8-K
Revolve Group, Inc. (RVLV)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2020
REVOLVE GROUP, INC.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 001-38927 | 46-1640160 |
|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br><br>Identification No.) |
| 12889 Moore Street<br><br><br>Cerritos, California | 90703 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(562) 677-9480
Registrant’s Telephone Number, Including Area Code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s): | Name of each exchange on which registered: |
|---|---|---|
| Class A Common Stock, par value $0.001 per share | RVLV | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 25, 2020, Revolve Group, Inc. (the “Company”) issued a press release announcing its financial results for its fourth quarter and fiscal year ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information included in Item 2.02 of this Current Report on Form 8-K and the exhibits attached hereto are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in any such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated February 25, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| REVOLVE INC. | ||
|---|---|---|
| Date: February 25, 2020 | By: | /s/ JESSE TIMMERMANS |
| Jesse Timmermans | ||
| Chief Financial Officer |
2
rvlv-ex991_6.htm
Exhibit 99.1
Revolve Group Announces Fourth Quarter and Full Year 2019 Financial Results
Los Angeles, CA – February 25, 2020 - Revolve Group, Inc. (NYSE: RVLV), the next-generation fashion retailer for Millennial and Generation Z consumers, today announced financial results for the fourth quarter and full year ended December 31, 2019.
“We are proud to extend our long track record of achieving top-line growth and profitability, delivering net sales growth of over 20%, continued growth in profitability and exceptional cash flow in 2019,” said co-founder and co-CEO Michael Mente. “We are excited about our 2020 initiatives to continue building on the recent momentum in the Forward segment and International markets, while further investing in the core REVOLVE segment, including enhancing the owned brands platform and continuing to innovate in marketing, technology and customer experience,” added co-founder and co-CEO Mike Karanikolas.
Fourth Quarter and Full Year 2019 Financial Summary
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | %<br><br><br>Change | 2019 | 2018 | %<br><br><br>Change | |||||
| (in thousands) | ||||||||||
| Net sales | $ | 147,556 | $ | 127,723 | 16% | $ | 600,993 | $ | 498,739 | 21% |
| Gross profit | $ | 78,103 | $ | 69,156 | 13% | $ | 321,953 | $ | 265,306 | 21% |
| Gross margin | 52.9% | 54.1% | 53.6% | 53.2% | ||||||
| Net income | $ | 8,405 | $ | 7,699 | 9% | $ | 35,667 | $ | 30,638 | 16% |
| Adjusted EBITDA (non-GAAP financial measure) | $ | 13,650 | $ | 11,876 | 15% | $ | 55,605 | $ | 46,495 | 20% |
| Net cash provided by (used in) operating activities | $ | 14,224 | $ | (1,382) | N/A | $ | 46,057 | $ | 26,655 | 73% |
| Free cash flow (non-GAAP financial measure) | $ | 13,226 | $ | (2,762) | N/A | $ | 33,602 | $ | 23,610 | 42% |
Operational Metrics
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | %<br><br><br>Change | 2019 | 2018 | %<br><br><br>Change | |||||
| (in thousands, except average order value) | ||||||||||
| Active customers | 1,488 | 1,175 | 27% | 1,488 | 1,175 | 27% | ||||
| Orders placed | 1,092 | 954 | 14% | 4,715 | 3,710 | 27% | ||||
| Average order value | $ | 282 | $ | 274 | 3% | $ | 275 | $ | 279 | (1)% |
Full Year 2019 Highlights
| • | Total net sales of $601.0 million, a year-over-year (YoY) increase of 21% |
|---|---|
| • | Gross margin of 53.6%, a YoY increase of 37 basis points |
| --- | --- |
| • | Net income of $35.7 million, a YoY increase of 16% |
| --- | --- |
| • | Adjusted EBITDA (a non-GAAP financial measure) of $55.6 million, a YoY increase of 20% |
| --- | --- |
| • | Net cash generated by operating activities of $46.1 million, a YoY increase of 73% |
| --- | --- |
| • | Free cash flow (a non-GAAP financial measure) of $33.6 million, a YoY increase of 42% |
| --- | --- |
| • | Cash and cash equivalents of $65.4 million, an increase of $14.3 million, or 28%, from September 30, 2019, and no debt |
| --- | --- |
Segment Revenue Highlights
| • | Revolve segment net sales of $527.3 million in FY 2019 and $125.2 million in Q4 2019, YoY increases of 22% and 13%, respectively |
|---|---|
| • | Forward segment net sales of $73.7 million in FY 2019 and $22.3 million in Q4 2019, YoY increases of 13% and 33%, respectively |
| --- | --- |
2020 Outlook
Based on information available as of February 25, 2020, we are providing the following outlook for the full fiscal year ending December 31, 2020:
| Net Sales | $679 - $703 million | 13% - 17% growth |
|---|---|---|
| Adjusted EBITDA | $56 - $61 million | 1% - 10% growth<br><br><br>8.2% - 8.7% margin |
Additional Full Year 2020 Outlook Assumptions
| • | The net sales outlook factors in an estimated 1 to 3 point negative impact to the FY 2020 net sales growth rate as a result of the coronavirus outbreak, due primarily to supply constraints for our owned brand products and, to a lesser extent, supply constraints for third party brands that source from China, as well as reduced consumer demand in the greater China region. The situation remains fluid and uncertain, so estimates of the negative impact are subject to change. |
