you know like where we're guiding to today at that you know 13 to 13.2 bottom line keep in mind that we have you know 300 to 400 basis points of tariff pressure so if you were to back that out you know we're up to a much more favorable level and we continue to see the opportunity to scale into the future and how we think about that is really the opportunity with is within scaling our SG&A. So, you know, from a gross margin perspective, you know, I think that we will continue to be in range of where we are today, maybe a bit of headwind as we continue to expand our assortment. But within SG&A, you know, we continue to see opportunity within our outbound shipping and packaging rates. And so some of the efforts there is continuing to look at the opportunity to reduce that cost internationally. And that is part of our roadmap to explore, you know, a potential 3PL facility that would make distance to customer much shorter than it is today. We have the opportunity to continue to reduce our marketing costs. And that's really just through continuing to find efficiencies and scale the brand. And then similarly within our GNA structure. I think you would have seen over time as we continue to increase revenue, there is definitely an opportunity to leverage that. So we haven't given an exact number for the longer range, but I think we've been demonstrating that as revenue increases, we are seeing quite a bit of ability to pass through profit improvement, and we'll continue to deliver that going forward.

Brian Nagel, Analyst — Oppenheimer

That's very helpful. So on tariffs, you talked about a moment ago, you talked about that ongoing head with, to the extent that it's weighing upon the current margin profile of business. So how should we think about FIG's efforts over time to mitigate those tariffs?

Sarah Oughtred, CFO

Yeah, so we've been happy with our tariff mitigation to date. We did successfully negotiate certain cost reductions, and we really went aggressively after all areas of the P&L to identify where we could find mitigation. And so that's been really looking at both our inbound and outbound freight costs, finding efficiencies across the P&L. And so you can see that we've been able to continue to expand our bottom line despite incurring and having to cover these higher tariffs. We had disclosed that we incurred about $20 million of the IEPA tariffs. We've gone through the process to submit for a refund on that. We have seen some refund come through already. We'll be able to give a more detailed update in our next quarter, but we feel fairly confident on continuing to be able to receive the remaining amount of that $20 million. And our guidance is structured, you know, right now that we'll continue to incur the 10% Section 122 tariffs through to the end of July, and our guidance assumes 15% thereafter. Clearly, there is some uncertainty on the go forward, but I think we feel comfortable with our ability to navigate whatever may come at us post-July, given our ability to navigate what has come to us so far.

Brian Nagel, Analyst — Oppenheimer

So on the tariff refunds, and I mean, recognizing this is a very fluid conversation, frankly, a new conversation, but what portion has been refunded to you? And then how does FIGS recognize that? And what's the use of that refund? Or how do you utilize that refund? It's probably a better way to say it.

Sarah Oughtred, CFO

So we've received some of it. We haven't disclosed yet. We'll be able to share that exact number when we share in our upcoming earnings. And so we will, you know, we've done analysis to identify how much of that has actually hit the P&L. We would record any refunds pertaining to what is already been recognized into the P&L as a credit into cost of goods sold. Um, and, you know, uh, you know, right now we feel that, uh, you know, that would be a one-time, one-time benefit and, uh, you know, we're still evaluating, um, you know, what we would do with that at this point, um, you know, keeping in mind that we, we do have a significant amount of, of cash. Um, and so we continue to deploy that cash to continue to grow the business and return, you know return to shareholders so we'll continue to evaluate those opportunities and can give a more detailed update on our next earnings call. Then just on tariff so is it over time you know

Brian Nagel, Analyst — Oppenheimer

is the expectation that most of these tariff costs should be mitigated? I think we've been able to

Sarah Oughtred, CFO

mitigate what we've incurred and that's evidence not necessarily through gross margin but through our overall improvement in bottom line. And so the mitigation efforts can be specific to tariffs, but can be, you know, just the ways that we've looked to improve the overall P&L profile. And so I think that we have been able to mitigate what has come from us and we'll continue to, you know, find opportunities within the business to ensure that our profitability continues to grow over time.

