Thank you. And good morning, everyone. Here with me today are Neil Blumenthal and Dave Gilboa, our Co-Founders and Co-CEOs, alongside Steve Miller, Senior Vice President and Chief Financial Officer. Before we begin, we have a couple of reminders. Our earnings release and slide presentation are available on our website at investors.warbyparker.com. During this call and in our presentation, we will be making comments of a forward-looking nature. Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties. For more information about some of these risks, please review our company’s SEC filings, including the section titled Risk Factors in the company's latest annual forms on Form 10-K. These forward-looking statements are based on the information as of May 16th, 2022 and we assume no obligation to publicly update or revise our forward-looking statements. Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not to substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of these items to our nearest U.S. GAAP measure can be found in this morning's press release and on our slide deck available on our IR website. I would now like to pass over to host, Neil Blumenthal to begin. Please go ahead.

Good morning, everyone. And thank you for starting your day with us. This is probably the first meeting many of you are having this week, so we'll try to do our best to make this engaging and productive. And with that, I'll dive right into Q1 performance. Our team has continued to make strong progress throughout the quarter in executing on our key objectives and driving sustainable growth. In particular, we grew our active customer base, expanded our products and services offerings, opened eight new retail stores, and further enhanced our digital capabilities. As we walked through our last earnings call, Omicron was particularly impactful for us in Q1 given the unique seasonality of our business. We believe Omicron resulted in approximately $15 million worth of lost sales in Q1. Revenue for the first quarter was $153.2 million, up 10.3% versus the first quarter of 2021, and up 18% on a three-year CAGR basis. And while Q1 was the lowest growth and profitability quarter we expect to have this year, we are proud of the milestones we achieved despite the challenging backdrop. This quarter, we launched four eyewear collections, including our spring core collection starting at our core price point of $95, including prescription lenses, as well as our Nesso Series, which is priced at $195 and features a unique interlocking construction dreamed up by our in-house design team and produced in Italy. Across our collections, we continue to focus on delivering a range of styles and fits for different consumer lifestyles and preferences, all while prioritizing exceptional quality and value. This commitment to design and convenience inspired our new clip-on assortment, which allows customers to transform their favorite optical frames into sunglasses instantaneously, and just in time for summer. We ended the quarter with more than 2.2 million happy customers who helped fuel our growth by telling friends and family members about their experiences with us. Since day one, word of mouth has been and continues to be the primary way customers learn about our brand. And we're encouraged that these customers are spending more with us than ever before, as our average revenue per customer grew 11% year-over-year to $249. To continue to meet customers where and how they want to shop, we expanded our retail fleet by opening eight new stores, bringing our store count to 169 locations at the end of Q1. This included opening our very first store in Nebraska and going deeper in key markets like Houston and Tampa, where we opened our sixth and third stores respectively. Throughout Q1, we continued to enhance our holistic vision care offering by making it even easier for customers to get an eye exam with us. This starts by adding and retaining highly engaged optometrists. We believe our optometrists love working for Warby Parker because of our mission and culture, the career opportunities they see in front of them as part of the fast-growing brand, the competitive benefits we offer, and the work structure and environment we've created, which allows them to focus first and foremost on patient experience and care. We continue to see increasing sales coming out of our exam rooms. On our last call, we shared our commitment to converting 40 of our existing stores in states where we cannot directly employ optometrists to a professional corporation or PC model, which gives us greater control over the customer experience and enables us to recognize exam revenue. This quarter, we made progress towards that goal by converting 17 existing stores to the PC model. At the end of Q1, 115 of our 169 stores offered eye exams. And for eligible patients who prefer to update their prescription from the comfort of their homes, we're continuing to make that easier too, leveraging first-to-market technology like our Virtual Vision Test, Telehealth app. Compared to Q1 2021, this quarter, we nearly doubled the number of vision tests administered through our app. We also continue to see meaningful growth in our contact lens business, which more than doubled since Q1 2021. This past quarter, we continued to scale our optical labs in Las Vegas, Nevada, and Sloatsburg, New York, which strengthens our vertically integrated supply chain and further insulates us from global supply chain pressures. And we did all this while staying laser-focused on our customer, delivering remarkable experiences both online and offline that result in a Net Promoter Score above 80, which we believe is not only best-in-class within our industry but also beyond it. Alongside our commitment to our customers is our commitment to driving impact. We aim to inspire other entrepreneurs and businesses to think along the same lines we do and to serve as an example that you can indeed scale while creating impact. As part of this commitment, we announced a partnership with Eastman Chemical to pioneer a first-of-its-kind demo lens molecular recycle program. One of the largest environmental impacts within the eyewear industry is the lack of a recycling solution for demo lenses. The demo lens is used in the industry to maintain frame shape and integrity while frames are in transit or on display. Working in close partnership with Eastman, we've come up with a solution to break the material down to the molecular level so that it can be repurposed to create acetate that is chemically and physically identical to traditional acetate and offers a sustainable solution without compromising aesthetics or performance. Currently, we are the only eyewear brand to recycle our demo lenses while sourcing sustainable acetate, making progress towards a circular solution and should lower the environmental impact of producing our frames. It's programs like this and our team's focus on driving vision for all that earned Warby Parker the top honor on the top companies 2022 list of the most innovative companies within social good, recognized in particular for our work distributing glasses to students in need through our Pupils Project program. We're honored to be recognized alongside the organizations reshaping industries and broader culture. This recognition is a testament to the dedication and important work Team Warby continues to execute as part of our mission to provide vision for all. In Q1, we continued to hire great talent across the business within our manufacturing facilities, our customer experience and retail team, our corporate offices, and our optometry team. We're proud that the retention of our full-time team members narrows out of pre-pandemic levels and continue to focus on fostering a work environment where employees can think big and have fun. Dave and I are inspired every single day by Team Warby's resilience, creativity, and commitment to our stakeholders. While Q1 was the lowest growth and profitability quarter we expect to have this year, we're starting to see improvements in retail productivity and have confidence in our growth trajectory for 2022, which Dave will talk more about.