|---|---|
| • | Gross margin is expected to be below the 52.9% gross margin reported for Q4 2019. |
| --- | --- |
| • | Effective tax rate is expected to be approximately 25%. |
| --- | --- |
| • | Weighted average diluted shares are expected to be approximately 72 million. |
| --- | --- |
| • | Capital expenditures are expected to be approximately $5 million. |
| --- | --- |
We have not reconciled our adjusted EBITDA outlook to GAAP net income because we do not provide an outlook for GAAP net income due to the uncertainty and potential variability of other expense, net, the provision for income taxes and non-routine items, which are reconciling items between adjusted EBITDA and GAAP net income. Because such items cannot be reasonably predicted, we are unable to provide a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure. However, such items could have a significant impact on GAAP net income.
Conference Call Information
Revolve Group management will host a call today at 4:30 pm ET / 1:30 pm PT to discuss today’s results in more detail. To participate, please dial (866) 393-4306 within the United States or (734) 385-2616 outside the United States approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 8389657. The conference call will also be accessible, live via audio broadcast, on the Investor Relations section of the Revolve Group website at investors.revolve.com. A replay of the conference call will be available online at investors.revolve.com. In addition, an audio replay of the call will be available for one week following the call and can be accessed by dialing (855) 859-2056 within the United States or (404) 537-3406 outside the United States. The replay ID is 8389657.
Forward-Looking Statements
This press release contains ‘‘forward-looking statements’’ within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements, including but not limited to statements regarding our future growth and our financial outlook for the full fiscal year 2020. Forward-looking statements include statements containing words such as “expect,” “anticipate,” “believe,” “project,” “will” and similar expressions intended to identify forward-looking statements. These forward-looking statements are based upon our current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-
looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to general economic conditions, our fluctuating operating results, seasonality in our business, our ability to acquire products on reasonable terms, our online business model, demand for our products, our ability to attract customers in a cost effective manner, the strength of our brand, competition, fraud, system interruptions, our ability to fulfill orders and other risks and uncertainties included under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission, including, without limitation, the final prospectus related to our initial public offering filed with the SEC on June 7, 2019 and the Annual Report on Form 10-K for the year ended December 31, 2019, which we expect to file with the SEC on or before February 26, 2019. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and Revolve Group, Inc. undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.
Use of Non-GAAP Financial Measures and Other Operating Metrics
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), we reference in this press release and the accompanying tables the following non-GAAP financial measures: adjusted EBITDA, free cash flow and adjusted diluted earnings per share.
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 prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.
We use these non-GAAP financial measures to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and when planning, forecasting, and analyzing future periods.
For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned “Reconciliation of Non-GAAP Financial Measures” included at the end of this release
Definitions of our Non-GAAP financial measures and other operating metrics are presented below.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income before other expense, net, taxes, depreciation and amortization, adjusted to exclude the effects of equity-based compensation expense and certain non-routine items. Adjusted EBITDA is a key measure used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of equity-based compensation, excludes an item that we do not consider to be indicative of our core operating performance.
Free Cash Flow
Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by (used in) operating activities less net cash used in capital expenditures. We view free cash flow as an important indicator of our liquidity because it measures the amount of cash we generate. Free cash flow also reflects changes in working capital.
Adjusted Diluted Earnings per Share
Adjusted diluted earnings per share is a non-GAAP financial measure that we calculate as diluted earnings (net loss) per share adjusted to exclude the per share impact of the issuance and repurchase of Class B common stock as part of our initial public offering.
