Ladies and gentlemen, good afternoon. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Revolve Group first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question press star one again thank you and i would now like to turn the conference over to eric randerson senior vice president of investor relations you may begin good afternoon everyone and thanks for joining us to discuss revolve first quarter 2026 results before we begin i'd like to mention that we have posted the presentation containing q1 2026 financial highlights to our investor relations website located at investors.revolve.com i would also like to remind you that this conference call will include forward-looking statements, including statements related to our future growth, our inventory balance, our key priorities in business initiatives, industry trends, our marketing events and their expected impact, our physical retail stores, our own brand expansion, our use of AI, our partnerships, and our outlook for net sales, gross margin, operating expenses, and effective tax rate. These statements are subject to various risks, uncertainties, and assumptions that could cause our actual results to differ materially from these statements including the risk mentioned in this afternoon's press release as well as other risks and uncertainties disclosed under the caption risk factors and elsewhere in our filings with the Securities Exchange Commission including without limitation our annual report on Form 10-K for the year into December 31, 2025 and our subsequent quarterly reports on Form 10-Q all of which can be found on our website at investors.revolve.com we undertake no obligation to revise or update any forward-looking statements or information except as required by law during our call today we'll also reference certain non-GAAP financial information including adjusted EBITDA and free cash flow we use non-GAAP measures in some of our financial discussions as we believe they provide valuable insights on our operational performance and underlying operating results the presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information presented and prepared in accordance with GAAP and our non-GAAP measures may be different from non-GAAP measures used by other companies. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures, as well as the definitions of each measure, their limitations and our rationale for using them, can be found in this afternoon's press release and in our SEC filings. Joining me on the call today are our co-founders and co-CEOs Mike Karenicolas and Michael Mente, as well as Jesse Timmermans, our CFO. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn it over to Mike.

Hello, everyone, and thanks for joining us today. Outstanding execution by our team within a dynamic operating environment led to strong first quarter results and continued market share gains, highlighted by our net sales increasing 16% year-over-year, our highest growth rate in nearly four years. This growth acceleration, particularly in the current environment, is evidence that our investments in brand, technology, and AI, site experience, and category diversification are paying off. In addition to our strong top-line growth, diluted earnings per share increased 25% year-over-year, despite a several-million-dollar increase in marketing investments year-over-year to support our growth initiatives, including the launch of Revolve Los Angeles, our first-ever namesake label that we are incredibly excited about. And we generated $49 million in operating cash flow, significantly strengthening our pristine balance sheet with cash and cash equivalents increasing to $336 million at quarter end. Our core underlying business metrics illustrate our increased engagement and deepening connection with next-generation consumers. Year-over-year growth in active customers accelerated in Q1, and we are generating increased revenue per active customer, fueled by our success in capturing a greater share of the consumer's wallet and a lower product return rate year-over-year. beyond the numbers i am most excited about our visible progress and longer term initiatives such as international expansion and advancing our use of ai technology that have become key contributors to our momentum and reinforce my confidence that we will continue to drive profitable growth in the future continuing with our longer term initiatives michael will talk about the exciting new chapter for our own brands assortment with revolve los angeles as well as an important new milestone in our physical retail expansion. We view each of these initiatives as potential game changers for our business over the long term. Our ability to invest in and execute on many exciting initiatives simultaneously underscores that our strong cash flow and balance sheet are key competitive advantages, particularly at a time when many industry peers with weaker financials are stuck playing defense. With that as an introduction, I will step back and provide a brief recap of our Q1 results before reviewing the progress on our longer term initiatives net sales for the quarter were 343 million dollars an increase of 16 year-over-year a more than five point sequential improvement from our 10 year-over-year growth rate in the fourth quarter of 2025. gains were broad-based as year-over-year growth rates improved across revolve forward domestic and international compared to the year-over-year growth rates in the fourth quarter with double-digit growth