Thanks Neil, it's great to be speaking to so many of you again, and to those joining us for the first time, welcome. While 2022 began with significant and unique Omicron-related challenges for our customers and the optical industry, overall, we remain as optimistic as ever about the long-term prospects for our category and our opportunities to strengthen our market position within it. As we look ahead to the rest of 2022, we expect to see our growth rate accelerate as retail productivity continues to recover. On our last earnings call, we talked about the impact that Omicron had on retail productivity, which we defined as average sales per store compared with pre-pandemic levels in 2019. In Q1 retail productivity was around 82% of pre-pandemic levels, far below where this metric was trending in mid-Q4 prior to Omicron. In April, retail productivity rose to 90%, indicating progress along the recovery curve we have observed after each wave of the pandemic and pointing to continued recovery. We said then and continue to believe that we'll reach full retail productivity by year-end. We do not need or expect retail foot traffic to rebound to pre-pandemic levels in order to achieve 100% retail productivity. The conversion and retention gains our team has driven will enable us to get there with modest assumptions around traffic increases. In addition to increased productivity from our existing stores, we also remain on track to expand our retail footprint by 40 new stores this year, ending 2022 with 201 stores. Even with this rapid growth at year-end, we will still represent less than 1% of the 41,000 optical shops open in the U.S. today. In addition to serving our customers better through our expanding retail footprint and driving adoption of our industry-leading digital tools like our Virtual Try-On and Virtual Vision Test, we'll continue to drive growth by launching new products and scaling our existing product offerings, in particular: Progressive, Contacts, and Eye Exams; all areas in which our business still represents just a fraction of the broader market. We expect our Progressives penetration to continue to increase, driving top line growth and gross margin expansion. Progressives make up 21% of our Prescription Eyewear business, less than half of the industry average. Progressives are our highest price point and highest gross margin category, and we see a higher mix of Progressives in our stores versus online. So as retail productivity increases, we expect to see Progressive’s growth will benefit both our top and bottom-line. We will continue to drive growth in our Contacts business, which currently accounts for just 7% of our business while typically accounting for 15% to 20% of an optical retailer's sales. As many of our customers purchase both glasses and contact lenses from us, we will continue to see growth in average revenue per customer. And we'll continue to invest in our Eye Exam and Vision Testing business. We anticipate ending the year providing eye exams in more than 150 of our stores, up from 107 in 2021, and we'll continue to drive innovation in the Telehealth space as we add new features and draw more awareness to our Virtual Vision Test App. Industry-wide, approximately 70% of glasses wearers purchase glasses from the same place they get their eye exam. Our business is unique in that historically, we have not been dependent on customers getting their prescription from Warby Parker. Going forward, having more convenient exam and vision testing options for our customers will reduce friction for them and should be a significant growth catalyst for our business. Vision Insurance remains a large opportunity for us. We are currently focused on scaling our in-network insurance relationships, while also making it easier for customers to use their out-of-network benefits with us. Starting on January 4th, we became an in-network option for members of the Blue Cross Blue Shield Federal Employee Program. We're excited to make it even easier for federal government employees to purchase glasses, exams, and contacts for as little as $10. These numbers joined the million to have in-network revision plans managed by UnitedHealthcare and large employers like Timmy and Boeing. A meaningful portion of our customers use their out-of-network benefits to pay for our glasses, exams, and contacts, paying $0 out-of-pocket for their purchase of eyeglasses. We are investing in a number of ways to make it even easier for these customers to use their existing benefits with us, and to educate consumers that they can use their benefits with us regardless of the plan. We price our products in order to offer exceptional value to all our customers, whether they have insurance benefits or not. Our $95 prescription glasses are cheaper than most out-of-pocket reimbursements. And as a reminder, that unified price includes lightweight and impact-resistant poly-carbonate prescription lenses with anti-reflective and anti-scratch treatments. In an environment like the challenging world we're in, we are grateful for the inherent resilience and durability of both our industry and business model. The optical industry is large and growing and historically has remained resilient across both strong and weak economic environments. While we can't predict what the economy will look like in the coming months and years, we do know that consumers across the U.S. and Canada will need to access the essential products and services we offer to help them see. 79% of adults use some form of vision correction and we expect that number to increase as there are several macro factors contributing to rising vision correction needs, like increased screen time and increased time spent indoors. The various waves of the pandemic have disrupted the normally consistent shopping behavior in our category. But we are confident that consumers will resume their eye doctor visits and prescription purchases. This recovery will not be linear and will take time, but we are already seeing evidence of it as we did after prior COVID waves. We recognize that consumers have a lot on their mind these days with high costs and rising inflation in every part of their lives. Given the exceptional value we offer through our convenient omnichannel business model, we believe we are uniquely positioned to capture the attention of consumers searching for vision care and to serve their needs. And we expect to be less impacted than others in the industry as the median household income for our customer base is above $100,000. Even this past quarter where our growth was below our typical levels, we still took market share and strengthened our competitive position in our category. As the recovery continues, we expect we will benefit differentially, continue to scale our base of happy customers, continue to take share and create impact. And now I will pass over to Steve to dive a bit deeper into our financial performance.