Active Customers
We define an active customer as a unique customer account from which a purchase was made across our platform at least once in the preceding 12-month period. In any particular period, we determine our number of active customers by counting the total number of customers who have made at least one purchase in the preceding 12-month period, measured from the last date of such period.
Total Orders Placed
We define total orders placed as the total number of customer orders placed by our customers across our platform in any period.
Average Order Value
We define average order value as the sum of the total gross sales from our sites in a given period divided by the total orders placed in that period. We believe our high average order value demonstrates the premium nature of our product. Average order value varies depending on the site through which we sell merchandise.
About Revolve Group, Inc.
Revolve Group, Inc. (RVLV) is the next-generation fashion retailer for Millennial and Generation Z consumers. As a trusted, premium lifestyle brand, and a go-to online source for discovery and inspiration, we deliver an engaging customer experience from a vast yet curated offering of apparel, footwear, accessories and beauty styles. Our dynamic platform connects a deeply engaged community of millions of consumers, thousands of global fashion influencers, and hundreds of emerging, established and owned brands.
We were founded in 2003 by our co-CEOs, Michael Mente and Mike Karanikolas. We sell merchandise through two differentiated segments, REVOLVE and FORWARD, that leverage one platform. Through REVOLVE we offer a highly curated assortment of full-price premium apparel and footwear, accessories and beauty products from emerging, established and owned brands. Through FORWARD we offer an assortment of iconic and emerging luxury brands. For more information, visit www.revolve.com.
Contact:
Investors:
Erik Randerson, CFA
562.677.9513
or
Media:
Kendall Sargeant
REVOLVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | ||||||
| Net sales | $ | 147,556 | $ | 127,723 | $ | 600,993 | $ | 498,739 | |
| Cost of sales | 69,453 | 58,567 | 279,040 | 233,433 | |||||
| Gross profit | 78,103 | 69,156 | 321,953 | 265,306 | |||||
| Operating expenses: | |||||||||
| Fulfillment | 4,499 | 3,920 | 19,413 | 13,292 | |||||
| Selling and distribution | 20,895 | 17,794 | 87,706 | 70,621 | |||||
| Marketing | 21,602 | 18,924 | 89,141 | 74,394 | |||||
| General and administrative | 20,471 | 17,836 | 77,595 | 65,201 | |||||
| Total operating expenses | 67,467 | 58,474 | 273,855 | 223,508 | |||||
| Income from operations | 10,636 | 10,682 | 48,098 | 41,798 | |||||
| Other expense, net | 278 | 156 | 931 | 631 | |||||
| Income before income taxes | 10,358 | 10,526 | 47,167 | 41,167 | |||||
| Provision for income tax | 1,953 | 2,827 | 11,500 | 10,529 | |||||
| Net income | 8,405 | 7,699 | 35,667 | 30,638 | |||||
| Less: Net loss attributable to non-controlling interest | — | — | — | 47 | |||||
| Net income attributable to Revolve Group, Inc. | 8,405 | 7,699 | 35,667 | 30,685 | |||||
| Less: Repurchase of Class B common stock upon<br><br><br>corporate conversion | — | — | (40,816 | ) | — | ||||
| Net income (loss) attributable to common<br><br><br>stockholders | $ | 8,405 | $ | 7,699 | $ | (5,149 | ) | $ | 30,685 |
| Earnings (net loss) per share of Class A and Class B<br><br><br>common stock: | |||||||||
| Basic | $ | 0.12 | $ | 0.12 | $ | (0.09 | ) | $ | 0.47 |
| Diluted | $ | 0.12 | $ | 0.11 | $ | (0.09 | ) | $ | 0.44 |
| Weighted average Class A and Class B common shares<br><br><br>outstanding: | |||||||||
| Basic | 68,921 | 41,936 | 57,294 | 41,936 | |||||
| Diluted | 71,947 | 44,810 | 57,294 | 44,584 |
REVOLVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except unit, share and per share data)
| 2018 | |||
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | 65,418 | $ | 16,369 |
| Accounts receivable, net | 4,751 | 5,337 | |
| Inventory | 104,257 | 102,220 | |
| Income taxes receivable | 761 | — | |