across the board also notable is that our dresses Category net sales accelerated by 13 points compared to the fourth quarter of 2025 performance, and we delivered even stronger growth in fashion apparel, validating the momentum behind our category diversification strategy. The strong start to the year puts us on a good path to achieving our goal of double-digit revenue growth in 2026. By segment, Revolve net sales increased 15% and Forward net sales increased 17% year-over-year. These were our highest growth rates since 2022. By territory, domestic net sales increased 15% and international net sales grew 20% year-over-year in the first quarter. We achieved these outstanding international results despite a meaningful slowdown in the Middle East that has continued into the second quarter amidst significant geopolitical uncertainty. Shifting to our bottom line results, net income was $14 million and diluted earnings per share was 20 cents, an increase of 25% year-over-year. Adjusted EBITDA was 21 million dollars an increase of nine percent year-over-year all while investing in a number of meaningful growth initiatives including investments to position the new revolve los angeles assortment for long-term success most exciting is that our profitable growth once again converted very strongly to cash flow our business generated a 33 million dollar increase in cash and cash equivalents in the first quarter alone even while investing 11 million dollars in january for a synergistic minority investment. Now, I'll conclude by recapping our progress against our longer-term strategic priorities and growth vectors. We have many exciting initiatives underway, and the team has done a great job executing to position us to deliver meaningful value for shareholders over the long term. First, we continue to efficiently invest to expand our brand awareness, grow our customer base, and strengthen our connection with the next-generation consumer. I could not be more excited about our recent brand team that Michael will talk about in his remarks, ranging from the impactful and well-received launch of Revolve Los Angeles to an incredible and efficient Revolve Festival held last month attended by countless A-listers. The recent launch of Grow Good Beauty, developed in partnership with Cardi B, also serves as a powerful demonstration of our brand building capabilities, one that exceeded our highest expectations, amassing several billion impressions and 640,000 Instagram followers within days of the official launch. Second, we continue to successfully expand our international penetration, highlighted by 20% growth outside of the U.S. in the first quarter. It was the 13th straight quarter that international growth has outpaced the U.S., and we are still very early in our journey. I am particularly excited about a strong growth resurgence in Mexico following our launch of elevated service levels and an impactful new marketing playbook in recent months. In fact, new customers in Mexico increased more than 80% year-over-year in the first quarter, contributing to our improved growth and active customers. Third, our first quarter results provide further confirmation that our investments to capture market share in the luxury segment are paying off. Forward net sales grew 17% year-over-year, our highest growth rate in four years, and forward gross profit increased 36% year-over-year, Notably, at a time when the world's largest multi-brand luxury retailer is closing most of its store locations, we are rapidly expanding our customer base, attracting coveted new brand partners, and having particular success in generating increased sales from high-value customers. Finally, we continue to leverage AI to drive growth and efficiency across the company, including to further elevate the shopping experience and drive higher conversion. I am pleased to report that we have successfully tested and recently launched into production our internally developed generative AI feature discussed last quarter that surfaces contextually relevant questions and answers about our products. This new feature is now live on our Revolve mobile channel for our vast assortment of dresses and delivering meaningful gains. The conversion lift was so compelling that our team is already hard at work to expand our A-B testing to include additional channels and product categories consistent with our efforts to continuously raise the bar on the customer experience. Also notable, we use generative AI to significantly assist in the creation of marketing collateral for the incredibly successful launch of Grow Good Beauty that Michael will talk about in his remarks. It's another great example of how we are able to leverage our data-driven culture and AI technology innovations to drive revenue and efficiency throughout the company. To wrap up, I would like to thank our passionate and innovative Revolve colleagues for their incredible efforts in driving strong results in the first quarter while also advancing our exciting longer-term initiatives that further strengthen our foundation for future profitable growth. It is gratifying to see our team so energized by these growth opportunities, such as physical retail, international, and AI expansion, which we believe give us the opportunity to accelerate our market share gains. The current momentum in the business and the great progress on our initiatives reinforces my confidence in our ability to drive profitable growth in 2026 and beyond. Now, over to Michael.