Thanks, Neil and Dave. Good morning, everyone. Let's jump right in and talk through top-line performance for the quarter. Revenue for the first quarter of 2022 came in at $153.2 million, up 10.3% versus the first quarter of 2021, and up 18% on a three-year CAGR basis versus the first quarter of 2019. We finished the quarter with 2.23 million active customers, an increase of 18% versus the same period a year ago. Our average revenue per customer increased 11% year-over-year to $249. We're pleased to see continued scaling in average revenue per customer, which reflects our ability to continue to provide more value to our customers as we evolve from a glasses-only company to one that sells eye exams, contacts, and eyeglasses. As a reminder, both active customers and average revenue per customer are measured on a trailing 12-month basis. Our growth in top line and average revenue per customer for the quarter was driven by a number of factors, including a consistent replenishment cycle of our core prescription glasses offering, as well as continued progress in growing our contact lens business, which while up 400 basis points compared with Q1, still only represented 7% of our business overall in Q1 '22. As we mentioned on our fourth quarter earnings call in March, our Q1 2022 revenue and year-over-year growth rate reflect the impact of approximately $15 million in estimated lost sales due to the effect of Omicron on store traffic and the recovery time needed for consumers to re-book eye exams and return to stores to purchase glasses. This impact was most prominent within our stores where store traffic and productivity declined from above 90% in the weeks preceding the onset of Omicron down to below 75% in the early weeks of January. We saw a slow but steady recovery in store productivity as Q1 progressed. For the first quarter, retail productivity came in at 82% of 2019 levels. With that said, we saw retail productivity rise to 90% in April, which is roughly a ten-point improvement from where we started the year. We expect to see this momentum continue as the year progresses. As it relates to our e-commerce business, for the first quarter, it represented 44% of our overall business versus 56% in Q1 2021 and 37% in Q1 2019. E-commerce revenue grew 81% in the first quarter of 2021. As such, our Q1 '22 e-com revenue was down 14% year-over-year, but is up 24% on a three-year CAGR basis versus Q1 2019. We've experienced minimal supply chain disruption due to increased reliance on our in-house lab network and having developed a diversified network of suppliers. As additional color on a factor affecting Q1 revenue, we did want to call out a small shipping delay from the freight forwarder that temporarily suspended operations in the last week of March. We were able to move quickly and transition these shipments to another supplier, shifting roughly $600,000 of customer delivery from Q1 to Q2. This is a good example of the resilience of our supplier base as these deliveries still reached customers within our promised turnaround time. If not for this delay at the end of March, revenue for Q1 would have been towards the high-end of our guidance range. Moving onto gross margin. As a reminder, our gross margin is fully loaded and accounts for a range of costs, including frames, lenses, optical labs, customer shipping, optometrists, store rents, and the depreciation of store build-outs. Our gross margin also includes stock-based compensation expense for our optometrists and optical lab employees. For comparability, I will be speaking to gross margin excluding stock-based compensation. Adjusted gross margin in Q1 '22 came in at 58.7% compared to 60.3% in Q1 2021. For the quarter, we had some unique benefits in Q1 2021 impacting comparability, as well as several operational puts and takes. Q1 2021 benefited from a Tariff rebate of approximately 25 basis points, excluding this benefit, the change in adjusted gross margin between Q1 '21 and Q1 '22 would have been narrower. With regard to the various operational puts and takes to gross margin, first, the acceleration in penetration of our contacts business as a percentage of the total was the primary driver of the decrease in gross margin year-over-year. As I noted, our contacts business expanded to represent approximately 7% of our business in Q1 '22 from approximately 3% of our business in Q1 '21. And as we've mentioned on prior earnings calls, expanding our contact lens offering is a core part of scaling our holistic vision care offering and a key driver of increasing average revenue per customer. While contact lenses have a lower gross margin percentage compared to our other product offerings, they are accretive to gross margin dollars given the higher purchase frequency and subscription-like purchase cycle of this product. We're also pleased to see sales of non-prescription sunglasses improve year-over-year by approximately 200 basis points and were nearly back in line with our pre-pandemic product mix in 2019. Given sunglasses have moderately lower margins, this ultimately had some deleverage on gross margin for the quarter. Next, we saw the impact of Omicron on lower store traffic and productivity results in year-over-year deleverage in gross margin in two key areas, which are the more fixed portion of our cost of goods. These fixed elements of our COGS stack are retail occupancy and eye