Brian Nagel, Analyst — Oppenheimer

That's very helpful. So shifting maybe back to big picture. So Trina, you mentioned some of your comments about FIGS being the largest player in this very big space. How do you think about competition? Are there competitors out there, so to say, that are in any way, shape, or form going head to head with FIGS in the business?

Trina Spear, CEO

You know, I really think that we're a truly unique business in terms of how we disrupted this space close to 15 years ago. I mean, we really branded an unbranded industry. We decommoditized a commodity product, and we built a community around a profession. And, you know, and we've now built an authentic brand that means something to this community over a very long time. And, you know, I would say in terms of the competitive landscape, there's really two parts to it. The first part is the old world. We call it the anti-moat. These companies are really stuck in the strip mall, right? Prior to FIGS, you had to drive to an out-of-the-way location in a strip mall. You would walk into a medical supply store. There's a rack of black, a rack of navy, a rack of white. They're selling bedpans and knee braces next to your scrubs. There was a box on the middle of the floor to find your size. And it was a really awful experience. And those companies are really still stuck in that, I would say, outdated experience. And then there are companies that saw our success when we went public in 2021, five years ago. And up until that point, we were relatively quiet. We didn't do a ton of PR. That wasn't what the business was about. We weren't trying to get on covers of magazines. We were really focused on this community. And so there weren't a lot of people that really knew about FIGS, which was a good thing because we were able to really widen the moat during that time. Once we went public, a lot of companies started saying, oh, we can do what they do. And a lot of copycat brands started popping up. I mean, to date, you know, our revenue, sorry, our marketing budget is larger than I think all of these companies' revenue combined. You know, these are really subscale. We're going to do over $700 million in net revenue this year. I don't believe there's a company, maybe there's one that's exceeding the $100 million mark. And so there's a big difference in terms of what scale enables you to do. It enables you to work with the best manufacturers to make the best product for healthcare professionals. And it enables you to put together full-fledged campaigns that people can connect with. It enables you to operate really efficiently and at the highest level and at the highest standard of excellence, which we hold ourselves to. And so, you know, not to say that we're not paranoid and, you know, every now and then we look around and see what's happening. But for us, this is our industry to lead. This is ours to execute on. It's ours to deliver on. And every day we wake up and think about how can we, you know, really change the game for this community, make their experience better, make more product for them so they can go to their job and look good and feel good and perform at their best. That is our goal. That is our only goal. And sometimes I say, you know, you can't look left, you can't look right. Let's just keep focusing on how we can outdo what we did yesterday, what we did last week, what we did last month, what we did last year. And that's what you're seeing. That's what you're seeing in the numbers. That's what you're seeing across the business, to your point, around broad-based growth. We're not taking this lightly. This is a company in an industry that no one's been focused on, and it's ours to kind of put it on the map, and that's what we're doing.

Brian Nagel, Analyst — Oppenheimer

Let's talk a bit about the Teams business. You know, so it's still a relatively new effort, but something I'm personally excited because I think it's a big opportunity long-term. But I'd love to kind of hear, you know, where you are in Teams, you know, how you think about the growth profile there, maybe any investments that need to still be put in place in order to really start to grow the opportunity.