Thanks, Mike, and hello, everyone. We delivered an outstanding first quarter with strength across geographies, segments, and categories. It is gratifying to see the strong results from the investments we've been making over the recent quarters. Our top line is accelerating, brand heat is building, and customer connection is strengthening. We believe this momentum in the business illustrates our core competitive advantages that position us for continued success over the long term. Our technology and data-driven DNA and proprietary technology infrastructure, our operational excellence and agility, and our powerful brands in connection with the next generation consumer. With that as an introduction, I will focus my remarks on some of the strategic areas we are investing in and that we are especially excited about. The launch of our first ever Revolve label, our ninth annual Revolve festival, physical retail expansion, and our joint venture with Cardi B. First, Revolve Los Angeles. For years, Mike and I have talked about launching a Revolve namesake label. Over the past 23 years, we have diligently focused on building Revolve as a brand, a true brand beyond just a fashion retailer. With this focus and disciplined investment, we have earned the trust and loyalty from millions of Revolve consumers resulting in incredible brand power. We are truly unique as a multi-brand retailer that consumers completely trust to provide fashion discovery. As background, our customers rarely search for a specific brand on Revolve. In fact, less than 10% of products added to shopping carts on Revolve originate from a brand page. Instead, our community views Revolve as their preferred destination to discover what is new and on trend from our edits of more than 1,600 brands, which is very different from other retail destinations. On countless occasions, I have met customers who are excited to share that they are wearing Revolve. They can't remember which brand they are wearing, but know they bought it on Revolve. And with that as context, we couldn't be more excited to leverage our brand strength, design talent, and operational excellence to provide our customers with a true Revolve label. In March, we introduced Revolve Los Angeles, our first ever namesake label that features elevated apparel and evening wear to fill a genuine gap in the market. It aligns with our expansion into physical retail, allowing customers to engage with our brand in real life and in a more permanent, meaningful way. We believe this new collection could expand our market opportunity and create a halo effect on the entire business. Revolve Los Angeles is just the beginning of a new Revolve branded assortment that will extend across categories and price points over time. Since we see incredible potential for this initiative, we are investing incremental brand marketing dollars to drive its success. We have invested in elevated print, billboard, YouTube, and connected TV brand advertising featuring Revolve Los Angeles brand ambassador, Bella Hadid, who perfectly embodies the brand's quintessential Los Angeles energy. We estimate that the impactful campaign has already generated more than 200 million impressions, creating one of the most powerful brand moments in our 23-year history. Revolve and Forward also sponsored the ultra-exclusive and prestigious Vanity Fair Oscar after-party, where Amelia Gray impressed in a striking black gown from Revolve Los Angeles. These longer-term investments are already creating favorable awareness and moving the needle. During March, consumer interest in the Revolve search term increased more than 40% year-over-year, according to Google Trends. We are also continuing to see strength in Revolve mobile app downloads, which increased by more than 50% year-over-year in March. This is particularly exciting considering that our mobile app converts at a much higher rate and app customers have the highest expected lifetime value by a wide margin. Second, Revolve Festival. On April 11th, we hosted our ninth annual Revolve Festival in Coachella Valley, an exclusive experience where everything we're known for comes to life, blending fashion, community, and culture. Every year, we push ourselves to create something more immersive, more unexpected, and more iconic than the last. Our team met the challenge and again raised the bar, delivering an incredible lineup featuring Don Tolliver, Kehlani, and Mustard that captivated the crowd of A-listers and kept the energy buzzing throughout. Built for the next generation of fashion consumers, Revolve Festival ensures that our brand stays connected and strong with the trend-setting young consumers who define what's next. In true Revolve fashion, our event transforms every detail into a story worth sharing on social media with curated photo moments and immersive brand activations that put Revolve and forward looks at the center of the cultural conversation. Our brand-elevating event delivered an incredible experience to our community of celebrities, brands, content creators, partners, and fans attending what one editor called the real main stage of the weekend. The impressive range of A-listers in attendance included Tiana Taylor, who looked stunning in a futuristic gown from our Revolve Los Angeles label, Blackpink members Jenny and Lisa, who turned heads styled in our Halo-owned brand, Emma Roberts, Gabriette, Becky G, members of CatSci, Damson Idris, Charlie and Dixie D'Amelio, members of Binnie, Dwayne Wade, Paige Bueckers, Cameron Brink, Tyga, Big Sean, Thomas Doherty, Sean White, Wiz Khalifa, Rachel Zoe, Victoria Justice, Ty Dolla $ign, The proof of our success is in the incredible numbers. Revolve generated the highest earned media value among all brands during both weekends of the Coachella Music Festival, even though our Revolve Festival was only held during the first weekend, according to Creator IQ, an influencer marketing analytics firm. As icing on the cake, the top performing post during the entire Coachella Festival generated nearly $25 million in earned media value for Revolve, according to Meltwater, a media intelligence firm. Third, physical retail. We remain very excited about the growth opportunity in physical retail over the long term. As we approach its two-year anniversary, our Aspen store continues to achieve great progress on the top line and conversion gains year over year. We are especially pleased with our recent performance considering that Aspen tourism has declined year over year in recent months, coinciding with well below average snow conditions during the ski season. Our investments in the team, operations, and retail technology platform are clearly paying off and further raising the bar on our go-to-market retail strategy. While our Los Angeles store at The Grove is just getting started, several of the early metrics are encouraging. The owned brand mix of net sales at The Grove in Los Angeles is meaningfully higher than online and improving month over month. Also very exciting, even in our LA roots, where the Revolve brand has the highest consumer awareness, we are seeing a measurable lift in e-commerce sales in the local community surrounding The Grove. This illustrates the halo effect synergies between retail stores and our core e-commerce operations and further validates physical retail as a key growth strategy for increasing brand awareness, acquiring new customers, and expanding our market share as stores generate over 60% of global retail spend on apparel and footwear. With these positive signals and the momentum of our brands bolstering our confidence, I am thrilled to share that we have signed a lease for an incredible retail store location in Miami. We expect to open our doors by year-end in what has become one of our strongest U.S. markets. At a recent Miami event held for our VIP clients, our vibrant community of local customers were beyond excited to learn we were opening a store nearby. Before I close, I'll provide an update on our joint venture with Grammy Award-winning performer and global style icon, Cardi B. The partnership leverages our strong operational brand building and marketing expertise with Cardi's powerful brand, trend-setting fashion and beauty inspiration, and a global audience that extends well beyond our current core target demographic. We recently launched the GrowGood beauty assortment of hair care products with Cardi, and early results have exceeded expectations. In fact, every product sold out in less than an hour during a March presale event and sold out again in less than an hour when we officially launched the GrowGood brand in April. Cardi's and our teams did a great job driving awareness leading up to the launch, promoting Grow Good on impactful social channels during Cardi's sold-out tour of 30 cities across North America and at Revolve Festival. The brand was also prominently featured during Cardi's appearances on the Today Show, the Tonight Show starring Jimmy Fallon, and in press features including WWD, Allure, Essence, Marie Claire, and People. Most striking is Grow Good's rapid ascent to over 640,000 Instagram followers in a matter of weeks. But compared to Cardi's 164 million Instagram followers, the gap underscores the brand's extraordinary untapped potential as we look ahead. The market response has been exceptional, and we're moving aggressively to scale on the back of that early demand. We're just getting started and are very excited to build on this early momentum. Wrapping up, our continued profitable growth and strong balance sheet are strategic advantages that give us the capacity to invest for long-term success from a position of strength. With the acceleration in the business, it's clear that our investments are working, setting us up for our next phase of growth. We have incredible momentum, and I am more excited than ever about our many initiatives underway that we believe will enable us to gain further market share in 2026 and beyond. Now, I will turn it over to Jesse for a discussion of the financials.