doctor salaries, which generally remain the same regardless of revenue. As Q1 was impacted by $15 million in lost sales, the fixed portions of COGS became elevated as a percent of revenue. We anticipate this to normalize as retail productivity returns. We added 35 net new stores over the course of the last 12 months, going from 134 stores as of March 31st, 2021 to 169 stores as of March 31st, 2022, or an increase in our store base of 26% year-over-year, which naturally leads to an increase in store rents and the cost associated with store build-outs. We saw some downward pressure on gross margin year-over-year due to the acceleration from rolling out our professional corporation or PC Model. As of the end of Q1 '22, we operated with 68 stores where we engage directly with an optometrist, recognizing revenue from the exam service performed as well as the salaries and benefits for the optometrist. Of these 68 stores, 44 are in stores where we directly employ the doctor, and 24 are in stores where we engage the doctor through the PC Model. This was twice the amount of stores we had at the end of Q1 2021 where we employed an optometrist, all of which at the time were direct-employment models, as we did not start our PC Model rollout until Q4 '21. The majority of our PC Model stores are ones where we're converting an existing store with an independent eye doctor to the PC Model. Therefore, we'd already been recognizing a significant portion of product conversion sales at our stores from the independent doctor. As we convert these stores to a PC Model, we expect a near-term margin headwind given the gross margin on the exam service alone is lower than our glasses and contact gross margins. With that said, as we mentioned, we expect the PC Model will give us greater control over the customer experience, enable us to recognize eye exam revenue, and measure and see higher conversion rates from eye exams to product purchases. We believe this will benefit us over the long term in achieving our goal of becoming a holistic vision care company. In both cases, we would have incurred these same costs with or without the $15 million in estimates as lost sales in the quarter due to Omicron. Offsetting these items was the continued mix shift of optical lab fulfillment completed at our in-house facilities in Sloatsburg, New York, and Las Vegas, Nevada. In Q1 '22, we continued to increase the percentage of orders fulfilled through our in-house labs, which has many benefits, including higher NPS, lower refund rates, faster turnaround times, and improved gross margin overall. As we mentioned last quarter, we're still scaling our second optical lab in Las Vegas that we opened in Q3 2021. We expect this lab to reach scale in the back half of 2022, which will allow us to more efficiently serve our West Coast customers. As we continue to scale our Las Vegas lab, we expect to see more cost efficiencies, which will translate to improved gross margin. Lastly, we saw a benefit to gross margin from the expansion of our higher-margin progressives’ business, which has increased from 18% of our prescription business in Q1 last year to 21% in Q1 2022. Next, I would like to talk about SG&A expenses. As we previously discussed, most of our improvement in adjusted EBITDA will come from leverage in corporate overhead and through continued disciplined deployment of marketing spend and strategic hiring. We're conscious of the fact that we continue to operate within a challenging macroeconomic backdrop and will continue to manage the business toward both growth and profitability. As a reminder, SG&A for our business includes three main components: Salary expense for our headquarters, customer experience, and retail employees, marketing spend, including our Home Try-On program and general corporate overhead expenses. Adjusted SG&A, which excludes stock-based compensation in the first quarter, came in at $96.2 million or 62.8% of revenue. This compares to Q1 2021's adjusted SG&A of $79.2 million or 57% of revenue, an increase of 580 basis points year-over-year. In terms of year-over-year dollar growth, adjusted SG&A was up 21% year-over-year compared to Q1 2021, which was a slight deceleration from the year-over-year adjusted SG&A in Q1 2021 versus Q1 2020, which was up 26% year-over-year. The primary driver of the increase year-over-year in adjusted SG&A as a percentage of revenue was related to an increase in corporate overhead expenses, mostly related to costs we incurred to operate as a public company, which we did not incur in Q1 2021, and investments in our technology infrastructure, as well as an increase in salary expense for our retail employees due to the growth in our store base. Public company costs equaled roughly 1.65% of revenue in the quarter. The impact of lost sales in Q1 had a negative impact on adjusted SG&A as a percentage of revenue, as these costs would have been incurred regardless. On a sequential basis, our adjusted SG&A spend in Q1 2022 of $96.2 million was moderately higher than Q4 2021 adjusted SG&A spend of $89.4 million. We believe Q4 '21 is relevant for comparability for two reasons. One, it is the first quarter where we operated as a public company, and therefore more closely reflects a corporate overhead cost base supportive of that. And two, our store count in Q4 is more similar to our store count in Q1 2022 and is therefore more