| Prepaid expenses and other current assets | 24,155 | 15,227 | |
| Total current assets | 199,342 | 139,153 | |
| Property and equipment, net | 14,734 | 5,907 | |
| Intangible assets, net | 240 | 564 | |
| Goodwill | 2,042 | 2,042 | |
| Other assets | 642 | 731 | |
| Deferred income taxes, net | 15,290 | 13,677 | |
| Total assets | 232,290 | $ | 162,074 |
| Liabilities and Members'/Stockholders' Equity | |||
| Current liabilities: | |||
| Accounts payable | 29,813 | $ | 20,219 |
| Income taxes payable | 470 | 917 | |
| Accrued expenses | 19,399 | 18,398 | |
| Returns reserve | 35,104 | 29,184 | |
| Other current liabilities | 16,740 | 13,538 | |
| Total current liabilities | 101,526 | 82,256 | |
| Members' equity: | |||
| Class T Preferred Units, no par value—zero and 23,551,834 units authorized,<br> issued and outstanding as of December 31, 2019 and December 31, 2018,<br> respectively. | — | 15,000 | |
| Class A Common Units, no par value—zero and 41,936,219 units authorized,<br> issued and outstanding as of December 31, 2019 and December 31, 2018,<br> respectively. | — | 3,548 | |
| Stockholders' equity: | |||
| Class A common stock, 0.001 par value; 1,000,000,000 and zero shares<br> authorized as of December 31, 2019 and December 31, 2018, respectively;<br> 14,009,859 and zero shares issued and outstanding as of December 31, 2019<br> and December 31, 2018, respectively. | 14 | — | |
| Class B common stock, 0.001 par value; 125,000,000 and zero shares authorized<br> as of December 31, 2019 and December 31, 2018, respectively; 55,069,124 and<br> zero shares issued and outstanding as of December 31, 2019 and December 31,<br> 2018, respectively. | 55 | — | |
| Accumulated members' equity | — | 61,270 | |
| Additional paid-in capital | 74,018 | — | |
| Retained earnings | 56,677 | — | |
| Total members'/stockholders' equity | 130,764 | 79,818 | |
| Total liabilities and members’/stockholders’ equity | 232,290 | $ | 162,074 |
All values are in US Dollars.
REVOLVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Year Ended December 31, | ||
|---|---|---|
| 2019 | 2018 | |
| Operating activities: | ||
| Net income | $35,667 | $30,638 |
| Adjustments to reconcile net income to net cash provided by operating<br><br><br>activities: | ||
| Depreciation and amortization | 3,952 | 2,867 |
| Equity-based compensation | 2,067 | 1,400 |
| Deferred income taxes, net | (1,613) | (3,768) |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 586 | 361 |
| Inventories | (15,623) | (26,046) |
| Income taxes receivable | (761) | 3,708 |
| Prepaid expenses and other current assets | 1,662 | (3,356) |
| Other assets | 89 | (517) |
| Accounts payable | 9,594 | 2,365 |
| Income taxes payable | (447) | 917 |
| Accrued expenses | 1,001 | 5,579 |
| Returns reserve | 5,920 | 10,179 |
| Other current liabilities | 3,963 | 2,328 |
| Net cash provided by operating activities | 46,057 | 26,655 |
| Investing activities: | ||
| Purchases of property and equipment | (12,455) | (3,045) |
| Net cash used in investing activities | (12,455) | (3,045) |
| Financing activities: | ||
| Proceeds from initial public offering, net of underwriting discounts<br><br><br>paid | 57,077 | — |
| Repurchase of Class B common stock upon corporate conversion | (40,816) | — |
| Repayment of line of credit | — | (15,100) |
| Payment of deferred offering costs | (1,834) | (2,521) |
| Proceeds from the exercise of stock options, net | 752 | — |
| Net cash provided by (used in) financing activities | 15,179 | (17,621) |
| Effect of exchange rate changes on cash and cash equivalents | 268 | (208) |
| Net increase in cash and cash equivalents | 49,049 | 5,781 |
| Cash and cash equivalents, beginning of period | 16,369 | 10,588 |
| Cash and cash equivalents, end of period | $65,418 | $16,369 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid during the period for: | ||
| Interest | $ — | $87 |
| Income taxes, net of refund | $14,324 | $9,673 |
REVOLVE GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