Thanks, Michael, and hello, everyone. I am very proud of our first quarter results, highlighted by strong double-digit growth in net sales and earnings per share, and meaningful cash flow generation that further solidifies our balance sheet. I'll start by recapping our first quarter results and then close with updates on recent trends in the business and guidance for the balance of the year. Starting with the first quarter results, net sales were $343 million, a year-over-year increase of 16%, and a more than five-point improvement from our net sales growth in the fourth quarter of 2025. Revolve segment net sales increased 15%, and forward segment net sales increased 17% year-over-year in the first quarter. By territory, domestic net sales increased 15%, and international net sales increased 20% year-over-year. Growth in trailing 12-month active customers accelerated to 8% year-over-year, increasing to 2.9 million. Contributing to the strong top line was 12% growth in total orders placed year-over-year to 2.6 million.

Average order value was $298, an increase of 1% year-over-year.

The increase was driven by growth in average selling price, or ASP, that was partially offset by lower units per order. Consolidated gross margin was 52.7%, an increase of 68 basis points year-over-year that primarily reflects meaningful margin expansion in our forward segment. The slight margin decline year-over-year in our Revolve segment primarily reflects a slightly lower mix of full-price net sales compared to the first quarter of 2025, partially offset by shallower markdowns and an increased mix of owned brand net sales year-over-year. Now, moving on to operating expenses. Fulfillment costs were 3.1% of net sales, outperforming our guidance, and a slight decrease year-over-year. Selling and distribution costs were 16.8% of net sales, outperforming our guidance by 30 basis points, and a slight decrease year-over-year. Contributing to the better-than-expected result was a decrease in our return rate year-over-year, partially offset by higher shipping costs. Our marketing investment grew to 15.8% of net sales, an increase of 152 basis points year-over-year. Consistent with our guidance, we meaningfully increased our marketing investments to support exciting growth initiatives, such as the launch of our Revolve Los Angeles label. For the second straight quarter, we achieved operating leverage year-over-year in general and administrative expenses, all while making meaningful investments in various growth initiatives. In dollar terms, G&A expense of $42 million exceeded our guidance. Most of the overage, however, reflects costs that are excluded from adjusted EBITDA, including nearly $700,000 in non-routine costs that were not factored in our outlook and higher than anticipated stock-based compensation expense as our business momentum drove an increase in equity compensation tied to performance objectives. To align our interests with shareholders, a meaningful portion of our equity grants are performance-based with vesting tied to achievement of long-term targets. Below the operating line, other income increased to $2.7 million from $900,000 a year ago. Our tax rate was 25% in the first quarter, a decrease of approximately one percentage point from the prior year. Net income was $14 million and diluted earnings per share was $0.20, an increase of 25% year-over-year. Adjusted EBITDA was $21 million, an increase of 9% year-over-year. Moving on to the balance sheet and cash flow statement, we generated $49 million in net cash provided by operating activities and $45 million in free cash flow, an increase of 9% and 5% year-over-year, respectively. The healthy cash flow generation has further strengthened our balance sheet and liquidity. As of March 31st, 2026, our balance of total cash and cash equivalents increased by $33 million, or 11%, in just three months compared to year-end 2025. And we continue to have no debt. Inventory at March 31, 2026 was $245 million, an increase of 15% year-over-year, broadly consistent with our 16% net sales growth for the first quarter. Now, let me update you on some recent trends in the business since the first quarter ended and provide some direction on our outlook to help in your modeling of the business for the balance of the year. Starting from the top, we're off to an encouraging start with net sales through the month of April, 2026, increasing by approximately 14% year-over-year. For modeling purposes, I want to point out that we face more difficult prior year comparisons for the rest of the second quarter, as net sales in April 2025 following Liberation Day were softer than normal due to peak tariff uncertainty, before rebounding into the low double-digit growth territory for the months of May and June 2025. Shifting to gross margin, we expect gross margin in the second quarter of 2026 of between 54.1% and 54.6%, which implies an increase of 25 basis points year over year at the midpoint of the range. For the full year 2026, we now expect gross margin of between 53.5% and 54.0%, which also implies a year-over-year increase of around 25 basis points at the midpoint of the range. The slight decrease from our prior full year guidance reflects the first quarter results and slightly lower trending of full price mix of net sales year over year. Fulfillment. We expect fulfillment as a percentage of net sales of approximately 3.2% for the second quarter of 2026, consistent with the second quarter of 2025. For the full year 2026, we continue to expect fulfillment costs of between 3.2% and 3.4% of net sales. Selling and distribution. We expect selling and distribution costs as a percentage of net sales of approximately 17.5% for the second quarter of 2026, an increase of approximately 10 basis points year over year. For the full year, we continue to expect selling and distribution costs of between 17.1% and 17.3% of net sales. Marketing. We expect our marketing investment to be approximately 15.7% of net sales in the second quarter, and between 15.3% and 15.8% for the full year 2026, unchanged from our prior guidance. General and administrative. We expect G&A expense of approximately $43 million in the second quarter of 2026, and now expect G&A expense of between $164 million and $168 million for the full year 2026. Approximately half of the increase from our prior G&A outlook is due to increased performance-based equity compensation expense resulting from our business momentum. We are also increasing our investments in the Cardi B joint venture to capitalize on the incredible recent launch of Grow Good Beauty that we believe has tremendous upside potential. And lastly, we continue to expect our effective tax rate to be around 24% to 26% for the full year, 2026. To recap, I am very excited about our strong momentum and confident in the promising growth initiatives we are investing behind and that we believe position us well for continued profitable growth and market share gains in the years ahead. Now we'll open it up for your questions.

And again, if you would like to ask a question, press star and then the number one on your telephone keypad, and we will pause for just a moment to compile the Q&A roster. And our first question comes from the line of Anna Andrivo with Piper Sandler. Your line is open.

Great. Thank you so much for taking our question and congrats on a nice brand momentum. We wanted to follow up on gross margin, declined at the Revolve brand for the past two quarters. What are you embedding in terms of the pressure, again, for Revolve in the second quarter and for the year? Are you guys seeing the shipping cost pressures just given the Middle East conflict? And how are you thinking about those in the guide?