Trina Spear, CEO

Yeah, the Teams business is such a huge opportunity, right? I think it's even a bigger opportunity international than it is in the U.S. In the U.S., 85% of healthcare professionals buy their own uniforms. It is more of a D2C industry. And globally, the B2B side of this industry is actually larger. And so we're seeing, you know, we're building out this pipeline. We built this sales force. We built out this technology. And we're starting to see incredible gains. I still think we're quite a time away because these are longer sales cycles. But like I said, our pipeline's never been bigger. We've never connected more with some of the largest health care institutions around the U.S. and some around the globe. And so, you know, we're going to keep investing in this sales team. We're putting marketing dollars behind the team's effort. And we're continuing to build features and functionality within the technology experience and make it super seamless for any administrator, any head of a private practice, any head of a hospital to be able to order an entire uniform, not just your scrubs, but also your underscrubs and your jackets and your compression socks, anything that you need for your entire workforce at any time. The ultimate vision is that we really want to connect into the HR systems of these institutions to make it even easier for them, right? To make it even easier for them to a new employee joins. We now welcome to, and we do this actually with Veg, which is one of our largest team's accounts. Welcome to Veg. You're now a veterinarian, veteran doctor or vet nurse on the team. You need your new uniform. And so Figs is our partner. You go on, you get your charcoal scrubs with your Veg logo, with your red draw cord. You get your underscrubs, you get your fleeces, your jackets, your footwear, and it's an awesome experience. We want to scale that across all of our team's customers as well as to future ones as well. And I think the opportunity is just massive because you know what these institutions are doing and veg is another great example of this is that they're providing stipends for their employees okay i want to spend 200 400 a year on each employee and then you know we're and then we want figs to also give them a discount if they buy anything else and so this platform enables you to basically say i only want to cover a portion of that uniform spend and then they can go on and get call it 15 ish percent off to buy other things from FIGS as well. And so this is kind of a B2B2C model because we're not only building that relationship with the parent, with the institution, but then also have that relationship with every employee within that institution. And that is all about data. And once we have that data, we're able to connect not only again with the institutional level, but with the individual level as well. And so Teams, massive, massive opportunity. I would say we're still early days on it, but much more to come over the coming 12 months, over the coming two years, over the coming 10 years. This is going to be big.

Brian Nagel, Analyst — Oppenheimer

And so, Sarah, with Teams, how should we think about the financial implications here?

Sarah Oughtred, CFO

Yeah, so Teams is an accretive business for us, bottom line. The economic profile is different from e-com. Within gross margin, it would be a lower gross margin rate just because of the discount, but a much lower operating expense structure as we gain efficiencies, you know, from a marketing effort, as well as within selling costs. And so, you know, as I mentioned, this isn't a creative business, bottom line. So we, you know, will be able to continue to, you know, have that be a lever for expanding bottom lines for total company as that business, you know, as that business scales.

Brian Nagel, Analyst — Oppenheimer

So another, I think, really interesting aspect of the story here is the community hubs. So I've spent time in your facility and your community hub in L.A. and then Philly and New York. So they're looking great. I'm loving watching the evolution. From your perspective, I mean, how are these physical locations helping you connect better with consumers, better advertise the unique brand?

Trina Spear, CEO

Yeah, I mean, I always say the most iconic brands have stores, right? And we now have five and there's four more to come. But this is a, you know, I do think this is a space where healthcare professionals can come in and talk to somebody about our fabrications, about our products. They're feeling and touching and experiencing the product firsthand. They're able to try it on and get the right fit. And, you know, it's hard to embroider something because it is final sale before you figured out your fit. So doing that in the hub, in our stores is super important. We, like I said, we have five. We have LA. I love, Brian, that you've been to a number of them. We have LA, we have Philly, we have Upper East Side, we have Rice Village in Houston, and we have West Loop in Chicago. They're all performing incredibly well beyond our expectations. 40% of people coming into the store are new or people transacting in the store are new to the brand. That's amazing. I would say I think the stat is 80-ish percent of all apparel sales still are offline. And so in our survey, 60% of healthcare professionals want to shop offline. And so having that experience, not just digitally, is super important. And so early days on our hubs, but, and Sarah can give more color on our paybacks and our economics, but all are exceeding our plan.

Sarah Oughtred, CFO

We've done some incrementality testing in our Philly market that shows that the store sales are fully incremental and actually added a halo impact to the overall MSA area, which is awesome. Earlier days in New York, but similarly where adding the store did not cannibalize e-com and those store sales are fully incremental, some of the top MSA growth areas in the U.S. are in those five cities where we've added a store. So really like the metrics that we're seeing, you know, what we've shared is for the upcoming openings that we would be targeting, you know, a 24 month payback, that they would be accretive to bottom line as well. And so happy with how that will generate added profitability to the company overall. You know, the fact that they can be profitable while also being a customer acquisition driver, a billboard for our brand, all has really great implications for driving the brand into the future and being able to continue to serve healthcare professionals. I could also share that we do see some different trends in that, you know, in community hubs, we do see a higher portion of men's sales than we see online. We see a higher portion of our, you know, new fabrications. We see a higher portion of sales for embroidery. So, you know, having that physical experience does allow for, you know, expanded growth within some of these new areas to the business. and we like those dynamics as well.