reflective of the level of store-related fixed costs required to operate a larger fleet of stores. Given the challenges to store productivity in Q1 we've already discussed, we still incurred the costs to operate our larger store base and expect as retail productivity improves, we will realize additional leverage on these costs. As it relates to marketing spend, we've highlighted previously that we maintain a highly flexible model with the only committed spend largely around linear TD during competitive periods. Prior to 2020, our marketing spend as a percentage of revenue was in the low teens, measuring at approximately 13% in 2019. We elevated this spend to close to 20% throughout both 2020 and 2021 for reasons previously discussed, including surge demand for our Home Try-On program and to continue to reach customers through store closures. We continue the same level of marketing spend as a percentage of revenue in Q1 of this year. We're now back in a cadence of opening stores at the pace we were pre-pandemic. As our stores are effective marketing vehicles, this will allow us to toggle down marketing spend below the mid-teens and closer to pre-pandemic levels in the second half of the year. As we look ahead to the rest of the year, we expect to see a similar sequential trend in adjusted SG&A to what we saw in 2021, with Q2 and Q3 adjusted SG&A spend moderately lower than Q1, with an increase into Q4 to support the important holiday season and FSA expiry in December. For the first quarter of 2022, we generated adjusted EBITDA of $0.8 million, representing an adjusted EBITDA margin of 0.5%. The $15 million in estimated lost sales had a significant impact on first-quarter profitability, as we estimate that incremental sales flow through to adjusted EBITDA at a rate of roughly 50%. We did contemplate the impact of lost sales on adjusted EBITDA in our guidance for the full year. Despite the challenges presented in the quarter, we were pleased to still be able to generate moderately profitable adjusted EBITDA. We finished the quarter with a strong balance sheet reflecting $230 million in cash, which we'll continue to deploy deliberately to support our growth and operations. As I noted earlier, the impact of the lost sales on revenue and adjusted EBITDA in Q1 was factored into our projections for the year; and we believe the cost pressures that we experienced in the first quarter will be mitigated in the remaining quarters of the year. Therefore, for 2022, we still expect revenue to be between $650 million and $660 million, representing growth of approximately 20% to 22%. For Q2 2022 specifically, we're guiding to revenue growth of 13% to 15% year-over-year. For the full year, we expect gross margins to be in the range of 58% to 60%. With regard to adjusted EBITDA margin, we are reiterating our target range of 5.6% to 6.6% for 2022. In terms of how our overall results are breaking down by quarter, 2022 will look different than past years due to the impact of Omicron. We have historically generated strong adjusted EBITDA margins in the first quarter, followed by similarly strong margins in the second and third quarters. Q4 has typically been our lowest profit quarter or has swung to a loss as we make investments to support increased holiday buying and the exploration of flex spend. Many of these investments in Q4 lead to deferred revenue that gets recognized in Q1 of the following year. We expect this year's performance to be somewhat in reverse order with margins being the weakest in Q1 and the strongest in Q3 and Q4 as stores return to full productivity. More specifically, we expect Q2 adjusted EBITDA margin to be in the low single-digits, and the second half of 2022 adjusted EBITDA margins to be in the high single-digits. As we mentioned on our last call, our full-year guidance assumes continued retail recovery reaching approximately 90% of pre-pandemic levels in Q2, and at the high end of our guidance, reaching full productivity by year-end. Our guidance also assumes we maintain a consistent three-year CAGR for our e-commerce business that we observed in Q1 in the mid-20s. Finally, with respect to our outlook for 2022, we are forecasting stock-based compensation as a percentage of net revenue to be in the mid-teens compared with 20% in 2021. Stock-based compensation for both years is above our long-range forecast of the low single-digits as the result of RSU expense associated with our direct listing and multi-year equity grants for our Co-CEOs in 2021. In summary, we are proud of all of the progress we've made growing our business, developing our teams, and maintaining both discipline and optimism of operating through a challenging period in the world. We acknowledge that the macro environment continues to be murky, yet we are as excited as ever about the long-term prospects for the business. We provide a medical necessity that combines the price point and level of customer experience that is unique within the optical industry. We'll continue to keep a close eye on the broader environment, manage costs as needed to achieve growth with profitability, and invest in people, stores, and technology as we evolve into a holistic vision care company. Thanks for joining us on this call. We look forward to keeping you updated and providing as much transparency as we can into our performance. With that, we will open up the line for Q&A.