And what tariff rates are you basing the guidance on and then we had a follow-up as well yeah thanks Anna yeah I think you hit all of the points I think first of all for the second quarter we're factoring in the kind of a consistent trend on what we've been seeing for the full price mix and then second to your point we are seeing higher input costs both on the freight side and then also on materials for those petroleum-based products that are impacting the margin there and that has a bigger impact on Revolve than it does on Ford given the own brand mix on Revolve. So those are the big drivers when it comes to the forecast looking forward. For tariffs we are factoring in the current tariff rate which is the incremental 10 percent. That said as we've talked about before been really successful in mitigating the vast majority of tariffs we don't see that as a significant driver one way or another.

And just you know stepping back really happy with the overall result on margin with the 70 basis point increase year on year and particularly on the forward side which increased almost six points so I think overall good results and we're just kind of seeing some of that increased input cost pressure great that's really helpful and just as a follow-up you guys talked about the strength and the high value consumer at forward are you seeing that at Revolve as well I would think yes just given the launch of Revolve LA what percentage of the mix currently is coming from this cohort and just how do you think about that opportunity over time?

Yeah, so we think the opportunity in the high value customer segment is very large for us over time, not just at Ford, but also Revolve. Revolve is a premium price point and a lot of our top Ford shoppers shop significantly on Revolve as well. So we're seeing strength across both websites with that high value consumer. We don't release a specific take mixed percentage publicly. And of course, it depends where we put the cutoff, but we're seeing that as a real area of strength in our business.

Next question comes from the line of Rick Patel with Raymond James. Your line is open.

Thank you. Good afternoon. And I'll add my congrats as well on the strong execution. A couple for me. First, can you help us understand trends by month and whether you think tax refunds were a material benefit to results? And what does guidance assume in terms of the health of the consumer for 2Q and the back half. And then I also have a follow-up.

Yeah, thanks, Rick. So on the monthly cadence, as you recall, we were plus 16% for the first seven weeks of the year. And then we closed at plus 16, and that was on Tupperd Comp. So, you know, I think really great progress as we move through the quarter. And we had some really great marketing activities. We've all Los Angeles, for example. So really pleased with the cadence of the growth throughout the first quarter. And then on the go forward for April, we are seeing some pressure, specifically in the Middle East regions as a result of the geopolitical uncertainty there. So that is definitely having an impact. And that started in March and is continuing to have an impact in April. And then, you know, likely, as you've heard, probably some consumer confidence, consumer sentiment impact building as a result of that conflict.

Got it. And then can we double click on operating expenses? So revenue growth is pretty strong, but you still had a bit of deleverage in the quarter. What's the right way to think about the level of sales growth that would result in operating leverage? And if the strong demand that you're having now does go through some variability, how confident are you in cutting back spending to protect margins?

Yeah, yeah. We, you know, as we've talked about before, we're investing in a number of growth initiatives. So that's a big driver in especially the Q&A results, but also for the full year. So if you just take marketing, for example, up 150 basis points year on year, that was largely due to the growth initiatives we've been driving, Revolve Los Angeles, Grow Good, And then that impacts G&A as well. So really impressive that we got 50 basis points of G&A leverage while investing. If you pull those growth initiatives out, specifically out of G&A, G&A would have been up kind of mid-single digits, call it. So we would have had more than a point of leverage on GNA. So just kind of setting the stage for kind of what it would take and getting to your question. So on GNA for the year, I think at the high end of the range, it would be plus 7%. So anything north of that, of course, on revenue, we'd get leverage on that line item. The other line items are largely variable. And again, in marketing, we're continuing to invest. So that will be an investment point for this year. And as we look ahead to future years, that marketing will balance out after this initial investment year. And then also on the GNA side.

And our next question comes from the line of Peter McGoldrick with Stiefel. Your line is open.

Hey, thanks, guys. Thanks for taking my questions. First, I wanted to ask about the Revolve Los Angeles brand. I was hoping you could share a framework for us to think about the planned resources to support future growth. I'm trying to get at, like, how the Revolve LA brand will fit into the portfolio of your owned brands.

Yes. You know, we think that given the strong, strong, strong, you know, beloved nature of the Revolve brand itself, having the Revolve brand will be a very, very powerful own brand. This allows us to focus and attack with a strong, strong halo that drives product sales in those zones, but also gives greater awareness and affinity for the overall Revolve brand, which should halo into all other categories. Revolve LA is really the beginning of multiple Revolve oriented brands which allow us to touch a range of categories that we currently are not active in so that's very very important for us over the course of college the next 12 to 24 months we'll be attacking very high margin categories that will be really really a whole new white space for us so super excited about that we'll be able to attack and really have a strong presence in a range you know given that we do have a broad range of reasons why customers love us the revolve brand will ultimately touch a wide range of that and ultimately opens up some new fields that we haven't really attacked with our existing brand kind of roster so super excited this is a multi-year roadmap and if you fast forward two to three years from now you'll see that this is going to be you know the next next chapter for our business we're super excited about this and everything is going perfectly according to plan with that first launch excellent and then i just wanted to follow up on uh the full price mix.

How should we be thinking about the change in full price mix? Is this a new consumer behavioral trend or a function of inventory access? And I was curious if you can size what the change in full price mix represents in gross margin guidance relative to the prior outlook and on a year-over-year basis.