The following table summarizes our net sales and gross profit for each of our reportable segments (in thousands):
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| Net sales | 2019 | 2018 | 2019 | 2018 | ||||
| REVOLVE | $ | 125,230 | $ | 110,960 | $ | 527,251 | $ | 433,548 |
| FORWARD | 22,326 | 16,763 | 73,742 | 65,191 | ||||
| Total | $ | 147,556 | $ | 127,723 | $ | 600,993 | $ | 498,739 |
| Gross profit | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| REVOLVE | $ | 68,951 | $ | 62,725 | $ | 292,042 | $ | 241,061 |
| FORWARD | 9,152 | 6,431 | 29,911 | 24,245 | ||||
| Total | $ | 78,103 | $ | 69,156 | $ | 321,953 | $ | 265,306 |
The following table lists net sales by geographic area (in thousands):
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||
| United States | $ | 123,188 | $ | 107,814 | $ | 502,882 | $ | 409,320 |
| Rest of the world | 24,368 | 19,909 | 98,111 | 89,419 | ||||
| Total | $ | 147,556 | $ | 127,723 | $ | 600,993 | $ | 498,739 |
REVOLVE GROUP, INC. AND SUBSIDIARIES
KEY OPERATING AND FNANCIAL METRICS
(Unaudited)
(In thousands, except average order value and percentages)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||||
| (in thousands, except average order value and percentages) | ||||||||||||
| Gross margin | 52.9 | % | 54.1 | % | 53.6 | % | 53.2 | % | ||||
| Adjusted EBITDA | $ | 13,650 | $ | 11,876 | $ | 55,605 | $ | 46,495 | ||||
| Free cash flow | $ | 13,226 | $ | (2,762 | ) | $ | 33,602 | $ | 23,610 | |||
| Active customers | 1,488 | 1,175 | 1,488 | 1,175 | ||||||||
| Total orders placed | 1,092 | 954 | 4,715 | 3,710 | ||||||||
| Average order value | $ | 282 | $ | 274 | $ | 275 | $ | 279 |
REVOLVE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
A reconciliation of non-GAAP adjusted EBITDA to net income for the three and twelve months ended December 31, 2019 and 2018 is as follows (in thousands):
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||
| (in thousands) | ||||||||
| Net income | $ | 8,405 | $ | 7,699 | $ | 35,667 | $ | 30,638 |
| Excluding: | ||||||||
| Other expense, net | 278 | 156 | 931 | 631 | ||||
| Provision for income tax | 1,953 | 2,827 | 11,500 | 10,529 | ||||
| Depreciation and amortization | 1,236 | 658 | 3,952 | 2,867 | ||||
| Equity-based compensation | 522 | 536 | 2,067 | 1,400 | ||||
| Non-routine items ^(1)^ | 1,256 | — | 1,488 | 430 | ||||
| Adjusted EBITDA | $ | 13,650 | $ | 11,876 | $ | 55,605 | $ | 46,495 |
| (1) | Non-routine items in the three and twelve months ended December 31, 2019 primarily relate to legal settlements. Non-routine items in the twelve months ended December 31, 2018 primarily relate to our entity restructuring and our initial public offering. | |||||||
| --- | --- |
A reconciliation of non-GAAP free cash flow to cash provided by operating activities for the three and twelve months ended December 31, 2019 and 2018 is as follows (in thousands):
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||||
| (in thousands) | ||||||||||||
| Net cash provided by (used in) operating activities | $ | 14,224 | $ | (1,382 | ) | $ | 46,057 | $ | 26,655 | |||
| Purchases of property and equipment | (998 | ) | (1,380 | ) | (12,455 | ) | (3,045 | ) | ||||
| Free cash flow | $ | 13,226 | $ | (2,762 | ) | $ | 33,602 | $ | 23,610 | |||
| Net cash used in investing activities | $ | (998 | ) | $ | (1,380 | ) | (12,455 | ) | (3,045 | ) | ||
| Net cash provided by (used in) financing activities | $ | 612 | $ | (741 | ) | 15,179 | (17,621 | ) |
A reconciliation of non-GAAP adjusted diluted earnings per share to diluted earnings (net loss) per share for the three and twelve months ended December 31, 2019 and 2018 is as follows (in dollars):
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Class A | Class B | Class B | Class A | Class B | Class B | |||||||||
| Earnings (net loss) per share — diluted | $ | 0.12 | $ | 0.12 | $ | 0.11 | $ | (0.09 | ) | $ | (0.09 | ) | $ | 0.44 |
| Repurchase of Class B common stock, net | — | — | — | 0.59 | 0.59 | — | ||||||||
| Adjusted earnings per share — diluted | $ | 0.12 | $ | 0.12 | $ | 0.11 | $ | 0.50 | $ | 0.50 | $ | 0.44 |