Thank you. We will now begin our Q&A session. Our first question comes from Oliver Chen at Cowen. Please go ahead; your line is open.

Hi. Thank you very much. The productivity data is very helpful. What's assumed ahead in terms of productivity levels, and what do you think will be key drivers in achieving that, as well as key risk factors? Second question, you made a lot of progress within network customers. Just would love to hear about the opportunity ahead regarding insurance and what's happening in the consumer experience, and also the demand you're seeing from employees. Thank you.

Thanks, Oliver. I'll start. This is Neil. We see continued strength in retail productivity throughout the course of the year. One of the things that we are particularly excited about is the new stores that we opened in 2021 reaching maturity. So we opened 35 stores in 2021. That was an increase of store count by 28% in 2020, right in the depths of the pandemic where we only opened seven stores or increased our store count by 6%. The majority of those new stores that we've been opening are in suburban areas. So as we think about retail productivity increasing rates, not only the U.S. consumer returning to normal habits and visiting shopping centers. But our store fleet has been shifting from urban to suburban. One of the things that we shared during the last call was that we saw last year a 15-point differential in retail productivity from our urban locations to our suburban locations. We've now seen that narrow to only an eight-point spread. We expect that to continue to narrow, but again, even if it doesn't, we now have more suburban locations than we did a year ago. So we continue to be optimistic and confident in growing retail productivity.

And then on the insurance front, we continue to believe that insurance remains a really big opportunity for us, and within the world of vision insurance, that there are distinct opportunities for us to go after. The first is continuing to expand our in-network relationships, that we're excited to add Blue Cross Blue Shield, the federal employee program, and be able to serve federal government employees in better ways, where those consumers can now purchase exams, glasses, and contacts for as little as $10, joining the consumers who have coverage from UnitedHealthcare, employees from large employers like GE and Boeing. You will see us expand our in-network options for more and more companies and employer groups in the coming months and years. We also believe that there is a significant opportunity to educate consumers that they can use their vision insurance benefits with us regardless of the plan, and that often they will be spending less coming to Warby Parker, paying out-of-pocket or using their out-of-network benefits than they would go on to use in-network benefits somewhere else. In a recent survey, we found that most consumers are spending $130 out-of-pocket when they use their out-of-network benefits going to a non-Warby Parker provider. Those same people can often buy a single-vision glasses from us where they would pay $0 out-of-pocket. So in the coming months, you will see us really create a lot of education on our site and in our stores around how people can use those benefits.

Thank you. Thank you very much, David and Neil. Last question on the marketing spend. As we look ahead on the digital marketing landscape, it's been somewhat volatile with IDFA and privacy. What's your philosophy in terms of thinking about the marketing spend relative to productivity and also what you're seeing with customer acquisition trends? Thank you.

Sure. Thanks, Oliver. We've seen relative consistency in terms of customer acquisition trends, and that's despite seeing continued scale in average revenue per customer. We continue to want to see a separation between those two numbers in average revenue per customer and average growth in customer acquisition costs. What we did call out earlier is that we elevated with intention throughout the pandemic our marketing spend as a percent of revenue, from 13% in 2019 to almost 20% in 2020 and 2021, and right around 20% as a percent of revenue in Q1 of this year. As Neil called out, we opened up 35 new stores over the past 12 months, and we'll open up 40 new stores this year. Stores for us are very, very efficient marketing vehicles, and what that will enable us to do is toggle down the marketing spend as a percent of revenue closer to pre-pandemic levels below the mid-single-digits and closer to that 13% that we were spending in 2019. I would characterize our marketing spend as very disciplined. The way that we view marketing spend and store rollout is really in tandem with one another, as we know that stores are not just effective at selling product and servicing customers but also attracting new customers and retaining existing customers. That shift in marketing spend also dovetails with our incremental profitability that we've talked about over the course of the year. As we talked about adjusted EBITDA, leverage will largely come from improvements in SG&A. The largest portion of that is marketing spend, which we called out, we'll go from around 20% down toward pre-pandemic levels closer to 13%.

Oliver, I'll also add to that. As we mentioned, driven by our last call as well, we have not seen big impact from IDFA or the Apple privacy updates because we deliberately, several years ago, reduced reliance on paid social channels for customer acquisition. Whereas we hear from many other companies that that continues to be a challenge, that has not been a challenge for us. We've also historically seen that when we bring down marketing spend, we find that marketing efficiency increases. So that has potential tailwind for the rest of the year as well.