Yeah, I would say full price mix fluctuates month-to-month, quarter-to-quarter, so I wouldn't put too much weight towards any significant shift you know there could be some consumer sentiment consumer confidence impacting that but over time we've driven that up and although it is down year on year over the past few years it's it's meaningfully higher than it was kind of in the pre-COVID era so you know I think not putting too much into just the month-to-month quarter-to-quarter volatility there and it's still in a very healthy zone we saw a double-digit increase in full price sales and really healthy increase in full price customers so at this point you know we feel good about the inventory composition um and the mix although it was lower year on year and a little bit lower than our

expectations and our next question comes from the line of michael benetti with evercore your line is open hello hey guys thanks for our question taking our questions here um jesse on input cost could you just double click on that a little bit more you you could you talk through where you're seeing the input cost pressure you mentioned maybe a little bit more on on the materials bucket maybe you can help us separate that from anything you're seeing on freight either domestic or ocean or air freight and then on the um if i if i have our math right here the the product returns look like it was a pretty good improvement year over year on this quarter is there anything new that came online to help support that in the quarter i know you guys are always talking about some

new initiatives there and whether you think those are durable improvements that could continue through the year yeah yeah thanks michael um so first of all on the input costs uh and fuel so So on the input side, as it relates to gross margin, seeing it both on the freight and then also on product, so any kind of petroleum-based products, we're seeing increased costs there and that's just starting. So that impacts the go-forward guidance on gross margin and more of an impact on Revolve, as I mentioned, given that the own brand mix there has a more direct impact than the third parties where we're marking up. And then we are seeing higher freight costs outside of gross margin, higher freight costs within selling and distribution. We've done a really good job in managing fuel surcharges and managing rates with the carriers, but there still has been increased surcharges, especially international, that we're battling against right now. So, some pressure there. And then offsetting that to your point, return rate was down nicely in the first quarter, 80 basis points on top of a 280 basis point reduction last first quarter, first quarter of 2025. And then even sequentially, historically, we do see an increase from Q4 to Q1 around around 150 basis points, and this year, the sequential increase with half of that, so really good results on return rate. And we do have a number of issues still in play. Not getting too specific on it, but we've got a couple more rolling out around the middle of this year, so continue to work on it and continue to try to drive that down in the right ways without impacting the customer experience.

Okay, thanks a lot, guys.

And our next question comes from the line of Nathan Feather with Morgan Stanley. Your line is open.

Hey, everyone. Thanks for taking the question. Really encouraging to see the positive early reception to grow good. I guess just given how quickly that's sold out, both nearly pre-sale and official launch, what are the key limitations to scale and how quickly can you ramp up inventory there? And can you give us an update on the timing for the other, you know, not grow good portions of the Cardi B partnership? Thank you.

Right now, the current limitation is really inventory. So we have the big waves of inventory coming, you know, sequentially over the next few months. So we'll definitely see a sales ramp up there. Sales velocity is just so fast that, you know, predictability is going to be interesting to see over time, but we have nothing but, you know, literally like the highest momentum that we've ever had for a product or a brand ever. So feeling excited, excited about that. Also an extremely, extremely exciting roadmap for, you know, the Groker brand and phonic introduction and beyond. There's a really, really cool plan. Carter's been nothing but the best, best partner, you know, as locked in as possible. So super, super could not be going better. there will be an apparel brand you know plan for the future which we'll get into too many details just yet but that is extremely exciting as well it's it's a zone that is complete white spot in our universe so excited to do something very very special over there as well so super excited for the partnership could not be going any better great thank you and our next question comes from the line of oliver chin with td securities your line is open Hi, this is Julie Shalansky on for Oliver Chen.

I'm curious if you could walk us through the main drivers of the improvement in return rates from this quarter and how you think about that evolving as categories like beauty and own brands continue to scale. And second, I would love to hear some more color on how much the 1Q step up in marketing is recurring infrastructure versus one-time cost for Revolve LA. Thank you.

Yeah, so with regard to the return rates, there's a couple of factors in place. Certainly, there's things we've been working on over the longer term in terms of getting those return rates down, including, I'd say, some pre-existing initiatives that we were able to step up in a bigger way during the quarter. You're also going to have some fluctuation quarter-to-quarter, period-to-period in the return rate number, just like the gross margin number, depending on category, mixed shift, and other factors. So that played a bit of a role there. And then, you know, shifting over to, you know, marketing expenses. I wouldn't say there's any structural change in marketing, but certainly to the extent that we have exciting things to launch that we think can be big growth drivers for many years to come, such as Revolve Los Angeles, incredibly strategic, and then, of course, the Grow Good brand, quite exciting as well. We're going to make sure we fuel those investments with the proper marketing support, and we think it's going to deliver nice returns from those investments.

Great. Thank you.

And our next question comes from the line of Janine Sticker with BTIG. Your line is open.

Hi, thanks for taking my question. I want to ask about the double-digit growth algorithm. You know, you've talked about getting back there for a while. You've been there for two quarters in a row now. Maybe just speak to your confidence in this being the right level of growth to business and sustaining double-digit growth go forward. Thank you.