Brian Nagel, Analyst — Oppenheimer

So on the non, that's very helpful. On the non-scrubware topic, we talked about this a little bit, let's discuss the opportunity there. And I think one question I always ask, a question I hear a lot from our clients too, is when you look at non-scrubware, is that adding to the purchase of your core consumer or is this bringing a new, maybe not even a healthcare worker to the brand?

Trina Spear, CEO

You know, I think it really is about that layering system. I think what we see is that, you know, as a new customer, you really are shopping with us for what we're best known for, what we became famous for, which is our scrubware. So you're kind of coming in for, let's say, our Katerina top and now our Isabel Pamp, which are two of our best-selling items that our healthcare professionals love. And then as you, you know, get to know us better, as we get to know you better, we're able to personalize more and more to you and who you are, where you work, what you do. And so you're adding on these other elements. You're adding on our fleece jackets. You're adding on our Sydney scrub jacket. You're layering underneath your scrubs our Salta or our ribbed underscrub. You are, you know, coming to us for our compression socks, our Archtech medical grade patented compression socks, which are incredible. Or we have an amazing collaboration with New Balance from the footwear side. And so, you know, I do think what we're seeing is a really high, what we call, like, people talk about attachment rate. We call it a layering rate. How are you layering on all these other pieces over time with us? You know, our goal really isn't to have non-healthcare professionals. These are healthcare professionals. When we think about that uniform, it isn't just your scrubs. It's all of these other pieces within your uniform wardrobe. And we saw non-scrub were at 31% growth in the quarter. And so really exciting to see how that will continue to scale and grow. And we're early days even in terms of building out these categories from a weight perspective, a fabrication perspective. You know, like I said, we have two underscrubs. We have one scrub jacket, really. You know, we've tested some other styles, but the majority of the revenue within these categories is made up by like one or two styles. So really building that out for different use cases, for different types of environments, for different types of health care professionals, you know, is super important as we move forward. And it's a really exciting opportunity.

Brian Nagel, Analyst — Oppenheimer

Well, Tom's going to wind down here. So the last topic I really want to address is just, and we talked a little bit about it already, but the balance sheet and cash. We have one thing, a huge positive here for the story is just, you know, the strength of the balance sheet and the cash position. So I guess how do you think about the balance sheet? You do have the buyback in place now. How should we be thinking about, you know, your ability to buy that and repurchase shares?

Sarah Oughtred, CFO

Yeah, I would say that this is a highly cash generative business. And, you know, we do have ample cash on the balance sheet, $277 million at the end of Q1. How we think about deploying that is first and foremost investing back into the business across our product innovation, community engagement, and market expansion strategic pillars. And we've been, you know, increasing that investment, you know, really in 2025 and into 2026 and seeing those returns come in the way of, you know, this accelerated growth rate that we've been driving. And so we will continue to invest in that growth, you know, from a capital perspective. We will deploy capital to fund our community hub expansion strategy. And, you know, within both of that, we can fund that with the free cash flow that we're generating. So we will continue to, you know, accumulate cash. And we do have our share buyback program that we will continue to, you know, return capital to shareholders. We were active buyers in Q1, bought back 8.8 million worth of shares. And so we'll continue to use that as a lever to return capital to shareholders. And, yeah, feel good about our ability to have a really strong balance sheet to help keep us agile, help take advantage of any future opportunities that may come their way. And so, yeah, really great financial profile for this business.

Brian Nagel, Analyst — Oppenheimer

Well, is there anything that, thank you, Sarah, is there anything we did not discuss that we should have discussed here in this fireside chat?

Trina Spear, CEO

I think we covered it. this has been awesome and thank you brian for your continued support and helping us get the story out i do think what we're doing at figs is really unique um and you know it's exciting to to

Brian Nagel, Analyst — Oppenheimer

talk about it so thank you well i appreciate your attendance here congrats on the recent success Tom, thanks for all the work and the help and we appreciate it. Thank you.