Thank you so much for your question. Our next question comes from Paul Lejuez at Citi. Please go ahead.

Hey, thanks guys. Could you give any more color in terms of your expectations for active customer growth for both 2Q and year versus how you're thinking about average spend per customer? Also curious if you're seeing anything in your business that you would describe as customers trading down within your assortment. Maybe not opting for certain additional features, anything along those lines. Thanks.

Sure. Thanks, Paul. So we report on active customers at the end of each quarter and each year, but don't provide specific guidance each quarter. Aside from Q1 which was impacted by Omicron, our active customer growth has generally been in the low 20's with average revenue per customer somewhere in the 5% to 8% zone. So I would expect as our business normalizes and as our stores ramp back to productivity, that we would see that consistent trend continue.

The other thing is we haven't observed customers trading down. One of our highest value products, our prescription is our Progressives offering, which starts at $295, whereas other high-end optical chains or independent optometric practices would cost significantly more. So by coming to Warby, customers are saving $100. And again, as retail productivity increases, we expect and have seen Progressives penetration increase, which is our highest price and highest margin product. The other thing that we've observed as well is the resilience of our consumer base, which has an average income of over $100,000.

Thank you. Good luck, guys.

Thanks.

Thank you.

Thank you very much for your question. Our next question comes from Dana Telsey at Telsey Advisory Group. Please go ahead, your line is open.

Hi, can you hear me okay?

We can.

Can you talk a little about the improving productivity at the stores that you've seen? Has it thinned in different regions, was it consistent during the cadence for the quarter, how did you see it? And then on the gross margin component with Contacts and Progressives, how did you envision the cadence going forward given the improvement in the increases in contact lenses? And then just lastly, on insurance, what are you seeing on the insurance front? And how do you expect that to progress? Thank you.

Thanks, Dana. On the store front, again, we tend to see a differential between performance in our suburban locations and our urban locations. Last year from a retail productivity standpoint, urban stores had 15 points lower productivity than urban locations. However, if we look at Q1, that gap has narrowed to 11 points to nine points. The other thing that we remain confident about our retail store rollout is that our new stores that we opened in the last 12 plus months are performing in line with pre-pandemic targets. So our new stores continued to perform well, and those are proportionately more in suburban locations than historically we've had.

And Dana, as it relates to your gross margin question, as we called out, there are a range of puts and takes in our gross margin line, and our COGS stack is fully loaded as intended. It includes frames, lenses, customer shipping, store occupancy, the depreciation of store build-outs, and eye doctor salaries. I would look to see our gross margin consistent in the 58% to 60% zone. Generally, Q1 exhibits higher gross margin than Q1 of this year due to the impact of Omicron and our ability to leverage fixed costs, while Q4 is moderately our lowest quarter, given the fact that we make investments in the business. A lot of these investments lead to deferred revenue that gets recognized in Q1 of the following year. Contacts will certainly continue to have a deleveraging effect on our gross margin percentage. But given the subscription-like nature of that particular product, this product offering will amplify gross margin dollars, which is what we want to continue to optimize the business for. We're really reiterating our 58% to 60% gross margin guidance for the full year. There will be some fluctuations during the year, particularly in Q1 and Q4. As you saw what happened in Q1 this year, given the impact of Omicron, we saw fixed costs become a larger portion of revenue, adding some deleverage to our story for Q1. But as store productivity comes back, those fixed costs will continue to be leveraged.

From a product mix standpoint, we tend to see a higher percentage of contacts mix from our online orders and a higher progressive mix from our store transactions. Given the impact of Omicron and its particular detrimental impact on store productivity, that balance between contacts and progressives, which had opposite impact on gross margin, is not the mix of transactions that we would expect in a typical quarter. And then on the insurance front, we're seeing really promising trends. In particular, for our customers with network coverage through plans that were part of where that cohort of customers is growing faster than our overall business. So we're excited to be able to expand some of those efforts with this federal employee program and other employer groups that we are hopefully able to add soon.

Thank you so much for your questions, Dana. Our next question comes from Mark Altschwager at Baird & Co. Please go ahead. Your line is open.

Hello. Good morning. Thank you. Your revenue guidance suggests a growth in revenue throughout the year, which differs from the seasonal patterns the company has observed in the past. Similarly, the profitability guidance seems to reflect this as well. Is this expectation mainly based on anticipated improvements in store productivity following the Omicron surge, or are there other controllable factors that provide you with confidence in that expected sequential growth in such a rapidly changing external environment?