Yeah, so I think we've seen really nice execution the past couple quarters in terms of delivering growth numbers, and, you know, it's certainly our intention and expectation that that should continue. You know, Revolve itself has huge continued opportunity in just the Revolve core. You know, our brand awareness is still relatively low compared to, you know, much larger premium brands. And, you know, we're still adding active customers at quite a nice rate, and there's a lot of new areas of marketing that we're investing into. So just the core itself is going to provide plenty of opportunity for growth in the coming quarters and in the coming years. And then on top of that, you have category expansion, which is a big growth driver for us. You have international expansion, you know, where we've seen 13 consecutive quarters with international outpacing the U.S. And we saw strong growth in international across pretty much every major region in Q1, despite some of the weakness in the Middle East. And so really strong core drivers. And then on top of that, you have these, you know, really high upside drivers, physical retail completely untouched for the Revolve brand, right? And, you know, we think that's going in a really nice direction and ultimately can have a huge impact on our overall TAM and revenue. You know, you have Revolve LA, right, which strategically we think just opens things up completely from a marketing playbook perspective and also from a kind of product category perspective as far as, you know, merchandise that can be more broadly appealing and kind of fit with consumers in a different way than Revolve historically has. And then, of course, you have these brand partnership opportunities, right, with Grow Good launching in the quarter. And that's something that's been obviously building. We've been investing in it for some time, an absolutely incredible launch. And, you know, we think it can be a brand that's quite substantial in value and revenue. And, you know, there may be more of that to come. And so, yeah, I think the core growth algorithm has a ton of upside. And then we have these huge opportunities on top of it. And I think we're positioned very well.

Great. And then maybe just from a consumer lens, anything you've seen in terms of consumer behavior last year, you saw some volatility, but any of that this year?

No, nothing significant to call out, you know, outside of the obvious, you know, Middle East impact. But yeah, nothing outside of that. And then, you know, we talked about the high value customers continuing to really perform, especially on the forward side. So it's kind of more of the same.

And our next question comes from the line of Simeon Siegel with Guggenheim. Your line is open.

Thanks. Hey, everyone. Afternoon. Nice job. Could you elaborate at all on that $11 million minority investment you talked about? How should we think in general about your approach to that building cash balance? And then maybe this one's for Jesse. Just what do we think about the 1% AOV growth, recognizing the next shift to the higher ticket forward segment? So I guess maybe how is AOV for evolve versus forward on a segment basis, and how are you thinking about AOV going forward? Thanks, guys.

Yeah, so I can start with talking about our approach to considering acquisitions. You know, first and foremost, we're going to be disciplined. We're going to be opportunistic. In this case, we found a brand that we felt like was very strategic for us in terms of the category that it operated in. And we felt like it was an incredible brand with an incredible team behind it. You know, it's investment terms that made a lot of sense. And so, you know, those are the sorts of opportunities we're looking for. We're really excited about the partnership and, you know, we're hopeful it's going to work out quite well for both sides.

Yeah, and then on AOV up 1%, it was up across both Revolve and Forward, and we did see a higher increase in the average selling price, partially offset by units per order. So as we look at that going forward, a similar trend in April, and we'd expect a flat to slight increase in AOV for the balance of the year.

All right, sounds good. Thanks, guys. Best luck for the year.

And our next question comes from the line of Dylan Cardin with William Blair. Your line is open.

Thanks. Jesse, you mentioned kind of guiding or exiting at 16% growth, but then sort of talking down the latter part of the quarter. So presumably sales came in above your expectations. And I'm just curious, is the strategy here to take that kind of upside and invest it back into marketing such that, you know, you're kind of doing presumably not the similar thing and talking down sort of the latter part of this quarter, to the extent that you see those trends hold, would you want to temper expectations on flow through.

Yeah. Yeah. I would say we had the marketing plans in play ahead of that revenue growth and the revenue growth came through very well for us. So really happy with the way that played out. I wouldn't say that we are taking excess revenue and investing it back into marketing, but I will say that when we see something working, we'll continue to invest. So you could see that going forward. And is there anything you can share on the efficiency or any incremental efficiency on marketing that gives you sort of confidence that ramping it here is the right strategy or is it simply just to support these initiatives yeah most of it was to support these initiatives and it impacted both performance and brand we talked about in the prepared remarks you know investments in billboard placements connected tv and other areas that we typically haven't done in the past but have been playing out very well and a really good roi on those incremental investment thanks and then finally anything to share on maybe the lift in your beauty business in the quarter given that launch and the success of it are you seeing kind of traction or follow-on or any sustained

growth beyond that one item or one kit or one brand yeah so with regards to beauty grow good the grow good launch and sales we did not hit the gap numbers for the first quarter because that's because any sales that occurred in the first quarter were all pre-sale. So, beauty as a whole, as you noted, we saw strong growth, excluding the Grow Good launch, which was incredible. And, you know, that's really just a continuation of a trend, I think, that we've seen for a number of years now. And, you know, of course, we think that that business has a lot more room to grow.

Thanks, Jess.

Our next question comes from the line of JSOLE with UBS. Your line is open.

Great. Thank you so much. Two questions. Michael, for you, just on retail, sound excited about the Miami store. What have you learned so far about retail? Maybe who shops in your store, the demographics, price points, traffic that maybe informs your long-term store account opportunity in the U.S.? You know, do you see 50 stores, 100 stores possible? Can you give us any kind of color on that? And then maybe, Mike, for you, you mentioned AI is a key contributor to recent momentum. Can you maybe just give us some examples of how AI is currently impacting, you know, operational metrics or fulfillment efficiencies or some other part of the business? Thank you.

Probably the most notable thing about physical retail is that our customer loves our own brands. We're pushing the limit there and pushing further and further and own brands performs better on a style or style foot space and rack space, you know, so we will continue to ramp there. This has also been part of the insight that's helped us invest more into own brands, launch revolve Los Angeles, expanded the categories that we haven't historically been active in because they were more suited for physical retail versus you know e-commerce so those two coming together over the long term will be incredibly incredibly powerful also thus far we feel quite confident in our choice of locations we were very nervous that you know we we get a wrong location you really can't do much about that but we'll be very disciplined about locations that we feel extremely de-risked and this location in Aventura specifically where in Aventura Mall it is, we feel 100% positive that we will get our customer for sure. Do you guys want to run with the AI question? It's super fun for all of us.

Yeah, yeah, for sure. So, in terms of AI, yeah, there's a whole host of areas. It's been impacting the business in a very positive way, which has enabled a lot of the revenue growth that we've seen and enabled our ability to go after opportunities quickly, make better decisions, et cetera. So, you know, some of the things we talked about on the call in terms of recent launches, launch of the new generative AI Q&A section on portions of our website. We saw a really strong lift from that. And what's exciting is it was launched only on dresses and only on a subsegment of our property. So obviously, we have a lot of room to continue to expand that and roll that out. We also talked about the marketing collateral, how it really accelerated our ability to produce high-quality marketing collateral quickly. We mentioned that with regards to the Grow Good launch, but the reality is that's true across the business, right? And so that enables us to you move faster, more quickly, and do more from a marketing perspective. AI virtual styling tools we've talked about on previous calls. That's another area where we're seeing really strong consumer reception and interest, and another area where it's not fully rolled out by any means, right? So a lot of continued opportunity there. And then, of course, just across the whole business, you know, we're continuing to develop new, better internal tools and algorithms to make better decisions. And, you know, you've seen a lot of the gross margin gains we've been able to gain through the years in terms of full price markdown ratios, better margins on markdown and things of that nature. And there's more in the works. We have some incredible internal tools for reporting purposes that can really kind of unlock and I think unleash certain areas of the company in terms of quicker decision making.

So again, really across the board, taking a step back, if you look at a multi-year period, you have AI search enhancements that we've rolled out. you have improvements to merchandise and personalization algorithms it's really impactful across the entire business got it thank you so much and as a reminder to star one if you would like to ask a question and our next question comes from the line of matt coranda with roth capital your line is open hey guys thanks um maybe just wanted to spin back to the lower mix of full price sales um could you pinpoint sort of when that trend showed up in the quarter Was that more of a consumer behavior shift that you saw, or is that an assortment and sort of mixed shift based on what you had available?

Yeah, so with regard to the full price markdown mix, I think it's important to take a step back. And, you know, one note that, again, these percentages are going to fluctuate a bit quarter to quarter. Over longer periods of time, we've driven that percentage up significantly over multi-year periods. And it's also extremely favorable versus, you know, I think a lot of the competition, especially in multi-brand. retail. And then I think it's also important to kind of note and look at how we manage it, which is by and large algorithmic in nature, right? And so, you know, there'll be some mixes and product shift that can affect the full price markdown ratio from quarter to quarter. You know, as you noted, there can be some shifts in consumer behavior, but overall, we think it's in a very healthy place. And again, it'll fluctuate a bit quarter to quarter, segment to segment. Also taking a step back, we saw the combined business had gross margin gains for the quarter. So, again, we think it's in a very healthy place, and, you know, I think nothing particularly of note to call out with regards to the fluctuation.

Okay, and then on actives, the growth is really solid, and I don't know if anyone's focused on that just yet, but any color on drivers of the growth in active customers, reactivations versus entirely new?

It sounded like maybe there was some strength in international that just wanted you to unpack the strong growth there a little bit more. yeah yeah it was a really great number that plus eight percent on active customers and it was driven by both new customers and existing customers we saw orders per active and revenue per active go up so really good engagement from the existing and then on new customers it was across the board we saw really great growth across revolve forward domestic international full price markdown so i think it all goes back to the execution and the investments we've been making over the past few quarters and then you know specifically this quarter we're very active in marketing and revolve los angeles creates a nice halo effect for the entire business all right thanks guys nice job our final question comes from the line of ashley owens with key bank capital

markets your line is open hi great thanks for taking our questions so maybe just to start out quickly on international you said plus 20 despite the slowdown in the middle east continuing could you just help us understand regional composition and maybe quantify what percentage total international middle east represents and then how much of that growth was driven by mexico versus other regions and then to follow up just on tariff refunds if you could provide an update on the status of any claims you filed or just where you are in the process what timing we should expect for potential recovery and then just more broadly is there anything embedded in the current growth margin guidance that assumes refund recoveries or are you treating any potential benefit as aside to the current outlook. Thanks.

Yeah, so I can start with talking about international. So we saw broad strength internationally. Every major region was up year every year. So it certainly wasn't any particular one region driving the growth, including the Middle East, actually was up for Q1. Now, if you pull the quarter apart, March was down for the Middle East, and that continued through April. But as a whole, we saw strong growth across the board. And then, you know, In terms of some of the outlier contributors, Mexico, we're having incredible growth in as a result of some service enhancements we've rolled out and some new marketing issues. So we're really pleased with the growth in that region. And certainly it drove a very significant portion of overall international growth. But again, at the same time, all major regions were up year over year. So we're seeing nice growth across the board.

Yeah, then on tariffs, the team was very on top of this. And I think the refund application process started on April 20th. um and they filed everything within a day or two of that so claims have been filed um starting to receive responses timing i think is tbd you know we've heard 60 to 90 days but there's some tiering system so you know i don't think we'll see it all in one fell swoop it is not included in the guidance so that will be a potential benefit but again timing is tbd on that and that concludes our question and answer session i will now turn the call back over to management for closing remarks Thank you guys for joining this quarter, and a big thanks to our team for the hard work

It's very clear to me that our multi-year strategic plans and investments are going exactly as planned, great work, continued focus and execution quarter after quarter will undoubtedly result in phenomenal results, excited for the next quarter ahead and the many years Thank you, guys.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.