Sure, thanks Mark. At a high level, there are two building blocks to bear in mind as we think about scaling, growth, and productivity over the course of the year. One, we called out a few times and you certainly mentioned, and that's the ramp in retail productivity back to 100% by Q4. The other is really maintaining a consistent three-year CAGR for our e-commerce business in the mid-twenties. E-commerce, our three-year CAGR payment at 24%. As long as we see scaling retail productivity, and as long as we maintain a consistent e-com three-year CAGR, we will be able to achieve our top-line guidance of 20% to 22% for the full year. I would look to see how we're reporting on those two key items in particular, each time we meet here to discuss.

Thank you, and then Steve, with the direct listing, you provided some detail on customer level contribution. Can you update us on where that shook out in 2021, and what your guidance implies in terms of per customer contribution this year? Thank you.

Sure. We provided a window into our customer economics, really meant as a one-time view in how we orient and manage the business as an omni-channel business, where we really look at blended margins by customer across channels, and we don't look at things through the lens of the channel, but through the lens of the customer. Customer contribution margins have been consistent with what we've reported. We're not anticipating providing visibility into that metric on a regular quarterly basis, but I would look for us to provide some incremental visibility into our customer economics towards the end of the year, and perhaps as part of an annual recap of performance. Suffice it to say, we've seen consistency in those numbers, and we don't plan to report on them regularly, but on an annual basis are planning to provide an updated view into that number.

Great, thank you.

Thank you, Mark, for your question. Our next question comes from Brooke Roach at Goldman Sachs. Please go ahead.

Good morning and thank you so much for taking our question. I was wondering if you could provide some more color on the initiatives you have in place to continue to deliver consistent four-year e-commerce CAGR? Have you seen any change in customer activity among any demographic in your online business as the external macro-environment has changed? Thank you.

Thanks for your question. We haven't seen significant changes in customer behavior online. What we have seen since the pandemic is increased use of our first-in-class Virtual Try-On. As a reminder, this was a feature that we built in-house that was tough to scale. We had to overcome a bunch of technical challenges to actually make it realistic. Being able to try on glasses virtually is quite different than, for example, trying a lipstick color or different face filters that you may see on various social channels. We've been excited by the adoption of this technology by our consumers. Similarly, we've seen a significant ramp-up in usage of our virtual vision test, which was first to the market; an online vision test that enables our customers to renew their prescriptions.

Perfect. Thank you for your question. Our final question comes from Mark Mahaney at Evercore. Please go ahead.

Thank you for your insights. You mentioned the narrowing gap in store productivity between urban and suburban areas and provided some data on it. Can you explain the reasons behind this shift? What factors are contributing to the rise in suburban productivity to match urban levels? Additionally, could you discuss the steps needed to achieve your long-term margin goal of 20%? Steve, could you highlight the easiest opportunities as well as the more challenging aspects in your plan to reach that goal? What are the straightforward strategies you can implement over the next few years, and what will be the tougher parts of that plan? Thank you.

Thanks Mark. First, one of the things that we're seeing in our urban locations is increased traffic. It still hasn't fully returned, and we still see elevated conversion across the entire store fleet. But we think this is due to people in cities spending more time outdoors, but also as offices reopen. That's where we're seeing certain improvements in our urban locations. We expect that to continue as the year progresses.

Great. And then in terms of the second question around margin expansion, as we march toward our long-term adjusted EBITDA target of 20%, we called out that since gross margin will be consistent in the 58% to 60% zone, the real sources of our leverage are going to come from SG&A. If COGS in aggregate is order of magnitude, let's say 40%, the other 40% that we want to see is what SG&A represents as a percent of revenue. As we've talked about, the three largest components of SG&A are salaries, which is split between our corporate headquarters, our retail stores, our customer experience team, marketing spend, which includes our Home-Try-On program and what we deploy on media, and general corporate overhead, public company costs, and what we pay to vendors. The top of the list, in terms of the single easiest lever to pull is marketing spend as a percentage of revenue. As we called out in Q1, that represented 20% of revenue. Pre-pandemic, that number represented roughly 13% of revenue. That number was elevated to 20% for a few factors, including store closures and the surge in demand for our Home Try-On program, and we've seen that normalize somewhat, given that stores are now reopening and getting back to full productivity. The maturation of stores in new and existing locations is also important. We are excited about the investments we've made in our corporate overhead and our corporate functions across the board to support growth outlook for years to come. Being in corporate overhead in a smart way will help us drive leverage on those costs.

Okay. Thank you very much.

Thank you so much Mark for your question. At this time, there are no other questions. And now I'd like to pass back over to Dave for any final remarks.

Thank you all for joining us today and for the great questions. We're very proud of what Team Warby has accomplished so far this year, and we look forward to the months ahead as we maintain both discipline and optimism while operating through a challenging period. We're incredibly excited about the opportunities that lie in front of us. Of course, we'll keep you informed of our progress as the year progresses. If you have any additional questions or follow-ups, please feel free to reach out to our Investor Relations inbox at [email protected]. Thank you.

Thank you everybody so much for joining today's conference call. You may now disconnect.